As filed with the Securities and Exchange Commission on November 4, 1997
File No. 34-
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
REGISTRATION STATEMENT UNDER THE SECURITIES EXCHANGE ACT OF 1934
PACIFIC GREAT CHINA CO., LTD.
(Name of Small Business Issuer in its charter)
Delaware 75-2300997
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16910 Dallas Parkway, Suite 100, Dallas, Texas
75248, (972) 248-1922 (Address and
telephone of principal executive
offices)
Kevin B. Halter, Jr., 16910 Dallas Parkway,
Suite 100, Dallas, Texas 75248, (972)
248-1922 (Name, address and telephone
number of agent for service)
Copies to:
Jaqluin Lloyd, Esq.
16910 Dallas Parkway, Suite 100
Dallas, Texas 75248
(972) 248-1922
Securities to be registered pursuant to
Section 12(b) of the Act:
None
Securities to be registered pursuant to
Section 12(g) of the Act:
10,000,000 shares of Common Stock, $.00001 par value per share
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C>
Title of each Amount to be Proposed maximum Proposed maximum Registration
class of securities registered offering price aggregate offering price(1) Fee
to be registered per share (1)
COMMON
STOCK 10,000,000 $ .0001 $1,000.00 $333.00
Shares
</TABLE>
Note: (1) Estimated solely for the purpose of calculating the registration fee.
<PAGE>
PART I
PART I
Item 1. DESCRIPTION OF BUSINESS.
General
Pacific Great China Co., Ltd. (the "Company") was incorporated under the
laws of the state of Delaware on May 31, 1989, under the name
Professionalistics, Inc. It is in the early developmental and promotional
stages. To date the Company's only activities have been organizational ones,
directed at developing its business plan and raising its initial capital. The
Company has not commenced any commercial operations. The Company has no
full-time employees and owns no real estate.
The Company can be defined as a "shell" company whose sole purpose at this time
is to locate and consummate a merger or acquisition with a private entity. As
part of its business plan, this Company is filing this registration statement on
Form 10-SB on a voluntary basis in order to become a "public" company by virtue
of being subject to the reporting requirements of the Securities Exchange Act of
the Securities and Exchange Act of 1934 (the "Exchange Act"). Another aspect of
its business plan which the Company intends to implement after this registration
statement becomes effective is to seek to facilitate the eventual creation of a
public trading market in its outstanding securities.
The Company's business plan is to seek, investigate, and, if warranted, acquire
one or more properties or businesses, and to pursue other related activities
intended to enhance shareholder value. The acquisition of a business opportunity
may be made by purchase, merger, exchange of stock, or otherwise, and may
encompass assets or a business entity, such as a corporation, joint venture, or
partnership. The Company has very limited capital, and it is unlikely that the
Company will be able to take advantage of more than one such business
opportunity. The Company intends to seek opportunities demonstrating the
potential of long-term growth as opposed to short-term earnings.
At the present time the Company has not identified any business opportunity that
it plans to pursue, nor has the Company reached any agreement or definitive
understanding with any person concerning an acquisition. The Company's officer
and director has previously been involved in transactions involving a merger
between an established company and a shell entity, and has a number of contacts
within the field of corporate finance. As a result, he has had preliminary
contacts with representatives of numerous companies concerning the general
possibility of a merger or acquisition by a shell company. However, none of
these preliminary contacts or discussions involved the possibility of a merger
or acquisition transaction with the Company.
It is anticipated that the Company's officer and director will contact
broker-dealers and other persons with whom they are acquainted who are involved
in corporate finance matters to advise them of the Company's existence and to
determine if any companies or businesses they represent have an interest in
considering a merger or acquisition with the Company. No assurance can be given
that the Company will be successful in finding or acquiring a desirable business
opportunity, given the limited funds that are expected to be available for
acquisitions, or that any acquisition that occurs will be on terms that are
favorable to the Company or its stockholders.
The Company's search will be directed toward small and medium-sized enterprises
which have a desire to become public corporations and which are able to satisfy,
or anticipate in the reasonably near future being able to satisfy, the minimum
asset requirements in order to qualify shares for trading on NASDAQ (the
automated quotation system sponsored by the National Association of Securities
Dealers, Inc.) or on a stock exchange (See "Investigation and Selection of
Business Opportunities"). The Company anticipates that the business
opportunities presented to it will (i) be recently organized with no operating
history, or a history of losses attributable to under-capitalization or other
factors; (ii) be experiencing financial or operating difficulties; (iii) be in
need of funds to develop a new product or service or to expand into a new
market; (iv) be relying upon an untested product or marketing concept; or (v)
have a combination of the characteristics mentioned in (i) through (iv). The
Company intends to concentrate its acquisition efforts on properties or
businesses that it believes to be undervalued. Given the above factors,
investors should expect that any acquisition candidate may have a history of
losses or low profitability.
The Company does not propose to restrict its search for investment opportunities
to any particular geographical area or industry, and may, therefore, engage in
essentially any business, to the extent of its limited resources. This includes
industries such as service, finance, natural resources, manufacturing, high
technology, product development, medical, communications and others. The
Company's discretion in the selection of business opportunities is unrestricted,
subject to the availability of such opportunities, economic conditions and other
factors.
As a consequence of this registration of its securities, any entity that has an
interest in being acquired by, or merging into the Company, is expected to be an
entity that desires to become a public company and establish a public trading
market for its securities. In connection with such a merger or acquisition, it
is highly likely that an amount of stock constituting control of the Company
would be issued by the Company or purchased from the current principal
shareholders of the Company by the acquiring entity or its affiliates. If stock
is purchased from the current shareholders, the transaction is very likely to
result in substantial gains to them relative to their purchase price for such
stock. In the Company's judgment, neither its officer or director would thereby
become an "underwriter" within the meaning of the Section 2(11) of the
Securities Act of 1933, as amended (the "33 Act"). The sale of a controlling
interest by certain principal shareholders of the Company could occur at a time
when the other shareholders of the Company remain subject to restrictions on the
transfer of their shares.
Depending upon the nature of the transaction, the current sole officer and
director of the Company may resign his management positions with the Company in
connection with the Company's acquisition of a business opportunity. See "Form
of Acquisition," below, and "Risk Factors - The Company - Lack of Continuity in
Management." In the event of such a resignation, the Company's current
management would not have any control over the conduct of the Company's business
following the Company's combination with a business opportunity.
It is anticipated that business opportunities will come to the Company's
attention from various sources, including its officer and director, its other
stockholders, professional advisors such as attorneys and accountants,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals. The Company has no
plans, understandings, agreements, or commitments with any individual for such
person to act as a finder of opportunities for the Company. The Company does not
foresee that it would enter into a merger or acquisition transaction with any
business with which its sole officer or director is currently affiliated.
Investigation and Selection of Business Opportunities
To a large extent, a decision to participate in a specific business opportunity
may be made upon management's analysis of the quality of the other company's
management and personnel, the anticipated acceptability of new products or
marketing concepts, the merit of technological changes, the perceived benefit
the company will derive from becoming a publicly held entity, and numerous other
factors which are difficult, if not impossible, to analyze through the
application of any objective criteria. In many instances, it is anticipated that
the historical operations of a specific business opportunity may not necessarily
be indicative of the potential for the future because of the possible need to
shift marketing approaches substantially, expand significantly, change product
emphasis, change or substantially augment management, or make other changes. The
Company will be dependent upon the owners of a business opportunity to identify
any such problems which may exist and to implement, or be primarily responsible
for the implementation of, required changes. Because the Company may participate
in a business opportunity with a newly organized firm or with a firm which is
entering a new phase of growth, it should be emphasized that the Company will
incur further risks, because management in many instances will not have proved
its abilities or effectiveness, the eventual market for such company's products
or services will likely not be established, and such company may not be
profitable when acquired.
It is anticipated that the Company will not be able to diversify, but will
essentially be limited to one such venture because of the Company's limited
financing. This lack of diversification will not permit the Company to offset
potential losses from one business opportunity against profits from another, and
should be considered an adverse factor affecting any decision to purchase the
Company's securities.
It is emphasized that management of the Company may effect transactions having a
potentially adverse impact upon the Company's shareholders pursuant to the
authority and discretion of the Company's management to complete acquisitions
without submitting any proposal to the stockholders for their consideration.
Holders of the Company's securities should not anticipate that the Company
necessarily will furnish such holders, prior to any merger or acquisition, with
financial statements, or any other documentation, concerning a target company or
its business. In some instances, however, the proposed participation in a
business opportunity may be submitted to the stockholders for their
consideration, either voluntarily by such director to seek the stockholders'
advice and consent or because state law so requires.
The analysis of business opportunities will be undertaken by or under the
supervision of the Company's president, who is not a professional business
analyst. See "Management." Although there are no current plans to do so, Company
management might hire an outside consultant to assist in the investigation and
selection of business opportunities, and might pay a finder's fee. Since Company
management has no current plans to use any outside consultants or advisors to
assist in the investigation and selection of business opportunities, no policies
have been adopted regarding use of such consultants or advisors, the criteria to
be used in selecting such consultants or advisors, the services to be provided,
the term of service, or regarding the total amount of fees that may be paid.
However, because of the limited resources of the Company, it is likely that any
such fee the Company agrees to pay would be paid in stock and not in cash.
Otherwise, the Company anticipates that it will consider, among other things,
the following factors:
1. Potential for growth and profitability, indicated by new technology,
anticipated market expansion, or new products;
2. The Company's perception of how any particular business opportunity will be
received by the investment community and by the Company's stockholders;
3. Whether, following the business combination, the financial condition of the
business opportunity would be, or would have a significant prospect in the
foreseeable future of becoming sufficient to enable the securities of the
Company to qualify for listing on an exchange or on a national automated
securities quotation system, such as NASDAQ, so as to permit the trading of such
securities to be exempt from the requirements of Rule 15c2-6 recently adopted by
the Securities and Exchange Commission (the "Commission"). See "Risk Factors -
The Company - Regulation of Penny Stocks."
4. Capital requirements and anticipated availability of required funds to be
provided by the Company or from operations, through the sale of additional
securities, through joint ventures or similar arrangements, or from other
sources;
5. The extent to which the business opportunity can be advanced;
6. Competitive position as compared to other companies of similar size and
experience within the industry segment as well as within the industry as a
whole;
7. Strength and diversity of existing management, or management prospects that
are scheduled for recruitment;
8. The cost of participation by the Company as compared to the perceived
tangible and intangible values and potential; and
9. The accessibility of required management expertise, personnel, raw materials,
services, professional assistance, and other required items.
In regard to the possibility that the shares of the Company would qualify for
listing on NASDAQ, the current standards include the
requirements that the issuer of the securities that aresought to be listed have
total net tangible assets of at least $4,000,000 and total capital and surplus
of at least $2,000,000, and proposals have recently been made to increase these
qualifying amounts. Many, and perhaps most, of the business opportunities that
might be potential candidates for a combination with the Company would not
satisfy the NASDAQ listing criteria.
No one of the factors described above will be controlling in the selection of a
business opportunity, and management will attempt to analyze all factors
appropriate to each opportunity and make a determination based upon reasonable
investigative measures and available data. Potentially available business
opportunities may occur in many different industries and at various stages of
development, all of which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and complex.
Potential investors must recognize that, because of the Company's limited
capital available for investigation and management's limited experience in
business analysis, the Company may not discover or adequately evaluate adverse
facts about the opportunity to be acquired.
The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals and
the selection of a business opportunity may take several months or more.
Prior to making a decision to participate in a business opportunity, the Company
will generally request that it be provided with written materials regarding the
business opportunity containing such items as a description of products,
services and company history; management resumes; financial information;
available projections, with related assumptions upon which they are based; an
explanation of proprietary products and services; evidence of existing patents,
trademarks, or services marks, or rights thereto; present and proposed forms of
compensation to management; a description of transactions between such company
and its affiliates during relevant periods; a description of present and
required facilities; an analysis of risks and competitive conditions; a
financial plan of operation and estimated capital requirements; audited
financial statements, or if they are not available, unaudited financial
statements, together with reasonable assurances that audited financial
statements would be able to be produced within a reasonable period of time not
to exceed 60 days following completion of a merger transaction; and other
information deemed relevant.
As part of the Company's investigation, the Company's executive officer and
director may meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis or verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise.
It is possible that the range of business opportunities that might be available
for consideration by the Company could be limited by the impact of the
Commission's regulations regarding purchase and sale of "penny stocks." The
regulations would affect, and possibly impair, any market that might develop in
the Company's securities until such time as they qualify for listing on NASDAQ
or on another exchange which would make them exempt from applicability of the
"penny stock" regulations. See "Risk Factors - - - Regulation of Penny Stocks."
Company management believes that various types of potential merger or
acquisition candidates might find a business combination with the Company to be
attractive. These include acquisition candidates desiring to create a public
market for their shares in order to enhance liquidity for current shareholders,
acquisition candidates which have long-term plans for raising capital through
the public sale of securities and believe that the possible prior existence of a
public market for their securities would be beneficial, and acquisition
candidates which plan to acquire additional assets through issuance of
securities rather than for cash, and believe that the possibility of development
of a public market for their securities will be of assistance in that process.
Acquisition candidates who have a need for an immediate cash infusion are not
likely to find a potential business combination with the Company to be an
attractive alternative.
Form of Acquisition
It is impossible to predict the manner in which the Company may participate in a
business opportunity. Specific business opportunities will be reviewed as well
as the respective needs and desires of the Company and the promoters of the
opportunity and, upon the basis of that review and the relative negotiating
strength of the Company and such promoters, the legal structure or method deemed
by management to be suitable will be selected. Such structure may include, but
is not limited to, leases, purchase and sale agreements, licenses, joint
ventures and other contractual arrangements. The Company may act directly or
indirectly through an interest in a partnership, corporation or other form of
organization. Implementing such structure may require the merger, consolidation
or reorganization of the Company with other corporations or forms of business
organization, and although it is likely, there is no assurance that the Company
would be the surviving entity. In addition, the present management and
stockholders of the Company most likely will not have control of a majority of
the voting shares of the Company following a reorganization transaction. As part
of such a transaction, the Company's existing director may resign and new
director may be appointed without any vote by stockholders.
It is likely that the Company will acquire its participation in a business
opportunity through the issuance of Common Stock or other securities of the
Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" reorganization under the
Internal Revenue Code of 1986, as amended (the "Tax Code"), depends upon the
issuance to the stockholders of the acquired company of a controlling interest
(i.e. 80% or more) of the common stock of the combined entities immediately
following the reorganization. If a transaction were structured to take advantage
of these provisions rather than other "tax free" provisions provided under the
Tax Code, the Company's current stockholders would retain in the aggregate 20%
or less of the total issued and outstanding shares. This could result in
substantial additional dilution in the equity of those who were stockholders of
the Company prior to such reorganization. Any such issuance of additional shares
might also be done simultaneously with a sale or transfer of shares representing
a controlling interest in the Company by the current officer, director and
principal shareholders. (See "Description of Business - General").
It is anticipated that any new securities issued in any reorganization would be
issued in reliance upon exemptions, if any are available, from registration
under applicable federal and state securities laws. In some circumstances,
however, as a negotiated element of the transaction, the Company may agree to
register such securities either at the time the transaction is consummated, or
under certain conditions or at specified times thereafter. The issuance of
substantial additional securities and their potential sale into any trading
market that might develop in the Company's securities may have a depressive
effect upon such market.
The Company will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of such
agreement cannot be predicted, generally such an agreement would require
specific representations and warranties by all of the parties thereto, specify
certain events of default, detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing, outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.
As a general matter, the Company anticipates that it, and/or its officer and
principal shareholders will enter into a letter of intent with the management,
principals or owners of a prospective business opportunity prior to signing a
binding agreement. Such a letter of intent will set forth the terms of the
proposed acquisition but will not bind any of the parties to consummate the
transaction. Execution of a letter of intent will by no means indicate that
consummation of an acquisition is probable. Neither the Company nor any of the
other parties to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement concerning the acquisition
as described in the preceding paragraph is executed. Even after a definitive
agreement is executed, it is possible that the acquisition would not be
consummated should any party elect to exercise any right provided in the
agreement to terminate it on specified grounds.
It is anticipated that the investigation of specific business opportunities and
the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others. If a
decision is made not to participate in a specific business opportunity, the
costs theretofore incurred in the related investigation would not be
recoverable. Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are provided, the
inability of the Company to pay until an indeterminate future time may make it
impossible to procure goods and services.
No ruling of the Internal Revenue Service has been requested or obtained with
respect to the tax consequences of the registration and none will be sought.
This registration does not purport to cover federal or state income tax
consequences (including those that may apply to particular categories of
shareholders). Each shareholder should consult his or her tax advisor as to the
particular consequences of the registration to him or her, including application
of federal, state, local, and foreign tax law, and how possible changes in tax
laws may affect the shareholder.
Investment Company Act and Other Regulation
The Company may participate in a business opportunity by purchasing, trading or
selling the securities of such business. The Company does not, however, intend
to engage primarily in such activities. Specifically, the Company intends to
conduct its activities so as to avoid being classified as an "investment
company" under the Investment Company Act of 1940 (the "Investment Act"), and
therefore to avoid application of the costly and restrictive registration and
other provisions of the Investment Act, and the regulations promulgated
thereunder.
Section 3(a) of the Investment Act contains the definition of an "investment
company" and it excludes any entity that does not engage primarily in the
business of investing, reinvesting or trading in securities, or that does not
engage in the business of investing, owning, holding or trading "investment
securities" (defined as "all securities other than government securities or
securities of majority-owned subsidiaries") the value of which exceeds 40% of
the value of its total assets (excluding government securities, cash or cash
items). The Company intends to implement its business plan in a manner, which
will result in the availability of this exception from the definition of
"investment company." Consequently, the Company's participation in a business or
opportunity through the purchase and sale of investment securities will be
limited.
The Company's plan of business may involve changes in its capital structure,
management, control and business, especially if it consummates a reorganization
as discussed above. Each of these areas is regulated by the Investment Act, in
order to protect purchasers of investment company securities. Since the Company
will not register as an investment company, stockholders will not be afforded
these protections.
Any securities which the Company might acquire in exchange for its Common Stock
will be "restricted securities" within the meaning of the 33 Act. If the Company
elects to resell such securities, such sale cannot proceed unless a registration
statement has been declared effective by the Commission or an exemption from
registration is available. Section 4(1) of the Act, which exempts sales of
securities not involving a distribution, would in all likelihood be available to
permit a private sale. Although the plan of operation does not contemplate
resale of securities acquired, if such a sale were to be necessary, the Company
would be required to comply with the provisions of the 33 Act to effect such
resale.
An acquisition made by the Company may be in an industry which is regulated or
licensed by federal, state or local authorities. Compliance with such
regulations can be expected to be a time-consuming and expensive process.
Competition
The Company expects to encounter substantial competition in its efforts to
locate attractive opportunities, primarily from business development companies,
venture capital partnerships and corporations, venture capital affiliates of
large industrial and financial companies, small investment companies, and
wealthy individuals. Many of these entities will have significantly greater
experience, resources and managerial capabilities than the Company and will
therefore be in a better position than the Company to obtain access to
attractive business opportunities. The Company also will experience competition
from other public "blind pool" companies, many of which may have more funds
available than does the Company.
<PAGE>
Administrative Offices
The Company currently maintains a mailing address at 16910 Dallas Parkway #100,
Dallas, Texas 75248, which is the office address of Halter Capital Corporation,
its majority shareholder. The Company's telephone number is (972) 248-1922.
Other than this mailing address, the Company does not currently maintain any
other office facilities, and does not anticipate the need for maintaining office
facilities at any time in the foreseeable future. The Company pays no rent or
other fees for the use of this mailing address.
Employees
The Company is a development stage company and currently has no employees.
Management of the Company expects to use consultants, attorneys and accountants
as necessary, and does not anticipate a need to engage any full-time employees
so long as it is seeking and evaluating business opportunities. The need for
employees and their availability will be addressed in connection with the
decision whether or not to acquire or participate in specific business
opportunities. Although there is no current plan with respect to its nature or
amount, remuneration may be paid to or accrued for the benefit of the Company's
sole officer prior to, or in conjunction with, the completion of a business
acquisition. See "Executive Compensation" and under "Certain Relationships and
Related Transactions."
Risk Factors
Shareholders of the Company should be aware that registration and ownership of
the shares of common shares of the Company involves certain considerations and
factors, including those described below and elsewhere in this Information
Statement, which could adversely affect the value of their holdings. The Company
does not make, nor is any other person authorized to make, any representation as
to the future market value of the common stock of the Company.
Any forward-looking statement contained in this registration statement should
not be relied upon as predictions of future events. Such statements are
necessarily dependent on assumptions, data or methods that may be incorrect or
imprecise and that may be incapable of being realized. Investors are hereby
notified that such information reflects the opinions of Company management as to
the future. Investors should use their own judgment as to the significance of
this information to their individual investment decisions.
1. Conflicts of Interest. Certain conflicts of interest exist between the
Company and its sole officer and director. He has other business interests to
which he devotes his attention, and he may be expected to continue to do so
although management time should be devoted to the business of the Company. As a
result, conflicts of interest may arise that can be resolved only through his
exercise of such judgment as is consistent with his fiduciary duties to the
Company. See "Management," and "Conflicts of Interest."
The officer and director of the Company, by virtue of his association with other
business entities, may get engaged in other business activities, which in some
part may be similar to those in which the Company proposes to engage. To the
extent that such officer and/or director engaged in similar activities on behalf
of other entities, possible conflicts of interest may arise. No assurance can be
given that any such potential conflicts of interest will not cause the Company
to lose potential opportunities. No policy has been established to deal with
potential conflicts of interest. The impact of not having an established policy
to deal with conflicts of interest leaves the Company in a situation where it
has to depend on the judgment of its officer and director as to which business
opportunities will be considered or not considered by the Company. Accordingly,
it is possible that not all business opportunities which are presented to the
officer and director of the Company will, in turn, be made available to the
Company.
Further, Kevin B. Halter, Jr., the sole officer and director of the Company is
also the president and a shareholder of Securities Transfer Corporation, the
transfer agent for the Company. The arrangements between Securities Transfer
Corporation and the Company are identical to the arrangements Securities
Transfer Corporation has with all the various companies for whom it acts as
transfer agent. Neither the Company, nor its shareholders pay any fees to
Securities Transfer Corporation for the transfer of any securities, including
warrant transfers, as such fees are paid by the various brokerage firms at the
time of transfer. The fee is not customarily passed on to either the buyer or
the seller of the securities. Inasmuch as Securities Transfer Corporation
charges $15 per certificate it transfers, Kevin B. Halter, Jr., through his
ownership interest in Securities Transfer Corporation, will directly benefit by
any transfer fees paid to Securities Transfer Corporation.
2. Possible Need for Additional Financing. The Company has very limited funds
and such funds may not be adequate to take advantage of any available business
opportunities. Even if the Company's funds prove to be sufficient to acquire an
interest in, or complete a transaction with, a business opportunity, the Company
may not have enough capital to exploit the opportunity. The ultimate success of
the Company may depend upon its ability to raise additional capital. The Company
has not investigated the availability, source, or terms that might govern the
acquisition of additional capital and will not do so until it determines a need
for additional financing. If additional capital is needed, there is no assurance
that funds will be available from any source or, if available, that they can be
obtained on terms acceptable to the Company. If not available, the Company's
operations will be limited to those that can be financed with its modest
capital.
3. Regulation of Penny Stocks. The Company's securities, when available for
trading, will be subject to a Securities and Exchange Commission rule that
imposes special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited investors.
For purposes of the rule, the phrase "accredited investors" means, in general
terms, institutions with assets in excess of $5,000,000, or individuals having a
net worth in excess of $1,000,000 or having an annual income that exceeds
$200,000 (or that, when combined with a spouse's income, exceeds $300,000). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell the Company's securities and also
may affect the ability of purchasers in this offering to sell their securities
in any market that might develop therefor. In addition, the Securities and
Exchange Commission has adopted a number of rules to regulate "penny stocks."
Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6,
15g-7, 15g-8, 15g-9 and 15g-100 under the Exchange Act. Because the securities
of the Company may constitute "penny stocks" within the meaning of the rules,
the rules would apply to the Company and to its securities. The rules may
further affect the ability of owners of Shares to sell the securities of the
Company in any market that might develop for them.
Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i) control
of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker-dealers; and
(v) the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and consequent losses for investors. The
Company's management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in
the market, management will strive within the confines of practical limitations
to prevent the described patterns from being established with respect to the
Company's securities.
4. No Operating History. The Company was formed in May 1989 for the purpose of
acquiring a business opportunity. The Company has no operating history, revenues
from operations, or assets other than cash from private sales of stock. The
Company faces all of the risks of a new business and the special risks inherent
in the investigation, acquisition, or involvement in a new business opportunity.
The Company must be regarded as a new or "start-up" venture with all of the
unforeseen costs, expenses, problems, and difficulties to which such ventures
are subject.
5. No Assurance of Success or Profitability. There is no assurance that the
Company will acquire a favorable business opportunity. Even if the Company
should become involved in a business opportunity, there is no assurance that it
will generate revenues or profits, or that the market price of the Company's
Common Stock will be increased thereby.
6. Possible Business - Not Identified and Highly Risky. The Company has not
identified and has no commitments to enter into or acquire a specific business
opportunity and therefore can disclose the risks and hazards of a business or
opportunity that it may enter into in only a general manner, and cannot disclose
the risks and hazards of any specific business or opportunity that it may enter
into. An investor can expect a potential business opportunity to be quite risky.
The Company's acquisition of or participation in a business opportunity will
likely be highly illiquid and could result in a total loss to the Company and
its stockholders if the business or opportunity proves to be unsuccessful. See
"Item 1 Description of Business."
7. Type of Business Acquired. The type of business to be acquired may be one
that desires to avoid effecting its own public offering and the accompanying
expense, delays, uncertainties, and federal and state requirements which purport
to protect investors. Because of the Company's limited capital, it is more
likely than not that any acquisition by the Company will involve other parties
whose primary interest is the acquisition of control of a publicly traded
company. Moreover, any business opportunity acquired may be currently
unprofitable or present other negative factors.
8. Impracticability of Exhaustive Investigation. The Company's limited funds and
the lack of full-time management will likely make it impracticable to conduct a
complete and exhaustive investigation and analysis of a business opportunity
before the Company commits its capital or other resources thereto. Management
decisions, therefore, will likely be made without detailed feasibility studies,
independent analysis, market surveys and the like which, if the Company had more
funds available to it, would be desirable. The Company will be particularly
dependent in making decisions upon information provided by the promoter, owner,
sponsor, or others associated with the business opportunity seeking the
Company's participation. A significant portion of the Company's available funds
may be expended for investigative expenses and other expenses related to
preliminary aspects of completing an acquisition transaction, whether or not any
business opportunity investigated is eventually acquired.
9. Lack of Diversification. Because of the limited financial resources that the
Company has, it is unlikely that the Company will be able to diversify its
acquisitions or operations. The Company's probable inability to diversify its
activities into more than one area will subject the Company to economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.
10. Possible Reliance upon Unaudited Financial Statements. The Company generally
will require audited financial statements from companies that it proposes to
acquire. No assurance can be given, however, that audited financials will be
available to the Company. In cases where audited financials are unavailable, the
Company will have to rely upon unaudited information received from target
companies' management that has not been verified by outside auditors. The lack
of the type of independent verification which audited financial statements would
provide increases the risk that the Company, in evaluating an acquisition with
such a target company, will not have the benefit of full and accurate
information about the financial condition and operating history of the target
company. This risk increases the prospect that the acquisition of such a company
might prove to be an unfavorable one for the Company or the holders of the
Company's securities.
Moreover, the Company will be subject to the reporting provisions of the
Exchange Act and thus will be required to furnish certain information about
significant acquisitions, including audited financial statements for any
business that it acquires. Consequently, acquisition prospects that do not have,
or are unable to provide reasonable assurances that they will be able to obtain,
the required audited statements would not be considered by the Company to be
appropriate for acquisition so long as the reporting requirements of the
Exchange Act are applicable. Should the Company, during the time it remains
subject to the reporting provisions of the Exchange Act, complete an acquisition
of an entity for which audited financial statements prove to be unobtainable,
the Company would be exposed to enforcement actions by the Commission and to
corresponding administrative sanctions, including permanent injunctions against
the Company and its management. The legal and other costs of defending a
Commission enforcement action are likely to have material, adverse consequences
for the Company and its business. The imposition of administrative sanctions
would subject the Company to further adverse consequences.
In addition, the lack of audited financial statements would prevent the
securities of the Company from becoming eligible for listing on NASDAQ or on any
existing stock exchange. Moreover, the lack of such financial statements is
likely to discourage broker-dealers from becoming or continuing to serve as
market makers in the securities of the Company. Without audited financial
statements, the Company would almost certainly be unable to offer securities
under a registration statement pursuant to the 33 Act, and the ability of the
Company to raise capital would be significantly limited until such financial
statements were to become available.
11. Other Regulation. An acquisition made by the Company may be of a business
that is subject to regulation or licensing by federal, state, or local
authorities. Compliance with such regulations and licensing can be expected to
be a time-consuming, expensive process and may limit other investment
opportunities of the Company.
12. Dependence upon Management; Limited Participation of Management. The Company
currently has a single individual who is serving as its sole officer and
director. The Company will be heavily dependent upon his skills, talents, and
abilities to implement its business plan, and may, from time to time, find that
the inability of the sole officer and director to devote his full time and
attention to the business of the Company results in a delay in progress toward
implementing its business plan. Furthermore, since one individual is serving as
the sole officer and director of the Company, it will be entirely dependent upon
his experience in seeking, investigating, and acquiring a business and in making
decisions regarding the Company's operations. Because investors will not be able
to evaluate the merits of possible business acquisitions by the Company, they
should critically assess the information concerning the Company's sole officer
and director.
13. Lack of Continuity in Management. The Company does not have an employment
agreement with its sole officer and director, and as a result, there is no
assurance that he will continue to manage the Company in the future. In
connection with acquisition of a business opportunity, it is likely the current
officer and director of the Company may resign. A decision to resign will be
based upon the identity of the business opportunity and the nature of the
transaction, and is likely to occur without the vote or consent of the
stockholders of the Company.
14. Dependence upon Outside Advisors. To supplement the business experience of
its sole officer and director, the Company may be required to employ
accountants, technical experts, appraisers, attorneys, or other consultants or
advisors. The selection of any such advisors will be made by the Company's
president without any input from stockholders. Furthermore, it is anticipated
that such persons may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to the Company. In the event the president of the
Company considers it necessary to hire outside advisors, he may elect to hire
persons who are affiliates if they are able to provide the required services.
15. Leveraged Transactions. There is a possibility that any acquisition of a
business opportunity by the Company may be leveraged, i.e., the Company may
finance the acquisition of the business opportunity by borrowing against the
assets of the business opportunity to be acquired, or against the projected
future revenues or profits of the business opportunity. This could increase the
Company's exposure to larger losses. A business opportunity acquired through a
leveraged transaction is profitable only if it generates enough revenues to
cover the related debt service and expenses. Failure to make payments on the
debt incurred to purchase the business opportunity could result in the loss of a
portion or all of the assets acquired. There is no assurance that any business
opportunity acquired through a leveraged transaction will generate sufficient
revenues to cover the related debt and expenses.
16. Competition. The search for potentially profitable business opportunities is
intensely competitive. The Company expects to be at a disadvantage when
competing with many firms that have substantially greater financial and
management resources and capabilities than the Company. These competitive
conditions will exist in any industry in which the Company may become
interested.
17. No Foreseeable Dividends. The Company has not paid dividends on its Common
Stock and does not anticipate paying any dividends in the foreseeable future.
18. Loss of Control by Present Management and Stockholders. The Company may
consider an acquisition in which the Company would issue as consideration for
the business opportunity to be acquired an amount of the Company's authorized
but unissued Common Stock that would, upon issuance, represent the great
majority of the voting power and equity of the Company. The result of such an
acquisition would be that the acquired company's stockholders and management
would control the Company, and the Company's management could be replaced by
persons unknown at this time. Such a merger would result in a greatly reduced
percentage of ownership of the Company by its current shareholders.
19. No Public Market Exists for Stock. There is no public market for the
Company's common stock, and no assurance can be given that a market will develop
or that a shareholder ever will be able to liquidate his investment without
considerable delay, if at all. If a market should develop, the price may be
highly volatile. Factors such as those discussed in this "Risk Factors" section
may have a significant impact upon the market price of the securities offered
hereby. Owing to the low price of the securities, many brokerage firms may not
be willing to effect transactions in the securities. Even if a purchaser finds a
broker willing to effect a transaction in these securities, the combination of
brokerage commissions, state transfer taxes, if any, and any other selling costs
may exceed the selling price. Further, many lending institutions will not permit
the use of such securities as collateral for loans.
20. Rule 144 Sales. A majority of the outstanding shares of Common Stock held by
present stockholders are "restricted securities" within the meaning of Rule 144
under the 33 Act. As restricted shares, these shares may be resold only pursuant
to an effective registration statement or the requirements of Rule 144 or other
applicable exemptions from registration under the 33 Act and as required under
applicable state securities laws. Rule 144 provides in essence that a person who
has held restricted securities for a prescribed period may, under certain
conditions, sell every three months, in brokerage transactions, a number of
shares that does not exceed the greater of (a) 1.0% of a company's outstanding
common stock or (b) the average weekly trading volume during the four calendar
weeks prior to the sale. As a result of revisions to Rule 144 which became
effective on or about April 29, 1997, there is no limit on the amount of
restricted securities that may be sold by an affiliate after the restricted
securities have been held by the owner for a period of two years. A sale under
Rule 144 or under any other exemption from the Act, if available, or pursuant to
subsequent registrations of shares of Common Stock of present stockholders, may
have a depressive effect upon the price of the Common Stock in any market that
may develop.
The 7,750,129 shares of common stock currently owned by the majority shareholder
of the Company, Halter Capital Corporation, are "restricted securities" and
under certain circumstances may in the future be sold in compliance with Rule
144. The 7,750,129 common shares have been eligible for sale pursuant to Rule
144 since October 6, 1994.
21. Blue Sky Considerations. Because the securities registered hereunder have
not been registered for resale under the blue sky laws of any state, the holders
of such shares and persons who desire to purchase them in any trading market
that might develop in the future, should be aware that there may be significant
state blue-sky law restrictions upon the ability of investors to sell the
securities and of purchasers to purchase the securities. Some jurisdictions may
not under any circumstances allow the trading or resale of blind-pool or
"blank-check" securities. Accordingly, investors should consider the secondary
market for the Company's securities to be a limited one.
Agreements
The Company is not a party to any agreements other than an agreement between the
Company and Securities Transfer Corporation that provides that Securities
Transfer Corporation shall act as transfer agent for the Company.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
Liquidity and Capital Resources
The Company remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
stockholder's equity other than the receipt of net cash proceeds in the amount
of $5,518, from its inside capitalization funds. The Company's balance sheet as
of June 30, 1997, reflects a zero current asset value.
The Company will carry out its plan of business as discussed above. See "Item 1
Description of Business." The Company cannot predict to what extent its
liquidity and capital resources will be diminished prior to the consummation of
a business combination or whether its capital will be further depleted by the
operating losses (if any) of the business entity which the Company may
eventually acquire.
Results of Operations
From the date of incorporation in May 1989 to present the Company has engaged in
no significant operations other than organizational activities, acquisition of
capital and preparation for registration of its securities under the Exchange
Act. No revenues were received by the Company during this period.
For the current fiscal year, the Company anticipates incurring a loss as a
result of organizational expenses, expenses associated with registration under
the Securities Exchange Act of 1934, and expenses associated with locating and
evaluating acquisition candidates. The Company anticipates that until a business
combination is completed with an acquisition candidate, it will not generate
revenues other than interest income and may continue to operate at a loss after
completing a business combination, depending upon the performance of the
acquired business.
Need for Additional Financing
The Company has no capital. Certain operating and development expenses have been
paid by Halter Capital Corporation, the Company's majority shareholder. It is
anticipated that Halter Capital Corporation will continue to fund certain
expenses of the Company, including the costs of compliance with the continuing
reporting requirements of the Exchange Act. There is no assurance that these
available funds will ultimately prove to be adequate to allow it to complete a
business combination and, once a business combination is completed, the
Company's needs for additional financing are likely to increase substantially.
Although Halter Capital Corporation may, in its discretion, provide additional
funds to the Company to pay certain expenses, there is no assurance that any
additional funds will be available to the Company to allow it to cover its
expenses.
Irrespective of whether the Company's cash assets prove to be inadequate to meet
the Company's operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash. For information as to the
Company's policy in regard to payment for consulting services see "Certain
Relationships and Transactions."
Item 3. DESCRIPTION OF PROPERTY.
The Company does not currently maintain an office or any other facilities. It
does currently maintain a mailing address at 16910 Dallas Parkway #100, Dallas,
Texas 75248, which is the office address of its majority shareholder, Halter
Capital Corporation. The Company pays no rent for the use of this mailing
address. The Company does not believe that it will need to maintain an office at
any time in the foreseeable future in order to carry out its plan of operations
described herein. The Company's telephone number is (972) 248-1922.
<PAGE>
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information, with regard to the
beneficial ownership of the stock of the Company by each person known to the
Company to be the beneficial owner of 5% or more of its stock and the sole
officer and director of the Company.
<TABLE>
<S> <C>
Name and Address of Amount of Beneficial Percent of
Title of Class Beneficial Owner Ownership Class
Halter Capital Corporation
16910 Dallas Parkway, #100
Common Dallas, Texas 75248 7,750,129 Shares 97%
Kevin B. Halter, Jr.
1804 Switzerland Avenue
Common Plano, Texas 75025 6,735 Shares .001%
</TABLE>
Item 5. DIRECTORS, EXECUTIVE OFFICER, PROMOTERS AND CONTROL PERSONS.
The sole director and officer of the Company is:
Name Age Position
Kevin B. Halter, Jr. 36 President and Director
Vice President
Secretary
Treasurer
Kevin B. Halter, Jr. has served as the president, vice president and treasurer
of the Company since May 1, 1995. He has served as secretary of the Company
since May 31, 1989.
No officer or director receives any remuneration and it is anticipated that none
will be paid in the future. Also, no reimbursement will be made for any expenses
incurred on behalf of the Company. Management does not receive any finder's fees
or other compensation for locating a merger or acquisition partner.
Article 3.12 of the Company's bylaws provides that directors may be paid their
expenses, if any, and may be paid a fixed sum for attendance of each board of
directors meeting. The present directors have waived in writing any
reimbursement of expenses or fees for attending meetings. Such waiver, however,
is in no way binding upon their successors. The current officer and directors,
by virtue of their stock ownership in the Company, will directly benefit in any
future success the Company may enjoy.
Directors are generally elected at the annual meeting of stockholders and remain
in office until their successors are chosen and qualified. The officer and
director of the Company will spend less than all of their time on matters
related to the Company, but they will spend such time as is necessary in order
to carry out the business plan of the Company. It is anticipated that no current
officer or director will remain in management after the sale of the Company.
The director named above will serve until the next annual meeting of the
Company's stockholders. Directors are and will be elected for one-year terms at
the annual stockholders' meeting. Officers will hold their positions at the
pleasure of the board of directors, absent any employment agreement, of which
none currently exists or is contemplated. There is no arrangement or
understanding between the sole director and officer of the Company and any other
person pursuant to which any director or officer was or is to be selected as a
director or officer.
The sole director and officer of the Company will devote his time to the
Company's affairs on an "as needed" basis. As a result, the actual amount of
time which he will devote to the Company's affairs is unknown and is likely to
vary substantially from month to month.
Biographical Information
Kevin B. Halter, Jr. has acted as president of the Company since May 1, 1995 and
as secretary since May 31, 1989. He has served and serves as vice president,
secretary and director of Digital Communications Technology Corporation (listed
on the American Stock Exchange) from January 1994 to present; as vice president
and secretary of Halter Capital Corporation from 1987 to present; vice president
secretary and director of Millennia, Inc. (listed on the American Stock
Exchange) from January 1994 to present; and president of Securities Transfer
Corporation from 1987 to present.
Kevin B. Halter, Jr. was also the vice president and secretary of Halter Venture
Capital. He has previous experience in implementing business plans of blind-pool
companies by virtue of his prior interest in Halter Venture Capital. Halter
Venture Capital was the original sole shareholder of the Company when the
Company was organized in May 1989. In October 1992, Halter Venture Capital, a
publicly-owned corporation (now known as Debbie Reynolds Hotel and Casino,
Inc.), divested itself of 100% of its holding in the Company by distributing
100% of the issued and outstanding stock of the Company to its shareholders.
Upon distribution by Halter Venture Capital, Halter Capital Corporation became
the majority shareholder of the Company.
Kevin B. Halter, Jr. is the son of Kevin Halter, Sr. Kevin Halter, Sr. has
served as Chairman of the Board and Chief Executive Officer of Halter Capital
Corporation, a privately-held investment and consulting company, since 1987.
Halter Capital Corporation is the majority shareholder of the Company. Kevin
Halter, Sr. also beneficially owns .01% of the common stock of the Company.
<PAGE>
Indemnification of Officers and Directors
The bylaws of the Company provide for the indemnification of officers,
directors, agents and employees of the Company to the fullest extent permitted
by the General Corporation Law of the state of Delaware ("Delaware Code").
Pursuant to section 145 of the Delaware Code, the Company generally has the
power to indemnify its present and former directors, officers, employees and
agents against expenses incurred by them in connection with any suit to which
they are, or are threatened to be made, a party by reason of their serving in
such positions so long as they acted in good faith and in a manner they
reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to any criminal action, they had no reasonable cause
to believe their conduct was unlawful. The Company has the power to purchase and
maintain insurance for such persons. The statute also expressly provides that
the power to indemnify authorized thereby is not exclusive of any rights granted
under any bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise. The foregoing discussion of the Company's bylaws and of section 145
of the Delaware Code is not intended to be exhaustive and is qualified in its
entirety by such bylaws and the Delaware Code.
Other Public Shell Activities
The sole director and officer of the Company has prior experience with off blank
check/blind pool companies. Over the past several years, he has been involved in
spinning off approximately 35 blank check/blind pool companies.
Conflicts of Interest
The sole officer and director of the Company will devote only a small portion of
his time to the affairs of the Company, estimated to be no more than
approximately 10 hours per month. There will be occasions when the time
requirements of the Company's business conflict with the demands of his other
business and investment activities. Such conflicts may require that the Company
attempt to employ additional personnel. There is no assurance that the services
of such persons will be available or that they can be obtained upon terms
favorable to the Company.
The Company's president may elect, in the future, to form one or more additional
shell companies with a business plan similar or identical to that of the
Company. Any such additional shell companies would also be in direct competition
with the Company for available business opportunities.
There is no procedure in place that would allow Mr. Halter to resolve potential
conflicts in an arms-length fashion. Accordingly, he will be required to use his
discretion to resolve them in a manner that he considers appropriate.
The Company's sole officer and director may actively negotiate or otherwise
consent to the purchase of a portion of his common stock as a condition to, or
in connection with, a proposed merger or acquisition transaction. It is
anticipated that a substantial premium over the initial cost of such shares may
be paid by the purchaser in conjunction with any sale of shares by the Company's
officer and
director which is made as a condition to, or in connection with aproposed merger
or acquisition transaction. The fact that a substantial premium may be paid to
the Company's sole officer and director to acquire his shares creates a
potential conflict of interest for him in satisfying his fiduciary duties to the
Company and its other shareholders. Even though such a sale could result in a
substantial profit to him, he would be legally required to make the decision
based upon the best interests of the Company and the Company's other
shareholders, rather than his own personal pecuniary benefit.
Item 6. EXECUTIVE COMPENSATION.
Although there is no current plan, it is possible that the Company will adopt a
plan to pay or accrue compensation to its sole officer and director for services
related to seeking business opportunities and completing a merger or acquisition
transaction. See "Certain Relationships and Related Transactions." The Company
has no stock option, retirement, pension, or profit-sharing programs for the
benefit of directors, officers or other employees, but the Board of Directors
may recommend adoption of one or more such programs in the future.
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
For information concerning restrictions that are imposed upon the securities
held by current stockholders, and the responsibilities of such stockholders to
comply with federal securities laws in the disposition of such Common Stock, see
"Risk Factors - Rule 144 Sales."
No officer, director, promoter, or affiliate of the Company has or proposes to
have any direct or indirect material interest in any asset proposed to be
acquired by the Company through security holdings, contracts, options, or
otherwise.
The Company has adopted a policy under which any consulting or finder's fee that
may be paid to a third party for consulting services to assist management in
evaluating a prospective business opportunity would be paid in stock or in cash.
Any such issuance of stock would be made on an ad hoc basis. Accordingly, the
Company is unable to predict whether or in what amount such a stock issuance
might be made.
Although there is no current plan in existence, it is possible that the Company
will adopt a plan to pay or accrue compensation to its sole officer and director
for services related to seeking business opportunities and completing a merger
or acquisition transaction.
The Company maintains a mailing address at the office of its majority
shareholder, but otherwise does not maintain an office. As a result, it pays no
rent and incurs no expenses for maintenance of an office and does not anticipate
paying rent or incurring office expenses in the future. It is likely that the
Company will establish and maintain an office after completion of a business
combination.
Although management has no current plans to cause the Company to do so, it is
possible that the Company may enter into an agreement with an acquisition
candidate requiring the sale of all or a portion of the Common Stock held by the
Company's current stockholders to the acquisition candidate or principals
thereof, or to other individuals or business entities, or requiring some other
form of payment to the Company's current stockholders, or requiring the future
employment of specified officers and payment of salaries to them. It is more
likely than not that any sale of securities by the Company's current
stockholders to an acquisition candidate would be at a price substantially
higher than that originally paid by such stockholders. Any payment to current
stockholders in the context of an acquisition involving the Company would be
determined entirely by the largely unforeseeable terms of a future agreement
with an unidentified business entity.
Item 8. DESCRIPTION OF SECURITIES.
The Company's authorized capital consists of 50,000,000 common shares, par value
$.00001 per share, and 10,000,000 preferred shares, par value $.00001 per share.
None of the preferred stock is issued or outstanding.
Common Stock.
Each common share is fully paid and non-assessable, and is entitled to one vote
at all meetings of shareholders. All common shares are equal to each other with
respect to liquidation rights and dividend rights. There are no preemptive
rights to purchase any additional common shares. The articles of incorporation
of the Company prohibit cumulative voting in the election of directors. In the
event of liquidation, dissolution or winding up of the Company, holders of the
common shares will be entitled to receive on a pro rata basis all assets of the
Company remaining after satisfaction of all liabilities, presuming that no
preferred shares have been issued, which might have a preference over common
shareholders (see "Preferred Stock"). Although the Company has filed a Form
15c2-11 with NASD (the National Association of Securities Dealers) to have the
Common Stock listed and traded on the OTC Bulletin Board the Common Stock is not
currently listed. Further, there is no present market for the Company's stock,
and there can be no assurance that a market for the common stock will develop
or, if it develops, that it will continue.
Preferred shares.
None of the preferred stock of the Company is being registered under this
Registration Statement. The articles of incorporation authorize issuance of up
to 10,000,000 shares of $.00001 par value preferred stock. None of the preferred
stock is issued or outstanding. The board of directors is authorized to divide
the preferred stock into such series and to fix and determine the relative
rights and preferences of the shares of any such series, as the board of
directors designates. It is not contemplated that the Company will issue any
shares of preferred stock in the foreseeable future. The Company was organized
with this class of securities authorized, in order to provide flexibility for
financing of Company activities in the future. Since no preferred stock has been
issued, and the issuance of such stock is not contemplated, it is not possible
to know of the preferred stock, if ever issued in the future, would have any
preference over the common shareholders in the distribution of any assets in the
event of liquidation. The Company is not registering the preferred stock of the
Company under this registration statement.
Transfer Agent
The Company's transfer agent is Securities Transfer Corporation, P.O. Box
701629, Dallas, Texas 75370. The Company's shareholders will not be required to
surrender or exchange their stock certificates in connection with the
registration. No vote of the Company's shareholders is required or sought in
connection with the registration.
Reports to Stockholders
The Company plans to furnish its stockholders with an annual report for each
fiscal year containing financial statements audited by its independent certified
public accountants. In the event the Company enters into a business combination
with another company, it is the present intention of management to continue
furnishing annual reports to stockholders. Additionally, the Company may, in its
sole discretion, issue unaudited quarterly or other interim reports to its
stockholders when it deems appropriate. The Company intends to comply with the
periodic reporting requirements of the Exchange Act for so long as it is subject
to those requirements.
PART II
Item 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
There is presently no public market for the shares and there can be no assurance
that an active market will develop following registration. The prices at which
the shares trade will be determined by the marketplace and could be subject to
significant fluctuations in response to many factors, including, among others,
variations in the Company's quarterly operating results, changing economic
conditions in the industries in which the Company participates and changes in
governmental regulations. In addition, the general stock market has in recent
years experienced significant price fluctuations, often unrelated to the
operating performance of the specific companies whose stock is traded. Market
fluctuations, as well as economic conditions, may adversely affect the market
price of the Company stock. Furthermore, given the relatively small market
capitalization of the Company, the market for the shares may be subject to
greater volatility than would be the case for a larger company.
No dividend has been declared or paid by the Company since inception. None is
contemplated at any time in the foreseeable future. Its board of directors will
determine the dividend policy of the Company. The future payment of dividends
will depend on business decisions that will be made by the board of directors
from time to time based on the results of operations and financial condition of
the Company and such other business considerations as the board of directors
considers relevant.
Item 2. LEGAL PROCEEDINGS.
The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated. No director, officer or affiliate of
the Company, and no owner of record or beneficial owner of more than 5.0% of the
securities of the Company, or any associate of any such director, officer or
security holder is a party adverse to the Company or has a material interest
adverse to the Company in reference to pending litigation.
Item 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not applicable.
Item 4. RECENT SALES OF UNREGISTERED SECURITIES.
None. There is presently no public market for the shares of the Company.
Item 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The bylaws of the Company provide for the indemnification of officers,
directors, agents and employees of the Company to the fullest extent permitted
by the General Corporation Law of the state of Delaware ("Delaware Code").
Pursuant to section 145 of the Delaware Code, the Company generally has the
power to indemnify its present and former directors, officers, employees and
agents against expenses incurred by them in connection with any suit to which
they are, or are threatened to be made, a party by reason of their serving in
such positions so long as they acted in good faith and in a manner they
reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to any criminal action, they had no reasonable cause
to believe their conduct was unlawful. The Company has the power to purchase and
maintain insurance for such persons. The statute also expressly provides that
the power to indemnify authorized thereby is not exclusive of any rights granted
under any bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise. The foregoing discussion of the Company's bylaws and of section 145
of the Delaware Code is not intended to be exhaustive and is qualified in its
entirety by such bylaws and the Delaware Code.
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<PAGE>
PACIFIC GREAT CHINA CO., LTD
(a development stage company)
FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants
Board of Directors and StockholdersPacific Great China Co., Ltd.(formerly
Professionalistics, Inc.)We have audited the accompanying balance sheets of
Pacific Great China Co., Ltd. (formerly Professionalistics, Inc.) (a Delaware
corporation and a development stage company) as of June 30, 1997, December 31,
1996 and 1995 and the related statements of operations, changes in stockholders'
equity and cash flows for the six months ended June 30, 1997 and each of the
years ended December 31, 1996 and 1995, respectively, and for the period May 31,
1989 (date of inception) through June 30, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis. evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects. the financial position of Pacific Great China Co., Ltd.
(formerly Professionalistics, Inc.) (a development stage company) as of June
30,1997, December 31,1996 and 1995, and the results of its operations and its
cash flows for the six months ended June 30,1997 and for each of the years ended
December 31,1996 and 1995, respectively, and for the period May 31, 1989 (date
of inception) through June 30, 1997, in conformity with generally accepted
accounting principles.
/s/ S. W. HATFIELD + ASSOCIATES
Dallas, Texas
July 1. 1997
F-1
<PAGE>
BALANCE SHEETS
December 31, 1996, 1995, and June 30, 1997
1996 1995 June 30,
1997
ASSETS $ -- $ -- $ --
======= ======= =======
LIABILITIES -- -- --
------- ------- -------
STOCKHOLDERS' EQUITY
Preferred stock - $.00001 par value
10,000,000 shares authorized
none issued and outstanding
Common stock - $.00001 par value
50,000,000 shares authorized
7,999,807 shares issued and
outstanding, respectively 80 80 80
Contributed capital 5,438 5,438 5,438
Deficit accumulated during the
development stage (5,518) (5,518) (5,518)
------- ------- -------
Total stockholders' equity -- -- --
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ -- $ -- $ --
======= ======= =======
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F-2
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
Six months ended June 30, 1997
years ended December 31, 1996 and 1995
and the period May 31, 1989 (date of incorporation) through June 30, 1997
<S> <C> <C> <C>
Period
from
Six months Year ended Year 5/31/89
ended 12/31/96 ended through
6/30/97 12/31/95 6/30/97
REVENUES $ - $ - $ - $ -
------- -------- -------- --------
EXPENSES
Rent and management fees - - - 4,000
Other expenses - - - 1,433
Amortization of organization costs - - - 85
-------- -------- -------- --------
Total expenses - - - $ 5,518
-------- -------- -------- --------
NET LOSS $ - $ - $ - $ (5,518)
======== ======== ======== ========
Net loss per weighted-average share of
common stock outstanding nil nil nil nil
======== ======== ======== ========
Weighted-average number of shares of
common stock outstanding 7,999,807 7,999,807 7,999,807 7,999,807
========= ========= ========= =========
</TABLE>
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F-3
<PAGE>
<TABLE>
<CAPTION>
STATEMENT IN CHANGES IN STOCKHOLDERS' EQUITY
For the period May 31, 1989 (date of incorporation)
through June 30, 1997
<S> <C> <C> <C>
Deficit ac-
cumulated
Contributed during the
Capital develop-
Common Stock ment stage
Total
Shares Amount
--------------------------- ------------ ---------- ----------
Issuance of stock at formation 16,000,000 $ 160 $ - $ - $ 160
Capital contributed to support development - - 1,460 - 1,460
Net loss for the period - - - (1,545) (1,545)
---------- ---------- ---------- ---------- ----------
Balances at December 31, 1989 16,000,000 160 1,460 (1,545) 75
----------
Capital contributed to support development - - 1,700 - 1,700
Net loss for the year - - - (1,717) (1,717)
---------- ---------- ---------- ---------- ----------
Balances at December 31, 1990 16,000,000 160 3,160 (3,262) 58
Capital contributed to support development - - 1,298 - 1,298
Net loss for the year - - - (1,315) (1,315)
---------- ---------- ---------- ---------- ----------
Balances at December 31, 1991 16,000,000 160 4,458 (4,577) 41
Capital contributed to support development - - 900 - 900
Net loss for the year - - - (941) (941)
---------- ---------- ---------- ---------- ----------
Balances at December 31, 1992 16,000,000 160 5,358 (5,518) -
Net loss for the year - - - - -
---------- ---------- ---------- ---------- ----------
Balances at December 31, 1993 16,000,000 160 5,358 (5,518) -
Net loss for the year - - - - -
---------- ---------- ---------- ---------- ----------
Balances at December 31, 1994 16,000,000 160 5,358 (5,518) -
Net loss for the year - - - - -
---------- ---------- ---------- ---------- ----------
Balances at December 31, 1995 16,000,000 160 5,358 (5,518) -
</TABLE>
F-4
<PAGE>
<TABLE>
<S> <C> <C> <C>
Effect of one for two reverse stock split,
including rounding (8,000,193) (80) 80 - -
Net loss for the year - - - - -
Balances at December 31, 1996 7,999,807 (80) 5,438 (5,518) -
Net loss for the year - - - -
Balances at June 30, 1997 7,999,807 $ 80 $ 5,438 (5,518) -
=========== =========== =========== =========== ======
</TABLE>
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F-5
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
Six months ended June 30, 1997,
years ended December 31, 1996 and 1995
and the period May 31, 1989 (date of incorporation) through June 30, 1997
<S> <C> <C>
Six months Year ended Year ended Period from 5/31/89
ended 6/30/97 12/31/96 12/31/95 through 6/30/97
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period
Adjustments to reconcile net loss to $ - $ - $ - $ (5,518)
net cash provided by operating
activities
Payment of organization costs - - - (85)
Amortization of organization
costs - - - 85
-------------- -------------- -------------- --------------
Net cash used in operating activities - - - (5,518)
CASH FLOWS FROM FINANCING
ACTIVITIES - - - -
-------------- -------------- -------------- --------------
Issuance of common stock - - - 160
Capital contributed to support
development - - - 5,358
-------------- -------------- -------------- --------------
Net cash used in financing activities - - - 5,518
-------------- -------------- -------------- --------------
INCREASE IN CASH
Cash at beginning of period - - - -
-------------- -------------- -------------- --------------
Cash at end of period $ - $ - - -
============== ============== ============== ==============
SUPPLEMENTAL DISCLOSURE
OF INTEREST AND INCOME
TAXES PAID
Interest paid for the period $ - $ - $ - $ -
============== ============== ============== ==============
Income taxes paid for the period $============= $============= $============= $=============
</TABLE>
Independent Accountants' Notes to Financial Statements
Note A - Organization and Description of Business
Pacific Great China Co., Ltd. (formerly Professionalistics, Inc.) (the
"Company") was incorporated on May 31, 1989, under the laws of the state of
Delaware, as a wholly-owned subsidiary Halter Venture Capital ("HVC") now known
as Debbie Reynolds Hotel and Casino, Inc., a publicly-owned corporation. The
Company changed its name to Pacific Great China Co.,
F-6
<PAGE>
Ltd., on May 8, 1996 as a result of an action by the Company's board of
directors in anticipation of a business acquisition or merger transaction.
Subsequently, during 1996, the anticipated business acquisition or merger
transaction was canceled.
The Company has had no substantial operations or substantial assets since
inception. The business purpose of the Company is to seek out and obtain a
merger, acquisition or outright sale transaction whereby the Company's
stockholders will benefit.
In October 1992, HVC divested itself of 100% of its holdings in the Company by
distributing 100% of the issued and outstanding stock of the Company to HVC
stockholders. The then majority stockholder of HVC became the majority
stockholder of the Company. This stockholder has continued to maintain the
corporate status of the Company and provides all nominal working capital support
on the Company's behalf. Because of the Company's lack of operating assets, its
continuance is fully dependent upon the majority stockholder's continuing
support. The majority stockholder intends to continue the funding of nominal
necessary expenses to sustain the corporate entity.
The Company is considered in the development stage and, as such, has generated
no significant operating revenues and has incurred cumulative operating losses
of approximately $5,500.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumption that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
Note B - Summary of Significant Accounting Policies
1. Cash and cash equivalents. The Company considers all cash on hand and in
banks, including accounts in book overdraft positions, certificates of deposit
and other highly-liquid investments with maturities of three months or less,
when purchased, to be cash and cash equivalents.
2. Organization costs. Organization costs were amortized using the straight-line
basis.
3. Income taxes. For the period May 31, 1989 (date of inception) through
December 31, 1990, the Company was included in the consolidated income tax
return of HVC. For the years ended December 31, 1992 and 1991, respectively, the
Company (and its parent, HVC) were included in the consolidated income tax
return of the Company's majority stockholder. As of December 31, 1993, the
Company began filing its own separate federal income tax return. The Company has
no net operating loss carryforwards available to offset financial statement or
tax return taxable income in future periods.
4. Loss per share. Loss per share is computed by dividing the net loss by the
weighted-
F-7
<PAGE>
average number of shares of common stock and common stock equivalents, if any,
outstanding during the year/period.
Note B - Related Party Transactions
For the period May 31, 1989 (date of inception) through September 30, 1992, HVC
provided office space and management services to the Company for a fee of $100
per month. Total expenses under this arrangement aggregated $4,000 for the total
period and $900 for the year ended December 31, 1992.
Note C - Equity Transactions
On May 8, 1996, the sole member of the Board of Directors approved a one for two
reverse stock split of the Company's common stock. All amounts presented in the
accompanying financial statements reflect the effect of the reverse split,
including the effect of funding, since inception.
On May 23, 1996, the Company issued approximately 1,585,875 shares of
restricted, unregistered common stock to a group of consultants pursuant to a
stock subscription agreement. The agreement was anticipated to be satisfied with
either consulting services related to a then-pending transaction or cash.
Subsequently, during 1996, the then-pending business combination or merger
transaction was canceled and, accordingly, the shares issued under the
subscription agreement were returned and canceled by the Company.
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F-8
<PAGE>
PACIFIC GREAT CHINA CO., LTD
(a development stage company)
PART III
INDEX TO FINANCIAL STATEMENTS
Page
Report of independent
certified public accountant F-1
Audited financial statements
Balance sheets F-2
Statements of operations F-3
Statement in changes in stockholders' equity F-4
Statement of cash flows F-6
Independent accountants' notes to financial statements F-6
INDEX TO EXHIBITS
The Exhibits listed below are filed as part of this Registration Statement.
Exhibit No. Document
EX-3.(i) Certificate of Incorporation and
Certificate of Amendment of
Certificate of Incorporation
EX-3.(ii) Bylaws
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
PACIFIC GREAT CHINA CO., LTD.
/s/ Kevin B. Halter, Jr.
- - --------------------------------------------
Kevin B. Halter, Jr., President and Director
(Principal Executive Officer)
Date: November 4, 1997
<PAGE>
EX-3.(i)
CERTIFICATE OF INCORPORATION
AND CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORORATION
<PAGE>
CERTIFICATE OF INCORPORATION
(Articles of Incorporation)
PROFFESSIONALISTICS, INC.
I, the undersigned natural person of the age of eighteen (18) years or more,
acting as Incorporator of a corporation under the General Corporation Law of
Delaware, do hereby adopt the following Articles of Incorporation for such
Corporation
ARTICLE I
NAME
The name of the Corporation is PROFESSIONALISTICS INC.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The address of the Corporation's registered office in the State of Delaware is
The Company Corporation, 725 Market Street, in the City of Wilmington, and
County of New Castle. The name of its registered agent at such address is The
Company Corporation.
ARTICLE III
PURPOSES
The purposes of which the Corporation is organized are:
A. To purchase, receive by way of gift, subscribe for, invest in, and in
all other ways acquire, import, lease, possess, maintain, handle on consignment,
own, hold for investment or otherwise, use, enjoy, exercise, operate, manage,
conduct, perform, make, borrow, contract in respect of, trade and deal in, sell,
exchange, let, lend, export, mortgage, pledge, deed in trust, hypothecate,
encumber, transfer, assign and in all other ways dispose of, design, develop,
invent, improve, equip, repair, alter, fabricate, assemble, build, construct,
operate, manufacture, plant, cultivate, produce, market and in all other ways
(whether like or unlike any of the foregoing), deal in and with property of
every kind and character, real, personal, or mixed, tangible or intangible,
wherever situated and however held, including, but not limited to, money,
credits, choses in action, securities, stocks, bonds, warrants, script,
certificates, debentures, mortgages, notes, commercial paper, and other
obligations and evidences of indebtedness of any government or subdivision or
agency thereof, documents of title and accompanying rights, and every other kind
and character of personal property, real property (improved and unimproved), and
the products and avails thereof, and every character of interest therein and
appurtenance thereto, including, but not limited to, mineral, oil, gas and water
rights, all or any part of any going business and its incidents, franchises,
subsidies, characters, concessions, grants, rights, powers, or privileges,
EX-3.(i) - 1
<PAGE>
granted or conferred by any government or subdivision or agency thereof, and any
interest in or part of any of the foregoing and to exercise in respect thereof
all of the rights, powers, privileges, and immunities of individual owners or
holders thereof
B. To establish, maintain, and conduct any sales, service or merchandising
business in all its aspects for the purpose of selling, purchasing, licensing,
renting, leasing, operating, franchising, and otherwise dealing with personal
services, instruments, machines, appliances, inventions, trademarks, tradenames,
patents, privileges, processes, improvements, copyright and personal property of
all kinds and descriptions.
C. To serve as manager, consultant, representative, agent or advisor for
other persons, associations, corporations, partnerships and firms.
D. To purchase, take, receive, lease or otherwise acquire, own, hold, use,
improve, and otherwise deal in and with, sell, convey, mortgage, pledge, lease,
exchange, transfer and otherwise dispose of liens, real estate, real property,
chattels real and estates, interests, and rights and equities of all kinds of
lands; and to engage in the business of managing, supervising and operating real
property, buildings and structures to negotiate and consummate for itself or for
others leases with respect to such properties, to enter into contracts and
arrangements either as principal or as agent for the maintenance, repair and any
improvement of any property managed, supervised, or operated by the Corporation;
to engage in and conduct or authorize, license and permit others to engage in
and conduct any business or activity incident, necessary, advisable or
advantageous to the ownership of property, buildings, and the structures,
managed, supervised or operated by the Corporation.
E. To enter into or become an associate, member, shareholder, or partner in
any firm, association, partnership (whether limited, general or otherwise),
company, joint stock company, syndicate or corporation, domestic or foreign,
formed or to be formed to accomplish any lawful purpose, and to allow or cause
the title to any estate, right or interest in any property (whether real,
personal or mixed), owned, acquired, controlled, or operated by or in which the
Corporation has an interest, to remain or be vested or registered in the name of
or operated by any firm, association, partnership (whether limited, general or
otherwise), company, joint stock company, syndicate, or corporation, domestic or
foreign, formed to accomplish any of the purposes enumerated herein.
F. To acquire the goodwill, rights, assets and property, and to undertake
or assume the whole, or any part of, the obligations for liabilities of any
person, firm, association or corporation.
G. To hire and employ agents, servants, and employees, to enter into
agreements of employment and collective bargaining agreements, and to act as
agent, contractor, factor, or otherwise, either alone or in company with others.
EX-3.(i) - 2
<PAGE>
H. To promote or aid in any manner, financially or otherwise, any person,
firm, association, or corporation, including its employees, officers and
directors if such aid reasonably may be expected to benefit, directly or
indirectly, the Corporation.
I. To let concessions to others to do any of the things that this
Corporation is empowered to do, and to enter into, make, perform, and carry out,
contracts and arrangements of every kind and character with any person, firm,
association, or corporation, or any government or authority or subdivision or
agency thereof.
J. To carry on any business whatsoever that this Corporation may deem
proper or convenient in connection with any of the foregoing purposes or
otherwise, or that it may deem calculated, directly or indirectly, to improve
the interest of this Corporation, and to have and to exercise all powers
conferred by the laws of the State of Delaware on corporations formed under the
laws pursuant to which and under which this Corporation is formed, as such laws
are now in effect or may at any time hereafter be amended, and to do any and all
things hereinabove set forth to the same extent and as fully as natural persons
might or could do, either along or in connection with other persons, firms,
associations, or corporations, and in any Dart of the world.
K. To transact any business and to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of
Delaware, as amended, or which may be authorized in the future by amendment
thereto.
L. The foregoing statement of purposes shall be construed as a statement of
both purposes and powers, shall be liberally construed in aid of the powers of
this Corporation, and the powers and purposes stated in each clause shall not,
except where otherwise stated, be limited or restricted by any term or provision
of any other clause, and shall be regarded not only as independent purposes, but
the purposes and powers stated shall be construed distributively as each object
expressed, and the enumeration as to specific powers shall not be construed as
to limit in any manner the aforesaid general powers, but are in furtherance of,
and in addition to and not in limitation of said general powers.
ARTICLE IV
SHARES OF STOCK
The total number of shares of stock which the Corporation shall have authority
to issue is Fifty Million (50,000,000) shares of Common Stock, and Ten Million
(10,000,000) shares of Preferred Stock. The par value of each of such shares is
($0.00001) amounting in the aggregate to Six Hundred Dollars ($600).
ARTICLE V
INCORPORATOR
The name and mailing address of the Incorporator of the Corporation is as
follows:
EX-3.(i) - 3
<PAGE>
Kevin B. Halter, Jr. - 7441 Marvin D. Love Freeway, Suite 2000, Dallas, Texas
75237
ARTICLE VI
DIRECTORS
The name and mailing address of each person who is to serve as a director of the
Corporation until the first annual meeting of the shareholders of the
Corporation or until their successor is elected and qualified is as follows:
Kevin B. Halter, Jr. - 7441 Marvin D. Love Freeway, Suite 2000, Dallas, Texas
75237
ARTICLE VII
DURATION
The period of duration of the Corporation is perpetual.
ARTICLE VIII
ELECTION OF DIRECTORS
Elections of directors of the Corporation need not be by written ballot unless
the By-Laws of the Corporation shall so provide.
ARTICLE IX
MEETINGS OF SHAREHOLDER
Meetings of shareholders of the Corporation may be held within or without the
State of Delaware, as the By-Laws of the Corporation may provide.
ARTICLE X
AMENDMENTS
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by the Delaware statutes, and all nights conferred upon
shareholders herein are granted subject to this reservation
THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of
forming a corporation pursuant to the General Corporation Law of the State of
Delaware, does make this certificate, hereby declaring and certifying that this
is my act and deed and the facts herein stated are true, and accordingly have
hereunto set my hand this 30th day of May, 1989.
/s/ Kevin B. Halter. Jr
EX-3.(i) - 4
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Professionalistics, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by the unanimous
written consent of its members, filed with the minutes of the Board, adopted a
resolution proposing and declaring advisable the following amendment to the
Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of Professionalistics, Inc
be amended by changing the name of the Corporation, Article I Article thereof so
that, as amended, said Article shall be and read as follows:
"The name of the Corporation is Pacific Great China Co., Ltd."
SECOND: That in lieu of a meeting and vote of stockholders, the Board of
Directors have given written consent to said amendment in accordance with the
provisions of Section 141 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Section 141 of the General Corporation Law of the State
of Delaware.
IN WITNESS WHEREOF, said Professionalistics, Inc. has caused this certificate to
be signed by Kevin B. Halter, Jr., its Secretary, this 17th day of May, 1996.
/S/ Kevin B. Halter, Jr.
Secretary
EX-3.(i) - 5
<PAGE>
EX-3.(ii)
BYLAWS
<PAGE>
BYLAWS
ARTICLE I.
GENERAL
1.1 GENERAL OFFICES. Unless otherwise determined by resolution of the Board of
Directors, the principal, office of the Corporation shall be located in the City
of Dallas, County of Dallas, State of Texas. The Corporation may have such other
offices, either within or without the State of Texas, as the Board of Directors
may determine or as the affairs of the Corporation may require from time to
time.
1.2 REGISTERED OFFICE. The Corporation shall have and continuously maintain in
the state of Delaware a registered office which may be, but need not be, the
same as the principal office in the State of Texas. The address of the
registered office may be changed from time to time by the Board of Directors.
The present registered office of the Corporation is 725 Market Street,
Wilmington, Delaware.
1.3 REGISTERED AGENT. The Corporation shall have and continuously maintain in
the State of Delaware, a registered agent, which agent may be either an
individual resident of the State of Delaware whose business office is identical
with the Corporation's registered office, or a domestic corporation, or a
foreign corporation authorized to transact business in the State of Delaware
which has a business office identical with the Corporation's registered office.
The registered agent may be changed from time to time by the Board of Directors.
The present registered agent of the Corporation is The Company Corporation.
ARTICLE II.
SHAREHOLDERS
2.1 ANNUAL SHAREHOLDERS' MEETINGS. An annual meeting of the Shareholders shall
be held each year on a day and hour to be selected by the President of the Board
of Directors within six months after the end of the Corporation's fiscal year,
for the purpose of electing Directors and for the transaction of such other
business as may come before the meeting. The annual meeting shall not be held on
a date declared a legal holiday by the State of Delaware. If the election of the
Directors shall not be held on the date selected for any annual meeting of
Shareholders, or at any adjournment therefore, the Board of Directors shall
cause the election to be held at a special meeting of the Shareholders as soon
thereafter as conveniently may be held.
2.2 SPECIAL MEETING. Special meetings of the Shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or these Bylaws, may be called
by the President, the Board of Directors, or the holders of not less than one
tenth of all outstanding shares of the Corporation entitled to vote at the
meeting. Business translated at a special meeting shall be limited to the
purposes stated in the notice of the meeting.
EX-3.(ii) - 1
<PAGE>
2.3 PLACE OF MEETING. The Board of Directors or the President may designate any
place, either within or without the State of Delaware, unless otherwise
prescribed by statute, as the place of meeting for any annual meeting or for any
special meeting of Shareholders. A waiver of notice signed by all Shareholders
entitled to vote at a meeting may designate any place, either within or without
the State of Delaware, unless otherwise prescribed by statute, as the place for
the holding of such meeting. If no designation is made, or if a special meeting
be otherwise called, the place of meeting shall be the principal office of the
Corporation in the State of Delaware.
2.4 NOTICE OF MEETING. Written or printed notice stating the place, day and hour
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than ten (10) nor
more than fifty (60) days before the date of the meeting, either personally or
by mail, by or at the direction of the President, the Secretary, or the officer
or person calling the meeting, to each Shareholder of record entitled to vote at
such meeting If mailed, such notice shall be deemed to be delivered when
deposited in the United States Mail addressed to the Shareholder at this address
as it appears on the stock transfer book of the Corporation, with postage
thereon prepaid. 2.5 ACTION WITHOUT MEETING. Unless otherwise provided by the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
2.6 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the purpose of
determining Shareholders entitled to notice of or to vote at any meeting of
Shareholders or any adjournment thereof, or entitled to receive payment of any
dividend, or in order to make a determination of Shareholders for any other
proper purpose, the Board of Directors of the Corporation may provide that the
stock transfer books shall be closed for a stated period but not to exceed, in
any case, fifty (50) days. If the stock transfer books shall be closed for the
purpose of determining Shareholders entitled to notice of or to vote at a
meeting of Shareholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting. In lieu of closing the stock transfer books,
the Board of Directors may fix in advance a date as the record date for such
determination of Shareholders, such date in any case to be not more than fifty
(50) days and, in case of a meeting of Shareholders, not less than ten (10) days
prior to the date on which the particular action, requiring such determination
of Shareholders, is to be taken. If the stock transfer books are not closed and
no record date is fixed for the determination of Shareholders entitled to notice
of or to vote at a meeting of Shareholders, or Shareholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
EX-3.(ii) - 2
<PAGE>
of Shareholders. When a determination of Shareholders entitled to vote at any
meeting of Shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof except where the
determination has been made through the closing of stock transfer books and the
stated period of closing has expired.
2.7 VOTING LISTS.
A. The officer or agent having charge of the stock transfer books for shares of
the Corporation shall make, at least ten (10) days before each meeting of
shareholders, a complete list of the Shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten (10) days prior to such meeting, shall be kept on file at the registered
office of the Corporation or the principal office of the Corporation, if it be
other than the registered office, and shall be subject to inspection by any
Shareholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any Shareholder during the whole time of the meeting. The
original stock transfer book shall be prima facie evidence as to who are the
Shareholders entitled to examine such list or transfer books or to vote at any
meeting of Shareholders.
B. Failure to comply with the requirements of this Section shall not affect the
validity of any action taken at such meeting.
C. An officer or agent having charge of the stock transfer books who shall fail
to prepare the list of Shareholders or keep the same on file for a period of ten
(10) days, or produce and keep it open for inspection at the meeting, as
provided in this Section, shall be liable to any Shareholder suffering damage on
account of such failure, to the extent of such damage. In the event that such
officer or agent does not receive notice of a meeting of Shareholders
sufficiently in advance of the date of such meeting reasonable to enable him or
her to comply with the duties prescribed by this Section, the Corporation, but
not such officer or agent, shall be liable to any Shareholder suffering damage
on account of such failure, to the extent of such damage.
2.8 QUORUM OF SHAREHOLDERS. The holders of a majority of the shares of the
Corporation entitled to vote, represented or by proxy, shall constitute a quorum
at a meeting of Shareholders. The vote of the holders of a majority of the
shares entitled to vote, and thus represented at a meeting at which a quorum is
present, shall be the act of the Shareholders' meeting, unless the vote of a
greater number is required by law.
2.9 VOTING OF SHARES.
A. Each outstanding share, regardless of class, shall be entitled to one vote on
such matter submitted to a vote of a meeting of Shareholders, except to the
extent that the Articles of Incorporation provide for more or less than one vote
per share
EX-3.(ii) - 3
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or limit or deny voting rights to the holders of the shares of any class of
series, and except as otherwise provided by the General Corporation Law of
Delaware Business Corporation Act.
B. Treasury shares, shares of this Corporation's stock owned by another
corporation, the majority of the voting stock of which is owned or controlled by
this Corporation, and shares of this Corporation's stock held by this
Corporation in a fiduciary capacity shall not be voted, directly or indirectly,
at any meeting, and shall not be counted in determining the total number of
outstanding shares at any given time.
C. A Shareholder may vote either in person or by proxy executed in writing by
the Shareholder or by the Shareholder's duly authorized attorney in fact. No
proxy shall be valid after eleven (11) months from the date of its execution
unless otherwise provided in the proxy. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and unless otherwise made
irrevocable by law.
D. At each election for Directors every Shareholder entitled to vote at such
election shall have the right to vote, in person or by proxy, the number of
shares owned by the Shareholder for as many persons as there are Directors to be
elected and for whose election the Shareholder has a right to vote. (For
cumulative voting see Section 2.13 below.)
E. Shares standing in the name of another corporation, domestic or foreign, may
be voted by such officer, agent, or proxy as the Bylaws of such corporation may
authorize or, in the absence of such authorization, as the Board of Directors of
such corporation may determine; provided, however, that when any foreign
corporation without a permit to do business in this State lawfully owns or may
lawfully own or acquire stock in the Corporation, it shall not be lawful for
such foreign corporation to vote said stock and participate in the management
and control of the business and affairs of the Corporation, as other
Shareholders, subject to all laws, rules and regulations governing Delaware
corporations and especially subject to the provisions of the antitrust laws of
the State of Delaware.
F. Shares held by an administrator, executor, guardian, or conservator may be
voted by him or her so long as such shares forming a part of the estate being
served by him or her, either in person or by proxy, without a transfer of such
shares into his or her name. Shares standing in the name of a trustee may be
voted by that trustee, either in person or by proxy, but no trustee shall be
entitled to vote shares held by him or her without a transfer of such shares
into his or her name as trustee.
G. Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority so to do be contained in
a appropriate order of the court by which such receiver was appointed.
H. A Shareholder whose shares are pledged shall be entitled to vote such shares
until the shares have been transferred into his name of the pledged, and
thereafter, the pledgee shall be entitled to vote the shares so transferred.
EX-3.(ii) - 4
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2.10 METHOD OF VOTING. Voting on any question or in any election may be by voice
or show of hands unless the presiding officer shall order, or any Shareholder
shall demand, that voting be by written ballot.
2.11 RULES OF PROCEDURE. To the extent applicable, Robert's Rule of Order may
govern the conduct and procedure at all Shareholders' meetings.2.12 TELEPHONE
MEETINGS. Subject to the provisions required or permitted by the General
Corporation Law of Delaware for Notice of Meetings, unless otherwise restricted
by the Articles of Incorporation or these Bylaws, Shareholders may participate
in and hold a meeting of Shareholders, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
section shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
2.13 CUMULATIVE VOTING. Cumulative voting is expressly prohibited by the
Articles of Incorporation.
2.14 PRE-EMPT1VE RIGHTS. No holder of any stock of the Corporation shall be
entitled as a matter of right to purchase or subscribe for any part of any stock
of the Corporation authorized by the Articles of Incorporation or of any
additional stock of any class to be issued by reason of any increase of the
authorized stock of the Corporation, or of any bonds, certificates or
indebtedness, debentures, warrants, options or other securities convertible into
any class of stock of the Corporation, but any stock authorized by the Articles
of Incorporation or any such additional authorized issue of any stock or
securities convertible into any stock may be issued and disposed of by the Board
of Directors to such persons, firms, corporations or associations for such
consideration and upon such terms and in such manner as the Board of Directors
may in its discretion determine without offering any thereof on the same terms
or on any terms to the Shareholder then of record of to any class of
Shareholders, provided only that such issuance may not be inconsistent with any
provision of law or with any of the provisions of the Articles of Incorporation.
ARTICLE III.
DIRECTORS
3.1 MANAGEMENT. The business and affairs of the Corporation shall be managed by
its Board of Directors. Directors need not be residents of Delaware of
Shareholders of the Corporation in order to qualify as a Director.
3.2 NUMBER. The number of directors of the Corporation shall consist of from one
to nine members as shall be elected by the Shareholders from time to time. The
number of Directors
EX-3.(ii) - 5
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may be increased or decreased from time to time by amendment to this section of
the Bylaws, but no decrease in the number of Directors shall have the effect of
shortening the term of any incumbent Director
3.3 ELECTION. At the first annual meeting of Shareholders and at each annual
meeting thereafter, the Shareholders shall elect Directors to hold office until
the next succeeding annual meeting.
3.4 TERM OF OFFICE. Unless removed in accordance with these Bylaws each Director
shall hold office for the term of which the Director is elected and until the
Director's successor shall have been elected and qualified.
3.5 REMOVAL. The entire Board of Directors or any Director may be removed from
office either with or without cause at any special meeting of Shareholders by
the affirmative vote of a majority in number of shares of the shareholders
present in person or by proxy at such meeting and entitled to vote for the
election of such Director or Directors if notice of intention to act upon the
question of removing such Director shall have been stated as one of the purposes
for the calling of such meeting and such meeting shall have been called in
accordance with these Bylaws.
3.6 VACANCY.
A. Any vacancy occurring in the Board of Directors may be filled in accordance
with paragraph C of this section or may be filled by the affirmative vote of a
majority of the remaining Directors, though less than a quorum of the Board of
Directors. A Director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office.
B. A Directorship to be filled by reason of an increase in the number of
Directors may be filled in accordance with paragraph C of this section or may be
filled by the Board of Directors for a term of office continuing only until the
next election of one or more Directors by the Shareholders; provided that the
Board of Directors may not fill more than two such Directorship during the
period between any two successive annual meetings of Shareholder
C. Any vacancy occurring in the Board of Directors or any Directorship to be
filled by reason of an increase in the number of Directors may be filled by
election at an annual or special meeting of Shareholders called for that
purpose.
3.7 QUORUM. A majority of the number of Directors fixed by these Bylaws shall
constitute a quorum for the transaction of business unless a greater number is
required by law or these Bylaws. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless a greater number is required by law or these Bylaws.
EX-3.(ii) - 6
<PAGE>
3.8 ANNUAL DIRECTORS' MEETINGS. Immediately after the annual meeting of the
Shareholders and at the place such meeting of the Shareholders has been held,
the Board of Directors shall meet each year for the purpose of election of
officers and consideration of any other business that may properly be brought
before the meeting. No notice of any kind to either old or new members of the
Board of Directors for this annual meeting shall be necessary.
3.9 REGULAR MEETINGS. The Board of Directors may provide by resolution the time
and place, either within or without the State of Delaware, for the holding of
regular meetings without other notice that such resolution.
3.10 SPECIAL MEETINGS. Special meetings of the Board of Directors may be called
by the President or shall be called at the request of any two members of the
Board of Directors and shall be held upon notice by letter, telegram, or fax,
delivered for transmission not later than during the third day immediately
preceding the day for the meeting, or by word of mouth, telephone, or radiophone
received not later than during the second day immediately preceding the day for
the meeting. Notice of any special meeting of the Board of Directors may be
waived before or after the time of the meeting. The person or persons authorized
to call special meetings of the Board of Directors may fix any place, either
within or without the State of Delaware, as the place for holding any special
meeting of the Board of Directors called by them.
3.11 NO STATEMENT OF PURPOSE OF MEETING REQUIRED. Neither the business proposed
to be transacted, nor the purpose of any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such meeting
3.12 COMPENSATION. By resolution of the Board of Directors, the Directors may be
paid their expenses, if any, of attendance at such meeting of the Board of
Directors, and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as Director. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefore.
3.13 ATTENDANCE AND PRESUMPTION OF ASSENT. Attendance of a Director at a meeting
shall constitute a waiver of notice of such meeting, except where a Director
attends a meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened. A
Director who is present at a meeting of the Board of Directors at which action
on any corporate matter is taken shall be presumed to have assented to the
action taken unless that Director's dissent shall be entered in the minutes of
the meeting or unless that Director shall file a written dissent to such action
with the person acting as the Secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a Director who voted in favor of such action.
EX-3.(ii) - 7
<PAGE>
3.14 EXECUTIVE AND OTHER COMMITTEES. The Board of Directors, by resolution
adopted by a majority of the full Board of Directors, may designate from among
its members an executive committee and one or more other committees, each of
which, to the extent provided in such resolution or in these Bylaws, shall have
and may exercise all of the authority of the Board of Directors, except that no
such committee shall have the authority of the Board of Directors in reference
to amending the Articles of Incorporation of the Corporation, approving a plan
of merger or consolidation, recommending to the Shareholders the sale, lease, or
exchange of all or substantially all of the property and assets of the
Corporation other than in the usual and regular course of the Corporation's
business, recommending to the Shareholders a voluntary dissolution of the
Corporation or a revocation thereof, amending, altering, or repealing these
Bylaws or adopting new Bylaws, filling vacancies in the Board of Directors of
any such committee, filling any Directorship to be filled by reason of an
increase in the number of Directors, electing or removing officers or members of
any such committee, fixing the compensation of any member of such committee, or
altering or repealing any resolution of the Board of Directors which by its
terms provides that it shall not be so amendable or repealable; and, unless such
resolution or these Bylaws expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
shares of the Corporation. The designation of such committee and the delegation
thereto of authority shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed by law.
3.15 REMOVAL OF COMMITTEE MEMBERS. Any member of a committee elected by the
Board of Directors whenever in its judgment the best interests of the
Corporation will be served thereby but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Election or
appointment of a member of a committee shall not itself create contract rights.
3.16 WAIVER BY UNANIMOUS CONSENT IN WRITING. Any action required or permitted to
be taken at a meeting of the Board of Directors, any Executive Committee or any
other committee of the Board of Directors may be taken without a meeting if a
consent in writing, setting forth the action so taken is signed by all of the
Board of Directors, any Executive Committee or any other committee of the Board
of Directors as the case may be, and then delivered to the Secretary of the
Corporation for inclusion in the Minute Book of the Corporation. Such consent
shall have the same force and effect as a unanimous vote at a meeting, and may
be stated as such in any document or instrument filed with the Secretary of
State.
3.17 TELEPHONE MEETING. Subject to the provisions required or permitted by the
General Corporation Law of Delaware for Notice of Meetings, unless otherwise
restricted by the Articles of Incorporation, members of the Board of Directors,
or members of any committee designated by the Board of Directors, may
participate in and hold a meeting of the Board of Directors, or committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this section shall constitute presence in
person at such
EX-3.(ii) - 8
<PAGE>
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
ARTICLE IV.OFFICERS4.1 NUMBER. The principal officers of the Corporation shall
consist of a President, one or more Vice President (the number thereof to be
determined by the Board of Directors), a Secretary and a Treasurer, each of whom
shall be elected by the Board of Directors. Such other officers and assistant
officers and agents as may be deemed necessary may be elected or appointed by
the Board of Directors. Any two (2) or more offices may be held by the same
person. No officer need be a Shareholder, a Director. or a resident of Delaware
4.2 ELECTION AND TERM OF OFFICE. The officers of the Corporation shall be
elected by the Board of Directors at its annual meeting or as soon thereafter as
conveniently possible. New or vacated offices may be filled at any meeting of
the Board of Directors. The subordinate officers and agents not elected or
appointed by the Board of Directors shall be appointed by the President or any
other principal officer to whom the President shall delegate the authority. Each
officer shall hold office until that officer's successor shall have been fully
elected and shall have qualified or until that officer's death or until that
office shall resign or shall have been removed in the manner hereinafter
provided. Election or appointment of an officer or agent shall not of itself
create contract rights.
4.3 REMOVAL. Any officer or agent elected or appointed by the Board of Directors
may be removed by the Board of Directors whenever in its judgment the best
interests of the Corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
4.4 VACANCIES. A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the Board of Directors for the
unexpired portion of the term as herein provided.
4.5 AUTHORITY. Officers and agents shall have such authority and perform such
duties in the management of the Corporation as are provided in these Bylaws or
as may be determined by resolution of the Board of Directors not inconsistent
with these Bylaws.
4.6 PRESIDENT. The President shall be the principal executive officer of the
Corporation and shall have general and active management of the business and
affairs of the Corporation. The President shall preside at all meetings of the
Shareholders and of the Board of Directors, and may sign, with the Secretary or
an Assistant Secretary, certificates for shares of the Corporation, any deeds,
mortgages, bonds, contracts, or other instruments which the Board of Directors
has
EX-3.(ii) - 9
<PAGE>
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed. The President shall see that all
orders and resolutions of the Board of Directors are carried into effect, and
shall perform all duties incident to the office of President and such other
duties as may be prescribed by the Board of Directors from time to time.
4.7 VICE PRESIDENT. In the absence of the President or in the event of the
President's death, inability or refusal to act, the Vice President, or in the
event there be more than one Vice President, the Vice Presidents in the order
designated by the Board of Directors or in the absence of any designation then
in the order of their election, shall perform all the duties of the President,
and when so acting shall have all the powers of and be subject to all the
restrictions upon the President. The Vice President shall perform such other
duties as from time to time may be assigned by the President or by the Board of
Directors.
4.8 SECRETARY. The Secretary shall keep the minutes of the Shareholders' and
Board of Directors' meetings in one or more books provided for that purpose; see
that all notices are duly given in accordance with the provisions of these
Bylaws or as required by law; be custodian of the corporate records and of the
seal of the Corporation and see that the seal of the Corporation is affixed to
all certificates for shares prior to the issue thereof and to the execution of
which on behalf of the Corporation under its seal is duly authorized in
accordance with the provisions of the Bylaws; keep a register of the post office
address of each Shareholder which shall be furnished to the Secretary by such
Shareholder; sign with the President certificates for shares of the Corporation,
the issue of which shall have been authorized by resolution of the Board of
Directors; have general charge of the stock transfer books of the Corporation;
and in general perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned by the President or by the
Board of Directors.
4.9 TREASURER. The Treasurer shall be the principal financial officer of the
Corporation and shall have charge and custody and be responsible for all funds
and securities of the Corporation; receive and give receipts for monies due and
payable to the Corporation from any source whatsoever, and deposit all such
monies in the name of the Corporation in such banks, trust companies or other
depositories as shall be selected by the Board Of Directors; render to the
President and the Board of Directors, whenever the same shall be required, an
account of all transactions as Treasurer and of the financial condition of the
Corporation; if required so to do by the Board of Directors for the faithful
condition of the Corporation; if required so to do by the Board of Directors for
the faithful performance of the duties of this office and for the restoration to
the Corporation, in case of the Treasurer's death, resignation, retirement, or
removal from office, of all books, papers, vouchers, money, and other property
of whatever kind in the Treasurer's possession or under his or her control
belonging to the Corporation; and in general perform all of the duties incident
to the office of Treasurer and such other duties as from time to time may be
assigned by the President or by the Board of Directors.
EX-3.(ii) - 10
<PAGE>
4.10 ASSISTANT TREASURER AND ASSISTANT SECRETARY. The Assistant Treasurer shall,
if required by the Board of Directors, give bond for the faithful discharge of
his or her duties in such sums and with such sureties as the Board of Directors
shall determine. The Assistant Secretary as "hereunto authorized by the Board of
Directors may sign with the President certificates for shares of the
Corporation, the issue of which shall have been authorized by a resolution of
the Board of Directors. The Assistant Treasurer and Assistant Secretary, in
general, shall perform such duties as shall be assigned to them by the Treasurer
or the Secretary, respectively, or by the President or the Board of Directors.
4.11 SALARIES. The salaries of the officers shall be fixed from time to time by
the Board of Directors and no officer shall be prevented from receiving such
salary by reason of the fact that the officer is also a Director of the
Corporation.
ARTICLE V.
CONTRACTS, LOANS CHECKS AND DEPOSITS
5.1 CONTRACTS, DEEDS, MORTGAGES, ETC. Subject always to the specific direction
of the Board of Directors, all deeds and mortgages made by the Corporation and
all other written contracts and agreements to which the Corporation shall be a
party shall be executed in its name by the President or Vice President (or one
of the Vice Presidents if there are more than one), and when requested, the
Secretary shall attest to such signatures and affix the corporate seal to the
instrument.
5.2 LOANS. No indebtedness, other than for office furniture and equipment which
does not exceed $10,000.00 in amount, shall be contracted on behalf of the
Corporation and no evidence of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
5.3 CHECKS, DRAFT, ETC. All checks, drafts, notes, bonds, bills of exchange,
other orders for the payment of money, notes or other evidences of indebtedness
issued in the name of the Corporation, shall be signed by such officer or
officers, agent or agents of the Corporation and in such manner as shall from
time to time be determined or other depositories as the Board of Directors may
select.
5.4 DEPOSITS. All funds of the Corporation not otherwise employed, shall be
deposited from time to time to the credit of the Corporation in such banks,
trust companies or other depositories as the Board of Directors may select.
ARTICLE VI.CERTIFICATES FOR SHARES AND THEIR TRANSFER6.1 CERTIFICATES FOR
SHARES. The Corporation shall deliver certificates representing all shares to
which Shareholders are entitled in such form as may be determined by the Board
of Directors. Each certificate representing shares shall state upon the face
thereof that the Corporation is organized under the laws of the State of
Delaware; the name of the person to whom it is issued; the number and class of
shares
EX-3.(ii) - 11
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and the designation of the series, if any, which such certificate represents;
the par value of each represented by such certificate, or a statement by law.
Such certificates shall be signed by the President or Vice President and either
by the Secretary or Assistant Secretary or such officer or officers as the Board
of Directors shall designate, and may be sealed with the seal of the Corporation
or a facsimile thereof.
6.2 FACSIMILE SIGNATURES. The signatures of the President or Vice President,
Secretary or Assistant Secretary or such officer or officers as these Bylaws or
the Board of Directors of the Corporation shall prescribe upon a certificate may
be facsimiles, if the certificate is countersigned by a transfer agent or
registered by a registrar, either of which is other than the Corporation itself
or an employee of the Corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he or she were such officer at the date
of its issuance.
6.3 ISSUANCE. Shares (both treasury and authorized but unissued) may be issued
for such consideration, not less than par value, and to such persons as the
Board of Directors may determine from time to time.
6.4 SUBSCRIPTIONS. Unless otherwise provided in the subscription agreement,
subscriptions for shares, whether made before or after organization of the
Corporation, shall be paid in full at such time or in such installments and at
such times as shall be determined by the Board of Directors. Any call made by
the Board of Directors for payment on subscriptions shall be uniform as to all
shares of the same class or as to all shares of the same series, as the case may
be. In case of default in the payment on any installment or call when payment is
due, the Corporation may proceed to collect the amount due in the same manner as
any debt due to the Corporation.
6.5 PAYMENT. The consideration paid for the issuance of shares of the
Corporation shall consist of money actually paid, labor or services actually
performed, or property, both tangible and intangible, actually received.
Certificates for shares may not be issued until the full amount of the
consideration, fixed as provided by law, has been paid. When such consideration
shall have been paid to the Corporation or to a corporation of which all of the
outstanding shares of each class are owned by the Corporation, the shares shall
be deemed to have been issued and the subscriber or Shareholder entitled to
receive such issue shall be a Shareholder with respect to such shares, and the
shares shall be considered fully paid and non-assessable. Neither promissory
notes nor the promise of future services shall constitute payment or partial
payment for shares of the Corporation. In the absence of fraud in the
transaction, the judgment of the Board of Directors or the Shareholders as the
case may be, as to the value of the consideration received for shares shall be
conclusive.
EX-3.(ii) - 12
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6.6 LIEN. The Corporation shall have a first and prior lien on all shares of its
stock and upon all dividends being declared upon the same for any indebtedness
of the respective holders thereof to the corporation.
6.7 REPLACEMENT OF LOST OR DESTROYED CERTIFICATES. The Board of Directors may
direct a new certificate or certificates to be issued in place of any
certificate or certificates thereto-fore issued by the Corporation alleged to
have been lost or destroyed, upon the making of an affidavit of fact by the
person claiming the certificate or certificates representing shares to be lost
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost or destroyed certificate or
certificates, or the owner's legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a bond with a surety
or sureties satisfactory to the Corporation with respect to the certificate or
certificates alleged to have been lost or destroyed.
6.8 TRANSFER OF SHARES. Shares of stock shall be transferable only on the books
of the Corporation by the holder thereof in person or by the holder's duly
authorized attorney. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation or its transfer agent shall issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
6.9 REGISTERED SHAREHOLDERS. The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in fact thereof
and, accordingly, shall not be bound to recognize any equitable or other claim
to or interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof, except as otherwise
provided by law.
ARTICLE VII.
DIVIDENDS AND RESERVES
7.1 DECLARATION AND PAYMENT. Subject to provisions of the statutes and the
Articles of Incorporation (if any), dividends may be declared by the Board of
Directors at any regular or special meeting and may be paid in cash, property,
or in shares of the Corporation. Such declaration and payment shall be at the
discretion of the Board of Directors.
7.2 RECORD DATE. The Board of Directors may fix in advance a record date for the
purpose of determining Shareholders entitled to receive payment of any dividend,
such record date to be not more than fifty (50) days prior to the payment date
of such dividend, or the Board of Directors may close the stock transfer books
for such purpose for a period of not more than fifty (50) days prior to the
payment date of such dividend. In the absence of any action by the Board of
Directors, the date upon which the Board of Directors adopt the resolution
declaring such dividend shall be the record date.
EX-3.(ii) - 13
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7.3 RESERVES. There may be created by resolution of the Board of Directors out
of the earned surplus of the Corporation such reserve or reserves as the
Directors from time to time, in their discretion, think proper to provide for
contingencies, or to equalize dividends, or to repair or maintain any property
of the Corporation, or for such other purposes as the Directors shall think
beneficial to the Corporation, and the Directors may modify or abolish any such
reserve in the manner in which it was created
ARTICLE VIII.
INDEMNIFICATION
8.1 DEFINITIONS. In this Article:
A, "Corporation" includes any domestic or foreign predecessor entity of the
Corporation in a merger, consolidation, or other transaction in which the
liabilities of the predecessor are transferred to the Corporation by operation
of law and in any other transaction in which the Corporation assumes the
liabilities of the predecessor but does not specifically exclude liabilities
that are the subject matter of this Article VIII.
B. "Director" means any person who is or was a director of the Corporation and
any person who, while a director of the Corporation, is or was serving at the
request of the Corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary or another foreign
or domestic corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise.
C. "Expenses" include court costs and attorneys" fees.D. "Official capacity"
means:1. When used with respect to a director, the office of Director in the
Corporation, and
2. When used with respect to a person other than a Director, the elective or
appointive office in the Corporation held by the officer or the employment or
agency relationship undertaken by the employee or agent in behalf of the
Corporation.
3. In both Paragraphs (1) and (2) does not include service for any other foreign
or domestic corporation or any partnership, joint venture, sole proprietorship,
trust, employee benefit plan, or other enterprise.
E. "Proceeding' means any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, arbitrative, or
investigative, any appeal in such an action, suit, or proceeding, and any
inquiry or investigation that could lead to such an action, suit, or proceeding.
EX-3.(ii) -14
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8.2 POWER TO INDEMNIFY. The Corporation may indemnify a person who was, is, or
is threatened to be made a named defendant or respondent in a proceeding because
the person is or was a Director only if it is determined in accordance with
Section 8.6 of this Article that the person:
A. Conducted himself in good faith;
B. Reasonably believed:
1. In the case of conduct in his official capacity as a Director of the
Corporation, that his conduct was in the Corporation's best interests; and
2. In all other cases, that his conduct was at least not opposed to the
Corporation's best interests; and
C. In the case of any criminal proceeding, had no reasonable cause to believe
his conduct was unlawful.
8.3 DIRECTOR LIMITATION. A Director may not be indemnified under Section 8.2 of
this Article for obligations resulting from a proceeding:
A. In which the person is found liable on the basis that personal benefit was
improperly received by him, whether or not the benefit resulted from an action
taken in the person's official capacity; or
B. In which the person is found liable to the Corporation.
8.4 TERMINATION OF A PROCEEDING. The termination of a proceeding by judgment,
order, settlement, or conviction, or on a plea of nolo contendere or its
equivalent is not of itself determinative that the person did not meet the
requirements set forth in Section 3.2 of the Articles
8.5 PROCEEDING BROUGHT BY THE Corporation. A person may be indemnified under
Section 8.2 of this Article against judgments, penalties (including excise and
similar taxes), fines, settlements, and reasonable expenses actually incurred by
the person in connection with the proceeding; but if the proceeding was brought
by or in behalf of the Corporation, the indemnification is limited to reasonable
expenses actually incurred by the person in connection with the proceeding.
8.6 DETERMINATION OF INDEMNIFICATION. A determination of indemnification under
Section 8.2 of this Article must be
A. By a majority vote of a quorum consisting of Directors who at the time of the
vote are not named defendants or respondents in the proceeding;
EX-3.(ii) - 15
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B. If such a quorum cannot be obtained, by a majority vote of a committee of the
Board of Directors, designated to act in the matter by a majority vote of all
Directors, consisting solely of two or more Directors who at the time of the
vote are not named defendants or respondents in the proceeding:
C. By special legal counsel selected by the Board of Directors or a committee of
the Board by vote as set forth in Subsection A or B of this Section 8.6, or, if
such a quorum cannot be obtained and such a committee cannot be established, by
a majority vote of all Directors; or
D. By the Shareholders in a vote that excludes the shares held by Directors who
are named defendants or respondents in the proceeding.
8.7 AUTHORIZATION OF INDEMNIFICATION. Authorization of indemnification and
determination as to reasonableness of expenses must be made in the same manner
as the determination that indemnification is permissible, except that if the
determination that indemnification is permissible is made by special legal
counsel, authorization of indemnification and determination as to reasonableness
of expenses must be made in the manner specified by Subsection C of Section 8.6
of this Article, for the selection of special legal counsel. A provision
contained in the Articles of Incorporation, the Bylaws, a resolution of
Shareholders or Directors, or an agreement that makes mandatory the
indemnification permitted under Section 8.2 of this Article shall be deemed to
constitute authorization of indemnification in the manner required by this
Section 8.7 even though such provision may not have been adopted or authorized
in the same manner as the determination that indemnification is Permissible
8.8 INDEMNIFICATION OF A DIRECTOR.
A. The Corporation shall indemnify a Director against reasonable expenses
incurred by him or her in connection with a proceeding in which he or she is
named defendant or respondent because he or she is or was a Director if he or
she has been wholly successful, on the merits or otherwise, in the defense of
the proceeding.
B. If, in a suit for the indemnification required by Section 8.8 of this
Article, a court of competent jurisdiction determines that the Director is
entitled to indemnification under that section, the court shall order
indemnification and shall award to the director the expenses incurred in
securing the indemnification.
C. If, upon application of a Director, a court of competent jurisdiction
determines, after giving any notice the court considers necessary, that the
Director is fairly and reasonable entitled to indemnification in view of all the
relevant circumstances, whether or not he or she has met the requirements set
forth in Section 8.2 of this Article or has been adjudged liable in the
EX-3.(ii) - 16
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circumstances described in Section 8.3 of this Article, the court may order the
indemnification that the court determines is proper and equitable. The Court
shall limit indemnification to reasonable expenses if the proceeding is brought
by or in behalf of the Corporation or if the Director is found liable on the
basis that personal benefit was improperly received by him, whether or not the
benefit resulted from an action taken in the person's official capacity.
D. Reasonable expenses incurred by a Director who was, is or is threatened to be
made a named defendant or respondent in a proceeding may be paid or reimbursed
by the Corporation in advance of the final disposition of the proceeding after:
1. The Corporation receives a written affirmation by the director of his good
faith belief that he has met the standard of conduct necessary for
indemnification under this Article and a written undertaking by or on behalf of
the Director to repay the amount paid or reimbursed if it is ultimately
determined that he has not met those requirements; and
2. A determination that the facts then known to those making the determination
would not preclude indemnification under this Article.E. The written undertaking
required by Subsection D of this Section 8.8 must be an unlimited general
obligation of the Director but need not be secured. It may be accepted without
reference to financial ability to make repayment. Determinations and
authorizations of payment under Subsection D of this Section 8.8 must be made in
the manner specified by Section 8.6 of this Article for determining that
indemnification is permissible.
F. Notwithstanding any other provision of this Article, a Corporation may pay or
reimburse expenses incurred by a Director in connection with his appearance as a
witness or other participation in a proceeding at a time when he or she is not a
named defendant or respondent in the proceeding.
8.9 INDEMNIFICATION OF OTHERS.
A. An officer of the Corporation shall be indemnified as, and to the same
extent, provided by Subsections A, B and C of this Section 8.9 for a Director
and is entitled to seek indemnification under those Subsections to the same
extent as a Director. The Corporation may indemnify and advance expenses to an
officer, employee, or agent of the Corporation to the same extent that it may
indemnify and advance expenses to Directors under this Article.
B. The Corporation may indemnify and advance expenses to persons who are not or
were not officers, employees, or agents of the Corporation but who are or were
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise to the same
extent that it may indemnify and advance expenses to Directors under this
Article.
EX-3.(ii) - 17
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C. The Corporation may indemnify and advance expenses to an officer, employee,
agent, or person identified in Subsection B of this Section 8.9 and who is not a
Director to such further extent, consistent with law, as may be provided by the
Corporation's Articles of Incorporation, Bylaws, general or specific action of
its Board of Directors, or contract or as permitted or required by common law.
8.10 INDEMNITY INSURANCE. A Corporation may purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee, or agent of
the Corporation or who is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor; trustee, employee, agent, or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, against any liability asserted against him or her and incurred by
him or her in such a capacity or arising out of his or her status as such a
person, whether or not the Corporation would have the power to indemnify him or
her against that liability under this Article.
8.11 REPORTS TO SHAREHOLDERS. Any indemnification of or advance of expenses to a
Director in accordance with this Article shall be reported in writing to the
Shareholders with or before the notice or waiver of notice of the next
Shareholders' meeting or with or before the next submission to Shareholders of a
consent to action without a meeting pursuant to The General Corporation Law of
Delaware and, in any case, within the 12-month period immediately following the
date of the indemnification or advance.
8.12 EMPLOYEE BENEFIT PLAN. For purpose of this Article, the Corporation is
deemed to have requested a Director to serve an employee benefit plan whenever
the performance by him or her duties to the Corporation also imposes duties on
or otherwise involves services by him or her to the plan or participants or
beneficiaries of the plan pursuant to applicable law are deemed fines. Action
taken or omitted by him or her with respect to an employee benefit plan in the
performance of his or her duties for a purpose reasonable believed by him or her
to be in the interest of the participants and beneficiaries of the plan is
deemed to be for a purpose which is not opposed to the best interests of the
Corporation.
ARTICLE IX.MISCELLANEOUS9.1 LIMITATION OF LIABILITY. No person shall be liable
to the Corporation for any loss or damage suffered by it on account of any
action taken or omitted to be taken by that person as a director, officer or
employee of the Corporation in good faith, if, in the exercise of ordinary care,
this person:
A. Relied upon financial statements of the Corporation represented to this
person to be correct by the President or the officer of the Corporation having
charge of its books of account, or stated in a written report by an independent
public or certified public accountant or firm of such accountants fairly to
EX-3.(ii) - 18
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reflect the financial condition of the Corporation; or considered the assets to
be of their book value; or
B. Relied upon the written opinion of an attorney for the Corporation.
9.2 FISCAL YEAR. The Fiscal Year of the Corporation shall be fixed by resolution
of the Board of Directors.
9.3 SEAL. The corporate seal shall be in such form as may be determined by the
Board of Directors. Said seal may be used by causing it or a facsimile thereof
to be impressed or affixed or reproduced or otherwise.
9.4 BOOKS AND RECORDS. The Corporation shall keep correct and complete books and
records of account and shall keep minutes of the proceedings of its Shareholders
and the Board of Directors, and shall keep at its registered office or principal
place of business, or at the office of its transfer agent or registrar, a record
of its Shareholders, giving the names and addressees of all Shareholders and the
number and class of the shares held by each. Any books, records and minutes may
be in written form or in any other form capable of being converted into written
form within a reasonable time. Any person who shall have been a holder of record
of shares for at least six (6) months immediately preceding demand, or shall be
the holder of record of at least five percent (5%) of all the outstanding shares
of a corporation, upon written demand stating the purpose thereof, shall have
the right to examine, in person or by agent, accountant, or attorney, at any
reasonable time or times, for any proper purpose, its relevant books and records
of account, minutes and records of Shareholders' and to make extracts therefrom
9.5 ANNUAL STATEMENT. The Board of Directors shall present at each annual
meeting of Shareholders a full and clear statement of the business and condition
of the Corporation, including a reasonably detailed balance sheet and income
statement.
9.6 RESIGNATION. Any Director, officer or agent may resign by giving written
notice to the President or the Secretary. Such resignation shall take effect at
the time specified therein, or immediately if no time is specified therein.
Unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective
9.7 AMENDMENT OF BYLAWS. These Bylaws may be altered, amended, or repealed
either by unanimous written consent of the Board of Directors, in the manner
stated in Article 3.16 herein, or at any meeting of the Board of Directors at
which a quorum is present, by the affirmative vote of a majority of the
Directors present at such meeting, provided notice of the proposed alteration,
amendment, or repeal be contained in the notice of such meeting.
9.8 INVALID PROVISIONS. If any part of these Bylaws shall be held invalid or
inoperative for any reason, the remaining parts, so far as possible and
reasonable, shall be valid and operative.
EX-3.(ii) - 19
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9.9 HEADINGS. The headings used in these Bylaws have been inserted for
administrative convenience only and do not constitute matter to be construed in
interpretation.
9.10 WAIVER OF NOTICE. Whenever any notice is required to be given to any
Shareholder or Director of the Corporation, a Waiver thereof in writing signed
by the person or persons entitled to such notice, whether before or after the
time stated therein, shall be equivalent to the giving of such notice.
9.11 GENDER. Words which import one gender shall be applied to any gender
wherever appropriate and words which import the singular or plural shall be
applied to either the plural or singular wherever appropriate.
I, the undersigned, being the Secretary of Professionalistics Inc., do hereby
certify the foregoing to be the Bylaws of said Corporation, as adopted at a
meeting of the Directors held on the 12th day of June, 1989.
/s/ Kevin B. Halter, Jr.
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Secretary
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