U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities
Exchange Act of 1934
BUFFALO CAPITAL I, LTD.
(Name of Small Business Issuer in its charter)
Colorado 84-11356381
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7331 S. Meadow Court,
Boulder, Colorado 80301
(Address of Principal Office) Zip Code
Issuer's telephone number: (303) 530-3353
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on
to be so registered which each class is to be
registered
Not Applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
Class A Warrants to purchase common stock
(Title of class)
Class B Warrants to purchase common stock
(Title of class)
<PAGE>
PART I
Item 1. Description of Business.
General
The Company was incorporated under the laws of the
State of Colorado on August 28, 1996, and 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'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 officers and directors and
other affiliates have previously been involved in several transactions
involving mergers between an established company and a blind pool
or blank check entity, and they have numerous contacts within the
field of corporate finance (See Item 5 "Directors, Executive Officers,
Promoters and Control Persons - Other Blind Pool Activities"). As a
result, they have had preliminary contacts with representatives of
numerous companies concerning the general possibility of a merger or
acquisition with a blind pool or blank check company. However,
none of these preliminary contacts or discussions involved the
possibility of a merger or acquisition transaction with the Company.
Prior to the effective date of this registration statement,
it is anticipated that the Company's officers, directors, and affiliates
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 a general interest in considering a
merger or acquisition with a blind pool or blank check entity. No
direct discussions regarding the possibility of a merger with the
Company are expected to occur until after the effective date of this
registration statement. However, 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 (See
"Investigation and Selection of Business Opportunities"). The
Company anticipates that the business opportunities presented to it will
(i) either be in the process of formation or, be recently organized with
limited 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 or that it believes may
realize a substantial benefit from being publicly owned. Given the
above factors, investors should expect that any acquisition candidate
may have little or no operating history, or 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 in-
dustry, 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 which 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 be a private transaction rather than a public distribution
of securities, but is also likely to result in substantial gains to them
relative to their purchase price for such stock. In the Company's
judgment, none of its officers and directors would thereby become an
"underwriter" within the meaning of the Section 2(11) of the
Securities Act of 1933, as amended as long as the transaction is a
private transaction rather than a public distribution of securities. 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 officers and directors of the Company may resign their
management positions with the Company in connection with a change
in control of the Company or its 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
change in control of 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 officers
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
officers or directors are currently affiliated. Should the Company
determine in the future, contrary to the foregoing expectations, that a
transaction with an affiliate would be in the best interests of the
Company and its stockholders, the Company is in general permitted
by Colorado law to enter into such a transaction if:
(1) The material facts as to the relationship or interest
of the affiliate and as to the contract or transaction are disclosed or are
known to the Board of Directors, and the Board in good faith
authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested directors, even though the disinterested
directors constitute less than a quorum; or
(2) The material facts as to the relationship or interest
of the affiliate and as to the contract or transaction are disclosed or are
known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
stockholders; or
(3) The contract or transaction is fair as to the
Company as of the time it is authorized, approved or ratified, by the
Board of Directors or the stockholders.
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 anti-
cipated 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 antici-
pated 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, 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 the 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 directors 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 officers,
directors and affiliates, none of whom are professional business
analysts (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 adopted
by the Securities and Exchange 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 are
sought to be listed have gross assets of at least $4,000,000 and net
assets of at least $2,000,000, and the NASD has made a proposal to
increase the requirements to $6,000,000 of gross assets and $3,000,000
of net assets. 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 officers and directors 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 Securities and Exchange Commission
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 which 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. 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 merger or
reorganization transaction. As part of such a transaction, the
Company's existing directors may resign and new directors 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 In-
ternal Revenue Code of 1986, 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 immedi-
ately following the reorganization. If a transaction were structured to
take advantage of these provisions rather than other "tax free"
provisions provided under the Internal Revenue 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 officers, directors 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. Al-
though the terms of such agreement cannot be predicted, generally
such an agreement would require specific representations and war-
ranties 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 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 ac-
quisition 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.
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.
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 Securities Act of 1933, as amended (the "Act").
If the Company elects to resell such securities, such sale cannot
proceed unless a registration statement has been declared effective by
the Securities and Exchange Commission or an exemption from
registration is available. Section 4(1) of the Act, which exempts sales
of securities not involving a public distribution by persons other than
the issuer, 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 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 indi-
viduals. 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.
Administrative Offices
The Company currently maintains a mailing address at
7331 S. Meadow Court, Boulder, Colorado 80301, which is the office
address of its President. The Company's telephone number there is
(303) 530-3353. 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 em-
ployees and their availability will be addressed in connection with the
decision whether or not to acquire or participate in specific business
opportunities.
Risk Factors
A. Conflicts of Interest. Certain conflicts of interest
exist between the Company and its officers and directors. They have
other business interests to which they currently devote attention, and
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 their
exercise of judgment in a manner which is consistent with their
fiduciary duties to the Company. See "Management," and "Conflicts
of Interest."
In particular, the Company's officers and directors have
formed three other blind pool or blank check companies with a
structure and a business plan which is identical to that of the
Company, and may, in the future, form additional blind pool or blank
check companies with a business plan similar or identical to that of
the Company. The three other blind pool or blank check companies
which were formed at the same time as the Company and have an
identical structure and business plan do not currently create a conflict
of interest with the Company because they have the same
shareholders. However, any such additional blind pool or blank check
companies formed in the future, which do not have the same capital
structure and shareholders as the Company, would also be in direct
competition with the Company for available business opportunities
(See Item 5 - "Directors, Executive Officers, Promoters and Control
Persons - Conflicts of Interest").
It is anticipated that the Company's principal
shareholders may actively negotiate or otherwise consent to the
purchase of a portion of their common stock as a condition to, or in
connection with, a proposed merger or acquisition transaction. In this
process, the Company's principal shareholders may consider their own
personal pecuniary benefit rather than the best interests of other
Company shareholders, and the other Company shareholders are not
expected to be afforded the opportunity to approve or consent to any
particular stock buy-out transaction. See "Conflicts of Interest."
B. 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.
C. 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, and
15g-7 under the Securities Exchange Act of 1934, as amended.
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 with consequent investor losses. 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.
D. No Operating History. The Company was formed
in August of 1996 for the purpose of registering its common stock
under the 1934 Act and 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.
E. No Assurance of Success or Profitability. There
is no assurance that the Company will acquire a favorable business op-
portunity. 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.
F. 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."
G. Type of Business Acquired. The type of business
to be acquired may be one that desires to avoid effecting its own pub-
lic 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.
H. 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.
I. 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.
J. 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 Securities Exchange Act of 1934, as amended (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 Securities and Exchange Commission (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, the automated quotation system sponsored by
the National Association of Securities Dealers, Inc., 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
Securities Act of 1933, and the ability of the Company to raise capital
would be significantly limited until such financial statements were to
become available.
K. 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.
L. Dependence upon Management; Limited
Participation of Management. The Company will be heavily
dependent upon the skills, talents, and abilities of its officers and
directors to implement its business plan, and may, from time to time,
find that the inability of such persons to devote their full time
attention to the business of the Company results in a delay in progress
toward implementing its business plan. Furthermore, the Company
will be entirely dependent upon the experience of its officers and
directors in seeking, investigating, and acquiring a business and in
making decisions regarding the Company's operations. See
"Management." 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 officers
and directors.
M. Lack of Continuity in Management. The
Company does not have an employment agreement with any of its sole
officers or directors, and as a result, there is no assurance that they
will continue to manage the Company in the future. In connection
with acquisition of a business opportunity, it is likely the current
officers and directors 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.
N. Indemnification of Officers and Directors. The
Company's Articles of Incorporation provide for the indemnification
of its directors, officers, employees, and agents, under certain cir-
cumstances, against attorney's fees and other expenses incurred by
them in any litigation to which they become a party arising from their
association with or activities on behalf of the Company. The
Company will also bear the expenses of such litigation for any of its
directors, officers, employees, or agents, upon such person's promise
to repay the Company therefor if it is ultimately determined that any
such person shall not have been entitled to indemnification. This
indemnification policy could result in substantial expenditures by the
Company which it will be unable to recoup.
O. Director's Liability Limited. The Company's
Articles of Incorporation exclude personal liability of its directors to
the Company and its stockholders for monetary damages for breach of
fiduciary duty except in certain specified circumstances. Accordingly,
the Company will have a much more limited right of action against its
directors than otherwise would be the case. This provision does not
affect the liability of any director under federal or applicable state
securities laws.
P. Dependence upon Outside Advisors. To
supplement the business experience of its officers and directors, 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 officers 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 officers
of the Company consider it necessary to hire outside advisors, they
may elect to hire persons who are affiliates, if they are able to provide
the required services.
Q. 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 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.
R. 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 capa-
bilities than the Company. These competitive conditions will exist in
any industry in which the Company may become interested.
S. No Foreseeable Dividends. The Company has not
paid dividends on its Common Stock and does not anticipate paying
such dividends in the foreseeable future.
T. 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. In addition, the
Company's President could sell his control block of stock at a
premium price to the acquired company's stockholders.
U. No Public Market Exists. 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 any loans.
V. Rule 144 Sales. All of the outstanding shares of
Common Stock held by present stockholders are "restricted securities"
within the meaning of Rule 144 under the Securities Act of 1933, as
amended. As restricted shares, these shares may be resold only
pursuant to an effective registration statement or under the re-
quirements of Rule 144 or other applicable exemptions from regis-
tration under the 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 1.0% of a
company's outstanding common stock or the average weekly trading
volume during the four calendar weeks prior to the sale. There is no
limit on the amount of restricted securities that may be sold by a
nonaffiliate after the restricted securities have been held by the owner
for a period of three 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. Of the total 2,415,000 shares of common
stock held by present stockholders of the Company, 2,400,000 shares
will become available for resale under Rule 144 ninety (90) days after
the Company registers its common stock under Section 12(g) of the
Securities and Exchange Commission, and the remaining 15,000
shares will become available for resale starting in August, 1999.
W. Market Overhang of Warrants. There are a total
of 4,830,000 Class A Warrants outstanding. Subject to prior
cancellation, each Class A Warrant is exercisable for one share of
Common Stock during the period beginning January 1, 1997, and
ending December 31, 2002 (unless extended). Each Class A Warrant
carries an exercise price of $2.00. There are a total of 2,415,000
Class B Warrants outstanding. Subject to prior cancellation, each
Class B Warrant is exercisable for one share of Common Stock during
the period beginning January 1, 1997, and ending December 31, 2002
(unless extended). Each Class B Warrant carries an exercise price of
$4.00. Exercise of the Warrants can be expected to have an adverse
effect upon the trading price of and market for the Common Stock, if
any such market develops. Even if a public market for the Common
Stock should develop, it is not possible to predict whether normal
market forces might cause an increase in the bid price of the Common
Stock to the level of the exercise price of either the Class A or the
Class B Warrants. It is possible that so long as any of the Warrants
remain outstanding, their existence will prevent a rise in the price of
the Common Stock higher than their exercise price. See "Description
of Securities - Class A Warrants." Sale or transfer of the Warrants is
subject to the Company's filing of and obtaining effectiveness for a
registration statement with appropriate federal and state securities
agencies. See "Possible Cancellation of Class A Warrants without
Notice," below, for further risks related to the market for Class A
Warrants.
X. Exercise of Warrants Uncertain. Because of the
lack of a market for the Warrants and the uncertainty of the
Company's potential for success, the Warrants may not be exercised
before they expire, with the result that no proceeds from exercise of
the Warrants would be received by the Company. The Warrants may
be exercised only at a time when a current registration statement is in
effect and only if the shares are qualified for sale under applicable
securities laws of the states in which the various warrantholders reside.
Although the Company intends to use its best efforts to keep a
registration statement current during the exercise periods of the
Warrants, and when justified by market conditions, there is no
assurance that it will do so or that it will be financially able to do so.
Further, it is not required to do so at any time when the market bid
price for the Common Stock is less than the exercise price of the
Warrants. Proceeds from the exercise of Warrants may be subject to
the escrow requirements of the Colorado Securities Act. See "Use of
Proceeds."
Y. Possible Cancellation of Warrants without Notice.
The Company is entitled to cancel the Warrants without prior notice
to the warrantholders should the representatives of a business
opportunity with which the Company wishes to combine require, as
a condition to consummation of the combination, that the Warrants be
canceled. Under these circumstances, the warrantholders will have no
opportunity to exercise the purchase rights under the Warrants. See
"Description of Securities - Class A and Class B Warrants." The
Company's ability to cancel the Warrants without notice may cause
them to be of little value, may inhibit or prevent the formation of a
separate trading market for the Warrants, and may have a substantial,
depressive effect upon the trading price of the Warrants should such
a separate market come into being.
Z. 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.
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
proceeds in the amount of $7,500 from its inside capitalization funds.
Consequently, the Company's balance sheet for the period of August
28, 1996 (inception) through August 31, 1996, reflects a current asset
value of $7,494.80 and a total asset value of $7,794, primarily in the
form of cash.
The Company will carry out its plan of business as
discussed above. 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
During the period from August 28, 1996 (inception)
through August 31, 1996, the Company has engaged in no significant
operations other than organizational activities, acquisition of capital
and preparation for registration of its securities under the Securities
Exchange Act of 1934, as amended. 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 believes that its existing capital will be
sufficient to meet the Company's cash needs, including the costs of
compliance with the continuing reporting requirements of the
Securities Exchange Act of 1934, as amended, for a period of
approximately one year. Accordingly, in the event the Company is
able to complete a business combination during this period, it
anticipates that its existing capital will be sufficient to allow it to
accomplish the goal of completing a business combination. There is
no assurance, however, that the 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.
No commitments to provide additional funds have been
made by management or other stockholders. Accordingly, there can
be 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
7331 S. Meadow Court, Boulder, Colorado 80301, which is the
address of its President. 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 (303) 530-3353.
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth, as of the date of this
Registration Statement, the number of shares of Common Stock owned
of record and beneficially by executive officers, directors and persons
who hold 5% or more of the outstanding Common Stock of the
Company. Also included are the shares held by all executive officers
and directors as a group.
<TABLE>
<CAPTION>
%
of
Number of Shares Class
Name and address Owned Beneficially Owned
<S> <C> <C>
Grant W. Peck <F1>
7331 S. Meadow Court
Boulder, Colorado 80301 600,000<F2> 24.84%
Dean F. Sessions<F1>
P. O. Box 17881
Boulder, Colorado 80308 600,000<F2> 24.84%
Scott B. Olson
6025 S. Quebec Street, # 340
Englewood, Colorado 80111 600,000<F2> 24.84%
Gary S. Joiner
4750 Table Mesa Drive
Boulder, Colorado 80303 600,000<F2> 24.84%
All directors and executive
officers (2 persons) 1,200,000 49.69%
<FN>
<F1> The person listed is an officer, a director, or both, of the
Company.
<F2> Does not include 1,200,000 shares subject to Class A Warrants
owned by each such person exercisable at $2.00 per share beginning
January 1, 1997, or 600,000 shares subject to Class B Warrants owned
by each such person exercisable at $4.00 per share beginning January
1, 1997.
</FN>
</TABLE>
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers currently serving the Company are
as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Positions Held and Tenure
Grant W. Peck 42 President and a Director since January, 1995
Dean F. Sessions 44 Secretary, Treasurer, and a Director since
January, 1995
</TABLE>
August, 1997
The directors named above will serve until the first annual
meeting of the Company's stockholders. Thereafter, directors 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 any of the directors or officers 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 directors and officers will devote their time to the Com-
pany's affairs on an "as needed" basis, which, depending on the
circumstances, could amount to as little as two hours per month, or
more than forty hours per month, but more than likely will fall within
the range of five to ten hours per month.
Biographical Information
Grant W. Peck.
Mr. Peck has served as President and a Director of the
Company since its inception.
Mr. Peck was the principal shareholder, the President and a
Director of J. S. Grant's, Inc., doing business as Just Squeezed Juices,
from its inception in 1985 until January, 1995, when the Company
was sold. J.S. Grant's distributed fresh juices from Denver, Colorado,
to five states, and had approximately $3.5 million in annual sales and
36 employees. Between 1977 and 1984, Mr. Peck was an owner and
Director of Operations for the Harvest Restaurant and Bakery, a
restaurant company that catered to the then emerging health-conscious
market. During his tenure with Harvest Restaurant and Bakery,
Mr. Peck was responsible for the growth and daily operation of the
restaurant company, employing over 385 employees and staffing 28
managers.
Mr. Peck has been the President and a director of Buffalo
Capital II, Ltd., Buffalo Capital III, Ltd., and Buffalo Capital IV, Ltd,
all of which are Colorado corporations, since their inception in
August, 1997. All of these entities are in the same business as the
Company (blind pool or public shell companies). For further
information about these other entities, see "Other Blind Pool
Activities").
Mr. Peck attended the University of Colorado and Macalester
College in St. Paul, Minnesota, but did not receive a degree from
either institution.
In 1990 Mr. Peck personally filed for the protection of the
federal bankruptcy laws as a result of the temporary inability of his
company, J. S. Grant's, Inc., to pay him a salary or otherwise arrange
to pay debts Mr. Peck had incurred to capitalize such company.
Dean F. Sessions.
Mr. Sessions has served as Secretary and Treasurer, and as a
Director of the Company since its inception.
From 1973 through 1982 Mr. Sessions was employed as an
investment broker by E. F. Hutton & Co., in its Boulder, Colorado
office. From 1982 through 1986 Mr. Sessions was an officer, director
and principal shareholder of A. S. Food Company, Inc., a Colorado
corporation formed to acquire the franchise rights for Round The
Corner restaurants in Oregon, Washington and British Columbia. A.
S. Food Company, Inc., opened and operated two Round The Corner
restaurants in the Seattle, Washington area, but in 1986 it filed
bankruptcy and ceased operations. As a result of the failure of the
business of A. S. Food Company, Inc., Mr. Sessions also filed a
personal bankruptcy petition in 1986.
In October 1986, Mr. Sessions renewed his securities license
with the NASD and simultaneously joined the Boulder, Colorado
office of E. F. Hutton as an account executive. From June of 1987
through March of 1988, Mr. Sessions was a registered representative
of L. T. Securities, the securities division of Lincoln Trust
Corporation of Denver, Colorado. From March, 1988, to August,
1990, Mr. Sessions was a registered representative with Cohig
Securities, Inc. of Denver, Colorado, and from January, 1991 to June,
1994, Mr. Sessions was a registered representative with Walford and
Company, of Boulder, Colorado. In addition, from August, 1990, to
the present, Mr. Sessions has been actively engaged in attempting to
acquire his Professional Golf Association (PGA) tour card.
Mr. Sessions has been the Secretary, Treasurer, and a director
of Buffalo Capital II, Ltd., Buffalo Capital III, Ltd., and Buffalo
Capital IV, Ltd., all of which are Colorado corporations, since their
inception in January, 1995. All of these entities are in the same
business as the Company (blind pool or public shell companies). For
further information about these other entities see "Other Blind Pool
Activities."
Mr. Sessions has a B.S. degree from the University of
Colorado.
Indemnification of Officers and Directors
As permitted by Colorado law, the Company's Articles of In-
corporation provide that the Company will indemnify its directors and
officers against expenses and liabilities they incur to defend, settle, or
satisfy any civil or criminal action brought against them on account
of their being or having been Company directors or officers unless, in
any such action, they are adjudged to have acted with gross negligence
or willful misconduct. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that, in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy as expressed in that Act and is, therefore, unenforceable.
Exclusion of Liability
Pursuant to the Colorado Business Corporation Act, the
Company's Articles of Incorporation exclude personal liability for its
directors for monetary damages based upon any violation of their
fiduciary duties as directors, except as to liability for any breach of the
duty of loyalty, acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, acts in violation
of Section 7-106-401 of the Colorado Business Corporation Act, or
any transaction from which a director receives an improper personal
benefit. This exclusion of liability does not limit any right which a
director may have to be indemnified and does not affect any director's
liability under federal or applicable state securities laws.
Other Blind Pool Activities
Each of the Company's executive officers, directors, and
principal shareholders holds an identical officer, director and/or
shareholder position with three other companies, Buffalo Capital II,
Ltd., Buffalo Capital III, Ltd., and Buffalo Capital IV, Ltd., all of
which are Colorado corporations. The Company and each of these
other entities will be in competition with each other for prospective
companies to acquire. See "Conflicts of Interest" below.
In addition, the Company's officers, directors and principal
shareholders have been affiliated in the past with other blind pool
companies. Such other companies and such affiliations are set forth
in this section below.
Messrs. Joiner, Peck, and Sessions were founders and officers
and directors of two blind pool companies established in 1993, Dakota
Equities, Ltd. ("Dakota"), and Cumberland Capital Corporation
("Cumberland"), and were founders and officers and directors of three
blind pool companies established in 1995, Alchemy Equities, Ltd.
("Alchemy"), Chelmsford Capital, Ltd. ("Chelmsford"), and Global
Capital Access Corporation ("Global").
Dakota filed a registration statement under the Securities
Exchange Act of 1934, which became effective on or about January
24, 1994. On December 14, 1994, the controlling shareholders of
Dakota sold stock representing approximately 87.5% of the
outstanding shares to California Brokerage Services, Inc., for an
aggregate purchase price of $60,000.00. Thereafter, on or about
February 1, 1995, Dakota completed a merger transaction with Sel-
Drum International, Inc., which, through its wholly owned subsidiaries
Sel-Drum Corp (Canada), Sel-Drum Corporation (U.S.A.), Inc., and
Micron Imaging Technologies, is engaged in the distribution of copier
photoreceptors, high mortality parts for copy machines, and copier
accessories. The shares of Sel-Drum (formerly Dakota Equities), trade
in the over the counter market on the NASD Bulletin Board.
On or about October 8, 1993, Cumberland filed a registration
statement under the Securities Act of 1933. The registration statement
was subsequently withdrawn, and until its investment in Alchemy,
Chelmsford and Global, Cumberland did not engage in any business
activities. Cumberland Capital subsequently sold its interests in
Alchemy, Chelmsford and Global, and is not currently engaged in any
business operations.
Alchemy filed a registration statement under the Securities
Exchange Act of 1934, on April 3, 1995, which became effective on
or about June 2, 1995. On January 15, 1996, the controlling
shareholders of Alchemy sold stock representing approximately
74.69% of the outstanding shares to California Brokerage Services,
Inc., for an aggregate purchase price of $25,000, and all of the
existing officers and directors resigned and nominated replacements
designated by the purchaser. Thereafter, on or about March 6, 1996,
Alchemy completed a merger transaction with Heritage Mines, Ltd.,
which is engaged in the mining business in Northern California. The
shares of Heritage Mines, Ltd (formerly Alchemy), trade in the over
the counter market on the NASD Bulletin Board.
Chelmsford filed a registration statement under the Securities
Exchange Act of 1934, on April 6, 1995, which became effective on
or about June 6, 1995. On November 6, 1996, the controlling
shareholders of Chelmsford sold stock representing approximately
86.86% of the outstanding shares to Capital Twain, Inc., a Nevada
corporation, for an aggregate purchase price of $70,000, and all of the
existing officers and directors resigned and nominated replacements
designated by the purchaser. Chelmsford has not completed a merger
transaction, and there is not currently a public market for its shares.
Global filed a registration statement under the Securities
Exchange Act of 1934, on April 11, 1995, which became effective on
or about June 12, 1995. On July 12, 1996, the controlling
shareholders of Global sold stock representing approximately 71.03%
of the outstanding shares to The Rally Group, Ltd., for an aggregate
purchase price of $30,000, and all of the existing officers and directors
resigned and nominated replacements designated by the purchaser.
Thereafter, Global changed its name to Controlled Environment
Aquaculture Technology, Inc. ("CEA Tech"), and commenced
activities related to intensive land-based aquaculture, including
acquisition of all of the outstanding stock of Aquacare Environment,
Inc., a Washington corporation. There is not currently a public market
for the shares of CEA Tech (formerly Global).
The officers and directors of the Company may establish additional
blind pools in the future.
See "Conflicts of Interest."
Conflicts of Interest
None of the officers of the Company will devote more than a
portion of his time to the affairs of the Company. There will be
occasions when the time requirements of the Company's business
conflict with the demands of the officers' 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.
Each of the Company's officers and directors also are officers,
directors, or both of three other Boulder, Colorado based development-
stage corporations in the same business as the Company. See "Other
Blind Pool Activities." These three companies will be in direct
competition for available opportunities.
When a business opportunity comes to the attention of any of
the Company's officers or directors, he intends to inform the other
officers and directors of the Company, and together, they will
determine which blind pool or public shell company will have the first
option to consider an acquisition of the particular target. It is
presently anticipated that the officers and directors will pursue a
policy whereby the opportunity will be presented to the public
company that has had its securities registered pursuant to Section
12(g) of the 1934 Act for the longest period of time. In the event that
none of the pool is more mature than the others, the officers and
directors will arbitrarily assign the particular business opportunity to
one of the pool companies. Potential investors should expect that,
because of the policy that will be employed by the Company's officers
and directors as set forth above, whereby more "mature" pool
companies will have business opportunities presented to them first, the
Company and its shareholders may have to wait a significant amount
of time before an appropriate business opportunity for the Company
is identified.
Members of management have a fiduciary obligation to the
stockholders of the Company as well as to the stockholders of other
companies with which they are affiliated. Should a business
opportunity that would be appropriate for consideration by the
Company arise and be presented by an officer or director of the
Company to another company with which one of them is affiliated,
and not be presented to the Company, then any one or all of them
may be unable to satisfy his fiduciary obligation to the Company's
stockholders. Notwithstanding the foregoing, however, as of the date
of this registration statement, the Company and the three other blind-
pool companies described herein, have the same shareholders. It is
also anticipated that all such companies will continue to have the same
shareholders until such time as a public market, if any, develops for
their shares. Since a public market is not expected to develop for the
shares of the Company, or for either of the other three blind-pool
companies, until they have completed the acquisition of a business
opportunity, the possibility of claims by a shareholder of the
Company, or of one of the other entities, alleging breach of fiduciary
duty by the officers and directors, is substantially reduced or
eliminated.
Company management intends to actively negotiate or
otherwise consent to the purchase of a portion of their common stock
as a condition to, or in connection with, a proposed merger or
acquisition transaction. Members of management acquired their shares
for services rendered at a price of $0.0001 per share, and the total
purchase price for all presently issued and outstanding shares was
$7,740.00, of which $7,500.00 was paid in cash and $240.00 was paid
in the form of performance of services. It is anticipated that a
substantial premium may be paid by the purchaser in conjunction with
any sale of shares by members of Company management which is
made as a condition to, or in connection with, a proposed merger or
acquisition transaction. The fact that a substantial premium may be
paid to members of Company management to acquire their shares
creates a conflict of interest for them and may compromise their state
law fiduciary duties to the Company's other shareholders. In making
any such sale, members of Company management may consider their
own personal pecuniary benefit rather than the best interests of the
Company and the Company's other shareholders, and the other
shareholders are not expected to be afforded the opportunity to
approve or consent to any particular buy-out transaction involving
shares held by members of Company management.
Item 6. Executive Compensation.
At inception of the Company each Director received 600,000
shares of Common Stock valued at $.0001 per share which were
issued for services rendered to the Company in investigating and
developing the Company's business plan and for agreeing to be a
Director. Two other principal shareholders of the Company each
received 600,000 shares of Common Stock, valued at $.0001 per
share, for consulting services provided to the Company. No officer or
director has received any other remuneration. Until the Company
acquires additional capital, it is not intended that any officer or
director will receive compensation from the Company other than
reimbursement for out-of-pocket expenses incurred on behalf of the
Company. 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.
The Company may employ a spouse of an officer or director,
or an employee of a company owned by an officer or director, to
perform administrative or secretarial services required by the
Company. Such individuals would be paid standard, "going rate"
hourly compensation for services rendered.
The Company has employed the law firm of Frascona, Joiner
& Goodman, P.C., in which one of its principal shareholders, Gary S.
Joiner, is a shareholder, to provide legal services in connection with
registration of the Company's shares. It may also employ the same
law firm to provide legal services in connection with the acquisition
of a business. Mr. Joiner and any other members of his firm, if
employed, would be paid their normal hourly rate for legal services
provided.
Item 7. Certain Relationships and Related Transactions.
Prior to the date of this Prospectus, the Company issued to its
officers, directors, and others a total of 2,415,000 shares of Common
Stock, Class A Warrants to purchase 4,830,000 additional shares of
Common Stock at $2.00 per share, and Class B Warrants to purchase
2,415,000 additional shares of Common Stock at $4.00 per share for
a total of $7,500.00 in cash and $240.00 in services, or an average of
$.0.0032 per share (without allocating any of the consideration to the
Warrants). Certificates evidencing the Common Stock, Class A
Warrants and Class B Warrants issued by the Company to these
persons have all been stamped with a restrictive legend, and are
subject to stop transfer orders by the Company. For additional
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.
It is not currently anticipated that any salary, consulting fee,
or finder's fee shall be paid to any of the Company's directors or
executive officers, or to any other affiliate of the Company except as
described under "Executive Compensation" above.
The Company maintains its offices at the residence of its
President, for which it pays no rent, and for which it does not
anticipate paying rent in the future. The Company anticipates that
following the consummation of a business combination with an
acquisition candidate, the Company's office will be moved, but cannot
predict future office or facility arrangements with officers, directors
or affiliates of the Company.
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 or Warrants 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.
Common Stock
The Company's Articles of Incorporation authorize the issu-
ance of 100,000,000 shares of Common Stock. Each record holder of
Common Stock is entitled to one vote for each share held on all
matters properly submitted to the stockholders for their vote.
Cumulative voting for the election of directors is not permitted by the
Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled
to such dividends as may be declared from time to time by the Board
of Directors out of legally available funds; and, in the event of
liquidation, dissolution or winding up of the affairs of the Company,
holders are entitled to receive, ratably, the net assets of the Company
available to stockholders after distribution is made to the preferred
stockholders, if any, who are given preferred rights upon liquidation.
Holders of outstanding shares of Common Stock have no preemptive,
conversion or redemptive rights. All of the issued and outstanding
shares of Common Stock are, and all unissued shares when offered
and sold will be, duly authorized, validly issued, fully paid, and
nonassessable. To the extent that additional shares of the Company's
Common Stock are issued, the relative interests of then existing
stockholders may be diluted.
Preferred Stock
The Company's Articles of Incorporation authorize the issu-
ance of 10,000,000 shares of preferred stock. The Board of Directors
of the Company is authorized to issue the preferred stock from time
to time in series and is further authorized to establish such series, to
fix and determine the variations in the relative rights and preferences
as between series, to fix voting rights, if any, for each series, and to
allow for the conversion of preferred stock into Common Stock. No
preferred stock has been issued by the Company. The Company anti-
cipates that preferred stock may be utilized in making acquisitions.
Warrants
A total of 4,830,000 Class A Warrants have been issued to the
Company's current shareholders exercisable to purchase a like number
of Common Shares at $2.00 each. A total of 2,415,000 Class B
Warrants have been issued to the Company's current shareholders
exercisable to purchase a like number of Common Shares at $4.00
each. The Class A Warrants and Class B Warrants are referred to
herein collectively as the "Warrants." The Class A and B Warrants
are in registered form and are issued pursuant to a Warrant Agent
Agreement between the Company and a Warrant Agent. As of the
date hereof, the Company is serving as its own Warrant Agent.
However, it is anticipated that following completion of a merger
transaction, and prior to the existence of any public trading market in
the Company's shares, an independent Warrant Agent will be
designated. The information presented below is only a summary of
that agreement and is qualified in its entirety by the provisions of the
agreement itself.
Exercise Price and Periods. Subject to the current Registration
Statement requirement described below, each Warrant entitles the
holder to purchase one share of Common Stock, during the period
commencing January 1, 1997 and terminating December 31, 2002, at
a price of $2.00 per share for the Class A Warrants and $4.00 per
share for the Class B Warrants. The expiration date of the Warrants
(and the period during which the Warrants are exercisable) may be
extended indefinitely, or the exercise price thereof reduced, at the
discretion of the Company, upon giving five (5) days' prior notice to
the Warrant Agent and giving subsequent notice thereof to
warrantholders.
Manner of Exercise. Warrants may be exercised by surrender
of the Warrants to the Warrant Agent with appropriate instructions
accompanied by payment of the full purchase price for the Common
Stock underlying each Warrant being exercised. Payment of the pur-
chase price must be made in United States funds payable to the
Company. The Warrants and payment therewith must reach the
Warrant Agent on or before the expiration date (or the earlier
cancellation date, as provided in the next paragraph) of the Warrants.
Cancellation of the Warrants. The Warrants shall be subject
to cancellation by the Company as follows:
(a) Subject to the limitations set forth below in this
subparagraph (a), all, but not fewer than all, of each class of Warrants
may be canceled by the Company at any time prior to the declaration
by the Securities and Exchange Commission of the effectiveness of a
registration statement relating to the underlying Common Stock,
without prior written notice to the registered holders of such class of
Warrants and without any right on the part of the holders of the
Warrants to exercise their purchase rights. Upon cancellation, the
right of the warrantholder to purchase the Common Stock underlying
the Warrants will be extinguished. Because the Warrants may be
exercised only so long as a registration statement shall have been
declared effective by the Commission and remains current, a
cancellation of either class of Warrants pursuant to this subparagraph
(a) will mean that the warrantholder shall never have received an
opportunity to exercise the Warrants following the acquisition of a
business opportunity by the Company. The Company's right to cancel
the Warrants in accordance with this subparagraph (a) may be
exercised, however, only in the event that management of a business
opportunity that is the target of a business combination with the
Company shall have required, in writing, that the cancellation of the
Warrants shall be a condition precedent to the consummation of the
business combination between the Company and the target company.
The cancellation is to become effective only upon the closing of such
a business combination. Should the contemplated business
combination fail to close, the cancellation shall be void and the
exercisability of the Warrants covered by the cancellation shall not be
affected. The failure of one or more business combinations to close
shall not, however, impair the Company's right to cancel either class
of Warrants under this subparagraph (a) if the Company enters into
arrangements for a subsequent business combination featuring the
warrant-cancellation condition described above in this subparagraph
(a). To the extent that the management of a business opportunity that
consummates a business combination with the Company does not
require cancellation of Warrants as a condition of closing, the right of
the Company to cancel the Warrants as described in this subparagraph
(a) shall be extinguished.
(b) In addition to the cancellation mechanism described in
subparagraph (a), above, all or any number of either class of Warrants
may be canceled by the Company at any time during their exercise
term upon a minimum of thirty (30) days' prior written notice mailed
to the registered holders of such Warrants, subject to the right of the
holders of such Warrants to exercise their purchase rights between the
date of any notice of cancellation up to and including the cancellation
date given by the Company. See, however, "Limitations upon
Exercise," below. The notice period may be extended, at the
discretion of the Company, upon giving subsequent notice to the
Warrant Agent and to registered holders of the Warrants. Any holder
who does not exercise his Warrants prior to the date set for
cancellation will forfeit his right to purchase the Common Stock
underlying the Warrants being canceled.
Limitations upon Exercise. Warrants may not be exercised
unless the Company maintains a current Registration Statement in
effect for the Common Stock issuable upon exercise of the Warrants,
during the exercise period of the Warrants in question. The Company
will have no obligation, however, to file or to keep the Registration
Statement current with respect to either class of Warrants when there
is no current public market for the Company's shares or when the
market bid price for the Company's Common Stock is below the
exercise price of the Warrants in question. The Common Stock
issuable upon the exercise of the Warrants cannot be sold in various
states without qualifying the Common Stock under state law and the
Company may find it impractical or impossible so to qualify the
Common Stock in certain states. Warrantholders who are residents of
states in which the Company does not qualify the Common Stock
underlying the Warrants for sale will have no choice but either to sell
their Warrants or to let them expire.
Rights of Warrantholders. Holders of the Warrants will have
no voting rights, and will not be entitled to dividends. In the event of
liquidation, dissolution or winding up of the affairs of the Company,
holders of the Warrants will not be entitled to participate in any
liquidation distribution. Holders of Warrants are protected against
dilution of their interests represented by the underlying shares of
Common Stock upon the occurrence of stock dividends, stock splits
or reclassifications of the Company's Common Stock.
Effect of Warrants. For the life of the Warrants, warrant-
holders have the opportunity to profit from a rise in the market value
of the Common Stock of the Company, if any, at the expense of the
Common Stock holders. A warrantholder may be expected to exercise
Warrants at a time when the Company, in all likelihood, would be
able to obtain equity capital, if it so desires, by a public sale of a new
Common Stock offering on terms more favorable than those provided
in the Warrants. Exercise of the Warrants will dilute the equity
interest of other stockholders in the Company.
Transfer and Warrant Agent
As of the date hereof, the Company is serving as its own
Transfer Agent and Warrant Agent.
Reports to Stockholders
The Company plans to furnish its stockholders with an annual
report for each fiscal year ending August 31 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 Securities Exchange Act of 1934.
PART II
Item 1. Market Price and Dividends on the Registrant's Common
Equity and Other Shareholder Matters
No public trading market exists for the Company's securities
and all of its outstanding securities are restricted securities as defined
in Rule 144. There were seven (7) holders of record of the
Company's common stock on August 31, 1996. No dividends have
been paid to date and the Company's Board of Directors does not
anticipate paying dividends in the foreseeable future.
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.
Since August 28, 1996 (the date of the Company's formation),
the Company has sold its Common Stock to the persons listed in the
table below in transactions summarized as follows:
<TABLE>
<CAPTION>
Name Date of Shares Aggregate Purchase Price
Sale Purchase Price per Share
<S> <C> <C> <C> <C>
Gary S. Joiner 08/28/96 600,000<F1> 60.00<F2> 0.0001<F3>
Grant W. Peck 08/28/96 600,000<F1> 60.00<F2> 0.0001<F3>
Dean F. Sessions 08/28/96 600,000<F1> 60.00<F2> 0.0001<F3>
Scott B. Olson 08/28/96 600,000<F1> 60.00<F2> 0.0001<F3>
John H. Stearns 08/30/96 5,000<F1> 2,500.00 0.50<F3>
Richard Stearns 08/30/96 5,000<F1> 2,500.00 0.50<F3>
Frank & Janet
Jackson 08/30/96 5,000<F1> 2,500.00 0.50<F3>
<FN>
<F1> Sold in units each comprised of one share of common stock,
two Class A Warrants and one Class B Warrant.
<F2> Consideration consisted of pre-incorporation consulting services
rendered to the Registrant related to investigating and developing the
Registrant's proposed business plan and capital structure and
completing the organization and incorporation of the Registrant.
<F3> Indicates price per share without allocating any portion of the
purchase price to the Class A Warrants or Class B Warrants.
</FN>
</TABLE>
Each of the sales listed above was made for cash or services.
All of the listed sales were either made in reliance upon the exemption
from registration provided by Rule 701 adopted pursuant to Section
3(b) of the Securities Act of 1933, or in reliance upon the exemption
from registration offered by Section 4(2) of the Securities Act of
1933. Based upon Purchaser Questionnaires and/or Consultation and
Subscription Agreements completed by each of the subscribers and the
pre-existing relationship between the subscribers of the Company's
officers and directors, the Company had reasonable grounds to believe
immediately prior to making an offer to the private investors, and did
in fact believe, when such subscriptions were accepted, that such
purchasers (1) were purchasing for investment and not with a view to
distribution, and (2) had such knowledge and experience in financial
and business matters that they were capable of evaluating the merits
and risks of their investment and were able to bear those risks. The
purchasers had access to pertinent information enabling them to ask
informed questions. The shares were issued without the benefit of
registration. An appropriate restrictive legend is imprinted upon each
of the certificates representing such shares, and stop-transfer
instructions have been entered in the Company's transfer records. All
such sales were effected without the aid of underwriters, and no sales
commissions were paid.
Item 5. Indemnification of Directors and Officers
The Articles of Incorporation and the Bylaws of the Company,
filed as Exhibits 3.1 and 3.2, respectively, provide that the Company
will indemnify its officers and directors for costs and expenses
incurred in connection with the defense of actions, suits, or
proceedings where the officer or director acted in good faith and in a
manner he reasonably believed to be in the Company's best interest
and is a party by reason of his status as an officer or director, absent
a finding of negligence or misconduct in the performance of duty.
<PAGE>
FINANCIAL STATEMENTS<PAGE>
Board of Directors
Buffalo Capital I, Ltd.
Statement on Auditing Standards (SAS) No. 61, Communication with
Audit Committees issued by the AICPA Auditing Standards Board
requires the auditor to communicate certain matters to those
responsible for the oversight of the financial reporting process. The
following comments regarding the scope and results of our audit of
Buffalo Capital I, Ltd. as of August 31, 1996, will assist you in
overseeing the financial reporting and disclosure process for which
management is responsible.
Scope of Audit
Our responsibility is to express an opinion on the financial statements
based on our audit. The audit is conducted in accordance with
generally accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation.
Results of Audit
1. We found all significant accounting policies to be as described in
the notes to the financial statements.
2. There were no material accounting estimates made by management.
3. No significant audit adjustments were made.
4. If our report is included in documents filed with the Securities and
Exchange Commission, our responsibility with respect to information
included in that document will be limited to its consistency and
accuracy when compared to the amounts and disclosures included in
our audit. We will not apply any audit procedures to information
included in any 1933 or 1934 Act documents, or any other document
in which our audit report is included. We will, however, read the
document to determine the presence of inconsistencies as compared
with our audit report.
5. We did not encounter difficulty in obtaining supporting
documentation for this audit.
6. Although management has significant control over the extent and
amount of obligations incurred, the Company may experience
difficulty meeting current obligations as they come due in ensuing
years. While circumstances did not warrant a going concern comment
in the current financial statements due to the nature of the Company's
business, minimal interest earnings may bring about the need for a
going concern clause in subsequent years if management is
unsuccessful in locating a suitable target.
This report is intended solely for the information and use of the board
of directors, management, and others in the organization.
/s/
Aurora, Colorado Comiskey & Co.
October 21, 1996 Professional Corporation<PAGE>
AUDITED FINANCIAL STATEMENTS
(A Development Stage Company)
Buffalo Capital I, Ltd.
Period Ended August 31, 1996<PAGE>
Buffalo Capital I, Ltd.
(A Development Stage Company)
Index to
Audited Financial Statements
Audited Balance Sheet _
Comparative Quarters/Inception to Date _
Audited Statement of Cash Flows _
<PAGE>
Buffalo Capital I, Ltd.
(A Development State Company)
AUDITED BALANCE SHEET AS OF AND FOR PERIOD
ENDED August 31, 1996
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents 4,994
Other current assets -
Subscriptions
receivable 2,500
TOTAL CURRENT
ASSETS 7,494
OTHER ASSETS
Organizational costs (net) 300
Total Other Assets 300
TOTAL ASSETS 7,794
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable -
Accrued liabilities 405
TOTAL CURRENT
LIABILITIES 405
STOCKHOLDERS' EQUITY
Preferred stock, no par value
10,000,000 shares authorized;
no shares issued and outstanding
Common stock, no par value; -
100,000,000 shares authorized;
2,415,000 shares issued and
outstanding at August 31, 1996. 7,740
Deficit accumulated
during the
development stage (351)
TOTAL STOCKHOLDERS'
EQUITY (DEFICIT) 7,389
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY (DEFICIT) 7,794
/TABLE
<PAGE>
Buffalo Capital I, Ltd.
(A DEVELOPMENT STAGE COMPANY)
AUDITED STATEMENT OF LOSS AND ACCUMULATED DEFICIT
AS OF AND FOR THE PERIOD ENDED
AUGUST 31, 1996
<TABLE>
<CAPTION> Period from
Inception
(8/28/96)
thru 8/31/96
<S> <C>
REVENUES
Investment Income -
TOTAL REVENUES -
EXPENSES
Legal and accounting 105
Bank charges 6
Directors' fees 200
Consulting fees 40
TOTAL EXPENSES 351
NET LOSS (391)
Accumulated deficit
Beginning of period -
End of period (351)
NET LOSS
PER SHARE (NIL)
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 2,415,000
/TABLE
<PAGE>
Buffalo Capital I, Ltd.
(A Development Stage Company)
AUDITED STATEMENT OF STOCKHOLDERS' EQUITY
For the period from inception
(August 28, 1996) to August 31, 1996
<TABLE>
<CAPTION>
Deficit
accumulated
Common Stock during the Total
Number of development stockholders
shares Amount stage equity
<S> <C> <C> <C> <C>
Common stock issued for
cash and subscriptions,
receivable,
August 1996 at
$.50 per share 15,000 7,500 - 7,500
Common stock subscribed
for services, August 1996
at $.0001 per
share 2,400,000 240 240
Net loss for the period
ended August 31, 1996 (351) (351)
Balance August
31, 1996 2,415,000 7,740 (351) 7,389
/TABLE
<PAGE>
Buffalo Capital I, Ltd.
(A Development Stage Company)
AUDITED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Period August 28, 1996
(inception) to August 31, 1996
<S> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Loss (351)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Stock issued for directors' fees 200
Stock issued for consulting fees 40
Increase (decrease) in accounts
payable - related party 405
Net cash used by
operating activities 294
CASH FLOWS FROM INVESTING ACTIVITIES
Organization costs (300)
Net cash used by
investing activities (300)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 5,000
Net cash provided by
financing activities 5,000
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 4,994
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD -
CASH AND CASH EQUIVALENTS,
END OF PERIOD 4,994
/TABLE
<PAGE>
Buffalo Capital I, Ltd.
(A Development Stage Company)
NOTES TO AUDITED FINANCIAL STATEMENTS
August 31, 1996
1. Summary of Significant accounting policies
Development stage company Buffalo Capital I, Ltd. (a
development stage company) (the "Company") was
incorporated under the laws of the State of Colorado
on August 28, 1996. Its office is located at the office
of its president at 7331 South Meadow Court, Boulder,
CO 80301.
The Company is a new enterprise in the development
stage as defined by Statement No. 7 of the Financial
Accounting Standards Board and has not engaged in
any business other than organizational efforts. It has
no full-time employees and owns now real property.
The Company intends to operate as a capital market
access corporation by registering with the U.S.
Securities and Exchange Commission under the
Securities Exchange Act of 1934. After this, the
company intends to seek to acquire one or more
existing businesses which have existing management,
through merger or acquisition, Management of the
Company will have virtually unlimited discretion in
determining the business activities in which the
Company might engage.
Organization costs
Costs to incorporate the Company have been
capitalized and will be amortized over a sixty-month
period.
Fiscal year
The Company has selected an August 31 fiscal year
end.
Loss per share
Loss per share was computed using the weighted
number of share outstanding
Accounting method
The Company records income and expenses on the
accrual method.
Statement of cash flows
For the purpose of the statement of cash flows, the
Company considers all highly liquid debt instruments
purchased with an original maturity of three month or
less to be cash equivalents.
Use of estimates
The preparation of the Company's financial statements
in conformity with generally accepted accounting
principals requires the Company's management to
make estimates and assumptions that affect the
amounts reported in these financial statements and
accompanying notes. Actual results could differ from
those estimates.
2. Stockholders' equity
As of August 31, 1996, 2,415,000 shares of the
company's no par value common stock had been
subscribed but not yet issued, along with 15,000 Class
A warrants and 15,000 Class B warrants entitling the
holder to purchase one share of stock for $2.00 and
$4.00 respectively. Of these shares 2,400,000 were
subscribed by directors for services rendered in the
capacity of directors, and consulting fees, of the
remaining 15,000 shares, 10,000 were subscribed for
cash and 5,000 were subscribed and a receivable was
recorded. The receivable of $2,500 was collected
during September 1996.
3. Dilution
For the period ended August 31, 1996, the Company
offered stock to investors at a purchase price of $.50
per share. In additional, the Company authorized and
subscribed shares to the directors for services rendered
(as directors' fees and general administrative expenses)
at a price of $.0001 per share. The result is a
disproportionate relationship between contributions and
percentage of ownership.
4. Related Party Transactions
The Company's four directors and officer are also the
principal shareholders. Each has received 700,000
shares of stock (24.86% each of the outstanding
shares). In each case the shares were issued for
services provided which have been valued at $280.
The accounts payable of $405 is due to Gary Joiner,
corporate counsel and one of the directors of the
Company.
One of the directors is providing office space at no
charge to the Company. For purposes of the financial
statements, the Company is accruing $50 per month as
additional paid-in capital for this use.
5. Income Taxes
The Company has a Federal net operating loss
carryforwards of approximately $351 expiring in the
year 2011. The tax benefit of these net operating
losses, which total approximately $76 has been offset
by a full allowance for realization. This carryforward
may be limited upon the consummation of a business
combination under IRS Section 381. For the period
ended August 31, 1996, the valuation allowance
increased by $76.
6. Supplemental disclosure of non-cash financing
activities
During the year ended August 31, 1996, the Company
elected not to accumulate any amortization of the
organization costs, as three days of amortization is
immaterial to the financial statements taken as a
whole.
Similarly, the Company elected to forego any rent
expense for the year ended August 31, 1996, but will
begin recording the rent expense as additional paid-in
capital during the year ended August 31, 1997.
<PAGE>
PART III
Item 1. Index to Exhibits
The Exhibits listed below are filed as part of this Registration
Statement.
Exhibit
No. Document
2.1 Articles of Incorporation
2.2 Bylaws
3.1 Warrant Agent Agreement
3.2 Specimen Stock Certificate
3.3 Specimen Class A Warrant and Class B Warrant Certificates
Item 2. Description of Exhibits.
<PAGE>
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.
BUFFALO CAPITAL I, LTD.
By: /s/
President and Director
(Principal Executive Officer)
Date: January 9, 1997
By: /s/
Secretary, Treasurer and Director
(Principal Financial Officer)
Date: January 9, 1997
<PAGE>
U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
BUFFALO CAPITAL I, LTD.
(Name of Small Business Issuer in its charter)
Colorado 84-11356381
State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4750 Table Mesa Drive, Boulder, CO 80303
(Address of principal executive offices)
Issuer's telephone number, (303) 442-1021
EXHIBIT INDEX
Exhibit
No. Document
2.1 Articles of Incorporation
2.2 Bylaws
3.1 Warrant Agent Agreement
3.2 Specimen Stock Certificate
3.3 Specimen Class A Warrant and Class B Warrant
Certificates
<PAGE>
EXHIBIT 2.1
ARTICLES OF INCORPORATION
OF
BUFFALO CAPITAL I, LTD.
The undersigned, who, if a natural person, is eighteen
years of age or older, hereby establishes a corporation pursuant to the
Colorado Business Corporation Act as amended and adopts the
following Articles of Incorporation:
FIRST: The name of the corporation is
Buffalo Capital I, Ltd.
SECOND: The corporation shall have and may
exercise all of the rights, powers and privileges now or hereafter
conferred upon corporations organized under the laws of Colorado.
In addition, the corporation may do everything necessary, suitable or
proper for the accomplishment of any of its corporate purposes. The
corporation may conduct part or all of its business in any part of
Colorado, the United States or the world and may hold, purchase,
mortgage, lease and convey real and personal property in any of such
places.
THIRD: The aggregate number of shares which
the corporation shall have authority to issue is one hundred ten million
(110,000,000) shares of which a portion shall be common stock and
a portion shall be preferred stock, all as described below.
A. Common Stock. The aggregate number
of common shares which the corporation shall have the authority to
issue is one hundred million (100,000,000), which shares shall be
designated "Common Stock." Subject to all the rights of the Preferred
Stock as expressly provided herein, by law or by the Board of
Directors pursuant to this Article, the Common Stock of the
corporation shall possess all such rights and privileges as are afforded
to capital stock by applicable law in the absense of any express grant
of rights or privileges in these Articles of Incorporation, including, but
not limited to, the following rights and privileges:
(a) dividends may be declared and paid or set apart
for payment on the Common Stock out of any assets or funds of the
corporation legally available for the payment of dividends;
(b) the holders of Common Stock shall have unlimited
voting rights, including the right to vote for the election of directors
and on all other matters requiring stockholder action. Each holder of
Common Stock shall have one vote for each share of Common Stock
standing in his name on the books of the corporation and entitled to
vote, except that in the election of directors each holder of Common
Stock shall have as many votes for each share of Common Stock held
by him as there are directors to be elected and for whose election the
holder of Common Stock has a right to vote. Cumulative voting shall
not be permitted in the election of directors or otherwise.
(c) on the voluntary or involuntary liquidation,
dissolution or winding up of the corporation, and after paying or
aduquately providing for the payment of all of its obligations and
amounts payable in liquidation, dissolution or winding up, and subject
to the rights of the holders of Preferred Stock, if any, the net assets of
the corporation shall be distributed pro rata to the holders of the
Common Stock.
B. Preferred Stock. The aggregate number
of preferred shares which this corporation shall have the authority to
issue is ten million (10,000,000) shares, each with no par value, which
shares shall be designated "Preferred Stock." Shares of Preferred
Stock may be issued from time to time in one or more series as
determined by the Board of Directors. The Board of Directors is
hereby authorized, by resolution or resolutions, to provide from time
to time, out of the unissued shares of Preferred Stock not then
allocated to any series of Preferred Stock, for a series of the Preferred
Stock. Each such series shall have distinctive serial designations.
Before any shares of any such series of Preferred Stock are issued, the
Board of Directors shall fix and determine, and is hereby expressly
empowered to fix and determine, by resolution or resolutions, the
voting powers, full or limited, or no voting powers, and the
designations, preferences and relative, participating, optional or other
special rights, and the qualifications, limitations and restrictions
thereof as provided by Colorado law. Before issuing any shares of a
class or series, the corporation shall deliver to the secretary of state for
filing articles of amendment to these articles of incorporation that set
forth information required by Colorado law, including but not limited
to, the designations, preferences, limitations, and relative rights of the
class or series of shares.
C. Voting. Unless otherwise ordered by a court
of competent jurisdiction, at all meetings of shareholders one-third of
the shares of a voting group entitled to vote at such meeting,
represented in person or by proxy, shall constitute a quorum of that
voting group.
FOURTH: The number of directors of the
corporation shall be fixed by the bylaws, should the bylaws fail to fix
such a number, then by resolution adopted from time to time by the
board of directors, provided that the number of directors shall not be
more than five (5) nor less than two (2). Two (2) directors shall
constitute the initial board of directors. The following persons are
elected to serve as the corporation's initial directors until the first
annual meeting of shareholders or until their successors are duly
elected and qualified:
Name/Address
Grant W. Peck
7331 South Meadow Court
Boulder, CO 80301
Dean F. Sessions
2040 W. 10th
Avenue, Apt. E-301
Broomfield, Colorado 80020
FIFTH: The street address of the initial
registered office of the corporation is 4750 Table Mesa Drive,
Boulder, Colorado 80303. The name of the initial registered agent of
the corporation at such address is Gary S. Joiner.
SIXTH: The address of the initial principal
office of the corporation is 7331 South Meadow Court, Boulder, CO
80301.
SEVENTH: The following provisions are inserted
for the management of the business and for the conduct of the affairs
of the corporation, and the same are in furtherance of and not in
limitation or exclusion of the powers conferred by law.
(a) Conflicting Interest Transactions. As
used in this paragraph, "conflicting interest transaction" means any of
the following: (i) a loan or other assistance by the corporation to a
director of the corporation or to an entity in which a director of the
corporation is a director or officer or has a financial interest; (ii) a
guaranty by the corporation of an obligation of a director of the
corporation or of an obligation of an entity in which a director of the
corporation is a director or officer or has a financial interest; or (iii)
a contract or transaction between the corporation and a director of the
corporation or between the corporation and an entity in which a
director of the corporation is a director or officer or has a financial
interest. No conflicting interest transaction shall be void or voidable,
be enjoined, be set aside, or give rise to an award of damages or other
sanctions in a proceeding by a shareholder or by or in the right of the
corporation, solely because the conflicting interest transaction involves
a director of the corporation or an entity in which a director of the
corporation is a director or officer or has a financial interest, or solely
because the director is present at or participates in the meeting of the
corporation's board of directors or of the committee of the board of
directors which authorized, approves or ratifies a conflicting interest
transaction, or solely because the director's vote is counted for such
purpose if: (A) the material facts as to the director's relationship or
interest and as to the conflicting interest transaction are disclosed or
are known to the board of directors or the committee, and the board
of directors or committee in good faith authorizes, approves or ratifies
the conflicting interest transaction by the affirmative vote of a
majority of the disinterested directors, even though the disinterested
directors are less than a quorum; or (B) the material facts as to the
director's relationship or interest and as to the conflicting interest
transaction are disclosed or are known to the shareholders entitled to
vote thereon, and the conflicting interest transaction is specifically
authorized, approved or ratified in good faith by a vote of the
shareholders; or (C) a conflicting interest transaction is fair as to the
corporation as of the time it is authorized, approved or ratified by the
board of directors, a committee thereof, or the shareholders. Common
or interested directors may be counted in determining the presence of
a quorum at a meeting of the board of directors or of a committee
which authorizes, approves or ratifies the conflicting interest
transaction.
(b) Loans and Guaranties for the Benefit
of Directors. Neither the board of directors nor any committee thereof
shall authorize a loan by the corporation to a director of the
corporation or to an entity in which a director of the corporation is a
director or officer or has a financial interest, or a guaranty by the
corporation of an obligation of a director of the corporation or of an
obligation of an entity in which a director of the corporation is a
director or officer or has a financial interest, until at least ten days
after written notice of the proposed authorization of the loan or
guaranty has been given to the shareholders who would be entitled to
vote thereon if the issue of the loan or guaranty were submitted to a
vote of the shareholders. The requirements of this paragraph (b) are
in addition to, and not in substitution for, the provisions of paragraph
(a) of Article SEVENTH.
(c) Indemnification. The corporation shall
indemnify, to the maximum extent permitted by law, any person who
is or was a director, officer, agent, fiduciary or employee of the
corporation against any claim, liability or expenses arising against or
incurred by such person made party to a proceeding because he is or
was a director, officer, agent, fiduciary or employee of the corporation
or because he was a director, officer, agent, fiduciary or employee of
the corporation or because he is or was serving another entity as a
director, officer, partner, trustee, employee, fiduciary or agent at the
corporation's request. The corporation shall further have the authority
to the maximum extent permitted by law to purchase and maintain
insurance providing such indemnification.
(d) Limitation on Director's Liability. No
director of this corporation shall have any personal liability for
monetary damages to the corporation or its shareholders for breach of
his fiduciary duty as a director, except that this provision shall not
eliminate or limit the personal liability of a director to the corporation
or its shareholders for monetary damages for: (i) any breach of the
director's duty of loyalty to the corporation or its shareholders; (ii)
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) voting for or assenting
to a distribution in violation of Colorado Revised Statutes Section 7-
106-401 or the articles of incorporation if it is established that the
director did not perform his duties in compliance with Colorado
Revised Statutes Section 7-108-401, provided that the personal
liability of a director in this circumstance shall be limited to the
amount of the distribution which exceeds what could have been
distributed without violation of Colorado Revised Statutes Section 7-
106-401 or the articles of incorporation; or (iv) any transaction from
which the director directly or indirectly derives an improper personal
benefit. Nothing contained herein will be construed to deprive any
director of his right to all defenses ordinarily available to a director
nor will anything herein be construed to deprive any director of any
right he may have for contribution from any other director or other
person.
(e) Negation of Equitable Interests in
Shares or Rights. Unless a person is recognized as a shareholder
through procedures established by the corporation pursuant to
Colorado Revised Statutes Section 7-107-204 or any similar law, the
corporation shall be entitled to treat the registered holder of any shares
of the corporation as the owner thereof for all purposes permitted by
the Colorado Business Corporation Act, including without limitation
all rights deriving from such shares, and the corporation shall not be
bound to recognize any equitable or other claim to, or interest in, such
shares or rights deriving from such shares on the part of any other
person including without limitation, a purchaser, assignee or transferee
of such shares, unless and until such other person becomes the
registered holder of such shares or is recognized as such, whether or
not the corporation shall have either actual or constructive notice of
the claimed interest of such other person. By way of example and not
of limitation, until such other person has become the registered holder
of such shares or is recognized pursuant to Colorado Revised Statutes
Section 7-107-204 or any similar applicable law, he shall not be
entitled: (i) to receive notice of the meetings of the shareholders; (ii)
to vote at such meetings; (iii) to examine a list of the shareholders;
(iv) to be paid dividends or other distributions payable to shareholders;
or (v) to own, enjoy and exercise any other rights deriving from such
shares against the corporation. Nothing contained herein will be
construed to deprive any beneficial shareholder, as defined in
Colorado Revised Statutes Section 7-113-101(1), of any right he may
have pursuant to Article 113 of the Colorado Business Corporation
Act or any subsequent law.
EIGHTH: The name and address of the
incorporator is:
Gary S. Joiner
4750 Table Mesa Drive
Boulder, Colorado 80303
DATED the 28th day of August, 1996.
/s/
Incorporator
Gary S. Joiner hereby consents to the appointment as the initial
registered agent for Buffalo Capital I, Ltd.
/s/
Initial Registered Agent<PAGE>
EXHIBIT 2.2
BYLAWS
OF
BUFFALO CAPITAL I, LTD.
ARTICLE I
Offices
The principal office of the corporation shall be
designated from time to time by the corporation and may be within or
outside of Colorado.
The corporation may have such other offices, either
within or outside Colorado, as the board of directors may designate or
as the business of the corporation may require from time to time.
The registered office of the corporation required by the
Colorado Business Corporation Act to be maintained in Colorado may
be, but need not be, identical with the principal office, and the address
of the registered office may be changed from time to time by the
board of directors.
ARTICLE II
Shareholders
Section 1. Annual Meeting. The annual meeting
of the shareholders shall be held during the month of September of
each year on a date and at a time fixed by the board of directors of
the corporation (or by the president in the absence of action by the
board of directors), beginning with the year 1996, for the purpose of
electing directors and for the transaction of such other business as may
come before the meeting. If the election of directors is not held on
the day fixed as provided herein for any annual meeting of the
shareholders, or any adjournment thereof, the board of directors shall
cause the election to be held at a special meeting of the shareholders
as soon thereafter as it may conveniently be held.
A shareholder may apply to the district court in the
county in Colorado where the corporation's principal office is located
or, if the corporation has no principal office in Colorado, to the
district court of the county in which the corporation's registered office
is located to seek an order that a shareholder meeting be held (i) if an
annual meeting was not held within six months after the close of the
corporation's most recently ended fiscal year or fifteen months after
its last annual meeting, whichever is earlier, or (ii) if the shareholder
participated in a proper call of or proper demand for a special meeting
and notice of the special meeting was not given within thirty days
after the date of the call or the date the last of the demands necessary
to require calling of the meeting was received by the corporation
pursuant to C.R.S. Section 7-107-102(1)(b), or the special meeting
was not held in accordance with the notice.
Section 2. Special Meetings. Unless otherwise
prescribed by statute, special meetings of the shareholders may be
called for any purpose by the president or by the board of directors.
The president shall call a special meeting of the shareholders if the
corporation receives one or more written demands for the meeting,
stating the purpose or purposes for which it is to be held, signed and
dated by holders of shares representing at least ten percent of all the
votes entitled to be cast on any issue proposed to be considered at the
meeting.
Section 3. Place of Meeting. The board of
directors may designate any place, either within or outside Colorado,
as the place for any annual meeting or any special meeting called by
the board of directors. A waiver of notice signed by all shareholders
entitled to vote at a meeting may designate any place, either within or
outside Colorado, as the place for such meeting. If no designation is
made, or if a special meeting is called other than by the board, the
place of meeting shall be the principal office of the corporation.
Section 4. Notice of Meeting. Written notice
stating the place, date, and hour of the meeting shall be given not less
than ten nor more than sixty days before the date of the meeting,
except that (i) if the number of authorized shares is to be increased,
at least thirty days' notice shall be given, or (ii) any other longer
notice period is required by the Colorado Business Corporation Act.
Notice of a special meeting shall include a description of the purpose
or purposes of the meeting. Notice of an annual meeting need not
include a description of the purpose or purposes of the meeting except
the purpose or purposes shall be stated with respect to (i) an
amendment to the articles of incorporation of the corporation, (ii) a
merger or share exchange in which the corporation is a party and, with
respect to a share exchange, in which the corporation's shares will be
acquired, (iii) a sale, lease, exchange or other disposition, other than
in the usual and regular course of business, of all or substantially all
of the property of the corporation or of another entity which this
corporation controls, in each case with or without the goodwill, (iv)
a dissolution of the corporation, or (v) any other purpose for which a
statement of purpose is required by the Colorado Business Corporation
Act. Notice shall be given personally or by mail, private carrier,
telegraph, teletype, electronically transmitted facsimile or other form
of wire or wireless communication by or at the direction of the
president, the secretary, or the officer or persons calling the meeting,
to each shareholder of record entitled to vote at such meeting. If
mailed and if in a comprehensible form, such notice shall be deemed
to be given and effective when deposited in the United States mail,
addressed to the shareholder at his address as it appears in the
corporation's current record of shareholders, with postage prepaid. If
notice is given other than by mail, and provided that such notice is in
a comprehensible form, the notice is given and effective on the date
received by the shareholder.
If requested by the person or persons lawfully calling
such meeting, the secretary shall give notice thereof at corporation
expense. No notice need be sent to any shareholder if three successive
notices mailed to the last known address of such shareholder have
been returned as undeliverable until such time as another address for
such shareholder is made known to the corporation by such
shareholder. In order to be entitled to receive notice of any meeting,
a shareholder shall advise the corporation in writing of any change in
such shareholder's mailing address as shown on the corporation's
books and records.
When a meeting is adjourned to another date, time or
place, notice need not be given of the new date, time or place if the
new date, time or place of such meeting is announced before
adjournment at the meeting at which the adjournment is taken. At the
adjourned meeting the corporation may transact any business which
may have been transacted at the original meeting. If the adjournment
is for more than 120 days, or if a new record date is fixed for the
adjourned meeting, a new notice of the adjourned meeting shall be
given to each shareholder of record entitled to vote at the meeting as
of the new record date.
A shareholder may waive notice of a meeting before
or after the time and date of the meeting by a writing signed by such
shareholder. Such waiver shall be delivered to the corporation for
filing with the corporate records. Further, by attending a meeting
either in person or by proxy, a shareholder waives objection to lack
of notice or defective notice of the meeting unless the shareholder
objects at the beginning of the meeting to the holding of the meeting
or the transaction of business at the meeting because of lack of notice
or defective notice. By attending the meeting, the shareholder also
waives any objection to consideration at the meeting of a particular
matter not within the purpose or purposes described in the meeting
notice unless the shareholder objects to considering the matter when
it is presented.
Section 5. Fixing of Record Date. For the
purposes of determining shareholders entitled to (i) notice of or vote
at any meeting of shareholders or any adjournment thereof, (ii) receive
distributions or share dividends, or (ii) demand a special meeting, or
to make a determination of shareholders for any other proper purpose,
the board of directors may fix a future date as the record date for any
such determination of shareholders, such date in any case to be not
more than seventy days, and, in case of a meeting of shareholders not
less than ten days, prior to the date on which the particular action
requiring such determination of shareholders is to be taken. If no
record date is fixed by the directors, the record date shall be the date
on which notice of the meeting is mailed to shareholders, or the date
on which the resolution of the board of directors providing for a
distribution is adopted, as the case may be. When a determination of
shareholders entitled to vote at any meeting of shareholders is made
as provided in this Section, such determination shall apply to any
adjournment thereof unless the board of directors fixes a new record
date, which it must do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
Notwithstanding the above, the record date for
determining the shareholders entitled to take action without a meeting
or entitled to be given notice of action so taken shall be the date a
writing upon which the action is taken is first received by the
corporation. The record date for determining shareholders entitled to
demand a special meeting shall be the date of the earliest of any of the
demands pursuant to which the meeting is called.
Section 6. Voting Lists. The secretary shall
make, at the earlier of ten days before each meeting of shareholders
or two business days after notice of the meeting has been given, a
complete list of the shareholders entitled to be given notice of such
meeting or any adjournment thereof. The list shall be arranged by
voting groups and within each voting group by class or series of
shares, shall be in alphabetical order within each class or series, and
shall show the address of and the number of shares of each class or
series held by each shareholder. For the period beginning the earlier
of ten days prior to the meeting or two business days after notice of
the meeting is given and continuing through the meeting and any
adjournment thereof, this list shall be kept on file at the principal
office of the corporation, or at a place (which shall be identified in the
notice) in the city where the meeting will be held. Such list shall be
available for inspection on written demand by any shareholder
(including for the purpose of this Section 6 any holder of voting trust
certificates) or his agent or attorney during regular business hours and
during the period available for inspection. The original stock transfer
books shall be prima facie evidence as to the shareholders entitled to
examine such list or to vote at any meeting of shareholders.
Any shareholder, his agent or attorney may copy the
list during regular business hours and during the period it is available
for inspection, provided (i) the shareholder has been a shareholder for
at least three months immediately preceding the demand or holds at
least five percent of all outstanding shares of any class of shares as of
the date of the demand, (ii) the demand is made in good faith and for
a purpose reasonably related to the demanding shareholder's interest
as a shareholder, (iii) the shareholder describes with reasonable
particularity the purpose and the records the shareholder desires to
inspect, (iv) the records are directly connected with the described
purpose and (v) the shareholder pays a reasonable charge covering the
costs of labor and material for such copies, not to exceed the
estimated cost of production and reproduction.
Section 7. Recognition Procedure for Beneficial
Owners. The board of directors may adopt by resolution a procedure
whereby a shareholder of the corporation may certify in writing to the
corporation that all or a portion of the shares registered in the name
of such shareholder are held for the account of a specified person or
persons. The resolution may set forth (i) the types of nominees to
which it applies, (ii) the rights or privileges that the corporation will
recognize in a beneficial owner, which may include rights and
privileges other than voting; (iii) the form of certification and the
information to be contained therein, (iv) if the certification is with
respect to a record date, the time within which the certification must
be received by the corporation, (v) the period for which the nominee's
use of the procedure is effective, and (vi) such other provisions with
respect to the procedure as the board deems necessary or desirable.
Upon receipt by the corporation of a certificate complying with the
procedure established by the board of directors, the persons specified
in the certification shall be deemed, for the purpose or purposes set
forth in the certification, to be the registered holders of the number of
shares specified in place of the shareholder making the certification.
Section 8. Quorum and Manner of Acting. One-
third of the votes entitled to be cast on a matter by a voting group
shall constitute a quorum of that voting group for action on the matter.
If less than one-third of such votes are represented at a meeting, a
majority of the votes so represented may adjourn the meeting from
time to time without further notice, for a period not to exceed 120
days for any one adjournment. If a quorum is present at such
adjourned meeting, any business may be transacted which might have
been transacted at the meeting as originally noticed. The shareholders
present at a duly organized meeting may continue to transact business
until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, unless the meeting is
adjourned and a new record date is set for the adjourned meeting.
If a quorum exists, action on a matter other than the
election of directors by a voting group is approved if the votes cast
within the voting group favoring the action exceed the votes cast
within the voting group opposing the action, unless the vote of a
greater number or voting by classes is required by law or the articles
of incorporation.
Section 9. Proxies. At all meetings of
shareholders, a shareholder may vote by proxy by signing an
appointment form or similar writing, either personally or by his duly
authorized attorney-in-fact. A shareholder may also appoint a proxy
by transmitting or authorizing the transmission of a telegram, teletype,
or other electronic transmission providing a written statement of the
appointment to the proxy, a proxy solicitor, proxy support service
organization, or other person duly authorized by the proxy to receive
appointments as agent for the proxy, or to the corporation. The
transmitted appointment shall set forth or be transmitted with written
evidence from which it can be determined that the shareholder
transmitted or authorized the transmission of the appointment. The
proxy appointment form or similar writing shall be filed with the
secretary of the corporation before or at the time of the meeting. The
appointment of a proxy is effective when received by the corporation
and is valid for eleven months unless a different period is expressly
provided in the appointment form or similar writing.
Any complete copy, including an electronically
transmitted facsimile, of an appointment of a proxy may be substituted
for or used in lieu of the original appointment for any purpose for
which the original appointment could be used.
Revocation of a proxy does not affect the right of the
corporation to accept the proxy's authority unless (i) the corporation
had notice that the appointment was coupled with an interest and
notice that such interest is extinguished is received by the secretary or
other officer or agent authorized to tabulate votes before the proxy
exercises his authority under the appointment, or (ii) other notice of
the revocation of the appointment is received by the secretary or other
officer or agent authorized to tabulate votes before the proxy exercises
his authority under the appointment. Other notice of revocation may,
in the discretion of the corporation, be deemed to include the
appearance at a shareholders' meeting of the shareholder who granted
the proxy and his voting in person on any matter subject to a vote at
such meeting.
The death or incapacity of the shareholder appointing
a proxy does not affect the right of the corporation to accept the
proxy's authority unless notice of the death or incapacity is received
by the secretary or other officer or agent authorized to tabulate votes
before the proxy exercises his authority under the appointment.
The corporation shall not be required to recognize an
appointment made irrevocable if it has received a writing revoking the
appointment signed by the shareholder (including a shareholder who
is a successor to the shareholder who granted the proxy) either
personally or by his attorney-in-fact, notwithstanding that the
revocation may be a breach of an obligation of the shareholder to
another person not to revoke the appointment.
Subject to Section 11 and any express limitation on the
proxy's authority appearing on the appointment form, the corporation
is entitled to accept the proxy's vote or other action as that of the
shareholder making the appointment.
Section 10. Voting of Shares. Each outstanding
share, regardless of class, shall be entitled to one vote, except in the
election of directors, and each fractional share shall be entitled to a
corresponding fractional vote on each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting rights of
the shares of any class or classes are limited or denied by the articles
of incorporation as permitted by the Colorado Business Corporation
Act. Cumulative voting shall not be permitted in the election of
directors or for any other purpose. Each record holder of stock shall
be entitled to vote in the election of directors and shall have as many
votes for each of the shares owned by him as there are directors to be
elected and for whose election he has the right to vote.
At each election of directors, that number of candidates
equaling the number of directors to be elected, having the highest
number of votes cast in favor of their election, shall be elected to the
board of directors.
Except as otherwise ordered by a court of competent
jurisdiction upon a finding that the purpose of this Section would not
be violated in the circumstances presented to the court, the shares of
the corporation are not entitled to be voted if they are owned, directly
or indirectly, by a second corporation, domestic or foreign, and the
first corporation owns, directly or indirectly, a majority of the shares
entitled to vote for directors of the second corporation except to the
extent the second corporation holds the shares in a fiduciary capacity.
Redeemable shares are not entitled to be voted after
notice of redemption is mailed to the holders and a sum sufficient to
redeem the shares has been deposited with a bank, trust company or
other financial institution under an irrevocable obligation to pay the
holders the redemption price on surrender of the shares.
Section 11. Corporation's Acceptance of Votes.
If the name signed on a vote, consent, waiver, proxy appointment, or
proxy appointment revocation corresponds to the name of a
shareholder, the corporation, if acting in good faith, is entitled to
accept the vote, consent, waiver, proxy appointment or proxy
appointment revocation and give it effect as the act of the shareholder.
If the name signed on a vote, consent, waiver, proxy appointment or
proxy appointment revocation does not correspond to the name of a
shareholder, the corporation, if acting in good faith, is nevertheless
entitled to accept the vote, consent, waiver, proxy appointment or
proxy appointment revocation and to give it effect as the act of the
shareholder if:
(i) the shareholder is an entity and the
name signed purports to be that of an officer or agent of the entity;
(ii) the name signed purports to be that of
an administrator, executor, guardian or conservator representing the
shareholder and, if the corporation requests, evidence of fiduciary
status acceptable to the corporation has been presented with respect to
the vote, consent, waiver, proxy appointment or proxy appointment
revocation;
(iii) the name signed purports to be that of
a receiver or trustee in bankruptcy of the shareholder and, if the
corporation requests, evidence of this status acceptable to the
corporation has been presented with respect to the vote, consent,
waiver, proxy appointment or proxy appointment revocation;
(iv) the name signed purports to be that of
a pledgee, beneficial owner or attorney-in-fact of the shareholder and,
if the corporation requests, evidence acceptable to the corporation of
the signatory's authority to sign for the shareholder has been presented
with respect to the vote, consent, waiver, proxy appointment or proxy
appointment revocation;
(v) two or more persons are the
shareholder as co-tenants or fiduciaries and the name signed purports
to be the name of at least one of the co-tenants or fiduciaries, and the
person signing appears to be acting on behalf of all the co-tenants or
fiduciaries; or
(vi) the acceptance of the vote, consent,
waiver, proxy appointment or proxy appointment revocation is
otherwise proper under rules established by the corporation that are
not inconsistent with this Section 11.
The corporation is entitled to reject a vote, consent,
waiver, proxy appointment or proxy appointment revocation if the
secretary or other officer or agent authorized to tabulate votes, acting
in good faith, has reasonable basis for doubt about the validity of the
signature on it or about the signatory's authority to sign for the
shareholder.
Neither the corporation nor its officers nor any agent
who accepts or rejects a vote, consent, waiver, proxy appointment or
proxy appointment revocation in good faith and in accordance with the
standards of this Section is liable in damages for the consequences of
the acceptance or rejection.
Section 12. Informal Action by Shareholders. Any
action required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting if a written consent (or
counterparts thereof) that sets forth the action so taken is signed by all
of the shareholders entitled to vote with respect to the subject matter
thereof and received by the corporation. Such consent shall have the
same force and effect as a unanimous vote of the shareholders and
may be stated as such in the document. Action taken under this
Section 12 is effective as of the date the last writing necessary to
effect this action is received by the corporation, unless all of the
writings specify a different effective date, in which case such specified
date shall be the effective date for such action. If any shareholder
revokes his consent as provided for herein prior to what would
otherwise be the effective date, the action proposed in the consent
shall be invalid. The record date for determining shareholders entitled
to take action without a meeting is the date the corporation receives
a writing upon which the action is taken.
Any shareholder who has signed a writing describing
and consenting to action taken pursuant to this Section 12 may revoke
such consent by a writing signed by the shareholder describing the
action and stating that the shareholder's prior consent thereto is
revoked, if such writing is received by the corporation before the
effectiveness of the action.
Section 13. Meetings by Telecommunication. Any
or all of the shareholders may participate in an annual or special
shareholders' meeting by, or the meeting may be conducted through
the use of, any means of communication by which all persons
participating in the meeting may hear each other during the meeting.
A shareholder participating in a meeting by this means is deemed to
be present in person at the meeting.
ARTICLE III
Board of Directors
Section 1. General Powers. All corporate powers
shall be exercised by or under the authority of, and the business and
affairs of the corporation shall be managed under the direction of its
board of directors, except as otherwise provided in the Colorado
Business Corporation Act or the articles of incorporation.
Section 2. Number, Qualifications and Tenure.
The number of directors of the corporation shall be fixed from time
to time by the board of directors, within a range of no less than three
or more than five. A director shall be a natural person who is
eighteen years of age or older. A director need not be a resident of
Colorado or a shareholder of the corporation.
Directors shall be elected at each annual meeting of
shareholders. Each director shall hold office until the next annual
meeting of shareholders following his election and thereafter until his
successor shall have been elected and qualified. Directors shall be
removed in the manner provided by the Colorado Business
Corporation Act.
Section 3. Vacancies. Any director may resign
at any time by giving written notice to the corporation. Such
resignation shall take effect at the time the notice is received by the
corporation unless the notice specifies a later effective date. Unless
otherwise specified in the notice of resignation, the corporation's
acceptance of such resignation shall not be necessary to make it
effective. Any vacancy on the board of directors may be filled by the
affirmative vote of a majority of the shareholders or the board of
directors. If the directors remaining in office constitute fewer than a
quorum of the board, the directors may fill the vacancy by the
affirmative vote of a majority of all the directors remaining in office.
If elected by the directors, the director shall hold office until the next
annual shareholder's meeting at which directors are elected. If elected
by the shareholders, the director shall hold office for the unexpired
term of his predecessor in office; except that, if the director's
predecessor was elected by the directors to fill a vacancy, the director
elected by the shareholders shall hold office for the unexpired term of
the last predecessor elected by the shareholders.
Section 4. Regular Meetings. A regular meeting
of the board of directors shall be held without notice immediately after
and at the same place as the annual meeting of shareholders. The
board of directors may provide by resolution the time and place, either
within or outside Colorado, for the holding of additional regular
meetings without other notice.
Section 5. Special Meetings. Special meetings
of the board of directors may be called by or at the request of the
president or any two directors. The person or persons authorized to
call special meetings of the board of directors may fix any place,
either within or outside Colorado, as the place for holding any special
meeting of the board of directors called by them, provided that no
meeting shall be called outside the State of Colorado unless a majority
of the board of directors has so authorized.
Section 6. Notice. Notice of any special meeting
shall be given at least two days prior to the meeting by written notice
either personally delivered or mailed to each director at his business
address, or by notice transmitted by telegraph, telex, electronically
transmitted facsimile or other form of wire or wireless communication.
If mailed, such notice shall be deemed to be given and to be effective
on the earlier of (i) three days after such notice is deposited in the
United States mail, properly addressed, with postage prepaid, or (ii)
the date shown on the return receipt, if mailed by registered or
certified mail return receipt requested. If notice is given by telex,
electronically transmitted facsimile or other similar form of wire or
wireless communication, such notice shall be deemed to be given and
to be effective when sent, and with respect to a telegram, such notice
shall be deemed to be given and to be effective when the telegram is
delivered to the telegraph company. If a director has designated in
writing one or more reasonable addresses or facsimile numbers for
delivery of notice to him, notice sent by mail, telegram, telex,
electronically transmitted facsimile or other form of wire or wireless
communication shall not be deemed to have been given or to be
effective unless sent to such addresses or facsimile numbers, as the
case may be.
A director may waive notice of a meeting before or
after the time and date of the meeting by a writing signed by such
director. Such waiver shall be delivered to the corporation for filing
with the corporate records. Further, a director's attendance at or
participation in a meeting waives any required notice to him of the
meeting unless at the beginning of the meeting, or promptly upon his
arrival, the director objects to holding the meeting or transacting
business at the meeting because of lack of notice or defective notice
and does not thereafter vote for or assent to action taken at the
meeting. Neither the business to be transacted at, 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.
Section 7. Quorum. A majority of the number
of directors fixed by the board of directors pursuant to Section 2 or,
if no number is fixed, a majority of the number in office immediately
before the meeting begins, shall constitute a quorum for the
transaction of business at any meeting of the board of directors. If
less than such majority is present at a meeting, a majority of the
directors present may adjourn the meeting from time to time without
further notice, for a period not to exceed sixty days at any one
adjournment.
Section 8. Manner of Acting. 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. No director may
vote or act by proxy at any meeting of directors.
Section 9. Compensation. By resolution of the
board of directors, any director may be paid any one or more of the
following: his expenses, if any, of attendance at meetings, a fixed
sum for attendance at each meeting, a stated salary as director, or such
other compensation as the corporation and the director may reasonably
agree upon. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving
compensation therefor.
Section 10. Presumption of Assent. A director of
the corporation who is present at a meeting of the board of directors
or committee of the board at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless (i)
the director objects at the beginning of the meeting, or promptly upon
his arrival, to the holding of the meeting or the transaction of business
at the meeting and does not thereafter vote for or assent to any action
taken at the meeting, (ii) the director contemporaneously requests that
his dissent or abstention as to any specific action taken be entered in
the minutes of the meeting, or (iii) the director causes written notice
of his dissent or abstention as to any specific action to be received by
the presiding officer of the meeting before its adjournment or by the
corporation promptly after the adjournment of the meeting. A director
may dissent to a specific action at a meeting, while assenting to
others. The right to dissent to a specific action taken at a meeting of
the board of directors or a committee of the board shall not be
available to a director who voted in favor of such action.
Section 11. Committees. By resolution adopted
by a majority of all the directors in office when the action is taken,
the board of directors may designate from among its members an
executive committee and one or more other committees, and appoint
one or more members of the board of directors to serve on them. To
the extent provided in the resolution, each committee shall have all the
authority of the board of directors, except that no such committee
shall have the authority to (i) authorize distributions, (ii) approve or
propose to shareholders actions or proposals required by the Colorado
Business Corporation Act to be approved by shareholders, (iii) fill
vacancies on the board of directors or any committee thereof, (iv)
amend articles of incorporation, (v) adopt, amend or repeal the
bylaws, (vi) approve a plan of merger not requiring shareholder
approval, (vii) authorize or approve the reacquisition of shares unless
pursuant to a formula or method prescribed by the board of directors,
or (viii) authorize or approve the issuance or sale of shares, or contract
for the sale of shares or determine the designations and relative rights,
preferences and limitations of a class or series of shares, except that
the board of directors may authorize a committee or officer to do so
within limits specifically prescribed by the board of directors. The
committee shall then have full power within the limits set by the
board of directors to adopt any final resolution setting forth all
preferences, limitations and relative rights of such class or series and
to authorize an amendment of the articles of incorporation stating the
preferences, limitations and relative rights of a class or series for filing
with the Secretary of State under the Colorado Business Corporation
Act.
Sections 4, 5, 6, 7, 8 and 12 of Article III, which
govern meetings, notice, waiver of notice, quorum, voting
requirements and action without a meeting of the board of directors,
shall apply to committees and their members appointed under this
Section 11.
Neither the designation of any such committee, the
delegation of authority to such committee, nor any action by such
committee pursuant to its authority shall alone constitute compliance
by any member of the board of directors or a member of the
committee in question with his responsibility to conform to the
standards of care set forth in Article III, Section 14 of these bylaws.
Section 12. Action Without a Meeting. Any
action required or permitted to be taken at a meeting of the directors
or any committee designated by the board of directors may be taken
without a meeting if a written consent (or counterparts thereof) that
sets forth the action so taken is signed by all of the directors entitled
to vote with respect to the action taken. Such consent shall have the
same force and effect as a unanimous vote of the directors or
committee members and may be stated as such in any document.
Unless the consent specifies a different effective date, action taken
under this Section 12 is effective at the time the last director signs a
writing describing the action taken, unless, before such time, any
director has revoked his consent by a writing signed by the director
and received by the president or secretary of the corporation.
Section 13. Telephonic Meetings. The board of
directors may permit any director (or any member of a committee
designated by the board) to participate in a regular or special meeting
of the board of directors or a committee thereof through the use of
any means of communication by which all directors participating in
the meeting can hear each other during the meeting. A director
participating in a meeting in this manner is deemed to be present in
person at the meeting.
Section 14. Standard of Care. A director shall
perform his duties as a director, including, without limitation his
duties as a member of any committee of the board, in good faith, in
a manner he reasonably believes to be in the best interests of the
corporation, and with the care an ordinarily prudent person in a like
position would exercise under similar circumstances. In performing
his duties, a director shall be entitled to rely on information, opinions,
reports or statements, including financial statements and other financial
data, in each case prepared or presented by the persons herein
designated. However, he shall not be considered to be acting in good
faith if he has knowledge concerning the matter in question that would
cause such reliance to be unwarranted. A director shall not be liable
to the corporation or its shareholders for any action he takes or omits
to take as a director if, in connection with such action or omission, he
performs his duties in compliance with this Section 14.
The designated persons on whom a director is entitled
to rely are (i) one or more officers or employees of the corporation
whom the director reasonably believes to be reliable and competent in
the matters presented, (ii) legal counsel, public accountant, or other
person as to matters which the director reasonably believes to be
within such person's professional or expert competence, or (iii) a
committee of the board of directors on which the director does not
serve if the director reasonably believes the committee merits
confidence.
ARTICLE IV
Officers and Agents
Section 1. General. The officers of the
corporation shall be a president, one or more vice presidents, a
secretary, a treasurer, and/or such other officers as may be appointed
from time to time by the board of directors, each of whom shall be a
natural person eighteen years of age or older. The board of directors
or an officer or officers authorized by the board may appoint such
other officers, assistant officers, committees and agents, including a
chairman of the board, assistant secretaries and assistant treasurers, as
they may consider necessary. The board of directors or the officer or
officers authorized by the board shall from time to time determine the
procedure for the appointment of officers, their term of office, their
authority and duties and their compensation. One person may hold
more than one office. In all cases where the duties of any officer,
agent or employee are not prescribed by the bylaws, or by the board
of directors, such officer, agent or employee shall follow the orders
and instructions of the president of the corporation.
Section 2. Appointment and Term of Office.
The officers of the corporation shall be appointed by the board of
directors at each annual meeting of the board held after each annual
meeting of the shareholders. If the appointment of officers is not
made at such meeting or if an officer or officers are to be appointed
by another officer or officers of the corporation, such appointment
shall be made as soon thereafter as conveniently may be. Each officer
shall hold office until the first of the following occurs: his successor
shall have been duly appointed and qualified, his death, his
resignation, or his removal in the manner provided in Section 3.
Section 3. Resignation and Removal. An officer
may resign at any time by giving written notice of resignation to the
corporation. The resignation is effective when the notice is received
by the corporation unless the notice specifies a later effective date.
Any officer or agent may be removed at any time with
or without cause by the board of directors or an officer or officers
authorized by the board. Such removal does not affect the contract
rights, if any, of the corporation or of the person so removed. The
appointment of an officer or agent shall not in itself create contract
rights.
Section 4. Vacancies. A vacancy in any office,
however occurring, may be filled by the board of directors, or by the
officer or officers authorized by the board, for the unexpired portion
of the officer's term. If an officer resigns and his resignation is made
effective at a later date, the board of directors, or officer or officers
authorized by the board, may permit the officer to remain in office
until the effective date and may fill the pending vacancy before the
effective date if the board of directors or officer or officers authorized
by the board provide that the successor shall not take office until the
effective date. In the alternative, the board of directors, or officer or
officers authorized by the board of directors, may remove the officer
at any time before the effective date and may fill the resulting
vacancy.
Section 5. President. Subject to the direction
and supervision of the board of directors, the president shall be the chief
executive officer of the corporation, and shall have general and active
control of its affairs and business and general supervision of its
officers, agents and employees. Unless otherwise directed by the
board of directors, the president shall attend in person or by substitute
appointed by him, or shall execute on behalf of the corporation written
instruments appointing a proxy or proxies to represent the corporation,
at all meetings of the stockholders of any other corporation in which
the corporation holds any stock. On behalf of the corporation, the
president may in person or by substitute or by proxy execute written
waivers of notice and consents with respect to any such meetings. At
all such meetings and otherwise, the president, in person or by
substitute or proxy, may vote the stock held by the corporation,
execute written consents and other instruments with respect to such
stock, and exercise any and all rights and powers incident to the
ownership or said stock, subject to the instructions, if any, of the
board of directors. The president shall have custody of the treasurer's
bond, if any.
Section 6. Vice Presidents. The vice presidents
shall assist the president and shall perform such duties as may be
assigned to them by the president or by the board of directors. In the
absence of the president, the vice president, if any (or, if more than
one, the vice presidents in the order designated by the board of
directors, or if the board makes no such designation, then the vice
president designated by the president, or if neither the board nor the
president makes any such designation, the senior vice president as
determined by first election to that office), shall have the powers and
perform the duties of the president.
Section 7. Secretary. The secretary shall (i)
prepare and maintain as permanent records the minutes of the
proceedings of the shareholders and the board of directors, a record of
all actions taken by the shareholders or board of directors without a
meeting, a record of all actions taken by a committee of the board of
directors in place of the board of directors on behalf of the
corporation, and a record of all waivers of notice of meetings of
shareholders and of the board of directors or any committee thereof,
(ii) see that all notices are duly given in accordance with the
provisions of these bylaws and as required by law, (iii) serve as
custodian of the corporate records and of the seal of the corporation
and affix the seal to all documents when authorized by the board of
directors, (iv) keep at the corporation's registered office or principal
place of business a record containing the names and addresses of all
shareholders in a form that permits preparation of a list of
shareholders arranged by voting group and by class or series of shares
within each group, that is alphabetical within each class or series and
that shows the address of, and the number of shares of each class or
series held by each shareholder, unless such a record shall be kept at
the office of the corporation's transfer agent or registrar, (v) maintain
at the corporation's principal office the originals or copies of the
corporation's articles of incorporation, bylaws, minutes of all
shareholders' meetings and records of all action taken by shareholders
without a meeting for the past three years, all written communications
within the past three years to shareholders as a group or to the holders
of any class or series of shares as a group, a list of the name and
business addresses of the current directors and officers, a copy of the
corporation's most recent corporate report filed with the Secretary of
State, and financial statements showing in reasonable detail the
corporation's assets and liabilities and results of operations for the last
three years, (vi) have general charge of the stock transfer books of the
corporation, unless the corporation has a transfer agent, (vii)
authenticate records of the corporation, and (vii) in general, perform
all duties incident to the office of secretary and such other duties as
from time to time may be assigned to him by the president or by the
board of directors. Assistant secretaries, if any, shall have the same
duties and powers subject to supervision by the secretary. The
directors and/or shareholders may however respectively designate a
person other than the secretary or assistant secretary to keep the
minutes of their respective meetings.
Any books, records, or minutes of the corporation may
be in written form or in any form capable of being converted into
written form within a reasonable time.
Section 8. Treasurer. The treasurer shall be the
principal financial officer of the corporation, shall have the care and
custody of all funds, securities, evidences of indebtedness and other
personal property of the corporation and shall deposit the same in
accordance with the instructions of the board of directors. He shall
receive and give receipts and acquittances for money paid in on
account of the corporation, and shall pay out of the corporation's
funds on hand all bills, payrolls and other just debts of the corporation
of whatever nature upon maturity. He shall perform all other duties
incident to the office of the treasurer and, upon request of the board,
shall make such reports to it as may be required at any time. He
shall, if required by the board, give the corporation a bond in such
sums and with such sureties as shall be satisfactory to the board,
conditioned upon the faithful performance of his duties and for the
restoration to the corporation of all books, papers, vouchers, money
and other property of whatever kind in his possession or under his
control belonging to the corporation. He shall have such other powers
and perform such other duties as may from time to time be prescribed
by the board of directors or the president. The assistant treasurers, if
any, shall have the same powers and duties, subject to the supervision
of the treasurer.
The treasurer shall also be the principal accounting
officer of the corporation. He shall prescribe and maintain the
methods and systems of accounting to be followed, keep complete
books and records of account as required by the Colorado Business
Corporation Act, prepare and file all local, state and federal tax
returns, prescribe and maintain an adequate system of internal audit
and prepare and furnish to the president and the board of directors
statements of account showing the financial position of the corporation
and the results of its operations.
ARTICLE V
Stock
Section 1. Certificates. The board of directors
shall be authorized to issue any of its classes of shares with or without
certificates. The fact that the shares are not represented by certificates
shall have no effect on the rights and obligations of shareholders. If
the shares are represented by certificates, such shares shall be
represented by consecutively numbered certificates signed, either
manually or by facsimile, in the name of the corporation by one or
more persons designated by the board of directors. 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, such certificate may nonetheless be issued by the
corporation with the same effect as if he were such officer at the date
of its issue. Certificates of stock shall be in such form and shall
contain such information consistent with law as shall be prescribed by
the board of directors. If shares are not represented by certificates,
within a reasonable time following the issue or transfer of such shares,
the corporation shall send the shareholder a complete written statement
of all of the information required to be provided to holders of
uncertificated shares by the Colorado Business Corporation Act.
Section 2. Consideration for Shares. Certificated
or uncertificated shares shall not be issued until the shares represented
thereby are fully paid. The board of directors may authorize the
issuance of shares for consideration consisting of any tangible or
intangible property or benefit to the corporation, including cash,
promissory notes, services performed or other securities of the
corporation. Future services shall not constitute payment or partial
payment for shares of the corporation. The promissory note of a
subscriber or an affiliate of a subscriber shall not constitute payment
or partial payment for shares of the corporation unless the note is
negotiable and is secured by collateral, other than the shares being
purchased, having a fair market value at least equal to the principal
amount of the note. For purposes of this Section 2, "promissory note"
means a negotiable instrument on which there is an obligation to pay
independent of collateral and does not include a non-recourse note.
Section 3. Lost Certificates. In case of the
alleged loss, destruction or mutilation of a certificate of stock, the
board of directors may direct the issuance of a new certificate in lieu
thereof upon such terms and conditions in conformity with law as the
board may prescribe. The board of directors may in its discretion
require an affidavit of lost certificate and/or a bond in such form and
amount and with such surety as it may determine before issuing a new
certificate.
Section 4. Transfer of Shares. Upon surrender
to the corporation or to a transfer agent of the corporation of a
certificate of stock duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, and receipt of such
documentary stamps as may be required by law and evidence of
compliance with all applicable securities laws and other restrictions,
the corporation shall issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock
shall be entered on the stock books of the corporation which shall be
kept at its principal office or by the person and at the place designated
by the board of directors.
Except as otherwise expressly provided in Article II,
Sections 7 and 11, and except for the assertion of dissenters' rights to
the extent provided in Article 113 of the Colorado Business
Corporation Act, the corporation shall be entitled to treat the
registered holder of any shares of the corporation as the owner thereof
for all purposes, and the corporation shall not be bound to recognize
any equitable or other claim to, or interest in, such shares or rights
deriving from such shares on the part of any person other than the
registered holder, including without limitation any purchaser, assignee
or transferee of such shares or rights deriving from such shares, unless
and until such other person becomes the registered holder of such
shares, whether or not the corporation shall have either actual or
constructive notice of the claimed interest of such other person.
Section 5. Transfer Agent, Registrars and Paying
Agents. The board may at its discretion appoint one or more transfer
agents, registrars and agents for making payment upon any class of
stock, bond, debenture or other security of the corporation. Such
agents and registrars may be located either within or outside Colorado.
They shall have such rights and duties and shall be entitled to such
compensation as may be agreed.
ARTICLE VI
Indemnification of Certain Persons
Section 1. Indemnification. For purposes of
Article VI, a "Proper Person" means any person who was or is a party
or is threatened to be made a party to any threatened, pending, or
complete action, suit or proceeding, whether civil, criminal,
administrative or investigative, and whether formal or informal, by
reason of the fact that he is or was a director, officer, employee,
fiduciary or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, partner, trustee,
employee, fiduciary or agent of any foreign or domestic profit or
nonprofit corporation or of any partnership, joint venture, trust, profit
or nonprofit unincorporated association, limited liability company, or
other enterprise or employee benefit plan. The corporation shall
indemnify any Proper Person against reasonably incurred expenses
(including any attorneys' fees), judgments, penalties, fines (including
any excise tax assessed with respect to an employee benefit plan) and
amounts paid in settlement reasonably incurred by him in connection
with such action, suit or proceeding if it is determined by the groups
set forth in Section 4 of this Article that he conducted himself in good
faith and that he reasonably believed (i) in the case of conduct in his
official capacity with the corporation, that his conduct was in the
corporation's best interests, or (ii) in all other cases (except criminal
cases), that his conduct was at least not opposed to the corporation's
best interests, or (iii) in the case of any criminal proceeding, that he
had no reasonable cause to believe his conduct was unlawful. A
Proper Person will be deemed to be acting in his official capacity
while acting as a director, officer, employee or agent on behalf of this
corporation and not while acting on this corporation's behalf for some
other entity.
No indemnification shall be made under this Article VI
to a Proper Person with respect to any claim, issue or matter in
connection with a proceeding by or in the right of a corporation in
which the Proper Person was adjudged liable to the corporation or in
connection with any proceeding charging that the Proper Person
derived an improper personal benefit, whether or not involving action
in an official capacity, in which he was adjudged liable on the basis
that he derived an improper personal benefit. Further, indemnification
under this Section in connection with a proceeding brought by or in
the right of the corporation shall be limited to reasonable expenses,
including attorneys' fees, incurred in connection with the proceeding.
Section 2. Right to Indemnification. The
corporation shall indemnify any Proper Person who was wholly
successful, on the merits or otherwise, in defense of any action, suit,
or proceeding as to which he was entitled to indemnification under
Section 1 of this Article VI against expenses (including attorneys'
fees) reasonably incurred by him in connection with the proceeding
without the necessity of any action by the corporation other than the
determination in good faith that the defense has been wholly
successful.
Section 3. Effect of Termination of Action. The
termination of any action, suit or proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not of itself create a presumption that the person
seeking indemnification did not meet the standards of conduct
described in Section 1 of this Article VI. Entry of a judgment by
consent as part of a settlement shall not be deemed an adjudication of
liability, as described in Section 2 of this Article VI.
Section 4. Groups Authorized to Make
Indemnification Determination. Except where there is a right to
indemnification as set forth in Sections 1 or 2 of this Article or where
indemnification is ordered by a court in Section 5, any indemnification
shall be made by the corporation only as authorized in the specific
case upon a determination by a proper group that indemnification of
the Proper Person is permissible under the circumstances because he
has met the applicable standards of conduct set forth in Section 1 of
this Article. This determination shall be made by the board of
directors by a majority vote of those present at a meeting at which a
quorum is present, which quorum shall consist of directors not parties
to the proceeding ("Quorum"). If a Quorum cannot be obtained, the
determination shall be made by a majority vote of a committee of the
board of directors designated by the board, which committee shall
consist of two or more directors not parties to the proceeding, except
that directors who are parties to the proceeding may participate in the
designation of directors for the committee. If a Quorum of the board
of directors cannot be obtained and the committee cannot be
established, or even if a Quorum is obtained or the committee is
designated and a majority of the directors constituting such Quorum
or committee so directs, the determination shall be made by (i)
independent legal counsel selected by a vote of the board of directors
or the committee in the manner specified in this Section 4, or, if a
Quorum of the full board of directors cannot be obtained and a
committee cannot be established, by independent legal counsel selected
by a majority vote of the full board (including directors who are
parties to the action) or (ii) a vote of the shareholders.
Section 5. Court-Ordered Indemnification. Any
Proper Person may apply for indemnification to the court conducting
the proceeding or to another court of competent jurisdiction for
mandatory indemnification under Section 2 of this Article, including
indemnification for reasonable expenses incurred to obtain court-
ordered indemnification. If the court determines that such Proper
Person is fairly and reasonably entitled to indemnification in view of
all the relevant circumstances, whether or not he met the standards of
conduct set forth in Section 1 of this Article or was adjudged liable
in the proceeding, the court may order such indemnification as the
court deems proper except that if the Proper Person has been adjudged
liable, indemnification shall be limited to reasonable expenses incurred
in connection with the proceeding and reasonable expenses incurred
to obtain court-ordered indemnification.
Section 6. Advance of Expenses. Reasonable
expenses (including attorneys' fees) incurred in defending an action,
suit or proceeding as described in Section 1 may be paid by the
corporation to any Proper Person in advance of the final disposition
of such action, suit or proceeding upon receipt of (i) a written
affirmation of such Proper Person's good faith belief that he has met
the standards of conduct prescribed by Section 1 of this Article VI,
(ii) a written undertaking, executed personally or on the Proper
Person's behalf, to repay such advances if it is ultimately determined
that he did not meet the prescribed standards of conduct (the
undertaking shall be an unlimited general obligation of the Proper
Person but need not be secured and may be accepted without reference
to financial ability to make repayment), and (iii) a determination is
made by the proper group (as described in Section 3 of this Article
VI) that the facts as then known to the group would not preclude
indemnification. Determination and authorization of payments shall
be made in the same manner specified in Section 4 of this Article VI.
Section 7. Witness Expenses. The sections of
this Article VI do not limit the corporation's authority to pay or
reimburse expenses incurred by a director in connection with an
appearance as a witness in a proceeding at a time when he has not
been a named defendant or respondent in the proceeding.
Section 8. Report to Shareholders. Any
indemnification of or advance of expenses to a director in accordance
with this Article VI, if arising out of a proceeding by or on behalf of
the corporation, shall be reported in writing to the shareholders with
or before the notice of the next shareholders' meeting. If the next
shareholder action is taken without a meeting at the instigation of the
board of directors, such notice shall be given to the shareholders at or
before the time the first shareholder signs a writing consenting to such
action.
ARTICLE VII
Provision of Insurance
By action of the board of directors, notwithstanding
any interest of the directors in the action, the corporation may
purchase and maintain insurance, in such scope and amounts as the
board of directors deems appropriate on behalf of any person who is
or was a director, officer, employee, fiduciary or agent of the
corporation, or who, while a director, officer, employee, fiduciary or
agent of the corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee, fiduciary
or agent of any other foreign or domestic corporation or of any
partnership, joint venture, trust, profit or nonprofit unincorporated
association, limited liability company or other enterprise or employee
benefit plan, against any liability asserted against, or incurred by, him
in that capacity arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such
liability under the provisions of Article VI or applicable law. Any
such insurance may be procured from any insurance company
designated by the board of directors of the corporation, whether such
insurance company is formed under the laws of Colorado or any other
jurisdiction of the United States or elsewhere, including any insurance
company in which the corporation has an equity interest or any other
interest, through stock ownership or otherwise.
ARTICLE VIII
Miscellaneous
Section 1. Seal. The corporate seal of the
corporation shall be circular in form and shall contain the name of the
corporation and the words, "Seal, Colorado."
Section 2. Fiscal Year. The fiscal year of the
corporation shall be as established by the board of directors.
Section 3. Amendments. The board of directors
shall have power, to the maximum extent permitted by the Colorado
Business Corporation Act, to make, amend and repeal the bylaws of
the corporation at any regular or special meeting of the board unless
the shareholders, in making, amending or repealing a particular bylaw,
expressly provide that the directors may not amend or repeal such
bylaw. The shareholders also shall have the power to make, amend
or repeal the bylaws of the corporation at any annual meeting or at
any special meeting called for that purpose.
Section 4. Gender. The masculine gender is used
in these bylaws as a matter of convenience only and shall be
interpreted to include the feminine and neuter genders as the
circumstances indicate.
Section 5. Conflicts. In the event of any
irreconcilable conflict between these bylaws and either the
corporation's articles of incorporation or applicable law, the latter
shall control.
Section 6. Definitions. Except as otherwise
specifically provided in these bylaws, all terms used in these bylaws
shall have the same definition as in the Colorado Business Corporation
Act.
THE FOREGOING BYLAWS, consisting of eighteen
(18) pages, including this page, constitute the bylaws of Buffalo
Capital I, Ltd. adopted by the board of directors of the corporation as
of August 28, 1996.
/s/
Secretary<PAGE>
WARRANT AGENT AGREEMENT
AGREEMENT, dated this ____ day of
______________, 1996, between Buffalo Capital I, Ltd., a Colorado
corporation (the "Company"), and Buffalo Capital I, Ltd., or its
assigns, as warrant agent (the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, the Company is issuing 4,830,000 Class
A Common Stock Purchase Warrants ("Class A Warrants"), and
2,415,000 Class B Common Stock Warrants ("Class B Warrants"),
each such warrant to purchase one (1) share of the Company's
Common Stock, no par value per share (the "Common Stock"), and all
such Class A Warrants and Class B Warrants are hereinafter
collectively referred to as the "Warrants;" and
WHEREAS, each Warrant entitles the registered holder
to purchase one (1) share of Common Stock; and
WHEREAS, the Company desires to provide for the
issuance of certificates representing the Warrants; and
WHEREAS, the Company desires the Warrant Agent
to act on behalf of the Company, and the Warrant Agent is willing so
to act, in connection with the issuance, registration, transfer and
exchange of certificates representing the Warrants and the exercise of
the Warrants;
NOW, THEREFORE, in consideration of the premises
and the mutual agreements hereinafter set forth, and for the purpose
of defining the terms and provisions of the Warrants and the
certificates representing the Warrants and the respective rights and
obligations thereunder of the Company, the holders of certificates
representing the Warrants, and the Warrant Agent, the parties hereto
agree as follows:
SECTION 1. Definitions.
For purposes of this Agreement, the terms listed below
shall have the respective meanings set forth below in this Section,
unless the context shall require otherwise.
(a) "Common Stock" shall mean common
stock of the Company, whether now or hereafter
authorized, which has the right to participate in the
distribution of earnings and assets of the Company
without limit as to amount or percentage, which as
authorized at the date hereof consists of 100,000,000
shares.
(b) "Warrant Expiration Date" shall mean
5 p.m. (Mountain Time) on December 31, 2002, or if
such a date shall, in the State of Colorado, be a
holiday or a day on which banks are authorized to
close, then 5 p.m. (Mountain Time) on the next
following day which, in the State of Colorado, is not
a holiday or a day on which banks are authorized to
close. The Warrant Expiration Date may be extended
from time to time for an indefinite period, by action of
the Company, upon giving five (5) days prior notice to
the Warrant Agent. Unless exercised during the
Warrant Exercise Period, as defined below, the
Warrants will thereafter automatically expire.
(c) "Warrant Exercise Period" shall mean
from January 1, 1997, until the Warrant Expiration
Date.
(d) "Corporate Office" shall mean the
office of the Warrant Agent (or its successor) at which
at any particular time its principal business in Denver,
Colorado, shall be administered, which office is
located at the date hereof at 7331 S. Meado Court,
Boulder, Colorado 80301.
(e) "Exercise Date" shall mean the date
a certificate representing a Warrant is surrendered for
exercise.
(f) "Purchase Price" shall mean (i) $2.00
per share of Common Stock in the case of a Class A
Warrant, and (ii) $4.00 per share of Common Stock in
the case of a Class B Warrant, unless either such
purchase price shall have been reduced as hereinafter
provided. The Company may, in its sole discretion,
reduce the Purchase Price of either the Class A
Warrants or the Class B Warrants upon five (5) days
prior notice to the Warrant Agent. Subject to the
provisions of Sections 4 and 5 and the other conditions
set forth in this Agreement, each Warrant is
exercisable for one (1) share of Common Stock upon
payment of the Purchase Price at any time during the
Warrant Exercise Period.
(g) "Registered Holder" shall mean the
person in whose name any certificate representing
Warrants shall be registered on the books maintained
by the Warrant Agent pursuant to Section 7.
(h) "Subsidiary" or "Subsidiaries" shall
mean any corporation or corporations, as the case may
be, of which stock having ordinary power to elect a
majority of the Board of Directors of such corporation
(regardless of whether at the time stock of any other
class or classes of such corporation shall have or may
have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned
by the Company or by one or more subsidiaries, or by
the Company and one or more Subsidiaries.
(i) "Transfer Agent" shall mean the
Company, or its authorized successor.
(j) "Warrant Certificate" shall mean a
certificate representing Warrants.
SECTION 2. Warrants and Issuance of Warrant
Certificates; Stop-Transfer Order.
(a) Each Warrant shall entitle the
Registered Holder of the Warrant Certificate
representing such Warrant to purchase one share of
Common Stock upon the exercise thereof. Until the
Company shall have consummated a business
combination that does not result in the cancellation of
the Warrants pursuant to Section 5(a), the Warrants (i)
shall be subject to a stop-transfer order, and (ii) may
not be transferred on the books and records of the
Company. Unless the Warrants shall have been
cancelled pursuant to Section 5(a), the Warrants shall
become freely transferable upon the consummation of
a business combination by the Company.
(b) Upon execution of this Agreement,
Warrant Certificates representing up to an aggregate of
4,830,000 Class A Warrants to purchase an aggregate
of 4,830,000 shares of Common Stock and Warrant
Certificates representing up to an aggregate of
2,415,000 Class B Warrants to purchase an aggregate
of 2,415,000 shares of Common Stock, shall be
executed by the Company and delivered to the Warrant
Agent and, after the corresponding certificates for
Warrants shall have been duly countersigned by the
Transfer Agent of the Company's Common Stock,
shall be countersigned, issued and delivered by the
Warrant Agent upon written order of the Company
signed by its Chief Executive Officer, President, or a
Vice President and its Treasurer or an Assistant
Treasurer or its Secretary or Assistant Secretary.
(c) From time to time, up to the Warrant
Expiration Date, plus such additional time as may
reasonably be required to perform, accomplish and
complete necessary administrative functions connected
with the exercise of the Warrants, the Transfer Agent
shall countersign and deliver stock certificates
representing up to an aggregate of 4,830,000 shares of
Common Stock upon the exercise of the Class A
Warrants and up to an aggregate of 2,415,000 shares
of Common Stock upon the exercise of the Class B
Warrants pursuant to the terms of this Agreement.
(d) From time to time, up to the Warrant
Expiration Date, the Warrant Agent shall countersign
and deliver Warrant Certificates in required whole
number denominations to the persons entitled thereto
in connection with any transfer or exchange permitted
under this Agreement. Except as provided in Section
8 hereof, no Warrant Certificates shall be issued
except (i) Warrant Certificates initially issued
hereunder, (ii) Warrant Certificates issued upon the
exercise of any Warrants, to evidence the unexercised
Warrants held by the exercising Registered Holder,
and (iii) Warrant Certificates issued upon any transfer
or exchange of Warrants.
SECTION 3. Form and Execution of Warrant
Certificates.
The Warrant Certificates shall be substantially in the
form annexed hereto as Exhibit A and Exhibit B (the provisions of
which are incorporated herein by this reference) and may have such
letters, numbers or other marks of identification or designation and
such legends, summaries or endorsements printed, lithographed or
engraved thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange
on which the Class A Warrants or the Class B Warrants may be listed,
or to conform to usage. The Warrant Certificates shall be dated the
date of issuance thereof (whether upon initial issuance, transfer,
exchange or in lieu of mutilated, lost, stolen or destroyed Warrant
Certificates). Class A Warrants shall be numbered serially with the
letters W-A on Class A Warrants of all denominations. Class B
Warrants shall be numbered serially with the letters W-B on Class B
Warrants of all denominations.
Warrant Certificates shall be executed on behalf of the
Company by its Chief Executive Officer, President or any Vice
President and its Treasurer or an Assistant Treasurer or its Secretary
or an Assistant Secretary, by manual signatures or by facsimile
signatures printed thereon, and shall have imprinted thereon a
facsimile of the Company's seal. Warrant Certificates shall be
manually countersigned by the Warrant Agent and shall not be valid
for any purpose unless so countersigned. In case any office of the
Company who shall have signed any of the Warrant Certificates shall
cease to be such officer of the Company before the date of issuance
of the Warrant Certificates or before countersignature by the Warrant
Agent and issue and delivery thereof, such Warrant Certificates,
nevertheless, may be countersigned by the Warrant Agent, issued and
delivered with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be such officer of
the Company.
SECTION 4. Exercise of Warrants.
Subject to (i) the provisions of Section 5 and the other
conditions set forth in this Agreement, (ii) the current prospectus
requirements of the Securities Act of 1933, as amended, and (iii) any
additional conditions set forth in the applicable Warrant Certificate,
each Warrant represented by a Warrant Certificate may be exercised
during the applicable Warrant Exercise Period upon the terms set forth
herein and in the applicable Warrant Certificate. A Warrant shall be
deemed to have been exercised immediately prior to the close of
business on the applicable Exercise Date, provided that the Warrant
Certificate representing such Warrant, with the appropriate exercise
form thereon duly executed by the Registered Holder thereof or his or
her attorney duly authorized in writing, together with payment in cash,
or by official bank or certified check made payable to the Company,
of an amount equal to the applicable Purchase Price has been timely
received by the Warrant Agent. Payment must be made in United
States funds. The person entitled to receive the securities deliverable
upon such exercise shall be treated, for all purposes, as the holder of
such securities as of the close of business on the Exercise Date. The
Company shall not be obligated to issue any fractional share interests
or fractional warrant interests upon the exercise of any Warrant or
Warrants. As soon as practicable on or after the Exercise Date, and
in any event within thirty (30) days after such date, if a Warrant has
been exercised, the Warrant Agent, on behalf of the Company, shall
cause to be issued to the person or persons entitled to receive the
same, a Common Stock certificate or certificates for the shares of
Common Stock, and the Warrant Agent shall deliver the same to the
person or persons entitled thereto. No adjustment shall be made in
respect of dividends on any shares delivered upon exercise of any
Warrant. Upon the exercise of any Warrants, the Warrant Agent shall
promptly notify the Company in writing of such fact and of the
number of securities delivered upon such exercise and shall cause all
payments of an amount in cash or check made payable to the order of
the Company, equal to the Purchase Price, to be deposited promptly
into the Company's bank account.
Notwithstanding the other provisions hereof, no
Warrants may be exercised unless the Company maintains a current
registration statement with the U.S. Securities and Exchange
Commission ("Registration Statement") in effect during the exercise
period of the Warrants. The Company will use its best efforts to file
a Registration Statement, and to keep the information on the Company
therein current during the period during which the Warrants may be
exercised. The Company will have no obligation, however, to file or
to keep the Registration Statement current for Common Stock to be
issued pursuant to a class of Warrants when the market bid price for
the Company's Common Stock is below the exercise price of such
class of Warrants, or when there is no current public market for the
Company's Common Stock.
SECTION 5. Cancellation of Warrants. Anything
in this Agreement or in the applicable Warrant Certificate to the
contrary notwithstanding, the Warrants shall be subject to cancellation
by the Company as follows:
(a) Subject to the limitations set forth below in this
Subsection (a), all, but not less than all, of the
Warrants may be cancelled by the Company at any
time prior to the declaration by the Securities and
Exchange Commission of the effectiveness of a
Registration Statement under which the Common
Stock shall have been registered without prior written
notice to the registered holders of the Warrants and
without any right on the part of the holders of the
Warrants to exercise their purchase rights prior to the
cancellation date. Upon cancellation, the
Warrantholder will forfeit his right to purchase the
Common Stock underlying the Warrants. Because the
Warrants may be exercised only so long as the
Company meets the current prospectus requirements of
the Securities Act of 1933, as amended, a cancellation
of the Warrants pursuant to this Subsection (a) will
mean that the Warrantholder shall never have received
an opportunity to exercise the Warrants following the
acquisition of a business opportunity by the Company.
The Company's right to cancel the Warrants in
accordance with this Subsection (a) may be exercised,
however, only in the event that management of a
business opportunity that is the target of a business
combination with the Company shall have required, in
writing, that the cancellation of the Warrants shall be
a condition precedent to the consummation of the
business combination between the Company and the
target company. The cancellation is to become
effective only upon the closing of such a business
combination. Should the contemplated business
combination fail to close, the cancellation shall be void
and the exercisability of the Warrants covered by the
cancellation shall not be affected. The failure of one
or more business combinations to close shall not,
however, impair the Company's right to cancel
Warrants under this Subsection (a) if the Company
enters into arrangements for a subsequent business
combination featuring the warrant-cancellation
condition described in this Subsection (a). To the
extent that the management of a business opportunity
that consummates a business combination with the
Company does not require cancellation of Warrants as
a condition of closing, the right of the Company to
cancel Warrants under this Subsection (a) shall be
extinguished.
(b) In addition to the cancellation mechanism
described in Subsection (a), above, all or any number
of the Warrants can be cancelled by the Company at
any time during their exercise term upon a minimum
of thirty (30) days prior written notice mailed to the
registered holders of the Warrants to exercise their
purchase rights between the date of any notice of
cancellation up to and including the cancellation date
given by the company. The notice period may be
extended, at the discretion of the Company, upon
giving subsequent notice to the Warrant Agent and to
registered holders of the Warrants. Any holder who
does not exercise his Warrants prior to the date set for
cancellation will forfeit his right to purchase the
Common Stock underlying the Warrants.
SECTION 6. Reservation of Shares; Listing;
Payment of Taxes; etc.
The Company covenants that it will at all times reserve
and keep available out of its authorized Common Stock, solely for the
purpose of issue upon exercise of Warrants, such number of shares of
Common Stock as shall then be issuable upon the exercise of all
outstanding Warrants. The Company covenants that all shares of
Common Stock which shall be issuable upon exercise of Warrants
shall be duly and validly issued and fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issue thereof,
and that upon issuance, such shares shall be listed on each national
securities exchange, if any, on which the other shares of outstanding
Common Stock of the Company are then listed.
If any securities to be reserved for the purpose of
exercise of Warrants hereunder require registration with or approval
of any governmental authority under any federal or state law, before
such securities may be validly issued or delivered upon such exercise,
then the Company covenants that it will, in good faith and as
expeditiously as possible, endeavor to secure such registration or
approval, as the case may be, provided, however, that the Company
need not endeavor to seek such registration or approval in a state in
which the Warrants were not sold by the Company pursuant to the
Registration Statement unless an exemption from registration under
such state's laws is available or such registration or approval may be
obtained with reasonable efforts and expenses, and provided further,
that Warrants may not be exercised by, or shares of Common Stock
issued to, any Registered Holder in any state in which such exercise
would be unlawful.
The Company shall pay all documentary, stamp or
similar taxes and other governmental charges that may be imposed
with respect to the issuance of Warrants, or the issuance or delivery
of any shares upon exercise of the said Warrants; provided, however,
that if shares of Common Stock are to be delivered in a name other
than the name of the Registered Holder of the Warrant Certificate
representing any Warrant being exercised, then no such delivery shall
be made unless the person requesting the same has paid to the Warrant
Agent the amount of transfer taxes or charges incident thereto, if any.
The Warrant Agent, unless it is already acting as such,
is hereby irrevocably authorized to requisition the Transfer Agent from
time to time for certificates representing shares of Common Stock
required upon exercise of the Warrants, and the Company will
authorize the Transfer Agent to comply with all such requisitions.
The Company will file with the Warrant Agent a statement setting
forth the name and address of the Transfer Agent for shares of
Common Stock or other capital stock issuable upon exercise of the
Warrants and of each successor Transfer Agent.
SECTION 7. Exchange and Registration of Transfer.
Warrant Certificates may be exchanged for other
Warrant Certificates representing an equal aggregate number of
Warrants or may be transferred in whole or in part. Warrant
Certificates to be so exchanged shall be surrendered to the Warrant
Agent at its Corporate Office, accompanied by an Assignment, when
necessary, and the Company shall execute and the Warrant Agent shall
countersign, issue and deliver in exchange therefor, the Warrant
Certificate or Certificates which the Registered Holder making the
exchange shall be entitled to receive.
The Warrant Agent shall keep at such office, books in
which, subject to such reasonable regulations as it may prescribe, it
shall register Warrant Certificates and the transfer thereof. Upon due
presentment for registration of transfer of any Warrant Certificate at
such office, the Company shall execute and the Warrant Agent shall
issue and deliver to the transferee or transferees a new Warrant
Certificate or Certificates representing an equal aggregate number of
Warrants.
With respect to all Warrant Certificates presented for
registration or transfer, or for exchange or exercise, the subscription
form on the reverse thereof shall be duly endorsed, or be accompanied
by a written instrument or instruments of transfer and subscription, in
form satisfactory to the Company and the Warrant Agent, duly
executed by the Registered Holder thereof or his or her attorney duly
authorized in writing.
A service charge shall be made for any exchange or
registration or transfer of Warrant Certificates. In addition, the
Company may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection
therewith.
All Warrant Certificates so surrendered for exercise or
for exchange in case of mutilated Warrant Certificates shall be
promptly cancelled by the Warrant Agent and thereafter retained by
the Warrant Agent until termination of the agency.
Prior to due presentment for registration of transfer
thereof, the Company and the Warrant Agent may deem and treat the
Registered Holder of any Warrant Certificate as the absolute owner
thereof and of each Warrant represented thereby (notwithstanding any
notations of ownership or writing thereon made by anyone other than
the Company or the Warrant Agent) for all purposes and shall not be
affected by any notice to the contrary.
SECTION 8. Loss or Mutilation.
Upon receipt by the Company and the Warrant Agent
of evidence satisfactory to them of the ownership of and the loss,
theft, destruction or mutilation of any Warrant Certificate and (in the
case of loss, theft or destruction) of indemnity satisfactory to them,
and (in the case of mutilation) upon surrender and cancellation thereof,
the Company shall execute and the Warrant Agent shall countersign
and deliver in lieu thereof, a new Warrant Certificate representing an
equal aggregate number of Warrants. Applicants for a substitute
Warrant Certificate shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Warrant
Agent may prescribe.
SECTION 9. Adjustment of Purchase Price and
Number of Shares Deliverable After a Recapitalization or
Restructuring of the Company.
(a) After each adjustment of the Purchase Price,
pursuant to this Section 9, the number of Common
Stock purchasable upon the exercise of each Warrant
shall be the number derived by dividing such adjusted
Purchase Price into the original Purchase Price as
defined in Section 1(f). In addition to this Section 9,
the Company's Board of Directors may, in its
discretion, reduce the applicable purchase price upon
the giving of five (5) days prior notice to the
registered holders of the Warrants and to the Warrant
Agent. Such reductions shall not be subject to the
adjustment provisions of this Section 9.
(b) The Purchase Price shall be subject to adjustment
as set forth below:
(i) In case the Company shall hereafter
(A) pay a dividend or make a distribution on its
Common Stock in shares of its capital stock (whether
shares of Common Stock or of capital stock of any
other class), (B) subdivide its outstanding shares of
Common Stock, (C) combine its outstanding shares of
Common Stock into a smaller number or shares, or
(D) issue by reclassification of its shares of Common
Stock any shares of capital stock of the Company, the
Purchase Price in effect immediately prior to such
action shall be adjusted so that the Registered Holder
of any Warrant thereafter exercised shall be entitled to
receive the number of shares of capital stock of the
Company which he or she would have owned
immediately following such action had such Warrant
been exercised immediately prior thereto.
(ii) An adjustment made pursuant to this
subsection shall become effective immediately after the
record date in the case of a dividend and shall become
effective immediately after the effective date in the
case of a subdivision, combination, reclassification or
issue. If, as a result of an adjustment made pursuant
to this subsection, the Registered Holder of any
Warrant thereafter exercised shall become entitled to
receive shares of two or more classes of capital stock
of the Company, the Board of Directors (whose
determination shall be conclusive and shall be
described in a statement filed with the Warrant Agent)
shall determine the allocation of the adjusted Purchase
Price between or among shares of such classes of
capital stock.
(iii) No adjustment in the Purchase Price
shall be required to be made unless such adjustment
would require an increase or decrease of at least $.01;
provided, however, that any adjustments, which by
reason of this subsection, are not required to be made,
shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this
Section 9 shall be made to the earnest one-hundredth
of a share, as the case may be, but in no event shall
the Company be obligated to issue fractional shares
upon the exercise of any Warrant.
(iv) In the event that at any time as a
result of an adjustment made pursuant to subsection (i)
of this Section 9(b), the Registered Holder of any
Warrant thereafter exercised shall become entitled to
receive any shares of the Company other than shares
of its Common Stock, thereafter the Purchase price of
such other shares so receivable upon exercise of any
Warrant shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common
Stock contained in subsections (i) through (iii) of this
Section 9(b).
(c) In case of any reclassification or change of
outstanding shares of Common Stock issuable upon
exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision or
combination), or in case of any consolidation or
merger of the Company with or into another
corporation (other than a merger with a Subsidiary in
which merger the Company is the continuing
corporation and which does not result in any
reclassification or change of the then outstanding
shares of Common Stock or other capital stock
issuable upon exercise of the Warrants [other than a
change in par value, or from par value to no par value,
or from no par value to par value or as a result of a
subdivision or combination]) or in case of any sale or
conveyance to another corporation of the property of
the Company as an entirety or substantially as an
entirety, then, as a condition of such reclassification,
change, consolidation, merger, sale or conveyance, the
Company, or such successor or purchasing corporation,
as the case may be, shall make lawful and adequate
provision whereby the Registered Holder of each
Warrant then outstanding shall have the right thereafter
to receive on exercise of such Warrant, the kind and
amount of securities and property receivable upon such
reclassification, change, consolidation, merger, sale or
conveyance by a Holder of the number of securities
issuable upon exercise of such Warrant immediately
prior to such reclassification, change, consolidation,
merger, sale or conveyance and shall forthwith file at
the Corporate Office of the Warrant Agent, a statement
signed by its Chief Executive Officer, President or a
Vice President and its Treasurer or an Assistant
Treasurer or its Secretary or an Assistant Secretary
evidencing such provisions. Such provisions shall
include provision for adjustment which shall be as
nearly equivalent as may be practicable to the
adjustments provided for in Section 9(b). The above
provisions of this Section 9(c) shall similarly apply to
the successive reclassifications and changes of shares
of Common Stock and to successive consolidations,
mergers, sales or conveyances.
(d) Before taking any action which would cause an
adjustment reducing the Purchase Price below the then
par value of the shares of Common Stock issuable
upon exercise of the Warrants, the Company will take
any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable
shares of such Common Stock at such adjusted
Purchase Price.
(i) Upon any adjustment of the Purchase
Price required to be made pursuant to this Section 9,
the Company within thirty (30) days thereafter shall
(A) cause to be filed with the Warrant Agent a
certificate of a firm of independent accountants setting
forth the Purchase Price after such adjustment and
setting forth in reasonable detail the method of
calculation and the facts upon which such calculation
is based, which certificate shall be conclusive evidence
of the correctness of such adjustment, and (B) cause to
be mailed to each of the Registered Holders of
Warrant Certificates written notice of such adjustment.
Where appropriate, such notice may be given in
advance and included as a part of the notice required
to be mailed under the provisions of Subsection
9(d)(ii).
(ii) In case at any time:
(A) The Company shall
declare any dividend upon its Common Stock
payable otherwise than in cash or in Common
Stock of the Company; or
(B) The Company shall
offer for subscription to all the holders of its
Common Stock, but not to the public generally,
any additional shares of stock of any class or any
other securities convertible into shares of stock or
any rights to subscribe therefore; or
(C) There shall be any
capital reorganization or reclassification of the
capital stock of the Company, or a sale of all or
substantially all of the assets of the Company, or
a consolidation or merger of the Company with
another corporation (other than a merger with a
Subsidiary in which merger the Company is the
continuing corporation and which does not result
in any reclassification or change of the then
outstanding shares of Common Stock or other
capital stock issuable upon exercise of the
Warrants [other than a change in par value, or
from par value to no par value, or from no par
value to par value, or as a result of subdivision or
combination]); or
(D) There shall be a
voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in any one or more of said cases, the Company
shall cause to be mailed to each of the Registered
Holders of Warrants, at the earliest practicable time
(and, in any event, not less than twenty (20) days
before any record date or other date set for definitive
action), written notice of the date on which the books
of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or
such reorganization, reclassification, sale,
consolidation, merger, dissolution, liquidation or
winding up shall taken place, as the case may be.
Such notice shall also set forth such facts as shall
indicate the effect of such action (to the extent that
such effect may be known at the date of such notice)
on the Purchase Price and the kind and amount of the
shares of stock and other securities and property
deliverable upon exercise of the Warrants. Such
notice shall also specify the date as of which the
holders of the Common Stock of record shall
participate in said dividend, distribution or subscription
rights or shall be entitled to exchange their Common
Stock for securities or other property deliverable upon
such reorganization, reclassification, sale,
consolidation, merger, dissolution, liquidation or
winding up, as the case may be (on which date, in the
event of voluntary or involuntary dissolution,
liquidation or winding up of the Company, the right to
exercise the Warrants shall terminate).
(iii) Without limiting the obligation of the
Company to provide notice to the Registered Holders
of corporation actions hereunder, it is agreed that
failure of the Company to give notice shall not
invalidate such corporation action of the Company.
SECTION 10. Concerning the Warrant Agent.
The Warrant Agent acts hereunder as agent and in a
ministerial capacity for the Company, and its duties shall be
determined solely by the provisions hereof. The Warrant Agent shall
not, by issuing and delivering Warrant Certificates or by any other act
hereunder, be deemed to make any representations as to the validity
or value or authorization of the Warrant Certificate or the Warrants
represented thereby or of any securities or other property delivered
upon exercise of any Warrant or whether any stock issued upon
exercise of any Warrant is fully paid and nonassessable.
The Warrant Agent shall not at any time (i) be liable
for any recital or statement of fact contained herein or for any action
taken, suffered or omitted by it in reliance on any Warrant Certificate
or other document or instrument believed by it in good faith to be
genuine and to have been signed or presented by the proper party or
parties, (ii) be responsible for any failure on the part of the Company
to comply with any of its covenants and obligations contained in this
Agreement or in any Warrant Certificate, or (iii) be liable for any act
or omissions in connection with this Agreement except for its own
negligence or willful misconduct.
The Warrant Agent may at any time consult with
counsel for the Company and shall incur no liability or responsibility
for any action taken, suffered or omitted by it in good faith in
accordance with the option or advice of such counsel.
Any notice, statement, instruction, request, direction,
order or demand of the Company shall be sufficiently evidenced by an
instrument signed by its Chief Executive Officer, President, a Vice
President, its Treasurer, an Assistant Treasurer, its Secretary, or an
Assistant Secretary (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable for any
action taken, suffered or omitted by it in accordance with such notice,
statement, instruction, request, direction, order or demand.
The Company agrees to pay the Warrant Agent
reasonable compensation for its services hereunder and to reimburse
it for its reasonable expenses hereunder; it further agrees to indemnify
the Warrant Agent and save it harmless against any and all losses,
expenses and liabilities, including judgments, costs and counsel fees,
for anything done or omitted by the Warrant Agent in the execution
of its duties and powers hereunder except losses, expenses and
liabilities arising as a result of the Warrant Agent's negligence or
willful misconduct.
The Warrant Agent may resign its duties and be
discharged from all further duties and liabilities hereunder (except
liabilities arising as a result of the Warrant Agent's own negligence or
willful misconduct), after giving thirty (30) days prior written notice
to the Company. At least fifteen (15) days prior to the date, such
resignation is to become effective, the Warrant Agent shall cause a
copy of such notice of resignation to be mailed to the Registered
Holder of each Warrant Certificate at the Company's expense. Upon
such resignation, the company shall appoint in writing, a new warrant
agent. If the company shall fail to make such appointment within a
period of thirty (30) days after it has been notified in writing of such
resignation by the resigning Warrant Agent, then the Registered
Holder of any Warrant Certificate may apply in any court of
competent jurisdiction for the appointment of a new warrant agent.
Any new warrant agent, whether appointed by the Company or by
such a court, shall be a bank or trust company having a capital and
surplus, as shown by its last published report of its stockholders, of
not less than $1,000,000 or a stock transfer company doing business
in the Denver, Colorado, metropolitan area. After acceptance in
writing of such appointment by the new warrant agent is received by
the Company, such new warrant agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally
named herein as the warrant agent, without any further assurance,
conveyance, act or deed; but if for any reason it shall be necessary or
expedient to execute and deliver any further assurance, conveyance,
act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the
resigning Warrant Agent. Not later than the effective date of any such
appointment, the Company shall file notice thereof with the resigning
Warrant Agent and shall forthwith cause a copy of such notice to be
mailed to the Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any
new warrant agent may be converted or merged or any corporation
resulting from any consolidation to which the Warrant Agent or any
new warrant agent shall be a party or any corporation succeeding to
the corporate trust business of the Warrant Agent shall be a successor
warrant agent under this Agreement without any further act, provided
that such corporation is eligible for appointment as successor to the
Warrant Agent under the provisions of the preceding paragraph. Any
such successor warrant agent shall promptly cause notice of its
succession as warrant agent to be mailed to the Company and to the
Registered Holder of each Warrant Certificate.
The Warrant Agent, its subsidiaries and affiliates, and
any of its or their officers or directors, may buy and hold or sell
Warrants or other securities of the Company and otherwise deal with
the Company in the same manner and to the same extent and with like
effect as though it were not the Warrant Agent. Nothing herein shall
preclude the Warrant Agent from acting in any capacity for the
Company or for any other legal entity.
The Warrant Agent and the Company may by
supplemental agreement, make any changes or corrections in this
Agreement (i) that they shall deem appropriate to cure any ambiguity
or to correct any defective or inconsistent provision or manifest
mistake or error herein contained; or (ii) that they may deem
necessary or desirable and which shall not adversely affect the
interests of the holders of Warrant Certificates; provided, however,
that this Agreement shall not otherwise be modified, supplemented or
altered in any respect except with the consent in writing of the
Registered Holders of Warrant Certificates representing not less than
50% of the Warrants then outstanding; and provided, further, that no
change in the number or nature of the securities purchasable upon the
exercise of any Warrant, or an increase in the Purchase Price therefor,
or the acceleration of the applicable Warrant Expiration Date, shall be
made without the consent in writing of the Registered Holders of the
Warrant Certificate representing such Warrant, other than such changes
as are specifically prescribed by this Agreement as originally executed.
SECTION 12. Notices.
All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to
have been made when delivered or mailed, first-class postage prepaid,
or delivered to a telegraph office for transmissions: if to the
Registered Holder of the Warrant Certificate, at the address of such
holder as shown on the registry books maintained by the Warrant
Agent; if to the Company, at c/o Frascona, Joiner and Goodman, P.C.,
4750 Table Mesa Drive, Boulder, Colorado 80303, Attention: Gary S.
Joiner, or at such other address as may have been furnished to the
Warrant Agent in writing by the Company, in each case with a copy
at the same time to Frascona, Joiner and Goodman, P.C., Attention:
Gary S. Joiner, Esq., 4750 Table Mesa Drive, Boulder, Colorado
80303-5575; and, if to the Warrant Agent, at the Corporate office.
SECTION 13. Governing law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
SECTION 14. Binding Effect.
This Agreement shall be binding upon and inure to the
benefit of the Company, the Warrant Agent and their respective
successors and assigns, and the Registered Holders from time to time
of Warrant Certificates or any of them. Nothing in this Agreement is
intended or shall be construed to confer upon any other person any
right, remedy or claim or to impose upon any other person any duty,
liability or obligation.
SECTION 15. Counterparts.
This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have
cause this Agreement to be duly executed as of the date first above
written.
BUFFALO CAPITAL I, LTD.
By:____________________________
Its: President
BUFFALO CAPITAL I, LTD.,
as Warrant Agent
By:___________________________
Its: President
<PAGE>
EXHIBIT 3.2 - SPECIMEN STOCK CERTIFICATE
CONTENTS:
State of Incorporation
Name of Company
Number of authorized shares of common stock
Name of Individual Shareholder
Number of shares owned by individual shareholder
Fully paid and non-assessable shares
Date of issuance of certificate
Signature of President
Restrictive transfer legend<PAGE>
EXHIBIT 3.3
SPECIMEN CLASS A WARRANT AND
CLASS B WARRANT CERTIFICATES
WARRANT CERTIFICATE NO ____
CANCELABLE WARRANT NO. W-A___
_______ CANCELABLE WARRANTS
BUFFALO CAPITAL I, LTD.
(a Colorado corporation)
CANCELABLE WARRANT CERTIFICATE
For the Purchase of Common Stock
CUSIP __________________
THIS CERTIFIES THAT, for value received, ____________________
________________________________________________________
________________________________________________________
("Warrantholder"), is the registered owner of the above-stated number
of Cancelable Class A Warrants ("Cancelable Warrants") of
BUFFALO CAPITAL I, LTD., a Colorado corporation ("Company"),
expiring on December 31, 2002, unless canceled or extended
("Expiration Date"). Subject to cancellation and other limitations as
described below, each Cancelable Warrant entitles the Warrantholder
to purchase one share of the common stock no par value ("Common
Stock" or "Shares"), of the Company, at a purchase price of $2.00 per
Share ("Exercise Price"), at any time beginning January 1, 1997 and
until to the Expiration Date, upon surrender of this Certificate with the
exercise form on the reverse side hereof duly completed and executed,
accompanied by payment of the Exercise Price, to, ("Warrant Agent"),
This Certificate and exercise of these Cancelable Warrants will be
subject to the provisions of the Warrant Agent Agreement dated
_____________, 1996, ("Warrant Agreement"), between the Company
and the Warrant Agent, to which provisions the Warrantholder agrees
by acceptance of this Certificate. The provisions of the Warrant
Agreement and those set forth on the reverse side of this Certificate
are fully incorporated by reference into this Certificate as if fully set
forth herein.
If all Cancelable Warrants represented by this
Certificate shall not have been duly exercised on or before the
Expiration Date, as it may be extended, the unexercised Cancelable
Warrants shall expire and this Certificate shall become void. The
Expiration Date may be extended from time to time for an indefinite
period, or the Exercise Price may be reduced, at the discretion of the
Company upon giving notice thereof to the Warrant Agent and giving
subsequent notice thereof to holders of Cancelable Warrants then listed
on its books.
The Warrantholder may exercise all or any of the
Cancelable Warrants in the manner and during the period stated above,
but only for an even number of Shares if less than all are exercised,
upon due presentment of this Certificate to the Warrant Agent. The
Exercise Price must be paid in lawful money of the United States of
America, in cash or by personal check, bank check or certified check
payable to the order of the Company. If fewer than all of the above
number of Cancelable Warrants are exercised, the Warrant Agent shall
execute and deliver to the Warrantholder a new Cancelable Class A
Warrant certificate of like tenor evidencing the number of Cancelable
Warrants not exercised. Should any or all the Cancelable Warrants be
assigned, then upon due presentment of this Certificate by the assignee
to the Warrant Agent accompanied by payment of the sum of $10.00
per Cancelable Class A Warrant certificate to be issued and of all
transfer taxes and other governmental charges due, if any, the Warrant
Agent shall transfer the Cancelable Warrants assigned on the transfer
books and shall (subject to the Warrant Agreement) execute and
deliver to the assignee a Cancelable Class A Warrant certificate of like
tenor representing the number of Cancelable Warrants assigned, and
if less than all of the Cancelable Warrants are assigned, execute and
deliver to the Warrantholder a Cancelable Class A Warrant certificate
of like tenor representing the number of Cancelable Warrants not
assigned.
The Company may cancel these Cancelable Warrants
at any time upon at least thirty days' prior written notice to holders of
Cancelable Warrants then listed on its books, at any time that a
current registration statement is in effect. This notice shall accelerate
the Expiration Date, which shall become the last day of the
cancellation period, and the Cancelable Warrants may be exercised on
or before the accelerated Expiration Date. Cancelable Warrants not
exercised timely shall expire and this Certificate shall become void.
The cancellation prior (and the accelerated Expiration Date) may be
extended by the Company upon two days' written notice to the
Warrant Agent and giving subsequent notice thereof to holders of
Cancelable Warrants then listed on its books.
The Cancelable Warrants may be exercised, or canceled
in accordance with the immediately proceeding paragraph, only if a
current prospectus is then in effect. The Company has undertaken to
use its best efforts to maintain a current prospectus at any time during
which the market bid price for the Common Stock exceeds the
Exercise Price, but is not obligated to do so.
In addition, should management of a business
opportunity that is the target of a business combination with the
Company require, as a condition to the consummation of the business
combination, that the Cancelable Warrants be canceled, the Cancelable
Warrants may be canceled by the Company under the terms set forth
in Section 5(a) of the Warrant Agreement without prior written notice
to the registered holders of the Cancelable Warrants and without any
right on the part of such holders to exercise the Cancelable Warrants
prior to cancellation. The Company may cancel the Cancelable
Warrants under these limited circumstances irrespective of whether a
current registration statement is then in effect. The Company's power
to cancel the Cancelable Warrants in accordance with Section 5(a) of
the Warrant Agreement shall expire upon the Company's
consummation of a business combination. UNTIL THE
CANCELABLE WARRANTS ARE NO LONGER SUBJECT TO
CANCELLATION UNDER SECTION 5(a) OF THE WARRANT
AGREEMENT, THE CANCELABLE WARRANTS MAY NOT BE
TRANSFERRED ON THE RECORDS OF THE COMPANY.
These Cancelable Warrants shall not entitle the
Warrantholder to any of the rights of stockholders or to any dividend
declared upon the Common Stock unless the Warrantholder shall have
exercised these Cancelable Warrants and purchased the Shares of
Common Stock prior to the record date fixed by the Board of
Directors of the Company for the determination of holders of
Common Stock entitled to such dividend or other right. Holders of
Cancelable Warrants are protected against dilution of their interests
represented by the underlying shares of Common Stock upon the
occurrence of stock dividends, stock splits or reclassifications of the
Common Stock, as provided in the Warrant Agreement.
This Certificate shall not be valid unless countersigned
by the Warrant Agent.
WITNESS the facsimile seal of the Company and the
facsimile signature of its duly authorized officer.
Dated:______________________________
BUFFALO CAPITAL I, LTD.
By:
Grant W.Peck, President
By:
Dean F. Sessions, Secretary
COUNTERSIGNED:
By:___________________________
Warrant Agent
Authorized Signature<PAGE>
CANCELABLE WARRANT SUBSCRIPTION FORM
BUFFALO CAPITAL I, LTD.
Date: ____________________, 19____
The Undersigned hereby elects irrevocably to exercise
the within Cancelable Warrant and to purchase _____________ shares
of Common Stock of the Company called for thereby, and hereby
makes payment of $_____________ (at the rate of $2.00 per share of
Common Stock) payable to Buffalo Capital I, Ltd. in payment of the
Exercise Price pursuant thereto and, if such number of shares shall not
be all of the shares purchasable hereunder, directs that a new
Cancelable Warrant Certificate of like tenor for the balance of the
remaining shares purchasable hereunder be delivered to the
undersigned at the address stated below. Please issue the shares of
Common Stock as to which this Cancelable Warrant is exercised in
accordance with the instructions given below.
Signature:
Signature Guaranteed:
By:
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
(Print in Block Letters)
Address
ASSIGNMENT
(To be executed by the registered Holder
to effect a transfer of the within Warrant)
FOR VALUE RECEIVED, _______________________________
does hereby sell, assign and transfer unto
__________________________________________
the right to purchase _____________ shares of the Common Stock of
the Company evidenced by the within Warrant, and does hereby
irrevocably constitute and appoint _____________________________
attorney to transfer such right on the books of the Company with full
power of substitution in the premises.
Dated:____________________, 19____
Signature:
Signature Guaranteed:
By:
* * * * * * * * * *
NOTICE: The signature to this Assignment must correspond with the
name as written upon the face of the within Warrant in every
particular without alteration or enlargement or any change whatsoever,
and must be guaranteed by a bank, other than a savings bank, or by
a trust company or by a firm having membership on a registered
national securities exchange.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<CASH> 4,994
<SECURITIES> 0
<RECEIVABLES> 2,500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,494
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,794
<CURRENT-LIABILITIES> 405
<BONDS> 0
0
0
<COMMON> 7,740
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,740
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 351
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (351)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (351)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
