U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 10-SB
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GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
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3PM HOLDING CORP.
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(Name of Small Business Issuer in its charter)
Colorado 84-1284185
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5650 Greenwood Plaza Blvd.
Suite 216
Englewood, Colorado 80111
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(Address of principal executive offices) (Zip code)
Issuer's telephone number: (303) 741-1118
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Securities to be registered pursuant to Section
12(b) of the Act:
none
Securities to be registered pursuant to Section
12(g) of the Act:
Common Stock
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(Title of Class)
Page One of Seventy-Four Pages
Exhibit Index is Located at Page 37.
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TABLE OF CONTENTS
Page
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Part I
Item 1. Description of Business . . . . . . . . . . . . . 3
Item 2. Plan of Operation. . . . . . . . . . . . . . . . . 8
Item 3. Description of Property. . . . . . . . . . . . . . 14
Item 4. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . . 14
Item 5. Directors, Executive Officers, Promoters
and Control Persons. . . . . . . . . . . . . . . . 15
Item 6. Executive Compensation . . . . . . . . . . . . . . 19
Item 7. Certain Relationships and
Related Transactions. . . . . . . . . . . . . . . 20
Item 8. Description of Securities. . . . . . . . . . . . . 20
Part II
Item 1. Market Price of and Dividends on Registrant's
Common Equity and Other Shareholder
Matters . . . . . . . . . . . . . .. . . . . . . . 22
Item 2. Legal Proceedings. . . . . . . . . . . . . . . . . 24
Item 3. Changes in and Disagreements with Accountants. . . 24
Item 4. Recent Sales of Unregistered Securities. . . . . . 24
Item 5. Indemnification of Directors and Officers. . . . . 25
Part F/S
Financial Statements . . . . . . . . . . . . . . . 25
Part III
Item 1. Index to Exhibits. . . . . . . . . . . . . . . . . 37
Item 2. Description of Exhibits. . . . . . . . . . . . . . 38
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PART I
Item 1. Description of Business
3PM Holding Corp. (the "Company"), was incorporated on October
19, 1994 under the laws of the State of Colorado under the name
3PM, Inc., to engage in any lawful corporate undertaking. The
Company has been in the developmental stage since inception and
initially was engaged in the business of retail service and repair
of electronic equipment under franchises. The Company acquired the
rights to purchase five franchises, two of which were acquired and
operated in the Denver Metropolitan area. In April 1996, the
Company's Board of Directors elected to terminate the initial
business plan, sold its repair franchises and rights thereto, and
adopted a plan consistent with the plan outlined hereinbelow. The
Company will seek out, investigate and possibly acquire an interest
in business opportunities. As such, the Company can be defined as
a "shell" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity. The
Board of Directors of the Company has elected to commence
implementation of the Company's principal business purpose,
described below under "Item 2. Plan of Operation."
The Company is filing this registration statement on a
voluntary basis because the primary attraction of the Company as a
merger partner or acquisition vehicle will be its status as a
public company. Any business combination or transaction will
likely result in a significant issuance of shares and substantial
dilution to present stockholders of the Company.
The proposed business activities described herein classify the
Company as a "blank check" company. Many states have enacted
statutes, rules and regulations limiting the sale of securities of
"blank check" companies in their respective jurisdictions.
Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities or undertake any
offering of the Company's securities, either debt or equity, until
such time as the Company has successfully implemented its business
plan described herein. Relevant thereto, each shareholder of the
Company has executed and delivered a "lock-up" letter agreement,
affirming that they shall not sell their respective shares of the
Company's common stock until such time as the Company has
successfully consummated a merger or acquisition and the Company is
no longer classified as a "blank check" company. In order to
provide further assurances that no trading will occur in the
Company's securities until a merger or acquisition has been
consummated, each shareholder has agreed to place their respective
stock certificate with the Company's legal counsel, Andrew I.
Telsey, P.C., who will not release these respective certificates
until such time as legal counsel has confirmed that a merger or
acquisition has been successfully consummated. However, while
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management believes that the procedures established to preclude any
sale of the Company's securities prior to closing of a merger or
acquisition will be sufficient, there can be no assurances that the
procedures established relevant herein will unequivocally limit any
shareholder's ability to sell their respective securities before
such closing.
The Company's business is subject to numerous risk factors,
including the following:
No Operating History or Revenue and Minimal Assets. The
Company has had a limited operating history and no significant
revenues or earnings from operations. The Company has no
significant assets or financial resources. The Company will, in
all likelihood, sustain operating expenses without corresponding
revenues, at least until the consummation of a business
combination. This may result in the Company incurring a net
operating loss which will increase continuously until the Company
can consummate a business combination with a profitable business
opportunity. There is no assurance that the Company can identify
such a business opportunity and consummate such a business
combination.
Speculative Nature of Company's Proposed Operations. The
success of the Company's proposed plan of operation will depend to
a great extent on the operations, financial condition and
management of the identified business opportunity. While
management intends to seek business combination(s) with entities
having established operating histories, there can be no assurance
that the Company will be successful in locating candidates meeting
such criteria. In the event the Company completes a business
combination, of which there can be no assurance, the success of the
Company's operations may be dependent upon management of the
successor firm or venture partner firm and numerous other factors
beyond the Company's control.
Scarcity of and Competition for Business Opportunities and
Combinations. The Company is and will continue to be an
insignificant participant in the business of seeking mergers with,
joint ventures with and acquisitions of small private and public
entities. A large number of established and well-financed
entities, including venture capital firms, are active in mergers
and acquisitions of companies which may be desirable target
candidates for the Company. Nearly all such entities have
significantly greater financial resources, technical expertise and
managerial capabilities than the Company and, consequently, the
Company will be at a competitive disadvantage in identifying
possible business opportunities and successfully completing a
business combination. Moreover, the Company will also compete in
seeking merger or acquisition candidates with numerous other small
public companies.
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No Agreement for Business Combination or Other Transaction, No
Standards for Business Combination. The Company has no arrangement,
agreement or understanding with respect to engaging in a merger
with, joint venture with or acquisition of, a private or public
entity. There can be no assurance the Company will be successful
in identifying and evaluating suitable business opportunities or in
concluding a business combination. Management has not identified
any particular industry or specific business within an industry for
evaluation by the Company. There is no assurance the Company will
be able to negotiate a business combination on terms favorable to
the Company. The Company has not established a specific length of
operating history or a specified level of earnings, assets, net
worth or other criteria which it will require a target business
opportunity to have achieved and without which the Company would
not consider a business combination in any form with such business
opportunity. Accordingly, the Company may enter into a business
combination with a business opportunity having no significant
operating history, losses, limited or no potential for earnings,
limited assets, negative net worth or other negative
characteristics.
Continued Management Control, Limited Time Availability.
Management presently holds approximately 64% interest in the
Company, which will assure adoption of any matter acceptable to
management which requires majority approval by the Company's
shareholders. While seeking a business combination, management
anticipates devoting up to twenty hours per month to the business
of the Company. None of the Company's officers has entered into a
written employment agreement with the Company and none is expected
to do so in the foreseeable future. The Company has not obtained
key man life insurance on any of its officers or directors.
Notwithstanding the combined limited experience and time commitment
of management, loss of the services of any of these individuals
would adversely affect development of the Company's business and
its likelihood of continuing operations. See "Item 4. Security
Ownership of Certain Beneficial Owners and Management."
Conflicts of Interest - General. Officers and directors of
the Company may in the future participate in business ventures
which could be deemed to compete directly with the Company.
Additional conflicts of interest and non-arms length transactions
may also arise in the future in the event the Company's officers or
directors are involved in the management of any firm with which the
Company transacts business. Management has adopted a policy that
the Company will not seek a merger with, or acquisition of, any
entity in which management serve as officers, directors or
partners, or in which they or their family members own or hold any
ownership interest.
Reporting Requirements May Delay or Preclude Acquisition.
Sections 13 and 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), require companies subject thereto to provide
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certain information about significant acquisitions, including
certified financial statements for the company acquired, covering
one, two, or three years, depending on the relative size of the
acquisition. The time and additional costs that may be incurred by
some target entities to prepare such statements may significantly
delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company. Acquisition prospects that
do not have or are unable to obtain the required audited statements
may not be appropriate for acquisition so long as the reporting
requirements of the 1934 Act are applicable.
Lack of Market Research or Marketing Organization. The
Company has neither conducted, nor have others made available to
it, results of market research indicating that market demand exists
for the transactions contemplated by the Company. Moreover, the
Company does not have, and does not plan to establish, a marketing
organization. Even in the event demand is identified for a merger
or acquisition contemplated by the Company, there is no assurance
the Company will be successful in completing any such business
combination.
Lack of Diversification. The Company's proposed operations,
even if successful, will in all likelihood result in the Company
engaging in a business combination with a business opportunity.
Consequently, the Company's activities may be limited to those
engaged in by business opportunities which the Company merges with
or acquires. The Company's inability to diversify its activities
into a number of areas may subject the Company to economic
fluctuations within a particular business or industry and therefore
increase the risks associated with the Company's operations.
Regulation. Although the Company will be subject to
regulation under the Securities Exchange Act of 1934, management
believes the Company will not be subject to regulation under the
Investment Company Act of 1940, insofar as the Company will not be
engaged in the business of investing or trading in securities. In
the event the Company engages in business combinations which result
in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would
be required to register as an investment company and could be
expected to incur significant registration and compliance costs.
The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company
under the Investment Company Act of 1940 and, consequently, any
violation of such Act would subject the Company to material adverse
consequences.
Probable Change in Control and Management. A business
combination involving the issuance of the Company's Common Shares
will, in all likelihood, result in shareholders of a private
company obtaining a controlling interest in the Company. Any such
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business combination may require management of the Company to sell
or transfer all or a portion of the Company's Common Shares held by
them, or resign as members of the Board of Directors of the
Company. The resulting change in control of the Company could
result in removal of one or more present officers and directors of
the Company and a corresponding reduction in or elimination of
their participation in the future affairs of the Company.
Reduction of Percentage Share Ownership Following Business
Combination. The Company's primary plan of operation is based
upon a business combination with a private concern which, in all
likelihood, would result in the Company issuing securities to
shareholders of any such private company. The issuance of
previously authorized and unissued Common Shares of the Company
would result in reduction in percentage of shares owned by present
and prospective shareholders of the Company and may result in a
change in control or management of the Company.
Disadvantages of Blank Check Offering. The Company may enter
into a business combination with an entity that desires to
establish a public trading market for its shares. A business
opportunity may attempt to avoid what it deems to be adverse
consequences of undertaking its own public offering by seeking a
business combination with the Company. Such consequences may
include, but are not limited to, time delays of the registration
process, significant expenses to be incurred in such an offering,
loss of voting control to public shareholders and the inability or
unwillingness to comply with various federal and state laws enacted
for the protection of investors.
Taxation. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination the
Company may undertake. Currently, such transactions may be
structured so as to result in tax-free treatment to both companies,
pursuant to various federal and state tax provisions. The Company
intends to structure any business combination so as to minimize the
federal and state tax consequences to both the Company and the
target entity; however, there can be no assurance that such
business combination will meet the statutory requirements of a tax-
free reorganization or that the parties will obtain the intended
tax-free treatment upon a transfer of stock or assets. A non-
qualifying reorganization could result in the imposition of both
federal and state taxes which may have an adverse effect on both
parties to the transaction.
Requirement of Audited Financial Statements May Disqualify
Business Opportunities. Management of the Company believes that
any potential business opportunity must provide audited financial
statements for review, for the protection of all parties to the
business combination. One or more attractive business
opportunities may choose to forego the possibility of a business
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combination with the Company, rather than incur the expenses
associated with preparing audited financial statements.
Item 2. Plan of Operation
The Company intends to seek to acquire assets or shares of an
entity actively engaged in business which generates revenues, in
exchange for its securities. The Company has no particular
acquisitions in mind and has not entered into any negotiations
regarding such an acquisition. None of the Company's officers,
directors, promoters or affiliates have engaged in any preliminary
contact or discussions with any representative of any other company
regarding the possibility of an acquisition or merger between the
Company and such other company as of the date of this registration
statement.
The Company has no full time employees. The Company's
President and Secretary have agreed to allocate a portion of their
time to the activities of the Company, without compensation. These
officers anticipate that the business plan of the Company can be
implemented by their devoting approximately 20 hours per month to
the business affairs of the Company and, consequently, conflicts of
interest may arise with respect to the limited time commitment by
such officers. See "Item 5. Directors, Executive Officers,
Promoters and Control Persons - Resumes."
The Company's officers and directors may, in the future,
become involved with other companies who have a business purpose
similar to that of the Company. As a result, potential conflicts
of interest may arise in the future. If such a conflict does arise
and an officer or director of the Company is presented with
business opportunities under circumstances where there may be a
doubt as to whether the opportunity should belong to the Company or
another "blank check" company they are affiliated with, they will
disclose the opportunity to all such companies. If a situation
arises in which more than one company desires to merge with or
acquire that target company and the principals of the proposed
target company has no preference as to which company will merger or
acquire such target company, the company which first filed a
registration statement with the Securities and Exchange Commission
will be entitled to proceed with the proposed transaction.
The Articles of Incorporation of the Company provides that the
Company shall possess and may indemnify officers and/or directors
of the Company for liabilities, which can include liabilities
arising under the securities laws. Therefore, assets of the
Company could be used or attached to satisfy any liabilities
subject to such indemnification. See "PART II - Item 5.
Indemnification of Directors and Officers."
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General Business Plan
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business
opportunities presented to it by persons or firms who or which
desire to seek the perceived advantages of an Exchange Act
registered corporation. The Company will not restrict its search
to any specific business, industry, or geographical location and
the Company may participate in a business venture of virtually any
kind or nature. This discussion of the proposed business is
purposefully general and is not meant to be restrictive of the
Company's virtually unlimited discretion to search for and enter
into potential business opportunities. Management anticipates that
it may be able to participate in only one potential business
venture because the Company has nominal assets and limited
financial resources. See "PART F/S - Financial Statements." This
lack of diversification should be considered a substantial risk to
shareholders of the Company because it will not permit the Company
to offset potential losses from one venture against gains from
another.
The Company may seek a business opportunity with entities
which have recently commenced operations, or which wish to utilize
the public marketplace in order to raise additional capital in
order to expand into new products or markets, to develop a new
product or service, or for other corporate purposes. The Company
may acquire assets and establish wholly owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business
opportunity in which to participate will be complex and extremely
risky. Due to general economic conditions, rapid technological
advances being made in some industries and shortages of available
capital, management believes that there are numerous firms seeking
the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms
on which additional equity financing may be sought, providing
liquidity for incentive stock options or similar benefits to key
employees, providing liquidity (subject to restrictions of
applicable statutes), for all shareholders and other factors.
Potentially, available business opportunities may occur in many
different industries and at various stages of development, all of
which will make the task of comparative investigation and analysis
of such business opportunities extremely difficult and complex.
The Company has, and will continue to have, no capital
with which to provide the owners of business opportunities with any
significant cash or other assets. However, management believes the
Company will be able to offer owners of acquisition candidates the
opportunity to acquire a controlling ownership interest in a
publicly registered company without incurring the cost and time
required to conduct an initial public offering. The owners of the
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business opportunities will, however, incur significant legal and
accounting costs in connection with acquisition of a business
opportunity, including the costs of preparing Form 8-K's, 10-K's or
10-KSB's, agreements and related reports and documents. The
Securities Exchange Act of 1934 (the "34 Act") specifically
requires that any merger or acquisition candidate comply with all
applicable reporting requirements, which include providing audited
financial statements to be included within the numerous filings
relevant to complying with the 34 Act. Nevertheless, the officers
and directors of the Company have not conducted market research and
are not aware of statistical data which would support the perceived
benefits of a merger or acquisition transaction for the owners of
a business opportunity.
The analysis of new business opportunities will be
undertaken by, or under the supervision of, the officers and
directors of the Company, none of whom is a professional business
analyst. Management intends to concentrate on identifying
preliminary prospective business opportunities which may be brought
to its attention through present associations of the Company's
officers and directors, or by the Company's shareholders. In
analyzing prospective business opportunities, management will
consider such matters as the available technical, financial and
managerial resources; working capital and other financial
requirements; history of operations, if any; prospects for the
future; nature of present and expected competition; the quality and
experience of management services which may be available and the
depth of that management; the potential for further research,
development, or exploration; specific risk factors not now
foreseeable but which then may be anticipated to impact the
proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the perceived public
recognition of acceptance of products, services, or trades; name
identification; and other relevant factors. Officers and directors
of the Company expect to meet personally with management and key
personnel of the business opportunity as part of their
investigation. To the extent possible, the Company intends to
utilize written reports and personal investigation to evaluate the
above factors. The Company will not acquire or merge with any
company for which audited financial statements cannot be obtained
within a reasonable period of time after closing of the proposed
transaction.
Management of the Company, while not especially experienced in
matters relating to the new business of the Company, shall rely
upon their own efforts as well as the efforts of the Company's
legal counsel and, to a much lesser extent, the efforts of the
Company's shareholders, in accomplishing the business purposes of
the Company. It is not anticipated that any outside consultants or
advisors will be utilized by the Company to effectuate its business
purposes described herein. However, if the Company does retain
such an outside consultant or advisor, any cash fee earned by such
party will need to be paid by the prospective merger/acquisition
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candidate, as the Company has minimal cash assets with which to pay
such obligation. There have been no contracts or agreements with
any outside consultants and none are anticipated in the future.
The Company will not restrict its search for any specific
kind of firms, but may acquire a venture which is in its
preliminary or development stage, which is already in operation, or
in essentially any stage of its corporate life. It is impossible
to predict at this time the status of any business in which the
Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded,
or may seek other perceived advantages which the Company may offer.
However, the Company does not intend to obtain funds in one or more
private placements to finance the operation of any acquired
business opportunity until such time as the Company has
successfully consummated such a merger or acquisition.
It is anticipated that the Company will incur nominal expenses
in the implementation of its business plan described herein.
Because the Company has no capital with which to pay these
anticipated expenses, present management of the Company will pay
these charges with their personal funds, as interest free loans to
the Company. However, the only opportunity which management has to
have these loans repaid will be from a prospective merger or
acquisition candidate. Management has agreed among themselves that
the repayment of any loans made on behalf of the Company will not
impede, or be made conditional in any manner, to consummation of a
proposed transaction.
Acquisition of Opportunities
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, reorganization, joint venture, or licensing
agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and
shareholders of the Company will no longer be in control of the
Company. In addition, the Company's directors may, as part of the
terms of the acquisition transaction, resign and be replaced by new
directors without a vote of the Company's shareholders or may sell
their stock in the Company. Any terms of sale of the shares
presently held by officers and/or directors of the Company will be
also afforded to all other shareholders of the Company on similar
terms and conditions. Any and all such sales will only be made in
compliance with the securities laws of the United States and any
applicable state.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance upon exemption from
registration under applicable federal and state securities laws.
In some circumstances, however, as a negotiated element of its
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transaction, the Company may agree to register all or a part of
such securities immediately after the transaction is consummated or
at specified times thereafter. If such registration occurs, of
which there can be no assurance, it will be undertaken by the
surviving entity after the Company has successfully consummated a
merger or acquisition and the Company is no longer considered a
"shell" company. Until such time as this occurs, the Company will
not attempt to register any additional securities. The issuance of
substantial additional securities and their potential sale into any
trading market which may develop in the Company's securities may
have a depressive effect on the value of the Company's securities
in the future, if such a market develops, of which there is no
assurance.
While the actual terms of a transaction to which the
Company may be a party cannot be predicted, it may be expected that
the parties to the business transaction will find it desirable to
avoid the creation of a taxable event and thereby structure the
acquisition in a so-called "tax-free" reorganization under Sections
368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In
order to obtain tax-free treatment under the Code, it may be
necessary for the owners of the acquired business to own 80% or
more of the voting stock of the surviving entity. In such event,
the shareholders of the Company, would retain less than 20% of the
issued and outstanding shares of the surviving entity, which would
result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and
directors of the Company will meet personally with management and
key personnel, may visit and inspect material facilities, obtain
independent analysis of verification of certain information
provided, check references of management and key personnel and take
other reasonable investigative measures, to the extent of the
Company's limited financial resources and management expertise.
The manner in which the Company participates in an opportunity will
depend on the nature of the opportunity, the respective needs and
desires of the Company and other parties, the management of the
opportunity and the relative negotiation strength of the Company
and such other management.
With respect to any merger or acquisition, negotiations with
target company management is expected to focus on the percentage of
the Company which the target company shareholders would acquire in
exchange for all of their shareholdings in the target company.
Depending upon, among other things, the target company's assets and
liabilities, the Company's shareholders will in all likelihood hold
a substantially lesser percentage ownership interest in the Company
following any merger or acquisition. The percentage ownership may
be subject to significant reduction in the event the Company
acquires a target company with substantial assets. Any merger or
acquisition effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held by the
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Company's then shareholders. In the event it is necessary to
obtain the approval of the shareholders of the Company to lawfully
consummate a business transaction, the effect will be to assure
such approval where management supports such a business transaction
because management presently controls sufficient shares of the
Company to effectuate a positive vote on the proposed transaction.
The Company will participate in a business opportunity
only after the negotiation and execution of appropriate written
agreements. Although the terms of such agreements cannot be
predicted, generally such agreements will require some specific
representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing
and the conditions which must be satisfied by each of the parties
prior to and after such closing, will outline the manner of bearing
costs, including costs associated with the Company's attorneys and
accountants, will set forth remedies on default and will include
miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge
with any entity which cannot provide independent audited financial
statements within a reasonable period of time after closing of the
proposed transaction. The Company is subject to all of the
reporting requirements included in the 34 Act. Included in these
requirements is the affirmative duty of the Company to file
independent audited financial statements as part of its Form 8-K to
be filed with the Securities and Exchange Commission upon
consummation of a merger or acquisition, as well as the Company's
audited financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial
statements are not available at closing, or within time parameters
necessary to insure the Company's compliance with the requirements
of the 34 Act, or if the audited financial statements provided do
not conform to the representations made by the candidate to be
acquired in the closing documents, the closing documents may
provide that the proposed transaction will be voidable, at the
discretion of the present management of the Company. If such
transaction is voided, the agreement may also contain a provision
providing for the acquisition entity to reimburse the Company for
all costs associated with the proposed transaction.
Competition
The Company will remain an insignificant participant among
the firms which engage in the acquisition of business
opportunities. There are many established venture capital and
financial concerns which have significantly greater financial and
personnel resources and technical expertise than the Company. In
view of the Company's combined extremely limited financial
resources and limited management availability, the Company will
continue to be at a significant competitive disadvantage compared
to the Company's competitors.
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Item 3. Description of Property
The Company has no properties and at this time has no
agreements to acquire any properties. The Company intends to
attempt to acquire assets or a business in exchange for its
securities which assets or business is determined to be desirable
for its objectives.
The Company operates from its offices at 5650 Greenwood Plaza
Blvd., Suite 216, Englewood, Colorado 80111. This space is
provided to the Company on a rent free basis by the President of
the Company and it is anticipated that this arrangement will remain
until such time as the Company successfully consummates a merger or
acquisition. Management believes that this space will meet the
Company's needs for the foreseeable future.
Item 4. Security Ownership of Certain Beneficial Owners and
Management
The table below lists the beneficial ownership of the
Company's voting securities by each person known by the Company to
be the beneficial owner of more than 5% of such securities, as well
as the securities of the Company beneficially owned by all
directors and officers of the Company. Unless otherwise indicated,
the shareholders listed possess sole voting and investment power
with respect to the shares shown.
Name and Amount and
Address of Nature of
Title Beneficial Beneficial Percent of
of Class Owner Owner Class
________ _________________________ __________ __________
Common Greg Simonds 160,000 32%
5650 Greenwood Plaza Blvd.
Suite 216
Englewood, CO 80111
Common Greg Skufca 160,000 32%
5650 Greenwood Plaza Blvd.
Suite 216
Englewood, CO 80111
Common All Officers and 320,000 64%
Directors as a
Group (2 persons)
- -------------------
The balance of the Company's outstanding Common Shares are
held by 8 persons.
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Item 5. Directors, Executive Officers, Promoters and Control
Persons.
The directors and officers of the Company are as follows:
Name Age Position
________________ ___ _________________________
Gregory J. Simonds 45 President, Director
Gregory W. Skufca 38 Secretary/Treasurer &
Director
The above listed officers and directors will serve until the
next annual meeting of the shareholders or until their death,
resignation, retirement, removal, or disqualification, or until
their successors have been duly elected and qualified. Vacancies
in the existing Board of Directors are filled by majority vote of
the remaining Directors. Officers of the Company serve at the will
of the Board of Directors. There is no family relationship between
any executive officer and director of the Company.
Resumes
Gregory J. Simonds, is President and a director of the
Company, positions he has held since the Company's inception. In
addition to his positions with the Company, since June 1991, Mr.
Simonds has been self-employed, acting as a consultant to various
different companies, both public and private, as well as managing
his own investment portfolio. Mr. Simonds is also President,
Treasurer and a Director of Golden Chain Marketing, Inc., a
privately held Colorado corporation in the development stage which
intends to engage in the business of designing, maufacturing,
merchandising and wholesale distribution of a full line of gold and
silver products. Further, Mr. Simonds is also President and a
director of Princeton Management Corporation, a Colorado
corporation whose principal business is the same as that of the
Company. Mr. Simonds received a Bachelor of Science degree from
New England College, Henniker, New Hampshire in 1973. Mr. Simonds
devotes only such time as necessary to the business of the Company,
which time is not expected to exceed 20 hours per month.
Gregory W. Skufca, is Secretary/Treasurer and a director of
the Company, positions he has held since the Company's inception.
In addition to his positions with the Company, since January 1989,
Mr. Skufca is also the President of Financial Communications,
Englewood, Colorado, a sole proprietorship engaged in assisting
public and private investors, assisting in the obtaining and
structuring of venture capital financing and public relations. IN
addition, Mr. Skufca is also Vice President, Secretary and a
director of Golden Chain Marketing, Inc. Prior, from May 1987
through January 1989, Mr. Skufca served as a loan officer and
15
<PAGE>
consultant with Skufca-Meyer Financial Corp., Lakewood, Colorado,
a small privately held lender specializing in residential mortgages
and corporate financing. Mr. Skufca obtained a Bachelor's degree
from the University of Colorado at Boulder in 1980. He devotes
only such time as necessary to the business of the Company, which
is not expected to exceed 20 hours per month.
Prior "Blank Check" Experience
Mr. Skufca has formerly participated in the following "Blank
Check" offerings:
From September 1987 through July 1988, Mr. Skufca served as
President and director of Marantha II, Inc. ("Marantha"). In July
1988, Marantha consummated a reverse merger with Equity Investors,
Inc. ("Equity") wherein Marantha issued 90% of its common stock to
the shareholders of Equity. Equity was engaged in the business of
real estate investment, management and related services. After
this acquisition, Mr. Skufca resigned his positions with Marantha,
which also changed its name to Equity Financial Group, Inc. Equity
Financial Group, Inc. ceased operations in 1990.
In April 1988, Mr. Skufca accepted the appointment to the
positions of President and a director of Parle International, Inc.
("Parle"). In October 1988, Parle successfully completed an
initial public offering of its securities on a "blank check" basis.
In December 1988, Parle acquired Vision Pictures, Inc., a Los
Angeles, California based motion picture company. Mr. Skufca
resigned as President of Parle simultaneous with the closing of
this transaction and thereafter resigned as a director in 1989.
Vision Pictures, Inc. changed its name to Independent Telemedia in
1990. Independent Telemedia trades on the NASDAQ under the symbol
"INDE." As of the date of this registration statement, INDE's
common stock trades at a price of $2.75 per share.
Also in 1988, Mr. Skufca became the President and a director
of Kiwi III, Ltd. ("Kiwi"), a "blank check" company. Kiwi
conducted an initial public offering of its securities and
thereafter, in October 1989, acquired Beat the House Enterprises,
Inc., Las Vegas, Nevada, a manufacturer of gaming devices.
Simultaneous with the closing of this transaction, Mr. Skufca
resigned his positions with Kiwi. In 1994, Kiwi changed its
business operations to the oil and gas industry and also changed
its name to Petro Union. Petro Union trades on the NASDAQ under
the symbol "PTRUQ" at a price of $.15 as of the date of this
registration statement.
Mr. Skufca also served as President and a director of Focus V,
Inc. ("Focus"). Focus undertook an initial public offering of its
securities and, thereafter, in December 1989, acquired Work
Recovery Centers, Inc. ("WRCI"), a Tucson, Arizona based
manufacturer and distributor of computerized work stations and
16
<PAGE>
assessment centers for the workman rehabilitation industry. Mr.
Skufca resigned his positions with Focus upon the closing of the
transaction with WRCI. WRCI trades on the OTC Bulletin Board at a
price of $.21 as of the date of this registration statement.
In October 1989, Mr. Skufca became President of Plantation
Capital Corp. ("PCC") which undertook an initial public offering of
its securities and, thereafter, in December 1990, acquired
Rehabnet, Inc. Mr. Skufca resigned his positions with Plantation
upon the closing of the transaction with Rehabnet. In May 1994,
Rehabnet was acquired by Work Recovery Centers, Inc. in a share-
for-share exchange. In July 1994, Rehabnet acquired Forestry
International. Forestry International trades on the Bulletin Board
under the symbol "FYNI" at a price of $.27 per share as of the date
of this registration statement.
In July 1994, Mr. Skufca became President of Knight Natural
Gas, Inc. ("Knight") In August 1996, Knight acquired Kalan Gold
Corp., a gold exploration company which trades on the OTC Bulletin
Board under the symbol "KNGC" at a price of $4.50 as of the date of
this registration statement. Upon consummation of the transaction
with Kalan Gold Corp., Mr. Skufca resigned his position with
Knight.
Mr. Skufca was also President and a director of HA Spinnaker,
Inc., a Colorado corporation ("Spinnaker"), whose principal
business was consistent with the business of the Company described
herein. As of the date of this registration statement, Spinnaker
has executed a Plan of Reorganization with Zaba International,
Inc., a Nevada corporation engaged in the business of manufacturing
tillage and seeding agricultural equipment, street sweepers and
what current management views as a new asphalt surface pothole
patcher. However, subsequent to execution of the closing
documents, management of Spinnaker discovered certain material
inaccuracies in the representations and warranties made by Zaba and
included in the applicable Agreement. Pursuant to the terms of
said Agreement, management of Spinnaker provided notice of the same
to management of Zaba. As a result, management of Zaba is
attempting to cure any and all defects. There are no assurances
that this transaction will become effective in the future.
In addition, Mr. Simonds is also President and a director of
Princeton Management Corporation, a Colorado corporation
("Princeton") whose principal business is consistent with the
business of the Company as outlined hereinabove. As of the date of
this registration statement, Princeton is in the process of
reviewing potential merger or acquisition candidates, but no
definitive agreement has been reached with any third party relevant
thereto.
17
<PAGE>
Conflicts of Interest
Members of the Company's management are associated with other
firms involved in a range of business activities. Consequently,
there are potential inherent conflicts of interest in their acting
as officers and directors of the Company. Insofar as the officers
and directors are engaged in other business activities, management
anticipates it will devote only a minor amount of time to the
Company's affairs.
The officers and directors of the Company are now and may in
the future become shareholders, officers or directors of other
companies which may be formed for the purpose of engaging in
business activities similar to those conducted by the Company.
Accordingly, additional direct conflicts of interest may arise in
the future with respect to such individuals acting on behalf of the
Company or other entities. Moreover, additional conflicts of
interest may arise with respect to opportunities which come to the
attention of such individuals in the performance of their duties or
otherwise. The Company does not currently have a right of first
refusal pertaining to opportunities that come to management's
attention insofar as such opportunities may relate to the Company's
proposed business operations.
The officers and directors are, so long as they are officers
or directors of the Company, subject to the restriction that all
opportunities contemplated by the Company's plan of operation which
come to their attention, either in the performance of their duties
or in any other manner, will be considered opportunities of, and be
made available to the Company and the companies that they are
affiliated with on an equal basis. A breach of this requirement
will be a breach of the fiduciary duties of the officer or
director. If the Company or the companies in which the officers
and directors are affiliated with both desire to take advantage of
an opportunity, then said officers and directors would abstain from
negotiating and voting upon the opportunity. However, all
directors may still individually take advantage of opportunities if
the Company should decline to do so. Except as set forth above,
the Company has not adopted any other conflict of interest policy
with respect to such transactions.
Investment Company Act of 1940
Although the Company will be subject to regulation under the
Securities Act of 1933 and the Securities Exchange Act of 1934,
management believes the Company will not be subject to regulation
under the Investment Company Act of 1940 insofar as the Company
will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business
combinations which result in the Company holding passive investment
interests in a number of entities, the Company could be subject to
regulation under the Investment Company Act of 1940. In such
18
<PAGE>
event, the Company would be required to register as an investment
company and could be expected to incur significant registration and
compliance costs. The Company has obtained no formal determination
from the Securities and Exchange Commission as to the status of the
Company under the Investment Company Act of 1940 and, consequently,
any violation of such Act would subject the Company to material
adverse consequences. The Company's Board of Directors unanimously
approved a resolution stating that it is the Company's desire to be
exempt from the Investment Company Act of 1940 via Regulation 3a-2
thereto.
Item 6. Executive Compensation.
None of the Company's officers and/or directors receive any
compensation for their respective services rendered unto the
Company, nor have they received such compensation in the past.
They all have agreed to act without compensation until authorized
by the Board of Directors, which is not expected to occur until the
Company has generated revenues from operations after consummation
of a merger or acquisition. As of the date of this registration
statement, the Company has no funds available to pay directors.
Further, none of the directors are accruing any compensation
pursuant to any agreement with the Company.
It is possible that, after the Company successfully
consummates a merger or acquisition with an unaffiliated entity,
that entity may desire to employ or retain one or a number of
members of the Company's management for the purposes of providing
services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a
policy whereby the offer of any post-transaction remuneration to
members of management will not be a consideration in the Company's
decision to undertake any proposed transaction. Each member of
management has agreed to disclose to the Company's Board of
Directors any discussions concerning possible compensation to be
paid to them by any entity which proposes to undertake a
transaction with the Company and further, to abstain from voting on
such transaction. Therefore, as a practical matter, if each member
of the Company's Board of Directors is offered compensation in any
form from any prospective merger or acquisition candidate, the
proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to
affirmatively approve such a transaction.
It is possible that persons associated with management may
refer a prospective merger or acquisition candidate to the Company.
In the event the Company consummates a transaction with any entity
referred by associates of management, it is possible that such an
associate will be compensated for their referral in the form of a
finder's fee. It is anticipated that this fee will be either in
the form of restricted common stock issued by the Company as part
of the terms of the proposed transaction, or will be in the form of
19
<PAGE>
cash consideration. However, if such compensation is in the form
of cash, such payment will be tendered by the acquisition or merger
candidate, because the Company has insufficient cash available.
The amount of such finder's fee cannot be determined as of the date
of this registration statement, but such compensation will be
negotiated on an "arm's length" basis between the respective
parties. Any such arrangement is expected to be comparable to
consideration normally paid in like transactions, in that the total
compensation is not expected to exceed 10% of the value of such
transaction. No member of management of the Company will receive
any finder's fee, either directly or indirectly, as a result of
their respective efforts to implement the Company's business plan
outlined herein.
In August 1996, the shareholders approved the adoption of a
Stock Plan pursuant to Rule 701 promulgated under the Securities
Act of 1933 for the benefit of its officers, directors and
employees. As of the date of this registration statement, no
shares have been issued under the plan.
Item 7. Certain Relationships and Related Transactions.
GS2 Partnership, a partnership owned by Greg Simonds and Greg
Skufca, principal shareholders of the Company, has advanced loans
to the Company in the aggregate principal amount of $69,510, which
loans are unsecured demand notes bearing interest at six percent
per annum. The entire principal and interest of the notes are due
December 31, 1997. Messrs. Simonds and Skufca have indicated that
they will extend the due date of the notes and will not make demand
upon the Company for repayment of the loans until such time as the
Company has sufficient assets to pay the same.
There have been no other related party transactions, or any
other transactions or relationships required to be disclosed
pursuant to Item 404 of Regulation S-B.
Item 8. Description of Securities.
The Company's authorized capital stock consists of 120,000,000
shares, of which 20,000,000 shares are Preferred Shares, par value
$0.01 per share, and 100,000,000 are Common Shares, par value
$0.0001 per share. There are 500,000 Common Shares issued and
outstanding as of the date of this filing. There are no preferred
shares issued or outstanding.
Common Stock. All shares of Common Stock have equal voting
rights and, when validly issued and outstanding, are entitled to
one vote per share in all matters to be voted upon by shareholders.
The shares of Common Stock have no preemptive, subscription,
conversion or redemption rights and may be issued only as fully-
paid and nonassessable shares. Cumulative voting in the election
of directors is not permitted, which means that the holders of a
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<PAGE>
majority of the issued and outstanding shares of Common Stock
represented at any meeting at which a quorum is present will be
able to elect the entire Board of Directors if they so choose and,
in such event, the holders of the remaining shares of Common Stock
will not be able to elect any directors. In the event of
liquidation of the Company, each shareholder is entitled to receive
a proportionate share of the Company's assets available for
distribution to shareholders after the payment of liabilities and
after distribution in full of preferential amounts, if any. All
shares of the Company's Common Stock issued and outstanding are
fully paid and nonassessable. Holders of the Common Stock are
entitled to share pro rata in dividends and distributions with
respect to the Common Stock, as may be declared by the Board of
Directors out of funds legally available therefor.
Preferred Shares. Shares of Preferred Stock may be issued
from time to time in one or more series as may be determined by the
Board of Directors. The voting powers and preferences, the
relative rights of each such series and the qualifications,
limitations and restrictions thereof shall be established by the
Board of Directors, except that no holder of Preferred Stock shall
have preemptive rights. The Company has no shares of Preferred
Stock outstanding, and the Board of Directors does not plan to
issue any shares of Preferred Stock for the foreseeable future,
unless the issuance thereof shall be in the best interests of the
Company. This may include issuance of Preferred Stock to deter or
delay a takeover that the Company's management opposes, or as part
of the structure of a proposed merger or acquisition as a mechanism
to means of providing control over the Company to the parties to
whom such shares were issued.
The proposed business activities described herein classify the
Company as a "blank check" company. Many states have enacted
statutes, rules and regulations limiting the sale of securities of
"blank check" companies in their respective jurisdictions.
Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities until such time as
the Company has successfully implemented its business plan
described herein. Relevant thereto, each shareholder of the
Company has executed and delivered a "lock-up" letter agreement,
affirming that they shall not sell their respective shares of the
Company's common stock until such time as the Company has
successfully consummated a merger or acquisition and the Company is
no longer classified as a "blank check" company. In order to
provide further assurances that no trading will occur in the
Company's securities until a merger or acquisition has been
consummated, each shareholder has agreed to place their respective
stock certificate with the Company's legal counsel, Andrew I.
Telsey, P.C., who will not release these respective certificates
until such time as legal counsel has confirmed that a merger or
acquisition has been successfully consummated. However, while
management believes that the procedures established to preclude any
21
<PAGE>
sale of the Company's securities prior to closing of a merger or
acquisition will be sufficient, there can be no assurances that the
procedures established relevant herein will unequivocally limit any
shareholder's ability to sell their respective securities before
such closing.
PART II
Item 1. Market Price of and Dividends on Registrant's Common
Equity and Other Shareholder Matters.
There is no trading market for the Company's Common Stock at
present and there has been no trading market to date. Management
has not undertaken any discussions, preliminary or otherwise, with
any prospective market maker concerning the participation of such
market maker in the aftermarket for the Company's securities and
management does not intend to initiate any such discussions until
such time as the Company has consummated a merger or acquisition.
There is no assurance that a trading market will ever develop or,
if such a market does develop, that it will continue.
a. Market Price. The Company's Common Stock is not quoted at
the present time.
The Securities and Exchange Commission has adopted a Rule
which established the definition of a "penny stock," for purposes
relevant to the Company, as any equity security that has a market
price of less than $5.00 per share or with an exercise price of
less than $5.00 per share, subject to certain exceptions. For any
transaction involving a penny stock, unless exempt, the rules
require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive
from the investor a written agreement to the transaction, setting
forth the identity and quantity of the penny stock to be purchased.
In order to approve a person's account for transactions in penny
stocks, the broker or dealer must (i) obtain financial information
and investment experience and objectives of the person; and (ii)
make a reasonable determination that the transactions in penny
stocks are suitable for that person and that person has sufficient
knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks. The broker
or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to
the penny stock market, which, in highlight form, (i) sets forth
the basis on which the broker or dealer made the suitability
determination, and (ii) that the broker or dealer received a
signed, written agreement from the investor prior to the
transaction. Disclosure also has to be made about the risks of
investing in penny stock in both public offering and in secondary
trading, and about commissions payable to both the broker-dealer
and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in
22
<PAGE>
cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for
the penny stock held in the account and information on the limited
market in penny stocks.
The National Association of Securities Dealers, Inc. (the
"NASD"), which administers NASDAQ, has recently made changes in the
criteria for continued NASDAQ eligibility. In order to continue to
be included on NASDAQ, a company must maintain $2,000,000 in total
assets, a $200,000 market value of its publicly traded securities
and $1,000,000 in total capital and surplus. In addition,
continued inclusion requires two market makers and a minimum bid
price of $1.00 per share; provided, however, that if a company
falls below such minimum bid price it will remain eligible for
continued inclusion on NASDAQ if the market value of its publicly
traded securities is at least $1,000,000 and the Company has
$2,000,000 in capital and surplus.
Management intends to strongly consider undertaking a
transaction with any merger or acquisition candidate which will
allow the Company's securities to be traded without the aforesaid
limitations. However, there can be no assurances that, upon a
successful merger or acquisition, the Company will qualify its
securities for listing on NASDAQ or some other national exchange,
or be able to maintain the maintenance criteria necessary to insure
continued listing. The failure of the Company to qualify its
securities or to meet the relevant maintenance criteria after such
qualification in the future may result in the discontinuance of the
inclusion of the Company's securities on a national exchange. In
such events, trading, if any, in the Company's securities may then
continue in the non-NASDAQ over-the-counter market. As a result,
a shareholder may find it more difficult to dispose of, or to
obtain accurate quotations as to the market value of, the Company's
securities.
b. Holders. There are twelve (10) holders of the Company's
Common Stock. In October 1994, the Company issued 50,000 shares of
its Common Shares to its initial shareholders for cash
consideration of $500.00 ($.01 per share) and, subsequently, in
September 1997, the Company undertook a forward split of its issued
and outstanding common stock, whereby ten (10) shares were issued
in exchange for each share then issued and outstanding. All of the
issued and outstanding shares of the Company's Common Stock were
issued in accordance with the exemption from registration afforded
by Section 4(2) of the Securities Act of 1933.
As of the date of this registration statement, all of the
shares of the Company's Common Stock are eligible for sale under
Rule 144 promulgated under the Securities Act of 1933, as amended,
subject to certain limitations included in said Rule. In general,
under Rule 144, a person (or persons whose shares are aggregated),
who has satisfied a one year holding period, under certain
23
<PAGE>
circumstances, may sell within any three month period a number of
shares which does not exceed the greater of one percent of the then
outstanding Common Stock or the average weekly trading volume
during the four calendar weeks prior to such sale. Rule 144 also
permits, under certain circumstances, the sale of shares without
any quantity limitation by a person who has satisfied a two year
holding period and who is not, and has not been for the preceding
three months, an affiliate of the Company.
c. Dividends. The Company has not paid any dividends to
date, and has no plans to do so in the immediate future.
Item 2. Legal Proceedings.
There is no litigation pending or threatened by or against
the Company.
Item 3. Changes in and Disagreements With Accountants.
The Company has not changed accountants since its
formation and there are no disagreements with the findings of said
accountants.
Item 4. Recent Sales of Unregistered Securities.
The Company has not issued any of its securities since October
1994. All of the shares of Common Stock of the Company previously
issued have been issued for investment purposes in a "private
transaction" and are "restricted" shares as defined in Rule 144
under the Securities Act of 1933, as amended (the "Act"). These
shares may not be offered for public sale except under Rule 144, or
otherwise, pursuant to the Act.
As of the date of this report, all of the issued and
outstanding shares of the Company's Common Stock are eligible for
sale under Rule 144 promulgated under the Securities Act of 1933,
as amended, subject to certain limitations included in said Rule.
However, all of the shareholders of the Company have executed and
delivered a "lock-up" letter agreement which provides that each
such shareholder shall not sell their respective securities until
such time as the Company has successfully consummated a merger or
acquisition. Further, each shareholder has placed their respective
stock certificate with the Company's legal counsel, Andrew I.
Telsey, P.C., who has agreed not to release any of the certificates
until the Company has closed a merger or acquisition. Any
liquidation by the current shareholders after the release from the
"lock-up" selling limitation period may have a depressive effect
upon the trading prices of the Company's securities in any future
market which may develop.
In general, under Rule 144, a person (or persons whose shares
are aggregated) who has satisfied a one year holding period, under
24
<PAGE>
certain circumstances, may sell within any three month period a
number of shares which does not exceed the greater of one percent
of the then outstanding Common Stock or the average weekly trading
volume during the four calendar weeks prior to such sale. Rule 144
also permits, under certain circumstances, the sale of shares
without any quantity limitation by a person who has satisfied a two
year holding period and who is not, and has not been for the
preceding three months, an affiliate of the Company.
Item 5. Indemnification of Directors and Officers.
The Company's Articles of Incorporation, as amended,
incorporate the provisions of the Colorado Business Corporation Act
providing for the indemnification of officers and directors and
other persons against expenses, judgments, fines and amounts paid
in settlement in connection with threatened, pending or
contemplated suits or proceedings against such persons by reason of
serving or having served as officers, directors or in other
capacities, except in relation to matters with respect to which
such persons shall be determined not to have acted in good faith
and in the best interests of the Company. With respect to matters
as to which the Company's officers and directors and others are
determined to be liable for misconduct or negligence, including
gross negligence in the performance of their duties to the Company,
Colorado law provides for indemnification only to the extent that
the court in which the action or suit is brought determines that
such person is fairly and reasonably entitled to indemnification
for such expenses which the court deems proper.
Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to officers, directors or persons
controlling the Company pursuant to the foregoing, the Company has
been informed that in the opinion of the U.S. Securities and
Exchange Commission such indemnification is against public policy
as expressed in the 1933 Act, and is therefore unenforceable.
PART F/S
Financial Statements.
The following financial statements are attached to this report
and filed as a part thereof. See page 26.
1) Table of Contents - Financial Statements
2) Independent Auditor's Report
3) Balance Sheet
4) Statement of Operations
5) Statement of Changes in Shareholders' Equity
6) Statement of Cash Flows
7) Notes to Financial Statements
25
<PAGE>
3PM HOLDING CORP.
AUDITED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
26
<PAGE>
3PM, INC.
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Balance Sheet 2
Statement of Operations 3
Statement of Changes in Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6-9
27
<PAGE>
Kish, Leake & Associates P.C.
Certified Public Accountants
J.D.Kish, C.P.A., M.B.A. 7901 E Belleview Ave - Suite 220
James D. Leake, C.P.A., M.T. Englewood, Colorado 80111
--------------------- Telephone (303) 779-5006
Arleen R. Brogan, C.P.A. Facsimile (303) 779-5724
Independent Auditors' Report
Board of Directors
3PM Holding Corp.
We have audited the accompanying balance sheet of 3PM Holding Corp., as of
December 31, 1996, and the related statements of operations, changes in
stockholders' equity, and cash flows for the fiscal years ended December
31, 1996 and 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of 3PM Holding Corp., as
of December 31, 1996, and the results of its operations and its cash flows
for the fiscal years ended December 31, 1996 and 1995, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The deficiency in working
capital as of December 31, 1996 and the Company's operating loss since
inception raise substantial doubt about its ability to continue as a going
concern. Management's plans concerning these matters are described in
Note 6. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
s/Kish, Leake & Associates, P.C.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
October 10, 1997
-1-
28
<PAGE>
<TABLE>
3PM Holding Corp.
Balance Sheet
- ------------------------------------------------------------------------------
<CAPTION>
Audited Unaudited
December September
31, 1996 30, 1997
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 4,787 $ 2,100
-------- --------
TOTAL ASSETS 4,787 2,100
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Accounts Payable Trade 4,391 0
Notes Payable Related Party 67,510 69,510
Accrued Interest Payable 6,661 6,661
-------- --------
Total Current Liabilities 78,562 76,171
-------- --------
TOTAL LIABILITIES 78,562 76,171
-------- --------
SHAREHOLDERS' EQUITY
Preferred Stock, Par Value $.01;
Authorized 20,000,000 Shares 12/31/96 and 9/30/97;
Issued and Outstanding 0 Shares 12/31/96 and 9/30/97. 0 0
Common Stock
Authorized: 100,000 Shares 12/31/96 $.001 Par Value,
100,000,000 Shares 9/30/97 $.0001 Par Value.
Issued and Outstanding 50,000 Shares 12/31/96,
500,000 Shares 9/30/97. 50 50
Additional Paid In Capital 59,950 59,950
Retained Deficit (133,775) (134,071)
-------- --------
TOTAL SHAREHOLDERS' EQUITY (73,775) (74,071)
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 4,787 $ 2,100
======== ========
<FN>
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
-2-
29
<PAGE>
<TABLE>
3PM Holding Corp.
Statement Of Operations
- ------------------------------------------------------------------------------
<CAPTION>
Unaudited
Nine Month
Audited Audited Interim
Year Ended Year Ended Period Ended
December December September
31, 1995 31, 1996 30, 1997
-------- -------- --------
<S> <C> <C> <C>
REVENUE: $ 0 $ 0 $ 0
EXPENSES:
Bank Charges 0 434 8
Professional Fees 0 6,085 288
Total 0 6,519 296
-------- -------- --------
Net Income From Operations 0 (6,519) (296)
-------- -------- --------
Other Income ( Expense):
Interest Income 0 527 0
Interest Expense (2,611) (4,232) 0
-------- -------- --------
Total Other Income (Expense) (2,611) (3,705) 0
-------- -------- --------
Net Income (Loss) Before Taxes ($2,611) ($10,224) ($296)
======== ======== ========
Income Tax 0 0 0
-------- -------- --------
Net Income (Loss) Before
Discontinued Operations ($2,611) ($10,224) ($296)
======== ======== ========
Discontinued operations:
Loss from operations of VCR
Doctor Franchises (64,115) (7,117) 0
Loss on disposal of VCR Doctor,
including operating loss of $5,633
and loss on disposal of $29,863 0 (35,496) 0
-------- -------- --------
Net Income (Loss) ($66,726) ($52,837) ($296)
======== ======== ========
Net Income Per Common Share ($0.13) ($0.11) ($0.00)
======== ======== ========
Common Shares Outstanding 500,000 500,000 500,000
======== ======== ========
<FN>
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
-3-
30
<PAGE>
<TABLE>
3PM Holding Corp.
Statement Of Shareholders' Equity
- ------------------------------------------------------------------------------
<CAPTION>
Number Of Additional
Common Common Paid-In Retained
Shares ** Stock Capital Earnings Total
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance At December 31, 1994 500,000 $ 50 $ 59,950 ($ 14,212) $ 45,788
Net Loss December 31, 1995 (66,726) (66,726)
-------- -------- -------- -------- --------
Balance At December 31, 1995 500,000 50 59,950 (80,938) (20,938)
Net Loss December 31, 1996 (52,837) (52,837)
-------- -------- -------- -------- --------
Balance At December 31, 1996 500,000 50 59,950 (133,775) (73,775)
Unaudited Net Loss September 30, 1997 (296) (296)
-------- -------- -------- -------- --------
Unaudited Balance At
September 30, 1997 500,000 $ 50 $ 59,950 ($134,071) ($74,071)
======== ======== ======== ======== ========
** Reflects 10 for 1 Stock Split.
<FN>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
</TABLE>
-4-
31
<PAGE>
<TABLE>
3PM Holding Corp.
Statement Of Cash Flows
- ------------------------------------------------------------------------------
<CAPTION>
Unaudited
Nine Month
Audited Audited Interim
Year Ended Year Ended Period Ended
December December September
31, 1995 31, 1996 30, 1997
-------- -------- --------
<S> <C> <C> <C>
Net Income (Loss) ($66,726) ($52,837) ($ 296)
-------- -------- --------
Items Not Affecting Cash Flow:
Depreciation & Amortization 4,170 1,217 0
Impaired Asset 14,625 0 0
-------- -------- --------
Total (47,931) (51,620) (296)
(Increase) Decrease In Prepaid Expenses 0 450 0
(Increase) Decrease In Deposits 0 1,450 0
Increase (Decrease) In Accounts
Payable Trade (2,447) 604 (4,391)
Increase (Decrease) In Other
Accrued Expenses 2,611 4,051 0
Increase (Decrease) In Payable to Bank 3,646 (3,646) 0
Loss on sale of Franchise 0 375 0
-------- -------- --------
Net Cash Flows Provided From Operations (44,121) (48,336) (4,687)
-------- -------- --------
Cash Flows From Investing Activities:
(Purchase) Sale of Signs (2,595) 1,980 0
(Purchase) Sale of Equipment 0 2,576 0
Sale of Franchise 0 25,000 0
-------- -------- --------
Net Cash Flows Provided From
Investing Activities (2,595) 29,556 0
-------- -------- --------
Cash Flows From Financing Activities:
Advances Received From Shareholder 43,510 24,000 2,000
Issuance of Stock 0 0 0
-------- -------- --------
Net Cash Flows Provided From
Financing Activities 43,510 24,000 2,000
-------- -------- --------
Net Increase In Cash (3,206) 5,220 (2,687)
Cash At Beginning Of Period 2,773 (433) 4,787
-------- -------- --------
Cash At End Of Period (433) 4,787 2,100
======== ======== ========
Summary Of Non-Cash Investing And Financing Activities: $0
<FN>
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
-5-
32
<PAGE>
3PM Holding Corp.
Notes to Financial Statements
December 31, 1996 and 1995
Note 1 - Organization and Summary of Significant Accounting Policies
Organization
On October 19, 1994, 3PM Holding Corp. (The Company), was incorporated under the
laws of Colorado. The Company's primary purpose is any lawful business or
activity.
The Company purchased three VCR Doctor franchises whose primary purpose is the
operation of retail VCR repair stores. In April 1996, company management sold
the VCR Doctor franchise and the related assets. The sale agreement was
completed in May 1996 with a down payment and 48 monthly payments, however, the
note was defaulted on and written off.
Losses applicable to the discontinued franchise operations segment were $7,117
and $64,115 for the years ended December 31, 1996 and 1995 respectively. The
Company sold all of the assets of the franchise operations segment for $25,000
in the form of a note. There were no assets or liabilities from the franchise
operations remaining after the sale.
Property and Equipment
Furniture and equipment are stated at cost and are depreciated over their
estimated economic lives. Depreciation is computed using the straight-line
method.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers demand
deposits and highly liquid-debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Cash paid for interest in 1996 and 1995 was -0-.
Cash paid for income taxes in 1996 and 1995 was -0-.
There were no non-cash transactions.
Net Income (Loss) Per Common Stock
The net income (loss) per common share is computed by dividing the net income
(loss) for the period by the weighted average number of shares outstanding at
December 31, 1996 and 1995.
-6-
33
<PAGE>
3PM Holding Corp.
Notes to Financial Statements
December 31, 1996 and 1995
Revenue Recognition
Revenue is recognized when repairs on the VCRs are complete.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts. Actual results could differ from those estimates.
Note 2 - Notes Payable
The Company maintains a $5,000 line of credit. The amount outstanding under
this line at December 31, 1996 was $-0- bearing a 10.75% annual interest rate.
Shareholders of the Company made unsecured demand loans to the Company bearing
simple interest at 6% annually. The notes, principle and interest, are due
December 31, 1997.
Note 3 - Rent Leases
The Company leased two retail spaces for repairs of VCRs. Both operating leases
expire December 31, 1997, however the franchises were sold in April 1996 and the
lease agreements were settled.
Note 4 - Related Party Events
Shareholders in the Company loaned money to the Company at various times during
the year.
Note 5 - Income Taxes
At December 31, 1996, the Company had a net operating loss carryforward
available for financial statement and Federal income tax purposes of
approximately $56,683 which, if not used, will expire in varying amounts during
the years 2010 to 2011.
-7-
34
<PAGE>
3PM Holding Corp.
Notes to Financial Statements
December 31, 1996 and 1995
Note 5 - Income Taxes (cont.)
The Company follows Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109), which requires, among other things,
an asset and liability approach to calculating deferred income taxes. As of
December 31, 1996, the Company has a deferred tax asset of $11,337 primarily for
its net operating loss carryforward which has been fully reserved through a
valuation allowance. The change in the valuation allowance for 1996 is $2,920.
Note 6 - Subsequent Events
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has incurred losses from its inception through December
31, 1996. It has not established revenues sufficient to cover its operating
costs and to allow it to continue as a going concern. The Company is seeking a
merger/acquisition candidate.
The Company intends to file a Form 10SB with the SEC in 1997.
On September 15, 1997 the shareholders of the Company adopted a 1 for 10 stock
split.
Note 7 - Impaired Asset
As of December 31, 1996 the Company had an impaired asset of $14,625 (net of
$375 amortization). This was an initial franchise fee for a VCR Doctor retail
store which never commenced operations.
-8-
35
<PAGE>
3PM Holding Corp.
Notes to Financial Statements
December 31, 1996 and 1995
Note 8 - Capital Stock
The Company initially authorized 100,000 shares of $.001 par value common stock.
In September 1996 the Company amended and restates its Articles of
Incorporation. The aggregate number of shares which the corporation shall have
authority to issue is 120,000,000 of which 20,000,000 shall be Preferred Shares,
$.01 par value per share and 100,000,000 shall be Common Shares, $.0001 par
value per share. There have been no dividends paid.
Note 9 - New Accounting Pronouncements
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be disposed of"
(SFAS No. 121) issued by the Financial Accounting Standards Board (FASB) is
effective for financial statements for fiscal years beginning after December 15,
1995. The new standard establishes new guidelines regarding when impairment
losses on long-lived assets, which include plant and equipment, certain
identifiable
intangible assets and goodwill, should be recognized and how impairment losses
should be measured. See note 7. SFAS No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123) issued by the FASB is effective for specific
transactions entered into after December 15, 1995, while the disclosure
requirements of SFAS No. 123 are effective for financial statements for fiscal
years beginning no later than December 15, 1995. The new standard established
a fair value method of accounting for stock-based compensation plans and for
transactions in which an entity acquires goods and services from nonemployees in
exchange for equity instruments. The Company will not adopt this accounting
policy for stock based compensation but will provide the required financial
statement disclosures. At this time there are no options outstanding that would
cause an impact on the Company's financial position and results of operations.
Note 10 - Unaudited Information
The information furnished herein was taken from the books and records of the
Company without audit. The Company believes, however, that it has made all
adjustments necessary to reflect properly the results of operations for the
interim periods presented. The adjustments consist only of normal reoccurring
accruals. The results of operations for the nine months ended September 30,
1997 are not necessarily indicative of the results to be expected for the year
ended December 31, 1997.
-9-
36
<PAGE>
PART III
Item 1. Exhibit Index
No. Sequential
Page No.
(3) Articles of Incorporation and Bylaws.
3.1 Articles of Incorporation and Amendment
to Articles of Incorporation 38
3.2 Bylaws 49
(4) Instruments Defining the Rights of Holders
4.1 Form of Lock-up Agreement by the
Company's Shareholders 71
(27) Financial Data Schedule
27.1 Financial Data Schedule 74
- ------------------------
37
<PAGE>
3PM HOLDING CORP.
----------------------------
EXHIBIT 3.1
----------------------------
ARTICLES OF INCORPORATION
AND AMENDMENTS
----------------------------
38
<PAGE>
ARTICLES OF INCORPORATION
OF
3PM, INC.
The undersigned incorporator being a natural person of the age
of eighteen years or more and desiring to form a body corporate
under the laws of the State of Colorado does hereby sign, verify
and deliver to the Secretary of State of the State of Colorado,
these Articles of Incorporation:
ARTICLE I FILED COPY
941116934 $55.00
NAME SOS 10-19-94 08:30
The name of the corporation shall be: 3PM, INC.
ARTICLE II
PERIOD OF DURATION
The period of duration of this corporation shall be perpetual.
ARTICLE III
PURPOSES AND POWERS
The nature of the business of the corporation, the purposes
for which it is organized and its powers are as follows:
1. Purposes. To engage in the transaction of all
lawful business or pursue any other lawful purpose of purposes for
which a corporation may be organized under the laws of the State of
Colorado.
2. Powers. To have, enjoy and exercise all of the
rights, powers and privileges conferred upon corporations organized
under the laws of the State of Colorado, whether now or hereafter
in effect, and whether or not herein specifically mentioned.
The foregoing enumeration of purposes and powers shall not
limit or restrict in any manner the exercise of other and further
rights and powers which may now or hereafter be allowed or
permitted by law.
-1-
39
<PAGE>
ARTICLE IV
CAPITAL STOCK
1. Capital Stock. The aggregate number of shares which
this corporation shall have authority to issue shall consist of
100,000 shares of $.001 par value common stock.
2. Consideration for Shares. Each share of common stock
when issued, shall be fully paid and nonassessable. The shares of
the corporation may be issued for such consideration as shall be
fixed, from time to time by the Board of Directors. The judgment
of the Board of Directors as to the value of any property or
service received shall, in the absence of fraud or bad faith, be
conclusive upon all persons.
3. Voting Rights; Cumulative Voting. Each outstanding
share of common stock shall be entitled to one vote on each matter
submitted to a vote of shareholders. A majority of the shares
entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. Cumulative
voting shall not be allowed in the election of directors of the
corporation.
4. Denial of Preemptive Rights. No holder of any shares
of the corporation, whether now or hereafter authorized, shall have
any preemptive or preferential right to acquire any shares or
securities of the corporation, including shares or securities held
in the treasury of the corporation.
5. Transfer Restrictions. The corporation shall have the
right to impose restrictions upon the transfer of all, or any part
of, its shares and may become party to agreements entered into by
any of its shareholders restricting the transfer or encumbrance of
any of its shares, or subjecting any of its shares to repurchase or
resale obligations.
ARTICLE V
INITIAL REGISTERED OFFICE AND AGENT
The initial registered office and principal office address of
the corporation shall be 5650 Greenwood Plaza Boulevard, Suite 216,
Englewood, Colorado 80111. The name of the initial registered
agent of the corporation at such address is Greg Simonds.
-2-
40
<PAGE>
ARTICLE VI
INITIAL BOARD OF DIRECTORS
The number of directors of the corporation shall be fixed by
the Bylaws of the corporation. The initial board of directors
shall consist of the following individuals, who shall serve until
the first annual meeting of shareholders and until their successors
be elected and qualified:
NAME ADDRESS
Greg Simonds 5650 Greenwood Plaza Blvd.
Suite 216
Englewood, CO 80111
Greg Skufca 5650 Greenwood Plaza Blvd.
Suite 216
Englewood, CO 80110
ARTICLE VII
TRANSACTIONS WITH INTERESTED DIRECTORS AND OFFICERS
No contract or other transaction between the corporation and
one or more of its directors or any other corporation, firm,
association, or entity in which one or more of its directors are
directors or officers or are financially interested shall be either
void or voidable solely because of such relationship or interest or
solely because such directors are present at the meeting of the
board of directors or a committee thereof which authorizes,
approves, or ratifies such contract or transaction or solely
because their votes are counted for such purpose if:
(a) the fact of such relationship or interest is
disclosed or know to the board of directors or committee which
authorizes, approves, or ratifies the contract or transaction
by a vote or consent sufficient for the purpose without
counting the votes or consents of such interested directors;
or
(b) the fact of such relationship or interest is
disclosed, or known to the shareholders entitled to vote and
they authorize, approve, or ratify such contract or
transaction by vote or written consent; or
(c) the contract or transaction is fair and reasonable
to the corporation.
Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the board of directors or
a committee thereof which authorizes, approves, or ratifies such
contract or transaction.
-3-
41
<PAGE>
ARTICLE VIII
INDEMNIFICATION AND LIMITATION OF LIABILITY
The corporation shall indemnify its officers and directors to
the fullest extent permitted by the Colorado Corporation Code, as
amended from time to time.
IN WITNESS WHEREOF, the undersigned incorporator has signed
these Articles of Incorporation on September 27, 1994.
s/Greg Simonds
_____________________________________
Greg Simonds
5650 Greenwood Plaza Blvd, Suite 216
Englewood, CO 80111
STATE OF COLORADO )
) ss.
COUNTY OR ARAPAHOE )
I, the undersigned, a Notary Public, hereby certify that on
September 27, 1994, the above-named incorporator personally
appeared before me, and being by me first duly sworn, declared that
he is the person who signed the foregoing document as incorporator
and that the statements therein contained are true.
WITNESS my hand and official seal.
s/Richard B. Vincent
_____________________________________
Notary Public
Address:5650 Greenwood Plaza Blvd. #135
-------------------------------
Englewood, CO 80111
-------------------------------
My commission expires: 12/29/97
-----------------
-4-
42
<PAGE>
October 5, 1994
To Whom it May Concern:
The undersigned consents to the appointment as the initial
registered agent of 3PM, Inc.
s/ Greg Simonds
______________________________
Greg Simonds
43
<PAGE>
CHANGE OF AMENDED AND RESTATED FILED COPY
R.O.R.A.
ARTICLES OF INCORPORATION
AMENDED AND RESTATED
OF
CHANGE OF NAME 961129164 C $60.00
3PM, INC. SECRETARY OF STATE
10-03-96 12:05
The undersigned corporation, pursuant to the provisions of the
Colorado Business Corporation Act, as amended, adopts the following
Amended and Restated Articles of Incorporation:
First: The corporate name and style of this corporation shall
be changed from 3PM, INC. to 3PM HOLDING CORP.
Second: The purposes for which the corporation is organized
and its powers are as follows:
A. To engage in any lawful business or activity for
which corporations may be organized under the laws of the
State of Colorado; and
B. To have, enjoy, and exercise all of the rights,
powers, and privileges conferred upon corporation incorporated
pursuant to Colorado law, whether now or hereafter in effect,
and whether or not herein specifically mentioned.
Third: The said corporation is to have perpetual existence
unless dissolved according to law.
Fourth: The aggregate number of shares which the corporation
shall have authority to issue is 120,000,000, of which 20,000,000
shall be Preferred Shares, $.01 par value per share, and
100,000,000 shall be Common Shares, $.0001 par value per share, and
the designations, preferences, limitations and relative rights of
the shares of each such class are as follows:
A. Preferred Shares
The corporation may divide and issue the Preferred
Shares into series. Preferred Shares of each series, when
issued, shall be designated to distinguish it from the shares
of all other series of the class of Preferred Shares. The
Board of Directors is hereby expressly vested with authority
to fix and determine the relative rights and preferences of
the shares of any such series so established to the fullest
extent permitted by these Articles of Incorporation and the
laws of the State of Colorado in respect to the following:
(a) The number of shares to constitute such
series, and the distinctive designations thereof;
(b) The rate and preference of dividend, if any,
the time of payment of dividend, whether dividends are
cumulative and the date from which any dividend shall
accrue;
(c) Whether the shares may be redeemed and, if so,
the redemption price and the terms and conditions of
redemption;
(d) The amount payable upon shares in the event of
involuntarily liquidation;
44
<PAGE>
(e) The amount payable upon shares in the event of
voluntary liquidation;
(f) Sinking fund or other provisions, if any, for
the redemption or purchase of shares;
(g) The terms and conditions on which shares may
be converted, if the shares of any series are issued with
the privilege of conversion;
(h) Voting powers, if any; and
(i) Any other relative right and preferences of
shares of such series, including, without limitation, any
restriction on an increase in the number of shares of any
series theretofore authorized and any limitation or
restriction of rights or powers to which shares of any
further series shall be subject.
B. Common Shares
(a) The rights of holders of the Common Shares to
receive dividends or share in the distribution of assets
in the event of liquidation, dissolution or winding up of
the affairs of the Corporation shall be subject to the
preferences, limitations and relative rights of the
Preferred Shares fixed in the resolution or resolutions
which may be adopted from time to time by the Board of
Directors of the corporation providing for the issuance
of one or more series of the Preferred Shares.
(b) The holders of the Common Shares shall have
unlimited voting rights and shall constitute the sole
voting group of the corporation, except to the extent any
additional voting groups or groups may hereafter be
established in accordance with the Colorado Business
Corporation Act, and shall be entitled to one vote for
each share of Common Shares held by them of record at the
time for determining the holders thereof entitled to
vote.
Fifth: Cumulative voting shall not be permitted in the
election of directors or otherwise.
Sixth: A shareholder of the corporation shall not be entitled
to a preemptive right to purchase, subscribe for, or otherwise
acquire any unissued or treasury shares of stock of the
corporation, or any options or warrants to purchase, subscribe for
or otherwise acquire any such unissued or treasury shares or any
shares, bonds, notes, debentures, or other securities convertible
into or carrying options or warrants to purchase, subscribe for or
otherwise acquire any such unissued or treasury shares.
Seventh: The corporate powers shall be exercised by or under
the authority of, and the business and affairs of the corporation
shall be managed under the direction of, a board of directors. The
number of directors of the corporation shall be fixed by the
bylaws, or if the bylaws fail to fix such a number, then by
resolution adopted from time to time by the board of directors,
provided that the number of directors shall comform to the
applicable laws of the State of Colorado.
Eighth: The following provisions are inserted for the
management of the business and for the conduct of the affairs of
the corporation, and the same are in furtherance of and not in
limitation or exclusion of the powers conferred by law.
45
<PAGE>
A. Conflicting Interest Transactions. As used in this
paragraph, "conflicting interest transactions" means any of
the following: (i) a loan or other assistance by the
corporation to a director of the corporation or to an entity
in which a director of the corporation is a director or
officer or has a financial interest; (ii) a guaranty by the
corporation of an obligation of a director of the corporation
or of an obligation of an entity in which a director of the
corporation is a director or officer or has a financial
interest; or (iii) a contract or transaction between the
corporation and a director of the corporation or between the
corporation and an entity in which a director of the
corporation is a director or officer or has a financial
interest. No conflicting interest transaction shall be void
or voidable, be enjoined, be set aside, or give rise to an
award of damages or other sanctions in a proceeding by a
shareholder or by or in the right of the corporation, solely
because the conflicting interest transaction involves a
director of the corporation or an entity in which a director
of the corporation is a director or officer or has a financial
interest, or solely because the director is present at or
participates in the meeting of the corporation's board of
directors or of the committee of the board of directors which
authorizes, approves or ratifies a conflicting interest
transaction, or solely because the director's vote is counted
for such purpose, if: (a) the material facts as to the
director's relationship or interest and as to the conflicting
interest transaction are disclosed or are known to the board
of directors or the committee, and the board of directors or
committee in good faith authorizes, approves or ratifies the
conflicting interest transaction by the affirmative vote of a
majority of the disinterested directors, even though the
disinterested directors are less than quorum; or (b) the
material facts as to the director's relationship or interest
and as to the conflicting interest transaction are disclosed
or are known to the shareholders entitled to vote thereon, and
the conflicting interest transaction is specifically
authorized, approved or ratified in good faith by a vote of
the shareholders; or (c) a conflicting interest transaction is
fair as to the corporation as of the time it is authorized,
approved or ratified by the board of directors, a committee
thereof, or the shareholders. Common or interested directors
may be counted in determining the presence of a quorum at a
meeting of the board of directors or of a committee which
authorizes, approves or ratifies the conflicting interest
transaction.
B. Loans and Guarantees for the Benefit of Directors.
Neither the board of directors nor any committee thereof shall
authorize a loan by the corporation to a director of the
corporation or to an entity in which a director of the
corporation is a director or officer or has a financial
interest, or a guaranty by the corporation of an obligation of
a director of the corporation or of an obligation of an entity
in which a director of the corporation is a director or
officer or has a financial interest, until at least ten days
written notice of the proposed authorization of the loan or
guaranty has been given to the shareholders who would be
entitled to vote thereon if the issue of the loan or guaranty
were submitted to a vote of the shareholders. The
requirements of this subparagraph B are in addition to, and
not in substitution for, the provisions of subparagraph A of
this Article.
Ninth: The following provisions are in furtherance of and not
in limitation or exclusion of the powers conferred by law for
indemnification and limitation on director's liability.
A. Indemnification. The corporation shall indemnify,
to the maximum extent permitted by law, any person who is or
was a director, officer, agent, fiduciary or employee of the
corporation against any claim, liability or expense arising
against or incurred by such person made party to a proceeding
because he is or was a director, officer, agent, fiduciary or
employee of the corporation or because he is or was serving
another entity or employee benefit plan as a director,
officer, partner, trustee, employee, fiduciary or agent at the
corporation's request. The corporation shall further have the
authority to the maximum extent permitted by law to purchase
and maintain insurance providing such indemnification.
46
<PAGE>
B. Limitation on Director's Liability. No director of
this corporation shall have any personal liability for
monetary damages to the corporation or its shareholders for
beach of his fiduciary duty as a director, except that this
provision shall not eliminate or limit the personal liability
of a director to the corporation or its shareholders for
monetary damages for: (i) any breach of the director's duty
of loyalty to the corporation or its shareholders; (ii) acts
or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) voting for or
assenting to a distribution in violation of Colorado Revised
Statutes Sec. 7-106-401 or the Articles of Incorporation if it is
established that the director did not perform his duties in
compliance with Colorado Revised Statutes Sec. 7-108-401,
provided that the personal liability of a director in this
circumstances shall be limited to the amount of the
distribution which exceeds what could have been distributed
without violation of Colorado Revised Statutes Sec. 7-106-401 or
the Articles of Incorporation; or (iv) any transaction from
which the director directly or indirectly derives an improper
personal benefit. Nothing contained herein will be construed
to deprive any director of his right to all defenses
ordinarily available to a director nor will anything herein be
construed to deprive any director of any right he may have for
contribution from any other director or other person.
C. Negation of Equitable Interests in Shares or Rights.
Unless a person is recognized as a shareholder through
procedures established by the corporation pursuant to Colorado
Revised Statutes Sec. 7-107-204 or any similar law, the
corporation shall be entitled to treat the registered holder
of any shares of the corporation as the owner thereof for all
purposes permitted by the Colorado Business Corporation Act,
including without limitation all rights deriving from such
shares, and the corporation shall not be bound to recognize
any equitable or other claim to, or interest in, such shares
or rights deriving from such shares on the part of any other
person including without limitation, a purchaser, assignee or
transferee of such shares, unless and until such other person
becomes the registered holder of such shares or is recognized
as such, whether or not the corporation shall have either
actual or constructive notice of the claimed interest of such
other person. By way of example and not of limitation, until
such other person has become the registered holder of such
shares or is recognized pursuant to Colorado Revised Statutes
Sec. 7-107-204 or any similar applicable law, he shall not be
entitled: (i) to receive notice or the meetings of the
shareholders; (ii) to vote at such meetings; (iii) to examine
a list of the shareholders; (iv) to be paid dividends or other
distributions payable to shareholders; or (v) to own, enjoy
and exercise any other rights deriving from such shares
against the corporation. Nothing contained herein will be
construed to deprive any beneficial shareholder, as defined in
Colorado Revised Statutes Sec. 7-113-101(1), of any right he may
have pursuant to Article 113 of the Colorado Business
Corporation Act or any subsequent law.
Tenth: The Board of Directors and stockholders of the
corporation shall have the right to hold their meetings outside of
the State of Colorado when deemed most convenient or to the best
interest of the corporation.
Eleventh: The street address of the registered office of the
corporation shall remain at 2851 South Parker Road, Suite 720,
Aurora, Colorado 80014, and the name of the registered agent at
such address shall remain Andrew I. Telsey.
Twelfth: Except as the bylaws adopted by the shareholders may
provide for a greater quorum requirement, a majority of the votes
entitled to be cast on any matter by each voting group entitled to
vote on a matter shall constitute a quorum of that voting group for
action on that matter at any meeting of shareholders. Except as
bylaws adopted by the shareholders may provide for a greater voting
requirement and except as is otherwise provided by the Colorado
Business Corporation Act, with respect
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to action on amendment to these Articles of Incorporation, on a
plan of merger or share exchange, on the disposition of
substantially all of the property of the corporation, on the
granting of consent to the disposition of property by an entity
controlled by the corporation, and on the dissolution of the
corporation, action on a matter other than the election of
directors is approved if a quorum exists and if the votes cast
favoring the action exceed the votes cast opposing the action. Any
bylaw adding, changing, or deleting a greater quorum or voting
requirement for shareholders shall meet the same quorum requirement
and be adopted by the same vote required to take action under the
quorum and voting requirements then in effect or proposed to be
adopted, whichever are greater.
Thirteenth: The address of the principal office of the
corporation is 5650 Greenwood Plaza Blvd. #216, Englewood, CO
80111.
DATED the 27th day of September ,
1996.
_______________________, INC.
By: s/Greg Simonds
---------------------------
_______________, President
The undersigned hereby consents to his appointment as the
registered agent for 3PM,
, INC.
s/Andrew I. Telsey
-----------------------------
Andrew I. Telsey
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3PM HOLDING CORP.
----------------------------
EXHIBIT 3.2
----------------------------
BYLAWS
----------------------------
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INDEX TO THE BYLAWS OF
3PM, INC.
ARTICLE I - OFFICES .......................................... 1
Section 1. Offices...................................... 1
Section 2. Registered Office............................ 1
ARTICLE II - SHAREHOLDERS..................................... 1
Section 1. Annual Meeting............................... 1
Section 2. Special Meetings............................. 1
Section 3. Place of Meetings............................ 2
Section 4. Notice of Meeting............................ 2
Section 5. Fixing of Record Date........................ 3
Section 6. Voting Lists................................. 3
Section 7. Recognition Procedure for Beneficial Owners.. 4
Section 8. Quorum and Manner of Acting.................. 4
Section 9. Proxies...................................... 4
Section 10. Voting of Shares............................ 5
Section 11. Corporation's Acceptance of Votes........... 6
Section 12. Informal Action by Shareholders............. 7
Section 13. Meetings by Telecommunication............... 7
ARTICLE III - BOARD OF DIRECTORS.............................. 7
Section 1. General Powers............................... 7
Section 2. Number, Qualifications and Tenure............ 7
Section 4. Regular Meetings............................. 8
Section 5. Special Meetings............................. 8
Section 6. Notice....................................... 8
Section 7. Quorum....................................... 9
Section 8. Manner of Acting............................. 9
Section 9. Compensation................................. 9
Section 10. Presumption of Assent....................... 9
Section 11. Committees.................................. 9
Section 12. Informal Action by Directors................ 10
Section 13. Telephonic Meetings......................... 10
Section 14. Standard of Care............................ 10
ARTICLE IV - OFFICERS AND AGENTS.............................. 11
Section 1. General...................................... 11
Section 2. Appointment and Term of Office............... 11
Section 3. Resignation and Removal...................... 11
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Section 4. Vacancies.................................... 11
Section 5. President.................................... 11
Section 6. Vice Presidents.............................. 12
Section 7. Secretary.................................... 12
Section 8. Treasurer.................................... 13
ARTICLE V - STOCK............................................. 13
Section 1. Certificates................................. 13
Section 2. Consideration for Shares..................... 14
Section 3. Lost Certificates............................ 14
Section 4. Transfer of Shares........................... 14
Section 5. Transfer Agent, Registrars and Paying Agents. 15
ARTICLE VI - INDEMNIFICATION OF CERTAIN PERSONS............... 15
Section 1. Indemnification.............................. 15
Section 2. Right to Indemnification..................... 16
Section 3. Effect of Termination of Action.............. 16
Section 4. Groups Authorized to Make Indemnification
Determination........................... 16
Section 5. Court-Ordered Indemnification................ 16
Section 6. Advance of Expenses.......................... 17
Section 7. Additional Indemnification to Certain Persons
Other Than Directors.................... 17
Section 8. Witness Expenses............................. 17
Section 9. Report to Shareholders....................... 17
ARTICLE VII - INSURANCE....................................... 17
Section 1. Provision of Insurance....................... 17
ARTICLE VIII - MISCELLANEOUS.................................. 18
Section 1. Seal......................................... 18
Section 2. Fiscal Year.................................. 18
Section 3. Amendments................................... 18
Section 4. Receipt of Notices by the Corporation........ 18
Section 5. Gender....................................... 18
Section 6. Conflicts.................................... 18
Section 7. Definitions.................................. 18
CERTIFICATE................................................... 19
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BYLAWS
OF
3PM, INC.
ARTICLE I - OFFICES
Section 1. Offices. The principal office of the corporation
shall be designated from time to time by the corporation and may be
within or outside of Colorado.
The corporation may have such other offices, either within or
outside of the State of Colorado, as the board of directors may
designate or as the business of the corporation may require from
time to time.
Section 2. Registered Office. The registered office of the
corporation, required by the Colorado Business Corporation Act to
be maintained in the State of Colorado, may be, but need not be,
identical with the principal office in the State of Colorado, and
the address of the registered office may be changed from time to
time by the board of directors.
ARTICLE II - SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the
shareholders shall be held during the month of October of each year
on a date and at a time fixed by the board of directors of the
corporation (or by the president in the absence of action by the
board of directors) beginning with the year 1996, for the purpose
of electing directors and for the transaction of such other
business as may come before the meeting. If the election of
directors is not held on the day fixed as provided herein for any
annual meeting of the shareholders, or any adjournment thereof, the
board of directors shall cause the election to be held at a special
meeting of the shareholders as soon thereafter as it may
conveniently be held.
A shareholder may apply to the district court in the county in
Colorado where the corporation's principal office is located or, if
the corporation has no principal office in Colorado, to the
district court of the county in which the corporation's registered
office is located to seek an order that a shareholder meeting be
held (i) if an annual meeting was not held within six months after
the close of the corporation's most recently ended fiscal year or
fifteen months after its last annual meeting, whichever is earlier,
or (ii) if the shareholder participated in a proper call of or
proper demand for a special meeting and notice of the special
meeting was not given within thirty days after the date of the call
or the date the last of the demands necessary to require calling of
the meeting was received by the corporation pursuant to C.R.S. Sec. 7-
107-102(1)(b), or the special meeting was not held in accordance
with the notice.
Section 2. Special Meetings. Unless otherwise prescribed by
statute, special meetings of the shareholders may be called for any
purpose by the president or by the board of directors. The
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president shall call a special meeting of the shareholders if the
corporation receives one or more written demands for the meeting,
stating the purpose or purposes for which it is to be held, signed
and dated by holders of shares representing at least ten percent of
all the votes entitled to be cast on any issue proposed to be
considered at the meeting.
Section 3. Place of Meetings. The board of directors may
designate any place, either within or outside of the State of
Colorado, as the place for any annual meeting or any special
meeting called by the board of directors. A waiver of notice
signed by all shareholders entitled to vote at a meeting may
designate any place, either within or outside the State of
Colorado, as the place for such meeting. If no designation is
made, or if a special meeting is called other than by the board,
the place of meeting shall be the principal office of the
corporation.
Section 4. Notice of Meeting. Written notice stating the
place, date and hour of the meeting shall be given not less than
ten nor more than sixty days before the date of the meeting, except
that (i) if the number of authorized shares is to be increased, at
last thirty days' notice shall be given, or (ii) any other longer
notice period is required by the Colorado Business Corporation Act.
The secretary shall be required to give such notice only to
shareholders entitled to vote at the meeting except as otherwise
required by the Colorado Business Corporation Act.
Notice of a special meeting shall include a description of the
purpose or purposes of the meeting. Notice of an annual meeting
need not include a description of the purpose or purposes of the
meeting except the purpose or purposes shall be stated with respect
to (i) an amendment to the articles of incorporation of the
corporation; (ii) a merger or share exchange in which the
corporation is a party and, with respect to a share exchange, in
which the corporation's shares will be acquired; (iii) a sale,
lease, exchange or other disposition, other than in the usual and
regular course of business, of all or substantially all of the
property of the corporation or of another entity which this
corporation controls, in each case with or without the goodwill;
(iv) a dissolution of the corporation; (v) restatement of the
articles of incorporation; or (vi) any other purpose for which a
statement of purpose is required by the Colorado Business
Corporation Act. Notice shall be given personally or by mail,
private carrier, telegraph, teletype, electronically transmitted
facsimile or other form of wire or wireless communication by or at
the direction of the president, the secretary, or the officer or
persons calling the meeting, to each shareholder of record entitled
to vote at such meeting. If mailed and if in a comprehensible
form, such notice shall be deemed to be given and effective when
deposited in the United States mail, properly addressed to the
shareholder at his address as it appears in the corporation's
current record of shareholders, with first class postage prepaid.
If notice is given other than by mail, and provided that such
notice is in a comprehensible form, the notice is given and
effective on the date actually received by the shareholder.
If requested by the person or persons lawfully calling such
meeting, the secretary shall give notice thereof at corporate
expense. No notice need be sent to any shareholder if three
successive notices mailed to the last known address of such
shareholder have been returned as undeliverable until such time as
another address for such shareholder is made known to the
corporation by such shareholder. In order to be entitled to
receive notice of any meeting, a shareholder shall advise the
corporation in writing of any change in such shareholders' mailing
address as shown on the corporation's books and records.
When a meeting is adjourned to another date, time or place,
notice need not be given of the new date, time or place if the new
date, time or place of such meeting is announced before adjournment
at the meeting at which the adjournment is taken. At the adjourned
meeting the corporation may
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transact any business which may have been transacted at the
original meeting. If the adjournment is for more than 120 days, or
if a new record date is fixed for the adjourned meeting, a new
notice of the adjourned meeting shall be given to each shareholder
of record entitled to vote at the meeting as of the new record
date.
A shareholder may waive notice of a meeting before or after
the time and date of the meeting by a writing signed by such
shareholder. Such waiver shall be delivered to the corporation for
filing with the corporate records, but this delivery and filing
shall not be conditions to the effectiveness of the waiver.
Further, by attending a meeting either in person or by proxy, a
shareholder waives objection to lack of notice or defective notice
of the meeting unless the shareholder objects at the beginning of
the meeting to the holding of the meeting or the transaction of
business at the meeting because of lack of notice or defective
notice. By attending the meeting, the shareholder also waives any
objection to consideration at the meeting of a particular matter
not within the purpose or purposes described in the meeting notice
unless the shareholder objects to considering the matter when it is
presented.
Section 5. Fixing of Record Date. For the purpose of
determining shareholders entitled to (i) notice of or to vote at
any meeting of shareholders or any adjournment thereof, (ii)
receive distributions or share dividends, (iii) demand a special
meeting, or (iv) make a determination of shareholders for any other
proper purpose, the board of directors may fix a future date as the
record date for any such determination of shareholders, such date
in any case to be not more than seventy days, and, in case of a
meeting of shareholders, not less than ten days, prior to the date
on which the particular action requiring such determination of
shareholders is to be taken. If no record date is fixed by the
directors, the record date shall be the day before the notice of
the meeting it given to shareholders, or the date on which the
resolution of the board of directors providing for a distribution
is adopted, as the case may be. When a determination of
shareholders entitled to vote at any meeting of shareholders is
made as provided in this Section, such determination shall apply to
any adjournment thereof unless the board of directors fixes a new
record date, which it must do if the meeting is adjourned to a date
more than 120 days after the date fixed for the original meeting.
Unless otherwise specified when the record date is fixed, the time
of day for such determination shall be as of the corporation's
close of business on the record date.
Notwithstanding the above, the record date for determining the
shareholders entitled to take action without a meeting or entitled
to be given notice of action so taken shall be the date a writing
upon which the action is taken is first received by the
corporation. The record date for determining shareholders entitled
to demand a special meeting shall be the date of the earliest of
any of the demands pursuant to which the meeting is called.
Section 6. Voting Lists. After a record date is fixed for a
shareholder's meeting, the secretary shall make, at the earlier of
ten days before such meeting or two business days after notice of
the meeting has been given, a complete list of the shareholders
entitled to be given notice of such meeting or any adjournment
thereof. The list shall be arranged by voting group by class or
series of shares, shall be in alphabetical order within each class
or series, and shall show the address of and the number of shares
of each class or series held by each shareholder. For the period
beginning the earlier of ten days prior to the meeting or two
business days after notice of the meeting is given and continuing
through the meeting and any adjournment thereof, this list shall be
kept on file at the principal office of the corporation, or at a
place (which shall be identified in the notice) in the city where
the meeting will be held. Such list shall be available for
inspection on written demand by any shareholder (including for the
purpose of this Section 6 any holder of voting trust certificates)
or his agent or attorney during
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regular business hours and during the period available for
inspection. The original stock transfer books shall be prima facie
evidence as to who are the shareholders entitled to examine such
list or transfer books or to vote at any meeting of shareholders.
Any shareholder, his agent or attorney may copy the list
during regular business hours and during the period it is available
for inspection, provided (i) the shareholder has been a shareholder
for at least three months immediately preceding the demand or holds
at least five percent of all outstanding shares of any class of
shares as of the date of the demand, (ii) the demand is made in
good faith and for a purpose reasonably related to the demanding
shareholder's interest as a shareholder, (iii) the shareholder
describes with reasonable particularity the purpose and the records
the shareholder desires to inspect, (iv) the records are directly
connected with the described purpose, and (v) the shareholder pays
a reasonable charge covering the costs of labor and materials for
such copies, not to exceed the estimated cost of production and
reproduction.
Section 7. Recognition Procedure for Beneficial Owners. The
board of directors may adopt by resolution a procedure whereby a
shareholder of the corporation may certify in writing to the
corporation that all or a portion of the shares registered in the
name of such shareholder are held for the account of a specified
person or persons. The resolution may set forth (i) the types of
nominees to which it applies; (ii) the rights or privileges that
the corporation will recognize in a beneficial owner, which may
include rights and privileges other than voting; (iii) the form of
certification and the information to be contained therein; (iv) if
the certification is with respect to a record date, the time within
which the certification must be received by the corporation; (v)
the period for which the nominee's use of the procedure is
effective; and (vi) such other provisions with respect to the
procedure as the board deems necessary or desirable. Upon receipt
by the corporation of a certificate complying with the procedure
established by the board of directors, the person specified in the
certification shall be deemed, for the purpose or purposes set
forth in the certification, to be the registered holders of the
number of shares specified in place of the shareholder making the
certification.
Section 8. Quorum and Manner of Acting. A majority of the
votes entitled to be cast on a matter by a voting group represented
in person or by proxy shall constitute a quorum of that voting
group for action on the matter. If less than one-third of such
votes are represented at a meeting, a majority of the votes so
represented may adjourn the meeting from time to time without
further notice, for a period not to exceed 120 days for any one
adjournment. If a quorum is present at such adjourned meeting, any
business may be transacted which might have been transacted at the
meeting as originally noticed. The shareholders present at a duly
organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough shareholders
to leave less than a quorum, unless the meeting is adjourned and a
new record date is set for the adjourned meeting.
If a quorum exists, action on a matter other than the election
of directors by a voting group is approved if the votes cast within
the voting group favoring the action exceed the votes cast within
the voting group opposing the action, unless the vote of a greater
number or voting by classes is required by law or the articles of
incorporation.
Section 9. Proxies. At all meetings of shareholders, a
shareholder may vote by proxy by signing an appointment form or
similar writing, either personally or by his duly authorized
attorney-in-fact. A shareholder may also appoint a proxy by
transmitting or authorizing the transmission of a telegram,
teletype, or other electronic transmission providing a written
statement of the appointment to the proxy, a proxy solicitor, proxy
support service organization, or other person duly authorized by
the
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proxy to receive appointments as agent for the proxy, or to the
corporation. The transmitted appointment shall set forth or be
transmitted with written evidence from which it can be determined
that the shareholder transmitted or authorized the transmission of
the appointment. The proxy appointment form or similar writing
shall be filed with the secretary of the corporation before or at
the time of the meeting. The appointment of a proxy is effective
when received by the corporation and is valid for eleven months
unless a different period is expressly provided in the appointment
form or similar writing.
Any complete copy, including an electronically transmitted
facsimile, of an appointment of a proxy may be substituted for or
used in lieu of the original appointment for any purpose for which
the original appointment could be used.
Revocation of a proxy does not affect the right of the
corporation to accept the proxy's authority unless (i) the
corporation had notice that the appointment was coupled with an
interest and notice that such interest is extinguished is received
by the secretary or other officer or agent authorized to tabulate
votes before the proxy exercises his authority under the
appointment, or (ii) other notice of the revocation of the
appointment is received by the secretary or other officer or agent
authorized to tabulate votes before the proxy exercises his
authority under the appointment. Other notice of revocation may,
in the discretion of the corporation, be deemed to include the
appearance at a shareholders' meeting of the shareholder who
granted the proxy and his voting in person on any matter subject to
a vote at such meeting.
The death or incapacity of the shareholder appointing a proxy
does not affect the right of the corporation to accept the proxy's
authority unless notice of the death or incapacity is received by
the secretary or other officer or agent authorized to tabulate
votes before the proxy exercises his authority under the
appointment.
The corporation shall not be required to recognize an
appointment made irrevocable if it has received a writing revoking
the appointment signed by the shareholder (including a shareholder
who is a successor to the shareholder who granted the proxy) either
personally or by his attorney-in-fact, notwithstanding that the
revocation may be a breach of an obligation of the shareholder to
another person not to revoke the appointment.
Subject to Section 11 and any express limitation on the
proxy's authority appearing on the appointment form, the
corporation is entitled to accept the proxy's vote or other action
as that of the shareholder making the appointment.
Section 10. Voting of Shares. Each outstanding share,
regardless of class, shall be entitled to one vote, except in the
election of directors, and each fractional share shall be entitled
to a corresponding fractional vote on each matter submitted to a
vote at a meeting of shareholders, except to the extent that the
voting rights of the shares of any class or classes are limited or
denied by the articles of incorporation as permitted by the
Colorado Business Corporation Act. Cumulative voting shall not be
permitted in the election of directors or for any other purpose.
Each holder of stock shall be entitled to vote in the election of
directors and shall have as many votes for each of the shares owned
by him as there are directors to be elected and for whose election
he has the right to vote.
At each election of directors, that number of candidates
equalling the number of directors to be elected, having the highest
number of votes cast in favor of their election, shall be elected
to the board of directors.
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Except as otherwise ordered by a court of competent
jurisdiction upon a finding that the purpose of this Section would
not be violated in the circumstances presented to the court, the
shares of the corporation are not entitled to be voted if they are
owned, directly or indirectly, by a second corporation, domestic or
foreign, and the first corporation owns, directly or indirectly, a
majority of the shares entitled to vote for directors of the second
corporation except to the extent the second corporation holds the
shares in a fiduciary capacity.
Redeemable shares are not entitled to be voted after notice of
redemption is mailed to the holders and a sum sufficient to redeem
the shares has been deposited with a bank, trust company or other
financial institution under an irrevocable obligation to pay the
holders the redemption price on surrender of the shares.
Section 11. Corporation's Acceptance of Votes. If the name
signed on a vote, consent, waiver, proxy appointment, or proxy
appointment revocation corresponds to the name of a shareholder,
the corporation, if acting in good faith, is entitled to accept the
vote, consent, waiver, proxy appointment or proxy appointment
revocation and give it effect as the act of the shareholder. If
the name signed on a vote, consent, waiver, proxy appointment or
proxy appointment revocation does not correspond to the name of a
shareholder, the corporation, if acting in good faith, is
nevertheless entitled to accept the vote, consent, waiver, proxy
appointment or proxy appointment revocation and to give it effect
as the act of the shareholder if:
(i) the shareholder is an entity and the name signed
purports to be that of an officer or agent of the entity;
(ii) the name signed purports to be that of an
administrator, executor, guardian or conservator representing
the shareholder and, if the corporation requests, evidence of
fiduciary status acceptable to the corporation has been
presented with respect to the vote, consent, waiver, proxy
appointment or proxy appointment revocation;
(iii) the name signed purports to be that of a receiver
or trustee in bankruptcy of the shareholder and, if the
corporation requests, evidence of this status acceptable to
the corporation has been presented with respect to the vote,
consent, waiver, proxy appointment or proxy appointment
revocation;
(iv) the name signed purports to be that of a pledgee,
beneficial owner or attorney-in-fact of the shareholder and,
if the corporation requests, evidence acceptable to the
corporation of the signatory's authority to sign for the
shareholder has been presented with respect to the vote,
consent, waiver, proxy appointment or proxy appointment
revocation;
(v) two or more persons are the shareholder as co-
tenants or fiduciaries and the name signed purports to be the
name of at least one of the co-tenants or fiduciaries, and the
person signing appears to be acting on behalf of all the co-
tenants or fiduciaries; or
(vi) the acceptance of the vote, consent, waiver, proxy
appointment or proxy appointment revocation is otherwise
proper under rules established by the corporation that are not
inconsistent with this Section 11.
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The corporation is entitled to reject a vote, consent, waiver,
proxy appointment or proxy appointment revocation if the secretary
or other officer or agent authorized to tabulate votes, acting in
good faith, has reasonable basis for doubt about the validity of
the signature on it or about the signatory's authority to sign for
the shareholder.
Neither the corporation nor its officers nor any agent who
accepts or rejects a vote, consent, waiver, proxy appointment or
proxy appointment revocation in good faith and in accordance with
the standards of this Section is liable for damages for the
consequences of the acceptance or rejection.
Section 12. Informal Action by Shareholders. Any action
required or permitted to be taken at a meeting of the shareholders
may be taken without a meeting if a written consent (or
counterparts thereof) that sets forth the action so taken is signed
by all of the shareholders entitled to vote with respect to the
subject matter thereof and received by the corporation. Such
consent shall have the same force and effect as a unanimous vote of
the shareholders and may be stated as such in any document. Action
taken under this Section 12 is effective as of the date the last
writing necessary to effect the action is received by the
corporation, unless all of the writing specify a different
effective date, in which case such specified date shall be the
effective date for such action. If any shareholder revokes his
consent as provided for herein prior to what would otherwise be the
effective date, the action proposed in the consent shall be
invalid. The record date for determining shareholders entitled to
take action without a meeting is the date the corporation first
receives a writing upon which the action is taken.
Any shareholder who has signed a writing describing and
consenting to action taken pursuant to this Section 12 may revoke
such consent by a writing signed by the shareholder describing the
action and stating that the shareholder's prior consent thereto is
revoked, if such writing is received by the corporation before the
effectiveness of the action.
Section 13. Meetings by Telecommunication. Any or all of the
shareholders may participate in an annual or special shareholders'
meeting by, or the meeting may be conducted through the use of, any
means of communication by which all persons participating in the
meeting may hear each other during the meeting. A shareholder
participating in a meeting by this means is deemed to be present in
person at the meeting.
ARTICLE III - BOARD OF DIRECTORS
Section 1. General Powers. All corporate powers shall be
exercised by or under the authority of, and the business and
affairs of the corporation shall be managed under the direction of,
its board of directors, except as otherwise provided in the
Colorado Business Corporation Act or the articles of incorporation.
Section 2. Number, Qualifications and Tenure. The number of
directors of the corporation shall be fixed from time to time by
the board of directors, but in no instance shall there be less than
one director or that number otherwise required by law and no
decrease in the number of directors shall have the effect of
shortening the term of any incumbent director. A director shall be
a natural person who is eighteen years of age or older. A director
need not be a resident of the State of Colorado or a shareholder of
the corporation.
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Directors shall be elected at each annual meeting of
shareholders. Each director shall hold office until the next
annual meeting of shareholders following his election and
thereafter until his successor shall have been elected and
qualified. Directors shall be removed in the manner provided by
the Colorado Business Corporation Act. Any director may be removed
by the shareholders of the voting group that elected the director,
with or without cause, at a meeting called for that purpose. The
notice of the meeting shall state that the purpose or one of the
purposes of the meeting is removal of the director. A director may
be removed only if the number of votes cast in favor of removal
exceeds the number of votes cast against removal.
Section 3. Vacancies. Any director may resign at any time by
giving written notice to the secretary. Such resignation shall
take effect at the time the notice is received by the secretary
unless the notice specifies a later effective date. Unless
otherwise specified in the notice of resignation, the corporation's
acceptance of such resignation shall not be necessary to make it
effective. Any vacancy on the board of directors may be filled by
the affirmative vote of a majority of all the directors remaining
in office. If elected by the directors, the director shall hold
office until the next annual shareholders' meeting at which
directors are elected. If elected by the shareholders, the
director shall hold office for the unexpired term of his
predecessor in office; except that, if the director's predecessor
was elected by the directors to fill a vacancy, the director
elected by the shareholders shall hold office for the unexpired
term of the last predecessor elected by the shareholders.
Section 4. Regular Meetings. A regular meeting of the board
of directors shall be held without notice immediately after and at
the same place as the annual meeting of shareholders. The board of
directors may provide by resolution the time and place, either
within or outside the State of Colorado, for the holding of
additional regular meetings without other notice.
Section 5. Special Meetings. Special meetings of the board
of directors may be called by or at the request of the president or
any two directors. The person or persons authorized to call
special meetings of the board of directors may fix any place,
either within or outside the State of Colorado, as the place for
holding any special meeting of the board of directors called by
them, provided that no meeting shall be called outside the State of
Colorado unless a majority of the board of directors has so
authorized.
Section 6. Notice. Notice of the date, time and place of any
special meeting shall be given to each director at least two days
prior to the meeting by written notice either personally delivered
or mailed to each director at his business address, or by notice
transmitted by private courier, telegraph, telex, electronically
transmitted facsimile or other form of wire or wireless
communication. If mailed, such notice shall be deemed to be given
and to be effective on the earlier of (i) five days after such
notice is deposited in the United States mail, properly addressed,
with first class postage prepaid, or (ii) the date shown on the
return receipt, if mailed by registered or certified mail, return
receipt requested, provided that the return receipt is signed by
the director to whom the notice is addressed. If notice is given
by telex, electronically transmitted facsimile or other similar
form of wire or wireless communication, such notice shall be deemed
to be given and to be effective when sent, and with respect to a
telegram, such notice shall be deemed to be given and to be
effective when the telegram is delivered to the telegraph company.
If a director has designated in writing one or more reasonable
addresses or facsimile numbers for delivery of notice to him,
notice sent by mail, telegraph, telex, electronically transmitted
facsimile or other form of wire or wireless communication shall not
be deemed to have been given or to be effective unless sent to such
addresses or facsimile numbers, as the case may be.
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A director may waive notice of a meeting before or after the
time and date of the meeting by a writing signed by such director.
Such waiver shall be delivered to the secretary for filing with the
corporate records, but such delivery and filing shall not be
conditions to the effectiveness of the waiver. Further, a
director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless at the beginning of
the meeting, or promptly upon his later arrival, the director
objects to holding the meeting or transacting business at the
meeting because of lack of notice or defective notice and does not
thereafter vote for or assent to action taken at the meeting.
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
Section 7. Quorum. A majority of the number of directors
fixed by the board of directors pursuant to Article III, Section 2,
or, if no number is fixed, a majority of the number in office
immediately before the meeting begins, shall constitute a quorum
for the transaction of business at any meeting of the board of
directors.
Section 8. Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall
be the act of the board of directors.
Section 9. Compensation. By resolution of the board of
directors, any director may be paid any one or more of the
following: his expense, if any, of attendance at meetings, a fixed
sum for attendance at each meeting, a stated salary as director, or
such other compensation as the corporation and the director may
reasonably agree upon. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving
compensation therefor.
Section 10. Presumption of Assent. A director of the
corporation who is present at a meeting of the board of directors
or committee of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the
action taken at the meeting unless (i) the director objects at the
beginning of the meeting, or promptly upon his arrival, to the
holding of the meeting or the transaction of business at the
meeting and does not thereafter vote for or assent to any action
taken at the meeting; (ii) the director contemporaneously requests
that his dissent shall be entered in the minutes of the meeting or
unless he or she shall file his or her written dissent or
abstention as to any specific action taken be entered in the
minutes of the meeting; or (iii) the director causes written notice
of his dissent or abstention as to any specific action to be
received by the presiding officer of the meeting before its
adjournment or by the secretary promptly after the adjournment of
the meeting. A director may dissent to a specific action at a
meeting while assenting to others. The right to dissent to a
specific action taken at a meeting of the board of directors or a
committee of the board shall not be available to a director who
voted in favor of such action.
Section 11. Committees. By resolution adopted by a majority
of all the directors in office when the action is taken, the board
of directors may designate from among its members an executive
committee and one or more other committees, and appoint one or more
members of the board of directors to serve on them. To the extent
provided in the resolution, each committee shall have all the
authority of the board of directors, except that no such committee
shall have the authority to (i) authorize distributions; (ii)
approve or propose to shareholders actions or proposals required by
the Colorado Business Corporation Act to be approved by
shareholders; (iii) fill vacancies on the board of directors or any
committee thereof; (iv) amend the articles of incorporation; (v)
adopt, amend or repeal the Bylaws; (vi) approve a plan of merger
not requiring shareholder approval; (vii) authorize or approve
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the reacquisition of shares unless pursuant to a formula or method
prescribed by the board of directors; or (viii) authorize or
approve the issuance or sale of shares, or contract for the sale of
shares or determine the designations and relative rights,
preferences and limitations of a class or series of shares, except
that the board of directors may authorize a committee or officer to
do so within limits specifically prescribed by the board of
directors. The committee shall then have full power within the
limits set by the board of directors to adopt any final resolution
setting forth all preferences, limitations and relative rights of
such class or series and to authorize an amendment to the articles
of incorporation stating the preferences, limitations and relative
rights of a class or series for filing with the Secretary of State
under the Colorado Business Corporation Act.
Sections 4, 5, 6, 7, 8 or 12 of Article III, which govern
meetings, notice, waiver of notice, quorum, voting requirements and
action without a meeting of the board of directors, shall apply to
committees and their members appointed under this Section 11.
Neither the designation of any such committee, the delegation
of authority to such committee, nor any action by such committee
pursuant to its authority shall alone constitute compliance by any
member of the board of directors or a member of the committee in
question with his responsibility to conform to the standard of care
set forth in Article III, Section 14 of these Bylaws.
Section 12. Informal Action by Directors. Any action
required or permitted to be taken at a meeting of the directors or
any committee designated by the board of directors may be taken
without a meeting if a written consent (or counterparts thereof)
that sets forth the action so taken is signed by all of the
directors or all of the committee members entitled to vote with
respect to the action taken. Such consent shall have the same
force and effect as a unanimous vote of the directors or committee
members and may be stated as such in any document. Unless the
consent specifies a different effective time or date, action taken
under this Section 12 is effective at the time or date the last
director signs a writing describing the action so taken, unless,
before such time, any director has revoked his consent by a writing
signed by the director and received by the president or the
secretary of the corporation.
Section 13. Telephonic Meetings. The board of directors may
permit any director (or any member of a committee designated by the
board) to participate in a regular or special meeting of the board
of directors or a committee thereof through the use of any means of
communication by which all directors participating in the meeting
can hear each other during the meeting. A director participating
in a meeting in this manner is deemed to be present in person at
the meeting.
Section 14. Standard of Care. A director shall perform his
duties as a director, including without limitation his duties as a
member of any committee of the board, in good faith, in a manner he
reasonably believes to be in the best interests of the corporation,
and with the care an ordinarily prudent person in a like position
would exercise under similar circumstances. In performing his
duties, a director shall be entitled to rely on information,
opinions, reports or statements, including financial statements and
other financial data, in each case prepared or presented by the
persons herein designated. However, he shall not be considered to
be acting in good faith if he has knowledge concerning the matter
in question that would cause such reliance to be unwarranted. A
director shall not be liable to the corporation or its shareholders
for any action he takes or omits to take as a director if, in
connection with such action or omission, he performs his duties in
compliance with this Section 14.
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ARTICLE IV - OFFICERS AND AGENTS
Section 1. General. The officers of the corporation shall be
a president, one or more vice presidents, a secretary and a
treasurer, each of whom shall be appointed by the board of
directors and shall be a natural person eighteen years of age or
older. One person may hold more than one office. The board of
directors or an officer or officers so authorized by the board may
appoint such other officers, assistant officers, committees and
agents, including a chairman of the board, assistant secretaries
and assistant treasurers, as they may consider necessary. Except
as expressly prescribed by these Bylaws, the board of directors or
the officer or officers authorized by the board shall from time to
time determine the procedure for appointment of officers, their
authority and duties and their compensation, provided that the
board of directors may change the authority, duties and
compensation of any officer who is not appointed by the board.
Section 2. Appointment and Term of Office. The officers of
the corporation to be appointed by the board of directors shall be
appointed at each annual meeting of the board held after each
annual meeting of the shareholders. If the appointment of officers
is not made at such meeting or if an officer or officers are to be
appointed by another officer or officers of the corporation, such
appointment shall be made as determined by the board of directors
or the appointing person or persons. Each officer shall hold
office until the first of the following occurs: his successor
shall have been duly appointed and qualified, his death, his
resignation, or his removal in the manner provided in Section 3.
Section 3. Resignation and Removal. An officer may resign at
any time by giving written notice of resignation to the president,
secretary or other person who appoints such officer. The
resignation is effective when the notice is received by the
corporation unless the notice specifies a later effective date.
Any officer or agent may be removed at any time with or
without cause by the board of directors or an officer or officers
authorized by the board. Such removal does not affect the contract
rights, if any, of the corporation or of the person so removed.
The appointment of an officer or agent shall not in itself create
contract rights.
Section 4. Vacancies. A vacancy in any office, however
occurring, may be filled by the board of directors, or by the
officer or officers authorized by the board, for the unexpired
portion of the officer's term. If an officer resigns and his
resignation is made effective at a later date, the board of
directors, or officer or officers authorized by the board, may
permit the officer to remain in office until the effective date and
may fill the pending vacancy before the effective date if the board
of directors or officer or officers authorized by the board provide
that the successor shall not take office until the effective date.
In the alternative, the board of directors, or officer or officers
authorized by the board of directors, may remove the officer at any
time before the effective date and may fill the resulting vacancy.
Section 5. President. The president shall preside at all
meetings of shareholders and all meetings of the board of directors
unless the board of directors has appointed a chairman, vice
chairman, or other officer of the board and has authorized such
person to preside at meetings of the board of directors. Subject
to the direction of the board of directors, the president shall be
the chief executive officer of the corporation and shall have
general and active control of its affairs and business and general
supervision of its officers, agents and employees. Unless
otherwise directed by the board of directors,
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the president shall attend in person or by substitute appointed by
him, or shall execute on behalf of the corporation written
instruments appointing a proxy or proxies to represent the
corporation, at all meetings of the stockholders of any other
corporation in which the corporation holds any stock. On behalf of
the corporation, the president may in person or by substitute or by
proxy execute written waivers of notice and consents with respect
to any such meetings. At all such meetings and otherwise, the
president, in person or by substitute or proxy, may vote the stock
held by the corporation, execute written consents and other
instruments with respect to such stock, and exercise any and all
rights and powers incident to the ownership of said stock, subject
to the instructions, if any, of the board of directors. The
president shall have custody of the treasurer's bond, if any. The
president shall have such additional authority and duties as are
appropriate and customary for the office of president and chief
executive officer, except as the same may be expanded or limited by
the board of directors from time to time.
Section 6. Vice Presidents. The vice presidents shall
assist the president and shall perform such duties as may be
assigned to them by the president or by the board of directors. In
the absence of the president, the vice president, if any (or, if
more than one, the vice presidents in the order designated by the
board of directors, or if the board makes no such designation, then
the vice president designated by the president, or if neither the
board nor the president make any such designation, the senior vice
president as determined by first election to that office) shall
have the powers and perform the duties of the president.
Section 7. Secretary. The secretary shall (i) prepare and
maintain as permanent records the minutes of the proceedings of the
shareholders and of the board of directors, a record of all actions
taken by the shareholders or board of directors without a meeting,
a record of all actions taken by a committee of the board of
directors in place of the board of directors on behalf of the
corporation, and a record of all waivers of notice of meetings of
shareholders and of the board of directors or any committee
thereof; (ii) see that all notices are duly given in accordance
with the provisions of these Bylaws and as required by law; (iii)
serve as custodian of the corporate records and of the seal of the
corporation and affix the seal to all documents when authorized by
the board of directors; (iv) keep at the corporation's registered
office or principal place of business a record containing the names
and addresses of all shareholders in a form that permits
preparation of a list of shareholders arranged by voting group and
by class or series of shares within each voting group, that is
alphabetical within each class or series and that shows the address
of, and the number of shares of each class or series held by, each
shareholder, unless such a record shall be kept at the office of
the corporation's transfer agent or registrar; (v) maintain at the
corporation's principal office the originals or copies of the
corporation's articles of incorporation, Bylaws, minutes of all
shareholders' meetings and records of all action taken by
shareholders without a meeting for the past three years, all
written communications within the past three years to shareholders
as a group or to the holders of any class or series of shares as a
group, a list of the names and business addresses of the current
directors and officers, a copy of the corporation's most recent
corporate report filed with the Secretary of State, and financial
statements showing in reasonable detail the corporation's assets
and liabilities and results of operations for the last three years;
(vi) have general charge of the stock transfer books of the
corporation, unless the corporation has a transfer agent; (vii)
authenticate records of the corporation; and (viii) in general,
perform all duties incident to the office of secretary and such
other duties as from time to time may be assigned to him by the
president or by the board of directors. Assistant secretaries, if
any, shall have the same duties and powers, subject to supervision
by the secretary. The directors and/or shareholders may, however,
respectively designate a person other than the secretary or
assistant secretary to keep the minutes of their respective
meetings.
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Any books, records, or minutes of the corporation may be in
written form or in any form capable of being converted into written
form within a reasonable time.
Section 8. Treasurer. The treasurer shall be the principal
financial officer of the corporation, shall have the care and
custody of all funds, securities, evidences of indebtedness and
other personal property of the corporation and shall deposit the
same in accordance with the instructions of the board of directors.
Subject to the limits imposed by the board of directors, he shall
receive and give receipts and acquittances for money paid in or on
account of the corporation, and shall pay out of the corporation's
funds on hand all bills, payrolls and other just debts of the
corporation of whatever nature upon maturity. He shall perform all
other duties incident to the office of treasurer and, upon request
of the board, shall make such reports to it as may be required at
any time. He shall, if required by the board, give the corporation
a bond in such sums and with such sureties as shall be satisfactory
to the board, conditioned upon the faithful performance of his
duties and for the restoration to the corporation of all books,
papers, vouchers, money and other property of whatever kind in his
possession or under his control belonging to the corporation. He
shall have such other powers and perform such other duties as may
from time to time be prescribed by the board of directors or the
president. The assistant treasurers, if any, shall have the same
powers and duties, subject to the supervision of the treasurer.
The treasurer shall also be the principal accounting officer
of the corporation. He shall prescribe and maintain the methods
and system of accounting to be followed, keep complete books and
records of account as required by the Colorado Business Corporation
Act, prepare and file all local, state and federal tax returns,
prescribe and maintain an adequate system of internal audit and
prepare and furnish to the president and the board of directors
statements of account showing the financial position of the
corporation and the results of its operations.
ARTICLE V - STOCK
Section 1. Certificates. The board of directors shall be
authorized to issue any of its classes of shares with or without
certificates. The fact that the shares are not represented by
certificates shall have no effect on the rights and obligations of
the shareholders. If the shares are represented by certificates,
such shares shall be represented by consecutively numbered
certificates signed, either manually or by facsimile, in the name
of the corporation by the president or one or more vice presidents
and the secretary or an assistant secretary. In case any officer
who has signed or whose facsimile signature has been placed upon
such certificate shall have ceased to be such officer before such
certificate is issued, such certificate may nonetheless be issued
by the corporation with the same effect as if he were such officer
at the date of its issue. All certificates shall be consecutively
numbered, and the names of the owners, the number of shares, and
the date of issue shall be entered on the books of the corporation.
Each certificate representing shares shall state upon its face:
(i) That the corporation is organized under the laws of
the State of Colorado;
(ii) The name of the person to whom issued;
(iii) The number and class of the shares and the
designation of the series, if any, that the certificate
represents;
(iv) The par value, if any, of each share represented by
the certificate;
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(v) A summary, on the front or the back, of the
designations, preferences, limitations, and relative rights
applicable to each class, the variations in preferences,
limitations and rights determined for each series, and the
authority of the board of directors to determine variations
for future classes or series, or in lieu thereof, a
conspicuous statement, on the front or the back, that the
corporation will furnish to the shareholder, on request in
writing and without charge, information concerning the
designations, preferences, limitations and relative rights
applicable to each class, the variations in preference,
limitations, and rights determined for each series, and the
authority of the board of directors to determine variations
for future classes or series; and
(vi) Any restrictions imposed by the corporation upon
the transfer of the shares represented by the certificate.
If shares are not represented by certificates, within a
reasonable time following the issue or transfer of such shares, the
corporation shall send the shareholder a complete written statement
of all of the information required to be provided to holders of
uncertificated shares by the Colorado Business Corporation Act.
Section 2. Consideration for Shares. Certificated or
uncertificated shares shall not be issued until the shares
represented thereby are fully paid. The board of directors may
authorize the issuance of shares for consideration consisting of
any tangible or intangible property or benefit to the corporation,
including cash, promissory notes, services performed or other
securities of the corporation. Future services shall not
constitute payment or partial payment for shares of the
corporation. The promissory note of a subscriber or an affiliate
of a subscriber shall not constitute payment or partial payment for
shares of the corporation unless the note is negotiable and is
secured by collateral, other than the shares being purchased,
having a fair market value at least equal to the principal amount
of the note. For purposes of this Section 2, "promissory note"
means a negotiable instrument on which there is an obligation to
pay independent of collateral and does not include a non-resource
note.
Section 3. Lost Certificates. In case of an alleged loss,
destruction or mutilation of a certificate of stock, the board of
directors may direct the issuance of a new certificate in lieu
thereof upon such terms and conditions in conformity with the law
as the board may prescribe. The board of directors may in its
discretion require an affidavit of lost certificate and/or a bond
in such form and amount and with such surety as it may determine
before issuing a new certificate.
Section 4. Transfer of Shares. Upon surrender to the
corporation or to a transfer agent of the corporation of a
certificate of stock duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, and
receipt of such documentary stamps as may be required by law and
evidence of compliance with all applicable securities laws and
other restrictions, the corporation shall issue a new certificate
to the person entitled thereto, and cancel the old certificate.
Every such transfer of stock shall be entered on the stock books of
the corporation which shall be kept at its principal office or by
the person and at the place designated by the board of directors.
Except as otherwise expressly provided in Article II, Sections
7 and 11, and except for the assertion of dissenters' rights to the
extent provided in Article 113 of the Colorado Business Corporation
Act, the corporation shall be entitled to treat the registered
holder of any shares of the corporation as the owner thereof for
all purposes, and the corporation shall not be bound to recognize
any equitable or other claim to, or interest in, such shares or
rights deriving from such shares on the part of any person
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other than the registered holder, including without limitation any
purchaser, assignee or transferee of such shares or right deriving
from such shares, unless and until such other person becomes the
registered holder of such shares, whether or not the corporation
shall have either actual or constructive notice of the claimed
interest of such other person.
Section 5. Transfer Agent, Registrars and Paying Agents. The
board may at its discretion appoint one or more transfer agents,
registrars and agents for making payment upon any class of stock,
bond, debenture or other security of the corporation. Such agents
and registrars may be located either within or outside the State of
Colorado. They shall have such rights and duties and shall be
entitled to such compensation as may be agreed.
ARTICLE VI - INDEMNIFICATION OF CERTAIN PERSONS
Section 1. Indemnification. For purposes of this Article VI,
a "Proper Person" means any person (including the estate or
personal representative of a director) 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, and whether formal or informal, by
reason of the fact that he is or was a director, officer, employee,
fiduciary or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, partner,
trustee, employee, fiduciary or agent of any foreign or domestic
profit or nonprofit corporation or of any partnership, joint
venture, trust, profit or nonprofit unincorporated association,
limited liability company, or other enterprise or employee benefit
plan. The corporation shall indemnify any Proper Person against
reasonably incurred expenses (including attorneys' fees),
judgments, penalties, fines (including any excise tax assessed with
respect to an employee benefit plan) and amounts paid in settlement
reasonably incurred by him in connection with such action, suit or
proceeding if it is determined by the groups set forth in Section
4 of this Article that he conducted himself in good faith and that
he reasonably believed (i) in the case of conduct in his official
capacity with the corporation, that his conduct was in the
corporation's best interest; or (ii) in all other cases (except
criminal cases) that his conduct was at least not opposed to the
corporation's best interest; or (iii) in the case of any criminal
proceeding, that he had no reasonable cause to believe his conduct
was unlawful. Official capacity means, when used with respect to
a director, the office of director and, when used with respect to
any other Proper Person, the office in a corporation held by the
officer or the employment, fiduciary or agency relationship
undertaken by the employee, fiduciary, or agent on behalf of the
corporation. Official capacity does not include service for any
other domestic or foreign corporation or other person or employee
benefit plan.
A director's conduct with respect to an employee benefit plan
for a purpose the director reasonably believed to be in the best
interests of the participants in or beneficiaries of the plan is
conduct that satisfies the requirements in subparagraph (ii) of
this Section 1. A director's conduct with respect to an employee
benefit plan for a purpose that the director did not reasonably
believe to be in the interests of the participants in or
beneficiaries of the plan shall be deemed not to satisfy the
requirements of this Section that he conducted himself in good
faith.
No indemnification shall be made under this Article VI to a
Proper Person with respect to any claim, issue or matter in
connection with a proceeding by or in the right of a corporation in
which the Proper Person was adjudged liable to the corporation or
in connection with any proceeding charging that the Proper Person
derived an improper personal benefit, whether or not involving
action in an official capacity, in which he was adjudged liable on
the basis that he derived an improper personal benefit.
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Further, indemnification under this Section in connection with a
proceeding brought by or in the right of the corporation shall be
limited to reasonable expenses, including attorneys' fees, incurred
in connection with the proceeding.
Section 2. Right to Indemnification. The corporation shall
indemnify any Proper Person who was wholly successful, on the
merits or otherwise, in defense of any action, suit, or proceeding
as to which he was entitled to indemnification under Section 1 of
this Article VI against expenses (including attorneys' fees)
reasonably incurred by him in connection with the proceeding
without the necessity of any action by the corporation other than
the determination in good faith that the defense has been wholly
successful.
Section 3. Effect of Termination of Action. The termination
of any action, suit or proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent
shall not of itself create a presumption that the person seeking
indemnification did not meet the standards of conduct described in
Section 1 of this Article VI. Entry of a judgment by consent as
part of a settlement shall not be deemed an adjudication of
liability, as described in Section 2 of this Article VI.
Section 4. Groups Authorized to Make Indemnification
Determination. Except where there is a right to indemnification as
set forth in Sections 1 or 2 of this Article or where
indemnification is ordered by a court in Section 5, any
indemnification shall be made by the corporation only as determined
in the specific case by a proper group that indemnification of the
Proper Person is permissible under the circumstances because he has
met the applicable standards of conduct set forth in Section 1 of
this Article. This determination shall be made by the board of
directors by a majority vote of those present at a meeting at which
a quorum is present, which quorum shall consist of directors not
parties to the proceeding ("Quorum"). If a Quorum cannot be
obtained, the determination shall be made by a majority vote of a
committee of the board of directors designated by the board, which
committee shall consist of two or more directors not parties to the
proceeding, except that directors who are parties to the proceeding
may participate in the designation of directors for the committee.
If a Quorum of the board of directors cannot be obtained and the
committee cannot be established, or even if a Quorum is obtained or
the committee is designated and a majority of the directors
constituting such Quorum or committee so directs, the determination
shall be made by (i) independent legal counsel selected by a vote
of the board of directors or the committee in the manner specified
in this Section 4 or, if a Quorum of the full board of directors
cannot be obtained and a committee cannot be established, by
independent legal counsel selected by a majority vote of the full
board (including directors who are parties to the action) or (ii)
a vote of the shareholders.
Authorization of indemnification and advance of expenses shall
be made in the same manner as the determination that
indemnification or advance of expenses is permissible except that,
if the determination that indemnification or advance of expenses is
permissible is made by independent legal counsel, authorization of
indemnification and advance of expenses shall be made by the body
that selected such counsel.
Section 5. Court-Ordered Indemnification. Any Proper Person
may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction for
mandatory indemnification under Section 2 of this Article,
including indemnification for reasonable expenses incurred to
obtain court-ordered indemnification. If a court determines that
the Proper Person is entitled to indemnification under Section 2 of
this Article, the court shall order indemnification,
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including the Proper Person's reasonable expenses incurred to
obtain court-ordered indemnification. If the court determines that
such Proper Person is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether
or not he met the standards of conduct set forth in Section 1 of
this Article or was adjudged liable in the proceeding, the court
may order such indemnification as the court deems proper except
that if the Proper Person has been adjudged liable, indemnification
shall be limited to reasonable expenses incurred in connection with
the proceeding and reasonable expenses incurred to obtain court-
ordered indemnification.
Section 6. Advance of Expenses. Reasonable expenses
(including attorneys' fees) incurred in defending an action, suit
or proceeding as described in Section 1 may be paid by the
corporation to any Proper Person in advance of the final
disposition of such action, suit or proceeding upon receipt of (i)
a written affirmation of such Proper Person's good faith belief
that he has met the standards of conduct prescribed in Section 1 of
this Article VI; (ii) a written undertaking, executed personally or
on the Proper Person's behalf, to repay such advances if it is
ultimately determined that he did not meet the prescribed standards
of conduct (the undertaking shall be an unlimited general
obligation of the Proper Person but need not be secured and may be
accepted without reference to financial ability to make repayment);
and (iii) a determination is made by the proper group (as described
in Section 4 of this Article VI) that the facts as then known to
the group would not preclude indemnification. Determination and
authorization of payments shall be made in the same manner
specified in Section 4 of this Article VI.
Section 7. Additional Indemnification to Certain Persons
Other Than Directors. In addition to the indemnification provided
to officers, employees, fiduciaries or agents because of their
status as Proper Persons under this Article, the corporation may
also indemnify and advance expenses to them if they are not
directors of the corporation to a greater extent than is provided
in these Bylaws, if not inconsistent with public policy, and if
provided for by general or specific action of its board of
directors or shareholders or by contract.
Section 8. Witness Expenses. The Sections of this Article VI
do not limit the corporation's authority to pay or reimburse
expenses incurred by a director in connection with an appearance as
a witness in a proceeding at a time when he has not been made or
named as a defendant or respondent in the proceeding.
Section 9. Report to Shareholders. Any indemnification of or
advance of expenses to a director in accordance with this Article
VI, if arising out of a proceeding by or on behalf of the
corporation, shall be reported in writing to the shareholders with
or before the notice of the next shareholders' meeting. If the
next shareholder action is taken without a meeting at the
instigation of the board of directors, such notice shall be given
to the shareholders at or before the time the first shareholder
signs a writing consenting to such action.
ARTICLE VII - INSURANCE
Section 1. Provision of Insurance. By action of the board of
directors, notwithstanding any interest of the directors in the
action, the corporation may purchase and maintain insurance, in
such scope and amounts as the board of directors deems appropriate,
on behalf of any person who is or was a director, officer,
employee, fiduciary or agent of the corporation, or who, while a
director, officer,
17
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<PAGE>
employee, fiduciary or agent of the corporation, is or was serving
at the request of the corporation as a director, officer, partner,
trustee, employee, fiduciary or agent of any other foreign or
domestic profit or nonprofit corporation or any partnership, joint
venture, trust, profit or nonprofit unincorporated association,
limited liability company, other enterprise or employee benefit
plan, against any liability asserted against, or incurred by, him
in that capacity or arising out of his status as such, whether or
not the corporation would have the power to indemnify him against
such liability under the provisions of Article VI or applicable
law. Any such insurance may be procured from any insurance company
designated by the board of directors of the corporation, whether
such insurance company is formed under the laws of the State of
Colorado or any other jurisdiction of the United States or
elsewhere, including any insurance company in which the corporation
has an equity interest or any other interest, through stock
ownership or otherwise.
ARTICLE VIII - MISCELLANEOUS
Section 1. Seal. The board of directors may adopt a
corporate seal, which shall be circular in form and shall contain
the name of the corporation and the words, "Seal, Colorado."
Section 2. Fiscal Year. The fiscal year of the corporation
shall be as established by the board of directors.
Section 3. Amendments. The board of directors shall have
power, to the maximum extent permitted by the Colorado Business
Corporation Act, to make, amend and repeal the Bylaws of the
corporation at any regular or special meeting of the board unless
the shareholders, in making, amending or repealing a particular
Bylaw, expressly provide that the directors may not amend or repeal
such Bylaw. The shareholders also shall have the power to make,
amend or repeal the Bylaws of the corporation at any annual meeting
or at any special meeting called for that purpose.
Section 4. Receipt of Notices by the Corporation. Notices,
shareholder writings consenting to action, and other documents or
writings shall be deemed to have been received by the corporation
when they are actually received: (1) at the registered office of
the corporation in Colorado; (2) at the principal office of the
corporation (as that office is designated in the most recent
document filed by the corporation with the Secretary of State for
Colorado designating a principal office) addressed to the attention
of the secretary of the corporation; (3) by the secretary of the
corporation wherever the secretary may be found; or (4) by any
other person authorized from time to time by the board of directors
or the president to receive such writings, wherever such person is
found.
Section 5. Gender. The masculine gender is used in these
Bylaws as a matter of convenience only and shall be interpreted to
include the feminine and neuter genders as the circumstances
indicate.
Section 6. Conflicts. In the event of any irreconcilable
conflict between these Bylaws and either the corporation's articles
of incorporation or applicable law, the latter shall control.
Section 7. Definitions. Except as otherwise specifically
provided in these Bylaws, all terms used in these Bylaws shall have
the same definition as in the Colorado Business Corporation Act.
18
69
<PAGE>
CERTIFICATE
I hereby certify that the foregoing Bylaws, consisting of 19
pages, including this page, constitute the Bylaws of 3PM, Inc.,
adopted by the board of directors of the corporation as of October
19, 1994.
s/Gregory W. Skufca
----------------------------------
Gregory W. Skufca, Secretary
19
70
<PAGE>
3PM HOLDING CORP.
----------------------------
EXHIBIT 4.1
----------------------------
FORM OF LOCK-UP AGREEMENT
----------------------------
71
<PAGE>
____________________, 1997
Board of Directors
3PM Holding Corp.
5650 Greenwood Plaza Blvd.
Suite 216
Englewood, Colorado 80111
Gentlemen:
The undersigned, a beneficial owner of the common stock of 3PM
Holding Corp. (the "Company"), par value $0.0001 per share (the
"Common Stock"), understands that the Company has filed with the
U.S. Securities and Exchange Commission a registration statement on
Form 10-SB (File No. ______________), (the "Registration
Statement"), for the registration of the Company's Common Stock.
As part of the disclosure included in the Registration Statement,
the Company has affirmatively stated that there will be no trading
of the Company's securities until such time as the Company
successfully implements its business plan as described in such
Registration Statement, consummating a merger or acquisition.
In order to insure that the aforesaid disclosure is adhered to, the
undersigned agrees, for the benefit of the Company, that he/she
will not offer to sell, assign, pledge, hypothecate, grant any
option for the sale of, or otherwise dispose of, directly or
indirectly, any shares of Common Stock of the Company owned by
him/her, or subsequently acquired through the exercise of any
options, warrants or rights, or conversion of any other security,
or by reason of any stock split or other distribution of stock, or
grant options, rights or warrants with respect to any such shares
of Common Stock, until the Company successfully closes a merger or
acquisition. Furthermore, the undersigned will permit all
certificates evidencing his/her shares to be endorsed with the
appropriate restrictive legends and will consent to the placement
of appropriate stop transfer orders with the transfer agent of the
Company.
Very truly yours,
______________________________
(signature of holder)
______________________________
Please Print Name(s)
__________________________
Number of shares of Common
Stock owned
72
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
3PM HOLDING CORP.
(Registrant)
Date: October 31, 1997
By:/s/ Greg Simonds
--------------------------------
Greg Simonds,
President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND UNAUDITED
FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> DEC-31-1996 SEP-30-1997
<CASH> 4,787 2,100
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 4,787 2,100
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 4,787 2,100
<CURRENT-LIABILITIES> 78,562 76,171
<BONDS> 0 0
0 0
0 0
<COMMON> 50 50
<OTHER-SE> (73,825) (74,121)
<TOTAL-LIABILITY-AND-EQUITY> 4,787 2,100
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 6,519 296
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 3,705 0
<INCOME-PRETAX> (10,224) (296)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> (42,613) 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (52,837) (296)
<EPS-PRIMARY> (.11) 0
<EPS-DILUTED> 0 0
</TABLE>
