A. Description of K-Business

K-Business is a school-related program in which students start, run, and liquidate their own businesses. All businesses run with the intention of making a profit as well as educating students about how to run a business. Students serve as company officers, workers, and salesmen, with adult guidance and supervision.

B. Description of Share Issues, the Initial Public Offering

All K-Business companies start with a single issue of 100 shares each sold at an initial "par value" of KD5. All IPOs (first sales) will sell at this price. While a company may issue fewer than 100 shares, no company may issue more than 100 shares making the maximum total capitalization per company 500KD.

C. Proxy Voting Rights

In a typical business, all shareholders theoretically can vote on company decision-making. In fact, the Company Board generally makes most decisions in the absence of much shareholder input. Large mutual funds representing many shares may attend company board meetings as may the largest stockholders, but few small shareholders usually attend such meetings.

In order to simulate this effect, the initial salesman within the Company will retain your proxy voting rights for each share he sells. Thus, if you purchase your share from the Company's Vice-President of Sales, you effectively give him the right to "vote your share." No matter who owns the share subsequently, the original salesman will retain these proxy rights. You may, if you wish, email or forward your instructions to this initial salesman, but he still can vote according to his own thoughts.

There are two exceptions to this principle. One, any stock owned by company advisors or the program director is always considered voting stock. Also, the company must hold two public board meetings. ANY stockholder may vote at those meetings.

A stockholder may accumulate as many shares as he or she desires. However (1) all members of the Company Board (each student) must keep one share of stock and (2) ownership of shares does not alter proxy voting rights. So though you can own up to 80 shares of stock, this does not effectively add to your power with the Company with the exceptions listed above.

After the IPO, the Company needs to keep track of the ownership of shares for liquidation purposes. Therefore, a secondary market purchaser (repurchaser) of the shares MUST notify the company's corporate secretary telling (1) which share he purchased (the #), (2) the date and price of the sale, and (3) the purchaser's contact number and email. In an emergency, the Corporate Secretary may require the owner to display the actual stock certificate, so please keep this in a safe place. In the event that the corporate secretary lacks accurate records, the proceeds of liquidation will go to the LAST registered owner. If your email to the Corporate Secretary fails, please email Dr. Daniel R. Fruit [<dfruit@hotmail.com>]. You should receive and keep an email giving acknowledgment of the transfer of the share to your name.

The Company President will issue periodic updates of information to shareholders as to the status of the Company via email. The Corporate Secretary may also email Board Meeting minutes to Shareholders. As a minimum, the President must email a one-page "mid-point" analysis in March, halfway through the five-month life of the company detailing the Company's progress and a final report.

You can sell your share at any time you wish. However, please tell the NEW owner to email the Corporate Secretary as to his purchase and give him the actual share certificate. Any company member can give the new buyer another Prospectus, but there are only 100 actual certificates. If you have lost that actual certificate, please consider NOT selling.

This year, there will be a special "market" for buying and selling shares. This will be the only place in which owners can sell shares or buy additional shares after the IPO. The Manaq Al Bayan will operate only the following days and in Dr. Dan's classroom for 1500-1700.

If you cannot come and wish another to act as your agent, he/she must have the information above and written orders with your signature and the certificate (if selling).

In May, all K-Business companies will liquidate, go out of business. After recording all sales, selling any assets, and paying all debts, stockholders will receive their share of the Company returns. Obviously, those with more shares will receive a greater return. A company recording a profit will return the initial par value of the shares (KD10) plus some additional funds as a dividend. The amount returned may or may not correspond to the market value, i.e., the current selling price of share.

Buying a share of this company does NOT guarantee a profit or even a return of the initial investment. However, in the event of the Company not having enough money to pay its debts, the Stockholder has absolutely NO obligation to contribute anything to the termination (paying) of the Company's debts.

At liquidation, the Corporate Secretary will email all CURRENT (last registered) shareholders as to the Company's results and profitability. He will then determine the best method of redeeming your shares and giving you their cash value. In the case of unclear ownership, the Corporate Secretary may ask to see a stock certificate. If a given stockholder CANNOT be contacted, his share of the company's liquidation will be evenly divided between the other shareholders. Should you choose to KEEP your shares, be aware that they will have no value since the Company no longer exists.

If you have any further questions, email your corporate secretary, or company president whose names, signatures, and emails will appear on the actual certificate. You can also go to the main K-Business Page and then follow the links to this year's companies. If you have further questions, email Dr. Daniel R. Fruit , program director of this activity.