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CHANGE IN CONTROL PROVISIONS
8.1. Benefits. In the event of a Change in Control of the Company (as defined
below), except as otherwise provided by the Committee upon the grant of an
Option, the Participant shall be entitled to the following benefits:
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(a) Subject to paragraph (b) below, all outstanding Options of Participants
granted prior to the Change in Control shall be fully vested and immediately
exercisable in their entirety. The Committee, in its sole discretion, may
provide for the purchase of any such Stock Options by the Company for an amount
of cash equal to the excess of the Change in Control price (as defined below) of
the shares of Common Stock covered by such Stock Options, over the aggregate
exercise price of such Stock Options. For purposes of this Section 8.1, Change
in Control price shall mean the higher of (i) the highest price per share of
Common Stock paid in any transaction related to a Change in Control of the
Company, or (ii) the highest Fair Market Value per share of Common Stock at any
time during the sixty (60) day period preceding a Change in Control.
(b) Notwithstanding anything to the contrary herein, unless the Committee
provides otherwise at the time an Option is granted to an Eligible Employee or
Consultant hereunder or thereafter, no acceleration of exercisability shall
occur with respect to such Option if the Committee reasonably determines in good
faith, prior to the occurrence of the Change in Control, that the Options shall
be honored or assumed, or new rights substituted therefore (each such honored,
assumed or substituted option hereinafter called an "Alternative Option"), by
such Participant's employer (or the parent or a subsidiary of such employer), or
in the case of a Consultant, by the entity (or its parent or subsidiary) which
retains the Consultant, immediately following the Change in Control, provided
that any such Alternative Option must meet the following criteria: (i) the
Alternative Option must be based on stock which is traded on an established
securities market, or which will be so traded within thirty (30) days of the
Change in Control; (ii) the Alternative Option must provide such Participant
with rights and entitlements substantially equivalent to or better than the
rights, terms and conditions applicable under such Option, including, but not
limited to, an identical or better exercise schedule; and (iii) the Alternative
Option must have economic value substantially equivalent to the value of such
Option (determined at the time of the Change in Control). For purposes of
Incentive Stock Options, any assumed or substituted Option shall comply with the
requirements of Treasury regulation sec. 1.425-1 (and any amendments thereto).
8.2. Change in Control. A "Change in Control" shall be deemed to have occurred:
(a) upon any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than the Company, any trustee or other fiduciary holding
securities under any employee benefit plan of the Company, any company owned,
directly or indirectly, by the shareholders of the Company in substantially the
same proportions as their ownership of Common Stock of the Company), becoming
the owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's then outstanding securities
(including, without limitation, securities owned at the time of any increase in
ownership);
(b) during any period of two consecutive years, a change in the composition of
the Board of Directors of the Company such that the individuals who, as of the
date hereof, comprise the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, for purposes of
this subsection that any individual who becomes a member of an Incumbent Board
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved in advance or contemporaneously with such
election by a vote of at least a majority of those individuals who are members
of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board; but,
provided further, that any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board of Directors of the Company or actual or
threatened tender offer for shares of the Company or similar transaction or
other contest for corporate control (other than a tender offer by the Company)
shall not be so considered as a member of the Incumbent Board;
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(c) upon the merger or consolidation of the Company with any other corporation
(other than a parent or subsidiary corporation within the meaning of Section
424(e) or 424(f) of the Code, respectively), other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or
(d) upon the shareholders' of the Company approval of a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets other than the sale
of all or substantially all of the assets of the Company to a person or persons
who beneficially own, directly or indirectly, at least fifty percent (50%) or
more of the combined voting power of the outstanding voting securities of the
Company at the time of the sale.
ARTICLE IX.
TERMINATION OR AMENDMENT OF THE PLAN
9.1. Termination or Amendment. Notwithstanding any other provision of this Plan,
the Board may at any time, and from time to time, amend, in whole or in part,
any or all of the provisions of the Plan, or suspend or terminate it entirely,
retroactively or otherwise; provided, however, that, unless otherwise required
by law or specifically provided herein, the rights of a Participant with respect
to Options granted prior to such amendment, suspension or termination, may not
be impaired without the consent of such Participant and, provided further,
without the approval of the shareholders of the Company, if and to the extent
required by the applicable provisions of Rule 16b-3 or under the applicable
provisions of Section 162(m) of the Code or, with regard to Incentive Stock
Options, Section 422 of the Code, no amendment may be made which would (i)
increase the maximum individual Participant limitations under Section
4.1(b);(ii) change the classification of employees eligible to receive Options
under this Plan; (iii) extend the maximum option period under Section 6.3; or
(iv) require shareholder approval in order for the Plan to continue to comply
with the applicable provisions, if any, of Section 162(m) of the Code or, with
regard to Incentive Stock Options, Section 422 of the Code. In no event may the
Plan be amended without the approval of the shareholders of the Company in
accordance with the applicable laws or other requirements to increase the
aggregate number of shares of Common Stock that may be issued under the Plan or
to make any other amendment that would require shareholder approval under the
rules of any exchange or system on which the Company's securities are listed or
traded at the request of the Company. The Committee may amend the terms of any
Option theretofore granted, prospectively or retroactively, but, subject to
Article IV above or as otherwise specifically provided herein, no such amendment
or other action by the Committee shall impair the rights of any holder without
the holder's consent.
ARTICLE X.
UNFUNDED PLAN
10.1. Unfunded Status of Plan. This Plan is intended to constitute an "unfunded"
plan for incentive compensation. With respect to any payments as to which a
Participant has a fixed and vested interest but which are not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.
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ARTICLE XI.
GENERAL PROVISIONS
11.1. Legend. The Committee may require each person receiving shares of Common
Stock pursuant to the exercise of a Stock Option under the Plan to represent to
and agree with the Company in writing that the Participant is acquiring the
shares without a view to distribution thereof. In addition to any legend
required by this Plan, the certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on Transfer.
All certificates for shares of Common Stock delivered under the Plan shall be
subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed or any national securities association system upon whose
system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
11.2. Other Plans. Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
11.3. No Right to Employment/Consultancy/Directorship. Neither this Plan nor the
grant of any Option hereunder shall give any Participant or other individual any
right with respect to continuance of employment or consultancy by the Company or
any Subsidiary, nor shall there be a limitation in any way on the right of the
Company or any Subsidiary by which an employee is employed or if a consultant,
retained, to terminate his employment or consultancy at any time. Neither this
Plan nor the grant of any Option hereunder shall impose any obligation on the
Company to retain any Participant as a director, nor shall it impose on the part
of any Participant any obligation to remain as a director of the Company.
11.4. Withholding of Taxes. The Company shall have the right, if necessary or
desirable (as determined by the Company),to deduct from any payment to be made
to a Participant, or to otherwise require, prior to the issuance or delivery of
any shares of Common Stock or the payment of any cash hereunder, payment by the
Participant of, any Federal, state or local taxes required by law to be
withheld. The Committee may permit any such withholding obligation with regard
to any Participant to be satisfied by reducing the number of shares of Common
Stock otherwise deliverable or by delivering shares of Common Stock already
owned. Any fraction of a share of Common Stock required to satisfy such tax
obligations shall be disregarded and the amount due shall be paid instead in
cash by the Participant.
11.5. Listing and Other Conditions.
(a) As long as the Common Stock is listed on a national securities exchange or
system sponsored by a national securities association, the issue of any shares
of Common Stock pursuant to the exercise of an Option shall be conditioned upon
such shares being listed on such exchange or system. The Company shall have no
obligation to issue such shares unless and until such shares are so listed, and
the right to exercise any Option with respect to such shares shall be suspended
until such listing has been effected.
(b) If at any time counsel to the Company shall be of the opinion that any sale
or delivery of shares of Common Stock pursuant to the exercise of an Option is
or may in the circumstances be unlawful or result in the imposition of excise
taxes on the Company under the statutes, rules or regulations of any applicable
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jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933, as amended, or
otherwise with respect to shares of Common Stock, and the right to exercise any
Option shall be suspended until, in the opinion of said counsel, such sale or
delivery shall be lawful or will not result in the imposition of excise taxes on
the Company.
(c) Upon termination of any period of suspension under this Section 11.5, any
Option affected by such suspension which shall not then have expired or
terminated shall be reinstated as to all shares available before such suspension
and as to shares which would otherwise have become available during the period
of such suspension, but no such suspension shall extend the term of any Option.
11.6. Governing Law. This Plan shall be governed and construed in accordance
with the laws of the State of California(regardless of the law that might
otherwise govern under applicable California principles of conflict of
laws).11.7. Construction. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.
11.8. Other Benefits. No Stock Option granted under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its Subsidiaries nor affect any benefits under any other benefit plan
now or subsequently in effect under which the availability or amount of benefits
is related to the level of compensation.
11.9. Costs. The Company shall bear all expenses included in administering this
Plan, including expenses of issuing Common Stock pursuant to the exercise of any
Options hereunder.
11.10. No Right to Same Benefits. The provisions of Options need not be the same
with respect to each Participant, and such Options to individual Participants
need not be the same in subsequent years.
11.11. Death/Disability. The Committee may in its discretion require the
transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Option. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of the Plan.
11.12. Section 16(b) of the Exchange Act. All elections and transactions under
the Plan by persons subject to Section 16 of the Exchange Act involving shares
of Common Stock are intended to comply with any applicable exemptive condition
under Rule 16b-3. To the extent applicable, the Committee may establish and
adopt written administrative guidelines, designed to facilitate compliance with
Section 16(b) of the Exchange Act, as it may deem necessary or proper for the
administration and operation of the Plan and the transaction of business
thereunder. For purposes of this paragraph, the Company shall be deemed publicly
held when and if the Company has a class of common equity securities registered
under Section 12 of the Exchange Act.
11.13. Severability of Provisions. If any provision of the Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions hereof, and the Plan shall be construed and enforced as if
such provisions had not been included.
11.14. Headings and Captions. The headings and captions herein are provided for
reference and convenience only, shall not be considered part of the Plan, and
shall not be employed in the construction of the Plan.
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ARTICLE XII.
EFFECTIVE DATE OF PLAN
The Plan shall take effect upon adoption by the Board, but the Plan (and any
grants of Options made prior to the shareholder approval mentioned herein) shall
be subject to the requisite approval of the shareholders of the Company. In the
absence of such approval, such Options shall be null and void.
ARTICLE XIII.
TERM OF PLAN
No Stock Option shall be granted pursuant to the Plan on or after the tenth
anniversary of the earlier of the date the Plan is adopted or the date of
shareholder approval, but Options granted prior to such tenth anniversary may
extend beyond that date.
ARTICLE XIV.
NAME OF PLAN
The name of the Plan is 2004 STOCK OPTION PLAN 0F QUINTEK TECHNOLOGIES, INC.
http://www.sec.gov/Archives/edgar/data/1107714/000093173104000061/quintek-pre14a2004.txt
The aggregate number of shares of Common Stock which may
be issued under this Plan with respect to which Stock Options may be granted
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shall not exceed 11,822,500 shares (subject to any increase or decrease pursuant
to Section 4.2) which may be either authorized and unissued Common Stock or
Common Stock held in or acquired for the treasury of the Company. If any Stock
Option granted under this Plan expires, terminates or is cancelled for any
reason without having been exercised in full or the Company repurchases any
Stock Option pursuant to Section 6.3(f), the number of shares of Common Stock
underlying the repurchased Option, and/or the number of shares of Common Stock
underlying any unexercised Option shall again be available for the purposes of
Options under the Plan.
(b) Individual Participant Limitations. The maximum number of shares of Common
Stock subject to any Option which may be granted under this Plan to each
Participant shall be determined by the Committee.
2004 STOCK OPTION PLAN 0F QUINTEK TECHNOLOGIES, INC.
QUINTEK TECHNOLOGIES, INC.
2004 Stock Option Plan
ARTICLE I.
PURPOSE
The purpose of this Quintek Technologies, Inc. 2004 Stock Option Plan (the
"Plan"), is to enhance the profitability and value of Quintek Technologies, Inc.
(the "Company") for the benefit of its shareholders by enabling the Company to
offer certain employees and Consultants (as defined herein) of the Company and
its Subsidiaries (as defined herein) and non-employee directors of the Company
stock based incentives in the Company, thereby creating a means to raise the
level of stock ownership by employees, Consultants and non-employee directors in
order to attract, retain and reward such individuals and strengthen the
mutuality of interests between such individuals and the Company's shareholders.
ARTICLE II.
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
2.1. "Board" shall mean the Board of Directors of the Company.
2.2. "Cause" shall mean, with respect to a Participant's Termination of
Relationship, unless otherwise determined by the Committee at grant, willful
misconduct in connection with the Participant's employment or consultancy or
willful failure to perform his or her employment or consultancy responsibilities
in the best interests of the Company (including, without limitation, breach by
the Participant of any provision of any employment, nondisclosure,
non-competition or other similar agreement between the Participant and the
Company), as determined by the Committee, which determination shall be final,
conclusive and binding. With respect to a Participant's Termination of
Directorship, Cause shall mean an act or failure to act that constitutes "cause"
for removal of a director under applicable California law.
2.3. "Change in Control" shall have the meaning set forth in Article VIII.
2.4. "Code" shall mean the Internal Revenue Code of 1986, as amended. Any
reference to any section of the Code shall also be a reference to any successor
provision.
2.5. "Committee" shall mean a committee or sub-committee of the Board appointed
from time to time by the Board or such committee, as the case may be, which
Committee shall include two or more directors who are non-employee directors as
defined in Rule 16b-3 (as defined herein) and outside directors as defined under
Section 162(m) of the Code (as defined herein). If for any reason the appointed
Committee does not meet the requirements of Rule 16b-3 or Section 162(m) of the
Code, such noncompliance with the requirements of Rule 16b-3 or Section 162(m)
of the Code shall not affect the validity of the awards, grants, interpretations
or other actions of the Committee. Notwithstanding the foregoing, with respect
to grants of Options to non-employee directors and any action hereunder relating
to Options held by non-employee directors, the Committee shall mean the Board.
If and to the extent that no Committee exists which has the authority to
administer the Plan, the functions of the Committee shall be exercised by the
Board.
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2.6. "Common Stock" means the Common Stock, no par value per share, of the
Company.
2.7. "Consultant" means any advisor or consultant to the Company or its
Subsidiaries who is eligible pursuant to Article V to be granted Options under
this Plan.
2.8. "Disability" shall mean total and permanent disability, as defined in
Section 22(e)(3) of the Code.
2.9. "Effective Date" shall mean the effective date of the Plan as defined in
Article XII.
2.10. "Eligible Employee" shall mean the employees of the Company and its
Subsidiaries who are eligible pursuant to Article V to be granted Options under
this Plan.
2.11. "Exchange Act" shall mean the Securities Exchange Act of 1934.
2.12. "Fair Market Value" for purposes of this Plan, unless otherwise required
by any applicable provision of the Code or any regulations issued thereunder,
shall mean, as of any date, the last sales price reported for the Common Stock
on the applicable date (i) as reported by the principal national securities
exchange in the United States on which it is then traded, or (ii) if not traded
on any such national securities exchange, as quoted on an automated quotation
system sponsored by the National Association of Securities Dealers. If the
Common Stock is not readily tradable on a national securities exchange or any
system sponsored by the National Association of Securities Dealers, its Fair
Market Value shall be set in good faith by the Committee. For purposes of the
grant of any Option, the applicable date shall be the date for which the last
sales price is available at the time of grant.
2.13. "Good Reason" shall mean, with respect to a Participant's Termination of
Relationship, (i) if there is an employment agreement between the Company or a
Subsidiary and the Participant in effect at the time of grant that defines "good
reason" (or words of like import) a termination that is or would be deemed for
"good reason" (or words of like import) as defined under such employment
agreement at the time of grant, (ii) if there is an employment agreement between
the Company or a Subsidiary and the Participant in effect at the time of grant
that does not define "good reason" (or words of like import), a voluntary
termination which is permitted under the terms of such employment agreement and
which is at least ninety (90) days after the occurrence of an event which would
be grounds for a termination by the Company that is or would be deemed for
"cause" (or words of like import) as defined under such employment agreement at
the time of grant, or (iii) if there is no employment agreement between the
Company or a Subsidiary and the Participant in effect at the time of grant, a
voluntary termination for any reason upon two (2) weeks' prior written notice to
the Company, which is at least ninety (90) days after the occurrence of an event
which would be grounds for a Termination of Relationship by the Company for
Cause (without regard to any notice or cure period requirement).
2.14. "Incentive Stock Option" shall mean any Stock Option awarded under this
Plan intended to be, and designated as, an "Incentive Stock Option" within the
meaning of Section 422 of the Code.
2.15. "Non-Qualified Stock Option" shall mean any Stock Option awarded under
this Plan that is not an Incentive Stock Option.
2.16. "Participant" shall mean the following persons to whom an Option has been
granted pursuant to this Plan; Eligible Employees and Consultants of the Company
or its Subsidiaries and non-employee directors of the Company.
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2.17. "Retirement" with respect to a Participant's Termination of Relationship
shall mean a Termination of Relationship without Cause from the Company and/or a
Subsidiary by a Participant who has attained (i) at least age sixty-five (65);
or (ii) such earlier date after age fifty-five (55) as approved by the Committee
with regard to such Participant. With respect to a Participant's Termination of
Directorship, Retirement shall mean the failure to stand for reelection or the
failure to be reelected after a Participant has attained age sixty-five (65).
2.18. "Rule 16b-3" shall mean Rule 16b-3 under Section 16(b) of the Exchange Act
as then in effect or any successor provisions.
2.19. "Section 162(m) of the Code" shall mean the exception for
performance-based compensation under Section 162(m) of the Code and any Treasury
regulations thereunder.
2.20. "Stock Option" or "Option" shall mean any option to purchase shares of
Common Stock granted to Eligible Employees, Consultants or non-employee
directors pursuant to Article VI.
2.21. "Subsidiary" shall mean any corporation that is defined as a subsidiary
corporation in Section 424(f) of the Code.
2.22. "Ten Percent Shareholder" shall mean a person owning Common Stock of the
Company possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company as defined in Section 422 of the
Code.
2.23 "Termination of Consultancy" shall mean (i) an individual is no longer
acting as a Consultant to the Company or a Subsidiary; or (ii) when an entity
which is retaining a Participant as a Consultant ceases to be a Subsidiary,
unless the Participant thereupon is retained as a Consultant by the Company or
another Subsidiary.
2.24. "Termination of Directorship" shall mean, with respect to a non-employee
director, that the non-employee director has ceased to be a director of the
Company for any reason.
2.25. "Termination of Employment" shall mean (i) a termination of service (for
reasons other than a military or personal leave of absence granted by the
Company) of a Participant from the Company and its Subsidiaries; or (ii) when an
entity which is employing a Participant ceases to be a Subsidiary, unless the
Participant thereupon becomes employed by the Company or another Subsidiary.
2.26. "Termination of Relationship" shall mean a Termination of Employment or a
Termination of Consultancy, as applicable.
2.27. "Transfer" or "Transferred" shall mean anticipate, alienate, attach, sell,
assign, pledge, encumber, charge or otherwise transfer.
2.28. "Withholding Election" shall have the meaning set forth in Section 11.4.
ARTICLE III.
ADMINISTRATION
3.1. The Committee. The Plan shall be administered and interpreted by the
Committee.
3.2. Awards. The Committee shall have full authority to grant Stock Options,
pursuant to the terms of this Plan. In particular, the Committee shall have the
authority:
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(a) to select the Eligible Employees, Consultants and non-employee directors to
whom Stock Options may from time to time be granted hereunder;
(b) to determine whether and to what extent Stock Options are to be granted
hereunder to one or more Eligible Employees, Consultants or non-employee
directors;
(c) to determine, in accordance with the terms of this Plan, the number of
shares of Common Stock to be covered by each Stock Option granted to an Eligible
Employee, Consultant or non-employee director;
(d) to determine the terms and conditions, not inconsistent with the terms of
this Plan, of any Stock Option granted hereunder to an Eligible Employee,
Consultant or non-employee director (including, but not limited to, the share
price, any restriction or limitation, any vesting schedule or acceleration
thereof, or any forfeiture restrictions or waiver thereof, and the shares of
Common Stock relating thereto, based on such factors, if any, as the Committee
shall determine, in its sole discretion);
(e) to determine whether and under what circumstances a Stock Option may be
settled in cash and/or Common Stock under Subsection 6.3(d);
(f) to determine whether, to what extent and under what circumstances to provide
loans (which shall be on a recourse basis and shall bear a reasonable rate of
interest) to Eligible Employees, Consultants or non-employee directors in order
to exercise Options under the Plan; and
(g) to determine whether to require Eligible Employees, Consultants or
non-employee directors, as a condition of the granting of any Option, to not
sell or otherwise dispose of shares acquired pursuant to the exercise of an
Option for a period of time as determined by the Committee, in its sole
discretion, following the date of the acquisition of such Option.
3.3. Guidelines. Subject to Article IX hereof, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing this Plan and perform all acts, including the delegation of
its administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of this Plan and
any Option granted under this Plan(and any agreements relating thereto); and to
otherwise supervise the administration of this Plan. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in this Plan or
in any agreement relating thereto in the manner and to the extent it shall deem
necessary to carry this Plan into effect, but only to the extent any such action
would be permitted under the applicable provisions of Rule 16b-3 (if any) and
the applicable provisions of Section 162(m) of the Code (if any). The Committee
may adopt special guidelines and provisions for persons who are residing in, or
subject to, the taxes of countries other than the United States to comply with
applicable tax and securities laws. If and solely to the extent applicable, this
Plan is intended to comply with Rule 16b-3 and Section162(m) of the Code and
shall be limited, construed and interpreted in a manner so as to comply
therewith.
3.4. Decisions Final. Any decision, interpretation or other action made or taken
in good faith by or at the direction of the Company, the Board, or the Committee
(or any of its members) arising out of or in connection with the Plan shall be
within the absolute discretion of all and each of them, as the case may be, and
shall be final, conclusive and binding on the Company and all employees,
directors, consultants and Participants and their respective heirs, executors,
administrators, successors and assigns.
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3.5. Reliance on Counsel. The Company, the Board or the Committee may consult
with legal counsel, who may be counsel for the Company or other counsel, with
respect to its obligations or duties hereunder, or with respect to any action or
proceeding or any question of law, and shall not be liable with respect to any
action taken or omitted by it in good faith pursuant to the advice of such
counsel.
3.6. Procedures. If the Committee is appointed, the Board shall designate one of
the members of the Committee as chairman and the Committee shall hold meetings,
subject to the By-Laws of the Company, at such times and places as it shall deem
advisable. A majority of the Committee members shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members. Any
decision or determination reduced to writing and signed by all Committee members
in accordance with the By-Laws of the Company shall be fully effective as if it
had been made by a vote at a meeting duly called and held. The Committee shall
keep minutes of its meetings and shall make such rules and regulations for the
conduct of its business as it shall deem advisable.
3.7. Designation of Advisors -- Liability.
(a) The Committee may designate employees of the Company and professional
advisors to assist the Committee in the administration of the Plan and may grant
authority to employees to execute agreements or other documents on behalf of the
Committee.
(b) The Committee may employ such legal counsel, consultants and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion received from any such counsel or consultant and any computation
received from any such consultant or agent. Expenses incurred by the Committee
or Board in the engagement of any such counsel, consultant or agent shall be
paid by the Company. The Committee, its members and any person designated
pursuant to paragraph (a) above shall not be liable for any action or
determination made in good faith with respect to the Plan. To the maximum extent
permitted by applicable law, no officer or former officer of the Company or
member or former member of the Committee or of the Board shall be liable for any
action or determination made in good faith with respect to the Plan or any Stock
Option granted under it. To the maximum extent permitted by applicable law and
the Certificate of Incorporation and By-Laws of the Company and to the extent
not covered by insurance, each officer or former officer and member or former
member of the Committee or of the Board shall be indemnified and held harmless
by the Company against any cost or expense (including reasonable fees of counsel
reasonably acceptable to the Company) or liability (including any sum paid in
settlement of a claim with the approval of the Company), and advanced amounts
necessary to pay the foregoing at the earliest time and to the fullest extent
permitted, arising out of any act or omission to act in connection with the
Plan, except to the extent arising out of such officer's or former officer's,
member's or former member's own fraud or bad faith. Such indemnification shall
be in addition to any rights of indemnification the officers, directors or
members or former officers, directors or members may have under applicable law
or under the Certificate of Incorporation or By-Laws of the Company or
Subsidiary. Notwithstanding anything else herein, this indemnification will not
apply to the actions or determinations made by an individual with regard to
Stock Options granted to him or her under this Plan.
ARTICLE IV.
SHARE AND OTHER LIMITATIONS
4.1. Shares.
(a) General Limitation. The aggregate number of shares of Common Stock which may
be issued under this Plan with respect to which Stock Options may be granted
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shall not exceed 11,822,500 shares (subject to any increase or decrease pursuant
to Section 4.2) which may be either authorized and unissued Common Stock or
Common Stock held in or acquired for the treasury of the Company. If any Stock
Option granted under this Plan expires, terminates or is cancelled for any
reason without having been exercised in full or the Company repurchases any
Stock Option pursuant to Section 6.3(f), the number of shares of Common Stock
underlying the repurchased Option, and/or the number of shares of Common Stock
underlying any unexercised Option shall again be available for the purposes of
Options under the Plan.
(b) Individual Participant Limitations. The maximum number of shares of Common
Stock subject to any Option which may be granted under this Plan to each
Participant shall be determined by the Committee.
4.2. Changes.
(a) The existence of the Plan and the Options granted hereunder shall not affect
in any way the right or power of the Board or the shareholders of the Company to
make or authorize any adjustment, recapitalization, reorganization or other
change in the Company's capital structure or its business, any merger or
consolidation of the Company or Subsidiary, any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting Common Stock, the
dissolution or liquidation of the Company or Subsidiary, any sale or transfer of
all or part of its assets or business or any other corporate act or proceeding.
(b) In the event of any such change in the capital structure or business of the
Company by reason of any stock dividend or distribution, stock split or reverse
stock split, recapitalization, reorganization, merger, consolidation, split-up,
combination or exchange of shares, distribution with respect to its outstanding
Common Stock or capital stock other than Common Stock, sale or transfer of all
or part of its assets or business, reclassification of its capital stock, or any
similar change affecting the Company's capital structure or business and the
Committee determines an adjustment is appropriate under the Plan, the number and
kind of shares or other property (including cash) to be issued upon exercise of
an outstanding Option and the purchase price thereof shall be appropriately
adjusted consistent with such change in such manner as the Committee may deem
equitable to prevent substantial dilution or enlargement of the rights granted
to, or available for, Participants under this Plan or as otherwise necessary to
reflect the change, and any such adjustment determined by the Committee shall be
final, conclusive and binding on the Company and all Participants and employees
and their respective heirs, executors, administrators, successors and assigns.
(c) Fractional shares of Common Stock resulting from any adjustment in Options
pursuant to this Section 4 shall be aggregated until, and eliminated at, the
time of exercise by rounding-down for fractions less than one-half (1/2) and
rounding-up for fractions equal to or greater than one-half (1/2). No cash
settlements shall be made with respect to fractional shares eliminated by
rounding. Notice of any adjustment shall be given by the Committee to each
Participant whose Option has been adjusted and such adjustment (whether or not
such notice is given) shall be effective and binding for all purposes of the
Plan.
(d) In the event of a merger or consolidation in which the Company is not the
surviving entity or in the event of any transaction that results in the
acquisition of all or substantially all of the Company's outstanding Common
Stock by a single person or entity or by a group of persons and/or entities
acting in concert, or in the event of the sale or transfer of all or
substantially all of the Company's assets (all of the foregoing being referred
to as "Acquisition Events"), then the Committee may, in its sole discretion,
terminate all outstanding Options of Eligible Employees, Consultants and
non-employee directors, effective as of the date of the Acquisition Event, by
delivering notice of termination to each such Participant at least twenty (20)
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days prior to the date of consummation of the Acquisition Event; provided, that
during the period from the date on which such notice of termination is delivered
to the consummation of the Acquisition Event, each such Participant shall have
the right to exercise in full all of his or her Options that are then
outstanding (without regard to any limitations on exercisability otherwise
contained in the Option Agreement) but contingent on occurrence of the
Acquisition Event, and, provided that, if the Acquisition Event does not take
place within a specified period after giving such notice for any reason
whatsoever, the notice and exercise shall be null and void.
If an Acquisition Event occurs, to the extent the Committee does not terminate
the outstanding Options pursuant to this Section 4.2(d), then the provisions of
Section 4.2(b) shall apply.
ARTICLE V.
ELIGIBILITY
All employees and Consultants of the Company and its Subsidiaries and all
non-employee directors of the Company are eligible to be granted Stock Options
under this Plan. Eligibility under this Plan shall be determined by the
Committee in its sole discretion.
ARTICLE VI.
STOCK OPTION GRANTS
6.1. Options. Each Stock Option granted hereunder shall be one of two types: (i)
an Incentive Stock Option intended to satisfy the requirements of Section 422 of
the Code or (ii) a Non-Qualified Stock Option.
6.2. Grants. The Committee shall have the authority to grant to any Eligible
Employee one or more Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options. The Committee shall have the authority to grant to
any Consultant one or more Non-Qualified Stock Options. The Board shall have the
authority to grant to any non-employee director one or more Non-Qualified Stock
Options. To the extent that any Stock Option does not qualify as an Incentive
Stock Option(whether because of its provisions or the time or manner of its
exercise or otherwise), such Stock Option or the portion there of which does not
qualify, shall constitute a separate Non-Qualified Stock Option.
6.3. Terms of Options. Options granted under this Plan shall be subject to the
following terms and conditions, and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of this Plan,
as the Committee shall deem desirable:
(a) Option Price. The option price per share of Common Stock purchasable under
an Incentive Stock Option shall be determined by the Committee at the time of
grant but shall not be less than 100% of the Fair Market Value of the share of
Common Stock at the time of grant; provided, however, if an Incentive Stock
Option is granted to a Ten Percent Shareholder, the purchase price shall be no
less than 110% of the Fair Market Value of the Common Stock. The purchase price
of shares of Common Stock subject to a Non-Qualified Stock Option shall be
determined by the Committee.
(b) Option Term. The term of each Stock Option shall be fixed by the Committee,
but no Stock Option shall be exercisable more than ten (10) years after the date
the Option is granted, provided, however, the term of an Incentive Stock Option
granted to a Ten Percent Shareholder may not exceed five (5) years.
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(c) Exercisability. Stock Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Committee at
grant. If the Committee provides, in its discretion, that any Stock Option is
exercisable subject to certain limitations (including, without limitation, that
it is exercisable only in installments or within certain time periods), the
Committee may waive such limitations on the exercisability at any time at or
after grant in whole or in part (including, without limitation, that the
Committee may waive the installment exercise provisions or accelerate the time
at which Options may be exercised), based on such factors, if any, as the
Committee shall determine, in its sole discretion.
(d) Method of Exercise. Subject to whatever installment exercise and waiting
period provisions apply under subsection (c) above, Stock Options may be
exercised in whole or in part at any time during the Option term, by giving
written notice of exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price in such form, or such other arrangement for the satisfaction of the
purchase price, as the Committee may accept. If and to the extent determined by
the Committee in its sole discretion at or after grant, payment in full or in
part may also be made in the form of Common Stock withheld from the shares to be
received on the exercise of a Stock Option hereunder or Common Stock owned by
the Participant (and for which the Participant has good title free and clear of
any liens and encumbrances) based on the Fair Market Value of the Common Stock
on the payment date as determined by the Committee. No shares of Common Stock
shall be issued until payment, as provided herein, therefore has been made or
provided for and the Participant shall have none of the rights of a holder of
shares of Common Stock until such shares of Common Stock have been issued.
(e) Incentive Stock Option Limitations. To the extent that the aggregate Fair
Market Value (determined as of the time of grant) of the Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
an Eligible Employee during any calendar year under the Plan and/or any other
stock option plan of the Company or any Subsidiary or parent corporation (within
the meaning of Section 424(e) of the Code) exceeds $100,000, such Options shall
be treated as Options which are not Incentive Stock Options.
Should the foregoing provision not be necessary in order for the Stock Options
to qualify as Incentive Stock Options, or should any additional provisions be
required, the Committee may amend the Plan accordingly, without the necessity of
obtaining the approval of the shareholders of the Company.
(f) Buy Out and Settlement Provisions. The Committee may at any time on behalf
of the Company offer to buy out an Option previously granted, based on such
terms and conditions as the Committee shall establish and communicate to the
Participant at the time that such offer is made.
(g) Form, Modification, Extension and Renewal of Options. Subject to the terms
and conditions and within the limitations of the Plan, an Option shall be
evidenced by such form of agreement or grant as is approved by the Committee,
and the Committee may modify, extend or renew outstanding Options granted under
the Plan (provided that the rights of a Participant are not reduced without his
consent), or accept the surrender of outstanding Options (up to the extent not
theretofore exercised) and authorize the granting of new Options in substitution
therefore (to the extent not theretofore exercised).
(h) Other Terms and Conditions. Options may contain such other provisions, which
shall not be inconsistent with any of the foregoing terms of the Plan, as the
Committee shall deem appropriate including, without limitation, permitting
"reloads" such that the same number of Options are granted as the number of
Options exercised, shares used to pay for the exercise price of Options or
shares used to pay withholding taxes ("Reloads"). With respect to Reloads, the
exercise price of the new Stock Option shall be the Fair Market Value on the
date of the Reload and the term of the Stock Option shall be the same as the
remaining term of the Options that are exercised, if applicable, or such other
exercise price and term as determined by the Committee.
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6.4. Termination of Relationship. The following rules apply with regard to
Options upon the Termination of Relationship of a Participant:
(a) Termination by Reason of Death. If a Participant's Termination of
Relationship is by reason of death, any Stock Option held by such Participant,
unless otherwise determined by the Committee at grant or, if no rights of the
Participant's estate are reduced, thereafter, may be exercised, to the extent
exercisable at the Participant's death, by the legal representative of the
estate, at any time within a period of one (1) year from the date of such death,
but in no event beyond the expiration of the stated term of such Stock Option.
(b) Termination by Reason of Disability. If a Participant's Termination of
Relationship is by reason of Disability, any Stock Option held by such
Participant, unless otherwise determined by the Committee at grant or, if no
rights of the Participant are reduced, thereafter, may be exercised, to the
extent exercisable at the Participant's termination, by the Participant (or the
legal representative of the Participant's estate if the Participant dies after
termination) at any time within a period of one (1) year from the date of such
termination, but in no event beyond the expiration of the stated term of such
Stock Option.
(c) Termination by Reason of Retirement. If a Participant's Termination of
Relationship is by reason of Retirement, any Stock Option held by such
Participant, unless otherwise determined by the Committee at grant, or, if no
rights of the Participant are reduced, thereafter, shall be fully vested and may
thereafter be exercised by the Participant at any time within a period of one
(1) year from the date of such termination, but in no event beyond the
expiration of the stated term of such Stock Option; provided, however, that, if
the Participant dies within such exercise period, any unexercised Stock Option
held by such Participant shall thereafter be exercisable, to the extent to which
it was exercisable at the time of death, for a period of one (1) year (or such
other period as the Committee may specify at grant or, if no rights of the
Participant's estate are reduced, thereafter) from the date of such death, but
in no event beyond the expiration of the stated term of such Stock Option.
(d) Involuntary Termination Without Cause or Termination for Good Reason. If a
Participant's Termination of Relationship is by involuntary termination without
Cause or for Good Reason, any Stock Option held by such Participant, unless
otherwise determined by the Committee at grant or, if no rights of the
Participant are reduced, thereafter, may be exercised, to the extent exercisable
at termination, by the Participant at any time within a period of ninety (90)
days from the date of such termination, but in no event beyond the expiration of
the stated term of such Stock Option.
(e) Termination Without Good Reason. If a Participant's Termination of
Relationship is voluntary but without Good Reason and such Termination of
Relationship occurs prior to, or more than ninety (90) days after, the
occurrence of an event which would be grounds for Termination of Relationship by
the Company for Cause (without regard to any notice or cure period
requirements), any Stock Option held by such Participant, unless otherwise
determined by the Committee at grant or, if no rights of the Participant are
reduced, thereafter, may be exercised, to the extent exercisable at termination,
by the Participant at any time within a period of thirty (30) days from the date
of such Termination of Relationship, but in no event beyond the expiration of
the stated term of such Stock Option.
(f) Other Termination. Unless otherwise determined by the Committee at grant or,
if no rights of the Participant are reduced, thereafter, if a Participant's
Termination of Relationship is for any reason other than death, Disability,
Retirement, Good Reason involuntary termination without Cause or voluntary
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termination as provided in subsection (e) above, any Stock Option held by such
Participant shall thereupon terminate and expire as of the date of termination,
provided that (unless the Committee determines a different period upon grant or,
if, no rights of the Participant are reduced, thereafter) in the event such
termination is for Cause or is a voluntary termination without Good Reason or
voluntary resignation within ninety (90) days after occurrence of an event which
would be grounds for Termination of Relationship by the Company for Cause
(without regard to any notice or cure period requirement), any Stock Option held
by the Participant at the time of occurrence of the event which would be grounds
for Termination of Relationship for Cause shall be deemed to have terminated and
expired upon occurrence of the event which would be grounds for Termination of
Relationship by the Company for Cause.
6.5. Termination of Directorship. The following rules apply with regard to
Options upon the Termination of Directorship:
(a) Death, Disability or Otherwise Ceasing to be a Director Other than for
Cause. Except as otherwise determined by the Committee at grant or, if no rights
of the Participant are reduced, thereafter, upon the Termination of
Directorship, on account of Disability, death, Retirement, resignation, failure
to stand for reelection or failure to be reelected or otherwise other than as
set forth in (b) below, all outstanding Options then exercisable and not
exercised by the Participant prior to such Termination of Directorship shall
remain exercisable, to the extent exercisable at the Termination of
Directorship, by the Participant or, in the case of death, by the Participant's
estate or by the person given authority to exercise such Options by his or her
will or by operation of law, for a one (1) year period commencing on the date of
the Termination of Directorship, provided that such one (1) year period shall
not extend beyond the stated time of such Options.
(b) Cause. Upon removal, failure to stand for reelection or failure to be
renominated for Cause, or if the Company obtains or discovers information after
Termination of Directorship that such Participant had engaged in conduct that
would have justified a removal for Cause during such directorship, all
outstanding Options of such Participant shall immediately terminate and shall be
null and void.
(c) Cancellation of Options. No Options that were not exercisable during the
period such person serves as a director shall thereafter become exercisable upon
a Termination of Directorship for any reason or no reason whatsoever, and such
Options shall terminate and become null and void upon a Termination of
Directorship.
ARTICLE VII.
NON-TRANSFERABILITY
No Stock Option shall be Transferable by the Participant otherwise than by will
or by the laws of descent and distribution. All Stock Options shall be
exercisable, during the Participant's lifetime, only by the Participant. No
Stock Option shall, except as otherwise specifically provided by law or herein,
be Transferable in any manner, and any attempt to Transfer any such Option shall
be void, and no such Option shall in any manner be liable for or subject to the
debts, contracts, liabilities, engagements or torts of any person who shall be
entitled to such Option, nor shall it be subject to attachment or legal process
for or against such person.
http://www.sec.gov/Archives/edgar/data/1107714/000093173104000061/quintek-pre14a2004.txt
Mr. Kazi was granted a warrant,
expiring July 31, 2003, to purchase 4,500,000 shares of our common stock at an
exercise price of $0.02 per share.
In January 2003, we entered into a Consulting Agreement with Zubair Kazi. In
exchange for his business consulting services, Mr. Kazi was granted a warrant,
expiring July 31, 2003, to purchase 4,500,000 shares of our common stock at an
exercise price of $0.02 per share. Mr. Kazi currently owns approximately 9.4% of
the Company's outstanding common stock.
In June 2003, we entered into an agreement to sell two purchase orders to Zubair
Kazi, a private investor. Mr. Kazi currently owns 9.4% of the Company's
outstanding common stock. The agreement allowed for the investor to buy these
two purchase orders at 97% of face value. This investor was paid directly from
the sales proceeds once they were received by Quintek. As part of the financing
agreement, the investor will receive a warrant to purchase 500,000 shares of our
common stock at an exercise price of $0.046 per share, if and when additional
shares of common stock are authorized for issuance by our shareholders. The
warrant will have an expiration date of June 2, 2008. As of June 30, 2003, we
received $123,083 in financing under this agreement.
In June 2003, we entered into a Purchase Order Financing Agreement with a
business management company owned by Zubair Kazi. As part of this agreement, Mr.
Kazi's company (or "investor") received an equity fee of a warrant to purchase
1,500,000 shares of our common stock at an exercise price of $0.043 per share,
if and when additional shares of common stock are authorized for issuance by our
shareholders. The warrant will have an expiration date of June 13, 2008. The
financing is limited to $200,000 per month and $4,800,000 in total financing
over the 2 year life of the agreement. The company will receive an additional
warrant, as a bonus, to purchase two additional shares of our common stock for
each $1.00 of financing provided. These bonus warrants shall allow the investor
to purchase common stock at the average closing price of our stock for the 90
days prior to the closing of the Purchase Order financing transaction they
represent or a fifty percent (50%) discount to the closing price of Quintek's
common stock at the day of the closing of the transaction they represent. As of
June 30, 2003, we received no financing under this agreement. Perfected Purchase
Orders (delivered to and accepted by the customer) will be purchased by the
investor at three percent (3%) discount to the investor, or ninety-seven percent
(97%) of face value. Non-Perfected Purchase orders (not yet shipped to customer)
will be purchased by the investor at ten percent (10%) discount to the investor,
or ninety percent (90%) of face value. Quintek will pay a late fee as follows.
For Perfected Purchase Orders not paid within 30 days Quintek will pay a late
fee equal to three percent (3%) per month. For Non-Perfected Purchase Orders not
paid within 60 days Quintek will pay a late fee equal to five percent (5%) per
month. Late fees may be paid in cash or stock at the option of the investor.
In November 2003 we entered into a Note Purchase Agreement with a
business management company owned by Zubair Kazi ("Kazi"). As part of the
Agreement, Kazi agreed to purchase from the Company up to a total of five (5)
Convertible Notes (the "Notes"), each in $100,000 denominations with a 10%
annual interest rate and one year term, and convertible into shares of the
Company's common stock at a conversion price of $0.06. Kazi shall receive one
five year Warrant for each conversion share. Each Warrant shall be exercisable
into common stock at a price ten cents ($0.10). The initial Note was issued and
Kazi transferred $100,000 to the Company. However, in the event that (a) the
authorization of more shares is not approved by the shareholders of the Company
within 90 days of receipt of initial funding, or (b) the Company is not able to
secure additional senior management satisfactory to Kazi within 45 days after
initial funding, purchase of additional Notes, if any, will occur at the
discretion of Kazi.
At the time of the execution and delivery of this Note Purchase
Agreement (and purchase by Kazi of the initial Note), Kazi and the Company
entered into (a) a Security Agreement whereby the Note(s) are secured by Kazi by
all the assets and intellectual property of the Company, and (b) a Registration
Rights Agreement whereby the Company agrees to register all of the shares
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underlying the convertible Note(s) and warrants described above with the
Securities and Exchange Commission ("SEC"). In the event the Registration
Statement is not declared Effective by the SEC within 90 days of the first Note
purchase, the Company shall pay a Kazi a penalty of 3% of the per value of the
Note, at its election in either in common stock, or cash, on a pro-rata basis
for partial months, for each full month the Registration Statement is not
declared effective. Further, the Company will pay a two and one half (2 1/2 due
diligence fee to Kazi which shall be deducted from each Note purchase amount.
http://www.sec.gov/Archives/edgar/data/1107714/000093173104000061/quintek-pre14a2004.txt
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the past we made unsecured loans to our previous directors and officers,
listed below. This is no longer a practice of the Company. These loans were all
renegotiated as of June 30, 1999. The current loan terms each provide that they
are due in 20 years, on June 30, 2019. They bear interest at 4% per annum. Each
former officer is obligated to pay $100 per month until the loan matures and to
pay the remaining unpaid balance in one balloon payment on June 30, 2019. At
June 30, 2002, and June 30, 2003, the following amounts of principal and
interest on these loans were unpaid:
6/30/02 6/30/03
Tom Sims $ 200,085 $ 216,409
Kurt Kunz 86,716 96,599
Kelly Kunz 50,624 55,897
Teresa Kunz 14,200 13,850
-------- --------
$ 351,625 $ 382,565
These loans were not made in arms-length negotiations between us and the
borrowers. The borrowers could not have obtained unsecured loans on similar
terms from unrelated third parties. Because of the unsecured nature and length
of these loans, they have been discounted by $378,739 (99%) on our financial
statements. To the extent that the interest rate, maturity and other terms of
these loans are more favorable than could be obtained from third parties, the
benefit received by the directors and officers can be considered additional
compensation to them.
http://www.sec.gov/Archives/edgar/data/1107714/000093173104000061/quintek-pre14a2004.txt
Mr. Robert Steele failed to file a Form 3 reporting his beneficial ownership of
securities at the time he became an officer or director of the Company. The
appropriate Form was filed by Mr. Steele on September 19, 2003. Mr. Andrew Haag
failed to file a Form 3 reporting his beneficial ownership of securities at the
time he became an officer or director of the Company. The appropriate Form was
filed by Mr. Haag on September 19, 2003.
http://www.sec.gov/Archives/edgar/data/1107714/000093173104000061/quintek-pre14a2004.txt
APPROVAL OF AN AMENDMENT TO THE COMPANY`S
ARTICLES OF INCORPORATION AUTHORIZING A QUORUM FOR ANY SHAREHOLDER MEETING
TO BE AT LEAST ONE THIRD (1/3) OF THE SHARES ENTITLED TO VOTE
-----------------------------------------------
(Item 5 on Proxy Card)
Section 602 of the California General Corporation Law states that "Unless
otherwise provided in the articles, a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of the
shareholders, but in no event shall a quorum consist of less than one-third ....
of the shares entitled to vote at the meeting...." The Company's articles of
incorporation currently do not provide for a quorum consisting of less than a
majority of shareholders; thus, currently a quorum for a shareholder meeting
must constitute a majority of the shares entitled to vote. However, the
Company's shares are currently rather widely distributed among a large number of
small shareholders, and even though notice of shareholder meeting are properly
and timely sent out to shareholders at addresses from current shareholder and
NOBO lists, it is sometimes difficult for small public companies (such as the
Company) to receive enough proxies and shareholders voting their shares in
person to form a quorum for the shareholder's meeting. In such event, a new time
and location for a shareholder's meeting must be set and new notices for the
meeting must be mailed again. Preparing initial proxy materials, paying for a
meeting place, and cost of mailing proxy materials to shareholders is a large
expense for the Company, i.e. the cost of preparation of the current proxy
preparation materials, mailing costs, cost of meeting facilities and cost of
time for parties attending the meeting. Reducing the quorum amount to one-third
of the shares entitled to vote at the meeting will greatly reduce (although not
eliminate) the likelihood of not having a quorum for a meeting of shareholders
and the necessity of having to reschedule another meeting, with attendant extra
costs and delay, or even to abandon having such a meeting.
The resolution to be considered by the shareholders at the Annual Meeting reads
as follows:
RESOLVED, that a new Article VIII shall be added to the Articles of
Incorporation of the Company to read in full as follows:
"Article VIII. A quorum for any shareholder meeting shall be at least one third
(1/3) of the shares entitled to vote."
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Shareholder approval of this proposal is required under California law. Approval
of the amendment to the Company's Articles of Incorporation authorizing a quorum
for any shareholder meeting to be at least one third (1/3) of the shares
entitled to vote requires the affirmative vote of a majority of all votes cast
by the holders of outstanding shares of Common Stock (with each share of Common
Stock entitled to one vote). If this proposal is adopted, it will become
effective upon filing of Articles of Amendment with the Secretary of State of
California which the Company anticipates filing immediately following the Annual
Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS AMENDMENT
TO THE COMPANY`S ARTICLES OF INCORPORATION AUTHORIZING A QUORUM FOR ANY
SHAREHOLDER MEETING TO BE AT LEAST ONE THIRD (1/3) OF THE SHARES ENTITLED TO
VOTE.
http://www.sec.gov/Archives/edgar/data/1107714/000093173104000061/quintek-pre14a2004.txt
APPROVAL OF AN AMENDMENT TO THE COMPANY`S ARTICLES OF INCORPORATION INCREASING
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK AND THE NUMBER
OF AUTHORIZED SHARES OF PREFERRED STOCK
-----------------------------------------------
(Item 3 on Proxy Card)
The Company's Articles of Incorporation presently authorizes the issuance of up
to 50,000,000 shares of Common Stock and up to 10,000,000 shares of Preferred
Stock. The Board of Directors has approved a resolution which if approved by the
shareholders would increase the number of authorized shares of Common Stock to
200,000,000 and the number of authorized shares of Preferred Stock to
50,000,000.
As of December 1, 2003, no shares of Preferred Stock are issued and outstanding.
However, the sole type of preferred stock allowed to be issued by the current
Articles of Incorporation is, in the experience and judgment of management, not
salable to investors and is unusable by the Company in its attempts to
restructure and finance the Company's liabilities.
As of December 2003, the number of actually issued and outstanding shares of
Common Stock is 48,884,994 which is slightly less than the number of shares of
Common Stock which are currently authorized (50,000,000) by the Articles of
Incorporation. Unfulfilled commitments of issuance of preferred and common
shares consist of the following:
(A) The Company committed to issue 1,008,654 shares of Series A Preferred Stock
in connection with the conversion $252,213 owed to employees. The Company has
committed to issue one creditor 320,000 shares of Series A Preferred stock in
connection with the conversion of $8,000 of past due monies owed. The Company
has committed to grant the holders of Series A Preferred Stock the right to
convert the shares into common stock on a one for one basis.
(B) The Company has committed to issue 2,000,000 shares of Series B Preferred
Stock in connection with two executive employment agreements. The Company has
committed to grant holders of the Series B Preferred Stock rights to convert the
shares into common stock on a one for one basis.
(C) The Company has committed to issue 11 creditors 20,148 shares of Series C
Preferred stock in connection with the conversion $20,148.16 of past due monies
owed. The Company has committed to grant holders of the Series C Preferred Stock
the rights to convert the shares into common stock on a twenty for one basis.
(D) The Company has committed to issue shareholders 4,828,572 shares of common
stock and 2,642,857 three-year warrants to purchase common stock at prices
ranging from $0.13-$0.175 in connection with consulting services and financing
transactions made with these shareholders.
(E) The Company has committed to issue warrants to purchase 2,000,000 shares of
common stock in connection with completed purchase order financing agreements.
(F) The Company has committed to issue 500,000 common shares and warrants to
purchase 500,000 common shares in connection with consulting agreements.
(G) The Company has committed to issue up to 8,333,333 common shares and
warrants to purchase up to 8,333,333 common shares in connection with a $500,000
financing agreement.
All of these commitments are part of the financing efforts that management has
been pursuing to maintain operations, grow the Company, retain employees and
build shareholder value.
12
<PAGE>
Based upon the foregoing outstanding shares, the Company currently has 1,115,006
shares of Common Stock and, practically speaking, no shares of Preferred Stock
remaining available for other purposes. The purpose of the proposed amendment is
to authorize a sufficient number of additional shares of Common Stock and
utilizable Preferred Stock (in conjunction with the proposal described in Item 4
below) to provide the Company with the flexibility to issue Common Stock and
Preferred Stock for a variety of corporate purposes, such as to make
acquisitions through the use of shares, to raise equity capital, to issue
additional warrants or options, or to issue shares in lieu of debts or for
payment of services. At this time, the Company has made arrangements to issue,
subject to the approval of this resolution, approximately 3,348,802 shares of
Preferred Stock, convertible into 3,731,614 shares of Common Stock, in lieu of
approximately $280,361 of debts and services. Additionally, the Company has made
arrangements to issue, subject to the approval of this resolution, up to
13,661,905 shares of Common Stock and warrants to purchase up to 13,476,190
shares of Common Stock. As of December 1, 2003, and assuming approval of this
proposal, there would be up to 27,138,095 shares of Common Stock eligible for
future issuance, and 3,348,802 shares of Preferred Stock eligible for future
issuance. The Board of Directors will have the authority to issue these
authorized shares of Common Stock and Preferred Stock from time to time for
proper corporate purposes without further shareholder approval unless required
by applicable law. Shareholders do not have preemptive rights with respect to
the Common Stock. The issuance of Common Stock or securities, which may include
Preferred Stock so designated, convertible into Common Stock, on other than a
pro-rata basis, would result in the dilution of a present shareholder's interest
in the Company.
The Company has not proposed the increase in the authorized number of shares
with the intention of using the additional shares for anti-takeover purposes,
although the Company could theoretically use the additional shares to make it
more difficult or to discourage an attempt to acquire control of the Company.
For example, in the event of an attempt to take over control of the Company, it
may be possible for the Company to endeavor to impede the attempt by issuing
shares of the Common Stock or voting Preferred Stock, thereby diluting the
voting power of the other outstanding shares and increasing the potential cost
to acquire control of the Company. The proposed amendment may therefore have the
effect of discouraging unsolicited takeover attempts. By potentially
discouraging initiation of any such unsolicited takeover attempt, the proposed
amendment may limit the opportunity for the Company's shareholders to dispose of
their shares at the higher price generally available in takeover attempts. In
addition, management might use the additional shares to resist or frustrate a
third-party transaction providing an above-market premium that is favored by a
majority of the independent shareholders. The Board of Directors is not aware of
any attempt to take control of the Company and the Board of Directors has not
presented this proposal with the intent that it be utilized as a type of
anti-takeover device. At this time, the Company has no additional plans or
proposals to adopt other provisions or enter into other arrangements that may
have material anti-takeover consequences.
The resolution to be considered by the shareholders at the Annual Meeting reads
as follows:
RESOLVED, that Paragraph A. of Article III of the Articles of Incorporation of
the Company shall be amended and restated to read in full as follows:
"A. The total number of shares of all classes of stock which the corporation
shall have authority to issue is 250,000,000 shares, consisting of
200,000,000 shares of Common Stock, without par value, and 50,000,000 shares
of Preferred Stock, without par value."
13
<PAGE>
Shareholder approval of this proposal is required under California law. Approval
of the amendment to the Company's Articles of Incorporation increasing the
number of authorized shares of Common Stock and Preferred Stock requires the
affirmative vote of a majority of all votes cast by the holders of outstanding
shares of Common Stock (with each share of Common Stock entitled to one vote).
If this proposal is adopted, it will become effective upon filing of Articles of
Amendment with the Secretary of State of California which the Company
anticipates filing immediately following the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS AMENDMENT
TO THE COMPANY`S ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF
SHARES OF COMMON STOCK AND THE AUTHORIZED NUMBER OF SHARES OF PREFERRED STOCK.
http://www.sec.gov/Archives/edgar/data/1107714/000093173104000061/quintek-pre14a2004.txt
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON April 8, 2004
-------------------------
To Our Shareholders:
The Annual Meeting of Shareholders of Quintek Technologies, Inc., a California
corporation (the "Company"), will be held at 10:00 a.m., April 8, 2004, at
Holiday Inn, 450 East Harbor Boulevard, Ventura, California 93001 for the
following purposes:
1. The election of Robert Steele and Andrew Haag as Directors;
2. To act upon a proposal to ratify the appointment of Heard, McElroy
& Vestal, LLP as the independent public accountants of the Company
for fiscal 2004;
3. To act upon an amendment to increase the number of authorized
shares of Common Stock to 200,000,000, and to increase the number
of authorized shares of Preferred Stock to 50,000,000;
4. To act upon an amendment to authorize the Board of Directors to
divide the Preferred Stock into any number of classes or series,
fix the designation and number of shares of each such series or
class, and alter or determine the rights, preferences, privileges
and restrictions of each class or series of Preferred Stock not
yet issued;
5. To act upon an amendment to authorize a quorum for any shareholder
meeting to be at least one third (1/3) of the shares entitled to
vote;
6. To approve and adopt the Quintek Technologies, Inc. 2004 Stock
Option Plan; and
7. To transact such other business as may properly come before the
Annual Meeting and any and all adjournments thereof.
The Board of Directors has fixed the close of business on February 20, 2004 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting and any and all adjournments thereof.
You are cordially invited to attend the meeting in person. Whether or not you
expect to attend the meeting in person, please promptly mark, sign and date the
enclosed proxy and return it in the envelope provided for that purpose.
By Order of the Board of Directors,
/s/ Robert Steele
-------------------------------------------
ROBERT STEELE
Chairman and Chief Executive Officer
http://www.sec.gov/Archives/edgar/data/1107714/000093173104000061/quintek-pre14a2004.txt
As of 8 days ago 57% of Americans want to replace Bush and counting:
http://www.investorshub.com/boards/read_msg.asp?message_id=2634626
57% of Americans want to replace Bush: survey
[1] March 18 (03 :46) Bush calls for int'l unity against terrorism - WASHINGTON
[2] March 16 (02 :38) Bush, Dutch PM vow unity in fight against terrorism - WASHINGTON
[3] March 15 (05 :31) Putin, Bush confirm importance of Russo-U.S. relations - MOSCOW
[4] March 15 (05 :25) Bush, Spain's new leader confirm antiterrorism cooperation - WASHINGTON
[5] March 15 (01 :49) Putin, Bush confirm importance of Russo-U.S. relations - MOSCOW
[6] March 11 (07 :37) Bush sticks with economic message - WASHINGTON
[7] March 11 (07 :26) Bush condemns Madrid train attacks - WASHINGTON
[8] March 11 (02 :12) Bush condemns Madrid train attacks - WASHINGTON
[9] March 10 (07 :43) Bush backs free trade, citing examples of Japanese companies - WASHINGTON
[10] March 9 (07 :15) 57% of Americans want to replace Bush: survey - WASHINGTON
[11] March 8 (07 :05) Bush congratulates Iraqis on signing of interim constitution - WASHINGTON
[12] March 2 (05 :10) Bush renews warning to N. Korea to abandon nuke arms - WASHINGTON
[13] Feb. 27 (07 :27) Bush moves to mend rift with Schroeder over Iraq - WASHINGTON
[14] Feb. 27 (05 :01) Bush, Shroeder discuss Iraq, N. Korea - WASHINGTON
[15] Feb. 24 (02 :08) Bush calls for constitutional amendment to stop gay marriage - WASHINGTON
[16] Feb. 24 (17 :19) Kobe Steel appoints Inubushi as president - TOKYO
[17] Feb. 23 (06 :35) Bush stresses benefits of free Iraq, citing postwar Japan - WASHINGTON
[18] Feb. 19 (02 :12) Bush, Roh agree to work together on 6-party talks - WASHINGTON
[19] Feb. 20 (00 :45) Roh, Bush talk ahead of six-party talks on N. Korea - SEOUL
[20] Feb. 19 (23 :49) Kobe Steel likely to promote Inubushi as new president - TOKYO
[21] Feb. 17 (05 :28) Bush rallies troops, vowing to win war on terrorism - WASHINGTON
[22] Feb. 11 (07 :35) Bush eyes tougher WMD rules, end to N. Korea, Iran nukes - WASHINGTON
[23] Feb. 11 (07 :31) Bush adviser urges Japan to boost foreign investment - NEW YORK
[24] Feb. 11 (06 :05) Bush urges N. Korea, Iran to abandon nuke arms ambitions - WASHINGTON
[25] Feb. 11 (05 :12) Bush urges N. Korea, Iran to abandon nuke arms ambitions - WASHINGTON
[26] Feb. 11 (04 :55) Bush urges N. Korea, Iran to abandon nuke arms ambitions - WASHINGTON
[27] Feb. 8 (04 :05) Bush opts for diplomacy over N. Korea's nuke program - WASHINGTON
[28] Feb. 8 (01 :50) Bush pursues diplomacy over N. Korea's nuke program - WASHINGTON
[29] Feb. 8 (01 :08) Bush says Afghan, Iraqi lessons can apply to N. Korea, Iran - WASHINGTON
[30] Feb. 7 (03 :20) Bush, reelection bid in mind, vows to open foreign markets - WASHINGTON
[31] Feb. 6 (05 :38) Bush announces formation of intelligence panel on Iraq - WASHINGTON
[32] Feb. 6 (04 :36) Bush announces formation of intelligence panel on Iraq - WASHINGTON
[33] Feb. 6 (04 :08) Bush unveils commission on WMD intelligence in Iraq, N. Korea - WASHINGTON
[34] Feb. 5 (07 :33) Bush defends Iraq war, repeats vow to fight terrorism - WASHINGTON
[35] Feb. 4 (07 :36) Bush cites Churchill, postwar democracies over war on terror - WASHINGTON
[36] Feb. 4 (20 :23) Koizumi lauds Bush for seeking greater U.N. role in Iraq - TOKYO
[37] Feb. 2 (01 :39) Bush budget seeks to boost defense costs, cut record deficit - WASHINGTON
[38] Feb. 2 (01 :24) Bush to authorize probe into Iraq intelligence issue - WASHINGTON
[39] Feb. 2 (23 :47) Bush budget seeks to boost defense costs, cut record deficit - WASHINGTON
[40] Jan. 31 (10 :42) Bush's approval rating falls to record low 49% - NEW YORK
[41] Jan. 28 (12 :34) U.S. Senate Democratic leader criticizes Bush's N. Korea policy - WASHINGTON
[42] Jan. 27 (06 :08) 2 CNN staffers fatally shot, another hurt in Iraqi ambush - NEW YORK
[43] Jan. 27 (02 :53) Bush confidence in Iraq weapons intelligence - WASHINGTON
[44] Jan. 22 (06 :11) Bush to boost homeland security budget - WASHINGTON
[45] Jan. 21 (17 :56) Dollar close to 106 yen level as Bush deficit-cut pledge ignored - TOKYO
[46] Jan. 20 (13 :39) Bush urges N. Korea, Iran to give up nuclear arms program - WASHINGTON
[47] Jan. 20 (11 :49) Bush urges N. Korea, Iran to give up WMD programs - WASHINGTON
[48] Jan. 20 (11 :45) Bush cites 'vital contributions' by Japan, other partners - WASHINGTON
[49] Jan. 20 (11 :34) Bush again urges N. Korea to abandon nuke program - WASHINGTON
[50] Jan. 20 (08 :58) Bush likely to urge N. Korea, others to give up WMD programs - WASHINGTON
[51] Jan. 16 (06 :06) Bush to tell Americans of continued war on terror - WASHINGTON
[52] Jan. 15 (20 :13) Restaurants to ask Bush to take steps to resume beef exports - TOKYO
[53] Jan. 14 (07 :44) Bush outlines plan for human return to moon in 2015 - WASHINGTON
[54] Jan. 14 (02 :32) Bush to outline moon and Mars exploration programs - WASHINGTON
[55] Jan. 12 (07 :37) Bush, Fox meet to mend rift over immigration, Iraq war - MONTERREY, Mexico
[56] Jan. 8 (07 :16) Powell reiterates Bush's support for one-China policy - WASHINGTON
[57] Jan. 7 (06 :43) Bush plan may legalize over 8 mil. immigrants - WASHINGTON
[58] Jan. 1 (07 :47) Bush confident in Musharraf, Pakistan's nuke arms - WASHINGTON
[59] Dec. 31 (14 :38) FOCUS: Bush-Koizumi honeymoon will be tested in 2004 - WASHINGTON
[60] Dec. 29 (21 :43) Bush likely to OK new protections for meat eaters: Washington Post - WASHINGTON
[61] Dec. 26 (07 :32) Bush says U.S. ready to help quake victims in Iran - WASHINGTON
[62] Dec. 22 (07 :59) Bush discusses Iraq, N. Korea with key Asian leaders - WASHINGTON
[63] Dec. 23 (01 :28) Roh, Bush agree on early resumption of 6-party nuke talks - SEOUL
[64] Dec. 22 (23 :22) Bush's envoy to visit Japan from Sun. to discuss Iraqi debts - TOKYO
[65] Dec. 22 (09 :11) FOCUS: Baker among Bush friends carving up Iraq pie - TOKYO
[66] Dec. 21 (05 :35) Hu, Bush talk over phone to discuss N. Korea, Iraq, Taiwan - BEIJING
[67] Dec. 21 (00 :13) Bush thanks Koizumi for Japan's planned troop dispatch to Iraq - TOKYO
[68] Dec. 19 (08 :20) Libya agrees to disclose, drop weapons program: Bush - WASHINGTON
[69] Dec. 19 (08 :02) Libya agrees to drop weapons, missile programs, Bush says - WASHINGTON
[70] Dec. 19 (07 :42) Libya agrees to drop weapons program, Bush says - WASHINGTON
[71] Dec. 19 (05 :18) Bremer confirms he survived ambush near Baghdad - BAGHDAD
71 news found.
http://home.kyodo.co.jp/search/afetch.jsp?key1=Bush&key2=&how=and&date1=2003%2F12%2F20&a....
Hey Rocky, watch me pull a rabbit out of my hat!
Yahoo BB client data likely leaked by insiders: Softbank panel
TOKYO March 18 Kyodo - The massive quantity of client data leaked from Internet service provider Yahoo BB last year in two separate cases was likely obtained by insiders as there was no sign of unauthorized access, an investigative panel said Thursday.
The panel of outside experts set up by Softbank BB Corp., the operator of Yahoo BB, released a report that said the data on 4.6 million customers obtained by a group of three men who tried to blackmail the parent company Softbank Corp. were likely obtained by someone using an authentic password.
Private testing, gov't OK needed to end beef import ban
TOKYO March 18 Kyodo - Japan is likely to remove its import ban on U.S. beef if U.S. exporters test all cattle for export for mad cow disease in cooperation with the U.S. government, a senior official at the Japanese agriculture ministry said Thursday.
''We will welcome private-sector testing with the U.S. government's firm involvement,'' Mamoru Ishihara, vice minister for agriculture, forestry and fisheries, told a press conference.
March 19 (07 :25) Japanese morning newspaper headlines - TOKYO
March 18 (06 :40) Kyodo news summary -12- - NEW YORK
March 19 (05 :30) Data on Citibank's Japanese customers missing in Singapore: report - TOKYO
March 18 (04 :00) Kyodo news summary -11- - NEW YORK
March 19 (03 :14) MMC concealed hub defects after 1999 bus accident: police - YOKOHAMA
March 18 (01 :55) U.S. takes China's tax polices on chips to WTO - WASHINGTON
March 18 (01 :31) EU, Microsoft fail to agree on antitrust case - BRUSSELS
March 18 (01 :14) U.S. takes China's tax polices on chips to WTO - WASHINGTON
March 18 (23 :50) Dollar falls below 107 yen to hit one-month low vs yen in NY - NEW YOK
March 18 (23 :22) Kyodo economic news summary -7- - TOKYO
March 18 (23 :14) Yahoo BB client data likely leaked by insiders: Softbank panel - TOKYO
March 18 (23 :09) EU, Microsoft fail to agree on antitrust case - BRUSSELS
March 18 (22 :46) Suspected hog cholera cases found in Kagoshima - KAGOSHIMA
March 18 (22 :24) H.K. businessman Li Ka-shing opposes direct elections in 2007 - HONG KONG
March 18 (22 :20) Bonuses at big Japanese firms last winter saw 1st rise in 2 years - TOKYO
March 18 (21 :59) Mazda to recall 2,656 vehicles to fix defective emission filter - TOKYO
March 18 (21 :25) Outstanding balance of JGB holdings by BOJ tops 100 trillion yen - TOKYO
March 18 (21 :20) Japan Post takes unprecedented step over savings limit - TOKYO
March 18 (21 :18) Dollar trades below 107 yen to hit 1-month low vs yen in London - LONDON
March 18 (21 :07) Konica Minolta to cut back on digital camera business despite growth - TOKYO
March 18 (20 :59) Travel agencies seeing brisk bookings for Golden Week tours - TOKYO
March 18 (20 :45) Kyodo economic news summary -6- - TOKYO
March 18 (20 :44) Mazda to recall 2,656 vehicles to fix defective emission filter - TOKYO
March 18 (20 :41) JAMA expects FY 2004 domestic auto sales to rise 0.9% to 5.9 mil. - TOKYO
March 18 (20 :14) Aisin AW to manufacture automatic transmissions in China - NAGOYA
March 18 (20 :12) Mitsubishi Fuso to begin recall middle of next week: official - TOKYO
March 18 (19 :54) Tokyo Motor Show to feature welfare vehicles Nov. 2-7 - TOKYO
March 18 (19 :25) Gov't to gradually scrap tax breaks for Japan Post - TOKYO
March 18 (19 :12) Tokyu Parking Systems urged to stop alleged illegal practice - TOKYO
March 18 (19 :11) Private testing, gov't OK needed to end beef import ban - TOKYO
March 18 (19 :09) Matsushita to sell part of condenser business to Nichicon - OSAKA
March 18 (18 :55) Japan's Feb. crude steel output grows 6.5% on year - TOKYO
March 18 (18 :49) Japan says still ready for forex action - TOKYO
March 18 (18 :37) Kyodo economic news summary -5- - TOKYO
March 18 (18 :35) Prosecutors drop case against dozing bullet train driver - OKAYAMA
March 18 (18 :33) H.K. jobless rate edges down to 7.2% in Dec.-Feb. - HONG KONG
March 18 (18 :30) NEC, SMBC group set up venture to write banking computer software - TOKYO
March 18 (18 :25) Toshiba to pay 3 yen year-end dividend for fiscal 2003 - TOKYO
March 18 (18 :18) Average monthly wage in 2003 falls 0.2% to 302,100 yen - TOKYO
March 18 (18 :15) NEC to release 3 new cell phone models in China - TOKYO
March 18 (18 :12) Individual investors turn net stock buyers last week - TOKYO
March 18 (17 :38) Dollar plunges to 1-month low below 107 yen in Tokyo - TOKYO
March 18 (17 :15) Japan among nations named as possible site for spaceport - NEW YORK
March 18 (17 :12) China to spend billions on training people to find jobs - BEIJING
March 18 (17 :04) Kyodo economic news summary -4- - TOKYO
March 18 (17 :03) Limited ratings impact seen on planned MTFG-Acom alliance: S&P - TOKYO
March 18 (16 :55) Main news advisory at 5 p.m. - TOKYO
March 18 (16 :45) Cash bonds, futures prices dip after rises in Tokyo stocks - TOKYO
March 18 (16 :29) Ito-Yokado group firms hold initiation ceremony for new hires - TOKYO
March 18 (16 :24) Moody's raises Showa Denko's rating outlook to stable - TOKYO
http://home.kyodo.co.jp/all/news.jsp?news=business&an=
New England Patriots A Winning Ticket for Paid, Inc./Rotman Auction
Tuesday March 16, 10:07 am ET
WORCESTER, Mass., March 16 /PRNewswire-FirstCall/-- Paid, Inc. (OTC Bulletin Board: PAYD - News) and the New England Patriots are a winning combination for fans online and off. The two celebrity signing events hosted by Paid's Rotman Auction in Worcester, Mass. that featured live appearances by six of the 2004 Super Bowl Championship Patriots Antowain Smith, Troy Brown, Matt Light, David Givens, Deion Branch and Mike Vrabel on February 28 and March 6 were near sell-outs with only 50 signature tickets remaining out of approximately 2500 available!
The concurrent launch of Troy Brown's web site, designed by Paid, Inc. in cooperation with Celebrity Marketing Inc., attracted more than 5,000 unique visitors and almost 100,000 page views on the site in its first week, immediately following Fox TVs coverage of the signing events and web site launch. With fans showing their support for Troy Brown, they came to the site in droves to purchase Mr. Brown's United Way Bingo t-shirt and buy autographed items.
"The event we coordinated for Troy Brown with Paid Inc./Rotman Auction was a tremendous success all around," said Cleon Daskalakis, Celebrity Marketing Inc. President. "Troy was pleased with the organization and professionalism of the staff and the fans were treated to a thrilling opportunity to meet with their sports heroes in a very fan-friendly, safe environment. Troy is excited about having the opportunity to communicate with fans via his new web site and plans to hold online chats on a consistent basis."
"We've developed a very unique business model that provides fans with news and interesting content directly from their favorite players while creating a steady revenue stream to our Company," said Rich Rotman, CFO of Paid, Inc. "This growing area of our business produces multiple revenue streams through live signing events and online memorabilia sales via auctions and the celebrities' web sites. In addition to ticket and memorabilia sales of approximately $70,000 at these two Patriots signing events, we anticipate additional future revenues from the online sale of memorabilia signed by the athletes at the events for Rotman Auction."
Additional sports memorabilia signed by the Patriots stars at the signing events are selling briskly via Rotman Auction.com's web site and on celebrity athletes' personal web sites. Paid Inc. receives a percentage of gross merchandise sales revenues from the celebrity web sites whose merchandise fulfillment it manages.
Paid, Inc. has designed and manages fulfillment for numerous celebrity web
sites, including the following:
-- Troy Brown - Patriots - www.Troybrown.meetthepros.com
-- Matt Light - Patriots - www.Mattlight72.com
-- Antoine Walker - Dallas Mavericks - www.AntoineWalker.com
-- Chris Chambers - Miami Dolphins - www.chrischambers84.com
-- Deuce McAllister - New Orleans Saints - www.deucemcallister26.com
-- Jerry Rice - Oakland Raiders - www.jerryricefootball.com
-- Jose Antonio Rivera - Boxing - www.joseantoniorivera.com
Paid, Inc. is in the process of developing numerous additional celebrity web sites, including sites for Antowain Smith (Patriots), David Givens (Patriots), Bethel Johnson (Patriots), Dan Klecko (Patriots), Deion Branch (Patriots), NHL Hall of Fame inductee Grant Fuhr (formerly with Buffalo Sabers), Dat Nguyen (Dallas Cowboys) and hockey icon Raymond Bourque!
"We had tremendous fan response to our recent signing events and are in the process of booking more top caliber athletes for events later this spring," said Rob Riggieri, Paid, Inc. Celebrity Promotions director. "Our reputation for web site development is growing and athletes are beginning to recommend our web site services to their peers."
About Paid, Inc.
Paid's innovative products and services are utilized in online auction management, ecommerce and web site development and hosting. Using proprietary technology, Paid, Inc. is a respected developer of dynamic, cutting edge celebrity web sites and ecommerce storefronts that attract tens of thousands of visitors daily. Paid's AuctionInc brand auction management and shipping calculation software utilized Paid's patent-pending process technologies to streamline back-office and shipping processes for online auctions and e- commerce. Paid's Rotman Auction is an eBay Platinum Powerseller that sells thousands of items -- primarily sports, Hollywood and Americana collectibles and memorabilia -- each week on eBay. The company also builds and maintains large database-driven portals across a broad array of industries. The Company's common stock is traded on the Nasdaq OTC Bulletin Board under the symbol PAYD. For further information visit www.paid.com.
Forward Looking Statements
This Press Release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are based upon current expectations or beliefs, as well as a number of assumptions about future events, including matters related to the Company's operations. Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which they are based are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties. In addition, other factors that could cause actual results to differ materially are discussed in the Company's most recent filings, including Form 10-KSB with the Securities and Exchange Commission.
Media Contact: Julie Shepherd, Accentuate PR, (815) 479-1833, Julie@paid.com
Investor Contact: Dennis Evanson, (719) 534-0292, dennis@paid.com
--------------------------------------------------------------------------------
Source: Paid, Inc.
Email this
Metal One Corp. to Form Automobile-Fastener Parts Distributor in Hungary
Kyodo News International, Tokyo Knight Ridder/Tribune Business News
Mar. 17--TOKYO - Metal products trader Metal One Corp. said Wednesday it will form a marketing subsidiary for automobile fastener and fixing parts such as nuts and bolts on June 1 in Hungary.
To be capitalized at 50 million yen, the wholly owned subsidiary, NIFAST Hungary Kft., will be set up in the city of Esztergom, Metal One said.
The company will be the first of its kind for Metal One in Europe and its establishment is part of Metal One's strategy to expand sales of fastener products worldwide, it said.
The new company will deliver parts using a "just-in-time" system to enable automakers to limit parts inventories, Metal One said.
The subsidiary will start delivery to automakers and auto parts manufacturers in Europe in October, it said.
The subsidiary will aim to post sales of 2 billion yen in the business year starting on April 1, 2005, it added.
Metal One was created in January 2003 through the integration of the steel businesses of Mitsubishi Corp. and Nissho Iwai Corp.
-----
To see more of Kyodo News International, go to http://www.kyodonews.com
© 2004, Kyodo News International, Tokyo. Distributed by Knight Ridder/Tribune Business News. MSBHY, 8058,
Regardless this Administration is the most corrupt in the history of the United States:
Cheney and Scalia are friends
By The New York Times, Monday, March 15:
Supreme Court arguments are only six weeks away in the Sierra Club's challenge to the secrecy surrounding Vice President Dick Cheney's energy task force and the formulation of the Bush administration's energy policy. And Justice Antonin Scalia, Cheney's duck-hunting buddy, still stubbornly resists stepping out of the case.
To protect the Supreme Court's integrity and legitimacy - and honor the rule of law - the final choice can no longer be left to Scalia alone. Unless he suddenly reverses himself, the Supreme Court as a whole has a duty to intervene, much as it reviews the recusal decisions of lower-court judges.
As late-night comedians have embarrassingly noted, again and again, Scalia went duck hunting with Cheney, and accepted free rides on Air Force Two for himself and his daughter, shortly after the Supreme Court agreed to hear the task force case. Cheney had appealed a lower court's order to reveal the names of some of the people who helped formulate President Bush's energy policies in 2001.
Extended private socializing between a litigant and a judge poised to hear his case generates serious concerns, not least because it gives one side a chance to talk about the case without the opposite side present. Scalia has said the case did not come up, which is reassuring but inadequate. Federal judges at all levels are legally mandated to disqualify themselves from cases in which their "impartiality might reasonably be questioned." This case plainly meets that standard. No matter how Scalia might rule, his involvement would hurt the court's reputation.
When the Sierra Club moved formally for Scalia's recusal, the court properly referred the motion to him initially. The court has a practice of letting individual justices handle their own recusal issues and Chief Justice William Rehnquist and the other justices probably do not relish second-guessing Scalia's personal contacts. But Scalia has had time to do the proper thing, and his eight colleagues now need to render an institutional judgment on the widely expressed concern about his impartiality.
The swelling controversy has exposed other less egregious but still troubling outside activities by Scalia. The Los Angeles Times recently reported that he delivered a speech to a $150-a-plate dinner of an anti-gay advocacy group in Philadelphia even as the Supreme Court was deliberating in the Texas sodomy case last year.
This problem is not Scalia's alone. On the other side of the court's ideological spectrum, as another L.A. Times article noted, Justice Ruth Bader Ginsburg maintains involvement in a lecture series named for her that is co-sponsored by New York City's bar association and the NOW Legal Defense and Education Fund, which frequently participates in Supreme Court cases. Ginsburg is relatively circumspect in her public remarks, but it's still unwise for her to retain a continuing affiliation with such an active advocacy and litigation group.
As the newly released papers of the late Justice Harry Blackmun demonstrated, Supreme Court justices are human beings with intellectual and personal strengths, foibles and frailties. They cannot be expected to live in a bubble, never speaking before bar organizations, for example, or expressing anything but the most innocuous personal views. Like the rest of the world, legal and judicial ethics are full of nuances. Everyone would benefit from an overall reappraisal of what kinds of actions are exemplary, borderline or unacceptable.
That said, Scalia chose a terrible moment to go duck hunting with the vice president and ride on his airplane. That decision, and his refusal to recuse himself in the coming case, are clear examples of bad judgment that his colleagues on the court can no longer responsibly ignore.
Its time for a domestic revolution, we have all been attacked and decieved enough!
True, but what goes around comes around and its coming home to America all too soon.
http://www.investorshub.com/boards/read_msg.asp?message_id=2625957
There have been 666 coalition deaths, 566 Americans, 59 Britons, five Bulgarians, one Dane, one Estonian, 17 Italians, two Poles, 10 Spaniards, two Thai and three Ukrainian, in the war as of March 17, 2004. The casualty list reflects the names of the soldiers, Marines, airmen and sailors whose families have been notified of their deaths by each country's government. The list is updated regularly. There have been 3,254 U.S. troops wounded in the war, according to the Pentagon.
All of America must now confront the real images of the horrors of any War:
Has America had enough of the Bush Doctrine yet?
Purported Al Qaeda Letter Calls Truce in Spain
Wed Mar 17, 4:56 PM ET Add World - Reuters to My Yahoo!
By Opheera McDoom
CAIRO (Reuters) - A group claiming to have links with al Qaeda said on Wednesday it was calling a truce in its Spanish operations to see if the new Madrid government would withdraw its troops from Iraq (news - web sites), a pan-Arab newspaper said.
In a statement sent to the Arabic language daily al-Hayat, the Abu Hafs al-Masri Brigades, which claimed responsibility for the Madrid bombings that killed 201 people, also urged its European units to stop all operations.
"Because of this decision, the leadership has decided to stop all operations within the Spanish territories... until we know the intentions of the new government that has promised to withdraw Spanish troops from Iraq," the statement said.
"And we repeat this to all the brigades present in European lands: Stop all operations."
Skepticism has greeted previous claims of responsibility by the group for attacks in Turkey and Iraq. U.S. officials say its links with Osama bin Laden (news - web sites)'s al Qaeda network are unclear.
An unrelated videotape of a man describing himself as al Qaeda's European military spokesman also claimed responsibility for the Madrid bombing, saying it was in retaliation for outgoing Spanish Prime Minister Jose Maria Aznar's domestically-unpopular support for the U.S.-led Iraq war.
In a shock election result three days after the Madrid bombs, Spain voted in the Socialist party, which has since said it will probably withdraw its troops from Iraq.
"The Spanish people... chose peace by choosing the party that was against the alliance with America," the statement said.
WE WANT BUSH TO WIN
The statement said it supported President Bush (news - web sites) in his reelection campaign, and would prefer him to win in November rather than the Democratic candidate John Kerry (news - web sites), as it was not possible to find a leader "more foolish than you (Bush), who deals with matters by force rather than with wisdom."
In comments addressed to Bush, the group said:
"Kerry will kill our nation while it sleeps because he and the Democrats have the cunning to embellish blasphemy and present it to the Arab and Muslim nation as civilization."
"Because of this we desire you (Bush) to be elected."
The group said its cells were ready for another attack and time was running out for allies of the United States.
"Whose turn is it next? Will it be Japan or America, or Italy, Britain or Oslo or Australia?" the statement said, adding Pakistan and Saudi Arabia were also targets.
The group is named after Muhammed Atef, also known as Abu Hafs, a close bin Laden aide killed in the U.S.-led war in Afghanistan (news - web sites).
As predicted elsewhere, it will be Italy, probably Rome, and the Pope will be dead within a year from yesterday's date
Previous Postulated Prediction at this Post:
http://www.investorshub.com/boards/read_msg.asp?message_id=2616008
"On 9.11.01 the lives of billions of people changed in a matter of seconds. It will change again in minutes too soon to count."
http://www.investorshub.com/boards/read_msg.asp?message_id=2616064
No wonder I can't get pregnant...pour me another whiskey, one bourbon and one beer!
Cheers!
US wounded in the shadows
By David Isenberg
On July 2 2003, President George W Bush, in referring to combat operations in Iraq, said, "Bring them on." And bring it on they have. As everyone knows, coalition forces, primarily American, are being killed and wounded on a regular basis - 357 US and British fatalities to date. But while the US dead, whether in combat operations or from other causes, are reported publicly, the wounded have almost disappeared from public view. And their numbers are growing, and providing appropriate care is an increasing burden for the military and civilian health systems.
How many wounded and injured are there? Nobody really knows for sure. Understandably, it is difficult to be precise when more casualties are being created on a near daily basis. But gathering data is difficult for other reasons.
Casualties are first triaged "in country" and then sent to the Landstuhl Regional Medical Center (LRMC) in Germany. The LRMC processes every patient from Operation Iraqi Freedom and Operation Enduring Freedom, the military campaign in Afghanistan. It is the largest military medical center outside the United States, and remains at its 322-bed capacity, nearly twice the number of pre-war beds. As of September 16, Landstuhl had treated approximately 6,000 service members from Operation Iraqi Freedom.
From LRMC, the wounded go on to facilities in the US, such as the Army's Walter Reed Army Medical Center in Washington, DC. From there they are sent as soon as possible throughout the country - first to base hospitals where their unit is or to local Veterans' Administration and hometown hospitals. This makes it next to impossible to collect data on the total number of injured, types of injuries and dispensation of the injured. To make a true database, one would have to poll nearly every hospital in the country on a weekly basis to garner real-time information on these patients.
As was recently evidenced in the recovery of well-known former US prisoner of war Jessica Lynch, hospital employees are told not to talk about numbers or types of injuries. The Health Insurance Portability and Accountability Act of 1996, which went into effect last October, states health care personnel can go to prison and/or be fined astronomical amounts for even talking to other health professionals or family members about the condition and/or treatment of anyone in health care in the US at this time.
The Washington Post reported on September 3 that the number of those wounded in action has grown so large and attacks have become so commonplace that US Central Command usually issues press releases listing injuries only when the attacks also kill one or more personnel. The result is that many injuries go unreported.
According to the Post article, C-17 transport jets arrive virtually every night at Andrews Air Force Base, outside Washington, on medical evacuation missions. Since the war began, more than 6,000 service members have been flown back to the United States. Aside from the wounded in action, and those with non-hostile injuries, the figure includes the mentally ill.
Interestingly enough, while the US Central Command website does post casualty reports, and even allows one to search back in time by day or month, there is no such feature on DefenseLink, the Pentagon's public website. It only lists fatalities.
According to Central Command figures, as of September 28, a total of 1,358 US people have been reported wounded in action, or an average of 7.07 a day since March 20, when Saddam Hussein's statue was toppled in Baghdad. Plus another 327, or 1.7 per day, wounded in non-hostile incidents. That is a total of 1,685, or 8.7 US military wounded per day. The numbers of course fluctuate day-to-day and don't appear to take in non-combat injuries (given the 6,000 plus figure mentioned as treated above) or are understated.
Fortunately for the soldiers, the percentage of those who die from their wounds is less than in past wars. The Boston Globe reported in August that roughly one in seven soldiers wounded in combat in Iraq has died. In previous conflicts dating to World War II, one in every three or four soldiers died after incurring combat wounds.
In World War II, 30.3 percent of soldiers wounded in combat died. That percentage fell during the Korean War to 24.1 percent, and held steady through the Vietnam War (23.6 percent) and the Gulf War of 1991(23.9 percent). But the number has declined sharply in Iraq, with 13.8 percent of battlefield wounds being fatal.
The types of wounds being seen in Iraq include gunshot wounds, shrapnel wounds from rocket-propelled grenades (RPGs) and mortars, burn injuries, motor vehicle accidents and many other injuries. Many of the wounded have required amputations.
According to Major Gene Delaune, a US Air Force reserve physician interviewed by Minnesota Public Radio, since arriving in Baghdad July 16, virtually every injured soldier he has seen had been hurt seriously enough to require transport out.
"We see a lot of amputations," Delaune said. "Initially I was probably seeing one or two amputations a day. Now we're down to maybe one every two or three days," said Delaune. "The limbs just get damaged to a point where they can't be salvaged, and in the field hospitals where they're initially treated, an amputation is performed. We see a lot of eye injuries as well."
While the issue of emotional or psychological disorders has received almost no public attention, it is very much on the minds of the medical community. One publication, prepared for clinics treating returned Iraq war veterans, stated, "Post-traumatic stress disorder is one of many different ways a veteran can manifest chronic post-war adjustment difficulties. Veterans are also at risk for depression, substance abuse, aggressive behavior problems, and the spectrum of severe mental illnesses precipitated by the stress of war."
According to a report in the July 9 Christian Science Monitor, the US military took unprecedented steps to prepare for the inevitable psychological problems among returning troops. It reported, "Early intervention, officials hope, will lessen the amount and severity of post traumatic stress, depression, substance abuse, as well as domestic violence and marital breakdowns."
Caring for the wounded has become more difficult due to lack of space. In August it was reported that Walter Reed Army Medical Center was referring some outpatients to nearby hotels because casualties from operations in Afghanistan and Iraq have overloaded the hospital's convalescence facility. At that time they were referring about 20 patients or their relatives to hotels each day. Walter Reed has been at maximum capacity since Operation Enduring Freedom began in Afghanistan in 2001.
The hospital staff is working 70- or 80-hour weeks, and Walter Reed is so full that it has taken over beds normally reserved for cancer patients to handle the influx.
Sometimes the lack of needed items borders on the surreal. Back in July, the Chaplain's Office at LRMC sent out an appeal for useable clothing for male soldiers injured in Iraq. Many of these soldiers were airlifted to the hospital in medical dressing gowns and had no access to clothes for onward transportation.
(Copyright 2003 Asia Times Online Co, Ltd. All rights reserved. Please contact content@atimes.com for information on our sales and syndication policies.)
http://www.atimes.com/atimes/Middle_East/EJ02Ak01.html
THE ELECTRONIC PEN IS MIGHTIER THAN AN ARMY BEHIND ALL NUCLEAR WEAPONS IN THE WORLD!
Infinite mind, infinite matter, infinite power doesn't matter, glory patter, military gone a titter tatter, Christ you know it ain't easy, their going to crucify me...
http://www.investorshub.com/boards/read_msg.asp?message_id=2627178
THE ANGEL GABRIEL HOLDING THE HEAD OF BUSH
Do you believe in the power of infinite magic?
Check this out:
http://www.investorshub.com/boards/read_msg.asp?message_id=2627178
Let's see, religion and politics, now I have had two boards removed (censored) from IHUB. One was on the subject of Religion and the other was titled "Military Man Moves Mountains" which was designed to help people get out of the military if they changed their minds. Do not be offended about what I am about to right...that is a double pun intended.
If there be magic, if there be infinity, if there be god, and there be a trinity, then let there be light, let there be might, let the demons out of the Bush and expel them tonight:
This Demon Comes Out of the Bush Now!
Elder Bush in Big G.O.P. Cast Toiling for Top Equity Firm
By LESLIE WAYNE
During the presidential campaign last year, former President George Bush took time off from his son's race to call on Crown Prince Abdullah of Saudi Arabia at a luxurious desert compound outside Riyadh to talk about American-Saudi business affairs.
Mr. Bush went as an ambassador of sorts, but not for his government. In the same way, Mr. Bush's secretary of state, James A. Baker III, recently met with a group of wealthy people at the elegant Lanesborough Hotel in London to explain the Florida vote count.
Traveling with the fanfare of dignitaries, Mr. Bush and Mr. Baker were using their extensive government contacts to further their business interests as representatives of the Carlyle Group, a $12 billion private equity firm based in Washington that has parlayed a roster of former top-level government officials, largely from the Bush and Reagan administrations, into a moneymaking machine.
In a new spin on Washington's revolving door between business and government, where lobbying by former officials is restricted but soliciting investments is not, Carlyle has upped the ante and taken the practice global. Mr. Bush and Mr. Baker were accompanied on their trips by former Prime Minister John Major of Britain, another of Carlyle's political stars. With door-openers of this caliber, along with shrewd investment skills, Carlyle has gone from an unknown in the world of private equity to one of its biggest players. Private equity, which involves buying up companies in private deals and reselling them, is a high-end business open only to the very rich.
Over the last decade, the Carlyle empire has grown to span three continents and include investments in most corners of the world. It owns so many companies that it is now in effect one of the nation's biggest defense contractors and a force in global telecommunications. Its blue-chip investors include major banks and insurance companies, billion-dollar pension funds and wealthy investors from Abu Dhabi to Singapore.
In getting business for Carlyle, Mr. Bush has been impressive. His meeting with the crown prince was followed by a yacht cruise and private dinners with Saudi officials, including King Fahd, all on behalf of Carlyle, which has extensive interests in the Middle East.
And Mr. Bush led Carlyle's successful entry into South Korea, the fastest-growing economy in Asia. After his meetings with the prime minister and other government and business leaders, Carlyle won a tough competition for control of KorAm, one of Korea's few healthy banks.
The steady flow of politicians to lucrative private-sector jobs based on their government contacts is a familiar Washington tale. But in this case, it is being played out for more dollars, on a global stage, and in the world of private finance, where the minimal government rules prohibiting lobbying by former officials for a given period are not a factor. These rules say nothing about potential conflicts when former government officials use their connections and insights for financial gain, and they may attract more notice now that George W. Bush is president. Many of those involved with Carlyle, which invests largely in companies that do business with the government or are affected by government regulations, have ties to the Oval Office.
For instance, Frank C. Carlucci, a Reagan secretary of defense who as much as anyone is responsible for Carlyle's success, said he met in February with his old college classmate Donald H. Rumsfeld, the secretary of defense, and Vice President Dick Cheney, himself a defense secretary under former President Bush, to talk about military matters -- at a time when Carlyle has several billion-dollar defense projects under consideration.
Carlyle officials contend that the firm's activities do not present any potential conflicts since Mr. Bush, Mr. Baker and other former Republican officials now at Carlyle -- including Mr. Carlucci, who is Carlyle's chairman, and Richard G. Darman, Mr. Bush's former budget director -- do not lobby the federal government. Carlyle executives point out that many corporations have former government officials as board members.
''Mr. Bush gives us no advice on what do with with the federal government,'' said David Rubenstein, the firm's founder and a former aide in the Carter White House. ''We've gone over backwards to make sure that we do no lobbying.''
Others, however, see little difference between potential conflicts involving lobbying and those involving investments.
''Carlyle is as deeply wired into the current administration as they can possibly be,'' said Charles Lewis, executive director of the Center for Public Integrity, a nonprofit public interest group based in Washington. ''George Bush is getting money from private interests that have business before the government, while his son is president. And, in a really peculiar way, George W. Bush could, some day, benefit financially from his own administration's decisions, through his father's investments. The average American doesn't know that and, to me, that's a jaw-dropper.''
It is difficult to determine exactly how much money the senior Mr. Bush and Mr. Baker have made. Mr. Baker is a Carlyle partner, and Mr. Bush has the title senior adviser to its Asian activities. With a current market value of about $3.5 billion on Carlyle's equity and with the firm owned by 18 partners and one outside investor, Mr. Baker's Carlyle stake would be worth about $180 million if each partner held an equal stake. It is not known whether he has more or less than the other partners.
Unlike Mr. Baker, Mr. Bush has no ownership stake in Carlyle; he is an adviser and an investor and is compensated by obtaining stakes in Carlyle investments. Carlyle executives cited, for example, Mr. Bush's being allowed to put money he earns giving speeches for Carlyle into its investment funds. Mr. Bush generally receives $80,000 to $100,000 for a speech. He sits on no corporate boards other than Carlyle's.
Carlyle also gave the Bush family a hand in 1990 by putting George W. Bush, who was then struggling to find a career, on the board of a Carlyle subsidiary, Caterair, an airline-catering company.
From Carlyle's point of view, the involvement of Mr. Baker and the former president is invaluable.
''It punches up the brand awareness for us globally,'' said Daniel A. D'Aniello, a Carlyle managing director. ''We are greatly assisted by Baker and Bush. It shows that we are associated with people of the highest ethical standards.''
With $12 billion from investors, Carlyle claims to be the nation's largest private equity fund and makes money by investing in undervalued companies and reselling at a profit. These numbers put Carlyle in the same league as better-known private equity firms like Kohlberg Kravis Roberts & Company and Forstmann-Little & Company.
Two hundred forty Carlyle employees are stationed throughout the world either raising money or finding ways to spend it. Carlyle has ownership stakes in 164 companies, which last year employed more than 70,000 people and generated $16 billion in revenues. About 450 institutions -- mainly large pension funds and banks -- are Carlyle investors.
The California state pension fund invested $305 million with Carlyle, and the Texas teachers pension fund -- whose board was appointed when George W. Bush was governor -- gave Carlyle $100 million to invest in November. Carlyle also works as a financial adviser to the Saudi government.
''Let's say Carlyle is going fund-raising in the Middle East and they bring Bush along,'' said David Snow, editor of Private Equity Central, a trade publication. ''He led the U.S. Army into that region. That will catch the attention of very wealthy investors in Saudi Arabia and Kuwait. The fact that Bush is involved doesn't mean that Carlyle will make great investment decisions. But it will get them access to certain deals and certain countries that they might otherwise not have.''
One former Carlyle employee said, ''The firm understands that having Bush and Major around is like having movie stars around.''
Yet Carlyle's success is not just because of its high-powered connections. Carlyle has done well for its investors, returning an average of 34 percent a year over the last decade, in line with other private equity funds. It has done this by buying what it knows best -- companies that are regulated by the government. Nearly two-thirds of its investments are in defense and telecommunications companies, which are affected by shifts in government spending and policy.
Carlyle has become the nation's 11th largest defense contractor, owning companies that make tanks, aircraft wings and a broad array of other military equipment. It also owns health care companies, real estate, Internet companies, a bottling company and even Le Figaro, the French newspaper.
''Carlyle is one of the most successful fund-raising groups,'' said Mario L. Giannini, president of Hamilton Lane, a Philadelphia consultant to institutional investors. ''They have tremendous access and they have done very well with their money.''
And its access extends well beyond American shores. In Europe, Carlyle has assembled an advisory board that besides Mr. Major includes Karl Otto Pöhl, former president of German's Bundesbank, and the past or present chairmen of B.M.W., Hoffman-LaRoche, Nestlé, LVMH-Moët Hennessy, Louis Vuitton and Aerospatiale, the French Airbus partner.
Carlyle's Asia advisory board, which helps raise money and finds and reviews deals, includes former President Fidel V. Ramos of the Philippines, the former prime minister of Thailand and the executive director of the Abu Dhabi Investment Authority. The former South Korean prime minister Park Tae Joon was also an adviser to Carlyle.
This star power is a source of great pride for Carlyle and part of an acknowledged long-term strategy to associate the firm with brand-name politicians and business executives in order to attract more of the same -- along with their money, insights and connections. That said, Carlyle partners bristle at any suggestion that the firm's success is based only on high-powered schmoozing.
''If our track record was not good, people would not invest with us,'' said Mr. Rubenstein, the founding partner. ''No one would gives us money just because Mr. Bush is one of our advisers.''
On that point, others agree. ''People took potshots at Carlyle early on and tried to denigrate their investment credentials because they had all these government officials over there,'' said Bernard Aronson, managing partner at ACON Investments, a private equity firm in Washington. ''But that's sort of a myth. The all-hat-and-no-cattle has disappeared because they performed consistently, delivered excellent returns and have become global players.''
One of the people who put Carlyle on the map -- developing its riches and its image -- is Mr. Carlucci, who joined the firm in 1989 when it had engaged in a string of ill-fated ventures. He is credited with steering Carlyle into successful defense industry acquisitions -- just when other investors were shunning them -- and with using his seat on more than a dozen corporate boards to bring Carlyle deals and investors.
In an office adorned with photographs of Mr. Carlucci and the politically mighty -- he sits beneath an Oval Office picture of himself and Mr. Reagan -- Mr. Carlucci makes it clear that his extensive government and global ties are as fresh as ever.
''I know Rumsfeld extremely well,'' Mr. Carlucci said in an interview. ''We've been close friends throughout the years. We were college classmates.''
Pointing to a picture of the Chinese president, he said, ''There's a photo of me and Jiang Zemin. And there's me and the president of Taiwan.''
Right now, Carlyle is hoping that financing is provided for the $13.7 billion Crusader program. The Crusader is a heavy-duty tank made by a Carlyle portfolio company and other contractors. And Carlyle just lodged a complaint with the government after another of its portfolio companies lost a $4 billion contract to build a lightweight combat vehicle.
While Mr. Carlucci is open about his discussions with Mr. Rumsfeld on Pentagon policies, he said he never lobbies. ''I've made it clear that I don't lobby the defense industry,'' Mr. Carlucci said. ''I will give our Carlyle bankers advice on what they might do and who they should talk to. But I do not pick up the phone and say you should fund X, Y or Z.''
If Washington's revolving door brought Republicans to Carlyle during the Clinton presidency, now the firm is preparing for an onslaught of Democrats. The day these interviews took place at Carlyle's Washington office, Gene Sperling, one of the Clinton administration's top economic advisers, was in for a job interview.
New ambassador to Saudi Arabia is another Bush/Carlyle Group crony.
October 9, 2001, Tuesday
By Jonathan Ashley, Eyes On American
Dallas attorney Robert Jordan was confirmed Wednesday by the United States Senate to serve as ambassador to Saudi Arabia.
Jordan has no diplomatic experience. However, his connections leave no doubt as to why he was named to the post. He defended George W. Bush in a probe of insider trading allegations in 1990. The allegations involved the sale by Bush of 60% of his Harken Energy Corp. stocks two months before a 25% drop in the stock's price. According to a 7 Sep 2000 article by the Associated Press, "At the time of the investigation, Bush's father was president of the United States and the SEC was run by one of his biggest political supporters, Richard Breeden. The SEC's then-general counsel, James R. Doty, was another staunch presidential supporter who as a private attorney was George W. Bush's lawyer when he purchased his share of the Texas Rangers baseball team."
This is not Jordan's only connection to the Bush family. Jordan is a corporate lawyer in the Dallas office of Houston-based Baker Botts. Baker Botts has an office in Riyadh, Saudi Arabia. The client list at Baker Botts includes "more than half of the Fortune 100 companies". The client list also includes The Carlyle Group. On the board of directors for Carlyle is former President George Herbert Walker Bush.
James A. Baker III is the current Baker in Baker Botts. Baker was Secretary of State under the first President Bush. He is currently senior counsel to The Carlyle Group. Baker was a classmate of Donald H. Rumsfeld at Yale University. Rumsfeld, the current Secretary of Defense, was the roommate of Frank C. Carlucci at Yale.
Carlucci, who was head of the National Security Counsel under President Ronald Reagan, is currently chairman of The Carlyle Group.
The current President Bush was a director of Caterair during the years 1990-1994. Caterair is owned by The Carlyle Group.
The board of directors of The Carlyle Group also includes: former Phillipines President, Fidel V. Ramos; former director of the U.S. Office of Management & Budget, Richard Darman; former Assistant to the President (Bush I), Robert Grady; former Prime Minister of South Korea, Park Tae Joon; former SEC chairman, Arthur Levitt; former Prime Minister of Great Britain, John Major; former general director of the World Health Organization, Michael Orloff; retired U.S. Army General, J. H. Binford Peay; former president of Deutsche Bundesbank, Karl Otto Pohl; and former chairman of the Joint Chief's of Staff, John Shalikashvili.
Two-thirds of Carlyle's holdings are in defense and telecommunications companies.
At leaset $2 million of Carlyle funding has come from the bin Laden family of Saudi Arabia.
Reprinted from Eyes On America : http://eyesonamerica.org/200110/10050102.html
http://www.truthout.org/docs_01/0662.Bush.Saudi.htm
The Wounded Come Home
By Mark Thompson
Time Magazine
Monday 03 November 2003
For every soldier who dies in Iraq, many more are injured. TIME takes an up-close look at the battle they face after the shooting is over
For several seconds after the rocket-propelled grenade (RPG) drilled through the back of their armored M113 "battle taxi," the soldiers inside, mainlining adrenaline, continued firing. Then they started screaming. "It blew my leg clean off," says Private First Class Tristan Wyatt, who was standing at the rear of the armored personnel carrier (APC), unloading an M-240 machine gun at a dozen or more Iraqis who had ambushed them minutes before. He was the first to be hit. The RPG then passed through Sergeant Erick Castro's hip, spinning him violently to the floor. His left leg was still attached — but barely. "I picked up my leg and put it on the bench," he says, "and lay down next to it." Finally, the RPG shredded Sergeant Mike Meinen's right leg. "It was pretty much torn off," he says. "There was just some meat and tendons holding it on."
There is horror and there is luck, and in war they sometimes come together. The RPG that severed three legs in a fire fight late last August near Fallujah didn't explode, which probably saved the lives of Wyatt, Castro and Meinen. But even a dud traveling at nearly 1,000 ft. per sec. can slice through limbs like a meat cleaver. The three men were alive, but there was a real danger that they would bleed to death in minutes amid the smoke, dust and confusion. As troops on the two other APCs continued firing, the lone medic among the 15 soldiers on the patrol climbed up the back ramp into the compartment. "'Holy s___!' was the first thing out of his mouth, and it looked like his eyes were about to pop out of his head," Wyatt remembers. "That's kind of disheartening when he's talking about you."
The medic, the wounded soldiers and their comrades began a frantic race against the clock. Buddies pressed their hands into Castro's hip wound to keep him from bleeding to death. The wound was so massive that his tourniquet was useless. He handed it to Wyatt, who needed two to stanch the blood flowing from his femoral artery. Amid the mayhem, Meinen, who had been manning a 50-cal. machine gun, noticed that he didn't have any feeling in his right foot. "It felt like it had gone to sleep on me, so I picked my foot up and was trying to massage it, trying to get the feeling back," he says. "But then it dawned on me: it wasn't even connected. So I put it on the floor."
They tried to raise their wounded legs to slow the bleeding. "There was nothing to elevate my leg except for the piece of my leg that had been blown off from the knee down," Wyatt says. "So I took my leg and jammed it under the stump to keep it pointing up. It was kind of messy." It may have been messy, but it worked. Meinen and Wyatt held hands, trying to reassure each other. "We're not gonna die in this track," Meinen said. "We're not gonna die over here." He was right. About an hour after being wounded — thanks to their colleagues and a Black Hawk medevac flight — the three U.S. soldiers were receiving some of the world's best medical care at the 28th Combat Support Hospital, south of Baghdad. Wyatt and Meinen were back in the U.S. about three days later. It was a week before the more seriously wounded Castro landed on U.S. soil.
This is a story of the unseen war — and the grim, quiet battles that take place when wounded soldiers arrive home. What happened to members of the 2nd Squad of the 1st Platoon — who call themselves the War Machine — of the 43rd Combat Engineer Company is a tale that has never been told. Soldiers have been wounded in war since the beginning of time — a fact that armies never like advertising. The Pentagon, which makes terse announcements when U.S. soldiers die in combat in Iraq, doesn't inform the public about those who have been wounded or release month-by-month injury counts. The wounded are mentioned only when some other soldier has been killed in the same attack. "When you join the Army, they send your picture to your hometown paper because they want everybody to know that you're leaving for the military," says Meinen, a dark-haired practical joker from Grangeville, Idaho. "But if you're wounded, the military doesn't tell them, because they might be worried about the public getting negative about what's going on over there." Says the serious, quiet-spoken Castro, from Santa Ana, Calif.: "Nobody knows what happened to us, even though it was one of the biggest ambushes in Iraq. People are only finding out about soldiers who are dying, but American soldiers are getting injured too."
October was the bloodiest month yet for the U.S. military occupation of Iraq, and the number of wounded is plainly on the rise. Daily attacks against U.S. troops have tripled. The number of U.S. troops who have died in hostilities in Iraq from May 1, when President Bush declared "major combat operations over," through last week has topped the 114 who died in the invasion and its immediate wake. By week's end 122 U.S. troops had been killed in action in Iraq, for a total of 236. But the number of U.S. wounded since May 1 is 1,242, more than double the 551 injured during the war.
Yet the American soldiers in the current Iraq war have a better chance of surviving those wounds and getting back home than any other soldiers in history. Better protection, faster evacuation and improved medical techniques at the edge of combat have dramatically reduced battlefield mortality. At the same time, although body armor and wound-sealing potions have made it less likely that soldiers will be killed in battle, they have also increased the likelihood of certain kinds of injuries, especially amputation, because a soldier's extremities remain vulnerable to the kind of homemade munitions the Iraqis are routinely deploying. The Iraqis lack the air power and artillery that can easily kill, but the weapons they are using — RPGs, car bombs and improvised explosive devices — have increased the ranks of the wounded. And these wounded seem to be threatening the morale of the soldiers left behind. While the Air Force has flown 1,513 battle casualties from the Iraqi theater, 9,341 have been flown out for other health reasons, including mental stress.
When the wounded come home, they are rarely greeted with waving flags and parades. Maimed soldiers are routinely flown from Iraq to Landstuhl Regional Medical Center in Germany, where they are stabilized before heading to the U.S. The most seriously injured are flown to Andrews Air Force Base, outside Washington, usually on nighttime flights, and then transported to Walter Reed Army Medical Center in Washington or Bethesda Naval Hospital in Maryland. "The wounded are brought back after midnight, making sure the press does not see the planes coming in with the wounded," said Democratic Senator Patrick Leahy of Vermont on Oct. 16 on the Senate floor.
In World War II, about 1 in 3 U.S. casualties died. During the next three wars — Korea, Vietnam and the Gulf — about 1 in 4 died. In the current war, about 1 of every 8 wounded soldiers have died.
Half of battlefield deaths occur within 30 minutes of wounding, largely on account of blood loss. But survival rates skyrocket if a casualty can get to a medical facility within the so-called golden hour after an injury. There are four major U.S. military medical outposts in Iraq, and the medical corps' critical mission is to keep wounded soldiers alive until they can be taken to one of them.
So far, a key rescue unit has a sterling record. The 159th Medical Company (Air Ambulance) has whisked more than 3,600 injured and ill troops to medical help with only a handful dying along the way. "We've given people a lot of tomorrows," says Major Arthur Jackson, chief of the unit's Baghdad squad. But many will face grim times. "People say, 'Well, he didn't die,'" says Captain Todd Farrell, a 159th helicopter pilot. "But a lot of these guys have an arm blown off or their leg blown off below the femur. Their lives are still going to suck."
At the front these days, small mobile surgical teams travel with combat forces. Navy Captain H.R. Bohman, a surgeon, was one of an eight-member medical team that did surgery 8 miles from Baghdad — the closest American operating room to the city — as the Iraqi capital fell to U.S. forces in early April. "We can document at least four Marines who are alive today who would have died if they'd had to be sent back as far as we were sending people back in the first Gulf War," says Bohman, a 30-year Navy veteran.
Such units generally consist of a trauma surgeon, an orthopedic surgeon, an emergency physician, an anesthetist, nurses and technicians. They carry with them a rudimentary field hospital in 70-lb. rucksacks. Their supplies include 5-lb. portable ultrasound units that allow quick and accurate diagnosis of internal bleeding and collapsed lungs. The ultrasound devices also can be used to locate shrapnel deeply buried in a thigh or torso. The teams also carry football-size electronic equipment for monitoring a patient's vital signs, small anesthetic-delivery devices and portable ventilators that help a wounded soldier breathe.
Despite improvements, new battlefield gear can't protect a soldier from top to bottom. Most troops in Iraq wear new $1,600 Kevlar vests with ceramic plates that slip into pockets in the front and rear to protect against small-arms fire. Their new $325 Kevlar helmets, although not bulletproof, afford greater protection than older models. While this gear shields the head and heart — along with the liver, lungs and guts — it leaves the extremities exposed. That's why 2 of every 3 wounds incurred by U.S. troops in Iraq involve legs or arms. It's also why some 100 U.S. troops have lost legs, arms, hands or feet in this war. Nearly half--45%--of the U.S. soldiers wounded in Iraq have been hit in the legs, with 19% injured in the arms, according to a recent Pentagon accounting shared with the American College of Emergency Physicians.
The homemade weapons put together by the Iraqi opposition and hidden along supply routes traveled by U.S. troops are devastating. "The energy of these rounds on impact is phenomenal," says Colonel Keith Albertson, chief of surgery at the 28th Combat Support Hospital. "These weapons were made to maim, and they do a good job at it. And a lot of the time the tissue damage done isn't apparent at the time of operation. A discouraging number of patients who left here with a damaged limb intact have ultimately needed to have it taken off later."
The reinforced vest and helmet, by protecting the soldier's vitals, have cut down on the instantaneous deaths once common in combat, and now bleeding has become the key threat to battlefield survival. Soldiers can bleed to death in almost no time at all. A wound to the aorta, the body's major blood vessel, can kill in about 5 min.; wounds to less vital vessels can kill in 10 to 15 min. On the modern battlefield more than 9 of 10 deaths occur before a soldier can be evacuated — and about half those deaths are the result of what military doctors call uncontrolled hemorrhage.
The military is using new products on the Iraqi battlefield to do one basic thing: keep a wounded soldier's blood inside him. One of the most promising is QuikClot, a 3.5-oz., $10 packet of mineral powder that sucks the water out of blood so clotting occurs more rapidly. The powder can even be poured into a gaping wound by the bleeding soldier himself. Military officials credit it with saving 23 lives in Iraq. In one case it saved the life of a Marine after a bullet pierced his neck, sliced his carotid artery and exited through his skull. The military is also using new $80 bandages made with chitosan, which is derived from shrimp shells. The chitosan chemically combines with blood cells to form a clot. And troops have begun getting new $8.50 one-handed tourniquets. The standard one requires a pair of hands to apply, which can be a problem for a soldier who has just lost an arm.
In addition to the physical and emotional toll they suffer, the wounded in Iraq face other challenges — rehabilitation, retraining, postcombat counseling and long-term medical care, to name a few. All of these will drive up spending at the Department of Veterans Affairs for decades to come. There are also the wounds you cannot see. Post-traumatic stress disorder is a legacy of any war, especially those — unlike the 100-hour first Gulf War — that demand months, if not years, of U.S. occupation. "We have become much better at keeping people with severe injuries alive," says Loren Thompson of the Lexington Institute, a military think tank in Arlington, Va. "But the range of treatments provided — including counseling, assisted living, disability benefits and so on — can be quite extensive."
Early-morning light spills into the physical-therapy room at Walter Reed, as wounded soldiers sweat and grimace aboard stationary bicycles. Each man is steadily grinding out the miles with a single leg, his crutches leaning against a nearby wall. This morning happy-go-lucky PFC Wyatt meets with Joseph Miller, the hospital's chief prosthetist, who makes wounded soldiers close to whole again with man-made arms and legs. The types of wounds coming back from Iraq — blast and shrapnel injuries — make his job tougher. "Those kinds of injuries mean more infections and multiple surgeries," he says. Wyatt nods; he knows this from experience. He has had 10 surgeries since being wounded, with several inches of thigh carved off in the process. "So I'm going to start off with a mechanical knee?" the young soldier asks. Miller says no. Like all soldiers now who have lost a leg above the knee, he's going to receive the high-tech, German-made CLeg, which is made of carbon fiber and has a hydraulic knee. "Cool!" says Wyatt with a smile.
Wyatt and more than 300 of the most seriously injured have come to the bucolic Walter Reed, which has been treating wounded U.S. soldiers since World War I. The men — and a few women — coming off the Iraqi battlefields in stretchers tend to be young: Castro is 23, Meinen 24, and Wyatt, from Franktown, Colo., turned 21 two weeks before losing his leg. Many enlisted as a way to earn money for college and get in shape, but now they're wheelchair bound. Contrary to the old Army recruiting motto, they're not fighting to be all they can be anymore. They're fighting to be as close to normal as they can be.
Monday through Friday, their mornings start at 9 o'clock and are filled with hours of physical and occupational therapy. They also take bus trips and tour the capital. The typical stay averages about six months — half the time healing and preparing for an artificial limb, the other half learning to live with it. The pain is decreased by the presence of family members, many of whom can live on Walter Reed's 147-acre campus. Although the soldiers relish stop-bys from stars like Bruce Willis and Jennifer Love Hewitt, they glow when speaking of getting their Purple Hearts from President Bush. "Laura and I are here to thank the brave souls who got wounded in the war on terror," Bush said in the hospital lobby this past Sept. 11.
For Wyatt and Castro, who came to the U.S. from Mexico as a baby, the grimaces that come from pedaling a bike with a single leg are followed by grins. Both men are certain that they are getting better all the time. They, along with Meinen (who is finishing his recovery at the Denver VA so he can be close to his wife Amber and baby daughter Abbigail), were each fitted late last week with a CLeg, which "knows" when to bend because its built-in microprocessor detects stresses 50 times a second and uses lithium-ion batteries to flex. Soldiers using the $100,000 device after having worn older, mechanical limbs that have to be swung forward with every step say the CLeg is much more natural. "Civilians get crappy legs," Castro says, "but ours is going to be top of the line."
There is a can-do spirit inside Walter Reed and scant grumbling from these soldiers about the war or the wounds it has inflicted on them. Most of these men were at the tip of the spear — warriors, in military parlance — and tend to gripe less about hardships than other troops. "We're on the brink of being able to walk again," Wyatt says. "When we first got here, I felt I was screwed and thought I never would." Seeing other soldiers learn to walk is powerful medicine. "They don't see it as a problem. They see it as a challenge," says Dr. Harold Wain, a Walter Reed psychiatrist in charge of monitoring the patients' psychological states. "These guys are very proud of what they've done, and they don't want people to feel sorry for them. They want people to support them."
Each of the three soldiers wounded in the back of their APC two months ago says he is glad he went to war in Iraq and misses his buddies who are still there. "I think the Iraqi people will finally get a government that works over there," Meinen says. "You don't want to get wounded, but you can't go to war and expect nothing to happen to anybody." His apartment in Colorado is near the 3rd Armored Cavalry Regiment's home base at Fort Carson, and he hopes to remain in the Army. But his voyage back was not made easy. When Meinen wanted to head to Denver, the military would not buy him a direct ticket and said he had to hitch rides on military planes, which hopscotch the country and are not regularly scheduled. At one point he was stranded at an Illinois air base for a week, which delayed his therapy. He finally made it to Colorado when an outraged soldier got him a commercial flight.
He has been back home for a month now, preparing for his new leg. "This life has its challenges," he says. "When the baby cries, I can't just run over and pick her up to put her in the crib. I'm kind of a stationary person right now, and sometimes I just have to drag myself across the floor." On the day he received his new leg at Denver VA last week, he walked around on it for two hours. But the VA won't let him take it home just yet. That's fine with him: he was thinking that his missing limb could make a fine homemade Halloween video. "I'm planning on getting together with my brothers-in-law," he says. "I'm going to make it look like they ran me over in a parking lot and have these other guys pull me out and make it look like they ripped my leg off." He never executes the idea, but the thought of it makes him laugh.
The three wounded soldiers are united not only in their good humor but also their unequivocal support for the war. Wyatt doesn't much care for those who think Bush fudged the intelligence on Saddam Hussein's weapons of mass destruction. "That makes you feel like you fought for nothing or you fought for a liar," he says. "They're telling me I went out there and I got my leg blown off for a liar, and I know that's just not true." Wyatt says he would stay in the Army if he could remain in a combat unit, but he knows that's unlikely. So he's considering college.
Castro says he just did what he signed up to do. "Someone has to do the job, and we did it," he says. "The price was my leg." He plans to return to college — his four-year hitch was up a week after he lost his leg — and marry his fiance Elizabeth Gonzalez, who quit her California job and moved to Washington to help him recover. Later this month, if all the paperwork comes through, Castro should reach another milestone: becoming a U.S. citizen.
http://www.truthout.com/docs_03/110603A.shtml
Pentagon Funding Phony Intelligence
March 11, 2004
Just days after CIA director George Tenet told Congress about his multiple interventions to correct false and misleading statements by the Bush administration prior to the U.S. invasion of Iraq, American taxpayers learn the Pentagon is channeling $340,000 per month for "intelligence collection" to Ahmad Chalabi's Iraqi National Congress – the organization responsible for providing Vice President Cheney and other administration officials with sham intelligence. The New York Times reports the government's own reviews show that much of the intelligence information provided by Chalabi’s group was misleading and even falsified. The CIA cut off the Iraqi National Congress in 1995, yet the Pentagon continues to fund the group and grant the organization special access to its own Defense Intelligence Agency.
The Iraqi National Congress supplied fabricated and deceptive intelligence information prior to the U.S. invasion of Iraq. In Senate testimony early this week, Admiral Lowell Jacoby, director of defense intelligence, admitted the Iraqi National Congress provided information that "was either fabricated or embellished." The National Intelligence Council determined the group's intelligence was useless, and the DIA's own staff designated defectors from the group as willful fabricators or embellishers of intelligence critical of Saddam Hussein.
Despite proven deceptions, the Pentagon continues to lavishly fund the Iraqi National Congress with taxpayer dollars. Knight-Ridder reported last month that the Pentagon continues to funnel huge amounts of money to the Iraqi National Congress despite multiple government reviews showing that much of the group’s intelligence information is bogus.
The Bush administration is circumventing the CIA by relying on the intelligence advice of known fabricators. The Bush administration talks a big game about streamlining intelligence, but continues to allow the Pentagon to use a group of known deceivers from Iraq for information. Amazingly, the CIA – the nation’s chief intelligence operation – must ask the Pentagon for permission to interview informants from the Iraqi National Congress and has been denied custody of important Iraqi documents seized by the group in the aftermath of the war.
Daily Talking Points is a product of the Center for American Progress, a non-partisan research and educational institute committed to progressive principles for a strong, just and free America.
http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=36780
United States Soldiers Killed in Iraq and Afghanistan
The List of Dead Can be Found at the below link:
http://www.thousandreasons.org/wardead.html
http://www.thousandreasons.org/
http://www.buckfush.com/
United States Soldiers Killed in Iraq and Afghanistan
Multiply this list by 10, next post has link to the full list:
First Lieutenant Michael R. Adams, 24, of Seattle, Wash., died March 16, in Al Asad, Iraq, when the barrel of the .50 caliber weapon mounted on his tank struck him. Lt. Adams was a member of the 1st Squadron, 3rd Armored Cavalry Regiment, Fort Carson, Colo.
Sgt. William J. Normandy, 42, of Augusta, Ga., died March 15, in Camp Virginia, Iraq (north of Kuwait City), of non-combat related injuries. Sgt. Normandy was assigned to the Army National Guard, 1st Battalion, 86th Field Artillery, from Montpelier, Vt.
Master Sgt. Thomas R. Thigpen, Sr., 52, of Augusta, Ga., died March 16, in Camp Virginia, Kuwait (north of Kuwait City), of non-combat related injuries. Master Sgt. Thigpen was assigned to the Army National Guard, 151st Signal Battalion, from Greenville, S.C.
The Department of Defense announced today the death of three soldiers supporting Operation Iraqi Freedom. They died on March 13, in Baghdad, Iraq, when an improvised explosive device struck their military vehicle. All three soldiers were assigned to the 1st Battalion, 504th Infantry Regiment, 82nd Airborne Division, Fort Bragg, N.C. Killed were:
Staff Sgt. Clint D. Ferrin, 31, of Picayune, Miss.
Sgt. Daniel J. Londono, 22, of Boston, Mass.
Pfc. Joel K. Brattain, 21, of Santa Anna, Calif.
Spc. Jocelyn L. Carrasquillo, 28, of Wrightsville Beach, N.C., died March 13, on the main supply route in Iraq, when an improvised explosive device hit his vehicle. Spc. Carrasquillo was assigned to the 1st Battalion, 120th Infantry Regiment, Army National Guard, from Wilmington, N.C.
Capt. John F. Kurth, 31, of Wis., died March 13 in Tikrit, Iraq, when his patrol encountered an improvised explosive device. Kurth was assigned to the 1st Battalion, 18th Infantry Regiment, based in Schweinfurt, Germany. The incident is under investigation.
Spc. Jason C. Ford, 21, of Bowie, Md., died March 13 in Tikrit, Iraq, when his patrol encountered an improvised explosive device. Spc. Ford was assigned to the 1st Battalion, 18th Infantry Regiment, based in Schweinfurt, Germany.
Staff Sgt. Joe L. Dunigan Jr., 37, of Belton, Texas, died Mar. 11, in Fallujah, Iraq, when his vehicle was hit by an improvised explosive device. Dunigan was assigned to the 1st Battalion, 16th Infantry Brigade, 1st Infantry Division, based at Fort Riley, Kan. The incident is under investigation.
Spc. Christopher K. Hill, 26, of Ventura, Calif., died Mar. 11, in Fallujah, Iraq, when his vehicle was hit by an improvised explosive device. Hill was assigned to the 1st Battalion, 16th Infantry Brigade, 1st Infantry Division, based at Fort Riley, Kan. The incident is under investigation.
The Department of Defense announced today the death of two Department of the Army civilians who were supporting Operation Iraqi Freedom. The civilians who were both assigned to the Coalition Provisional Authority, based in Arlington, Va., died March 9 in Al-Hillah, Iraq. Killed were:
Fern L. Holland, 33, (home of record not available).
Robert J. Zangas, 44, of Prince William County, Va.
Pfc. Bert. E. Hoyer, 23, of Ellsworth, Wis., died March 10, in Baqubah, Iraq, when an improvised explosive device hit his convoy. Hoyer was assigned to the 625th Engineer Company, U.S. Army Reserve, Ellsworth, Wis.
Spc. Edward W. Brabazon, 20, of Philadelphia, Pa., died March 9 in Baghdad, Iraq, of a non-hostile gunshot wound. Brabazon was assigned to the 2nd Battalion, 505th Parachute Infantry Regiment, 82nd Airborne Division, Fort Bragg, N.C.
Sgt. 1st Class Richard S. Gottfried, 42, of Lake Ozark, Mo., died March 9 in Tampa, Iraq, when struck by an improvised explosive device. Sgt. 1st Class Gottfried was assigned to the 1st Division Support Command, 1st Infantry Division, Kitzengen, Germany.
Capt. Gussie M. Jones, 41, of Louisiana, died March 7 in Baghdad, Iraq, as a result of a non-combat cause. As medical surgical nurse in support of area operations, Jones was assigned to the 31st Combat Support Hospital, Fort Bliss, Texas.
Spc. Michael R. Woodliff, 22, of Port Charlotte, Fla., died March 2 in Baghdad, Iraq, when an improvised explosive device struck his convoy. Woodliff was assigned to the Headquarters and Headquarters Company, 1st Battalion, 37th Armor Regiment, 1st Armor Division, Friedberg, Germany.
The Department of Defense announced today the death of two soldiers supporting Operation Iraqi Freedom. They died on Feb. 25 in Habbinayah, Iraq, when the OH-58 helicopter in which they were flying crashed. Both soldiers were assigned to the 4th Squadron, Outlaw Troop, 3rd Armored Cavalry Regiment, Fort Carson, Colo. Killed were:
Chief Warrant Officer Stephen M. Wells, 29, of Massachusetts.
Chief Warrant Officer Matthew C. Laskowski, 32, of Phoenix, Ariz.
Spc. David E. Hall, 21, of Uniontown, Kan., died Feb. 25 in Kabul, Afghanistan, in a non-hostile accident. Hall was assigned to 805th Military Police Company, 16th Military Police Brigade, U.S. Army Reserve, Raleigh, N.C.
Sgt. 1st Class Henry A. Bacon, 45, of Wagram, N.C., died Feb. 20 in Ad Dujayl, Iraq, when he was struck by a recovery vehicle while he was assisting a disabled vehicle. Bacon was assigned to Headquarters and Headquarters Troop, 1st Squadron, 10th Armored Cavalry Regiment, 4th Aviation Brigade, 4th Infantry Division, Fort Hood, Texas.
The Department of Defense announced today the Feb. 19 death in Khalidiyah, Iraq, of two soldiers who were supporting Operation Iraqi Freedom. They died of injuries sustained from small arms fire and an improvised explosive device attack. Killed were:
2nd Lt. Jeffrey C. Graham, 24, of Elizabethtown, Ky.
Spc. Roger G. Ling, 20, of Douglaston, N.Y.
Both soldiers were assigned to Company C, 1st Battalion, 34th Armor Regiment, 1st Brigade Combat Team, Fort Riley, Kan.
Spc. Christopher M. Taylor, 25, of Daphne, Ala., died Feb. 16 in Baghdad, Iraq, when an improvised explosive device struck his convoy. Taylor was assigned to the 1165th Military Police Company, Army National Guard, Fairhope, Ala. His unit was attached to the 18th Military Police Brigade operating in theater.
Spc. Michael M. Merila, 23, of Sierra Vista, Ariz., died Feb. 16 in Talifar, Iraq, when his convoy was hit by an improvised explosive device. Merila was assigned to the Headquarters and Headquarters Troop, 1st Squadron, 14th Cavalry Regiment, Fort Lewis, Wash.
Pfc. Nichole M. Frye, 19, of Lena, Wis., died Feb. 16 in Baqubah, Iraq, when an improvised explosive device struck her convoy. Frye was assigned to Company A, 415th Civil Affairs Battalion, U.S. Army Reserve, Kalamazoo, Mich.
The Department of Defense announced today it has changed the status of 1st Lt. Adam G. Mooney, 28, of Cambridge, Md., from duty status whereabouts unknown to a non-hostile casualty.
Mooney was listed as duty status unknown on Jan. 25 in Mosul, Iraq, when his helicopter went down in the Tigris River during a search for a missing soldier. On Feb. 14, his remains were recovered. Mooney was assigned to the 1st Battalion, 10th Aviation (Fort Drum), however, in support of mission requirements, he was attached to 3rd Squadron, 17th Cavalry, 10th Mountain Division, Fort Drum, N.Y.
Spc. Eric U. Ramirez, 31, of San Diego, Calif. died Feb. 12 in Abu Gireb, Iraq, when he was attacked by small arms fire, a rocket propelled grenade and an improvised explosive device. Ramirez was assigned to the 670th Military Police Company, Army National Guard, National City, Calif.
Pvt. Bryan N. Spry, 19, of Chestertown, Md., died Feb. 13 in Baghdad, Iraq, when his vehicle rolled into a water-filled ditch. Spry was assigned to Company A, 2-504th Infantry, 82nd Airborne Division, Fort Bragg, N.C.
Sgt. Nicholes D. Golding, 24, of Addison, Maine, died Feb. 13 in Ghanzni, Afghanistan, as a result of an AT-46 (anti-tank) mine explosion. Golding was assigned to Company C, 2/87th Infantry Regiment, 10th Mountain Division, Fort Drum, N.Y.
An improvised explosive device struck the soldiers while they were on a mounted patrol in Baghdad, Iraq. Killed are:
Sgt. Patrick S. Tainsh, 33, of Oceanside, Calif.
Pfc. William C. Ramirez, 19, of Portland, Ore.
Both soldiers were assigned to Troop E, 2nd Squadron, 2nd Armored Cavalry Regiment, Fort Polk, La.
The Department of Defense announced today the Feb. 9 death of two soldiers in Sinjar, Iraq, who were supporting Operation Iraqi Freedom when a collection of unexploded ordnance, rocket-propelled grenades and mortar rounds detonated while being moved to a demolition point. Killed were:
Sgt. Elijah Tai Wah Wong, 42, of Mesa, Ariz. Wong was assigned to the 363rd Explosive Ordnance Company, Army National Guard, Casa Grande, Ariz.
Sgt. Thomas D. Robbins, 27, Schenectady, N.Y. Robbins was assigned to Troop A, 1st Squadron, 14th Cavalry Regiment (Stryker), Fort Lewis, Wash.
Master Sgt. Jude C. Mariano, 39, of Vallejo, Calif., died Feb. 10 in Doha, Qatar. He died from injuries sustained in a motor vehicle accident. Mariano was assigned to the 615th Air Mobility Operations Squadron, Travis Air Force Base, Calif.
Staff Sgt. Richard P. Ramey, 27, of Canton, Ohio, died Feb. 8 in Mahmudiyah, Iraq, when an improvised explosive device detonated. Ramey was assigned to the 703rd Ordinance Company, Fort Knox, Ky., and he was supporting the 82nd Airborne Division.
Spc. Joshua L. Knowles, 23, of Sheffield, Iowa, died Feb. 5 in Baghdad, Iraq, when he was hit by a mortar round at a Baghdad International Airport checkpoint. Knowles was assigned to the 1133rd Transportation Company, Army National Guard, Mason City, Iowa.
Army Spc. Tamarra J. Ramos, 24, of Quakertown, Pa., died Oct. 1, 2003, at Walter Reed Army Medical Center (WRAMC), Washington D.C. Ramos died of non-combat related injuries. She was assigned to the 3rd Armor Medical Company, Medical Troop Regimental Support Squadron, 3rd Armored Cavalry Regiment, Fort Carson, Colo.
Army Sgt. Linda C. Jimenez, 39, of Brooklyn, N.Y., died Nov. 8, 2003, at WRAMC. On Oct. 31, 2003, Jimenez fell and was injured. She was taken to the 28th Combat Support Hospital and later evacuated to Landstuhl Army Regional Medical Center. Subsequently, she was moved to WRAMC where she later died. Jimenez was assigned to the 2nd Squadron Combat Support Aviation (Maintenance), 2nd Armored Cavalry Regiment, Fort Polk, La.
Navy Petty Officer 3rd Class David Sisung, 21, of Phoenix, Ariz., died June 6, 2003, while in the Persian Gulf. Sinsung died of a non-combat related injury. He was assigned to the USS Nimitz, home ported in San Diego, Calif.
Air Force Master Sgt. David A. Scott, 51, of Union, Ohio, died as a result of a non-hostile cause on July 20, 2003, in Doha, Qatar. He was assigned to the 445th Communications Flight, Wright Patterson Air Force Base, Ohio.
2nd Lt. Seth J. Dvorin, 24, of New Jersey, died Feb. 3 in Iskandariyah, Iraq, when an improvised explosive device (IED) exploded while he was conducting counter-IED operations along a supply route. Dvorin was assigned to Battery B, 3rd Battalion, 62nd Air Defense Artillery Regiment, based at Fort Drum, N.Y.
Sgt. Benjamin L. Gilman, 28, of Meriden, Conn., was designated duty status unknown on Jan. 29 in Ghazni, Afghanistan, when a weapons cache prematurely exploded. On Feb. 2, his remains were recovered. Gilman was assigned to 41st Engineer Battalion, 10th Mountain Division, Fort Drum, N.Y.
The Department of Defense announced today the death of three soldiers who were supporting Operation Iraqi Freedom when their vehicle was hit on Jan. 31 by an improvised explosive device during convoy operations in Kirkuk, Iraq. Killed were:
Sgt. Eliu A. Miersandoval, 27, of San Clemente, Calif.
Cpl. Juan C. Cabralbanuelos, 25, of Emporia, Kan.
Pfc. Holly J. McGeogh, 19, of Taylor, Mich.
The soldiers were assigned to Company A, 4th Forward Support Battalion, 4th Infantry Division (Mech), Fort Hood, Texas.
Staff Sgt. Roger C. Turner Jr., 37, of Parkersburg, W.Va., died Feb. 1 in Anaconda, Iraq. Turner was in his sleeping quarters when the logistical support area came under mortar attack. He died as a result of his injuries. Turner was assigned to the Headquarters and Headquarters Troop, 1st Squadron, 10th Cavalry Regiment, 4th Infantry Division, Fort Hood, Texas.
Pfc. Armando Soriano, 20, of Houston, Texas, died on Feb. 1 in Haditha, Iraq. Soriano was traveling in a two-vehicle convoy on a supply route when weather conditions caused his vehicle to slide off the road and roll over. He died as a result of his injuries. Soriano was assigned to the howitzer battery, 3rd Squadron, 3rd Armored Cavalry Regiment, Fort Carson, Colo. The unit is currently attached to the 82nd Airborne Division, Fort Bragg, N.C.
The Department of Defense announced today the deaths of seven soldiers who were supporting Operation Enduring Freedom on Jan. 29, 2004, west of Ghazni, Afghanistan. The seven soldiers and an additional soldier, whose status is currently being listed as Duty Status Whereabouts Unknown, were working around a weapons cache when there was an explosion.
Three other soldiers and an interpreter were injured and evacuated to the 452nd Combat Support Hospital at Bagram Air Base. Killed were:
Staff Sgt. Shawn M. Clemens, 28, of Allegany, N.Y. Clemens was assigned to 2nd Battalion, 87th Infantry Regiment, 10th Mountain Division, based at Fort Drum, N.Y.
Why?
http://www.sec.gov/Archives/edgar/data/1138188/000114420403005173/forms8.txt
http://www.sec.gov/Archives/edgar/data/1138188/000114420403005173/ex4.txt
http://www.sec.gov/Archives/edgar/data/1138188/000114420403005173/ex4b.txt
http://www.sec.gov/Archives/edgar/data/1138188/000113902004000028/ugo_ex16.txt
http://www.sec.gov/Archives/edgar/data/1138188/000113902004000025/ugo_ex99.txt
What is a GSA Schedule Contract?
http://biz.yahoo.com/pz/040126/51430.html
Out of Las Vegas huh?
http://finance.yahoo.com/q/bc?s=UGMI.PK&t=6m
http://www.sciax.com/
From NITE's Annual Report
In the normal course of our equities market-making business, we maintain inventories of exchange-listed and OTC equity securities. The fair value of these securities at December 31, 2003 and 2002 was $190.1 million and $130.5 million, respectively, in long positions and $173.1 million and $84.7 million, respectively, in short positions.
Legal
KEM Arbitration: On December 27, 2001, pursuant to an employee arbitration agreement, a former employee of Knight Securities, L.P. (“KSLP”) (effective as of September 1, 2003, now known as Knight Equity Markets, L.P., “KEM”) filed an arbitration claim with NASD Dispute Resolution, Inc. seeking damages relating to his employment (the “KEM Arbitration”; formerly the KS Arbitration). The former employee’s central allegation involves his alleged improper termination. However, he also alleged, among other things, damages based on his belief that during a defined period of time the Company allowed frontrunning of institutional orders to occur (the “purported improper trading practice”). On June 4, 2002, The Wall Street Journal published an article concerning the purported improper trading practice. The Company has investigated the allegations and believes them to be unfounded and without merit. The Company is vigorously defending itself and has denied the allegations in the arbitration. The Company has filed counterclaims against the former employee. The hearing commenced in April 2003. The claimant has concluded the presentation of his case. The Company is scheduled to begin presenting its witnesses on March 30, 2004.
Trading Litigation: As mentioned in previous filings, and in the description of the KEM Arbitration above, following the publication of the above-mentioned June 4, 2002 The Wall Street Journal article, a number of putative class action lawsuits were filed against the Company by the Company’s shareholders. These actions appeared to have been based upon the newspaper report of allegations made in the KEM Arbitration claim about the purported improper trading practice. Following consolidation, these actions comprised one lawsuit in U.S. District Court in New Jersey entitled Roth et al. v. Knight Trading Group, Inc. et al (“Roth”). In Roth, the plaintiffs asserted claims under Section 10(b) and Rule 10b-5 and Section 20(a) of the federal securities laws based on allegations by individuals who purchased the Company’s common stock during a defined period of time that the Company, among other things, failed to reveal the existence of the purported improper trading practice alleged in the KEM Arbitration. Pursuant to Court Order, dated November 7, 2003, this matter was dismissed with prejudice.
Short Selling Litigation: In or around June 2002, KEM, along with numerous other broker-dealers, was named in a Texas based lawsuit entitled JAG Media Holdings, Inc. et al. v. A.G. Edwards & Sons, Inc. et al., in which it was generally alleged that the firm improperly engaged in short sale transactions concerning a single security. Since that filing, KEM and/or the Company, again together with a number of broker-dealers, has also been named in similar actions in other jurisdictions concerning additional securities. The plaintiffs in all of these lawsuits are limited to either the issuer and/or shareholder(s) of the issuer. These lawsuits are in their preliminary stages. To date, no discovery has been conducted and no trial dates have been set. The Company, however, believes that it has meritorious defenses to each lawsuit and is defending each lawsuit vigorously.
Other Litigation:
In October 2003, Keener, a pro se plaintiff, filed a putative class action against the Company, Ameritrade Holdings Inc. and certain individuals in the United States District Court for the District of Nebraska, entitled Keener et al. v. Ameritrade Holdings, Inc. et al. The plaintiff commenced his lawsuit on behalf of persons who became clients of Ameritrade during the period from March 29, 1995 through September 30, 2003. In general, the plaintiff asserts that he (and those individuals he seeks to represent) placed certain orders for purchases and sales of securities as clients of Ameritrade which were in turn routed to KEM and that these orders were not executed properly. The plaintiff claims that the Company’s conduct violated certain provisions of the federal securities laws. Plaintiff further claims the individual defendants are liable as “control persons” for the claimed wrongs attributed to the Company and Ameritrade. In his request for relief, plaintiff requests monetary damages and/or rescissionary relief in the amount of $4.5 billion against all defendants, jointly and severally. The Company, and the individual defendants, believe they have meritorious legal defenses and intend to defend the action vigorously. This matter is in its preliminary stages, no discovery has been exchanged and no trial dates have been set.
In January 2004, thirty-five securities firms, including the Company and its subsidiary, Knight Financial Products LLC (collectively the “market maker defendants”), as well as four options exchanges, were named in a complaint filed in the United States District Court for the Northern District of Illinois entitled Last Atlantis Capital LLC et al. v. Chicago Board Options Exchange, Inc. et al. The plaintiffs in the action allegedly submitted orders to buy and sell options on the four named options exchanges, and the market maker defendants were prospective and/or actual counterparties to those orders. The plaintiffs allege that during the period of September 11, 2000 through the present day the market maker defendants, among other things, failed to provide a competitive and orderly market for the purchase and sale of the options and issued false and misleading price quotations that deceived the plaintiffs. The plaintiffs allege that this conduct violated certain sections of the Sherman and Clayton Acts, the federal securities laws and Illinois state law, and also should result in common law liability. The plaintiffs have requested unspecified monetary damages and injunctive relief. The Company is defending this matter vigorously and believes it has meritorious defenses. This matter is in its preliminary stages, no discovery has been exchanged and no trial date has been set.
Regulatory
The Company owns subsidiaries which are regulated broker-dealers and which are subject to extensive oversight under federal, state and applicable international laws. Changes in market structure and the need to remain competitive require constant changes to our systems and order handling procedures. The Company makes these changes while continuously endeavoring to comply with many complex laws and rules. Compliance, surveillance or trading issues, common in the securities industry, and which are monitored by or reported to the SEC or SROs, are reviewed in the ordinary course of business by our primary regulators: the SEC, NASD and the CBOE. The Company, as a major order flow execution destination, is named from time to time, or is asked to respond to a number of regulatory matters brought by the SEC or SROs that arise from its trading activity. In some instances, these matters may rise to an SEC or SRO disciplinary action and/or civil or administrative action.
Subsequent to the filing of the KEM Arbitration against the Company, the SEC initiated an examination of the purported improper trading practice through its Office of Compliance Inspections and Examinations. The SEC’s Division of Enforcement obtained a formal order of investigation that was discovered and disclosed by the Company in the third quarter of 2002. In addition, subsequent to the filing of the KEM Arbitration, the NASD’s Department of Market Regulation began an inquiry.
In March 2004, KSLP and its former CEO, Kenneth D. Pasternak, received Wells Notices from the staff of the SEC’s Division of Enforcement and from NASD’s Department of Market Regulation.
The Wells Notices from the SEC’s Division of Enforcement indicate that the Division is considering recommending that the SEC bring civil and administrative enforcement actions against KSLP and Mr. Pasternak for possible violations of securities laws. These Wells Notices pertain to investigations into specific trade activity, conduct, supervision and record-keeping that occurred in 1999 through 2001. The Wells Notices from NASD’s Department of Market Regulation indicate that NASD intends to bring formal disciplinary proceedings against both parties relating to similar trade activity and conduct that occurred in 1999 and 2000. We understand that three former KSLP employees have also received Wells Notices.
A Wells Notice from the SEC affords recipients an opportunity to present information and defenses in response to the SEC’s Division of Enforcement staff prior to the staff making its formal recommendation to the SEC on whether any disciplinary action should be authorized. Similar to the SEC’s procedures, NASD allows the recipients of its Wells Notices to present information and defenses in response to NASD’s Department of Market Regulation staff prior to the staff making its formal recommendation to NASD’s Office of Disciplinary Affairs on whether any disciplinary action should be authorized.
Since receiving the Wells Notices, the Company has not yet presented its response or met with the SEC or NASD to discuss the proposed charges. As a result, it is premature to fully assess the potential impact of these Wells Notices to the Company, the outcome of the investigations or the timing of their resolution. There can be no assurance that these matters will not have a material adverse effect on the Company’s results of operations in any future period and a substantial judgment or other resolution could have a material adverse impact on the Company’s financial condition and results of operations. However, it is the opinion of management, based on information currently available, that it is not probable that the ultimate outcome of these matters will have a material adverse effect on the consolidated financial condition of the Company, although they might be material to the operating results for any particular period, depending, in part, upon the operating results for that period.
Total stockholders’ equity 790,131,778
The above information regarding their short positions seems contrary to what this statement in the annual report indicates to be their real exposure:
Securities sold, not yet purchased:
Equities $ 1,144,381,039
Options 1,513,709,679
$1.1 billion exceeds their total current stockholder equity based on last year end statements, and there is no public information available as to their current risk exposure as of March or coming up on April 1, 2004 if the NASD does not extend the rule deadline for covering naked short positions.
This is also very interesting:
Receivable from/Payable to Brokers and Dealers
Payable:
Clearing brokers $ 301,962,160
Securities failed to receive 11,641,366
The information is not clear and appears to be contrary in three different places in the annual report.
Financial Instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk
As a market maker of equities and options, the majority of the Company’s securities transactions are conducted as principal or riskless principal with broker-dealer and institutional counterparties primarily located in the United States. The Company clears all of its securities transactions through clearing brokers. Accordingly, a substantial portion of the Company’s credit exposures are concentrated with its clearing brokers. The clearing brokers can rehypothecate the securities held on behalf of the Company. Additionally, pursuant to the terms of the agreement between the Company and the clearing brokers, the clearing brokers have the right to charge the Company for all losses that result from a counterparty’s failure to fulfill its contractual obligations. At December 31, 2003, the Company has recorded liabilities of approximately $2.1 million with regard to this right.
The Company has the ability to pursue collection from or performance with regard to this right. The Company’s policy is to monitor the credit standing of the clearing brokers and all counterparties with which it conducts business.
Securities sold, not yet purchased represent obligations to purchase such securities (or underlying securities) at a future date. The Company may incur a loss if the market value of the securities subsequently increases.
If the company may incur a loss if the market value of the securities subsequently increases then how can the majority of the Company’s securities transactions be conducted as a riskless principal? This appears to be a contradiction of terms and misleading to investors.
Organization and Description of the Business
Knight Trading Group, Inc. and its subsidiaries (the “Company”) operate in Equity Markets, Derivative Markets and Asset Management segments. The Company’s business segments are comprised of the following operating subsidiaries:
Equity Markets
• Knight Equity Markets, L.P. (“KEM;” formerly Knight Securities, L.P.) operates as a market maker in over-the-counter equity securities (“OTC securities”), primarily those traded in the Nasdaq stock market and on the OTC Bulletin Board (“OTCBB”). Additionally, in December 2003, KEM acquired the business of Donaldson & Co., Incorporated (“Donaldson”), a firm that offers soft dollar and commission recapture services. KEM is a broker-dealer registered with the Securities and Exchange Commission (“SEC”), is a member of the National Association of Securities Dealers (“NASD”), the National Stock Exchange and the Pacific Stock Exchange.
• Knight Capital Markets LLC (“KCM”) operates as a market maker in the Nasdaq Intermarket™, the over-the-counter market for New York Stock Exchange (“NYSE”) and American Stock Exchange (“AMEX”) listed securities. KCM is a broker-dealer registered with the SEC and is a member of the NASD.
• Knight Roundtable Europe Limited (“KREL”) owns Knight Securities International, Ltd. (“KSIL”), a U.K. registered broker-dealer that provides agency execution services for European clients in European and U.S. equities. KSIL also provided market-making services in European securities, however, these services were discontinued in 2002. At December 31, 2003, the Company owned an approximate 85% interest in KREL. KSIL is regulated by the Financial Services Authority in the U.K. and is a member of the London Stock Exchange.
• Knight Securities Japan Ltd. (“KSJ”) operated as a market maker in Japanese equity securities until it ceased its trading operations and was subsequently liquidated in 2003. The Company owned 60% of KSJ through a joint venture with Nikko Cordial Group. See Footnote 10 “Discontinued Operations” for a further discussion on KSJ.
Investment in Deephaven Sponsored Funds and Strategic Investments
The Company’s wholly-owned subsidiary, Deephaven, is the investment manager and sponsor of the Deephaven Funds, which engage in various trading strategies involving equities, debt instruments and derivatives. The underlying investments in the Deephaven Funds are carried at market value. Of the $1.6 billion of assets under management in the Deephaven Funds as of December 31, 2003, the Company had an investment of $201.1 million. Of the $201.1 million investment held by the Company, $197.6 million represented the Company’s strategic investment, while $3.5 million represented investments related to employee deferred compensation plans. In addition, certain officers, directors and employees of the Company have invested approximately $15.9 million in the Deephaven Funds, in the aggregate, as of December 31, 2003.
Strategic investments, which primarily include the Company’s investment in Nasdaq and the ISE, are reviewed on an ongoing basis to ensure that the fair value of the investment has not been impaired. In accordance with this policy, the Company wrote down its investment in Nasdaq, to fair value, resulting in a charge of $6.8 million in 2003.
But here is where the real risk lies in bold below:
Securities sold, not yet purchased represent obligations to purchase such securities (or underlying securities) at a future date. The Company may incur a loss if the market value of the securities subsequently increases.
Derivative contracts are financial instruments whose value is based upon the value of the underlying asset, index, reference rate or a combination of these factors. The Company uses derivative financial instruments as part of its options market-making and trading business and its overall risk management process. These financial instruments, which generally include exchange-traded options, options on futures and futures contracts, expose the Company to varying degrees of market and credit risk. The Company records its derivative-trading activities at market value, and unrealized gains and losses are recognized currently.
In November 2002, the FASB issued FIN 45 Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, which requires the Company to disclose information about obligations under certain guarantee arrangements. FIN 45 defines a guarantee as a contract that contingently requires the Company to pay a guaranteed party based on: (a) changes in an underlying asset, liability, or equity security of the guaranteed party, or (b) a third party’s failure to perform under a specified agreement. The Company considers written put options to be guarantees under FIN 45.
In addition to the contracts described above, there are certain derivative contracts to which the Company is a counterparty that meet the characteristics of a guarantee under FIN 45. These derivatives are recorded on the Statements of Financial Condition at fair value. These contracts include written put options that may require the Company to purchase assets from the option holder at a specified price by a specified date in the future. The total theoretical exposure of these derivatives that the Company deems to be guarantees, assuming the underlying positions have zero value, was approximately $9.6 billion at December 31, 2003. The Company reduces its exposures to these contracts by entering into offsetting transactions, or by entering into contracts that hedge the market risk related to these contracts.
Do those "put options" include promises to purchase convertible debentures with naked short positions behind them? It is not disclosed in the annual report.
It has been estimated by one high profile law firm in the US that the total outstanding naked short positions of all brokerages in the US exceeds $100 billion. Knight might have just under 10% of that total exposure.
http://www.sec.gov/Archives/edgar/data/1060749/000119312504041557/d10k.htm#tx47768_10
Stock Market Scams
by Christopher Mayer
[June 6, 2001]
An important part of the argument for free markets is the idea that the market is self-regulating. In other words, a free market would develop its own ways of protecting consumers and enforcing fair play. This development is one of the more intriguing aspects of a free market. In the absence of a government authority or agency, private groups emerge that efficiently provide services that might normally be provided by governments.
Given the ubiquitous nature of government in today’s world, the opportunity to witness this development is somewhat rare. The flurry of government regulatory bodies would seem to crowd out any entrepreneurial efforts in this area. Who wants to compete with the Securities and Exchange Commission, for example? When the SEC gives its blessing to a process, stamping it with approval, what incentive do investors have to seek out something more? And certainly, they do not have the option of something less, since participation in SEC rules is not a voluntary choice.
Therefore, when someone comes along and succeeds in showing us how they were able to provide a service to investors that far exceeds what a government agency (in this case, the SEC) can do, it deserves our attention. One of the market’s basic forces, self-interest, spurred this entrepreneur in a direction that benefits investors enormously and, in the process, enriches his own enterprise. As Mises tirelessly explained, profit and social gain are not antagonists in life’s dramas; they indelibly form the fabric of a progressing economy.
The entrepreneur in question is Manuel Asensio and the company he founded: Asensio & Company. In his new book Sold Short: Uncovering Deception in the Markets, Asensio invites readers along for a fascinating tour of recent stock promotions and stock frauds that went on undetected by the SEC and that cost investors millions. Asensio has made it his business to uncover these deceptions and to profit thereby. In his self-interested pursuit of profit, he provides tremendous benefits for all investors, who don’t even have to pay him for his services.
How can this be? Make a profit and provide a service for free? Asensio profits from uncovering stock fraud by performing transactions that are much-reviled on Wall Street. Asensio is a professional short seller. He sells stock that he does not own and promises to buy the stock back at a later date. This is no different conceptually from what any merchant does when he sells something and delivers it later. In both cases, a profit is made when the sales price is greater than the entrepreneur's cost to deliver the goods.
So, Asensio sells the stock of some company that he has determined to be a promotion—that is, a stock that owes its valuation primarily to the dissemination of misleading or false information. Asensio writes, "A stock promotion . . . is a stock whose price is not based on fundamentals—on the company’s actual sales and profits and an assessment of the future potential of its business—but solely on the ability of its promoters to conjure up schemes to sell its shares." These companies form the primary field for Asensio’s short selling campaigns.
After the stock is sold, Asensio makes his case public, and, if and when the stock takes a dive, he buys it back for pennies on the dollar, pocketing the difference. Sometimes, he doesn’t have to buy the stock back at all because it becomes totally worthless and the company ceases to exist.
Earlier, it was noted that investors do not have to pay Asensio for his research, and this is largely true. Anybody can go to his Web site and see his recent reports. It only helps Asensio’s cause to have his reports widely disseminated. However, the investor that holds a stock that becomes one of Asensio’s targets does "pay" in the sense that the value of the investment is worth much less than before Asensio came along.
Ultimately, someone would have had to bear the brunt of the loss from promotional stocks, assuming that such things cannot go on forever. So even here, it is probably better for the investor to know now. As Asensio notes, "A bum stock is like a straying partner: You may not want to hear about it, but you need to know."
Critics will undoubtedly say that such practices are subject to abuse and that there is nothing to prevent anyone from disseminating negative information about a company that is false. Certainly, this has happened and will continue to happen, whether there is a government watchdog or not. Asensio notes such past events, such as the fake news item in 1999 that damaged PairGain Technologies, and the college student who, in August 2000, circulated a phony story about Emulex that caused its stock to crater.
In a libertarian society, there would be no law against saying false things. While the morality of such acts can surely be questioned, the legal right to say them must be defended. As Rothbard wrote in The Ethics of Liberty, "For in that libertarian society, since everyone would know that false stories are legal, there would be far more skepticism on the part of the reading or listening public, who would insist on far more proof and would believe fewer derogatory stories than they do now." The same principle would apply to the stock market.
A free market in securities would be like a free market in any other good or service. The participants would have to consider a variety of information, including the quality and source of that information. When a consumer buys a car, he typically does a lot of upfront work before a purchase is made. Different cars are test-driven; various publications are consulted; and friends, family, and other people all contribute in forming the consumer’s opinion.
Also, people don’t generally rush out and sell their cars when someone disseminates negative information. Why should it be any different in the stock market? Any new information should be checked out and investigated. The purchase and sale of any stock should come only after much thinking and research. If consumers are unwilling or unable to perform such due diligence when it comes to their own hard-earned money, then they can take their chances in entrusting its care to some other party, which should still involve quite a bit of upfront work. Alternatively, they do not have to invest in the market at all.
There is a general desire to try to make life easier. Fine, but there is no way in which government agencies can wave wands and do away with criminal activity. So why not explore ways to improve the market without a government watchdog? Markets have been heavily regulated for quite some time now, and it has not prevented the stock promotions that fill volumes of financial history, nor has it prevented investors from losing money. A free-market alternative would not completely prevent these things either, but it would provide gains in efficiency and provide the added benefit that society no longer has to bear the costs of maintaining a plethora of government regulatory bodies that it does not endorse or need, much less understand.
Asensio gives us a model of what the regulator–entrepreneur of the stock market might look like. Asensio’s firm scours the investment world in search of stock promotions. His firm performs extensive research before issuing its sell recommendations. In the process, Asensio has uncovered numerous cases of outright fraud.
Many of the frauds run deep. These promoters have savvy lawyers and close working relationships with the SEC, to keep the company out of trouble long enough for the principals to make a lot of money. In his book, Asensio asks rhetorically, "How can any state regulator watch all these deals and check every fact?" Quite obviously, especially after reading Asensio’s book, no regulator can.
And even if they could, the investor might not want to trust the SEC (or any regulator) entirely. As Asensio explains, "One of the principles that allows us to sell short and publicly disseminate opinions comes from the Supreme Court decision Ray Dirks v. the SEC in the early 1980s.
"The SEC had censured Dirks in 1973 for issuing reports to his clients about an incipient scandal at Equity Funding—a scandal that Dirks is credited with uncovering. That’s right. The SEC sided with the then-almighty NYSE, which didn’t want its members uncovering fraud." The Supreme Court overturned the censure, but one has to wonder what the SEC was thinking.
In addition to compromised regulators, short sellers are also hampered by antiquated regulations. According to Asensio, these regulations were adopted in 1934, when the crash of 1929 was still a vivid memory. "They appeared in response to accusations that short sellers had caused the crash by manipulating the market." In reality, these regulations hamper the ability of the market to efficiently price securities.
For example, one of these regulations "force[s] short sellers to go through the pointless ritual of ‘borrowing’ stock to short." Ironically, this has the effect of aiding stock promoters, who register shares in cash accounts or offshore accounts, making them difficult or impossible to borrow. There are several other rules, all of which have the effect of hampering short sellers.
Asensio is not unaware of his role in the market from the point of view discussed here. He has a short section in his book titled "A Free Market Solution to Persistent Stock Fraud." He writes, "I’d like short sellers to be free to work, win or lose, independently of sometimes compromised regulators and sleazy lawyers. . . . I believe more than ever that, in the end, the free market system is capable of weeding out misinformation by itself."
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Christopher Mayer is a commercial lender for Provident Bank in the suburbs of Washington, D.C.
Bernard Lewis. Race and Slavery in the Middle East
Oxford Univ Press 1994.
Chpt. 1 Slavery
In 1842 the British Consul General in Morocco, as part of his government's worldwide endeavor to bring about the abolition of slavery or at least the curtailment of the slave trade, made representations to the sultan of that country asking him what measures, if any, he had taken to accomplish this desirable objective. The sultan replied, in a letter expressing evident astonishment, that "the traffic in slaves is a matter on which all sects and nations have agreed from the time of the sons of Adam . . . up to this day." The sultan continued that he was "not aware of its being prohibited by the laws of any sect, and no one need ask this question, the same being manifest to both high and low and requires no more demonstration than the light of day.''
The sultan was only slightly out of date concerning the enactment of laws to abolish or limit the slave trade, and he was sadly right in his general historic perspective. The institution of slavery had indeed been practiced from time immemorial. It existed in all the ancient civilizations of Asia, Africa, Europe, and pre-Columbian America. It had been accepted and even endorsed by Judaism, Christianity, and Islam, as well as other religions of the world.
In the ancient Middle East, as elsewhere, slavery is attested from the very earliest written records, among the Sumerians, the Babylonians, the Egyptians, and other ancient peoples. The earliest slaves, it would seem, were captives taken in warfare. Their numbers were augmented from other sources of supply. In pre-classical antiquity, most slaves appear to have been the property of kings, priests, and temples, and only a relatively small proportion were in private possession. They were employed to till the fields and tend the flocks of their royal and priestly masters but otherwise seem to have played little role in economic production, which was mostly left to small farmers, tenants, and sharccroppers and to artisans and journeymen. The slave population was also recruited by the sale, abandonment, or kidnapping of small children. Free persons could sell themselves or, more frequently, their offspring into slavery. They could be enslaved for insolvency, as could be the persons offered by them as pledges. In some systems, notably that of Rome, free persons could also be enslaved for a variety of offenses against the law.
Both the Old and New Testaments recognize and accept the institution of slavery. Both from time to time insist on the basic humanity of the slave, and the consequent need to treat him humanely. The Jews are frequently reminded, in both Bible and Talmud, that they too were slaves in Egypt and should therefore treat their slaves decently. Psalm 123, which compares the worshipper's appeal to God for mercy with the slave's appeal to his master, is cited to enjoin slaveowners to treat their slaves with compassion. A verse in the book of Job has even been interpreted as an argument against slavery as such: "Did not He that made me in the womb make him [the slave]? And did not One fashion us both?" (Job 31:15). This probably means no more, however, than that the slave is a fellow human being and not a mere chattel. The same is true of the much-quoted passage in the New Testament, that "there is neither Jew nor Greek, there is neither bond nor free, there is neither male nor female; for ye are all one in Christ Jesus." These and similar verses were not understood to mean that ethnic, social, and gender differences were unimportant or should be abolished, only that they conferred no religious privilege. From many allusions, it is clear that slavery is accepted in the New Testament as a fact of life. Some passages in the Pauline Epistles even endorse it. Thus in the Epistle to Philemon, a runaway slave is returned to his master; in Ephesians 6, the duty owed by a slave to his master is compared with the duty owed by a child to his parent, and the slave is enjoined "to be obedient to them that are your masters, according to the flesh, in fear and trembling, in singleness of your heart, as unto Christ." Parents and masters are likewise enjoined to show consideration for their children and slaves. All humans, of the true faith, were equal in the eyes of God and in the afterlife but not necessarily in the laws of man and in this world. Those not of the true faith -- whichever it was -- were in another, and in most respects an inferior, category. In this respect, the Greek perception of the barbarian and the Judeo-Christian-lslamic perception of the unbeliever coincide.
There appear indeed to have been some who opposed slavery, usually as it was practiced but sometimes even as such. In the Greco-Roman world, both the Cynics and the Stoics are said to have rejected slavery as contrary to justice, some basing their opposition on the unity of the human race, and the Roman jurists even held that slavery was contrary to nature and maintained only by "human" law. There is no evidence that either jurists or philosophers sought its abolition, and even their theoretical opposition has been questioned. Much of it was concerned with moral and spiritual themes -- the true freedom of the good man, even when enslaved, and the enslavement of the evil freeman to his passions. These ideas, which recur in Jewish and Christian writings, were of little help to those who suffered the reality of slavery. Philo, the Alexandrian Jewish philosopher, claims that a Jewish sect actually renounced slavery in practice. In a somewhat idealized account of the Essenes, he observes that they practiced a form of primitive communism, sharing homes and property and pooling their earnings. Furthermore,
"not a single slave is to be found among them, but all are free, exchanging services with each other, and they denounce the owners of slaves, not merely for their injustice in outraging the law of equality, but also for their impiety in annulling the statute of Nature, who mother-like bore and reared all men alike, and created them genuine brothers, not in mere name, but in very reality, though this kinship has been put to confusion by the triumph of malignant covetousness, which has wrought estrangement instead of affinity and enmity instead of friendship. "
This view, if it was indeed held and put into practice, was unique in the ancient Middle East. Jews, Christians, and pagans alike owned slaves and exercised the rights and powers accorded to them by their various religious laws. In all communities, there were men of compassion who urged slaveowners to treat their slaves humanely, and there was even some attempt to secure this by law. But the institution of slavery as such was not seriously questioned, and was indeed often defended in terms of either Natural Law or Divine Dispensation. Thus Aristotle defends the condition of slavery and even the forcible enslavement of those who are "by nature slaves, for whom to be governed by this kind of authority is beneficial"; other Greek philosophers express similar ideas, particularly about enslaved captives from conquered peoples. For such, slavery is not only right; it is also to their advantage.
The ancient Israelites did not claim that slavery was beneficial to the slaves, but, like the ancient Greeks, they felt the need to explain and justify the enslavement of their neighbors. In this, as in other matters, they sought a religious rather than a philosophical sanction and found it in the biblical story of the curse of Ham. Significantly, this curse was restricted to one line only of the descendants of Ham, namely, the children of Canaan, whom the Israelites had subjugated when they conquered the Promised Land, and did not affect the others.
The Qur'an, like the Old and the New Testaments, assumes the existence of slavery. It regulates the practice of the institution and thus implicitly accepts it. The Prophet Muhammad and those of his Companions who could afford it themselves owned slaves; some of them acquired more by conquest. But Qur'anic legislation, subsequently confirmed and elaborated in the Holy Law, brought two major changes to ancient slavery which were to have far-reaching effects. One of these was the presumption of freedom; the other, the ban on the enslavement of free persons except in strictly defined circumstances .
The Qur'an was promulgated in Mecca and Medina in the seventh century, and the background against which Qur'anic legislation must be seen is ancient Arabia. The Arabs practiced a form of slavery, similar to that which existed in other parts of the ancient world. The Qur'an accepts the institution, though it may be noted that the word 'abd (slave) is rarely used, being more commonly replaced by some periphrasis such as ma malakat aymanukum, "that which your right hands own." The Qur'an recognizes the basic inequality between master and slave and the rights of the former over the latter (XVI:71; XXX:28). It also recognizes concubinage (IV:3; XXIII:6; XXXIII:50-52; LXX:30). It urges, without actually commanding, kindness to the slave (IV:36; IX:60; XXIV:58) and recommends, without requiring, his liberation by purchase or manumission. The freeing of slaves is recommended both for the expiation of sins (IV:92; V:92; LVIII:3) and as an act of simple benevolence (II:177; XXIV:33; XC:13). It exhorts masters to allow slaves to earn or purchase their own freedom. An important change from pagan, though not from Jewish or Christian, practices is that in the strictly religious sense, the believing slave is now the brother of the freeman in Islam and before God, and the superior of the free pagan or idolator (II:221). This point is emphasized and elaborated in innumerable hadlths (traditions), in which the Prophet is quoted as urging considerate and sometimes even equal treatment for slaves, denouncing cruelty, harshness, or even discourtesy, recommending the liberation of slaves, and reminding the Muslims that his apostolate was to free and slave alike.
Though slavery was maintained, the Islamic dispensation enormously improved the position of the Arabian slave, who was now no longer merely a chattel but was also a human being with a certain religious and hence a social status and with certain quasi-legal rights. The early caliphs who ruled the Islamic community after the death of the Prophet also introduced some further reforms of a humanitarian tendency. The enslavement of free Muslims was soon discouraged and eventually prohibited. It was made unlawful for a freeman to sell himself or his children into slavery, and it was no longer permitted for freemen to be enslaved for either debt or crime, as was usual in the Roman world and, despite attempts at reform, in parts of Christian Europe until at least the sixteenth century. It became a fundamental principle of Islamic jurisprudence that the natural condition, and therefore the presumed status, of mankind was freedom, just as the basic rule concerning actions is permittedness: what is not expressly forbidden is permitted; whoever is not known to be a slave is free. This rule was not always strictly observed. Rebels and heretics were sometimes denounced as infidels or, worse, apostates, and reduced to slavery, as were the victims of some Muslim rulers in Africa, who proclaimed jihad against their neighbors, without looking closely at their religious beliefs, so as to provide legal cover for their enslavement. But by and large, and certainly in the central lands of Islam, under regimes of high civilization, the rule was honored, and free subjects of the state, Muslim and non-Muslim alike, were protected from unlawful enslavement.
Since all human beings were naturally free, slavery could only arise from two circumstances: (1) being born to slave parents or (2) being captured in war. The latter was soon restricted to infidels captured in a jihad.
These reforms seriously limited the supply of new slaves. Abandoned and unclaimed children could no longer be adopted as slaves, as was a common practice in antiquity, and free persons could no longer be enslaved. Under Islamic law, the slave population could only be recruited, in addition to birth and capture, by importation, the last either by purchase or in the form of tribute from beyond the Islamic frontiers. In the early days of rapid conquest and expansion, the holy war brought a plentiful supply of new slaves, but as the frontiers were gradually stabilized, this supply dwindled to a mere trickle. Most wars were now conducted against organized armies, like those of the Byzantines or other Christian states, and with them prisoners of war were commonly ransomed or exchanged. Within the Islamic frontiers, Islam spread rapidly among the populations of the newly acquired territories, and even those who remained faithful to their old religions and lived as protected persons (dhimmis) under Muslim rule could not, if free, be legally enslaved unless they had violated the terms of the dhimma, the contract governing their status, as for example by rebelling against Muslim rule or helping the enemies of the Muslim state or, according to some authorities, by withholding pa'yment of the Kharaj or the Jizya, the taxes due from dhimmls to the Muslim state.
In the Islamic empire, the humanitarian tendency of the Qur'an and the early caliphs was to some extent counteracted by other influences. Notable among these was the practice of the various conquered peoples and countries which the Muslims encountered after their expansion, especially in provinces previously under Roman law. This law, even in its Christianized form, was still very harsh in its treatment of slaves. Perhaps equally important was the huge increase in the slave population resulting first from the conquests themselves, and then from the organization of a great network of importation. These led to a fall in the cash value and hence the human value of slaves, and to a general adoption of a harsher tone and severer rules. But even after this stiffening of attitudes and laws, Islamic practice still represented a vast improvement on that inherited from antiquity, from Rome, and from Byzantium.
Slaves were excluded from religious functions or from any office involving jurisdiction over others. Their testimony was not admitted at judicial proceedings. In penal law, the penalty for an offense against a person, a fine or bloodwit, was, for a slave, half of that for a freeman. While maltreatment was deplored, there was no fixed shari'a penalty. In what might be called civil matters, the slave was a chattel with no legal powers or rights whatsoever. He could not enter into a contract, hold property, or inherit. If he incurred a fine, his owner was responsible. He was, however, distinctly better off, in the matter of rights, than a Greek or Roman slave, since Islamic jurists, and not only philosophers and moralists, took account of humanitarian considerations. They laid down, for example, that a master must give his slave medical attention when required, must give him adequate upkeep, and must support him in his old age. If a master defaulted on these and other obligations to his slave, the qadi could compel him to fulfill them or else either to sell or to emancipate the slave. The master was forbidden to overwork his slave, and if he did so to the point of cruelty, he was liable to a penalty which was, however, discretionary and not prescribed by law. A slave could enter into a contract to earn his freedom, in which case his master had no obliation to pay for his upkeep. While in theory the slave could not own property, he could be granted certain rights of ownership for which he paid a fixed sum to his master.
A slave could marry, but only by consent of the master. Theoretically, a male slave could marry a free woman, but this was discouraged and in practice prohibited. A master could not marry his own slave woman unless he first freed her. Islamic law provides a number of ways in which a slave could be set free. One was manumission, accomplished by a formal declaration on the part of the master and recorded in a certificate which was given to the liberated slave. The manumission of a slave included the offspring of that slave, and the jurists specify that if there is any uncertainty about an act of manumission, the slave has the benefit of the doubt. Another method is a written agreement by which the master grants liberty in return for a fixed sum. Once such an agreement has been concluded, the master no longer has the right to dispose of his slave, whether by sale or gift. The slave is still subject to certain legal disabilities, but in most respects is virtually free. Such an agreement, once entered into, may be terminated by the slave but not by the master. Children born to the slave after the entry into force of the contract are born free. The master may bind himself to liberate a slave at some specified future time. He may also bind his heirs to liberate a slave after his death. The law schools differ somewhat on the rules regarding this kind of liberation.
In addition to all these, which depend on the will of the master, there are various legal causes which may lead to liberation, independently of the will of the master. The commonest is a legal judgment by a qadi ordering a master to emancipate a slave whom he has maltreated. A special case is that of the umm walad, a slave woman who bears a son to her master, and thereby acquires certain irrevocable legal rights.
Non-Muslim subjects of the Muslim state, that is, dhimmis, were in practice allowed to own slaves; and Christian and Jewish families who could afford it owned and employed slaves in the same way as their Muslim counterparts. They were not permitted to own Muslim slaves; and if a slave owned by a dhimmi embraced Islam, his owner was legally obliged to free or sell him. Jews and Christians were of course not permitted to have Muslim concubines, and were indeed usually debarred by their own religious authorities -- not always effectively -- from sexual access to their slaves. Jewish slaves, acquired through privateering in the Mediterranean and slave raiding in Eastern Europe, were often redeemed and set free by their local co-religionists. The vastly more numerous Christian slaves -- apart from West Europeans, whose ransoms could be arranged from home -- were for the most part doomed to remain. Sometimes, Christian and Jewish slaveowners tried to convert their domestic slaves to their own religions. Jews were indeed required by rabbinic law to try to persuade their slaves to accept conversion with circumcision and ritual immersion. A form of semi-conversion, whereby the slave accepted some basic commandments and observances, but not the full rigor of the Mosaic law, was widely practiced. According to Jewish law, a converted or even semi-converted slave could not be sold to a Gentile. If the owner in fact so sold him or her, the slave was to be set free. Conversely, a slave who refused even semi-conversion was, after a stipulated interval of time, to be sold to a Gentile. Muslim authorities, both jurists and rulers, took different views of this. Conversion from Islam was of course a capital offense, and some jurists held that only conversion to Islam was lawful. Others, however, saw no objection to conversion between non-Muslim religions, provided that the converted slaves had reached the age of reason and changed their religion of their own free will.
Though a free Muslim could not be enslaved, conversion to Islam by a non-Muslim slave did not require his liberation. His slave status was not affected by his Islam, nor was that of a Muslim child born to slave parents.
There were occasional slave rebellions and, from the rules and regulations about runaway slaves, it would appear that such escapes were not infrequent. Slaves from neighboring countries might have some chance of returning to their homes, and examples are known of European slaves in the Ottoman lands escaping to Europe, where some indeed wrote memoirs or accounts of their captivity. The chances of a slave from the steppe-lands or from Africa finding his way back were remote.
As we have seen, the slave population was recruited in four main ways: by capture, tribute, offspring, and purchase.
Capture: In the early centuries of Islam, during the period of the conquest and expansion, this was the most important source. With the stabilization of the frontier, the numbers recruited in this way diminished, and eventually provided only a very small proportion of slave requirements. Frontier warfare and naval raiding yielded some captives, but these were relatively few and were usually exchanged. In later centuries, warfare in Africa or India supplied some slaves by capture. With the spread of Islam, and the acceptance of dhimml status by increasing numbers of non-Muslims, the possibilities for recruitment by capture were severely restricted.
Tribute: Slaves sometimes formed part of the tribute required from vassal states beyond the Islamic frontiers. The first such treaty ever made, that of the year 31 of the Hijra (= 652 A.D.), with the black king of Nubia, included an annual levy of slaves to be provided from Nubia. This may indeed have been the reason why Nuhia was for a long time not conquered. The stipulated delivery of some hundreds of male and female slaves, later supplemented by elephants, giraffes, and other wild beasts, continued at least until the twelfth century, when it was disrupted by a series of bitter wars between the Muslim rulers of Egypt and the Christian kings of Nubia. Similar agreements, providing for the delivery of a tribute of slaves, were imposed by the early Arab conquerors on neighboring princes in Iran and Central Asia, but were of briefer duration.
Offspring: The recruitment of the slave population by natural increase seems to have been small and, right through to modern times, insufficient to maintain numbers. This is in striking contrast with conditions in the New World, where the slave population increased very rapidly. Several factors contributed to this difference, perhaps the most important being that the slave population in the Islamic Middle East was constantly drained by the liberation of slaves -- sometimes as an act of piety, most commonly through the recognition and liberation, by a freeman, of his own offspring by a slave mother. There were also other reasons for the low natural increase of the slave population in the Islamic world. They include
1. Castration. A fair proportion of male slaves were imported as eunuchs and thus precluded from having offspring. Among these were many who otherwise, by the wealth and power which they acquired, might have founded families .
2. Another group of slaves who rose to positions of great power, the military slaves, were normally liberated at some stage in their career, and their offspring were therefore free and not slaves.
3. In general, only the lower orders of slaves -- menial, domestic, and manual workers -- remained in the condition of servitude and transmitted that condition to their descendants. There were not many such descendants -- casual mating was not permitted and marriage was not encouraged.
4. There was a high death toll among all classes of slaves, including great military commanders as well as humble menials. Slaves came mainly from remote places, and, lacking immunities, died in large numbers from endemic as well as epidemic diseases. As late as the nineteenth century, Wes ern travelers in North Africa and Egypt noted the high death rate among imported black slaves.
Purchase: This came to be by far the most important means for the legal acquisition of new slaves. Slaves were purchased on the frontiers of the Islamic world and then imported to the major centers, where there were slave markets from which they were widely distributed. In one of the sad paradoxes of human history, it was the humanitarian reforms brought by Islam that resulted in a vast development of the slave trade inside, and still more outside, the Islamic empire. In the Roman world, the slave population was occasionally recruited from outside, when a new territory was conquered or a barbarian invasion repelled, but mostly, slaves came from internal sources. This was not possible in the Islamic empire, where, although slavery was maintained, enslavement was banned. The result was an increasingly massive importation of slaves from the outside. Like enslavement, mutilation was forbidden by Islamic law. The great numbers of eunuchs needed to preserve the sanctity of palaces, homes, and some holy places had to be imported from outside or, as often happened, "manufactured" at the frontier. In medieval and Ottoman times the two main sources of eunuchs were Slavs and Ethiopians (Habash, a term which commonly included all the peoples of the Horn of Africa). Eunuchs were also recruited among Greeks (Rum), West Africans (Takrurl, pl. Takarina), Indians, and occasionally West Europeans.
The slave population of the Islamic world was recruited from many lands. In the earliest days, slaves came principally from the newly conquered countries -- from the Fertile Crescent and Egypt, from Iran and North Africa, from Central Asia, India, and Spain. Most of these slaves had a cultural level at least as high as that of their Arab masters, and by conversion and manumission they were rapidly absorbed into the general population. As the supply of slaves by conquest and capture diminished, the needs of the slave market were met, more and more, by importation from beyond the frontier. Small numbers of slaves were brought from India, China, Southeast Asia, and the Byzantine Empire, most of them specialists and technicians of one kind or another. The vast majority of unskilled slaves, however, came from the lands immediately north and south of the Islamic world -- whites from Europe and the Eurasian steppes, blacks from Africa south of the Sahara. Among white Europeans and black Africans alike, there was no lack of enterprising merchants and middlemen, eager to share in this profitable trade, who were willing to capture or kidnap their neighbors and deliver them, as slaves, to a ready and expanding market. In Europe there was also an important trade in slaves, Muslim, Jewish, pagan, and even Orthodox Christian, recruited by capture and bought for mainly domestic use.
Central and East European slaves, generally known as Saqaliba (i.e., Slavs), were imported by three main routes: overland via France and Spain, from Eastern Europe via the Crimea, and by sea across the Mediterranean. They were mostly but not exclusively Slavs. Some were captured by Muslim naval raids on European coasts, particularly the Dalmatian. Most were supplied by European, especially Venetian, slave merchants, who delivered cargoes of them to the Muslim markets in Spain and North Africa. The Saqaliba were prominent in Muslim Spain and to a lesser extent in North Africa but played a minor role in the East. With the consolidation of powerful states in Christian Europe, the supply of West European slaves dried up and was maintained only by privateering and coastal raiding from North Africa.
Black slaves were brought into the Islamic world by a number of routes -- from West Africa across the Sahara to Morocco and Tunisia, from Chad across the desert to Libya, from East Africa down the Nile to Egypt, and across the Red Sea and Indian Ocean to Arabia and the Persian Gulf. Turkish slaves from the steppe-lands were marketed in Samarkand and other Muslim Central Asian cities and from there exported to Iran, the Fertile Crescent, and beyond. Caucasians, of increasing importance in the later centuries, were brought from the land bridge between the Black Sea and the Caspian and were marketed mainly in Aleppo and Mosul.
By Ottoman times, the first for which we have extensive documentation, the pattern of importation had changed. At first, the expanding Ottoman Empire, like the expanding Arab Empire of earlier times, recruited its slaves by conquest and capture, and great numbers of Balkan Christians were forcibly brought into Ottoman service. The distinctively Ottoman institution of the devsirme, the levy of boys from the Christian village population, made it possible, contrary to previous Islamic law and practice, to recruit slaves from the subject peoples of the conquered provinces. The devsirme slaves were not servants or menials, however, but were groomed for the service of the state in military and civil capacities. For a long time, most of the grand viziers and military commanders of the Ottoman forces were recruited in this way. In the early seventeenth century, the devsirme was abandoned; by the end of the seventeenth century, the Ottoman advance into Europe had been decisively halted and reversed. Sea raiders operating out of North African ports continued to bring European captives, but these did not significantly add to the slave populations. Pretty girls disappeared into the harem; men often had the choice of being ransomed or joining their captors -- a choice of which many availed themselves. The less fortunate, like the Muslim captives who fell to the European maritime powers, served in the galleys.
The slave needs of the Ottoman Empire were now met from new sources. One of these was the Caucasians -- the Georgians, Circassians, and related peoples, famous for providing beautiful women and brave and handsome men. The former figured prominently in the harems, the latter in the armies and administrations of the Ottoman and also the Persian states. The supply of these was reduced but not terminated by the Russian conquest of the Caucasus in the early years of the nineteenth century. Another source of supply was the Tatar khanate of the Crimea, whose raiders every year rode far and wide in Central and Eastern Europe, carrying off great numbers of male and female slaves. These were brought to the Crimea and shipped thence to the slave markets in Istanbul and other Turkish cities. This trade came to an end with the Russian annexation of the Crimea in 1783 and the extinction of Tatar independence.
Deprived of most of their sources of white slaves, the Ottomans turned more and more to Africa, which in the course of the nineteenth century came to provide the overwhelming majority of slaves used in Muslim countries from Morocco to Asia. According to a German report published in 1860,
"the black slaves, at that time, were recruited mainly by raiding and kidnapping from Sennaar, Kordofan, Darfur, Nubia, and other places in inner Africa; the white mostly through voluntary sale on the part of their relatives in the independent lands of the Caucasus (Lesghi, Daghestani, and Georgian women, rarely men). Those offered for sale were already previously of servile status or were slave children by birth."
The need, from early medieval times onward, to import large and growing numbers of slaves led to a rapid increase, in all the lands beyond the frontiers of the Islamic world, of both slave raiding and slave trading -- the one to procure and maintain an adequate supply of the required commodity, the other to ensure its efficient distribution and delivery. In the ancient world, where most slaves other than war captives were of local provenance, slave trading was a simple and mostly local affair, often combined with other articles of commerce. In the Islamic world, where slaves were transported over great distances from their places of origin, the slave trade was more complex and more specialized with a network of trade routes and markets extending all over the Islamic world and far beyond its frontiers and involving commercial relations with suppliers in Christian Europe, in the Turkish steppe-lands, and in black Africa. In every important city there was a slave market, usually called Suq al-Raqiq. When new supplies were brought, government inspectors usually took the first choice, then officials, then private persons. It would seem that slaves were not normally sold in open markets but in decently covered places -- a practice which continued in some areas to the nineteenth, in others till the twentieth, century.
There is a fair amount of information on slave prices, most of it too heterogeneous in date and provenance to provide more than a general impression. The best-documented data come from medieval Egypt and show a remarkable consistency in price levels. Slave girls averaged twenty dinars (gold pieces), corresponding, at the rate of gold to silver current at that time, to 266 dirhams (silver pieces). Other medieval data show somewhat higher prices. Black slaves seem to have cost from two to three hundred dirhams; black eunuchs, at least two or three times as much. Female black slaves were sold at five hundred dirhams or so; trained singing girls or other performers, at ten or even twenty thousand. White slaves, mainly for military purposes, were more expensive. Prices of three hundred dirhams are quoted for Turks near the source in Central Asia, and much higher prices elsewhere. In Baghdad they fetched four to five hundred dirhams, while a white slave girl could be sold for a thousand dinars or more. The mid-nineteenth-century German report from Turkey quotes prices of four thousand to five thousand piasters, or two hundred to three hundred dollars, as the current price in Istanbul for a "trained, strong, black slave," while "for white slave girls of special beauty, fifty thousand piasters and more are paid." In general, eunuchs fetched higher prices than other males, younger slaves were worth more than older slaves, and slave women, whether for work or pleasure, were more expensive than males. Olufr Eigilsson, an Icelandic Lutheran pastor who was carried off to captivity with his family and many of his flock when his native village was raided by Barbary Corsairs in 1627 and who wrote an account of his adventures, notes that his young maidservant was sold for seven hundred dollars and later resold for a thousand.
Slaves were employed in a number of functions -- in the home and the shop, in agriculture and industry, in the military, as well as in specialized tasks. The Islamic world did not operate on a slave system of production, as is said of classical antiquity, but slavery was not entirely domestic either. Slave laborers of various kinds were of some importance in medieval times, especially where large-scale enterprises were involved, and they continued to be into the nineteenth century. The most important slaves, however, those of whom we have the fullest information, were domestic and commercial, and it is they who were the characteristic slaves of the Muslim world. They seem to have been mainly blacks, with some Indians, and some whites. ln later times, for which we have more detailed evidence, it would seem that while the slaves often suffered appalling privations from the moment of their capture until their arrival at their final destination, once they were placed with a family they were reasonably well treated and accepted in some degree as members of the household. In commerce, slaves were often apprenticed to their masters, sometimes as assistants, sometimes advancing to become agents or even business partners.
The slave and also the liberated ex-slave played an important part in domestic life. Eunuchs were required for the protection and maintenance of harems, as confidential servants, as palace staff, and also as custodians of mosques, tombs, and other sacred places. Slave women were required mainly as concubines and as menials. A Muslim slaveowner was entitled by law to the sexual enjoyment of his slave women. While free women might own male slaves, they had of course no equivalent right.
The economic exploitation of slaves, apart from some construction work, took place mainly in the countryside, away from the cities, and like almost everything else about rural life is sparsely documented. The medieval Islamic world was a civilization of cities. Both its law and its literature deal almost entirely with townspeople, their lives and problems, and remarkably little information has come down to us concerning life in the villages and the countryside. Sometimes a dramatic event like the revolt of the Zanj in southern Iraq or an occasional passing reference in travel literature sheds a sudden light on life in the countryside. Otherwise, we remain ignorant of what was happening outside the cities until the sixteenth century, when for the first time the surviving Ottoman archives make it possible to follow in some detail the life and activities of rural populations -- and the exploration of this material has still barely begun. The common view of Islamic slavery as primarily domestic and military may therefore reflect the bias of our documentation rather than the reality. There are occasional references, however, to large gangs of slaves, mostly black, employed in agriculture, in the mines, and in such special tasks as the drainage of marshes. Some, less fortunate, were hired out by their owners for piecework. These working slaves had a much harder life. The most unfortunate of all were those engaged in agricultural and other manual work and large-scale enterprises, such as for example the Zanj slaves used to drain the salt flats of southern Iraq, and the blacks employed in the salt mines of the Sahara and the gold mines of Nubia. These were herded in large settlements and worked in gangs. Large landowners, or crown lands, often employed thousands of such slaves. While domestic and commercial slaves were relatively well-off, these lived and died in wretchedness. Of the Saharan salt mines it is said that no slave lived there for more than five years. The cultivation of cotton and sugar, which the Arabs brought from the East across North Africa and into Spain, most probably entailed some kind of plantation system. Certainly, the earliest relevant Ottoman records show the extensive use of slave labor in the state-maintained rice plantations. Some such system, for cultivation of cotton and sugar, was taken across North Africa into Spain and perhaps beyond. While economic slave labor was mainly male, slave women were sometimes also exploited economically. The pre-lslamic practice of hiring out female slaves as prostitutes is expressly forbidden by Islamic law but appears to have survived nonetheless.
The military slaves were in a sense the aristocrats of the slave population. By far the most important among these were the Turks imported from the Eurasian steppe, from Central Asia, and from what is now Chinese Turkistan. A similar position was occupied by Slavs in medieval Muslim Spain and North Africa and, later, by slaves of Balkan and Caucasian origin in the Ottoman Empire. Black slaves were occasionally employed as soldiers, but this was not common and was usually of brief duration.
Certainly the most privileged of slaves were the performers. Both slave boys and slave girls who revealed some talent received musical, literary, and artistic education. In medieval times most singers, dancers, and musical performers were, at least in origin, slaves. Perhaps the most famous was Ziryab, a Persian slave at the court of Baghdad who later went to Spain, where he became an arbiter of taste and is credited with having introduced asparagus to Europe. Not a few slaves and freedmen have left their names in Arabic poetry and history.
In a society where positions of military command and political power were routinely held by men of slave origin or even status and where a significant proportion of the free population were born to slave mothcrs, prejudice against the slave as such, of the Roman or American type, could hardly develop. Where such prejudice and hostility appear -- and they are often expressed in literature and other evidence -- they must be attributed to racial more than to social distinction. The developing pattern of racial specialization in the use of slaves must surely have contributed greatly to the growth of such re judice .
Chpt. 9 Slaves in Arms
The military slave, who bears arms and fights for his owner, was a known but not common figure in antiquity. In the late fifth and early fourth centuries B.C., the city of Athens was policed by a corps of armed Scythian slaves, originally numbering some three hundred, who were the property of the city. Some Roman dignitaries had armed slave bodyguards; some owned gladiators, as men in other times might own gamecocks or racehorses, but in general the Greeks and Romans did not approve of the use of slaves in combatant duties. It was not until the medieval Islamic state that we find military slaves in significant numbers, forming a substantial and eventually predominant component in their armies.
The professional slave soldier, so characteristic of later Islamic empires, was not present in the earliest Islamic regimes. There were indeed slaves who fought in the army of the Prophet, but they were there as Muslims and as loyal followers, not as slaves or professionals. Most of them were freed for their services, and according to an early narrative, when the Prophet appeared before the walls of the Hijaz town of Ta'if, he sent a crier to announce that any slave who came out and joined him would be free. Abu Muslim, the first military leader of the Abbasid revolution which transformed the Islamic state and society in the mid-eighth century, appealed to slaves to come and join him and offered freedom to those who responded. So many, we are told, answered his call that he gave them a separate camp and formed them into a separate combat unit. During the great expansion of the Arab armies and the accompanying spread of the Islamic faith in the seventh and early eighth centuries, mally of the peoples of the conquered countries were captured, enslaved, convcrted, and liberated, and great numbers of these joined the armies of Islam. Iranians in the East, Berbers in the West, reinforced the Arab armies and contributed significantly to the further advance of Islam, eastward into Central Asia and beyond, westward across North Africa and into Spain. These were, however, not slaves but freedmen. Though their status was at first inferior to that of freeborn Arabs, it was certainly not servile, and in time the differences in rank, pay, and status between free and freed soldiers disappeared. As so often, the historiographic tradition foreshortens this development and attributes it to a decree of the Caliph 'Umar, who is said to have ordered his governors to make the privileges and duties of manumitted and converted recruits "among the red people" the same as those of the Arabs. "What is due to these, is due to those; what is due from these, is due from those." The limitation of this concession to the "red people," a term commonly applied by the Arabs to the Iranians and later extended to their Central Asian neighbors, is surely significant. The recruitment of aliens, that is, non-Arabs and often non-Muslims, was by no means restricted to liberated captives, and the distinction between freed subjects, free mercenaries, and bought barbarian slaves is often tenuous.
In recruiting barbarians from the "martial races" beyond the frontiers into their imperial armies, the Arabs were doing what the Romans and the Chinese had done centuries before them. In the scale of this recruitment, however, and the preponderant role acquired by these recruits in the imperial and eventually metropolitan forces, Muslim rulers went far beyond any precedent. As early as 766 a Christian clergyman writing in Syriac spoke of the "locust swarm" of unconverted barbarians -- Sindhis, Alans, Khazars, Turks, and others -- who served in the caliph's army. In the course of the ninth century, slave armies appeared all over the Islamic empire. Sometimes, as in North Africa and later Egypt, they were recruited by ambitious governors seeking to create autonomous and hereditary principalities and requiring troops who would be loyal to them against their immediate subjects and their imperial suzerains. Sometimes it was the caliphs themselves who recruited such armies. Such, for example, were the palace guards recruited by the Umayyad Caliph al-Hakam in Cordova and the Abbasid Caliph al-Mu'tasim in Iraq.
This was a new institution in Islam. The patriarchal caliphs, and their successors for more than a hundred years, had no slave praetorian guards, but were protected in their palace by a small force of free Arabs and, under the early Abbasids, freed soldiers and their descendants from Khurasan. Within a remarkably short time, the slave palace guard became the norm for Muslim rulers, and rapidly developed into a slave army, serving both to maintain the ruler in his palace and his capital and, for a sultan, to uphold his imperial authority in the provinces. In the East, slave soldiers were recruited mainly among the Turkish and to a lesser extent among the Iranian peoples of the Eurasian steppe and of Central and inner Asia; in the West, from the Berbers of North Africa and from the Slavs of Europe. Some soldiers, particularly in Egypt and North Africa, were brought from among the black peoples farther south. As the frontiers of Islam steadily expanded through conversion and annexation, the periphery was pushed farther and farther away, and the enslaved barbarians came from ever-remoter regions in Asia, Africa, and, to a very limited extent, Europe.
Some of these soldiers were captured in wars, raids, and forays. The more usual practice, however, was for them to be purchased, for money, on the Islamic frontiers. It was in this way that Muslims bought and imported the Central Asian Turks who came to constitute the vast majority of eastern Muslim armies. Captured and sold to the Muslims at a very tender age, they were given a careful and elaborate education and training, not only in the military arts but also in the norms of Islamic civilization. From their ranks were drawn the soldiers, then the officers, and finally the commanders of the armies of Islam. From this it was only a step to the ultimate paradox, the slave kings who ruled in Cairo, in Delhi, and in other capitals. Even the Ottomans, though themselves a freeborn imperial dynasty, relied for their infantry on the celebrated slave corps of Janissaries, and most of the sultans were themselves sons of slave mothers.
Various explanations have been offered for the reliance of Muslim sovereigns on slave armies. An obvious merit of the military slave, for the kings or generals who owned him, was his habit of prompt and unquestioning obedience to orders -- a quality less likely to be found among freeborn volunteers or even among conscripts, in the relatively few times and places when conscription was known or feasible before the nineteenth century. Perhaps the most convincing explanation of the growth of the slave armies is the eternal need of autocratic rulers for an armed force which would support and maintain their rule yet neither limit it with intermediate powers nor threaten it with the challenge of opposing loyalties. An army constantly renewed by slaves imported from abroad would form no hereditary nobility; an army manned and commanded by aliens could neither claim nor create any loyalties or bases of support among the local population.
Such soldiers, it was assumed, would have no loyalty but to their masters, that is, to the monarchs who bought and employed them. But their loyalty, all too often, was to the regiment and to its commanders, many of whom ultimately themselves became kings. The mamluk sultans and emirs who ruled Egypt, Syria, and western Arabia for two-and-a-half centuries, until the Ottoman conquest in 1517, rigorously excluded their own freeborn and locally born offspring from the apparatus of political and military power, including even the sultanate itself. They nevertheless succeeded in maintaining their system for centuries. In part, the common bond of mamluk regiments was ethnic. Many regiments, and the quarters which they inhabited, were based on ethnic and even tribal groups. But in the main, the bond was social rather than racial. At a certain stage in his career, the mamluk was emancipated, and, on becoming a freeman, himself bought and owned mamluks who, rather than his physical sons, were his true successors. The most powerful bond and loyalty, within the mamluk system, was that owed by the slave to his master, and, after manumission, by the freedman to his patron.
In the military sense, the slave armies were remarkably effective. In the later Middle Ages, it was the mamluks of Egypt who finally defeated and expelled the Crusaders and halted the Mongol advance across the Middle East, the Ottoman Janissary infantry who conquered Southeastern Europe. It was in accordance with the logic of the system that the mamluk armies of Egypt consisted mainly of slaves imported from the Turkish and Circassian peoples of the Black Sea area, while the Ottoman Janissaries were recruited mainly from the Slavic and Albanian populations of the Balkans.
Ibn Khaldun, surely the greatest of all Arab historians, writing in the fourteenth century, saw in the coming of the Turks and in the institution of slavery by which they came, the manifestation of God's providential concern for the safety and survival of the Muslim state and people:
"When the [Abbasid] state was drowned in decadence and luxury. . . and overthrown by the heathen Tatars . . . because the people of the faith had become deficient in energy and reluctant to rally in defense . . . then it was God's benevolence that He rescued the faith by reviving its dying breath and restoring the unity of the Muslims in the Egyptian realms.... He did this by sending to the Muslims, from among this Turkish nation and its great and numerous tribes, rulers to defend them and utterly loyal helpers, who were brought . . . to the House of Islam under the rule of slavery, which hides in itself a divine blessing. By means of slavery they learn glory and blessing and are exposed to divine providence; cured by slavery, they enter the Muslim religion with the firm resolve of true believers and yet with nomadic virtues unsullied by debased nature, unadulterated by the filth of pleasure, undefiled by ways of civilied living, and with their ardor unbroken by the profusion of luxury.... Thus one intake comes after another and generation follows generation, and Islam rejoices in the benefit which it gains through them, and the branches of the kingdom flourish with the freshness of youth."
Most of the military slaves of Islam were white -- Turks and Caucasians in the East, Slavs and other Europeans in the West. Black military slaves were, however, not unknown and indeed at certain periods were of importance. Individual black fighting men, both slaves and free, are mentioned as having participated in raiding and warfare in pre-Islamic and early Islamic times. According to the biographies and histories of the Prophet, there were several blacks, both in his army and in the armies of his pagan enemies. One of them, called Wahshi, an Ethiopian slave, distinguished himself in the battles against the Prophet at Uhud and at the Ditch; and later, after the Muslim capture of Mecca, he fought for the Muslims in the wars that followed the death of the Prophet. Black soldiers appear occasionally in early Abbasid times, and after the slave rebellion in southern Iraq, in which blacks displayed terrifying military prowess, they were recruited into the infantry corps of the caliphs in Baghdad. Ahmad b. Tulun (d. 884), the first independent ruler of Muslim Egypt, relied very heavily on black slaves, probably Nubians, for his armed forces; at his death he is said to have left, among other possessions, twenty-four thousand white mamluks and forty-five thousand blacks. These were organized in separate corps, and accommodated in separate quarters at the military cantonments. When Khumarawayh, the son and successor of Ahmad ibn Tulun. rode in procession, he was followed, according to a chronicler,
"by a thousand black guards wearing black cloaks and black turbans, so that a watcher could fancy them to be a black sea spreading over the face of the earth, because of the blackness of their color and of their garments. With the glitter of their shields, of the chasing on their swords, and of the helmets under their turbans, they made a really splendid sight. "
The black troops were the most faithful supporters of the dynasty, and shared its fate. When the Tulunids were overthrown at the beginning of 905, the restoration of caliphal authority was followed by a massacre of the black infantry and the burning of their quarters:
"Then the cavalry turned against the cantonments of the Tulunid blacks, seized as many of them as they could, and took them to Muhammad ibn Sulayman [the new governor sent by the caliph]. He was on horseback, amid his escort. He gave orders to slaughter them, and they were slaughtered in his presence like sheep."
A similar fate befell the black infantry in Baghdad in 930, when they were attacked and massacred by the white cavalry, with the help of other troops and of the populace, and their quarters burned. Thereafter, black soldiers virtually disappear from the armies of the eastern caliphate.
In Egypt, the manpower resources of Nubia were too good to neglect, and the traffic down the Nile continued to provide slaves for military as well as other purposes. Black soldiers served the various rulers of medieval Egypt, and under the Fatimid caliphs of Cairo black regiments, known as 'Abid al-Shira', "the slaves by purchase," formed an important part of the military establishment. They were particularly prominent in the mid-eleventh century, during the reign of al-Mustansir, when for a while the real ruler of Egypt was the caliph's mother, a Sudanese slave woman of remarkable strength of character. There were frequent clashes between black regiments and those of other races and occasional friction with the civil population. One such inci- dent occurred in 1021, when the Caliph al-Hakim sent his black troops against the people of Fustat (old Cairo), and the white troops joined forces to defend them. A contemporary chronicler of these events describes an orgy of burning, plunder, and rape. In 1062 and again in 1067 the black troops were defeated by their white colleagues in pitched battles and driven out of Cairo to Upper Egypt. Later they returned, and played a role of some importance under the last Fatimid caliphs.
With the fall of the Fatimids, the black troops again paid the price of their loyalty. Among the most faithful supporters of the Fatimid Caliphate, they were also among the last to resist its overthrow by Saladin, ostensibly the caliph's vizier but in fact the new master of Egypt. By the time of the last Fatimid caliph, al-'Adid, the blacks had achieved a position of power. The black eunuchs wielded great influence in the palace; the black troops formed a major element in the Fatimid army. It was natural that they should resist the vizier's encroachments. In 1169 Saladin learned of a plot by the caliph's chief black eunuch to remove him, allegedly in collusion with the Crusaders in Palestine. Saladin acted swiftly; the offender was seized and decapitated and replaced in his office by a white eunuch. The other black eunuchs of the caliph's palace were also dismissed. The black troops in Cairo were infuriated by this summary execution of one whom they regarded as their spokesman and defender. Moved, according to a chronicler, by "racial solidarity" (jinsiyya), they prepared for battle. In two hot August days, an estimated fifty thousand blacks fought against Saladin's army in the area between the two palaces, of the caliph and the vizier.
Two reasons are given for their defeat. One was their betrayal by the Fatimid Caliph al-'Adid, whose cause they believed they were defendrng against the usurping vizier:
"Al-'Adid had gone up to his belvedere tower, to watch the battle between the palaces. It is said that he ordered the men in the palace to shoot arrows and throw stones at [Saladin's] troops, and they did so. Others say that this was not done by his choice. Shams al-Dawla [Saladin's brother] sent naphtha-throwers to burn down al-'Adid's belvedere. One of them was about to do this when the door of the belvedere tower opened and out came a caliphal aide, who said: "The Commander of the Faithful greets Shams al-Dawla, and says: 'Beware of the [black] slave dogs! Drive them out of the country!'" The blacks were sustained by the belief that al-'Adid was pleased with what they did. When they heard this, their strength was sapped, their courage waned, and they fled."
The other reason, it is said, was an attack on their homes. During the battle between the palaces, Saladin sent a detachment to the black quarters, with instructions "to burn them down on their possessions and their children." Learning of this, the blacks tried to break off the battle and return to their families but were caught in the streets and destroyed. This encounter is variously known in Arabic annals as "the Battle of the Blacks" and "the Battle of the Slaves.'' Though the conflict was not primarily racial, it acquired a racial aspect, which is reflected in some of the verses composed in honor of Saladin's victory. Maqrizi, in a comment on this episode, complains of the power and arrogance of the blacks:
"If they had a grievance against a vizier, they killed him; and they caused much damage by stretching out their hands against the property and families of the people. When their outrages were many and their misdeeds increased, God destroyed them for their sins."
Sporadic resistance by groups of black soldiers continued, but was finally crushed after a few years. While the white units of the Fatimid army were incorporated by Saladin in his own forces, the blacks were not. The black regiments were disbanded, and black fighting men did not reappear in the armies of Egypt for centuries. Under the mamluk sultans, blacks were em- ployed in the army in a menial role, as servants of the knights. There was a clear distinction between these servants, who were black and slaves, and the knights' orderlies and grooms, who were white and free.
Though black slaves no longer served as soldiers in Egypt, they still fought occasionally -- as rebels or rioters. In 1260, during the transition from the Ayyubid to the mamluk sultanate, black stableboys and some others seized horses and weapons, and staged a minor insurrection in Cairo. They proclaimed their allegiance to the Fatimids and followed a religious leader who "incited them to rise against the people of the state; he granted them fiefs and wrote them deeds of assignment."
The end was swift: "When they rebelled during the night, the troops rode in, surrounded them, and shackled them; by morning they were crucified outside the Zuwayla gate."
The same desire among the slaves to emulate the forms and trappings of the mamluk state is expressed in a more striking form in an incident in 1446, when some five hundred slaves, tending their masters' horses in the pasturages outside Cairo, took arms and set up a miniature state and court of their own. One of them was called sultan and was installed on a throne in a carpeted pavilion; others were dignified with the titles of the chief of ficers of the mamluk court, including the vizier, the commander in chief, and even the governors of Damascus and Aleppo. They raided grain caravans and other traffic and were even willing to buy the freedom of a colleague. They succumbed to internal dissensions. Their "sultan" was challenged by another claimant, and in the ensuing struggles the revolt was suppressed. Many of the slaves were recaptured and the rest fled.
Toward the end of the fifteenth century, black slaves were admitted to units using firearms -- a socially despised weapon in the mamluk knightly society. When a sultan tried to show some favor to his black arquebusiers, he provoked violent antagonism from the mamluk knights, which he was not able to resist. In 1498 "a great disturbance occurred in Cairo." The sultan (according to the chronicler) had outraged the mamluks by conferring two boons on a black slave called Farajallah, chief of the firearms personnel in the citadel -- first, giving him a white Circassian slave girl from the palace as wife, and second, granting him a short-sleeved tunic, a characteristic garment of the mamluks:
"On beholding this spectacle [says the chronicler] the Royal mamluks expressed their disapproval to the sultan, and they put on their. . . armour. . . and armed themselves with their full equipment. A battle broke out between them and the black slaves, who numbered about five hundred. The black slaves ran away and gathered again in the towers of the citadel and fired at the Royal mamluks. The Royal mamluks marched on them, killing Farajallah and about fifty of the black slaves; the rest fled; two Royal mamluks were killed. Then the emirs and the sultan's maternal uncle, the Great Dawadar, met the sultan and told him: "We disapprove of these acts of yours [and if you persist in them, it would be better for you to ride by night in the narrow by-streets and go away together with those black slaves to far-off places!" The sultan answered: "I shall desist from this, and these black slaves will be sold to the Turkmans."
In the Islamic West black slave troops were more frequent, and sometimes even included cavalry -- something virtually unknown in the East. The first emir of Cordova, 'Abd al-Rahman I, is said to have kept a large personal guard of black troops; and black military slaves were used, especially to maintain order, by his successors. Black units, probably recruited by purchase via Zawila in Fezzan (now southern Libya), figure in the armies of the rulers of Tunisia between the ninth and eleventh centuries. Black troops became important from the seventeenth century, after the Moroccan military expansion into the Western Sudan. The Moroccan Sultan Mawlay Ismaili (1672-1727) had an army of black slaves, said to number 250,000. The nucleus of this army was provided by the conscription or compulsory purchase of all male blacks in Morocco; it was supplemented by levies on the slaves and serfs of the Saharan tribes and slave raids into southern Mauritania. These soldiers were mated with black slave girls, to produce the next generation of male soldiers and female servants. The youngsters began training at ten and were mated at fifteen. After the sultan's death in 1727, a period of anarchic internal struggles followed, which some contemporaries describe as a conflict between blacks and whites. The philosopher David Hume, writing at about the same time, saw such a conflict as absurd and comic, and used it to throw ridicule on all sectarian and factional strife:
"The civil wars which arose some few years ago in Morocco between the Blacks and Whites, merely on account of their complexion, are founded on a pleasant difference. We laugh at them; but, I believe, were things rightly examined, we afford much more occasion of ridicule to the Moors. For, what are all the wars of religion, which have prevailed in this polite and knowing part of the world? They are certainly more absurd than the Moorish civil wars. The difference of complexion is a sensible and a real difference; but the controversy about an article of faith, which is utterly absurd and unintelligible, is not a difference in sentiment, but in a few phrases and expressions, which one party accepts of without understanding them, and the other refuses in the same manner.... Besides, I do not find that the Whites in Morocco ever imposed on the Blacks any necessity of altering their complexion . . . nor have the Blacks been more unreasonable in this particular."
In 1757 a new sultan, Sidi Muhammad Ill, came to the throne. He decided to disband the black troops and rely instead on Arabs. With a promise of royal favor, he induced the blacks to come to Larache with their families and worldly possessions. There he had them surrounded by Arab tribesmen, to whom he gave their possessions as booty and the black soldiers, their wives, and their children as slaves. "I make you a gift," he said, "of these 'abid, of their children, their horses, their weapons, and all they possess. Share them among you.''
Blacks were occasionally recruited into the mamluk forces in Egypt at the end of the eighteenth century. "When the supply [of white slaves] proves insufficient," says a contemporary observer, W. G. Browne, "or many have been expended, black slaves from the interior of Africa are substituted, and if found docile, are armed and accoutred like the rest." This is confirmed by Louis Frank, a medical officer with Bonaparte's expedition to Egypt, who wrote an important memoir on the Negro slave trade in Cairo.
In the nineteenth century, black military slaves reappeared in Egypt in considerable numbers; their recruitment was indeed one of the main purposes of the Egyptian advance up the Nile under Muhammad 'Ali Pasha (reigned 1805-49) and his successors. Collected by annual razzias (raids) from Darfur and Kordofan, they constituted an important part of the Khedivial armies and incidentally furnished the bulk of the Egyptian expeditionary force which Sa'id Pasha sent to Mexico in 1863, in support of the French. An English traveler writing in 1825 had this to say about black soldiers in the Egyptian army:
"When the negro troops were first brought down to Alexandria, nothing could exceed their insubordination and wild demeanour; but they learned the military evolutions in half the time of the Arabs; and I always observed they went through the manoeuvres with ten times the adroitness of the others. It is the fashion here, as well as in our colonies, to consider the negroes as the last link in the chain of humanity, between the monkey tribe and man in intellect; and I do not suffer the eloquence of the slave driver to convince me that the negro is so stultified as to be unfit for freedom.
Even in Turkey, liberated black slaves were sometimes recruited into the armed forces, often as a means to prevent their reenslavement. Some of these reached of ficer rank. A British naval report, dated January 25,1858, speaks of black marines serving with the Turkish navy:
"They are from the class of freed slaves or slaves abandoned by merchants unable to sell them. There are always many such at Tripoli. I believe the government acquainted the Porte with the embarrassment caused by their numbers and irregularities, and this mode of relief was adopted. Those brought by the Faizi Bari, about 70 in number, were on their arrival enrolled as a Black company in the marine corps. They are in exactly the same position with respect to pay, quarters, rations, and clothing as the Turkish marines, and will equally receive their discharge at the expiration of the allotted term of service. They are in short on the books of the navy. They have received very kind treatment here, lodged in warm rooms with charcoal burning in them day and night. A negro Mulazim [lieutenant] and some negro tchiaoushes [sergeants], already in the service have been appointed to look after and instruct them. They have drilled in the manual exercise in their warm quarters, and have not been set to do any duty on account of the weather. They should not have been sent here in winter. Those among them unwell on their arrival were sent at once to the naval hospital. Two only have died of the whole number. The men in the barracks are healthy and appear contented. No amount of ingenuity can conjure up any conncxion between their condition and the condition of slavery."
While the slave in arms was, with few exceptions, an Islamic innovation, the slave in authority dates back to remote antiquity. Already in Sumerian times, kings appointed slaves to positions of prestige and even power -- or, perhaps more accurately, treated certain of their court functionaries as royal slaves. Different words were used to denote such privileged slaves, distinct from those applied to the menial and laboring generality. Under the Abbasid caliphs and under later Muslim dynasties, men of slave origin, usually but not always manumitted, figured prominently in the royal entourage. The system of court slavery reached its final and fullest development in the Ottoman Empire, where virtually all the servants of the state, both civil and military, had the status of kul, "slave," of the Gate, that is, of the sultan. The only exceptions were the members of the religious establishment. The Ottoman kul was not a slave in terms of Islamic law, and was free from most of the restraints imposed on slaves in such matters as marriage, property, and legal responsibility. He was, however, subject to the arbitrary power of the sultan, who was free to dispose of his assets, his person, and his life in ways not permitted by the law in relation to free- or freedmen. This perception of the status of political officeholders and their relationship to the supreme sovereign power was of course by no means limited to the Ottoman Empire, or indeed to the Islamic world.
SEC Internally Debates
'Trade Through' Rule
By DEBORAH SOLOMON
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- As the Securities and Exchange Commission prepares to consider changes to rules underlying the nation's stock markets, there is internal debate within the agency about how radically to overhaul a regulation that some say advantages the New York Stock Exchange.
The SEC Tuesday plans to consider proposals that could alter how stocks are quoted, what fees markets can charge for access to quotes and how investors trade securities. The agency is trying mitigate disparities in the way it regulates different markets. Pressure for changes is growing and some lawmakers say Congress could legislate if the SEC's changes don't go far enough.
At a special House Financial Service Committee hearing held in New York Friday, the heads of several electronic marketplaces criticized current SEC rules as anticompetitive, saying they favor the NYSE and its use of human traders known as "specialists."
In particular, they want the SEC to eliminate the "trade through" rule, which requires that markets always get investors the best price, even if it means going to a competing market to fill the order. The NYSE's competitors said it unfairly gives an advantage to the Big Board, which often posts superior stock prices but tends to fill orders more slowly as it allows human brokers to compete to find the best price for customers.
The SEC is expected to consider changes to the rule Tuesday, including a proposal that could let investors opt out of complying with the rule.
John Thain, the NYSE's new chief executive, has tried to fend off potential SEC changes by agreeing to automatically match some investors' stock orders electronically. The Big Board has come under fire because of alleged abusive trading practices by specialists and an outsize retirement package awarded to Dick Grasso, the former NYSE chairman and CEO. Five specialist firms recently agreed to pay $240 million to settle SEC charges that they disadvantaged investors.
Mr. Thain told the House panel Friday that the Big Board is working to prevent potential future abuses and is implementing technology to "respond to the requests we have received from some customers for faster speed of execution even if it means foregoing price improvement that often occurs."
But market representatives responded that the settlement proves the NYSE's specialist system is flawed and that the NYSE's electronic plans don't go far enough to foster true competition among markets.
Ed Nicoll, chief executive of Instinet GroupInc., an electronic marketplace, questioned the NYSE's plan to electronically automate trades, saying the existing program has a loophole that could render moot the best-price automated matching efforts. He also said the NYSE needs to make its specialists' trading behavior more transparent to the public.
Some lawmakers, including committee chairman Rep. Richard Baker (R., La.), are siding with the NYSE's competitors, calling on the SEC to eliminate the trade-through rule.
Some SEC commissioners, including Republican Paul Atkins, want the agency to eliminate the rule or, at the very least, offer an "opt out" provision to investors who want their orders executed on the fastest market, regardless of price. But SEC Chairman William Donaldson has expressed some reservations about an opt-out provision and wants feedback from the public about what effect it would have on investors and the overall market, according to people familiar with the matter.
SEC staff plan to recommend that the SEC consider both a modification and the opt-out clause. The modification would allow markets, in some cases, to ignore a superior price if getting that price would slow down execution. Under the staff recommendation, markets could trade through the better price as long as the price it gets is within two or three cents.
The SEC will also consider banning the quoting of stocks in increments beyond one penny, capping the fees that some electronic markets charge for access to stock quotes and adjusting the formula used for distributing market-data revenue -- money that markets collect based on how many trades they report.
Multiply his actions by 1 million through the actions of market makers and stock brokers and you begin to get a grip around the magnitude of the issue. It is highly likely that some firms might go bankrupt if they had to cover all their naked short positions.
Interesting list of cases just in Nevada:
Securities Fraud
(Nevada)
Alliance Capital Mutual Funds
Bank of America Mutual Funds
Bank One Mutual Funds
Columbia Mutual Funds
CSFB Stock Fraud
Enron Stock Fraud
Federated Mutual Funds
FranklinTempleton Mutual Funds
Fred Alger Mutual Funds
Goldman Sachs Mutual Funds
HealthSouth Fraud
Invesco Mutual Funds
Janus Mutual Funds
Merrill Lynch Stock Fraud
MFS Mutual Funds
Morgan Stanley Mutual Funds
Morgan Stanley Stock Fraud
Mutual Funds Fraud
Pilgrim Baxter Mutual Funds
Prudential Mutual Funds
Putnam Mutual Funds
Smith Barney Stock Fraud
Strong Funds Mutual Funds
Tyco Stock Fraud
Worldcom Stock Fraud
http://www.usalawyernetwork.com/Nevada/index.html?parea_id=11
I'm praying for some very big miracles too! Thanks for running this board.
French Bank Fined $13 million
http://www.investorshub.com/boards/read_msg.asp?message_id=2625973
Relative to their assets, they paid a penny for their prime crime:
http://www.credit-agricole-sa.fr/images/documents2/2_f289751078925686.pdf
http://www.credit-agricole-sa.fr/documentation/sommairedoc.php?langue_site=2
Crédit Agricole's combined public offer in cash and shares for Crédit Lyonnais opened on 28 March and closed on 25 May 2003. The final results confirmed its success. In July 2003 a plan was filed for a public buy-out offer followed by a squeeze-out aimed at purchasing the Crédit Lyonnais shares not tendered to the combined offer.
The compulsory buy-out procedure was completed on 4 August 2003, and Crédit Agricole now owns 100% of the capital of Crédit Lyonnais.
It is one point of view expressed 6 months before 911. You more or less hit the nail on the head by defining the "trap" of global capitalism. Are we all trapped or is there any way out of the mess? After all, we all live on the same ship called "Earth".
French Bank Fined $13 Million by Fed and NY State
The Federal Reserve Board and New York State Banking Department today announced the issuance of a joint Order to Cease and Desist and Order of Assessment of a Civil Money Penalty and Monetary Payment against Credit Agricole, S.A., Paris, France, and its affiliates in Paris, Credit Agricole Indosuez and Credit Lyonnais, S.A., and its offices and affiliates in New York, the New York branches of Credit Agricole Indosuez and Credit Lyonnais, S.A. The Order assesses fines totaling $13 million.
The Order addresses deficiencies in the operational controls, risk management, and compliance with laws and regulations by the New York branch of Credit Agricole Indosuez. The Order resolves allegations that Credit Agricole, S.A., Credit Agricole Indosuez, and the New York branch of Credit Agricole Indosuez failed to fully comply with a Written Agreement entered into with the Federal Reserve and the New York State Banking Department in November 2000; failed to maintain accurate and complete books and records for the operations of the New York branch of Credit Agricole Indosuez; and violated New York State law relating to the banks' obligation to maintain accurate books and records and to submit reports to the New York State Banking Department.
The joint Order includes Credit Lyonnais, S.A., and the New York branch of Credit Lyonnais, S.A., because Credit Agricole, S.A., plans to reorganize its U.S. operations and consolidate certain business operations of its affiliates' New York branches through the New York branch of Credit Lyonnais, S.A.
Credit Agricole, S.A., and its affiliates, without admitting to any allegations, consented to the issuance of the Order.
Credit Agricole, S.A., Credit Agricole Indosuez, and the New York branch of Credit Agricole Indosuez were assessed $10 million in fines under the joint Order. They will pay $5 million to the U.S. Department of the Treasury (through the Board of Governors) and $5 million to the state of New York under applicable federal and state laws.
Credit Agricole, S.A., also agreed to pay a $3 million fine to the Board of Governors to resolve allegations that Credit Agricole, S.A., acquired certain shares of Credit Lyonnais, S.A., and Credit Lyonnais Securities (USA), Inc., in 2002, without prior Federal Reserve approval as required by the Bank Holding Company Act. The Board will remit this fine to the U.S. Department of the Treasury.
http://www.federalreserve.gov/boarddocs/press/enforcement/2004/20040310/
For a schedule of upcoming postings to the Board's web site,
go to http://www.federalreserve.gov/calendar.htm
For a list of items posted to the Board's web site over the past two weeks, go to http://www.federalreserve.gov/whatsnew.htm