United States
U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Design Products, Inc.
Formerly "Entertainment Land, U.S.A. Incorporated"
(Exact name of registrant as specified in its charter)
Nevada 84-1431073
________________________________ ________________
(State or other jurisdiction of (I.R.S. employer identification
incorporation or organization) number)
1547 East Boulder Springs, St. George, UT 84790
(Address of principal executive offices)
Issuer's Telephone Number: (435) 656-3124
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered: n/a
Name of exchange on which each class is to be registered: n/a
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001 per share
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1 - DESCRIPTION OF BUSINESS
GENERAL
Design Products, Inc., (the "Company") was incorporated under the laws of
the State of Nevada on August 18, 1993 under the name of Entertainment Land
U.S.A. Incorporated. On August 4, 1997, Entertainment Land U.S.A. Incorporated
undertook a corporate name change, changing the name of the Company to Design
Products, Inc. The Company sells artistically designed and uniquely worded
"special awards" in the form of certificates, posters and cards for youth
basketball, football, soccer and baseball programs. The company has created
award certificates for use in the public school systems as well as for
various public and private music programs.
PRINCIPAL MARKETS AND PRODUCTS
The Company markets certificates created for private music teachers and
educators that are awarded to their students. Certificates are also marketed
in the school systems to reward scholastic achievement. The Company markets
certificates designed for use by music instructors in all areas of music study.
The Company's main focus has been large groups that would benefit from the
creation of a unique certificate reflecting the goals of their particular
organization. City-sponsored sports programs, volunteer programs and music
programs have been specifically targeted.
METHODS OF DISTRIBUTION
The Company's business is dependent upon management's ability to contact
organizations, create award certificates and deliver finished certificates. The
company relies on its personal representatives to make these contacts primarily
through telephone listings, followed by a personal visit and sales
presentation. The Company also relies on publicity (via word of mouth) to
bring awareness of the Company's products to its potential clientele. When the
Company is able to better identify and focus on more specific markets it will
adjust its distribution methods accordingly. The Company will look to expand its
operations by focusing on new communities and their sports, music and dance
programs.
SUPPLIERS
The Company obtains its designs by utilizing in-house artists obtaining
high-quality reproduction through color laser printers and computer
graphics. Because each certificate created is unique, it is not easily
reproduced by persons outside the company. A printing company currently
does the mass printing of the certificates once a market has been established.
COMPETITION
The business of selling certificates, posters and cards is intensely
competitive in all of its phases, and the Company will be competing with
several firms providing such services. The Company will be at a disadvantage
with other companies having larger technical staffs, established market
shares and greater financial operational resources than the Company.
Management believes that its lower operational costs will enable the
Company to compete because of low overhead. The company also keeps
advertising expenses to a minimum by relying on word of mouth advertising.
In addition, the Company believes it has two competitive advantages:
a. Service. The Company believes that having personal representatives
anticipating the seasonal need for the sports awards and music recitals will
create a convenience for the customer. The ability to offer a one on one
consultation with the client will be to the advantage of the Company. By
addressing the needs of each individual client and working with them on a
personal level, thecompany can provide for their specific needs.
b. Quality. The Company realizes that the success of any business is
dependent upon the quality of its product. The Company utilizes the services of
an excellent printing company, using quality paper and color laser printing. The
Company believes because of the unique, creative nature of their product,
organizations are attracted to using the Company's certificates.
SEASONALITY
The Company benefits from year-round activity in the sports, music and
education fields.
EMPLOYEES
The Company currently has four employees. President Kelly Fox is
responsible for creating the original artwork on the certificates.
Secretary/Treasurer Kristine Gornichec is responsible for production.
Directors Shirley Anderson and Clark Chipman are responsible for marketing
and sales. None of these individuals devote their full time to the affairs
of the Company at this time. As growth of the Company continues, additional
employees will be added when necessary.
The Company has no contractual obligations with any labor unions nor are
its employees represented by organized labor. The Company recognizes that its
continued success will depend in large measure on its ability to attract and
retain qualified personnel. Management believes that its employee relations are
very good.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
The Company currently operates at the resident address of Kristine
Gornichec, Secretary/Treasurer, at 1547 East Boulder Springs, St. George,
UT 84790. The Company's principal business is creating and providing award
certificates to sports, music, dance and educational programs.
The following is a discussion of the results of operations for the year
ended December 31, 1998, compared to the year ended December 31, 1997.
The Company had no revenues in either 1997 or 1998. The Company is still
in the development stage and has been devoting most of its efforts towards
creating award certificates and producing them in cost efficient quantities.
In the coming year, the Company plans to devote more of its efforts towards
marketing its product.
The Company did not commence operations until 1998 during which year it
incurred expenses of $11,315.00.
The Company had no net income for the year ended December 31, 1998.
Unused cash from the Company's securities offering as of December 31, 1998
was $5,994.00
PLAN OF OPERATION
During the next twelve months, the Company's plan of operation is
dependent upon the management's ability to contact organizations and
individuals, present a sales plan, take orders and deliver the product.
During the next twelve months, the Company is looking to increase its
market by locating new areas of interest that would benefit from the award
certificates. Although it is feasible that the Company may look into
expanding the range of its products at a future date, management desires to
focus solely on the creation of award certificates at this time.
During the next twelve months, the Company's primary cash requirements
will include its need to out source the printing of the award certificates.
The Company has an agreement with Competitive Image, Inc., in Las Vegas,
Nevada, print the bulk of the award certificates. At some future date, if
profitability is achieved, management will consider the purchase or lease of
a color laser printer. This is contingent upon achieving a much greater
volume of certificate orders than now exists as well as miscellaneous overhead.
Management believes that the Company's existing cash resources and cash
generated from operations will be sufficient to fund the company's ongoing
operations through the remainder of 1999 and be sufficient to provide for the
foregoing cash requirements for day to day operations in the next twelve months.
There is no guarantee that the budgeted funds will be sufficient to achieve
these goals.
The Company may require additional funds and time to achieve
profitability. Even if the Company begins generating revenues, it could
require additional funding for expansion. The Company may find it difficult
to succeed in securing additional financing. The Company may be able to
attract some private investors, or an officer and/or director may be willing
to make additional cash contributions, advancements or loans or, as an
alternative, the company could attempt some form of debt equity financing.
ITEM 3 - DESCRIPTION OF PROPERTY
The Company's executive offices are located at the residence address of
one of its officers at 1547 East Boulder Springs, St. George, UT 84790. The
Company utilizes storage area for its inventory at this location without
charge to the Company.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 15, 1999,
with respect to the beneficial ownership of the common stock by each officer
and director of the Company, each person (or group of persons whose shares are
required to be aggregated) known to the Company to own beneficially, more than
5% of the Company's Common Stock, and the name and share holdings of each
Officer and Director, and all Officers and Directors as a group. Unless
otherwise noted, the persons named below have sole voting and investment power
with respect to the shares shown as beneficially owned by them.
Title of Class Name & Address Amount & Nature Percent of Class
of Beneficial Owner of Beneficial Owner
___________________________________________________________________________
Common Kelly Fox <F1> 1,000,000<F2> 17.9%
711 E. 1050 S. Circle
St. George, UT 84790
Common Kristine Gornichec <F1> 3,000,000<F3> 53.6%
1547 E. Boulder Springs Rd.
St. George, UT 84790
Common Ronald Drake 350,000 6.3%
3204 Avalon Ave.
Las Vegas, NV 89107
Common Lisa-Lotte Newell 350,000 6.3%
6897 E. Mesquite Ave.
Las Vegas, NV 89110
Common Suzanne Pancheri 400,000 7.1%
1111 Warbonnet Way, Ste. 224
Las Vegas, NV 89117
______
All officers and directors as a group (3 persons) 4,007,500
______________________________________
<F1> President, Officer and a Director of the Company
<F2> These shares are restricted
<F3> These shares are control stock for which the resale is limited under
Rule 144(e) to 1% of the shares outstanding every 90 days.
CHANGES IN CONTROL
The Company has no arrangements which might result in a change in control
of the Company.
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth certain information with respect to each
of the Directors, Executive Officers of the Company, their ages, and all
positions with the Company.
Name Age Position
_______________________________________________________________________
Kelly Fox 39 President and a Director
711 E. 1050 S. Circle
St. George, UT 84790
Kristine Gornichec 50 Secretary/Treasure and a
1547 E. Boulder Springs Rd. Director
St. George, UT 84790
Shirley Anderson 69 Director
1487 Tamarisk Drive
St. George, UT 84790
Clark Chipman
287 Mountain Park Dr. S.E. 55 Director
Calgary, Alberta Canada
T2Z 2L3
Kelly Fox, age 39 is President and a director of the Company and is the
sister of Kristine Gornichec, Secretary/Treasurer of the Company and the
daughter of Shirley Anderson, director of the Company. Attending Utah State
University from 1978 to 1979 she studied commercial art, graphic design and
illustration. From 1979 to 1980 Ms. Fox worked as a jewelry designer for the
O.C. Tanner Company in Salt Lake City, Utah. In addition to her
responsibilities as a jewelry designer, Ms. Fox worked in the areas of
technical drawing, logo design, medallion design and art direction. In 1983,
Ms. Fox graduated from Southern Utah University with a Bachelor of Arts
Degree in Education with a minor in art and child development. From 1983 to
1987 Ms. Fox worked as a sixth grade teacher for the Granite School District
in Salt Lake City, Utah. In this capacity, she oversaw the art program as
the art specialist. In addition, she functioned as the artist-in-residence
faculty coordinator, working closely with the school district in implementing
art programs. Ms. Fox was also the annual art contest coordinator for her
school. In 1994, Ms. Fox accepted a position with the Washington County
School District as a fifth grade teacher where she served for four years as
the grade level art specialist. She was also the school-wide representative for
the school district Arts in Education Committee. She continues to teach as an
art specialist in the Alpine School District in Pleasant Grove, Utah.
Recently, Ms. Fox broadened her artistic profile in the areas of paper mache'
sculpture where she designed a line of unique fish sculptures that have been
sold privately to collectors. She contracts with companies and individuals to
do lettering, calligraphy and has been commissioned to design logos,
letterhead and business cards. Ms. Fox recently designed a new logo for the
Washington County School District. Ms.Fox is in demand in the Southern Utah
area to create logos for businesses and doctor's offices. Additionally, her
areas of emphasis include scenery design and painting, poster and publicity,
book illustrations and web site designs. For many years, Ms. Fox has created
a line of greeting cards. As an artist, Ms. Fox is an adept painter,
utilizing the acrylic and water color mediums. She also works with pen,
pencil and ink drawings and has experience with technical drawings.
Kristine Gornichec, age 50, is Secretary/Treasurer and a director of the
Company and is the sister of Kelly Fox, President of the Company and the
daughter of Shirley Anderson, director of the Company. Ms. Gornichec
attended Brigham Young University from 1967 to 1968 and graduated in 1972
from Southern Utah University, Cedar City, Utah with a Bachelor of Arts
degree in music. Ms. Gornichec has 9 hours toward her master's degree.
Ms. Gornichec has been a piano teacher since 1967 and also plays the flute
and piccolo. Ms. Gornichec has worked extensively with choirs in school,
church and the community as a conductor or accompanist. Ms. Gornichec was
instrumental in bringing a music curriculum to Dixie Jr. High School in St.
George, Utah, and taught vocal music to Junior High School students at Dixie
Jr. High from 1972 to 1974. Mrs. Gornichec taught vocal music to Sr. High
School students at Dixie High School from 1977 to 1982 and taught Jr. High
School students at Dixie Jr. High School from 1987 to 1988 in St. George,
Utah. Ms. Gornichec was the conductor and creator of a pop performing group,
"Spirit" in St. George, Utah from 1977 to 1982 which group performed
extensively throughout the West. Ms. Gornichec taught in a church
affiliated seminary program for three years in Las Vegas, Nevada
intermittently from 1993 to 1996. Ms. Gornichec's professional
accomplishments and recognitions include: "The Music Man" which she directed
as a consultant to the American Samoa Community College in 1987; performed in
"Oliver" in August of 1995 at Spring Mountain Ranch summer theater in Las
Vegas, Nevada; accompanist for Greenspun Jr. High Choirs from 1992 to 1994;
performed recently in Southern Nevada Musical Arts Society's production of
"H.M.S. Pinafore" and has been a member of the Southern Utah University
National Alumni Board since 1994. Ms. Gornichec was a former assistant
director and member of Southern Nevada Musical Arts Society Singers and
Chorus. She is currently invovled as a singer and assistant conductor with the
Southern Utah Heritage Choir, which performed in 1998, at Carnegie Hall in New
York City, New York. Ms. Gornichec has been editing books and manuscripts
for publication since 1993 to the present. Ms. Gornichec either has served
or continues to serve as an officer and/or director of a number of
development stage companies, some of which have been listed for trading.
Shirley Anderson, age 69, is a Director of the Company and is the mother
of Kelly Fox and Kristine Gornichec. Ms. Anderson attended Brigham Young
University in Provo, UT in 1948 where she majored in drama. The next several
years were spent in raising her five children as the family moved frequently
as a result of her husband's assignments in the U.S. Air Force. During this
time, Ms. Anderson served as president of the Officers Wives Club Association
at Chanute Air Force Base from 1958 to 1960. She also volunteered as an
activities specialist at several hospitals and nursing homes, among them
being the Utah State Mental Hospital in Provo, Utah. From 1965 to 1967, Ms.
Anderson obtained her real estate license and worked in the Washington D.C.
area. When the family moved to Salt Lake City, Utah, Ms. Anderson worked as
the office manager for the Sansom Dental Clinic from 1976 to 1980. From her
experience in drama, Ms. Anderson began working in the film industry in 1981
when the family moved to St. George, Utah. Because of its unique red rock
formations, St. George was popular with film directors as a shooting
location. Ms. Anderson worked on a contract per film basis on several
movies. In 1981, she worked as an assistant Art and Set Director for S.R.I.
Film Productions, Keith Merrill, Hollywood, California. In 1984, she served
as the assistant Film Production Coordinator for Titus Productions out of
New York City, New York in 1988. Ms. Anderson served as a Film Production
Coordinator with Dayton/Stweard Films, Inc. based in St. George, Utah in
1988 through 1989. Ms. Anderson then served as Public Relations Director
for Dixie Rural Electric Association in St. George, Utah, from 1986 to 1987.
From 1986 unit 1988, Ms. Anderson was a member to the City Planning
Commission with the City of St. George, Utah and served on the Board of the
State Red Cross Service Council in Salt Lake City, Utah from 1995 through 1997.
Since 1991 to the present time, Ms. Anderson has worked as a Victim's
Advocate assisting victims of domestic violence and rape in St. George, Utah.
She also serves as a volunteer at the Dixie Regional Mediacl Center in St.
George, Utah.
Clark Chipman, age 55, is a Director of the Company and resides in Calgary,
Alberta, Canada. From 1967 to 1971, Mr. Chipman attended Brigham Young
University in Provo, Utah. For twenty-five years he has worked in the
retain manufacturing industry both as a manufacturing representative and in
management. In 1978, Mr. Chipman opened his own retail clothing store
called Chipman's Broadway. From 1990 to the present, Mr. Chipman has
worked as an independent insurance broker and manages the Birnco Financial
Group. In that capacity, he sells life and disability insurance and manages
investments.
FAMILY RELATIONSHIPS
Kelly Fox, President of the Company, is the sister of Kristine
Gornichec, the Secretary/Treasurer. Shirley Anderson, a director, is the
mother of both Kelly Fox and Kristine Gornichec. Clark Chipman, a director, is
the father of Kristine Gornichec's daughter-in-law.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To the best of management's knowledge, during the past five years, no
present or former director or executive officer of the company
(1) Has filed a petition under federal bankruptcy laws or any state
insolvency law, had a receiver, fiscal agent or similar officer appointed by a
court for the business or property of such person, or any partnership in which
she was a general partner at or within two years before the time of such filing,
or any corporation or business association of which she was an executive
officer at or within two years before the time of such filing;
(2) Was convicted in a criminal proceeding or named the subject of a
pending criminal proceeding (excluding traffic violations and other minor
offences);
(3) Was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining her from otherwise limiting her
involvement in any type of business, securities or banking activities; or
(4) Was found by a court of competent jurisdiction in a civil action, by
the Securities and Exchange Commodity Futures Trading Commission to have
violated any federal or state securities law.
ITEM 6 - EXECUTIVE COMPENSATION
The following table sets forth the compensation received by the Company's
officers and directors since inception in August 1993. There are no other
officers of the Company who have been paid any compensation.
Name and Principal All other
Position Compensation Year
__________________________________________________________________________
Kelly Fox $500.00<F1> 1998
President -0- 1997
Kristine Gornichec $500.00<F1> 1998
Secretary/Treasurer -0- 1997
Shirley Anderson $500.00<F1> 1998
Director -0- 1997
Clark Chipman $500.00<F1> 1998
Director -0- 1997
_________________________________________________
<F1> Ms. Fox, Ms. Gornichec, Ms. Anderson and Mr. Chipman received $500.00
each for compensation for their assistance in the organization of the Company.
The total of $2,000.00 was paid in November 1998. No additional compensation in
any other form has been paid nor is there currently any plan or arrangement for
future compensation.
OPTIONS/SAR GRANTS
No stock options or stock appreciation rights were granted to any
executive officer since its inception through the present date.
AGGREGATE OPTION/SAR EXERCISES AND FISCAL YEAR END OPTION/SAR VALUE TABLE
Not Applicable.
LONG TERM INCENTIVE PLANS
No long term incentive plans are in effect. Therefore, no awards have been
given to any executive officer in the past year.
COMPENSATION OF DIRECTORS
The only fees paid to directors were paid in November 1998 for
compensation for assistance in the formation of the Company. the Company pays
no fees to members of the Company's Board of Directors for the performance
of their duties as directors. The Company has not established committees of
the Board of Directors.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
The Company has no employment contracts in effect with any of the members
of its Board of Directors or its executive officers nor are there any
agreements or understandings with such persons regarding termination of
employment or change-in-control arrangement.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no material transactions in the past two years or proposed
transactions to which the Company has been or proposed to be a party in which
any officer, director, nominee for officer or director, or security holder of
more than 5% of the Company's outstanding securities is involved.
The Company has no promoters other than its President, Kelly Fox, its
Secretary/Treasurer, Kristine Gornichec, and a Director, Shirley Anderson.
There have been no transactions which have benefited or will benefit Ms. Fox,
Ms. Gornichec, or Ms. Anderson directly.
TRANSACTIONS BETWEEN THE COMPANY AND MANAGEMENT
Each of the officers and directors of the Company are engaged in other
businesses, either individually or through partnerships and corporations in
which they have an interest, hold an office or serve on Boards of Directors to
which they devote substantial time. Certain conflicts of interest may arise
between the Company and its officers and directors with respect to the time
commitment which management is able to devote to the Company.
The Company will attempt to resolve any such conflicts of interest in
favor of the Company. The officers and directors of the Company are
accountable to it and its shareholders as fiduciaries, which requires that
such officers and directors exercise good faith and integrity in handling
the Company's affairs. A shareholder may be able to institute legal action
on behalf of the Company or on behalf of itself and all other similarly
situated shareholders to recover damages or for other relief in cases of
the resolution of conflicts in any manner prejudicial to the Company.
Prior to this Offering, the Company issued $4,000,000 shares of its common
stock in reliance on the "private placement" exemption of the Section 4(2) of
the Securities Act of 1933, as amended for services and assets valued at
$.001 per share. The shares were issued 3,000,000 shares to Kristine
Gornichec, Secretary/Treasurer and Director of the Company for services
rendered in connection with the organization of the Company and the
developments of its business plan; and 1,000,000 shares were issued to Kelly
Fox, President and Director of the Company for the acquisition of over 50
uniquely worded posters and/or award certificates with artistic design
acquired from Kelly Fox.
ITEM 8 - LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings and,
to the best of its knowledge, no such action by or against the Company has been
threatened. None of the Company's officers, directors, or beneficial owners of
5% or more of the Company's outstanding securities is a party adverse to the
Company nor do any of the foregoing individuals have a material interest adverse
to the Company.
ITEM 9 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company has no public trading market for its common stock. Although
the company intends to seek a quotation for its common shares on the
Over-the-Counter Bulletin Board in the futures, there is no assurance the
Company will do so, nor is there any assurance that should the Company
succeed in obtaining a listing for its securities on the OTC Bulletin Board or
on some other exchange, that a trading market for the Company's stock will
develop. There are no outstanding option, warrants to purchase, or securities
convertible into common equity of the Company outstanding. The Company has not
agreed to register any shares of is common stock for any shareholder.
STOCKHOLDERS
The Company's transfer agent, Pacific Stock Transfer Company, 3690 S.
Eastern Ave., Suite 218, Las Vegas, NV 89109, confirms that as of May 13,
1999, there are 42 shareholders of record for the Company.
DIVIDENDS
To date, the Company has not paid any dividends on its common stock. The
payment of dividends, if any, in the future is within the discretion of the
Board of Directors and will depend upon the Company's earning, its capital
requirements and financial condition and other relevant factors. The Board
does not intend to declare any dividends in the foreseeable future, but,
instead, intends to retain all earnings, if any, for use in the Company's
business operations. Under Nevada Corporate Law, dividends may be paid out of
surplus or, in case there is no surplus, out of net profits for the fiscal year
in which the dividend is declared and/or the proceeding fiscal year.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
On August 18, 1993, in connection with its organization, the Company
exchanged 4,000,000 shares of its common stock at $.001. On August 27, 1998,
1,600,000 shares were sold pursuant to an offering under Rule 504 of
Regulation D at $.01.
ITEM 11 - DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 25,000,000 shares
of common stock, $.001 par value per share. The holders of common stock (i)
have equal ratable rights to dividends from funds legally available
therefore, when, as and if declared by the Board of Directors of the Company;
(ii) are entitled to share ratably in all of the assets of the Company
available for distribution or winding up of the affairs of the Company; (iii)
do not have preemptive subscription or conversion rights and there are no
redemption or sinking fund applicable thereto; and (iv) are entitled to one
non-cumulative vote per share, on all matters which shareholders may vote on
at all meetings ofshareholders.
NON-CUMULATIVE VOTING
Holders of Shares of Common Stock as such, have no conversion, preemptive
or other subscription rights, and there are no redemption provisions applicable
to the Common Stock. The Company has not issued any Preferred Stock. However,
the Preferred Stock, if issued, may contain special preferences as determined
by the Board of Directors of the Company, including, but not limited to, the
bearing of interest and convertibility into Shares of Common Stock of the
Company.
The holders of Shares of common stock of the Company do not have
cumulative voting rights which means that the holders of more than fifty
percent (50%) of such outstanding Shares, voting for the election of
directors, can elect all of the directors to be elected, if they so choose,
and, in such event, the holders of the remaining Shares will not be able to
elect any of the Company's directors.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
A. Indemnification provided by statute:
Sections 78.037, 78.295, 78.300, 78.7502, 78.751 and 78.752 of the Nevada
Revised Statutes offer limitation of liability protection for officers and
directors and/or indemnification protection of officers, directors, employees
and agents of the Company, and provide as follows:
NRS 78.037. Articles of incorporation: Optional provision. The articles of
incorporation may also contain:
1. A provision eliminating or limiting the personal liability of a
director or officer to the corporation or its stockholders for damages for
breach of fiduciary duty as a director or officer, but such a provision must not
eliminate or limit the liability of a director or officer for:
(a) Acts or omissions which involve intentional misconduct, fraud or
a knowing violation of the law; or
(b) The payment of distributions in violation of NRS 78.300.
2. Any provision, not contrary to the laws of this state, for the
management of the business and for the conduct of the affairs of the
corporation, and any provision creating, defining, limiting or regulating the
powers of the corporation or the rights, powers or duties of the directors, and
the stockholders, or any class of the stockholders, or the holders of bonds or
other obligations of the corporation, or governing the distribution or division
of the profits of the corporation.
NRS 78.295. Liability of directors for declaration of distributions. A director
is fully protected in relying in good faith upon the books of account of the
corporation or statements prepared by any of its officials as to the value and
other facts pertinent to the existence and amount of money from which
distributions may properly be declared.
NRS 78.300. Liability of directors for unlawful distributions.
1. The directors of a corporation shall not make distributions to
stockholders except as provided by this chapter.
2. In case of any willful or grossly negligent violation of the provisions
of this section, the directors under whose administration the violation
occurred, except those who caused their dissent to be entered upon the minutes
of the meeting of the directors at the time, or who not then being present
caused their dissent to be entered on learning of such action, are jointly and
severally liable, at any time within 3 years after each violation, to the
corporation, and, in the event of its dissolution or insolvency, to its
creditors at the time of the violation, or any of them, to the lesser of the
full amount of the distribution made or of any loss sustained by the corporation
by reason of the distribution to stockholders.
NRS 78.7502. Discretionary and mandatory indemnification of officers,
directors, employees and agents: General provisions.
1. A corporation may indemnify any person who was or is a party of is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or is or 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 expenses,including attorneys fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or 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 expenses, including amounts paid in
settlement and attorneys fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation. Indemnification may not be
made for any claim, issue of matter as to which such a person has been
adjudged by a court of competent jurisdiction, after exhaustion of all
appeals therefrom, to be liable to the corporation or for amounts paid in
settlement to the corporation, unless and only to the extent that the court in
which the action or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnity for such expenses as
the court deems proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense of
any claim, issue or matter therein, the corporation shall indemnify him against
expenses, including attorneys fees, actually and reasonably incurred by him
in connection with the defense.
NRS 78.751. Authorization required for discretionary indemnification;
advancement of expenses; limitation on indemnification and advancement of
expenses.
1. Any discretionary indemnification under NRS 78.7502 unless ordered by
a court or advanced pursuant to subsection 2, may be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the action, suit or
proceeding;
(c) If a majority vote of a quorum consisting of directors
who were not parties to the action, suit or proceeding so orders, by
independent legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not
parties to the action, suit or proceeding cannot be obtained, by
independent legal counsel in a written opinion.
2. The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
3. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be entitled
under the articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an
action in his official capacity or an action in another capacity
while holding his office, except that indemnification, unless ordered
by a court pursuant to NRS 78.7502 or for the advancement of expenses
made pursuant to subsection 2, may not be made to or on behalf of
any director or officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
NRS 78.752. Insurance and other financial arrangements against liability of
directors, officers, employees and agents.
1. A corporation may purchase and maintain insurance or make other
financial arrangements on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or 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 for any
liability asserted against him and liability and expenses incurred by him in his
capacity as a director, officer, employee or agent, or arising out of his
status as such, whether or not the corporation has the authority to indemnify
him against such liability and expenses.
2. The other financial arrangements made by the corporation pursuant to
subsection 1 may include the following:
(a) The creation of a trust fund.
(b) The establishment of a program of self-insurance.
(c) The securing of its obligation of indemnification by
granting a security interest or other lien on any assets of the
corporation.
(d) The establishment of a letter of credit, guaranty or
surety.
No financial arrangement made pursuant to this subsection may provide
protection for a person adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable for intentional
misconduct, fraud or a knowing violation of law, except with respect to
the advancement of expenses or indemnification ordered by a court.
3. Any insurance or other financial arrangement made on behalf of a person
pursuant to this section may be provided by the corporation or any other person
approved by the Board of Directors, even if all or part of the other person
stock or other securities is owned by the corporation.
4. In the absence of fraud:
(a) The decision of the board of directors as to the
propriety of the terms and conditions of any insurance or other
financial arrangement made pursuant to this section and the choice of
the person to provide the insurance or other financial arrangement is
conclusive; and
(b) The insurance or other financial arrangement:
(1) Is not void or voidable; and
(2) Does not subject any director approving it to
personal liability for his action, even if a director approving
the insurance or other financial arrangement is a beneficiary of
the insurance or other financial arrangement.
5. A corporation or its subsidiary which provides self-insurance for
itself or for another affiliated corporation pursuant to this section is not
subject to the provisions of Title 57 of NRS.
B. Indemnification provided by the Articles of Incorporation
The NINTH article of the Company's Articles of Incorporation limits the
liability exposure of officers and directors of the Company for damages. It
provides as follows: No director or officer of the Corporation shall be
personally liable to the Corporation or any of its stockholders for damages
for breach of fiduciary duty as a director or officer involving any act or
omission of any such director of officer; provided however, that the foregoing
provision shall not eliminate or limit the liability or a director or officer
(i) for acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or (ii) the payment of dividends in violation of
Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of
this Article by the stockholders of the Corporation shall be prospective only
and shall not adversely affect any limitation on the personal liability of a
director or officer of the Corporation for acts of omissions prior to such
repeal or modification.
C. Indemnification provided by the By-Laws of the Company
Article VII, INDEMNIFICATION, of the Company's By-Laws provides for the
following indemnification protections: Except as hereinafter stated
otherwise, the Corporation shall indemnify all of its officers and directors,
past, present and future, against any and all expenses incurred by them, and
each of them including but not limited to legal fees, judgments and penalties
which may be incurred, rendered or levied in any legal action brought against
any or all of them for or on account of any act or omission alleged to have
been committed while acting within the scope of their duties as officers or
directors of this Corporation.
As of the date hereof, the Company has no contracts in effect providing any
indemnitee with any specific rights of indemnification although the Company's
bylaws authorize its Board of Directors to enter into and deliver such contracts
to provide an indemnitee with specific rights of indemnification in addition to
the rights provided in the Articles and Bylaws to the fullest extent provided
under Nevada law. The Company has no special insurance against liability
although the Company's Bylaws provide that the Company may, unless prohibited by
Nevada law, maintain such insurance.
ITEM 13. FINANCIAL STATEMENTS
DESIGN PRODUCTS, INC.
(FORMERLY ENTERTAINMENT LAND U.S.A. INCORPORATED)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
JUNE 30, 1999
(unaudited)
<PAGE>
TABLE OF CONTENTS
Page Number
-----------
ACCOUNTANT'S REPORT........................................1
FINANCIAL STATEMENT:
Balance Sheet.........................................2
Statement of Operations and Deficit
Accumulated During the Development Stage.............3
Statement of Changes in Stockholders' Deficit.........4
Statement of Cash Flows...............................5
Notes to the Financial Statements.....................6
<PAGE>
DAVID E. COFFEY 3651 Lindell Rd. - Suite H Las Vegas, NV 89103
CERTIFIED PUBLIC ACCOUNTANT (702) 871-3979
To the Board of Directors and Stockholders of
Design Products, Incorporated
Las Vegas, Nevada
I have compiled the balance sheet of Design Products, Inc. as of June 30,
1999 and the related statements of operations, cash flows and changes in
stockholders' deficit for the period then ended in accordance with Statement
on Standards for Accounting and Review Services issued by the American Institute
of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. I have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
/s/ David Coffey, C.P.A.
David Coffey, C.P.A.
September 7, 1999
<PAGE>
DESIGN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 1999
(UNAUDITED)
ASSETS
Cash $ 4,584
Organizational costs less accumulated
amortization of $4,400 0
-----
Total Assets $ 4,584
=====
LIABILITIES & STOCKHOLDERS' DEFICIT
Accounts Payable: $
Trade 5,000
-----
Total Liabilities 5,000
Stockholders' Deficit
Common stock, authorized 25,000,000 shares
at $.001 par value, issued and outstanding
5,600,000 shares 5,600
Additional paid-in capital 4,970
Deficit accumulated during the
development stage (10,986)
-----
Total Stockholders' Deficit (416)
Total Liabilities and Stockholders' Equity $ 5,739
=====
The accompanying notes are an integral part
of these financial statements.
-2-
<PAGE>
DESIGN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
FOR THE YEAR ENDED JUNE 30, 1999
(With Cumulative Figures From Inception)
(unaudited)
From Inception
Period ended August 18, 1993
June 30,1999 To June 30, 1999
----------------- ----------------
Sales $ 45 $ 45
Expenses
Amortization 0 4,400
Consulting 2,000 2,000
Fees 1,200 1,452
Office expenses 0 1,367
Printing 0 1,812
----- -----
Total expenses 1,200 11,031
Net loss (1,155) (10,986)
=====
Retained earnings,
beginning of period (9,831)
-----
Deficit accumulated during
the development state $ (10,986)
========
Earnings (loss) per share
assuning dilution:
Net loss $ (.00) $ (.00)
=== ===
Weighted average shares outstanding 5,600,000 4,866,666
========= =========
The accompanying notes are an integral part of
these financial statements.
-3-
<PAGE>
DESIGN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM Aug. 18, 1993 (Date of Inception)
To June 30, 1999
Additional
Common Stock Paid-in
Shares Amount Capital Total
---------- ------ ------- -----
Balance,
August 18, 1993 0 $ 0 $ 0 $ ---
Issuance of common
stock for services 4,000,000 4,000 0 4,000
Less net loss 0 --- --- (367)
--------- ----- ----- -----
Balance,
December 31, 1993 4,000,000 4,000 0 3,633
Less net loss 0 0 0 (880)
Balance,
December 31, 1994 4,000,000 4,000 0 2,753
Less net loss 0 0 0 (880)
--------- ----- ----- -----
Balance,
December 31, 1995 4,000,000 4,000 0 1,873
Less net loss 0 0 0 (880)
--------- ----- ----- -----
Balance,
December 31, 1996 4,000,000 4,000 0 993
Less net loss 0 0 0 (880)
Balance,
December 31, 1997 4,000,000 4,000 0 113
Issuance of common
stock for cash 1,600,000 1,600 14,400 16,000
Less offering cost 0 0 (9,430) (9,430)
Less net loss 0 0 0 (5,944)
--------- ----- ----- -----
Balance,
December 31, 1998 5,600,000 $ 5,600 $ 4,970 $ 739
Less net loss 0 0 0 (1,155)
-------- ------- ------ -------
Balance,
June 30, 1999 5,600,000 5,600 4,970 (416)
The accompanying notes are an integral part of
these financial statements.
-4-
<PAGE>
DESIGN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED June 30, 1999
(With Cumulative Figures From Inception)
From Inception,
Period ended Aug. 18, 1993
June 30, 1999 To June 30, 1999
----------------- ----------------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net loss $ (1,155) $ (10,986)
Noncash expenses included in net loss
Amortization 0 4,400
Increase in accounts payable:
Trade 0 5,000
----- -----
NET CASH USED BY
OPERATING ACTIVITY (1,155) (1,586)
CASH FLOWS USED BY INVESTING ACTIVITIES
Organizational costs --- 400
--------- -------
NET CASH USED BY
INVESTING ACTIVITIES 0 400
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 0 1,600
Additional paid-in capital 0 14,400
Less offering costs 0 (9,430)
------ ------
NET CASH PROVIDED BY
FINANCING ACTIVITY 0 6,570
NET INCREASE IN CASH 1,155 $ 4,584
=====
CASH AT BEGINNING OF PERIOD 5,739
------
CASH AT END OF PERIOD $ 4,584
======
Supplemental disclosures of cash flow information:
Issuance of common stock in exchange
for services 0 $ 4,000
===== ============
The accompanying notes are an integral part of
these financial statements.
-5-
DESIGN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
June 30, 1999
NOTES TO THE FINANCIAL STATEMENTS
Design Products, Inc. (the Company) has elected to omit substantially all
footnotes to the financial statements for the six months ended June 30, 1999,
since there have been no material changes (other than indicated in the other
footnotes) to the information previously reported by the Company in the audited
financial statements for the year ended December 31, 1998.
UNAUDITED INFORMATION
The information furnished herein was taken from the books and records of the
Company without audit. However, such information reflects all adjustments which
are, in the opinion of management, necessary to properly reflect the results of
the period presented. The information presented is not necessarily indicative of
the results from operations expected for the full fiscal year.
-6-
<PAGE>
DESIGN PRODUCTS, INC.
(FORMERLY ENTERTAINMENT LAND U.S.A. INCORPORATED)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
December 31, 1998
<PAGE>
TABLE OF CONTENTS
Page Number
-----------
ACCOUNTANT'S REPORT........................................1
FINANCIAL STATEMENT:
Balance Sheet.........................................2
Statement of Operations and Deficit
Accumulated During the Development Stage.............3
Statement of Changes in Stockholders' Equity..........4
Statement of Cash Flows...............................5
Notes to the Financial Statements....................6-7
<PAGE>
DAVID E. COFFEY 3651 Lindell Rd. - Suite H Las Vegas, NV 89103
CERTIFIED PUBLIC ACCOUNTANT (702) 871-3979
To the Board of Directors and Stockholders of
Design Products, Incorporated
Las Vegas, Nevada
I have audited the accompanying balance sheet of Design
Products, Inc. (development stage company) as of December 31, 1998
and the related statements of operations, cash flows, and changes in
stockholders' equity for the year ended December 31, 1998. These
financial statements are the responsibility of Design Products,
Inc.'s management. My responsibility is to express an opinion on
these financial statements based on my audit.
I conducted my audit in accordance with generally accepted
audited standards. Those standards require that I 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 significant
estimates made by management, as well as evaluating the overal
financial statement presentation. I believe that my audit of the
financial statements provide a reasonable basis for my opnion.
In my opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of Design Products, Inc. as of
December 31, 1998 and the results of operations, cash flows and changes in
stockholders' equity for the year then ended in conformity with generally
accepted accounting principles.
/s/ DAVID COFFEY C.P.A.
David Coffey C.P.A.
June 2, 1999
<PAGE>
DESIGN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
December 31, 1998
ASSETS
Cash $ 5,739
Organizational costs less accumulated
amortization of $4,400 0
-----
Total Assets $ 5,739
=====
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable: $
Trade 5,000
-----
Total Liabilities 5,000
Stockholders' Equity
Common stock, authorized 25,000,000 shares
at $.001 par value, issued and outstanding
5,600,000 shares 5,600
Additional paid-in capital 4,970
Deficit accumulated during the
development stage (9,831)
-----
Total Stockholders' Equity 739
Total Liabilities and Stockholders' Equity $ 5,739
=====
The accompanying notes are an integral part of
these financial statements.
-2-
<PAGE>
DESIGN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
FOR THE YEAR ENDED December 31, 1998
(With Cumulative Figures From Inception)
From Inception
Year ended August 18, 1993
December 31, 1998 To Dec. 31, 1998
----------------- ----------------
Sales $ 0 $ 0
Expenses
Amortization 513 4,400
Consulting 2,000 2,000
Fees 252 252
Office expenses 1,367 1,367
Printing 1,812 1,812
----- -----
Total expenses 5,944 9,831
Net loss (5,944) (9,831)
=====
Retained earnings,
beginning of period (3,887)
-----
Deficit accumulated during
the development state $ (9,831)
=====
Earnings (loss) per share
assuning dilution:
Net loss $ (.00) $ (.00)
=== ===
Weighted average shares outstanding 4,800,000 4,133,333
========= =========
The accompanying notes are an integral part of
these financial statements.
-3-
<PAGE>
DESIGN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM Aug. 18, 1993 (Date of Inception)
To December 31, 1998
Additional
Common Stock Paid-in
Shares Amount Capital Total
---------- ------ ------- -----
Balance,
August 18, 1993 0 $ 0 $ 0 $ ---
Issuance of common
stock for services 4,000,000 4,000 0 4,000
Less net loss 0 --- --- (367)
--------- ----- ----- -----
Balance,
December 31, 1993 4,000,000 4,000 0 3,633
Less net loss 0 0 0 (880)
--------- ----- ----- -----
Balance,
December 31, 1994 4,000,000 4,000 0 2,753
Less net loss 0 0 0 (880)
--------- ----- ----- -----
Balance,
December 31, 1995 4,000,000 4,000 0 1,873
Less net loss 0 0 0 (880)
--------- ----- ----- -----
Balance,
December 31, 1996 4,000,000 4,000 0 993
Less net loss 0 0 0 (880)
--------- ----- ----- -----
Balance,
December 31, 1997 4,000,000 4,000 0 113
Issuance of common
stock for cash 1,600,000 1,600 14,400 16,000
Less offering cost 0 0 (9,430) (9,430)
Less net loss 0 0 0 (5,944)
--------- ----- ----- -----
Balance,
December 31, 1998 5,600,000 $ 5,600 $ 4,970 $ 739
========= ===== ===== =====
The accompanying notes are an integral part of
these financial statements.
-4-
<PAGE>
DESIGN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED December 31, 1998
(With Cumulative Figures From Inception)
From Inception,
Year ended Aug. 18, 1993
December 31, 1998 To Dec. 31, 1998
----------------- ----------------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net loss $ (5,944) $ (9,831)
Noncash expenses included in net loss
Amortization 513 4,400
Increase in accounts payable:
Trade 4,600 5,000
----- -----
NET CASH USED BY
OPERATING ACTIVITY (831) (431)
CASH FLOWS USED BY INVESTING ACTIVITIES
Organizational costs --- 400
----- -----
NET CASH USED BY
INVESTING ACTIVITIES 0 400
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 1,600 1,600
Additional paid-in capital 14,400 14,400
Less offering costs (9,430) (9,430)
------ ------
NET CASH PROVIDED BY
FINANCING ACTIVITY 6,570 6,570
NET INCREASE IN CASH 5,739 $ 5,739
=====
CASH AT BEGINNING OF PERIOD 0
------
CASH AT END OF PERIOD $ 5,739
======
Supplemental disclosures of cash flow information:
Issuance of common stock in exchange
for services 0 $ 4,000
====== ======
The accompanying notes are an integral part of
these financial statements.
-5-
<PAGE>
DESIGN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on August 18, 1993 under
the laws of the state of Nevada. The business purpose of
the Company is to market uniquely worded "special awards"
in the form of certificates, posters and cards.
The Company will adopt accounting policies and procedures
based upon the nature of future transactions.
NOTE B ORGANIZATION COSTS
Organization costs are capitalized and amortized over 60
months.
NOTE C PUBLIC STOCK OFFERING
The Company completed a public stock offering in July of
1998 and sold 1,600,000 shares of its common stock for
$16,000 at $.01 per share. The net proceeds of the offering
will be used to market uniquely worded "special awards"
in the form of certificates, posters and cards.
NOTE D RELATED PARTY TRANSACTIONS
The Company has agreed to pay four of its directors a total
of $2,000 for serving in these positions during the
initial development stage of the Company.
The Company retained two of its stockholders and issued
them four million shares of common stock in exchange for
their services in connection with the organization of the
Company and preparation of the business plan. These
services were valued at $4,000 of $.001 per share.
NOTE E NAME CHANGE
On July 28, 1998, the shareholders approved a change in the
name of the Company from "Entertainment Land U.S.A.
Incorporated" to "design Products, Inc."
-6-
<PAGE>
DESIGN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998
NOTE F EARNINGS (LOSS) PER SHARE
Basic EPS is determined using net income divided by the
weighted average shares outstanding during the period. Diluted EPA
is computed by dividing net income by the weighted average shares
outstanding, assuming all dilutive potential common shares were
issued. Since the Comany has no common shares that are potentailly
issuable, such as stock options, convertible preferred stock and
warrants, basic and diluted earnings per share are the same.
-7-
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company has used the same independent accountant since its inception
in November of 1997 and has not had any disagreements with said independent
accountant.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) The Company's financial statements for the period from inception to
December 31, 1998 are included herein under Item 13 of this Registration
Statement.
(b) The following exhibits are furnished as required by Item 601 of Regulation
S-B.
Exhibit No. Description
3.0 Certificate of Incorporation of Design Products, Incorporated
consisting of Articles of Incorporation filed with the Secretary
of State of the State of Nevada on August 18, 1993, filed with
SEC in this Registration Statement.
3.1 By-Laws of Design Products, Incorporated, dated August 18, 1993 ,
are attached hereto, filed with SEC in this Registration
Statement.
4.0 Common Stock certificate, filed with SEC in this Registration
Statement.
27.0 Financial Data Schedule for the period ending 12/31/98, filed
with the SEC in this Registration Statement.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant has caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
Design Products, Inc.
(Registrant)
Date: July ___, 1999 By: /s/Kelly Fox
--------------------------------
President and Director
CERTIFICATE
I, CHERYL A. LAU, Secretary of State of the State of Nevada, do hereby certify
that ENTERTAINMENT LAND U.S.A. INCORPORATED did on the EIGHTEENTH day of
AUGUST, 1993, file in this office the original Articles of Incorporation; that
said Articles are now on file and of record in the office of the Secretary of
State of Nevada, and further, that said Articles contain all the provisions
required by the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal of
State, at my office in Carson City, Nevada, this EIGHTEENTH day of AUGUST,
A.D. 1993.
/s/ CHERYL LAU
Secretary of state
By
/s/ Kimberly DeVries
Deputy
[Filed stamped as follows: "Filed in the office of the Secretary
of State of the State of Nevada, August 18, 1993]
ARTICLES OF INCORPORATION
OF
ENTERTAINMENT LAND U.S.A. INCORPORATED
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated ourselves
together for the purpose of forming a Corporation under and pursuant to the
laws of the State of Nevada, and we do hereby certify that:
ARTICLE I - NAME: The exact name of this Corporation is:
Entertainment Land U.S.A. Incorporated
ARTICLE II - RESIDENT AGENT:
The Resident Agent of the Corporation is Max C. Tanner,Esq., The
Law Offices of Max C. Tanner, 2950 East Flamingo Road, Suite G, Las Vegas,
Nevada 89121.
ARTICLE III - DURATION: The Corporation shall have perpetual existence.
ARTICLE IV - PURPOSES: The purpose, object and nature of the business for
which this Corporation is organized are:
(a) To engage in any lawful activity;
(b) To carry on such business as may be necessary, convenient, or
desirable to accomplish the above purposes, and to do all other
things incidental thereto which are not forbidden by law or by
these Articles of Incorporation.
ARTICLE V - POWERS: The powers of the Corporation shall be those powers
granted by 78.060 and 78.070 of the Nevada Revised Statutes under which this
corporation is formed. In addition, the Corporation shall have the following
specific powers:
(a) To elect or appoint officers and agents of the Corporation and
to fix their compensation;
1
(b) To act as an agent for any individual, association, partnership,
corporation or other legal entity;
(c) To receive, acquire, hold, exercise rights arising out of the
ownership or possession thereof, sell, or otherwise dispose of,
shares or other interests in, or obligations of, individuals,
associations, partnerships, corporations, or governments;
(d) To receive, acquire, hold, pledge, transfer, or otherwise
dispose of shares of the corporation, but such shares may only
be purchased, directly or indirectly, out of earned surplus;
(e) To make gifts or contributions for the public welfare or for
charitable, scientific or educational purposes, and in time of
war, to make donations in aid of war activities.
ARTICLE VI - CAPITAL STOCK:
Section 1. Authorized Shares. The total number of shares which this
Corporation is authorized to issue is 25,000,000 shares of Common Stock
at $.001 par value per share.
Section 2. Voting Rights of Shareholders. Each holder of the Common
Stock shall be entitled to one vote for each share of stock standing in
his name on the books of the Corporation.
Section 3. Consideration for Shares. The Common Stock shall be issued
for such consideration, as shall be fixed from time to time by the Board
of Directors. In the absence of fraud, the judgment of the Directors as
to the value of any property for shares shall be conclusive. When
shares are issued upon payment of the consideration fixed by the Board
of Directors, such shares shall be taken to be fully paid stock and
shall be non-assessable. The Articles shall not be amended in this
particular.
Section 4. Pre-emotive Rights. Except as may otherwise be provided by
the Board of Directors, no holder of any shares of the stock of the
Corporation, shall have any preemptive right to purchase, subscribe for,
or otherwise acquire any shares of stock of the Corporation of any class
now or hereafter authorized, or any securities exchangeable for or
convertible into such shares, or any warrants or other instruments
evidencing rights or options to subscribe for, purchase, or otherwise
acquire such shares.
2
Section 5. Stock Rights and Options. The Corporation shall have the
power to create and issue rights, warrants, or options entitling the
holders thereof to purchase from the corporation any shares of its
capital stock of any class or classes, upon such terms and conditions
and at such times and prices as the Board of Directors may provide,
which terms and conditions shall be incorporated in an instrument or
instruments evidencing such rights. In the absence of fraud, the
judgment of the Directors as to the adequacy of consideration for the
issuance of such rights or options and the sufficiency thereof shall be
conclusive.
ARTICLE VII - ASSESSMENT OF STOCK: The capital stock of this Corporation,
after the amount of the subscription price has been fully paid in, shall not
be assessable for any purpose, and no stock issued as fully paid up shall
ever be assessable or assessed. The holders of such stock shall not be
individually responsible for the debts, contracts, or liabilities of the
Corporation and shall not be liable for assessments to restore impairments in
the capital of the Corporation.
ARTICLE VIII - DIRECTORS: For the management of the business, and for the
conduct of the affairs of the Corporation, and for the future definition,
limitation, and regulation of the powers of the Corporation and its directors
and shareholders, it is further provided:
Section 1. Size of Board. The members of the governing board of the
Corporation shall be styled directors. The number of directors of the
Corporation, their qualifications, terms of office, manner of election,
time and place of meeting, and powers and duties shall be such as are
prescribed by statute and in the by-laws of the Corporation. The name
and post office address of the directors constituting the first board of
directors, which shall be Three (3) in number are:
NAME ADDRESS
Mickey Rooney P. O. Box 3186
Thousand Oaks, CA 91359
Leonard Miller 1900 North Vine Street
Hollywood, CA 90068
Max C. Tanner 2950 E. Flamingo Road
Suite G
Las Vegas, NV 89121
3
Section 2. Powers of Board. In furtherance and not in limitation of
the powers conferred by the laws of the State of Nevada, the Board of
Directors is expressly authorized and empowered:
(a) To make, alter, amend, and repeal the By-Laws subject to the
power of the shareholders to alter or repeal the By-Laws made by
the Board of Directors.
(b) Subject to the applicable provisions of the ByLaws then in
effect, to determine, from time to time, whether and to what
extent, and at what times and places, and under what conditions
and regulations, the accounts and books of the Corporation, or
any of them, shall be open to shareholder inspection. No
shareholder shall have any right to inspect any of the accounts,
books or documents of the Corporation, except as permitted by
law, unless and until authorized to do so by resolution of the
Board of Directors or of the Shareholders of the Corporation;
(c) To issue stock of the Corporation for money, property, services
rendered, labor performed, cash advanced, acquisitions for other
corporations or for any other assets of value in accordance with
the action of the board of directors without vote or consent of
the shareholders and the judgment of the board of directors as to
value received and in return therefore shall be conclusive and
said stock, when issued, shall be fully-paid and non-assessable.
(d) To authorize and issue, without shareholder consent, obligations
of the Corporation, secured and unsecured, under such terms and
conditions as the Board, in its sole discretion, may determine,
and to pledge or mortgage, as security therefore, any real or
personal property of the Corporation, including after-acquired
property;
(e) To determine whether any and, if so, what part, of the earned
surplus of the Corporation shall be paid in dividends to the
shareholders, and to direct and determine other use and
disposition of any such earned surplus;
(f) To fix, from time to time, the amount of the profits of the
Corporation to be reserved as working capital or for any other
lawful purpose;
(g) To establish bonus, profit-sharing, stock option, or other types
of incentive compensation plans for the employees, including
officers and directors, of the Corporation, and to fix the amount
of profits to be shared or distributed, and to determine the
persons to
4
participate in any such plans and the amount of their respective
participation.
(h) To designate, by resolution or resolutions passed by a majority
of the whole Board, one or more committees, each consisting of
two or more directors, which, to the extent permitted by law and
authorized by the resolution or the By-Laws, shall have and may
exercise the powers of the Board;
(i) To provide for the reasonable compensation of its own members by
By-Law, and to fix the terms and conditions upon which such
compensation will be paid;
(j) In addition to the powers and authority herein before, or by
statute, expressly conferred upon it, the Board of Directors
may exercise all such powers and do all such acts and things as
may be exercised or done by the corporation, subject,
nevertheless, to the provisions of the laws of the State of
Nevada, of these Articles of Incorporation, and of the By-Laws
of the Corporation.
Section 3. Interested Directors. No contract or transaction between
this Corporation and any of its directors, or between this Corporation
and any other corporation, firm, association, or other legal entity
shall be invalidated by reason of the fact that the director of the
Corporation has a direct or indirect interest, pecuniary or otherwise,
in such corporation, firm, association, or legal entity, or because the
interested director was present at the meeting of the Board of Directors
which acted upon or in reference to such contract or transaction, or
because he participated in such action, provided that: (1) the
interest of each such director shall have been disclosed to or known by
the Board and and a disinterested majority of the Board shall have
nonetheless ratified and approved such contract or transaction (such
interested director or directors may be counted in determining
whether a quorum is present for the meeting at which such ratification
or approval is given); or (2) the conditions of N.R.S. 78.140 are met.
ARTICLE IX - LIMITATION OF LIABILITY OF OFFICERS OR DIRECTORS:
The personal liability of a director or officer of the corporation to the
corporation or the Shareholders for damages for breach of fiduciary duty as a
director or officer shall be limited to acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law.
ARTICLE X - INDEMNIFICATION: Each director and each officer of the
corporation may be indemnified by the corporation as follows:
5
(a) The corporation may indemnify any person who was or is a party,
or is threatened to be made a party,to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the corporation), by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee or agent of other corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' (fees), judgments, fines and amounts paid in settlement,
actually and reasonably incurred by him in connection with the
action, suit or proceeding, if he acted in good faith and in a
manner which he reasonably believed to be in or not opposed to the
best interests of the corporation and with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suite or
proceeding, by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, does not of itself
create a presumption that the person did not act in good faith and
in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and that, with respect to
any criminal action or proceeding, he had reasonable cause to
believe that his conduct was unlawful.
(b) The corporation may indemnify any person who was or is a party, or
is threatened to be made a party, to any threatened, pending or
completed action or suit by or in the right of the corporation, to
procure a judgment in its favor by reason of the fact that he is or
was a director, officer, employee or agent of the corporation, or
is or 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 expenses including
amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him in connection with the defense or
settlement of the action or suit, if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the
best interests of the corporation. Indemnification may not be made
for any claim, issue or matter as to which such a person has been
adjudged by a court of competent jurisdiction, after exhaustion of
all appeals there from, to be liable to the corporation or for
amounts paid in settlement to the corporation, unless and only to
the extent that the court in which the action or suit was brought
or other court of competent jurisdiction determines upon
application that
6
in view of all the circumstances of the case the person is fairly
and reasonably entitled to indemnity for such expenses as the court
deems proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in
defense for any action, suit or proceeding referred to in
subsections (a) and (b) of this Article, or in defense of any
claim, issue or matter therein, he must be indemnified by the
corporation against expenses, including attorney's fees,
actually and reasonably incurred by him in connection with the
defense.
(d) Any indemnification under subsections (a) and (b) unless ordered by
a court or advanced pursuant to subsection (e), must be made by the
corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer,
employee or agent is proper in the circumstances. The
determination must be made:
(i) By the stockholders;
(ii) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act,
suit or proceeding;
(iii) If a majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding so orders,
by independent legal counsel in a written opinion; or
(iv) If a quorum consisting of directors who were not parties to
the act, suit or proceeding cannot be obtained, by
independent legal counsel in a written opinion.
(e) Expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding must be paid by the corporation
as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is
ultimately determined by a court of competent jurisdiction that he
is not entitled to be indemnified by the corporation. The
provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or
otherwise by law.
7
(f) The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(i) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled
under the certificate or articles of incorporation or any
bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court
pursuant to subsection (b) or for the advancement of expenses
made pursuant to subsection (e) may not be made to or on
behalf of any director or officer if a final adjudication
establishes that his acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was
material to the cause of action.
(ii) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE XI - PLACE OF MEETING; CORPORATE BOOKS: Subject to the laws of the
State of Nevada, the shareholders and the Directors shall have power to hold
their meetings, and the Directors shall have power to have an office or
offices and to maintain the books of the Corporation outside the State of
Nevada, at such place or places as may from time to time be designated in the
By-Laws or by appropriate resolution.
ARTICLE XII - AMENDMENT OF ARTICLES: The provisions of these Articles of
Incorporation may be amended, altered or repealed from time to time to the
extent and in the manner prescribed by the laws of the State of Nevada, and
additional provisions authorized by such laws as are then in force may be
added. All rights herein conferred on the directors, officers and
shareholders are granted subject to this reservation.
ARTICLE XIII - INCORPORATOR: The name and address of the sole incorporator
signing these Articles of Incorporation is as
follows:
NAME POST OFFICE ADDRESS
1. Max C. Tanner 2950 East Flamingo Road, Suite G
Las Vegas, Nevada 89121
8
IN WITNESS WHEREOF, the undersigned incorporator has executed
these Articles of Incorporation this 17th day of August, 1993.
/s/ MAX C. TANNER
Max C. Tanner
STATE OF NEVADA )
)ss:
COUNTY OF CLARK )
On August 17, 1993, personally appeared before me, a Notary Public,
Max C. Tanner, who acknowledged to me that he executed the foregoing Articles
of Incorporation for Entertainment Land U.S.A. Incorporated, a Nevada
corporation.
/s/ JUNE Y. KELSAY
Notary Public
9
[Filed stamped as follows: "FILED IN THE OFFICE OF THE SECRETARY
OF STATE OF THE STATE OF NEVADA, AUG 18 1993]
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
IN THE MATTER OF ENTERTAINMENT LAND U.S.A. INCORPORATED
We, The Law Offices of Max C. Tanner, do hereby certify that on the 17th
day of August, 1993, we accepted the appointment as Resident Agent of
the above-entitled corporation in accordance with Sec. 78.090, NRS 1957.
Furthermore, that the principal office in this state is located at
The Law Offices of Max C. Tanner, 2950 East Flamingo Road, Suite G, City
of Las Vegas 89121, County of Clark, State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of
August, 1993.
THE LAW OFFICES OF MAX C. TANNER
By: /s/MAX C. TANNER
Max C. Tanner, Esq.
Resident Agent
10
BY-LAWS OF
ENTERTAINMENT LAND U.S.A. INCORPORATED
ARTICLE I
SHAREHOLDERS
Section 1.01 Annual Meeting. The annual meeting of the shareholders
shall be held at such date and time as shall be designated by the board of
directors and stated in the notice of the meeting or in a duly-executed waiver
of notice thereof. If the corporation shall fail to provide notice of the
annual meeting of the shareholders as set forth above, the annual meeting of
the shareholders of the corporation shall be held during the month of November
or December of each year as determined by the Board of Directors, for the
purpose of electing directors of the corporation to serve during the ensuing
year and for the transaction of such other business as may properly come
before the meeting. If the election of the directors is not held on the day
designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the president shall cause the election to be held at a
special meeting of the shareholders as soon thereafter as is convenient.
Section 1.02 Special Meetings. Special meetings of the shareholders may
be called by the president or the Board of Directors and shall be called by
the president at the written request of the holders of not less than 51% of
the issued and outstanding shares of capital stock of the corporation.
All business lawfully to be transacted by the shareholders may be
transacted at any special meeting at any adjournment thereof. However, no
business shall be acted upon at a special meeting, except that referred to in
the notice calling the meeting, unless all of the outstanding capital stock of
the corporation is represented either in person or by proxy. Where all of the
capital stock is represented, any lawful business may be transacted and the
meeting shall be valid for all purposes.
Section 1.03 Place of Meetings. Any meeting of the shareholders of the
corporation may be held at its principal office in the State of Nevada or such
other place in or out of the United States as the Board of Directors may
designate. A waiver of notice signed by the shareholders entitled to vote may
designate any place for the holding of such meeting.
Section 1.04 Notice of Meetings.
(a) The secretary shall sign and deliver to all shareholders
of record written or printed notice of any meeting at least ten (10)
days, but not more than sixty (60) days, before the date of such
meeting; which notice shall state the place, date and time of the
meeting, the general nature of the business to be transacted, and, in
the case of any
1
meeting at which directors are to be elected, the names of nominees, if
any, to be presented for election.
(b) In the case of any meeting, any proper business may be
presented for action, except that the following items shall be valid only
if the general nature of the proposal is stated in the notice or written
waiver of notice:
(1) Action with respect to any contract or transaction
between the corporation and one or more of its directors or
another firm, association, or corporation in which one or more of
its directors has a material financial interest;
(2) Adoption of amendments to the Articles of
Incorporation; or
(3) Action with respect to the merger, consolidation,
reorganization, partial or complete liquidation, or dissolution of
the corporation.
(c) The notice shall be personally delivered or mailed by
first class mail to each shareholder of record at the last known address
thereof, as the same appears on the books of the corporation, and the
giving of such notice shall be deemed delivered the date the same is
deposited in the United States mail, postage prepaid. If the address of
any shareholder does not appear upon the books of the corporation, it will
be sufficient to address any notice to such shareholder at the principal
office of the corporation.
(d) The written certificate of the person calling any meeting,
duly sworn, setting forth the substance of the notice, the time and place
the notice was mailed or personally delivered to the several shareholders,
and the addresses to which the notice was mailed shall be prima facie
evidence of the manner and fact of giving such notice.
Section 1.05 Waiver of Notice. If all of the shareholders of the
corporation shall waive notice of a meeting, no notice shall be required, and,
whenever all of the shareholders shall meet in person or by proxy, such
meeting shall be valid for all purposes without call or notice, and at such
meeting any corporate action may be taken.
Section 1.06 Determination of Shareholders of Record.
(a) The Board of Directors may at any time fix a future date
as a record date for the determination of the shareholders entitled to
notice of any meeting or to vote or entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any other lawful action. The record date
so fixed shall not be more than sixty (60) days prior to the date of such
meeting nor more than sixty (60) days prior to any other action. When a
record date is so fixed, only shareholders of record on that date are
entitled to notice of and to vote at the meeting or to receive the
dividend, distribution or allotment of rights, or to exercise their rights,
as
2
the case may be, notwithstanding any transfer of any shares on the books of
the corporation after the record date.
(b) If no record date is fixed by the Board of Directors, then
(1) the record date for determining shareholders entitled to notice of or
to vote at a meeting of shareholders shall be at the close of business on
the business day next preceding the day on which notice is given or, if
notice is waived, at the close of business on the day next preceding the
day on which the meeting is held; (2) the record date for determining
shareholders entitled to give consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which written consent is given; and (3)
the record date for determining shareholders for any other purpose shall
be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto, or the sixtieth (60th) day prior
to the date of such other action, whichever is later.
Section 1.07 Quorum: Adjourned Meetings.
(a) At any meeting of the shareholders, a majority of the issued
and outstanding shares of the corporation represented in person or by
proxy, shall constitute a quorum.
(b) If less than a majority of the issued and outstanding shares
are represented, a majority of shares so represented may adjourn from time
to time at the meeting, until holders of the amount of stock required to
constitute a quorum shall be in attendance. At any such adjourned meeting
at which a quorum shall be present, any business may be transacted which
might have been transacted as originally called. When a shareholders'
meeting is adjourned to another time or place, notice need not be given of
the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken, unless the adjournment is for
more than ten (10) days in which event notice thereof shall be given.
Section 1.08 Voting.
(a) Each shareholder of record, such shareholder's duly
authorized proxy or attorney-in-fact shall be entitled to one (1) vote for
each share of stock standing registered in such shareholder's name on the
books of the corporation on the record date.
(b) Except as otherwise provided herein, all votes with respect
to shares standing in the name of an individual on the record date
(included pledged shares) shall be cast only by that individual or such
individual's duly authorized proxy or attorney-in-fact. With respect to
shares held by a representative of the estate of a deceased shareholder,
guardian, conservator, custodian or trustee, votes may be cast by such
holder upon proof of capacity, even though the shares do not stand in
the name of such holder.
3
In the case of shares under the control of a receiver, the receiver may
cast votes carried by such shares even though the shares do not stand in
the name of the receiver provided that the order of the court of competent
jurisdiction which appoints the receiver contains the authority to cast
votes carried by such shares. If shares stand in the name of a minor,
votes may be cast only by the duly-appointed guardian of the estate of such
minor if such guardian has provided the corporation with written notice
and proof of such appointment.
(c) With respect to shares standing in the name of a corporation
on the record date, votes may be cast by such officer or agents as the
by-laws of such corporation prescribe or, in the absence of an applicable
by-law provision, by such person as may be appointed by resolution of the
Board of Directors of such corporation. In the event no person is so
appointed, such votes of the corporation may be cast by any person
(including the officer making the authorization) authorized to do so by the
Chairman of the Board of Directors, President or any Vice President of
such corporation.
(d) Notwithstanding anything to the contrary herein contained,
no votes may be cast by shares owned by this corporation or its
subsidiaries, if any. If shares are held by this corporation or its
subsidiaries, if any, in a fiduciary capacity, no votes shall be cast with
respect thereto on any matter except to the extent that the beneficial
owner thereof possesses and exercises either a right to vote or to give
the corporation holding the same binding instructions on how to vote.
(e) With respect to shares standing in the name of two or more
persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, husband and wife as community property, tenants by the
entirety, voting trustees, persons entitled to vote under a shareholder
voting agreement or otherwise and shares held by two or more persons
(including proxy holders) having the same fiduciary relationship respect in
the same shares, votes may be cast in the following manner:
(1) If only one such person votes, the votes of such person
binds all.
(2) If more than one person casts votes, the act of the
majority so voting binds all.
(3) If more than one person casts votes, but the vote is
evenly split on a particular matter, the votes shall be deemed cast
proportionately as split.
(f) Any holder of shares entitled to vote on any matter may cast
a portion of the votes in favor of such matter and refrain from casting the
remaining votes or cast the same against the proposal, except in the case
of elections of directors. If such holder entitled to vote fails to
specify the number of affirmative votes, it will be conclusively presumed
that the holder is casting affirmative votes with respect to all shares
held.
4
(g) If a quorum is present, the affirmative vote of holders of
a majority of the shares represented at the meeting and entitled to vote
on any matter shall be the act of the shareholders, unless a vote of
greater number or voting by classes is required by the laws of the State
of Nevada, the Articles of Incorporation and these By-Laws.
Section 1.09 Proxies. At any meeting of shareholders, any holder of
shares entitled to vote may authorize another person or persons to vote by
proxy with respect to the shares held by an instrument in writing and
subscribed to by the holder of such shares entitled to vote. No proxy shall
be valid after the expiration of six (6) months from the date of execution
thereof, unless coupled with an interest or unless otherwise specified in the
proxy. In no event shall the term of a proxy exceed seven (7) years from the
date of its execution. Every proxy shall continue in full force and effect
until its expiration or revocation. Revocation may be effected by filing an
instrument revoking the same or a duly-executed proxy bearing a later date
with the secretary of the corporation.
Section 1.10 Order of Business. At the annual shareholders meeting, the
regular order of business shall be as follows:
(1) Determination of shareholders present and existence
of quorum;
(2) Reading and approval of the minutes of the previous
meeting or meetings;
(3) Reports of the Board of Directors, the president,
treasurer and secretary of the corporation, in the order named;
(4) Reports of committee;
(5) Election of directors;
(6) Unfinished business;
(7) New business;
(8) Adjournment.
Section 1.11 Absentees Consent to Meetings. Transactions of any meeting
of the shareholders are as valid as though had at a meeting duly-held after
regular call and notice if a quorum is present, either in person or by proxy,
and if, either before or after the meeting, each of the persons entitled to
vote, not present in person or by proxy (and those who, although present,
either object at the beginning of the meeting to the transaction of any
business because the meeting has not been lawfully called or convened or
expressly object at the meeting to the consideration of matters not included
in the notice which are legally required to be included
6
therein), signs a written waiver of notice and/or consent to the holding of
the meeting or an approval of the minutes thereof. All such waivers,
consents, and approvals shall be filed with the corporate records and made a
part of the minutes of the meeting. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person objects
at the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened and except that attendance at a
meeting is not a waiver of any right to object to the consideration of matters
not included in the notice if such objection is expressly made at the
beginning. Neither the business to be transacted at nor the purpose of any
regular or special meeting of shareholders need be specified in any written
waiver of notice, except as otherwise provided in Section 1.04(b) of these
By-Laws.
Section 1.12 Action Without Meeting. Any action which may be taken by
the vote of the shareholders at a meeting may be taken without a meeting if
consented to by the holders of a majority of the shares entitled to vote or
such greater proportion as may be required by the laws of the State of Nevada,
the Articles of Incorporation, or these ByLaws. Whenever action is taken by
written consent, a meeting of shareholders needs not be called or noticed.
ARTICLE II
DIRECTORS
Section 2.01 Number, Tenure and Qualification. Except as otherwise
provided herein, the Board of Directors of the corporation shall consist of at
least one (1) but no more than nine (9) persons, who shall be elected at the
annual meeting of the shareholders of the corporation and who shall hold
office for one (1) year or until their successors are elected and qualify.
Section 2.02 Resignation. Any director may resign effective upon giving
written notice to the chairman of the Board of Directors, the president, or
the secretary of the corporation, unless the notice specifies a later time for
effectiveness of such resignation. If the Board of Directors accepts the
resignation of a director tendered to take effect at a future date, the Board
or the shareholders may elect a successor to take office when the resignation
becomes effective.
Section 2.03 Reduction in Number. No reduction of the number of
directors shall have the effect of removing any director prior to the
expiration of his term of office.
Section 2.04 Removal.
(a) The Board of Directors or the shareholders of the
corporation, by a majority vote, may declare vacant the office of a
director who has been declared incompetent by an order of a court of
competent jurisdiction or convicted of a felony.
6
Section 2.05 Vacancies.
(a) A vacancy in the Board of Directors because of death,
resignation, removal, change in number of directors, or otherwise may be
filled by the shareholders at any regular or special meeting or any
adjourned meeting thereof or the remaining director(s) by the affirmative
vote of a majority thereof. A Board of Directors consisting of less than
the maximum number authorized in Section 2.01 of ARTICLE II constitutes
vacancies on the Board of Directors for purposes of this paragraph and
may be filled as set forth above including by the election of a majority
of the remaining directors. Each successor so elected shall hold office
until the next annual meeting of shareholders or until a successor shall
have been duly-elected and qualified.
(b) If, after the filling of any vacancy by the directors, the
directors then in office who have been elected by the shareholders shall
constitute less than a majority of the directors then in office, any
holder or holders of an aggregate of five percent (5%) or more of the
total number of shares entitled to vote may call a special meeting of
shareholders to be held to elect the entire Board of Directors. The
term of office of any director shall terminate upon such election of a
successor.
Section 2.06 Regular Meetings. Immediately following the adjournment
of, and at the same place as, the annual meeting of the shareholders, the
Board of Directors, including directors newly elected, shall hold its annual
meeting without notice, other than this provision, to elect officers of the
corporation and to transact such further business as may be necessary or
appropriate. The Board of Directors may provide by resolution the place, date
and hour for holding additional regular meetings.
Section 2.07 Special Meetings. Special meetings of the Board of
Directors may be called by the chairman and shall be called by the chairman
upon the request of any two (2) directors or the president of the corporation.
Section 2.08 Place of Meetings. Any meeting of the directors of the
corporation may be held at its principal office in the State of Nevada, or at
such other place in or out of the United States as the Board of Directors may
designate. A waiver or notice signed by the directors may designate any place
for the holding of such meeting.
Section 2.09 Notice of Meetings. Except as otherwise provided in
Section 2.06, the chairman shall deliver to all directors written or printed
notice of any special meeting, at least three (3) days before the date of such
meeting, by delivery of such notice personally or mailing such notice first
class mail, or by telegram. If mailed, the notice shall be deemed delivered
two (2) business days following the date the same is deposited in the United
States mail, postage prepaid. Any director may waive notice of any meeting,
and the attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, unless such attendance is for the express purpose of
objecting to the transaction of business threat because the meeting is not
7
properly called or convened.
Section 2.10 Quorum: Adjourned Meetings.
(a) A majority of the Board of Directors in office shall
constitute a quorum.
(b) At any meeting of the Board of Directors where a quorum is not
present, a majority of those present may adjourn, from time to time,
until a quorum is present, and no notice of such adjournment shall be
required. At any adjourned meeting where a quorum is present, any
business may be transacted which could have been transacted at the
meeting originally called.
Section 2.11 Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting if a written consent thereto is signed by all
of the members of the Board of Directors or of such committee. Such written
consent or consents shall be filed with the minutes of the proceedings of the
Board of Directors or committee. Such action by written consent shall have
the same force and effect as the unanimous vote of the Board of Directors or
committee.
Section 2.12 Telephonic Meetings. Meetings of the Board of Directors
may be held through the use of a conference telephone or similar
communications equipment so long as all members participating in such meeting
can hear one another at the time of such meeting. Participation in such a
meeting constitutes presence in person at such meeting.
Section 2.13 Board Decisions. The affirmative vote of a majority of the
directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
Section 2.14 Powers and Duties.
(a) Except as otherwise provided in the Articles of
Incorporation or the laws of the State of Nevada, the Board of Directors
is invested with the complete and unrestrained authority to manage the
affairs of the corporation, and is authorized to exercise for such
purpose as the general agent of the corporation, its entire corporate
authority in such manner as it sees fit. The Board of Directors may
delegate any of its authority to manage, control or conduct the current
business of the corporation to any standing or special committee or to
any officer or agent and to appoint any persons to be agents of the
corporation with such powers, including the power to sub-delegate, and
upon such terms as may be deemed fit.
(b) The Board of Directors shall present to the shareholders at
annual meetings of the shareholders, and when called for by a majority
vote of the shareholders at a special meeting of the shareholders, a full
and clear statement of the condition of the corporation, and shall, at
request, furnish each of the shareholders with a true copy thereof.
8
(c) The Board of Directors, in its discretion, may submit any
contract or act for approval or ratification at any annual meeting of the
shareholders or any special meeting properly called for the purpose of
considering any such contract or act, provided a quorum is present. The
contract or act shall be valid and binding upon the corporation and upon
all the shareholders thereof, if approved and ratified by the affirmative
vote of a majority of the shareholders at such meeting.
(d) In furtherance and not in limitation of the powers conferred
by the laws of the State of Nevada, the Board of Directors is expressly
authorized and empowered to issue stock of the Corporation for money,
property, services rendered, labor performed, cash advanced, acquisitions
for other corporations or for any other assets of value in accordance
with the action of the Board of Directors without vote or consent of the
shareholders and the judgment of the Board of Directors as to the value
received and in return therefore shall be conclusive and said stock, when
issued, shall be fully-paid and non-assessable.
Section 2.15 Compensation. The directors shall be allowed and paid all
necessary expenses incurred in attending any meetings of the Board.
Section 2.16 Board Officers.
(a) At its annual meeting, the Board of Directors shall elect,
from among its members, a chairman to preside at the meetings of the
Board of Directors. The Board of Directors may also elect such other
board officers and for such term as it may, from time to time, determine
advisable.
(b) Any vacancy in any board office because of death,
resignation, removal or otherwise may be filled by the Board of
Directors for the unexpired portion of the term of such office.
Section 2.17 Order of Business. The order of business at any meeting of
the Board of Directors shall be as follows:
(1) Determination of members present and existence of quorum;
(2) Reading and approval of the minutes of any previous meeting
or meetings;
(3) Reports of officers and committeemen;
(4) Election of officers;
(5) Unfinished business;
9
(6) New business;
(7) Adjournment.
ARTICLE III
OFFICERS
Section 3.01 Election. The Board of Directors, at its first meeting
following the annual meeting of shareholders, shall elect a president, a
secretary and a treasurer to hold office for one (1) year next coming and
until their successors are elected and qualify. Any person may hold two or
more offices. The Board of Directors may, from time to time, by resolution,
appoint one or more vice presidents, assistant secretaries, assistant
treasurers and transfer agents of the corporation as it may deem advisable;
prescribe their duties; and fix their compensation.
Section 3.02 Removal; Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed by it whenever, in its
judgment, the best interest of the corporation would be served thereby. Any
officer may resign at any time upon written notice to the corporation without
prejudice to the rights, if any, of the corporation under any contract to
which the resigning officer is a party.
Section 3.03 Vacancies. Any vacancy in any office because of death,
resignation, removal, or otherwise may be filled by the Board of Directors
for the unexpired portion of the term of such office.
Section 3.04 President. The president shall be the general manager and
executive officer of the corporation, subject to the supervision and control
of the Board of Directors, and shall direct the corporate affairs, with full
power to execute all resolutions and orders of the Board of Directors not
especially entrusted to some other officer of the corporation. The president
shall preside at all meetings of the shareholders and shall sign the
certificates of stock issued by the corporation, and shall perform such other
duties as shall be prescribed by the Board of Directors.
Unless otherwise ordered by the Board of Directors, the president shall
have full power and authority on behalf of the corporation to attend and to
act and to vote at any meetings of the shareholders of any corporation in
which the corporation may hold stock and, at any such meetings, shall possess
and may exercise any and all rights and powers incident to the ownership of
such stock. The Board of Directors, by resolution from time to time, may
confer like powers on any person or persons in place of the president to
represent the corporation for these purposes.
Section 3.05 Vice President. The Board of Directors may elect one or
more vice presidents who shall be vested with all the powers and perform all
the duties of the president whenever the president is absent or unable to act,
including the signing of the certificates of stock
10
issued by the corporation, and the vice president shall perform such other
duties as shall be prescribed by the Board of Directors.
Section 3.06 Secretary. The secretary shall keep the minutes of all
meetings of the shareholders and the Board of Directors in books provided for
that purpose. The secretary shall attend to the giving and service of all
notices of the corporation, may sign with the president in the name of the
corporation all contracts authorized by the Board of Directors or appropriate
committee, shall have the custody of the corporate seal, shall affix the
corporate seal to all certificates of stock duly issued by the corporation,
shall have charge of stock certificate books, transfer books and stock
ledgers, and such other books and papers as the Board of Directors or
appropriate committee may direct, and shall, in general perform all duties
incident to the office of the secretary. All corporate books kept by the
secretary shall be open for examination by any director at any reasonable
time.
Section 3.07 Assistant Secretary. The Board of Directors may appoint an
assistant secretary who shall have such powers and perform such duties as may
be prescribed for him by the secretary of the corporation or by the Board of
Directors.
Section 3.08 Treasurer. The treasurer shall be the chief financial
officer of the corporation, subject to the supervision and control of the
Board of Directors, and shall have custody of all the funds and securities of
the corporation. When necessary or proper, the treasurer shall endorse on
behalf of the corporation for collection checks, notes and other obligations,
and shall deposit all monies to the credit of the corporation in such bank or
banks or other depository as the Board of Directors may designate, and shall
sign all receipts and vouchers for payments made by the corporation. Unless
otherwise specified by the Board of Directors, the treasurer shall sign with
the president all bills of exchange and promissory notes of the corporation,
shall also have the care and custody of the stocks, bonds, certificates,
vouchers, evidence of debts, securities and such other property belonging to
the corporation as the Board of Directors shall designate, and shall sign all
papers required by law, by these By-laws or by the Board of Directors to be
signed by the treasurer. The treasurer shall enter regularly in the books of
the corporation, to be kept for that purpose, full and accurate accounts of
all monies received and paid on account of the corporation and whenever
required by the Board of Directors, the treasurer shall render a statement of
any or all accounts. The treasurer shall at all reasonable times exhibit the
books of account to any directors of the corporation and shall perform all
acts incident to the position of treasurer subject to the control of the Board
of Directors. The treasurer shall, if required by the Board of Directors,give
a bond to the corporation in such sum and with such security as shall be
approved by the Board of Directors for the faithful performance of all the
duties of the treasurer and for restoration to the corporation in the event of
the treasurer's death, resignation, retirement, or removal from office, of all
books, records, papers, vouchers, money and other property belonging to the
corporation. The expense of such bond shall be borne by the corporation.
11
Section 3.09 Assistant Treasurer. The Board of Directors may appoint an
assistant treasurer who shall have such powers and perform such duties as may
be prescribed by the treasurer of the corporation or by the Board of
Directors, and the Board of Directors may require the assistant treasurer to
give a bond to the corporation in such sum and with such security as it may
approve,for the faithful performance of the duties of assistant treasurer, and
for the restoration to the corporation, in the event of the assistant
treasurer's death, resignation, retirement or removal from office, of all
books, records, papers, vouchers, money and other property belonging to the
corporation. The expense of such bond shall be borne by the corporation.
ARTICLE IV
CAPITAL STOCK
Section 4.01 Issuance. Shares of capital stock of the corporation shall
be issued in such manner and at such times and upon such conditions as shall
be prescribed by the Board of Directors.
Section 4.02 Certificates. Ownership in the corporation shall be
evidenced by certificates for shares of stock in such form as shall be
prescribed by the Board of Directors, shall be under the seal of the
corporation and shall be signed by the president or the vice president and
also by the secretary or an assistant secretary. Each certificate shall
contain the name of the record holder, the number, designation, if any, class
or series of shares represented, a statement of summary of any applicable
rights, preferences, privileges, or restrictions thereon, and a statement that
the shares are assessable, if applicable. All certificates shall be
consecutively numbered. The name and address of the shareholder, the number
of shares, and the date of issue shall be entered on the stock transfer books
of the corporation.
Section 4.03 Surrender: Lost or Destroyed Certificates. All
certificates surrendered to the corporation, except those representing shares
of treasury stock, shall be canceled and no new certificates shall be issued
until the former certificate for a like number of shares shall have been
canceled, except that in case of a lost, stolen, destroyed or mutilated
certificate, a new one may be issued therefor. However, any shareholder
applying for the issuance of a stock certificate in lieu of one alleged to
have been lost, stolen, destroyed or mutilated shall, prior to the issuance of
a replacement, provide the corporation with his, her or its affidavit of the
facts surrounding the loss, theft, destruction or mutilation and an indemnity
bond in an amount and upon such terms as the treasurer, or the Board of
Directors, shall require. In no case shall the bond be in amount less than
twice the current market value of the stock and it shall indemnify the
corporation against any loss, damage, cost or inconvenience arising as a
consequence of the issuance of a replacement certificate.
12
Section 4.04 Replacement Certificate. When the Articles of
Incorporation are amended in any way affecting the statements contained in the
certificates for outstanding shares of capital stock of the corporation or it
becomes desirable for any reason, including, without limitation, the merger or
consolidation of the corporation with another corporation or the
reorganization of the corporation, to cancel any outstanding certificate for
shares and issue a new certificate therefor conforming to the rights of the
holder, the Board of Directors may order any holders of outstanding
certificates for shares to surrender and exchange the same for new
certificates within a reasonable time to be fixed by the Board of Directors.
The order may provide that a holder of any certificate(s) ordered to be
surrendered shall not be entitled to vote, receive dividends or exercise any
other rights of shareholders until the holder has complied with the order
provided that such order operates to suspend such rights only after notice and
until compliance.
Section 4.05 Transfer of Shares. No transfer of stock shall be valid as
against the corporation except on surrender and cancellation by the
certificate therefor, accompanied by an assignment or transfer by the
registered owner made either in person or under assignment. Whenever any
transfer shall be expressly made for collateral security and not absolutely,
the collateral nature of the transfer shall be reflected in the entry of
transfer on the books of the corporation.
Section 4.06 Transfer Agent. The Board of Directors may appoint one or
more transfer agents and registrars of transfer and may require all
certificates for shares of stock to bear the signature of such transfer agent
and such registrar of transfer.
Section 4.07 Stock Transfer Books. The stock transfer books shall be
closed for a period of ten (10) days prior to all meetings of the shareholders
and shall be closed for the payment of dividends as provided in Article V
hereof and during such periods as, from time to time, may be fixed by the
Board of Directors, and, during such periods, no stock shall be transferable.
Section 4.08 Miscellaneous. The Board of Directors shall have the power
and authority to make such rules and regulations not inconsistent herewith as
it may deem expedient concerning the issue, transfer and registration of
certificates for shares of the capital stock of the corporation.
ARTICLE V
DIVIDENDS
Section 5.01 Dividends may be declared, subject to the provisions of
the laws of the State of Nevada and the Articles of Incorporation, by the
Board of Directors at any regular or special meeting and may be paid in cash,
property, shares of corporate stock, or any other medium. The Board of
Directors may fix in advance a record date, as provided in Section 1.06 of
these By-laws, prior to the dividend payment for the purpose of determining
shareholders entitled to receive payment of any dividend. The Board of
Directors may close the stock transfer books for such
13
purpose for a period of not more than ten (10) days prior to the payment date
of such dividend.
ARTICLE VI
OFFICES; RECORDS; REPORTS; SEAL AND FINANCIAL MATTERS
Section 6.01 Principal Office. The principal office of the corporation
in the State of Nevada shall be the Law Offices of Max C. Tanner, 2950 East
Flamingo Road, Suite G, Las Vegas, Nevada 89121, and the corporation may have
an office in any other state or territory as the Board of Directors may
designate.
Section 6.02 Records. The stock transfer books and a certified copy of
the By-laws, Articles of Incorporation, any amendments thereto, and the
minutes of the proceedings of the shareholders, the Board of Directors, and
committees of the Board of Directors shall be kept at the principal office of
the corporation for the inspection of all who have the right to see the same
and for the transfer of stock. All other books of the corporation shall be
kept at such places as may be prescribed by the Board of Directors.
Section 6.03 Financial Report on Request. Any shareholder or
shareholders holding at least five percent (5%) of the outstanding shares of
any class of stock may make a written request for an income statement of the
corporation for the three (3) month, six (6) month, or nine (9) month period
of the current fiscal year ended more than thirty (30) days prior to the date
of the request and a balance sheet of the corporation as of the end of such
period. In addition, if no annual report for the last fiscal year has been
sent to shareholders, such shareholder or shareholders may make a request for
a balance sheet as of the end of such fiscal year and an income statement and
statement of changes in financial position for such fiscal year. The
statement shall be delivered or mailed to the person making the request within
thirty (30) days thereafter. A copy of the statements shall be kept on file
in the principal office of the corporation for twelve (12) months, and such
copies shall be exhibited at all reasonable times to any shareholder demanding
an examination of them or a copy shall be mailed to each shareholder. Upon
request by any shareholder, there shall be mailed to the shareholder a copy of
the last annual, semiannual or quarterly income statement which it has
prepared and a balance sheet as of the end of the period. The financial
statements referred to in this Section 6.03 shall be accompanied by the report
thereon, if any, of any independent accountants engaged by the corporation or
the certificate of an authorized officer of the corporation that such
financial statements were prepared without audit from the books and records of
the corporation.
Section 6.04 Right of Inspection.
(a) The accounting books and records and minutes of proceedings
of the shareholders and the Board of Directors and committees of the
Board of Directors shall be open to inspection upon the written demand of
any shareholder or holder of a voting
14
trust certificate at any reasonable time during usual business hours for
a purpose reasonably related to such holder's interest as a shareholder
or as the holder of such voting trust certificate. This right of
inspection shall extend to the records of the subsidiaries, if any, of
the corporation. Such inspection may be made in person or by agent or
attorney, and the right of inspection includes the right to copy and make
extracts.
(b) Every director shall have the absolute right at any
reasonable time to inspect and copy all books, records and documents of
every kind and to inspect the physical properties of the corporation
and/or its subsidiary corporations. Such inspection may be made in
person or by agent or attorney, and the right of inspection includes the
right to copy and make extracts.
Section 6.05 Corporate Seal. The Board of Directors may, by
resolution, authorize a seal, and the seal may be used by causing it, or a
facsimile, to be impressed or affixed or reproduced or otherwise. Except when
otherwise specifically provided herein, any officer of the corporation shall
have the authority to affix the seal to any document requiring it.
Section 6.06 Fiscal Year. The fiscal year-end of the corporation shall
be the calendar year or such other term as may be fixed by resolution of the
Board of Directors.
Section 6.07 Reserves. The Board of Directors may create, by
resolution, out of the earned surplus of the corporation such reserves as the
directors may, from time to time, in their discretion, think proper to provide
for contingencies, or to equalize dividends or to repair or maintain any
property of the corporation, or for such other purpose as the Board of
Directors may deem beneficial to the corporation, and the directors may modify
or abolish any such reserves in the manner in which they were created.
ARTICLE VII
INDEMNIFICATION
Section 7.01 Indemnification. The corporation shall, unless prohibited
by Nevada Law, indemnify any person (an "Indemnitee") who is or was involved
in any manner (including, without limitation, as a party or a witness) or is
threatened to be so involved in any threatened, pending or completed action
suit or proceeding, whether civil, criminal, administrative, arbitrative or
investigative, including without limitation, any action, suit or proceeding
brought by or in the right of the corporation to procure a judgment in its
favor (collectively, a "Proceeding") by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other entity or enterprise, against all Expenses and Liabilities actually
and reasonably incurred by him
15
in connection with such Proceeding. The right to indemnification conferred in
this Article shall be presumed to have been relied upon by the directors,
officers, employees and agents of the corporation and shall be enforceable as
a contract right and inure to the benefit of heirs, executors and
administrators of such individuals.
Section 7.02 Indemnification Contracts. The Board of Directors is
authorized on behalf of the corporation, to enter into, deliver and perform
agreements or other arrangements to provide any Indemnitee with specific
rights of indemnification in addition to the rights provided hereunder to the
fullest extent permitted by Nevada Law. Such agreements or arrangements may
provide (i) that the Expenses of officers and directors incurred in defending
a civil or criminal action, suit or proceeding, must be paid by the
corporation as they are incurred and in advance of the final disposition of
any such action, suit or proceeding provided that, if required by Nevada Law
at the time of such advance, the officer or director provides an undertaking
to repay such amounts if it is ultimately determined by a court of competent
jurisdiction that such individual is not entitled to be indemnified against
such expenses, (iii) that the Indemnitee shall be presumed to be entitled to
indemnification under this Article or such agreement or arrangement and the
corporation shall have the burden of proof to overcome that presumption, (iii)
for procedures to be followed by the corporation and the Indemnitee in making
any determination of entitlement to indemnification or for appeals therefrom
and (iv) for insurance or such other Financial Arrangements described in
Paragraph 7.02 of this Article, all as may be deemed appropriate by the Board
of Directors at the time of execution of such agreement or arrangement.
Section 7.03 Insurance and Financial Arrangements. The corporation may,
unless prohibited by Nevada Law, purchase and maintain insurance or make other
financial arrangements ("Financial Arrangements") on behalf of any Indemnitee
for any liability asserted against him and liability and expenses incurred by
him in his capacity as a director, officer, employee or agent, or arising out
of his status as such, whether or not the corporation has the authority to
indemnify him against such liability and expenses. Such other Financial
Arrangements may include (i) the creation of a trust fund, (ii) the
establishment of a program of self-insurance, (iii) the securing of the
corporation's obligation of indemnification by granting a security interest or
other lien on any assets of the corporation, or (iv) the establishment of a
letter of credit, guaranty or surety.
Section 7.04 Definitions. For purposes of this Article:
Expenses. The word "Expenses" shall be broadly construed and,
without limitation, means (i) all direct and indirect costs incurred,
paid or accrued, (ii) all attorneys' fees, retainers, court costs,
transcripts, fees of experts, witness fees, travel expenses, food and
lodging expenses while traveling, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service, freight or other
transportation fees and expenses, (iii) all other disbursements and
out-of-pocket expenses, (iv) amounts paid in settlement, to the extent
permitted by Nevada Law, and (v) reasonable compensation for time spent
by the Indemnitee for which he is otherwise not
16
compensated by the corporation or any third party, actually and
reasonably incurred in connection with either the appearance at or
investigation, defense, settlement or appeal of a Proceeding or
establishing or enforcing a right to indemnification under any agreement
or arrangement, this Article, the Nevada Law or otherwise; provided,
however, that "Expenses" shall not include any judgments or fines or
excise taxes or penalties imposed under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or other excise taxes or
penalties.
Liabilities. "Liabilities" means liabilities of any type
whatsoever, including, but not limited to, judgments or fines, ERISA or other
excise taxes and penalties, and amounts paid in settlement.
Nevada Law. "Nevada Law" means Chapter 78 of the Nevada Revised
Statutes as amended and in effect from time to time or any successor or other
statutes of Nevada having similar import and effect.
This Article. "This Article" means Paragraphs 7.01 through 7.04 of
these bylaws or any portion of them.
Power of Stockholders. Paragraphs 7.01 through 7.04, including this
Paragraph, of these Bylaws may be amended by the stockholders only by vote of
the holders of sixty-six and two-thirds percent (66 2/3%) of the entire number
of shares of each class, voting separately, of the outstanding capital stock
of the corporation (even though the right of any class to vote is otherwise
restricted or denied); provided, however, no amendment or repeal of this
Article shall adversely affect any right of any Indemnitee existing at the
time such amendment or repeal becomes effective.
Power of Directors. Paragraphs 7.01 through 7.04 and this Paragraph
of these Bylaws may be amended or repealed by the Board of Directors only by
vote of eighty percent (80%) of the total number of Directors and the holders
of sixty-six and two-thirds percent (66 2/3) of the entire number of shares of
each class, voting separately, of the outstanding capital stock of the
corporation (even though the right of any class to vote is otherwise
restricted or denied); provided, however, no amendment or repeal of this
Article shall adversely affect any right of any Indemnitee existing at the
time such amendment or repeal becomes effective.
17
ARTICLE VIII
BY-LAWS
Section 8.01 Amendment. Amendments and changes of these By-Laws may be
made at any regular or special meeting of the Board of Directors by a vote of
not less than all of the entire Board, or may be made by a vote of, or a
consent in writing signed by the holders of a majority of the issued and
outstanding capital stock.
Section 8.02 Additional By-Laws. Additional by-laws not inconsistent
herewith may be adopted by the Board of Directors at any meeting of the Board
of Directors at which a quorum is present by an affirmative vote of a majority
of the directors present or by the unanimous consent of the Board of Directors
in accordance with Section 2.11 of these By-laws.
CERTIFICATION
I, the undersigned, being the duly elected secretary of the Corporation,
do hereby certify that the foregoing By-laws were adopted by the Board of
Directors on the 18th day of August, 1993.
/s/ MAX C. TANNER
Max C. Tanner, Secretary
18
(in form of certificate, two-sided)
Design Products, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
25,000,000 SHARES OF COMMON STOCK AUTHORIZED, $.001 PAR VALUE
NUMBER_________ SHARES________
CUSIP 25055S 10 9
This certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF
Design Products, Inc
transferable on the books of the corporation in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This
certificate and the shares represented hereby are subject to the laws of the
State of Nevada, and to the Certificate of Incorporation and Bylaws by the
Corporation, as now or hereafter amended. This certificate is not valid unless
countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the signature of its duly
authorized officers.
DATED
(seal as follows: "DESIGN PRODUCTS, INC. CORPORATE SEAL, NEVADA")
/s/KELLY A. FOX /s/KRISTINE A. GORNICHEC
PRESIDENT SECRETARY
Countersigned and Registered
PACIFIC STOCK TRANSFER COMPANY
P.O. Box 93385
Las Vegas, NV 89193
By:____________________________________
AUTHORIZED SIGNATURE
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT--Custodian--
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_______________________
in common (State)
Additional abbreviations may also be used though not in the above list.
For Value Received, __________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
__________________________________
- -----------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
- -----------------------------------------------------------------------Shares
of the capital stock represented by the within certificate, and do hereby
irrevocably constitute and appoint___________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated__________________
_________________________________________________________________________
NOTICE: SIGNATURE MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF
THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERNATION OR ENLARGEMENT OR
ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A BANK, BROKER OR ANY OTHER
ELIGIBLE GUARANTOR INSTITUTION THAT IS AUTHORIZED TO DO SO UNDER THE
SECURITIES TRANSFER AGENTS MEDALLION PROGRAM (STAMP) UNDER RULES PROMULGATED
BY THE U.S. SECURITIES AND EXCHANGE COMMISSION.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENT DATED DECEMEBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001045893
<NAME> DESIGN PRODUCTS INC / UT
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 5739
<SECURITIES> 0
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0
0
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</TABLE>
