SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10SB
General Form for Registration of Securities Of Small
Business Issuers
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
PINNACLE RESOURCES, INC.
(Exact name of Small Business Issuer in its charter)
WYOMING 84-1414869
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
7345 E. Peakview Avenue, Englewood, Colorado 80111
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code:
(303) 771-8100
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.00001 par value
Preferred Stock, $.01 par value
<PAGE>2
ITEM 1. DESCRIPTION OF BUSINESS
A. Business Development. Pinnacle Resources, Inc. (the "Company") is a
development stage company, incorporated pursuant to the laws of the State of
Wyoming on January 6, 1995 under the name of Claremont House, Corp. On June
26, 1997, the Articles of Incorporation were amended to change the name of
the Company to Pinnacle Resources, Inc. and to authorize 2,000,000 Preferred
Shares with a par value of $.01 per Preferred Share. Additionally, the
Company effectuated a 1 for 3.3333 reverse stock split reducing the number of
outstanding Common Shares from 500,000 to 150,000.
The Company is engaged in the business of providing financial services to
emerging growth companies in the United States, as well as development stage
companies located in selected developing countries, primarily in Africa and
South America. The Company has had limited operations since its inception
due to its lack of working capital.
Since inception, the Company has not had any material financial activities.
B. Business of Company. The Company will engage in the business of
financial services, making small commercial loans to, and equity investments
in, emerging growth companies which are unable to obtain financing from
traditional sources. The Company intends to be in the financial services
business and may also furnish financial consulting services and advice as an
incidental part of any other agreement or arrangement.
The Company will focus its financing and capital arrangement activities on
emerging growth companies which plan to raise capital in the public markets
within a reasonably short period of time, i.e., one to two years.
Management has not identified any particular industry within which the
Company will focus its efforts. Rather, management intends to identify any
number of candidates which may be brought to its attention through present
associations or by word-of-mouth. However, while the Company will direct
its activities in seeking and evaluating suitable candidates for financing
both in the United States and on companies operating in selected stable,
developing countries, principally in Africa and South America.
The Company's operating strategies will be to provide financing solutions to
privately-held corporations and other companies which, in all likelihood, do
not meet the overall credit standards typically required by commercial banks
in today's restrictive credit environment. Management believes that
commercial banks are reluctant to make loans to small and newly-organized
companies and, in the instances in which such loans are made, they are
heavily collaterized by homes and other personal assets in virtually every
case. Commercial bankers typically do not lend to companies with limited
assets, or which have been in business for less than three or four years.
Most, if not all, of the companies which will be candidates for loans and/or
equity investments by the Company or for other sources of capital known to
management, will not have an operating history which will support bank loans.
These companies, primarily privately-held corporations to be targeted by the
Company, may have negative working capital positions, negative cash flow,
recurring losses or other negative characteristics relating to their past
performance which would result, in all probability, in a bank's refusal to
lend funds. The Company may consider as candidates for financing,
corporations and entities which are affiliated with the Company, or in which
the Company or executive officers, directors and/or controlling shareholders
have an equity interest.
While the Company may require, as a condition to making a loan to any
particular candidate, adequate collateral as security, the Company will rely
upon the expertise and experience of its management on a case-by-case basis
in making the determination regarding the issue of collateral. Management
will not employ any specific formula for collateral coverage and may make
unsecured signature loans under circumstances deemed acceptable by
management. Banks, on the other hand, traditionally require collateral
coverage of approximately 133% for accounts receivable, 300% for inventory
and 200% of liquidation value for real estate, equipment and other tangible
assets. The Company intends to charge interest rates on loans in a range
from 5% to 18% and to obtain equity participation in the form of warrants or
options to purchase shares of the common stock of the entity financed or
other forms of securities in order to provide additional yield enhancement.
Where the Company receives such warrants, options or other securities, the
Company may distribute such securities to its shareholders as a stock
dividend, subject to compliance with applicable state and federal securities
laws. In addition to or in lieu of the aforementioned types of securities,
the Company may seek to obtain an interest in revenues, a carried working
interest or other carried interest in an operating, producing mine or oil,
gas or mineral property owned by a mining or energy-related company financed
by the Company or its other capital sources. Depending upon the nature of
the legal interest or right obtained, the Company could become subject to
liability in addition to that of a shareholder or holder of a debt
instrument.
The Company is not currently evaluating any development-stage companies with
a view to making a loan or stock purchase or arranging funding or any loan
proposals and has no contingent loan agreements subject to approval.
<PAGE>3
Subject to market conditions, the Company may attempt to raise additional
equity or debt capital to fund additional financing activities in the future.
As of the date of this filing, management has no specific plans in this
regard. Management acknowledges that the Company may have insufficient
capital with which to implement its business plans on the scale desired.
Accordingly, the Company may be capable of making only an extremely limited
number of loans to, and/or equity investments in , companies to which
traditional sources of capital are unavailable.
To date, the Company has not performed any financial services for any clients
or consummated or arranged any loans, equity investments or other financing
transactions. Further, no loans, stock purchases or other non-traditional
financing transactions are pending or under consideration. The Company has
no existing agreement or arrangement for the performance of financial
services.
Operating Strategy.
Management of the Company will evaluate the future potential, credit
worthiness and, if required, collateral of prospective candidates for funding
by the Company or other sources, including corporate and individual lenders
and investors, known to management. The fact that a corporation or other
entity is affiliated with the Company or an equity interest in a prospective
borrower is owned by one or more of the executive officers, directors and/or
controlling shareholders of the Company, will not disqualify such entity from
consideration as a potential borrower or recipient of investment capital.
In order to minimize conflicts of interest, the Company has adopted a policy
that any contracts or other transactions with entities with whom management
is affiliated, or in which they have a financial interest, will be approved
by a majority of the disinterested members of the Board of Directors and will
be fair and reasonable, but that no such transactions by the Company shall be
affected or invalidated solely because of such relationship or interest of
directors or officers. For purposes herein, the term "disinterested
directors" are those directors who have no direct, pecuniary interest in a
proposed transaction. If the Company's Board of Directors is unavailable to
approve a financing transaction with an affiliated or related party, the
Company will require that the transaction be approved by a majority of the
Company's shareholders, at a special meeting of shareholders called for such
purpose.
Prior to funding any loans or equity investments, management of the Company
will conduct a comprehensive credit investigation of the potential financing
candidate. The investigation will generally include, but not necessarily be
limited to, the following: (I) a review of the prospective candidate's
financial statements and operating and prior credit history; (ii) an analysis
of the prospect's projected cash flow; (iii) a survey of the performance of
other companies engaged in the candidate's business; (iv) an analysis of the
value of the collateral, if any, proposed to secure a loan; and (v) the
source of repayment for the loan. In addition, management intends, as part
of its credit procedures, to conduct a complete due diligence review of the
prospective candidate's business at its offices, during which management
proposes to review the prospect's record keeping systems and procedures, the
historical and projected financial condition of the borrower/recipient of
investment capital and its industry and any collateral offered to secure a
loan. Management may, in its discretion, conduct a formal, independent
appraisal of any collateral offered to assure that the collateral can be
liquidated without a loss in the event of a downturn in the economy, which
appraisal may include an assessment of auction liquidation and/or fair market
value. Management intends to make the decision whether to arrange or fund a
loan or purchase common stock of a financing candidate only after completing
the number and type of credit procedures described above and as deemed
necessary or appropriate, in the discretion of management, in order to
determine the candidate's business potential and credit worthiness.
In instances deemed appropriate by management, the Company may require
security in the form of inventory, accounts receivable, manufacturing and
other operating equipment, other tangible assets and/or real estate used in
the financing candidate's business. With respect to asset-based loans which
the Company may fund, management will have no fixed policy as to the
percentage of collateral coverage required. However, in almost every such
case, management envisions that the percentage of collateral coverage
required by it will be in excess of 100% of the amount of the loan.
Additionally, management may require that any one or more of the officers,
directors and principal shareholders of the borrower personally guarantee the
indebtedness and, depending upon the prospective borrower's financial
strength and the nature and value of any collateral, require, in addition,
that the personal guarantees be collateralized separately.
Management of the Company will closely monitor the borrower's performance
after funding a loan or equity investment and, with respect to a secured
loan, intends to monitor the adequacy of the collateral at least on a monthly
basis. If the primary collateral is accounts receivable, management may
require direct verification and a monthly aging of the receivables. The
Company's management intends to conduct aspects of its monitoring process,
<PAGE>4
inducing, if necessary, a reappraisal of any collateral, periodically at the
borrower's place of business. Regardless of whether the financing provided
by the Company takes the form of a loan, stock purchase or a combination
thereof, management will maintain close contact with management of the
financing recipient to ensure that the financial condition and overall
performance of the borrower are acceptable and that any collateral remains
adequate. In the event of default in the payment of principal or interest
on a loan, management may notify the borrower's customers to make payments
directly to the Company via a lock box established for the borrower. In a
case where the Company arranges financing for, but does not itself fund, a
development-stage company, management will also endeavor to monitor the
borrower's performance if an equity interest in the form of common stock,
warrants, options or any other type of security is received as part of the
finder's or consulting fee.
Management has not adopted any policy regarding the maximum size of any loans
or stock purchases which it may make with respect to a single company.
Further, management has not determined any maximum percentage of its loan or
stock portfolio which may be committed to loans or investments in excess of a
specified amount. Management, in its sole discretion, will determine
guidelines for levels of concentration as to the diversity of companies which
it funds and types of assets required as collateral for loans, in order to
attempt to minimize credit losses. However, management intends to employ a
policy of maintaining a diversity of companies financed and types of
collateral accepted as security for loans in order to minimize undue
exposure.
Competition. The Company is, and will remain for the foreseeable future,
an insignificant participant among those firms which are also engaged in the
business of the Company. There are many established entities and financial
concerns which have significantly greater financial and personnel resources
and technical expertise than the Company. Management will rely upon their
own ability to generate potential lending candidates, either through their
own personal industries in which management has had prior experience. In
view of the Company's extremely limited resources, it should be expected that
the Company will continue to be at a significant competitive disadvantage
compared to the Company's competitors.
Federal and/or State Regulation. The Company is not subject to any federal
or state regulations regarding its services.
Employees. The Company presently has two employees, none of whom are paid
any salary.
Seasonal Nature of Business Activities. The Company's business activities
are not seasonal.
Item 2. Management's Discussion and Analysis or Plan of Operation
Trends and Uncertainties. Until revenues commence, the Company shall raise
funds through equity financing which may or not be successful. The Company
has tried to limit its general and administrative expenses. The Company
has little or no control as to the demand for its services and, as a result,
inflation and changing prices could have a material effect on the future
profitability of the Company.
The Company will focus its financing and capital arrangement activities on
emerging growth companies which plan to raise capital in the public markets
within a reasonable short period of time, i.e., one to two years.
Management has not identified any particular industry within which the
Company will focus its efforts. Rather, management intends to identify any
number of candidates which may be brought to its attention through present
associations or by word-of-mouth.
Management believes that the Company will be able to successfully seek out
potential candidates who are interested in obtaining loans from the Company
in the immediate future. This belief is based upon the perceived difficulty
of many development and growth stage companies who require additional
financing, but are unable to obtain the same from established sources, such
as banking institutions and venture capitalists. As interest rates begin to
rise, management anticipates that those types of entities earmarked by the
Company as possible clients will continue to seek out the Company as a
lending source, as management views a potential borrower's borrowing base in
a different light than banks. For loans made by regulated commercial
lenders, there is normally a structured review and evaluation of a
prospective borrower's loan application by the lender, including an in-depth
review of such application by a loan committee. The loan committee will
then approve or reject each application as it is submitted. The evaluation
and approval of loans depends on subjective factors and judgments, as well as
objective criteria, such as loan to value ratios and independent appraisals,
when appropriate or available. The Company's loan committee consists of
substantially fewer persons than a commercial lender and uses a less formal
procedure than more traditional lenders. It is possible that any such
subjective factors and judgments may prove to be incorrect with a resulting
<PAGE>5
loss of part or all of the Company's investment in any particular loan.
However, as part of the consideration provided to the Company for issuance of
its loans, the Company receives its interest and attempts to also obtain
additional consideration in the form of equity or options or warrants in the
borrower. In the event the borrower's business plan proves successful, the
Company may receive substantial returns as a result of this equity
enhancement.
Most venture capitalists take an aggressive equity position far in excess of
that of the Company and in many instances, takes an active role in the
management of their clients. Management believes that this makes venture
capitalists unattractive to those types of entities with whom the Company
does business.
The Company's ability to become a significant lender is impaired primarily by
its own lack of capital with which to make loans. While management would
welcome the opportunity to make more loans for larger amounts, management
finds itself in the same predicament as that of its prospective clients.
That is, the lack of capital with which to fully implement the Company's
business plan. Management hopes that as the Company begins to make
successful loans, that its track record will allow the Company to attract
either private investors seeking to invest in the business of the Company on
a private basis, or that the Company will be able to attract an investment
banker willing to underwrite a secondary offering of the Company's securities
to generate additional capital. There are no assurances that the Company
will be able to attract either of the aforesaid entities to increase the
Company's working capital. If the Company is unable to obtain additional
working capital, it is unlikely that the Company will generate any
substantial growth in the near future.
Capital Resources and Source of Liquidity. The Company currently has no
material commitments for capital expenditures. The Company pays no rent for
its current office space. An increase in lease payments could have a
negative effect on the cash flow and liquidity of the Company.
On June 26, 1997, the Company sold 4,000,000 at $.025 per Common Share for
an aggregate of $100,000.
At June 30, 1997, the Company had working capital of $100,000 consisting of
$100,000 in current assets and $0 in current liabilities. The Company has
no long term liabilities.
Results of Operations. To date, the Company has not yet commenced
operations or received any revenues. The Company expended no amounts for
administrative expenses for the years ended June 30, 1997 and June 30, 1996.
Plan of Operation. The Company is not delinquent on any of its obligations
even though the Company has not yet begun to generate revenue. The Company
intends to market its services utilizing cash made available from the recent
sale of its Common Shares. The Company is of the opinion that revenues from
its services along with proceeds of the sale of its securities will be
sufficient to pay its expenses.
ITEM 3. DESCRIPTION OF PROPERTY. In May 1997, the Company moved its
offices to 7345 E. Peakview Avenue, Englewood, Colorado 80111, a building
owned by a shareholder in the Company. The Company pays no rent. The
Company's offices consist of approximately 500 square feet of executive
office space and secretarial area. Management believes that this space will
meet the Company's needs for the foreseeable future.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tabulates holdings of shares of the Company by each person or
entity who, subject to the above, at the date of this prospectus, holds of
record or is known by Management to own beneficially more than 5.0% of the
Common Shares and, in addition, by all directors and officers of the Company
individually and as a group. Each named beneficial owner has sole voting
and investment power with respect to the shares set forth opposite his name.
Shareholdings at Date of
This Prospectus
Percentage of
Number & Class<F1> Outstanding
Name and Address of Shares Common Shares
Glen R. Gamble<F1><F2>
12892 Sierra Circle
Parker, CO 80134 200,000 4.82%
Terryl K. Jensen
9600 E. Arapahoe Road
#260
Englewood, CO 80112 50,000 1.2%
<PAGE>6
Robert A. Hildebrand
7345 E. Peakview
Englewood, CO 80111 50,000 1.2%
Beverly Jo Gamble<F1><F2>
12892 Sierra Circle
Parker, CO 80134 200,000 4.82%
Mel Keller
R.R. 1 Box
Blairsburg, IA 840,000 20.24%
Victory Minerals Corp.<F1><F3>
7345 E. Peakview
Englewood, Co 80111 2,000,000 48.19%
Re-Group, Inc.
9600 E. Arapahoe Road
#260
Englewood, CO 80112 266,000 6.41%
All Directors & Officers
as a group (3 persons) 3,606,000 86.89%
<F1>Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared voting
power (including the power to vote or direct the voting) and/or sole or
shared investment power (including the power to dispose or direct the
disposition) with respect to a security whether through a contract,
arrangement, understanding, relationship or otherwise. Unless otherwise
indicated, each person indicated above has sole power to vote, or dispose or
direct the disposition of all shares beneficially owned, subject to
applicable community property laws.
<F2>Beverly Jo Gamble is married to Glen R. Gamble, an officer and director
of the Company. As a result, Glen R. Gamble would be deemed to be a
beneficial owner of the Common Shares owned of record by Beverly Jo Gamble.
Nevertheless, Glen R. Gamble disclaims any beneficial ownership of the Common
Shares owned of record by his wife.
<F3>Victory Minerals Corp. is a corporation controlled by Glen R. Gamble, an
officer and director of the Company. As a result, Glen R. Gamble would be
deemed to be a beneficial owner of the Common Shares owned of record by
Victory Minerals Corp.
The balance of the Company's outstanding Common Shares are held by 17
persons, not including those persons who hold their shares in street name.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Board of Directors. The following persons listed below have been retained to
provide services as director until the qualification and election of his
successor. All holders of Common Stock will have the right to vote for
Directors of the Company. The Board of Directors has primary responsibility
for adopting and reviewing implementation of the business plan of the
Company, supervising the development business plan, review of the officers'
performance of specific business functions. The Board is responsible for
monitoring management, and from time to time, to revise the strategic and
operational plans of the Company. Presently, Directors receive no
compensation or fees for their services rendered in such capacity.
The Executive Officers and Directors are:
Name Position Term(s) of Office
Glen R. Gamble, age 53 President, Director From June 26, 1997
Chief Executive Officer to present
Robert A. Hildebrand,
age 71 Vice President, Director From Inception
Secretary/Treasurer to present
Chief Financial Officer
Terry K. Jensen, age 58 Director From June 26, 1997
to present
Resumes:
Glen R. Gamble. Mr. Gamble has served as an officer and director of
variety of companies engaged in the fields of mining, oil and gas, cattle,
real estate and resource financing. Currently, Mr. Gamble is the Manager of
Viatica Fund, LLC; a Director of Natural Buttes Gas Corp.; Manager of Desert
Flower Mining, LLC; and President and Chairman of Victory Minerals Corp. and
the Company.
<PAGE>7
In mid-1979, Mr. Gamble effected a sale and financing package on a ranch in
Russell, Kansas on which were several producing oil and gas wells. This
opportunity led to the creation of a new entity, Petro-Package Brokerage Co.,
which Mr. Gamble owns. For the next few years Mr. Gamble specialized in
packaging, financing and selling producing oil and gas properties.
Additionally, he managed several oil properties for investors and drilled
over 20 wells in Central Kansas. He moved the Petro-Package operation to
Denver in 1985 and created a new Wyoming company called Victory Minerals
Corp. which is the flagship company for Mr. Gamble's mineral interest both in
the United States and in Africa.
Mr. Gamble graduated from Lakewood High School. in 1962, performed three
years of military service in the U.S. Army from which he was Honorably
Discharged in May 1966. Mr. Gamble attended the University of Colorado and
graduated with a Bachelor of Science degree in Accounting and Finance in
1970.
Robert A. Hildebrand. Since 1991, Mr. Hildebrand has been Vice President of
Environmental Assurance corporation, a company offering financial solutions
to owners of contaminated real estate. Mr. Hildebrand served as the
President and a director of Resource Finance Group, Ltd., a public Colorado
corporation engaged in the business of acquiring revenue interest in
producing mines in selected developing countries in exchange for mining and
processing equipment and training provided by Resource Finance Group, Ltd.,
from August 1991 until that company merged, in April 1993, with Onyx Systems,
Ltd. From June 1987 through October 1991, Mr. Hildebrand served as a
director and an officer, holding various positions including President, of
General Mining Company ("General Mining"), a small, inactive public mining
company. General Mining was active, from 1987 through early 1991, in
exploring for surface sulfur deposits in Bolivia, which did not result in
viable operations. On January 10, 1994, Mr. Hildebrand filed a voluntary
petition pursuant to Chapter 7 of the United States Bankruptcy Code. Mr.
Hildebrand attended the U.S. Naval Academy from 1947 through 1949 and
received his Geological Engineering Degree from the Colorado School of Mines
in 1954. He has been a registered Colorado Professional Engineer since
1958.
Terryl K. Jensen. Mr. Jensen is currently President of Horton Cavey Realty
Company and has twenty-eight years of experience in real estate as a broker,
manager and owner. He has held his real estate broker license since 1972.
His experience includes the sale of land and investment real estate,
syndication of investment property, development of commercial and residential
projects and management of the Company.
Mr. Jensen has participated in the development and marketing of twelve
residential projects of over 800 lots; the development of a small office
park, two apartment buildings and one office building. He was executive vice
president of a company that developed 5,200 acres in Kentucky into a large
equestrian community. In addition, he has participated in the forming,
marketing and management of over thirty investment partnership projects,
which included apartments, land, land development, mobile home parks and
residential subdivisions.
Mr. Jensen received a Bachelor of Science degree with a major in Business
from Dakota State University in 1964; and he is a licensed real estate broker
in the State of Colorado. Mr. Jensen is a member of the Denver Board of
Realtors Commercial Division, Colorado Association of Real Estate Boards,
National Association of Real Estate Boards, Home Builders Association of
Metropolitan Denver, Colorado Association of Home Builders and the National
Association of Home Builders.
Conflicts of Interest. The Corporation will be subject to various conflicts
of interest between the Corporation and its Affiliates. Since the executive
officers and directors will control the daily operations of the Corporation
and its Affiliates, there may be occasions when the interests of the
Corporation's Affiliates may be inconsistent with the interests of the
Corporation. The risk exists that such conflicts will not be resolved in the
best interest of the Corporation.
Allocation of Management Time. The Corporation will rely on its officers
to manage the Corporation's business operations. Currently the officers are
devoting approximately 30% of their time for the operation of the
Corporation. The Corporation may obtain additional officers, as necessary.
As such, and until all of their positions become "full time," there will be
conflicts of interest in allocating management time, services and functions
between the Corporation and its Affiliates. These individuals may engage
for their own account, or for the account of others in other business
ventures for which the Corporation shall not be entitled to any interest.
The Corporation may, at some time in the future, compete with others for the
management services of the current and future officers of the Corporation.
As a result, these individuals may be placed in a position where their
decision to favor other operations in which they are associated over those of
the Corporation will result in a conflict of interest. It should also be
<PAGE>8
noted that it may be expedient for them to favor one operation over another
since their participation in such operations will vary. In allocating their
time, they will recognize their fiduciary obligations to the Corporation, the
prevailing industry standards and the financial situation of the Corporation.
Conflicts of Interest Policy. The Corporation has adopted a policy that
any transactions with directors, officers or entities of which they are also
officers or directors or in which they have a financial interest, will only
be on terms consistent with industry standards and approved by a majority of
the disinterested directors of the Corporation's Board of Directors. No
such transactions by the Corporation shall be either void or voidable solely
because of such relationship or interest of directors or officers or solely
because such directors are present at the meeting of the Board of Directors
of the Corporation or a committee thereof which approves such transactions,
or solely because their votes are counted for such purpose if: (i) the fact
of such common directorship or financial interest is disclosed or known by
the Board of Directors or committee and noted in the minutes, and the Board
or committee authorizes, approves or ratifies the contract or transaction in
good faith by a vote for that purpose without counting the vote or votes of
such interested directors; or (ii) the fact of such common directorship or
financial interest is disclosed to or known by the shareholders entitled to
vote and they approve or ratify the contract or transaction in good faith by
a majority vote or written consent of shareholders holding a majority of the
Common Shares entitled to vote (the votes of the common or interested
directors or officers shall be counted in any such vote of shareholders), or
(iii) the contract or transaction is fair and reasonable to the Corporation
based on the material similarity of terms to recent consulting agreements not
involving interested parties, or in all other agreements by competitive bids,
at the time it is authorized or approved. In addition, interested directors
may be counted in determining the presence of a quorum at a meeting of the
Board of Directors of the Corporation or a committee thereof which approves
such transactions.
Non-Qualified and Incentive Stock Option Plans. The Corporation does not
currently have any stock option plans, however, the Corporation does intend
to pursue the adoption of a non-qualified stock option plan in the fourth
quarter of 1997.
ITEM 6. EXECUTIVE COMPENSATION
Since inception the Company has not paid any remuneration to its officers or
directors. As operations increase, the Company intends to enter into
employment agreements with its officers. Upon funding, either through
revenues from operations, a private placement or initial public offering,
should the amount justify the salary demands, the key management of the
Company would be compensated according to their duties. No specific details
have been determined.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company maintains a mailing address at Glen Gamble's (an officer of the
Company) place of business located at 7345 E. Peakview, Greenwood Village, CO
80111.
Glen Gamble, president of the Company, is also an officer and director of
Victory Minerals Corporation, a majority shareholder of the Company's common
stock.
ITEM 8. DESCRIPTION OF SECURITIES
Common Stock. The aggregate number of shares of common stock which the
Company has the authority to issue is Five Hundred million (500,000,000)
shares at par value of one-thousandth of a cent ($.00001) per share.
Holders of Common Shares of the Company are entitled to cast one vote for
each share held at all shareholders meetings for all purposes, including the
election of directors, and to share equally on a per share basis in such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. Upon liquidation or dissolution, each outstanding Common
Share will be entitled to share equally in the assets of the Company legally
available for distribution to shareholders after the payment of all debts and
other liabilities. Common Shares are not redeemable, have no conversion
rights and carry no preemptive or other rights to subscribe to or purchase
additional Common Shares in the event of a subsequent offering. All
outstanding Common Shares are, and the shares offered hereby will be when
issued, fully paid and non-assessable.
Cumulative Voting. The Common Shares do not have cumulative voting rights.
Dividends. There are no limitations or restrictions upon the rights of the
Board of Directors to declare dividends out of any funds legally available
therefor. The Company has not paid cash dividends to date and it is not
anticipated that any cash dividends will be paid in the foreseeable future.
The Board of Directors initially may follow a policy of retaining earnings,
<PAGE>9
if any, to finance the future growth of the Company. Accordingly, future
cash dividends, if any, will depend upon, among other considerations, the
Company's need for working capital and its financial conditions at the time.
Preferred Stock. The Preferred Stock authorized by this Certificate of
Incorporation may be issued from time to time in series. Preferred Shares
of each series when issued shall be designated to distinguish them from the
shares of all other series. The Board of Directors is hereby expressly
vested with authority to divide the class of Preferred Shares into series and
to fix and determine the relative rights and preferences of the shares of any
such series so established to the full extent permitted by these Articles and
the laws of the State of Wyoming in respect of the following:
(i) The number of shares to constitute such series, and the distinctive
designations thereof;
(ii) The rate and preference of dividends, if any, the time of payment of
dividends, whether dividends are cumulative, and the date from which any
dividend shall accrue;
(iii) Whether shares may be redeemed and, if so, the redemption price and
the terms and conditions of redemption;
(iv) The amount payable upon shares in event of involuntary liquidation;
(v) The amount payable upon shares in event of voluntary liquidation;
(vi) Sinking fund or other provisions, if any, for the redemption or
purchase of shares;
(vii) The terms and conditions on which shares may be converted, if the
shares of any series are issued with the privilege of conversion;
(viii) Voting rights, if any; and
(ix) Any other relative rights and preferences of shares of such series,
including, without limitation, any restriction of an increase in the number
of shares of any series theretofore authorized and any limitation or
restriction of rights or powers to which shares of any future series shall be
subject.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
The Company's common stock has not commenced trading on the over-the-counter
market. There has never been a market for the securities of the Company.
The Company has never paid any cash dividends nor does it intend, at this
time, to make any cash distributions to the its shareholders as dividends in
the near future.
As of June 30, 1997, the number of holders of Company's common stock is 24.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings nor is the Company aware
of any disputes which may result in legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
During the Company's two most recent fiscal years or any later interim
period, there have been no changes in or disagreements with the Company's
principal independent accountant or a significant subsidiary's independent
accountant.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
In January 1995, the Company issued 150,000 (post split) Common Shares for
cash advances made on behalf of the Company and for services rendered to the
following:
Name # of Common Shares Cash/Services valued at
Terry Whiteside 30,000 $300.00
Anthony Griffin 3,000 30.00
Marshall Griffin 3,000 30.00
Lane Whiteside 3,000 30.00
Duane C. Peterson 22,500 225.00
Mutual Ventures Int., Inc. 22,500 225.00
Alex Herman 22,500 225.00
Gayle Griffin 6,000 60.00
James Wood 15,000 150.00
Equitos Corporation 15,000 150.00
Phillip Georgensen 7,500 75.00
These above sales were made pursuant to an exemption from registration to
sophisticated investors pursuant to Section 4(2) of the Securities Act of
1933.
<PAGE>10
In June, 1997, the Company issued 4,000,000 (post split) Common Shares for
cash at $.025 per Common Share for an aggregate of $100,000 to the following:
Name # of Common Shares Cash payment of
Glen R. Gamble 200,000 $ 5,000
Beverly Jo Gamble 200,000 5,000
Trent A. Gamble 100,000 2,500
Melissa N. Gamble 100,000 2,500
Mel Keller 840,000 21,000
Gary Keller 80,000 2,000
Esther Keller 10,000 250
Randall Tegtmeyer 4,000 100
Falstaff Holdings Ltd. 100,000 2,500
Victory Minerals
Corporation 2,000,000 50,000
R.A. Hildebrand 50,000 1,250
Terryl K. Jensen 50,000 1,250
Re-Group, Inc. 266,000 6,650
These above sales were made pursuant to an exemption from registration to
sophisticated investors pursuant to Section 4(2) of the Securities Act of
1933.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws provide that it will indemnify its officers and
directors for liabilities arising from actions performed on behalf of the
Company to the extent allowed by Section 17-16-851 (as amended by Ch. 190, L.
1997) of the Wyoming Statutes Ann., as amended. Section 17-16-851 et al. of
the Wyoming Statutes Ann., as amended, contains provisions entitling
directors, officers and employees of the Company to indemnification for their
expenses (including reasonable costs, disbursements and counsel fees) and
liabilities (including amounts paid or received in satisfaction of
settlements, judgments, fines and penalties), as the result of an action or
proceeding in which they may be involved by reason of being or having been a
director, officer or employee of a corporation provided said officers,
directors or employees acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE CORPORATION FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE AGAINST
PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS THEREFORE
UNENFORCEABLE.
PART F/S
The following financial statements required by Item 310 of Regulation S-B
are furnished below:
Independent Auditor's Report
Balance Sheet as of June 30, 1997
Statement of Operations
Statement of Cash Flows
Statement of Changes in Stockholder's Equity
Notes to Financial Statements
<PAGE>11>
Independent Auditors' Report
We have audited the accompanying balance sheet of Pinnacle Resources, Inc.
(fka Claremont House, Corp. (a Developmental Stage Company), as of June 30,
1997 and the related statements of income, shareholders' equity, and cash
flows for the fiscal years ended June 30, 1997 and 1996 and period January 6,
1995 (Inception) through June 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit 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 includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pinnacle Resources, Inc. at
June 30, 1997 and the results of its operations and its cash flows for the
fiscal years ended June 30, 1997 and 1996 and the period January 6, 1995
(Inception) through June 30, 1997 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5, the
Company is in the development stage and has no operations as of June 30,
1997. The deficiency in working capital as of June 30, 1997 raises
substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are described in Note 5. The
financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
July 23, 1997
<PAGE>12
Pinnacle Resources, Inc.
(Fka Claremont House, Corp.)
A Development Stage Company
Balance Sheet
<TABLE>
<CAPTION>
NOTES June 30, 1997
<S> <C> <C>
ASSETS
Cash $100,000
========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES - Accounts Payable 0
SHAREHOLDERS' EQUITY *1,2
Preferred Stock, $.01 Par Value
Authorized 2,000,000 Shares; Issued
And Outstanding -0- Shares -
Common Stock, $.00001 Par Value
Authorized 500,000,000 Shares; Issued
And Outstanding 4,150,000 Shares 42
Additional Paid in Capital On Common Stock 101,458
Deficit Accumulated During the Development Stage (1,500)
TOTAL SHAREHOLDERS' EQUITY 100,000
--------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $100,000
========
* Restated See Note 2
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
<PAGE>13
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
JANUARY 6, 1995
(INCEPTION)
June June Through June
NOTES 30, 1997 30, 1996 30, 1997
<S> <C> <C> <C> <C>
Revenue $0 $0 $0
Expenses:
Office 0 0 1,500
--- --- -----
Total 0 0 1,500
--- --- -----
Net (Loss) $0 $0 ($1,500)
Net (Loss) 1 $0.00 $0.00 ($0.00)
Common Shares Outstanding* 2 4,150,000 150,000 4,150,000
========= ======= =========
* Restated See Note 2
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
<PAGE>14
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
Statement of Cash Flows
<TABLE>
<CAPTION>
JANUARY 6, 1995
(INCEPTION)
June June Through June
NOTES 30, 1997 30, 1996 30, 1997
<S> <C> <C> <C> <C>
Net (Loss) Accumulated
During the Development
Stage $0 $0 $(1,500)
Issuance of Common Stock For
Services 2 0 0 1,500
--- --- -----
Cash Flows From Operations 0 0 0
--- --- -----
Cash Flows From Investing
Activities:
Cash Flows from Investing 0 0 0
--- --- -----
Cash Flows From Financing
Activities:
Issuance of Common Stock 2 100,000 0 100,000
------- --- -------
Cash Flows From Financing 100,000 0 100,000
------- --- -------
Net Increase in Cash 100,000 0 100,000
Cash At Beginning of Period 0 0 0
------- --- -----
Cash At End of Period $100,000 $0 $100,000
======== === ========
Non-Cash Activities:
Stock Issued For Cash Advances
& Services $0 $0 $1,500
=== === ======
</TABLE>
The Accompanying Notes Are An Integral Part of These Financial Statements.
<PAGE>15
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE, CORP.)
A DEVELOPMENT STAGE COMPANY
Statement of Shareholders' Equity
<TABLE>
<CAPTION>
Deficit
Capital Paid Accumulated
Number Of In Excess During The
Common Common of Development
NOTES Shares Stock Par Value Stage Total
<S> <C> <C> <C> <C> <C> <C>
Balance At
January 6, 1995 1,2 0 $0 $ 0 $0 $ 0
Issuance of Common Stock:
January 1995 for Cash
Advances Made On Behalf
of the Company & Services
at $.01 Per Share * 150,000 2 1,498 1,500
Net (Loss) (1,500) (1,500)
------- --- ------- ------ -------
Balance At June 30,
1995, 1996 150,000 $2 $1,498 ($1,500) $0
Issuance Of Common Stock:
June 26, 1997 for Cash
At $.025 Per Share 4,000,000 40 99,960 0 100,000
Net (Loss) 0 0
--------- --- ------ ------ -------
Balance At June 30,
1995, 1996 4,150,000 $42 $101,458 ($1,500) $100,000
========= === ======== ====== ========
</TABLE>
* Restated See Note 2
The Accompanying Notes Are An Integral Part of These Financial Statements.
<PAGE>16
PINNACLE RESOURCES, INC.
(FKA CLAREMONT HOUSE CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED JUNE 30, 1997 AND 1996
NOTE 1 - Organization and Summary of Significant Accounting Policies
Organization:
On January 6, 1995 Pinnacle Resources, Inc. (fka Claremont House, Corp.),
(the Company) was incorporated under the laws of Wyoming to engage in all
aspects of the financial services industry or any other lawful business.
Development Stage:
The company entered the Development stage in accordance with SFAS No. 7 on
January 6, 1995. Its purpose is to evaluate, structure and complete a
merger with, or acquisition a privately owned corporation.
Statement of Cash Flows:
For the purpose of the State of Cash Flows, the Company considers demand
deposits and highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents.
Cash paid for interest in fiscal year ended June 30, 1997 and 1996 was $-0-.
Cash paid for income taxes in fiscal year ended June 30, 1997 and 1996 was $-
0-.
Net (Loss) per Common Share:
Net (Loss) per common share is computed by dividing the net loss for the
period by the number of shares outstanding at June 30, 1997 and June 30,
1996.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that effect the reported amounts. Actual results could differ from those
estimates.
NOTE 2 - Capital Stock and Capital in Excess of Par Value
The Company initially authorized 500,000,000 shares of $.0001 par value
common stock. in January 1995, the company issued 500,000 shares of common
stock for services and cash advances paid on behalf of the Company valued at
$1,500 or $.03 per share. On June 26, 1997, the Board of Directors
authorized a 1 for 3.33 reverse split. On June 25, 1997, the Company
amended its Articles of Incorporation and authorized 2,000,000 of $.01 par
value preferred stock.
On June 26, 1997, the Company issued 4,000,000 after split shares of common
stock for cash of $100,000 or $.025 per share.
NOTE 3 - Related Party Events
The Company maintains a mailing address at an officer's place of business.
This address is located at 7345 E. Peakview, Greenwood Village, CO 80111.
At this time the Company has no need for an office. As of June 30, 1997,
management has incurred a minimal amount of time and expense on behalf of the
Company.
The president of the Company is also an officer and director of a major
shareholder of the Company's common stock.
NOTE 4 - Income Taxes
At June 30, 1997, the Company had net operating loss carryforwards available
for financial statement and Federal income tax purposes of approximately
$1,500 which, if not used, will expire in the year 2008.
The Company follows Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109), which requires, among other
things, an asset and liability approach to calculating deferred income taxes.
As of June 30, 1997, the Company has a deferred tax asset of $300 primarily
for its net operating loss carryforward which has been fully reserved through
a valuation allowance. The change in the valuation allowance for June 30,
1997 is $-0-.
<PAGE>17
NOTE 5 - Basis of Presentation
In the course of its development activities the Company has sustained
continuing losses and expects such losses to continue for the foreseeable
future. The Company's management plans on advancing funds on an as needed
basis and in the longer term revenues from the operations of a merger
candidate, if found. The Company's ability to continue as a going concern
is dependent on these additional management advances, and, ultimately, upon
achieving profitable operations through a merger candidate.
NOTE 6 - Subsequent Events
The Company will be filing a Form 10 with the Securities and Exchange
Commission to become a 34 Act reporting company.
<PAGE>18
PART III
ITEM 1. INDEX TO EXHIBITS
(2) Charter and By-Laws
(3) Instruments defining the rights of security holders
(5) Voting Trust Agreement - Not Applicable
(6) Material Contracts - Not Applicable
(7) Material Foreign Patents - Not Applicable
(12) Additional Exhibits - Not Applicable
ITEM 2. DESCRIPTION OF EXHIBITS
(2.1) Articles of Incorporation
(2.2) Amendment to Articles of Incorporation
(2.3) Bylaws
(3.1) Specimen Common Stock Certificate
<PAGE>19
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.
PINNACLE RESOURCES, INC.
Date: August 3, 1997
-------------------
By: /s/ Glen R. Gamble
------------------------------------
Glen R. Gamble, President
<PAGE>20
ARTICLES OF INCORPORATION
Claremont House, Corp.
The undersigned natural person, more than 21 years of age, hereby
establishes a corporation pursuant to the statutes of Wyoming and adopts the
following Articles of Incorporation:
FIRST: The name of the corporation is: Claremont House, Corp.
SECOND: The Corporation shall have perpetual existence.
THIRD: (a) Purposes. The purposes for which the corporation is organized
are as follows: operate a financial services business; to purchase or
otherwise acquire, invest in, own, mortgage, pledge, sell assign and transfer
or otherwise dispose of, trade, manage, operate, develop, deal in and with
all kinds of personal and real property and interest therein; to act as a
representative or agent in any capacity for any other corporation,
association or other entity, and to conduct, manage and operate any lawful
enterprise in connection therewith; to promote, manage, acquire or invest in
any business lawful for the Corporation to engage in and in general to carry
on any lawful business necessary, suitable or convenient in connection with
or incidental to the accomplishment of any corporate purpose, or designed
directly or indirectly to promote the interest of the Corporation or to
enhance the value of its properties or services, whether such business is
similar in nature to the foregoing purposes, or otherwise.
(b) Powers. In furtherance of its lawful purposes the Corporation shall
have and may exercise all the rights, powers and privileges now or hereafter
exercisable by corporations organized under the laws of Wyoming. In
addition, it may do everything necessary, suitable, convenient or proper for
the accomplishment of any of its corporate purposes.
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is five Hundred million (500,000,000) shares of Common
Stock with .00001 par value.
FIFTH: The shareholders of the Corporation shall not have cumulative voting
rights in the election of directors.
SIXTH: The shareholders of the Corporation shall not have any pre-emptive
rights.
SEVENTH: The Board of Directors may from time to time distribute to the
shareholders in partial liquidation, out of stated capital or capital surplus
of the Corporation, a portion of its assets, in cash or property, subject to
the limitations contained in the statutes of Wyoming.
EIGHTH: The following provisions are inserted for the regulation of the
internal affairs of the Corporation, and they are in furtherance of and not
in limitation or exclusion of the powers conferred by law:
(a) Contracts with directors, etc. No contract or other transaction of the
Corporation with any other person, firm or corporation, or in which this
Corporation is interested, shall be affected or invalidated by: (I) The fact
that any one or more of the directors or officers of this Corporation is
interested in or is a director or officer of another corporation; or (ii) The
fact that any director of officer, individually or jointly with others, may
be party to or may be interested in any such contract or transaction. Each
person who may become a director or officer of the Corporation is hereby
relieved from any liability that might otherwise arise by reason of his
contracting with the Corporation for the benefit of himself or any firm or
corporation in which he may be in any way interested.
(b) Negation of equitable interest in shares or rights. The corporation
shall be entitled to treat the registered holder of any shares of the
Corporation as the owner thereof for all purpose, including all rights
deriving from such shares, and shall 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 but without limiting the
generality hereof, a purchaser, assignee or transferee of such shares or of
rights deriving from such shares, unless and until such purchaser, assignee,
transferee or other person becomes the registered holder of such shares,
whether or not the Corporation shall have either actual or constructive
notice of the interest of such purchaser, assignee, transferee or other
person; and no such purchaser, assignee, transferee or other person shall be
entitled to receive notice of the meetings of the shareholders, to vote at
such meetings, to examine a list of the shareholders, or to own, enjoy or
exercise any other property or rights deriving from such shares against the
Corporation, until such purchaser, assignee, transferee or other person has
become the registered holder of such shares.
<PAGE>21
(c) Restrictions on transfer of stock. The Corporation is granted the
right to impose such restrictions on the transfer of the shares as a majority
of the Board of Directors deems necessary, advisable or proper.
NINTH: The address of the initial registered office of the Corporation 506
Hunt. St., Gillette, Wyoming 82716. The name of its initial registered
agent at such address is Joe Banks.
TENTH: The number of directors of this corporation shall not be less than
three, provided however, in the event there are fewer than three
stockholders, the number of directors shall be the same as the number of
shareholders. The name and address of the original director shall be:
Robert A. Hildebrand
506 Hunt St.
Gillette, Wyoming 82716
ELEVENTH: The name and address of the incorporator is:
Robert A. Hildebrand
506 Hunt St.
Gillette, Wyoming 82716
January 6, 1995
/s/ Robert A. Hildebrand
- ---------------------------
Robert A. Hildebrand
<PAGE>22
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
of
CLAREMONT HOUSE, CORP.
Pursuant to the Wyoming Business Corporation Act, Chapter 16, Title 17,
Wyoming Statutes, Ann., the undersigned corporation adopts the following
Articles of Amendment to its Articles of Incorporation:
FIRST: The name of the corporation is Claremont House, Corp.
SECOND: The following amendments to the Articles of Incorporation were
adopted on June 26, 1997, as prescribed by the Wyoming Statutes, Ann., by a
vote of the shareholders. The number of shares voted for the amendment was
sufficient for approval.
Article I shall be amended to read:
FIRST: The name of the corporation is: Pinnacle Resources, Inc.
Article IV shall be amended to read:
FOURTH (a) Authorized Shares. The aggregate number of shares which the
corporation shall have the authority to issue is five hundred two million
(502,000,000) shares. Five hundred million (500,000,000) shares shall be
designated "Common Stock", and shall have a par value of $.00001. Two
Million (2,000,000) shares shall be designated "Preferred Stock", and shall
have a par value of $.01 per share, and shall be issued for such
consideration, expressed in dollars, as the Board of Directors may, from time
to time, determine.
(b) Consideration for Shares. All shares of Common Stock and Preferred Stock
shall be issued by the corporation for cash, property or services actually
performed, for no less than the par value of $.00001 for Common Stock and
$.01 for Preferred Stock. All shares shall be fully paid and non-assessable.
(c) Issuance of Preferred Stock. The Preferred Stock authorized by this
Certificate of Incorporation may be issued from time to time in series.
Preferred Shares of each series when issued shall be designated to
distinguish them from the shares of all other series. The Board of
Directors is hereby expressly vested with authority to divide the class of
Preferred Shares into series and to fix and determine the relative rights and
preferences of the shares of any such series so established to the full
extent permitted by these Articles and the laws of the State of Wyoming in
respect of the following:
(i) The number of shares to constitute such series, and the distinctive
designations thereof;
(ii) The rate and preference of dividends, if any, the time of payment of
dividends, whether dividends are cumulative, and the date from which any
dividend shall accrue;
(iii) Whether shares may be redeemed and, if so, the redemption price and the
terms and conditions of redemption;
(iv) The amount payable upon shares in event of involuntary liquidation;
(v) The amount payable upon shares in event of voluntary liquidation;
(vi) Sinking fund or other provisions, if any, for the redemption or
purchase of shares;
(vii) The terms and conditions on which shares may be converted, if the
shares of any series are issued with the privilege of conversion;
(viii) Voting rights, if any; and
(ix) Any other relative rights and preferences of shares of such series,
including, without limitation, any restriction of an increase in the number
of shares of any series theretofore authorized and any limitation or
restriction of rights or powers to which shares of any future series shall be
subject.
Claremont House, Corp.
/s/ Glen R. Gamble
- ------------------------------
Glen R. Gamble, President
/s/ Anthony Griffin
- ------------------------------
Anthony Griffin, Secretary
<PAGE>23
STATE OF COLORADO )
)ss.
CITY AND COUNTY OF DENVER )
I, , a notary public, hereby certify that on June
, 1997, personally before me, Glen R. Gamble and Anthony Griffin, who, being
by me first duly sworn, did declare they were the persons who signed the
foregoing document as President and Secretary and that the statements therein
contained are true.
WITNESS my hand and official seal
DATED: Notary Public
My commission expires:
<PAGE>24
BYLAWS OF
CLAREMONT HOUSE, CORP.
A WYOMING CORPORATION
ARTICLE I
OFFICES
Section 1.01 Registered Office and Agent. The name of the registered agent
and the location of the registered office of the Corporation in the State of
Wyoming shall be Joe Banks, 506 Hunt Street, Gillette, Wyoming 82716, and
such information shall be filed in the appropriate office of the State of
Wyoming pursuant to applicable provisions of law.
Section 1.02 Corporate Offices. The Corporation may have such corporate
offices within and outside the State of Wyoming as the board of directors
from time to time may direct or the Corporation may require. The principal
office of the Corporation may be fixed and so designated from time to time by
the board of directors, but the location or residence of the Corporation in
Wyoming shall be deemed for all purposes to be in the county in which its
principal office in Wyoming is maintained. The location of the principal
office of the Corporation shall be 7345 E. Peakview Avenue, Englewood,
Colorado.
Section 1.03 Records. The Corporation shall keep correct and complete
books and records of account, minutes of proceedings of its shareholders and
board of directors, and such other or additional records as may be required
by law. The Corporation shall keep at its registered office or principal
place of business, or at the office of its transfer agent or registrar,
either within or outside Wyoming, a record of its shareholders, giving the
names and addresses of all shareholders and the number and class of the
shares held by each.
ARTICLE II
SHAREHOLDERS' MEETINGS
Section 2.01 Place of Meeting. All meetings of the shareholders shall be
held at the principal office of the Corporation, unless the board of
directors designates some other place either within or outside the State of
Wyoming. Unless specifically prohibited by law any meeting may be held at
any place and at any time and for any purpose if consented to in writing by
all of the shareholders entitled to vote at such meeting.
Section 2.02 Annual Meetings. An annual meeting of the shareholders shall
be held on the 1st day of June of each year, unless notified of an alternate
date in accordance with the provisions of these bylaws, at 3:00 p.m. for the
purpose of electing directors and for the transaction of such other business
as may properly come before it. If such day is a legal holiday, the meeting
shall be on the next business day.
Section 2.03 Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be
called by the president, secretary or by the board of directors, and shall be
called by the president at the request of holders of not less than 10% of all
the outstanding shares of the Corporation entitled to vote at the meeting.
No business other than that specified in the notice of the meeting shall be
transacted at any such special meeting.
Section 2.04 Notice of Meetings. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose for which the meeting is called, shall be delivered not less than ten
days nor more than fifty days before the date of the meeting, either
personally or by mail, by or at the direction of the board of directors, the
president, the secretary, or the officer or person calling the meeting to
each shareholder of record entitled to vote at such meeting; except that, if
the authorized shares are to be increased at least thirty days' notice shall
be given.
Section 2.05 Fixing Record Date and Closing Transfer Books. The board of
directors may fix a date not less than ten nor more than fifty days prior to
any meeting as the record date for the purpose of determining shareholders
entitled to notice of and to vote at such meetings, of the shareholders. The
transfer books may be closed by the board of directors for a stated period
not to exceed fifty days for the purpose of determining shareholders entitled
to receive payment of any dividend or in order to make a determination of
shareholders for any other purpose. In the absence of any action by the
board of directors, the date upon which the board of directors adopts the
resolution declaring the dividend shall be the record date.
<PAGE>25
Section 2.06 Voting Lists. The officers or agent having charge of the
stock transfer books for shares of the corporation shall make, at least ten
days before each meeting of the shareholders, a complete record of the
shareholders entitled to vote at the meeting or any adjournment thereof,
arranged in alphabetical order with the address of, and the number of shares
held by each. The record, for a period of ten days before such meeting,
shall be kept on file at the principal office of the Corporation whether
within or outside the State of Wyoming, and shall be subject to inspection by
any shareholder for any purpose germane to the meeting at any time during
normal business hours. Such record shall also be produced and kept open at
the time and place of any purpose germane to the meeting during the whole
time of the meeting. The original stock transfer book shall be prima facie
evidence as to the shareholders who are entitled to examine the record or
transfer books or to vote any meeting of shareholders.
Section 2.07 Quorum. The holders of a majority of the shares who are
entitled to vote at a shareholders meeting and who are present in person or
by proxy shall be necessary for and shall constitute a quorum for the
transaction of business at such meetings, except as otherwise provided by
statute, by the Articles of Incorporation or these Bylaws. If a quorum is
not present or represented at a meeting of the shareholders, those present in
person or represented by proxy shall have the power to adjourn the meeting
from time to time, without notice other than announcement at the meeting,
until a quorum is present or represented. At an adjourned meeting where a
quorum is present or represented, any business may be transacted which might
have been transacted at the meeting as originally notified.
Section 2.08 Majority Vote; Withdrawal of Quorum. When a quorum is present
at a meeting, the vote of the holders of a majority of the issued and
outstanding shares having voting power, present in person or represented by
proxy, shall decide any question brought before the meeting, unless the
question is one which, by express provision of the statutes, the Articles of
Incorporation or these Bylaws, requires a higher vote in which case the
express provision shall govern. The shareholders present at a duly
constituted meeting may continue to transact business until adjournment,
despite the withdrawal of enough shareholders holding, in the aggregate,
issued and outstanding shares having voting power to leave less than a
quorum.
Section 2.09 Proxies. At all meetings of shareholders, a shareholder may
vote in person or by proxy executed in writing by the shareholder or by his
or her duly authorized attorney in fact. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided by
the proxy. Each proxy shall be filed with the secretary of the Corporation
before or at the time of the meeting.
Section 2.10 Voting. Each issued and outstanding share is entitled to its
respective vote and each fractional share is entitled to a corresponding
fractional vote on each matter submitted to a vote at a meeting of
shareholders. The vote of a majority of the shares voting on any matter at a
meeting of shareholders at which a quorum is present shall be the act of the
shareholders on that matter, unless the vote of a greater number is required
by law, the Articles of Incorporation, or these Bylaws. Voting on all
matters except the election of directors shall be by voice or by show of
hands, unless the holders of one-tenth of the shares represented at the
meeting shall, prior to the voting on any matter, demand a ballot vote on
that particular matter.
(A) Neither treasury shares nor shares held by another
Corporation if the majority of the shares entitled to vote for the election
of directors of such other Corporation is held by the Corporation shall be
voted at any meeting or counted in determining the total number of issued and
outstanding shares at any given time.
(B) Shares standing in the name of another Corporation,
domestic or foreign, may be voted by such officer, agent or proxy as the
Bylaws of that Corporation may prescribe, or, in the absence of such
provision, as the board of directors of that Corporation may determine.
(C) Shares held by an administrator, executor, guardian,
or conservator may be voted by him or her, either in person or by proxy,
without the transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him or her, either in person or by proxy,
but no trustee shall be entitled to vote shares held by him or her without a
transfer of the shares into his or her name.
(D) Shares standing in the name of a receiver may be
voted by such receiver, and shares held by or under the control of a receiver
may be voted by such receiver without the transfer into his or her name if
authority to do so is contained in an appropriate order of the court by which
the receiver was appointed.
(E) A shareholder whose shares are pledged shall be
entitled to vote such shares until the shares have been transferred into the
name of the pledgee, and thereafter the pledgee shall be entitled to vote the
shares transferred.
<PAGE>26
(F) Redeemable shares which have been called for
redemption shall not be entitled to vote on any matter and shall not be
deemed issued and outstanding shares on and after the date on which written
notice of redemption has been mailed to shareholders and a sum sufficient to
redeem such shares has been deposited with a bank or trust corporation with
irrevocable instruction and authority to pay the redemption price to the
holders of the shares upon surrender of their certificates.
Section 2.11 Action Without Meeting. Any action required by statute to be
taken at a meeting of the shareholders, or any action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
holders entitled to vote with respect to the subject matter thereof and such
consent shall have the same force and effect as a unanimous vote of the
shareholders. The consent may be in more than one counterpart so long as
each shareholder signs one of the counterparts. The signed consent, or a
signed copy shall be placed in the minutes book.
Section 2.12 Telephone and Similar Meetings. Shareholders may participate
in and hold a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in such a meeting shall
constitute presence in person at the meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Section 2.13 Order of Business at Meetings. The order of business at
annual meetings and so far as practicable at other meetings of shareholders
shall be as follows unless changed by the board of directors: (a) call to
order; (b) proof of due notice of meeting; (c) determination of quorum and
examination of proxies; (d) announcement of availability of voting lists; (e)
announcement of distribution of annual statement; (f) reading and disposing
of minutes of last meeting of shareholders; (g) reports of officers and
committees; (h) reports of directors; (l) opening of polls for voting; (m)
recess; (n) reconvening, closing of polls; (o) report of voting inspectors;
(p) other business; and (q) adjournment.
ARTICLE III
BOARD OF DIRECTORS
Section 3.01 General Powers. The business and affairs of the Corporation
shall be managed by its board of directors. The directors shall in all cases
act as a board of directors, and they may adopt such rules and regulations
for the conduct of their meetings and the management of the Corporation as
they deem proper. Such rules and regulations may not be inconsistent with
these Bylaws, the Articles of Incorporation, and the laws of Wyoming.
Section 3.02 Number, Tenure and Qualifications. The number of directors
constituting the board of directors of this Corporation is two. The number
of directors of this Corporation shall not be less than three; except that
there need by only as many directors as there are shareholders in the event
that the issued and outstanding shares are held of record by fewer than three
shareholders. A director shall be elected by the shareholders to serve until
the next annual meeting of shareholders, or until his or her death, or
resignation and his or her successor is elected. A director must be at least
eighteen years of age but need not be a shareholder in the Corporation nor a
resident of the State of Wyoming.
Section 3.03 Change in Number. The number of directors may be increased or
decreased from time to time by amendment to these Bylaws but no decrease
shall have the effect of shortening the term of any incumbent director. Any
directorship to be filled by reason of an increase in the number of directors
shall be filled by election at an annual meeting or at a special meeting of
shareholders called for that purpose.
Section 3.04 Election of Directors. The directors shall be elected at the
annual meeting of shareholders and those persons who receive the highest
number of votes shall be deemed to have been elected. Election of directors
shall be by ballot.
Section 3.05 Cumulative Voting. Directors shall be elected by majority
vote. Cumulative voting shall not be permitted.
Section 3.06 Removal of Directors. A meeting called expressly for the
purpose of removing a director, the entire board of directors or any lessor
number may be removed, with or without cause, by a vote of the holders of the
majority of the shares then entitled to vote at an election of directors. If
any directors are so removed, new directors may be elected at the same
meeting.
Section 3.07 Resignation. Subject to Section 3.02, a director may resign
at any time by giving written notice to the board of directors, the
president, or the secretary of the Corporation and unless otherwise specified
in the notice, the resignation shall take effect upon receipt thereof by the
board of directors or such officer, and the acceptance of the resignation
shall not be necessary to make it effective.
<PAGE>27
Section 3.08 Vacancies. A vacancy occurring in the board of directors may
be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the board of directors remains. A director
elected to fill a vacancy shall be elected for the unexpired term of his or
her predecessor in office. Any directorship to be filled by reason of an
increase in the number of directors shall be filled by election at an annual
meeting of shareholders or at a special meeting of the shareholders called
for that purpose. A director chosen to fill a position resulting from an
increase in the number of directors shall holder office until his or her
successor(s) shall have been qualified.
Section 3.09 Compensation. By resolution of the board of directors,
compensation may be paid to directors for their services. Also by resolution
of the board of directors, a fixed sum and expenses for actual attendance at
each regular or special meeting of the board of directors may also be paid.
Nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefore. Members of the executive committee or of special or standing
committees may, by resolution of the board of directors, be allowed like
compensation for attending committee meetings.
Section 3.10 First Meeting. The first meeting of a newly elected board
shall be held without further notice immediately following the annual meeting
of shareholders, and it shall be at the same place, unless by unanimous
consent of the directors then electing and serving, the time or place is
changed.
Section 3.11 Regular Meetings. Regular meetings of the board of directors
may be held without notice at such time and place as shall from time to time
be determined by the board of directors.
Section 3.12 Special Meetings. Special meetings of the board of directors
may be called by the president on three days notice to each director, either
personally or by mail or by telegram. Special meetings shall be called in
like manner and on like notice on the written request of two directors.
Except as otherwise expressly provided by statute, the Articles of
Incorporation or these Bylaws, neither the business to be transacted at, nor
the purpose of, any special meeting need be specified in a notice or waiver
of notice.
Section 3.13 Quorum; Majority Vote. At meetings of the board of directors
a majority of the number of directors fixed by these Bylaws shall constitute
a quorum for the transaction of business. The act of a majority of the
directors present at a meeting at which quorum is not present at a meeting of
the board of directors, the directors present may adjourn the meeting from
time to time, without notice other than announcement at the meeting until, a
quorum is present.
Section 3.14 Procedure. The board of directors shall keep regular minutes
of its proceedings. The minutes shall be placed in the minutes book of the
Corporation.
Section 3.15 Action Without Meeting. Any action required or permitted to
be taken at a meeting of the board of directors may be taken without a
meeting if a consent in writing, setting forth the action so taken, is signed
by all members of the board of directors. Such consent shall have the same
force and effect as a unanimous vote at a meeting. The signed consent, or a
signed copy, shall be placed in the minutes book. The consent may be in more
than one counterpart so long as each director signs one of the counterparts.
Section 3.16 Telephone and Similar Meetings. Directors may participate in
and hold a meeting by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in such a meeting shall constitute presence in
person at the meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
Section 3.17 Interested Directors and Officers.
(A) No contract or transaction between the Corporation and one or more
of its directors or officers, or any other corporation, firm, association,
partnership or entity in which one or more of its directors or officers are
directors or officers or are financially interested shall be either void or
voidable solely because of such relationship or interest or solely because
such directors or officers are present at the meeting of the board of
directors or a committee thereof which authorizes, approves, or ratifies such
contract or transaction or solely because their votes are counted for such
purposes if:
(1) the fact of the common directorship or financial interest is
disclosed to or known by the board of directors or committee and noted in the
minutes, and the board or committee which authorizes, approves, or ratifies
the contract or transaction by a vote sufficient for the purpose without
counting the votes or consents of such interested directors; or
<PAGE>28
(2) the material facts of such relationship or financial interest is
disclosed to or known by the shareholders entitled to vote thereon and they
authorize, approve or ratify such contract or transaction in good faith by a
majority vote or written consent of shareholders holding a majority of the
shares the votes of the common or interested directors or officers shall be
counted in any such vote of shareholders; or
(3) the contract or transaction is fair and reasonable to the
Corporation.
(B) Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
ARTICLE IV
EXECUTIVE COMMITTEE
Section 4.01 Designation. The board of directors may from time to time, by
resolution adopted by a majority of the whole board, designate an executive
committee.
Section 4.02 Number; Qualification and Term. The executive committee shall
consist of one or more directors, one of whom shall be the president of the
executive committee. The executive committee shall serve at the pleasure of
the board of directors.
Section 4.03 Authority. The executive committee, to the extent provided in
such resolution, shall have and may exercise all of the authority of the
board of directors in the management of the business and affairs of the
Corporation, including authority over the use of the corporate seal.
However, the executive committee shall not have the authority of the board of
directors in reference to: (a) amending the Articles of Incorporation; (b)
approving a plan of merger or consolidation; (c) recommending to the
shareholders the sale, lease or exchange of all or substantially all of the
property and assets for the corporation other than in the usual and regular
course of its business; (d) recommending to the shareholders a voluntary
dissolution of the Corporation or a revocation thereof; (e) amending,
altering, or repealing these Bylaws or adopting new Bylaws; (f) filling
vacancies in or removing members of the board of directors or of any
committee appointed by the board of directors; (g) electing or removing
officers or members of any such committee; (h) fixing the compensation of any
member of such committee; (i) altering or repealing any resolution of the
board of directors which by its terms provides that it shall not be so
amendable or repealable; (j) declaring a dividend; or (k) authorizing the
issuance of shares of the Corporation.
Section 4.04 Change in Number. The number of executive committee members
may be increased or decreased from time to time by resolution adopted by a
majority of the board of directors.
Section 4.05 Removal. Any member of the executive committee may be removed
by the board of directors by the affirmative vote of the majority of the
board of directors, whenever in its judgment the best interests of the
Corporation will be served thereby.
Section 4.06 Vacancies. A vacancy occurring in the executive committee (by
death, resignation, removal or otherwise) may be filled by the board of
directors in the manner providing for original designation in Bylaw Section
4.01.
Section 4.07 Resignation. A committee member may resign by giving written
notice to the board of directors, the president or the secretary of the
Corporation. The resignation shall take effect at the time specified in it,
or immediately if no time is specified. Unless it specifies otherwise, a
resignation takes effect without being accepted.
Section 4.08 Meetings. Time, place and notice (if any) of executive
committee meetings shall be determined by the executive committee.
Section 4.09 Quorum; Majority Vote. At meetings of the executive
committee, a majority of the number of members designated by the board of
directors shall constitute a quorum for the transaction of business. The act
of a majority of the members present at any meeting at which a quorum is
present shall be the act of the executive committee, except as otherwise
specifically provided by statute, the Articles of Incorporation or these
Bylaws. If a quorum is not present at a meeting of the executive committee,
the members present may adjourn the meeting from time to time, without notice
other than an announcement at the meeting, until a quorum is present.
Section 4.10 Compensation. By resolution of the board of directors,
compensation may be paid to members of the executive committee for their
services. Also by resolution of the board of directors, a fixed sum and
expenses for actual attendance at each regular or special meeting of the
executive committee may also be paid.
<PAGE>29
Section 4.11 Procedure. The executive committee shall keep regular minutes
of its proceedings and report the same to the board of directors when
required. The minutes of the proceedings of the executive committee shall be
placed in the minutes book of the Corporation.
Section 4.12 Action Without Meeting. Any action required or permitted to
be taken at a meeting of the executive committee may be taken without a
meeting if a consent in writing, setting forth the action so taken, is signed
by all the members of the executive committee. Such consent shall have the
same force and effect as a unanimous vote at a meeting. The signed consent,
or a signed copy, shall be placed in the minutes book.
Section 4.13 Telephone and Similar Meetings. Members of the executive
committee may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in such a
meeting shall constitute presence in person at the meeting, except where a
person participates in the meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not
lawfully called or convened.
Section 4.14 Responsibility. The designation of an executive committee and
the delegation of authority to it shall not operate to relieve the board of
directors, or any member thereof, of any responsibility imposed upon it, him
or her by law.
ARTICLE V
NOTICE
Section 5.01 Method. Whenever by statute, the Articles of Incorporation,
these Bylaws or otherwise, notice is required to be given to a shareholder,
director or committee member, and no provision is made as to how the notice
shall be given, it shall not be construed to mean personal notice, but any
such notice may be given: (a) in writing, by United States mail, certified,
return receipt requested, postage prepaid, addressed to the shareholder,
director or committee member at the address appearing on the books of the
Corporation; or (b) in any other method permitted by law. Any notice
required or permitted to be given by mail shall be deemed given at the time
when the same is deposited in the United States mails.
Section 5.02 Waiver. Whenever by statute, the Articles of Incorporation or
these Bylaws, notice is required to be given to a shareholder, committee
member or director, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before or after the time stated in
such notice, shall be equivalent to the giving of such notice. Attendance at
a meeting shall constitute a waiver of notice of such meeting, except where a
person attends for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
ARTICLE VI
OFFICERS AND AGENTS
Section 6.01 Number, Qualification; Election; Term.
(A) The Corporation shall have:
(1) a president, a vice president, a secretary and a treasurer; and
(2) such other officers (including a chairman of the board of directors
and additional Vice Presidents) and assistant officers and agents as the
board of directors may deem necessary.
(B) No officer or agent need be a shareholder, a director or a resident of
the state of incorporation.
(C) Officers named in Bylaw Section 6.01(A)(1) shall be elected by the
board of directors on the expiration of an officer's term or whenever a
vacancy exists. Officers and agents named in Bylaw Section 601(A)(2) may be
elected by the Board of Directors at any meeting.
(D) Unless otherwise specified by the board of directors at the time of
election or appointment, or in an employment contract approved by the board
of directors, each officer's and agent's term shall end at the first meeting
of directors held after each annual meeting of the shareholders. He shall
serve until the end of his or her term, or if earlier, until his or her
death, resignation or removal.
(E) Any two or more offices may be held by the same person, except that the
president and the secretary shall not be the same person.
Section 6.02 Election and Term of Office. The officers of the Corporation
shall be elected annually by the board of directors at the first meeting of
the board of directors held after each annual meeting of the shareholders.
If the election of officers shall not be held at such meeting, such election
<PAGE>30
shall be held as soon thereafter as convenient. Each officer shall hold
office until his or her successor shall have been duly elected and shall have
qualified or until his or her death or until he or she shall resign or shall
have been removed in the manner hereinafter provided.
Section 6.03 Resignation. Any officer may resign at any time by delivering
a written resignation either to the board of directors, the president or the
secretary of the Corporation. The resignation shall take effect at the time
specified therein or immediately if no time is specified. Unless it
specifies otherwise, a resignation takes effect without being accepted.
Section 6.04 Removal. Any officer or agent elected or appointed by the
board of directors may be removed by the board of directors, whenever, in its
judgment, the best interest of the Corporation will be served thereby, but
such removal shall be without prejudice to the contractual rights, if any, of
the person so removed.
Section 6.05 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, creation of a new office, or
otherwise, may be filled by the board of directors for the unexpired portion
of the term.
Section 6.06 Salaries and Compensation. The salaries or other compensation
of the officers of the Corporation shall be fixed from time to time by the
board of directors, except that the board of directors may delegate to any
person or group of persons the duty of fixing salaries or other compensation
by reason of the fact that he or she is also a director of the Corporation.
Section 6.07 Surety Bonds. In the event the board of directors shall so
require, any officer or agent of the Corporation shall execute to the
Corporation a bond in such sums and with such surety or sureties as the board
of directors may direct, conditioned upon the faithful performance of his or
her duties to the Corporation, including responsibility for negligence and
for the accounting for all property, monies, or securities of the Corporation
which may come into his or her hands.
Section 6.08 President.
(A) The president shall be the chief executive and administrative officer of
the Corporation.
(B) The president shall preside at all meetings of the shareholders, and, in
the absence of the chairman of the board of directors, at meetings of the
board of directors.
(C) The president shall exercise such duties as customarily pertain to the
office of the president and shall have general and active supervision over
the property, business and affairs of the Corporation and over its several
officers.
(D) The president may appoint officers, agents, or employees other than
those appointed by the board of directors.
(E) The president may sign, execute and deliver in the name of the
Corporation powers of attorney, contracts, bonds and other obligations, and
shall perform such other duties as may be prescribed from time to time by the
board of directors or by the Bylaws.
Section 6.09 Vice President. The vice president(s) in the order of their
seniority, unless otherwise determined by the board of directors, shall, in
the absence or disability of the president, perform the duties and have the
authority and exercise the powers of the president. They shall perform such
other duties and have such other authority and powers as the board of
directors may from time to time prescribe or as the president may from time
to time delegate.
Section 6.10 Secretary.
(A) The secretary shall keep the minutes of all meetings of the
shareholders and of the board of directors and, to the extent ordered by the
board of directors or the president, the minutes of meetings of all
committees.
(B) The secretary shall cause notice to be given of meetings of
shareholders, of the board of directors, and of any committee appointed by
the board of directors.
(C) The secretary shall have custody of the corporate seal and general
charge of the records, documents and papers of the Corporation not pertaining
to the performance of the duties vested in other officers, which shall at all
reasonable times be open to the examination of any director.
(D) The secretary may sign or execute contracts with the president in the
name of the Corporation and affix the seal of the Corporation thereto.
<PAGE>31
(E) The secretary shall perform such other duties as may be prescribed from
time to time by the board of directors or the Bylaws.
Section 6.11 Assistant Secretary. The assistant secretaries in the order
of their seniority, unless otherwise determined by the board of directors,
shall, in the absence or disability of the secretary, perform the duties and
have the authority and exercise the powers of the secretary. They shall
perform other duties and have such other powers as the board of directors may
from time to time prescribe or as the president may from time to time
delegate.
Section 6.12 Treasurer.
(A) The treasurer shall have general custody of the collection and
disbursements of funds of the Corporation.
(B) The treasurer shall endorse on behalf of the Corporation for
collection, checks, notes and other obligations, and shall deposit the same
to the credit of the Corporation in such bank or banks or depositories as the
board of directors may direct.
(C) The treasurer may sign, for the president and other persons as may be
designated for the purpose by the board of directors, all bills of exchange
or promissory notes of the Corporation.
(D) The treasurer shall enter or cause to be entered regularly in the books
of the Corporation a full and accurate account of all monies received and
paid by him or her on account of the Corporation; shall at all times exhibit
his or her books and accounts to any director of the Corporation upon
application at the office of the Corporation during business hours; and,
whenever required by the board of directors or the president, shall render
statements of his or her accounts. The treasurer shall perform such other
duties as may be prescribed from time to time by the board of directors or by
the Bylaws.
(E) If the board of directors require, the treasurer shall give bond for
the faithful performance of his or her duties in such sum and with or without
such surety as shall be approved by the board of directors.
Section 6.13 Assistant Treasurer. The assistant treasurers in the order of
their seniority, unless otherwise determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
have the authority and exercise the powers of the treasurer. They shall
perform such other duties and have such other powers as the board of
directors may from time to time prescribe or the president may from time to
time delegate.
Section 6.14 Registered Agent. The Registered Agent shall serve as the
agent of the Corporation for purposes of receiving service of process or any
demand or notice authorized by law to be served on the Corporation.
Section 6.15 Other Officers. Other officers shall perform such duties and
have such powers as may be assigned to them by the board of directors or the
president.
Section 6.16 Delegation of Duties. If any officer of the Corporation is
absent or unable to act for any other reason the board of directors may deem
sufficient, the board of directors may delegate, for a period of time, some
or all of the functions, duties, powers and responsibilities of any officer
to any other officer, agent or employee of the Corporation or other
responsible person, provided a majority of the whole board of directors
concurs therein.
ARTICLE VII
CONTRACTS, LOANS, DEPOSITS AND CHECKS
Section 7.01 Contracts. The board of directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Corporation and
such authority may be general or confined to specific instances.
Section 7.02 Loans. No loans or advances shall be contracted on behalf of
the Corporation; on negotiable paper or other evidence of its obligation
under any loan or advance shall be issued in its name, and no property of the
Corporation shall be mortgaged, pledged, hypothecated, or transferred as
security for the payment of any loan, advance, indebtedness or liability of
the Corporation unless and except as authorized by the board of directors.
Any such authorization may be general or confined to specific instances.
Section 7.03 Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the board of directors may
select, or as may be selected by an officer or agent authorized to do so by
the board of directors.
<PAGE>32
Section 7.04 Checks and Drafts. All notes, drafts, acceptances, checks,
endorsements, and evidences of indebtedness of the Corporation shall be
signed by such officer or officers, or such agent or agents of the
Corporation and in such manner as the board of directors from time to time
may determine.
ARTICLE VIII
CAPITAL STOCK
Section 8.01 Certificates. Certificates representing shares of the
Corporation shall be issued, in such form as the board of directors shall
determine, to every shareholder for the fully paid shares owned by him.
These certificates shall be signed by the president and the secretary. They
shall be consecutively numbered or otherwise identified; and the name and
address of the person to whom they are issued, with the number of shares and
the date of issue, shall be entered on the stock transfer books of the
Corporation.
Section 8.02 Issuance. Shares (both treasury and authorized but unissued)
may be issued for such consideration (not less than par value) and to such
persons as the board of directors may determine from time to time. Shares
may not be issued until the full amount of the consideration, fixed as
provided by law, has been paid.
Section 8.03 Payment of Shares.
(A) The consideration for the issuance of shares shall consist of money
paid, labor done (including the services actually performed for the
Corporation) or property (tangible or intangible) actually received. Neither
promissory notes nor the promise of future services shall constitute payment
for shares.
(B) In the absence of fraud in the transaction, the judgment of the board
of directors as to the value of consideration received shall be conclusive.
(C) When consideration, fixed as provided by law, has been paid, the shares
shall be deemed to have been issued and shall be considered fully paid and
nonassessable.
(D) The consideration received for shares shall be allocated by the board
of directors, in accordance with law, between stated capital and capital
surplus accounts.
Section 8.04 Subscriptions. Unless otherwise provided in the subscription
agreement, subscriptions for shares, whether made before or after
organization of the Corporation, shall be paid in full at such time or in
such installments and at such times as shall be determined by the board of
directors. Any call made by the board of directors for payment of
subscriptions shall be uniform as to all shares of the same series. In case
of default in the payment on any installment or call when payment is due, the
Corporation may proceed to collect the amount due in the same manner as any
debt due the Corporation.
Section 8.05 Lien. For any indebtedness of a shareholder to the
Corporation, the Corporation shall have a first and prior lien on all shares
of its stock owned by him or her and on all dividends or other distributions
declared thereon.
Section 8.06 Lost, Stolen or Destroyed Certificates. The Corporation shall
issue a new certificate in place of any certificate for shares previously
issued if the registered owner of the certificate: (a) makes proof in
affidavit form that it has been lost, destroyed or wrongfully taken; (b)
requests the issuance of a new certificate before the Corporation has notice
that the certificate has been acquired by a purchaser for value in good faith
and without notice of an adverse claim; (c) gives a bond in such form, and
with such surety or sureties, with fixed or open penalty, as the Corporation
may direct, to indemnify the Corporation (and its transfer agent and
registrar, if any) against any claim that may be made on account of the
alleged loss, destruction or theft of the certificate; and (d) satisfies any
other reasonable requirements imposed by the Corporation. When a certificate
has been lost, apparently destroyed or wrongfully taken, and the holder of
record fails to notify the Corporation within a reasonable time after he or
she has notice of it, and the Corporation registers a transfer of the shares
represented by the certificate before receiving such notification, the holder
of record is precluded from making any claim against the Corporation for the
transfer or for a new certificate.
Section 8.07 Registration of Transfer. The Corporation shall register the
transfer of a certificate for shares presented to it for transfer if: (a) the
certificate is properly endorsed by the registered owner or by his or her
duly authorized attorney; (b) the signature of such person has been notarized
and reasonable assurance is given that such endorsements are effective; (c)
the Corporation has no notice of an adverse claim or has discharged any duty
to inquire into such a claim; (d) any applicable law relating to the
collection of taxes has been complied with; and (e) there is an opinion of
counsel satisfactory to counsel of the Corporation that such transfer is made
in accordance with all federal and state securities regulations.
<PAGE>33
Section 8.08 Registered Owner. Prior to due presentment for registration
of transfer of a certificate for shares, the Corporation may treat the
registered owner as the person exclusively entitled to vote, to receive
notices and otherwise to exercise all the rights and powers of a shareholder.
Section 8.09 Transfer of Shares. Transfer of shares of the Corporation
shall be made only in the stock transfer books of the Corporation by the
holder of record thereof or by his or her legal representative, who shall
furnish proper evidence of authority to transfer, or by his attorney therein
authorized by power of attorney duly executed and filed with the secretary of
the Corporation and on surrender for cancellation of the certificate for such
shares. The person in whose name the shares stand on the books of the
Corporation shall be deemed by the Corporation to be the owner thereof for
all purposes by the stock transfer books shall be in the possession of the
secretary or transfer agent or clerk of the Corporation.
Section 8.10 Transfer Agent and Registrar. By resolution of the board of
directors, the Corporation may from time to time appoint a transfer agent,
and, if desired, a registrar, who will perform his or her duties in
accordance with the terms and conditions the board of directors deems
advisable; provided, however, that until and unless the board of directors
appoints some other person, firm or Corporation as its transfer agent, the
secretary of the Corporation shall act as transfer agent without the
necessity of any formal action of the board of directors and he or she shall
perform all of the duties thereof.
ARTICLE IX
INDEMNIFICATION
Section 9.01 Indemnification.
(A) No officer or director shall be personally liable for any
obligations of the Corporation or for any duties or obligation of the
Corporation or for any duties or obligations arising out of any actions or
conduct of such officer or director performed for or on behalf of the
Corporation.
(B) The Corporation shall and does hereby indemnify and hold harmless
each person and his or her heirs and administrators who shall serve at any
time hereafter as a director or officer of the Corporation from and against
any and all claims, judgments and liabilities to which such person shall
become subject by reason of his or her having heretofore or hereafter been a
director or officer of the Corporation or by reason of any action alleged to
have heretofore or hereafter been taken or admitted to have been taken by him
or her as such director or officer, and shall reimburse each such person for
all legal and other expenses reasonably incurred by him or her in connection
with any such claim or liability, including power to defend such person from
all suits or claims as provided for under the laws of the State of Wyoming;
provided, however, that no such person shall be indemnified against, or be
reimbursed for, any expense incurred in connection with any claim or
liability arising out of his or her negligence or willful misconduct. The
rights accruing to any person under the foregoing provisions of this section
shall not exclude any other right to which he or she may lawfully be
entitled, nor shall anything herein contained restrict the right of the
Corporation to indemnify or reimburse such person in any proper case, even
though not specifically herein provided. The Corporation, its directors,
officers, employees and agents shall be fully protected in taking any action
or making any payment in reliance upon the advice of counsel.
Section 9.02 Other Indemnification. The indemnification herein provided
shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any Bylaw, agreement, vote of
shareholders, or disinterested directors, or otherwise, both as to action in
his or her official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent, and shall inure to the benefit of the
heirs, executors and administrators of such person.
Section 9.03 Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation or is or who was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity,
or arising out of his or her status as such, whether or not the Corporation
would have the power to indemnify him or her against liability under the
provisions of this section or of the laws of the State of Wyoming.
Section 9.04 Settlement by Corporation. The right of any person to be
indemnified shall be subject always to the right of the Corporation by its
board of directors, in lieu of such indemnity, to settle any claim, action,
suit or proceeding at the expense of the Corporation by the payment of the
amount of such settlement and the cost and expense incurred in connection
therewith.
<PAGE>34
ARTICLE X
GENERAL PROVISIONS
Section 10.01 Dividends and Reserves.
(A) Subject to statute, the Articles of Incorporation and these Bylaws,
dividends may be declared by the board of directors at any regular or special
meeting and may be paid in cash, in property, or in shares of the
Corporation. The declaration and payment shall be at the discretion of the
board of directors.
(B) By resolution, the board of directors may create such reserve or
reserves out of the earned surplus of the Corporation as the directors from
time to time, in their discretion, think proper to provide for contingencies,
or to equalize dividends, or to repair or maintain any property of the
Corporation, or for any other purpose they think beneficial to the
Corporation. The directors may modify or abolish any such reserve in the
manner in which it was created.
Section 10.02 Books and Records. The Corporation shall keep correct and
complete books and records of account, shall keep minutes of the proceedings
of its shareholders and board of directors, and shall keep at its registered
office or principal place of business, or at the office of its transfer agent
or registrar, a record of its shareholders, giving the names and addresses of
all shareholders and the number and class of shares held by each.
Section 10.03 Annual Statement. The board of directors shall mail to each
shareholder of record, at least ten days before each annual meeting a full
and clear statement of the business and condition of the Corporation,
including a reasonably detailed balance sheet, income statement, surplus
statement, and statement of changes in financial position, for the last
fiscal year and for the prior fiscal year, all prepared in conformity with
generally accepted accounting principals applied on a consistent basis.
Section 10.04 Checks and Notes. Checks, demands for money and notes of the
Corporation shall be signed by officer(s) or other person(s) designated from
time to time by the board of directors.
Section 10.05 Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the board of directors.
Section 10.06 Seal. The corporate seal of the Corporation (of which there
may be one or more exemplars) shall contain the name of the Corporation and
the name of the state of incorporation. The seal may be used by impressing
it or reproducing a facsimile of it, or otherwise.
Section 10.07 Amendment of Bylaws.
(A) These Bylaws may be altered, amended or repealed at any meeting of the
board of directors at which a quorum is present, by the affirmative vote of a
majority of the directors present at such meeting, provided notice of the
proposed alteration, amendment, or repeal is contained in the notice of the
meeting.
(B) These Bylaws may also be altered, amended or repealed at any meeting
of the shareholders at which a quorum is present or represented, by the
affirmative vote of the holders of a majority of the shares present or
represented at the meeting and entitled to vote thereat, provided notice of
the proposed alteration, amendment or repeal is contained in the notice of
the meeting.
Section 10.08 Construction. Whenever the context so requires, the
masculine shall include the feminine and neuter, and the singular shall
include the plural, and conversely. If any portion of these Bylaws shall be
invalid or inoperative, then, so far as is reasonable and possible: (a) the
remainder of these Bylaws shall be considered valid and operative and (b)
effect shall be given to the intent manifested by the portion held invalid or
inoperative.
Section 10.09 Table of Contents; Headings. The table of contents and
headings are for organization, convenience and clarity. In interpreting
these Bylaws, they shall be subordinated in importance to the other written
material.
Section 10.10 Relation to Articles of Incorporation. These Bylaws are
subject to and governed by the Articles of Incorporation.
<PAGE>35
Adopted by the directors on this day of January, 1995.
- --------------------------------
Director
- --------------------------------
Director
<PAGE>36
PINNACLE RESOURCES, INC.
INCORPORATED UNDER THE LAWS OF WYOMING
NO. SHARES
THIS CERTIFIES THAT is the owner of
Shares of the Capital Stock of PINNACLE RESOURCES, INC. transferable only on
the books of the Corporation by the holder hereof in person or by Attorney
upon surrender of this Certificate preperly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation this day of A.D.
