U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
INTERNATIONAL CAPITAL FUNDING, INC.
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(Name of small business issuer in its charter)
COLORADO 84-1434313
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3140 SO. PEORIA STREET, SUITE K230
AURORA, CO 80014
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 755-9832
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Securities to be registered under Section 12(b) of the Act: NONE
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Securities registered under Section 12(g) of the Act:
COMMON STOCK, $.0001 PAR VALUE
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
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International Capital Funding, Inc. (the "Company"), was incorporated
on June 10, 1991 under the laws of the State of Colorado, to engage in any
lawful corporate undertaking, including, but not limited to, selected
mergers and acquisitions. The Company has had no activity since inception
and has no operations to date. Other than issuing shares to its original
shareholders, the Company never commenced any operational activities. The
Board of Directors of the Company has elected as this time to attempt to
locate and consummate a merger or acquisition with a private entity as the
Company's principal business purpose described below.
The Company can be defined as a "shell" company whose sole purpose at
this time is to locate and consummate a merger or acquisition with a
private entity. As part of its business plan, this Company is filing this
registration statement on Form 10-SB on a voluntary basis in order to
become a "public" company by virtue of being subject to the reporting
requirements of the Securities Exchange Act of 1934. Another aspect of its
business plan which the Company intends to implement after this
registration statement becomes effective and a merger or business
combination has been consummated, is to seek to facilitate the eventual
creation of a public trading market in its then outstanding securities.
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. In order to comply with these various
limitations, management does not intend to undertake any efforts to sell
any additional securities of the Company or cause a market to develop in
the Company's securities until such time as the Company has successfully
located and consummated a merger or business combination described herein.
Accordingly, each shareholder of the Company has executed and delivered a
"no sale" letter agreement, agreeing that they shall not sell or transfer
in any way, 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
certificates in a Company escrow account. The Company will not release
these respective certificates until such time as a merger or acquisition
has been successfully consummated.
The Company's business plan is to seek, investigate, and, if
warranted, acquire one or more properties or businesses, and to pursue
other related activities intended to enhance shareholder value. The
acquisition of a business opportunity may be made by purchase, merger,
exchange of stock, or otherwise, and may encompass assets or a business
entity, such as a corporation, joint venture, or partnership. The Company
has very limited capital, and it is unlikely that the Company will be able
to take advantage of more than one such business opportunity. The Company
intends to seek opportunities demonstrating the potential of long-term
growth as opposed to short-term earnings.
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At the present time the Company has not identified any business
opportunity that it plans to pursue, nor has the Company reached any
agreement or definitive understanding with any person concerning an
acquisition. The Company's Officers and Directors have previously been
involved in transactions involving a merger between an established company
and a shell entity, and has a number of contacts within the field of
corporate finance. As a result, they have had preliminary contacts with
representatives of numerous companies concerning the general possibility of
a merger or acquisition by a shell company. However, none of these
preliminary contacts or discussions involved the possibility of a merger or
acquisition transaction with the Company.
It is anticipated that the Company's Officers and Directors will
contact broker-dealers and other persons with whom they are acquainted who
are involved in corporate finance matters to advise them of the Company's
existence and to determine if any companies or businesses they represent
have an interest in considering a merger or acquisition with the Company.
No assurance can be given that the Company will be successful in finding or
acquiring a desirable business opportunity, given the lack of any funds
available for acquisitions, or that any acquisition that occurs will be on
terms that are favorable to the Company or its stockholders.
The Company's search will be directed toward small and medium-sized
enterprises which have a desire to become public corporations and which are
able to satisfy, or anticipate in the reasonably near future being able to
satisfy, the minimum asset requirements in order to qualify shares for
trading on NASDAQ or on a stock exchange (See "Investigation and Selection
of Business Opportunities"). The Company anticipates that the business
opportunities presented to it will (i) be recently organized with no
operating history, or a history of losses attributable to under-
capitalization or other factors; (ii) be experiencing financial or
operating difficulties; (iii) be in need of funds to develop a new product
or service or to expand into a new market; (iv) be relying upon an untested
product or marketing concept; or (v) have a combination of the
characteristics mentioned in (i) through (iv). The Company intends to
concentrate its acquisition efforts on properties or businesses that it
believes to be undervalued. Given the above factors, investors should
expect that any acquisition candidate may have a history of losses or low
profitability.
The Company does not propose to restrict its search for investment
opportunities to any particular geographical area or industry, and may,
therefore, engage in essentially any business, to the extent of its limited
resources. This includes industries such as service, finance, natural
resources, manufacturing, high technology, product development, medical,
communications and others. The Company's discretion in the selection of
business opportunities is unrestricted, subject to the availability of such
opportunities, economic conditions, and other factors.
As a consequence of this registration of its securities, any entity
which has an interest in being acquired by, or merging into the Company, is
expected to be an entity that desires to become a public company and
eventually establish a public trading market for its securities. In
connection with such a merger or acquisition, it is highly likely that an
amount of stock constituting control of the Company would be issued by the
Company or purchased from the current principal shareholders of the Company
by the acquiring entity or its affiliates. If stock is purchased from the
current shareholders, the transaction is very likely to result in
substantial gains to them relative to their purchase price for such stock.
In the Company's judgment, none
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of its Officers and Directors would thereby become an "underwriter" within
the meaning of the Section 2(11) of the Securities Act of 1933, as amended.
The sale of a controlling interest by certain principal shareholders of the
Company could occur at a time when the other shareholders of the Company
remain subject to restrictions on the transfer of their shares.
Depending upon the nature of the transaction, the current Officers and
Directors of the Company may resign their management positions with the
Company in connection with the Company's acquisition of a business
opportunity. See "Form of Acquisition," below, and "Risk Factors - The
Company - Lack of Continuity in Management." In the event of such
resignations, the Company's current management would not have any control
over the conduct of the Company's business following the Company's
combination with a business opportunity.
It is anticipated that business opportunities will come to the
Company's attention from various sources, including its Officers and
Directors, its other stockholders, professional advisors such as attorneys
and accountants, securities broker-dealers, venture capitalists, members of
the financial community, and others who may present unsolicited proposals.
The Company has no plans, understandings, agreements, or commitments with
any individual for such person to act as a finder of opportunities for the
Company.
The Company does not foresee that it would enter into a merger or
acquisition transaction with any business with which its Officers or
Directors are currently affiliated. Should the Company determine in the
future, contrary to the foregoing expectations, that a transaction with an
affiliate would be in the best interests of the Company and its
stockholders, the Company is in general permitted by Colorado law to enter
into such a transaction if:
1. The material facts as to the relationship or interest of the
affiliate and as to the contract or transaction are disclosed or
are known to the Board of Directors, and the Board in good faith
authorizes the contract or transaction by the affirmative vote of
a majority of the disinterested directors, even though the
disinterested directors constitute less than a quorum; or
2. The material facts as to the relationship or interest of the
affiliate and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by
vote of the stockholders; or
3. The contract or transaction is fair as to the Company as of the
time it is authorized, approved or ratified, by the Board of
Directors or the stockholders.
INVESTIGATION AND SELECTION OF BUSINESS OPPORTUNITIES
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To a large extent, a decision to participate in a specific business
opportunity may be made upon management's analysis of the quality of the
other company's management and personnel, the anticipated acceptability of
new products or marketing concepts, the merit of technological changes, the
perceived benefit the company will derive from becoming a publicly held
entity, and numerous other factors which are difficult, if not impossible,
to analyze through
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the application of any objective criteria. In many instances, it is
anticipated that the historical operations of a specific business
opportunity may not necessarily be indicative of the potential for the
future because of the possible need to shift marketing approaches
substantially, expand significantly, change product emphasis, change or
substantially augment management, or make other changes. The Company will
be dependent upon the owners of a business opportunity to identify any such
problems which may exist and to implement, or be primarily responsible for
the implementation of, required changes. Because the Company may
participate in a business opportunity with a newly organized firm or with
a firm which is entering a new phase of growth, it should be emphasized
that the Company will incur further risks, because management in many
instances will not have proved its abilities or effectiveness, the eventual
market for such company's products or services will likely not be
established, and such company may not be profitable when acquired.
It is anticipated that the Company will not be able to diversify, but
will essentially be limited to one such venture because of the Company's
limited financing. This lack of diversification will not permit the
Company to offset potential losses from one business opportunity against
profits from another, and should be considered an adverse factor affecting
any decision to purchase the Company's securities.
It is emphasized that management of the Company may effect
transactions having a potentially adverse impact upon the Company's
shareholders pursuant to the authority and discretion of the Company's
management to complete acquisitions without submitting any proposal to the
stockholders for their consideration. Holders of the Company's securities
should not anticipate that the Company necessarily will furnish such
holders, prior to any merger or acquisition, with financial statements, or
any other documentation, concerning a target company or its business. In
some instances, however, the proposed participation in a business
opportunity may be submitted to the stockholders for their consideration,
either voluntarily by such directors to seek the stockholders' advice and
consent or because state law so requires.
The analysis of business opportunities will be undertaken by or under
the supervision of the Company's President, who is not a professional
business analyst. See "Management." Although there are no current plans to
do so, Company management might hire an outside consultant to assist in the
investigation and selection of business opportunities, and might pay a
finder's fee. Since Company management has no current plans to use any
outside consultants or advisors to assist in the investigation and
selection of business opportunities, no policies have been adopted
regarding use of such consultants or advisors, the criteria to be used in
selecting such consultants or advisors, the services to be provided, the
term of service, or regarding the total amount of fees that may be paid.
However, because of the limited resources of the Company, it is likely that
any such fee the Company agrees to pay would be paid in stock and not in
cash. Otherwise, the Company anticipates that it will consider, among
other things, the following factors:
1. Potential for growth and profitability, indicated by new
technology, anticipated market expansion, or new products;
2. The Company's perception of how any particular business
opportunity will be received by the investment community and by
the Company's stockholders;
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3. Whether, following the business combination, the financial
condition of the business opportunity would be, or would have a
significant prospect in the foreseeable future of becoming
sufficient to enable the securities of the Company to qualify for
listing on an exchange or on a national automated securities
quotation system, such as NASDAQ, so as to permit the trading of
such securities to be exempt from the requirements of Rule 15c2-6
recently adopted by the Securities and Exchange Commission. See
"Risk Factors - The Company - Regulation of Penny Stocks."
4. Capital requirements and anticipated availability of required
funds, to be provided by the Company or from operations, through
the sale of additional securities, through joint ventures or
similar arrangements, or from other sources;
5. The extent to which the business opportunity can be advanced;
6. Competitive position as compared to other companies of similar
size and experience within the industry segment as well as within
the industry as a whole;
7. Strength and diversity of existing management, or management
prospects that are scheduled for recruitment;
8. The cost of participation by the Company as compared to the
perceived tangible and intangible values and potential; and
9. The accessibility of required management expertise, personnel,
raw materials, services, professional assistance, and other
required items.
In regard to the possibility that the shares of the Company would
qualify for listing on NASDAQ, the current standards include the
requirements that the issuer of the securities that are sought to be listed
have net tangible assets of at least $4,000,000 or a market capitalization
of $50 million or $950,000 in net income in the latest fiscal year. Many,
and perhaps most, of the business opportunities that might be potential
candidates for a combination with the Company would not satisfy the NASDAQ
listing criteria.
No one of the factors described above will be controlling in the
selection of a business opportunity, and management will attempt to analyze
all factors appropriate to each opportunity and make a determination based
upon reasonable investigative measures and available data. Potentially
available business opportunities may occur in many different industries and
at various stages of development, all of which will make the task of
comparative investigation and analysis of such business opportunities
extremely difficult and complex. Potential investors must recognize that,
because of the Company's limited capital available for investigation and
management's limited experience in business analysis, the Company may not
discover or adequately evaluate adverse facts about the opportunity to be
acquired.
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The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals
and the selection of a business opportunity may take several months or
more.
Prior to making a decision to participate in a business opportunity,
the Company will generally request that it be provided with written
materials regarding the business opportunity containing such items as a
description of products, services and company history; management resumes;
financial information; available projections, with related assumptions upon
which they are based; an explanation of proprietary products and services;
evidence of existing patents, trademarks, or services marks, or rights
thereto; present and proposed forms of compensation to management; a
description of transactions between such company and its affiliates during
relevant periods; a description of present and required facilities; an
analysis of risks and competitive conditions; a financial plan of operation
and estimated capital requirements; audited financial statements, or if
they are not available, unaudited financial statements, together with
reasonable assurances that audited financial statements would be able to be
produced within a reasonable period of time not to exceed 60 days following
completion of a merger transaction; and other information deemed relevant.
As part of the Company's investigation, the Company's executive
Officers and Directors may meet personally with management and key
personnel, may visit and inspect material facilities, obtain independent
analysis or verification of certain information provided, check references
of management and key personnel, and take other reasonable investigative
measures, to the extent of the Company's limited financial resources and
management expertise.
It is possible that the range of business opportunities that might be
available for consideration by the Company could be limited by the impact
of Securities and Exchange Commission regulations regarding purchase and
sale of "penny stocks." The regulations would affect, and possibly impair,
any market that might develop in the Company's securities until such time
as they qualify for listing on NASDAQ or on another exchange which would
make them exempt from applicability of the "penny stock" regulations. See
"Risk Factors - Regulation of Penny Stocks."
Company management believes that various types of potential merger or
acquisition candidates might find a business combination with the Company
to be attractive. These include acquisition candidates desiring to create
a public market for their shares in order to enhance liquidity for current
shareholders, acquisition candidates which have long-term plans for raising
capital through the public sale of securities and believe that the possible
prior existence of a public market for their securities would be
beneficial, and acquisition candidates which plan to acquire additional
assets through issuance of securities rather than for cash, and believe
that the possibility of development of a public market for their securities
will be of assistance in that process. Acquisition candidates which have
a need for an immediate cash infusion are not likely to find a potential
business combination with the Company to be an attractive alternative.
FORM OF ACQUISITION
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It is impossible to predict the manner in which the Company may
participate in a business opportunity. Specific business opportunities
will be reviewed as well as the respective needs and
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desires of the Company and the promoters of the opportunity and, upon the
basis of that review and the relative negotiating strength of the Company
and such promoters, the legal structure or method deemed by management to
be suitable will be selected. Such structure may include, but is not
limited to leases, purchase and sale agreements, licenses, joint ventures
and other contractual arrangements. The Company may act directly or
indirectly through an interest in a partnership, corporation or other form
of organization. Implementing such structure may require the merger,
consolidation or reorganization of the Company with other corporations or
forms of business organization, and although it is likely, there is no
assurance that the Company would be the surviving entity. In addition, the
present management and stockholders of the Company most likely will not
have control of a majority of the voting shares of the Company following a
reorganization transaction. As part of such a transaction, the Company's
existing directors may resign and new directors may be appointed without
any vote by stockholders.
It is likely that the Company will acquire its participation in a
business opportunity through the issuance of Common Stock or other
securities of the Company. Although the terms of any such transaction
cannot be predicted, it should be noted that in certain circumstances the
criteria for determining whether or not an acquisition is a so-called "tax
free" reorganization under the Internal Revenue Code of 1986, depends upon
the issuance to the stockholders of the acquired company of a controlling
interest (i.e. 80% or more) of the common stock of the combined entities
immediately following the reorganization. If a transaction were structured
to take advantage of these provisions rather than other "tax free"
provisions provided under the Internal Revenue Code, the Company's current
stockholders would retain in the aggregate 20% or less of the total issued
and outstanding shares. This could result in substantial additional
dilution in the equity of those who were stockholders of the Company prior
to such reorganization. Any such issuance of additional shares might also
be done simultaneously with a sale or transfer of shares representing a
controlling interest in the Company by the current Officers, Directors and
principal shareholders.
It is anticipated that any new securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available, from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of the transaction, the
Company may agree to register such securities either at the time the
transaction is consummated, or under certain conditions or at specified
times thereafter. The issuance of substantial additional securities and
their potential sale into any trading market that might develop in the
Company's securities may have a depressive effect upon such market.
The Company will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of
such agreement cannot be predicted, generally such an agreement would
require specific representations and warranties by all of the parties
thereto, specify certain events of default, detail the terms of closing and
the conditions which must be satisfied by each of the parties thereto prior
to such closing, outline the manner of bearing costs if the transaction is
not closed, set forth remedies upon default, and include miscellaneous
other terms.
As a general matter, the Company anticipates that it, and/or its
Officers and principal shareholders will enter into a letter of intent with
the management, principals or owners of a prospective business opportunity
prior to signing a binding agreement. Such a letter of intent
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will set forth the terms of the proposed acquisition but will not bind any
of the parties to consummate the transaction. Execution of a letter of
intent will by no means indicate that consummation of an acquisition is
probable. Neither the Company nor any of the other parties to the letter
of intent will be bound to consummate the acquisition unless and until a
definitive agreement concerning the acquisition as described in the
preceding paragraph is executed. Even after a definitive agreement is
executed, it is possible that the acquisition would not be consummated
should any party elect to exercise any right provided in the agreement to
terminate it on specified grounds.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require
substantial management time and attention and substantial costs for
accountants, attorneys and others. If a decision is made not to
participate in a specific business opportunity, the costs theretofore
incurred in the related investigation would not be recoverable. Moreover,
because many providers of goods and services require compensation at the
time or soon after the goods and services are provided, the inability of
the Company to pay until an indeterminate future time may make it
impossible to procure goods and services.
INVESTMENT COMPANY ACT AND OTHER REGULATION
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The Company may participate in a business opportunity by purchasing,
trading or selling the securities of such business. The Company does not,
however, intend to engage primarily in such activities. Specifically, the
Company intends to conduct its activities so as to avoid being classified
as an "investment company" under the Investment Company Act of 1940 (the
"Investment Act"), and therefore to avoid application of the costly and
restrictive registration and other provisions of the Investment Act, and
the regulations promulgated thereunder.
Section 3(a) of the Investment Act contains the definition of an
"investment company," and it excludes any entity that does not engage
primarily in the business of investing, reinvesting or trading in
securities, or that does not engage in the business of investing, owning,
holding or trading "investment securities" (defined as "all securities
other than government securities or securities of majority-owned
subsidiaries") the value of which exceeds 40% of the value of its total
assets (excluding government securities, cash or cash items). The Company
intends to implement its business plan in a manner which will result in the
availability of this exception from the definition of "investment company."
Consequently, the Company's participation in a business or opportunity
through the purchase and sale of investment securities will be limited.
The Company's plan of business may involve changes in its capital
structure, management, control and business, especially if it consummates
a reorganization as discussed above. Each of these areas is regulated by
the Investment Act, in order to protect purchasers of investment company
securities. Since the Company will not register as an investment company,
stockholders will not be afforded these protections.
Any securities which the Company might acquire in exchange for its
Common Stock will be "restricted securities" within the meaning of the
Securities Act of 1933, as amended (the "Act"). If the Company elects to
resell such securities, such sale cannot proceed unless a registration
statement has been declared effective by the Securities and Exchange
Commission
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or an exemption from registration is available. Section 4(1) of the Act,
which exempts sales of securities not involving a distribution, would in
all likelihood be available to permit a private sale. Although the plan of
operation does not contemplate resale of securities acquired, if such a
sale were to be necessary, the Company would be required to comply with the
provisions of the Act to effect such resale.
An acquisition made by the Company may be in an industry which is
regulated or licensed by federal, state or local authorities. Compliance
with such regulations can be expected to be a time-consuming and expensive
process.
COMPETITION
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The Company expects to encounter substantial competition in its
efforts to locate attractive opportunities, primarily from business
development companies, venture capital partnerships and corporations,
venture capital affiliates of large industrial and financial companies,
small investment companies, and wealthy individuals. Many of these
entities will have significantly greater experience, resources and
managerial capabilities than the Company and will therefore be in a better
position than the Company to obtain access to attractive business
opportunities. The Company also will experience competition from other
public "blind pool" companies, many of which may have more funds available
than does the Company.
CORPORATE OFFICES
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The Company currently maintains a mailing address at 3140 So. Peoria
Street, Suite K230, Aurora, Colorado 80014, which is the office address of
its President. The Company's telephone number is (303) 755-9832. Other
than this mailing address, the Company does not currently maintain any
other office facilities, and does not anticipate the need for maintaining
office facilities at any time in the foreseeable future. The Company pays
no rent or other fees for the use of this mailing address.
EMPLOYEES
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The Company is a development stage company and currently has no
employees. Management of the Company expects to use consultants, attorneys
and accountants as necessary, and does not anticipate a need to engage any
full-time employees so long as it is seeking and evaluating business
opportunities. The need for employees and their availability will be
addressed in connection with the decision whether or not to acquire or
participate in specific business opportunities.
RISK FACTORS
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Current and prospective shareholders should carefully consider the
following risk factors, together with the other information contained in
this Form 10, in evaluating the Company and its business. In particular,
readers should note the this Form 10 contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1996
and that actual results could differ materially from those contemplated by
such statements. The factors listed below represent certain important
factors the Company believes could cause such results
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to differ. These factors are not intended to represent a complete list of
the general or specific risks that may affect the Company. It should be
recognized that other risks may be significant, presently or in the future,
and the risks set forth below may affect the Company to a greater extent
than indicated.
CONFLICTS OF INTEREST. Certain conflicts of interest exist between
the Company and its Officers and Directors. They have other business
interests to which they devote their attention, and they may be expected to
continue to do so although management time should be devoted to the
business of the Company. As a result, conflicts of interest may arise that
can be resolved only through their exercise of such judgment as is
consistent with their fiduciary duties to the Company. See "Management,"
and "Conflicts of Interest."
It is anticipated that Company's Officers and Directors may actively
negotiate or otherwise consent to the purchase of a portion of their common
stock as a condition to, or in connection with, a proposed merger or
acquisition transaction. In this process, the Company's Officers and
Directors may consider their own personal pecuniary benefit rather than the
best interests of other Company shareholders, and the other Company
shareholders are not expected to be afforded the opportunity to approve or
consent to any particular stock buy-out transaction. See "Conflicts of
Interest."
POSSIBLE NEED FOR ADDITIONAL FINANCING. The Company has no cash
funds, and it may be impossible to take advantage of any available business
opportunities. Even if the lack of funds does not hinder the acquisition
or an interest in, or complete a transaction with, a business opportunity,
the Company will not, in all likelihood, have enough capital to exploit the
opportunity. Accordingly, the ultimate success of the Company may depend
upon its ability to raise additional capital. The Company has not
investigated the availability, source, or terms that might govern the
acquisition of additional capital and will not do so until it determines a
need for additional financing. If additional capital is needed, there is
no assurance that funds will be available from any source or, if available,
that they can be obtained on terms acceptable to the Company. If not
available, the Company's operations will be limited to those that can be
financed with its debt/equity securities.
REGULATION OF PENNY STOCKS. The Company's securities, when and if
available for trading, will be subject to a Securities and Exchange
Commission rule that imposes special sales practice requirements upon
broker-dealers who sell such securities to persons other than established
customers or accredited investors. For purposes of the rule, the phrase
"accredited investors" means, in general terms, institutions with assets in
excess of $5,000,000, or individuals having a net worth in excess of
$1,000,000 or having an annual income that exceeds $200,000 (or that, when
combined with a spouse's income, exceeds $300,000). For transactions
covered by the rule, the broker-dealer must make a special suitability
determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell the Company's securities and
also may affect the ability of purchasers in this offering to sell their
securities in any market that might develop therefor.
In addition, the Securities and Exchange Commission has adopted a
number of rules to regulate "penny stocks." Such rules include
Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5,
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15g-6, and 15g-7 under the Securities Exchange Act of 1934, as amended.
Because the securities of the Company may constitute "penny stocks" within
the meaning of the rules, the rules would apply to the Company and to its
securities. The rules may further affect the ability of owners of Shares
to sell the securities of the Company in any market that might develop for
them.
Shareholders should be aware that, according to Securities and
Exchange Commission Release No. 34-29093, the market for penny stocks has
suffered in recent years from patterns of fraud and abuse. Such patterns
include (i) control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer; (ii)
manipulation of prices through prearranged matching of purchases and sales
and false and misleading press releases; (iii) "boiler room" practices
involving high-pressure sales tactics and unrealistic price projections
by inexperienced sales persons; (iv) excessive and undisclosed bid-ask
differentials and markups by selling broker-dealers; and (v) the wholesale
dumping of the same securities by promoters and broker-dealers after prices
have been manipulated to a desired level, along with the resulting inevitable
collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically
in the penny stock market. Although the Company does not expect to be in
a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being
established with respect to the Company's securities.
NO OPERATING HISTORY. The Company was formed in June 1991 for the
purpose of to engage in any lawful activity, however, the Company has no
operating history, revenues from operations, or assets other than services
from private sales of stock. The Company faces all of the risks of a new
business and the special risks inherent in the investigation, acquisition,
or involvement in a new business opportunity. The Company must be regarded
as a new or "start-up" venture with all of the unforeseen costs, expenses,
problems, and difficulties to which such ventures are subject.
NO ASSURANCE OF SUCCESS OR PROFITABILITY. There is no assurance that
the Company will acquire a favorable business opportunity. Even if the
Company should become involved in a business opportunity, there is no
assurance that it will generate revenues or profits, or that the market
price of the Company's Common Stock will be increased thereby.
POSSIBLE BUSINESS - NOT IDENTIFIED AND HIGHLY RISKY. The Company has
not identified and has no commitments to enter into or acquire a specific
business opportunity and therefore can disclose the risks and hazards of a
business or opportunity that it may enter into in only a general manner,
and cannot disclose the risks and hazards of any specific business or
opportunity that it may enter into. A shareholder can expect a potential
business opportunity to be quite risky. The Company's acquisition of or
participation in a business opportunity will likely be highly illiquid and
could result in a total loss to the Company and its stockholders if the
business or opportunity proves to be unsuccessful. See Item 1 "Description
of Business."
TYPE OF BUSINESS ACQUIRED. The type of business to be acquired may be
one that desires to avoid effecting its own public offering and the
accompanying expense, delays, uncertainties, and federal and state
requirements which purport to protect investors. Because of the
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Company's lack of capital, it is more likely than not that any acquisition
by the Company will involve other parties whose primary interest is the
acquisition of control of a publicly traded company. Moreover, any
business opportunity acquired may be currently unprofitable or present
other negative factors.
IMPRACTICABILITY OF EXHAUSTIVE INVESTIGATION. The Company's lack of
funds and the lack of full-time management will likely make it
impracticable to conduct a complete and exhaustive investigation and
analysis of a business opportunity before the Company commits its capital
or other resources thereto. Management decisions, therefore, will likely
be made without detailed feasibility studies, independent analysis, market
surveys and the like which, if the Company had more funds available to it,
would be desirable. The Company will be particularly dependent in making
decisions upon information provided by the promoter, owner, sponsor, or
others associated with the business opportunity seeking the Company's
participation. A significant portion of the Company's available funds may
be expended for investigative expenses and other expenses related to
preliminary aspects of completing an acquisition transaction, whether or
not any business opportunity investigated is eventually acquired.
LACK OF DIVERSIFICATION. Because of the lack of financial resources
that the Company has, it is unlikely that the Company will be able to
diversify its acquisitions or operations. The Company's probable inability
to diversify its activities into more than one area will subject the
Company to economic fluctuations within a particular business or industry
and therefore increase the risks associated with the Company's operations.
POSSIBLE RELIANCE UPON UNAUDITED FINANCIAL STATEMENTS. The Company
generally will require audited financial statements from companies that it
proposes to acquire. No assurance can be given, however, that audited
financials will be available to the Company. In cases where audited
financials are unavailable, the Company will have to rely upon unaudited
information received from target companies' management that has not been
verified by outside auditors. The lack of the type of independent
verification which audited financial statements would provide, increases
the risk that the Company, in evaluating an acquisition with such a target
company, will not have the benefit of full and accurate information about
the financial condition and operating history of the target company. This
risk increases the prospect that the acquisition of such a company might
prove to be an unfavorable one for the Company or the holders of the
Company's securities.
Moreover, the Company will be subject to the reporting provisions of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
thus will be required to furnish certain information about significant
acquisitions, including audited financial statements for any business that
it acquires. Consequently, acquisition prospects that do not have, or are
unable to provide reasonable assurances that they will be able to obtain,
the required audited statements would not be considered by the Company to
be appropriate for acquisition so long as the reporting requirements of the
Exchange Act are applicable. Should the Company, during the time it
remains subject to the reporting provisions of the Exchange Act, complete
an acquisition of an entity for which audited financial statements prove to
be unobtainable, the Company would be exposed to enforcement actions by the
Securities and Exchange Commission (the "Commission") and to corresponding
administrative sanctions, including permanent injunctions against the
Company and its management. The legal and other costs of defending a
Commission
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enforcement action are likely to have material, adverse consequences for
the Company and its business. The imposition of administrative sanctions
would subject the Company to further adverse consequences.
In addition, the lack of audited financial statements would prevent
the securities of the Company from becoming eligible for listing on NASDAQ,
the automated quotation system sponsored by the National Association of
Securities Dealers, Inc., or on any existing stock exchange. Moreover, the
lack of such financial statements is likely to discourage broker-dealers
from becoming or continuing to serve as market makers in the securities of
the Company. Without audited financial statements, the Company would
almost certainly be unable to offer securities under a registration
statement pursuant to the Securities Act of 1933, and the ability of the
Company to raise capital would be significantly limited until such
financial statements were to become available.
OTHER REGULATION. An acquisition made by the Company may be of a
business that is subject to regulation or licensing by federal, state, or
local authorities. Compliance with such regulations and licensing can be
expected to be a time-consuming, expensive process and may limit other
investment opportunities of the Company.
DEPENDENCE UPON MANAGEMENT; LIMITED PARTICIPATION OF MANAGEMENT. The
Company currently has three individuals who serve as its Officers and
directors. The Company will be heavily dependent upon their skills,
talents, and abilities to implement its business plan, and may, from time
to time, find that the inability of the Officers and Directors to devote
their full time attention to the business of the Company results in a delay
in progress toward implementing its business plan. Furthermore, since
only three individuals are serving as the Officers and Directors of the
Company, it will be entirely dependent upon their experience in seeking,
investigating, and acquiring a business and in making decisions regarding
the Company's operations. See "Management." Because investors will not be
able to evaluate the merits of possible business acquisitions by the
Company, they should critically assess the information concerning the
Company's Officers and Directors.
LACK OF CONTINUITY IN MANAGEMENT. The Company does not have an
employment agreement with its Officers and Directors, and as a result,
there is no assurance that they will continue to manage the Company in the
future. In connection with acquisition of a business opportunity, it is
likely the current Officers and Directors of the Company may resign. A
decision to resign will be based upon the identity of the business
opportunity and the nature of the transaction, and is likely to occur
without the vote or consent of the stockholders of the Company.
INDEMNIFICATION OF OFFICERS AND DIRECTORS. The Company's Articles of
Incorporation provide for the indemnification of its Directors, Officers,
employees, and agents, under certain circumstances, against attorney's fees
and other expenses incurred by them in any litigation to which they become
a party arising from their association with or activities on behalf of the
Company. The Company will also bear the expenses of such litigation for
any of its Directors, Officers, employees, or agents, upon such person's
promise to repay the Company therefor if it is ultimately determined that
any such person shall not have been entitled to indemnification.
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This indemnification policy could result in substantial expenditures by the
Company which it will be unable to recoup.
DIRECTOR'S LIABILITY LIMITED. The Company's Articles of Incorporation
exclude personal liability of its Directors to the Company and its
stockholders for monetary damages for breach of fiduciary duty except in
certain specified circumstances. Accordingly, the Company will have a much
more limited right of action against its directors than otherwise would be
the case. This provision does not affect the liability of any director
under federal or applicable state securities laws.
DEPENDENCE UPON OUTSIDE ADVISORS. To supplement the business
experience of its Officers and Directors, the Company may be required to
employ accountants, technical experts, appraisers, attorneys, or other
consultants or advisors. The selection of any such advisors will be made
by the Company's President without any input from stockholders.
Furthermore, it is anticipated that such persons may be engaged on an "as
needed" basis without a continuing fiduciary or other obligation to the
Company. In the event the President of the Company considers it necessary
to hire outside advisors, he may elect to hire persons who are affiliates,
if they are able to provide the required services.
LEVERAGED TRANSACTIONS. There is a possibility that any acquisition
of a business opportunity by the Company may be leveraged, i.e., the
Company may finance the acquisition of the business opportunity by
borrowing against the assets of the business opportunity to be acquired, or
against the projected future revenues or profits of the business
opportunity. This could increase the Company's exposure to larger losses.
A business opportunity acquired through a leveraged transaction is
profitable only if it generates enough revenues to cover the related debt
and expenses. Failure to make payments on the debt incurred to purchase
the business opportunity could result in the loss of a portion or all of
the assets acquired. There is no assurance that any business opportunity
acquired through a leveraged transaction will generate sufficient revenues
to cover the related debt and expenses.
COMPETITION. The search for potentially profitable business
opportunities is intensely competitive. The Company expects to be at a
disadvantage when competing with many firms that have substantially greater
financial and management resources and capabilities than the Company.
These competitive conditions will exist in any industry in which the
Company may become interested.
NO FORESEEABLE DIVIDENDS. The Company has not paid dividends on its
Common Stock and does not anticipate paying such dividends in the
foreseeable future.
LOSS OF CONTROL BY PRESENT MANAGEMENT AND STOCKHOLDERS. The Company
may consider an acquisition in which the Company would issue as
consideration for the business opportunity to be acquired an amount of the
Company's authorized but unissued Common Stock that would, upon issuance,
represent the great majority of the voting power and equity of the Company.
The result of such an acquisition would be that the acquired company's
stockholders and management would control the Company, and the Company's
management could be replaced by persons unknown at this time. Such a
merger would result in a greatly reduced percentage of ownership
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of the Company by its current shareholders. In addition, the Company's
President could sell his control block of stock at a premium price to the
acquired company's stockholders.
NO PUBLIC MARKET EXISTS. There is no public market for the Company's
Common Stock, and no assurance can be given that a market will develop or
that a shareholder ever will be able to liquidate his investment without
considerable delay, if at all. If a market should develop, the price may
be highly volatile. Factors such as those discussed in this "Risk Factors"
section may have a significant impact upon the market price of the
securities offered hereby. Owing to the low price of the securities, many
brokerage firms may not be willing to effect transactions in the
securities. Even if a shareholder finds a broker willing to effect a
transaction in these securities, the combination of brokerage commissions,
state transfer taxes, if any, and any other selling costs may exceed the
selling price. Further, many lending institutions will not permit the use
of such securities as collateral for any loans.
BLUE SKY CONSIDERATIONS. Because the securities registered hereunder
have not been registered for resale under the blue sky laws of any state,
the holders of such shares and persons who desire to purchase them in any
trading market that might develop in the future, should be aware that there
may be significant state blue-sky law restrictions upon the ability of
investors to sell the securities and of purchasers to purchase the
securities. Some jurisdictions may not under any circumstances allow the
trading or resale of blind-pool or "blank-check" securities. Accordingly,
shareholders of the Company should consider the secondary market for the
Company's securities to be a limited one.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE
- -------------------------------------------------
When used in this Form 10, the words "anticipate," "estimate,"
"expect," "project," and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks,
uncertainties and assumptions including the possibility that the Company's
Internet backbone will fail to generate projected revenues or the Company
will be unable to satisfy certain settlement agreements. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated or projected.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company is in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
stockholder's equity other than the receipt of services valued in the
amount of $1,500. The Company's balance sheet as of September 30, 1997,
reflects no assets and no liabilities.
The Company will attempt to carry out its plan of business as
discussed above. The Company cannot predict to what extent its lack of
liquidity and capital resources will hinder its business plan prior to the
consummation of a business combination.
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RESULTS OF OPERATIONS
- ---------------------
During the period from September 30, 1996 through September 30, 1997
and from June 1991 (inception) through September 30, 1997, the Company has
engaged in no significant operations other than organizational activities
and the preparation for registration of its securities under the Securities
Exchange Act of 1934, as amended. No revenues have been received by the
Company during this period.
The Company anticipates that until a business combination is completed
with an acquisition candidate, it will not generate revenues and may
operate at a loss after completing a business combination, depending upon
the performance of the acquired business.
NEED FOR ADDITIONAL FINANCING
- -----------------------------
The Company believes that its existing capital will not be sufficient
to meet the Company's cash needs, including the costs of compliance with
the continuing reporting requirements of the Securities Exchange Act of
1934, as amended. Once a business combination is completed, the Company's
needs for additional financing are likely to increase substantially.
No commitments to provide additional funds have been made by
management or other stockholders. Accordingly, there can be no assurance
that any funds will be available to the Company to allow it to cover its
expenses.
The Company might seek to compensate providers of services by
issuances of stock in lieu of cash. For information as to the Company's
policy in regard to payment for consulting services.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company does not currently maintain an office or any other
facilities. It does currently maintain a mailing address at 3140 So.
Peoria Street, Suite K230, Aurora, Colorado 80014, which is the office
address of its President. The Company pays no rent for the use of this
mailing address. The Company does not believe that it will need to
maintain an office at any time in the foreseeable future in order to carry
out its plan of operations described herein. The Company's telephone
number is (303) 755-9832.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of the date of this Registration
Statement, the number of shares of Common Stock owned of record and
beneficially by executive Officers, Directors and persons who hold 5.0% or
more of the outstanding Common Stock of the Company. Also included are the
shares held by all executive Officers and Directors as a group.
Number of
Shares Owned Percent of
Name and Address Beneficially Class Owned
- ---------------- ------------ -----------
Mathew J. Kavanagh III 255,000 51%
3140 South Peoria
Suite K230
Aurora, CO 80014
Anthony M. Griffin 1,000 *
7345 E. Peakview Avenue
Englewood, CO 80111
Gary M. Griffin 50,000 (1) *
7345 E. Peakview Avenue
Englewood, CO 80111
Terry Whiteside 50,000 10%
7345 E. Peakview Avenue
Englewood, CO 80111
Marshal Griffin 50,000 10%
Muntaner 72
Barcelona, Spain
Duane Peterson 25,000 5%
44-100 Monterey, #206
Palm Desert, CA 92260
Alex Herman 25,000 5%
Hong Kong
Equitus Corp. 90,000 18%
0832-1020 World Trade Center
Panama, Republic de Panama
All Directors and Executive 306,000 61%
Officers as a group (3 persons)
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___________________
* Less than 1%
(1) Mr. Griffin may be deemed to be the beneficial owner of 50,000 shares
of the Company's Common Stock by virtue of his wife's ownership of
said shares, however, Mr. Griffin disclaims any beneficial ownership
with respect to these shares.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The Directors and executive Officers currently serving the Company are
as follows:
Name Age Positions Held and Tenure
- ---- --- -------------------------
Matthew J. Kavanagh III 62 President, Treasurer and Director since
January 13, 1995
Anthony M. Griffin 29 Secretary and Director since January 13,
1995
Gary M. Griffin 56 Director since January 13, 1995
The Directors named above will serve until the next annual meeting of
the Company's stockholders. Thereafter, Directors will be elected for
one-year terms at the annual stockholders' meeting. Officers will hold
their positions at the pleasure of the Board of Directors, absent any
employment agreement, of which none currently exists or is contemplated.
There is no arrangement or understanding between the Directors and Officers
of the Company and any other person pursuant to which any Director or Officer
was or is to be selected as a Director or Officer of the Company.
There is no family relationship between or among any Officer and
Director except that Gary M. Griffin and Anthony M. Griffin are father and
son.
The Directors and Officers of the Company will devote their time to
the Company's affairs on an "as needed" basis. As a result, the actual
amount of time which he will devote to the Company's affairs is unknown and
is likely to vary substantially from month to month.
The Company has no audit or compensation committee.
BIOGRAPHICAL INFORMATION
- ------------------------
MATTHEW J. KAVANAGH III. Mr. Kavanagh, who is the Company's President
and Treasurer, has served as an Officer and Director of the Company since
January 13, 1995. Since September 1982, Mr. Kavanagh has been the
President of The Amherst Group Ltd., a privately-held corporation located
in Englewood, Colorado, engaged in consulting services, including sales,
marketing, franchising, real estate development and fund raising to growth
and development stage companies. Mr. Kavanagh holds a Bachelor of Arts
degree from Southern
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Methodist University in Dallas, Texas. Mr. Kavanagh received a
professional certification as a Chartered Life Underwriter in 1969.
Additionally, he is a licensed real estate broker and insurance broker in
the State of Colorado. Mr. Kavanagh will only devote such time as is
necessary to the business of the Company.
ANTHONY GRIFFIN. Mr. Griffin has been the Company's Secretary and a
Director since January 13, 1995. Mr. Griffin has been the Company's
Secretary and a Director since January 13, 1995. Mr. Griffin attended the
University of Colorado, Boulder full time through the Spring of 1992. He
now holds a Bachelor of Arts degree from that institution. From 1992 Mr.
Griffin served as a manager and employee benefits consultant with Scoure
Financial Services, Inc. From 1994 through 1996, Mr. Griffin served in the
same capacity with Benefits Inc. in Denver, Colorado. Since that time, Mr.
Griffin has served as the Managing partner with Asset Partners, LLC, an
employee benefit consulting firm.
GARY M. GRIFFIN. Mr. Griffin has been a Director of the Company since
January 13, 1995. Since April 1988, Mr. Griffin has served as the
President of Consultant Group, Inc., Englewood, Colorado, a corporation
solely-owned by him, which provides financial public relations services and
advice on corporate restructuring to private and public corporations
operating in the United States, the United Kingdom and France. From
January 1992 to November 1994, Mr. Griffin was the President of Beneficial
Capital Financial Services, Inc., a financial consulting firm. He served
as the Treasurer and Chairman of the Board of Directors of Resource Finance
Group, Ltd. ("RFG"), a public Colorado corporation engaged in the business
of providing operators of metal mines in selected developing countries with
mining and processing equipment and training in exchange for a revenue
interest in the mines, from August 1991 until RFG merged, in April 1993,
with Onyx Systems, Ltd. He received a Bachelor of Business Administration
from the University of Texas in 1964 and a Master's degree in business
administration from North Texas State University in 1965.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
- -----------------------------------------
As permitted by Colorado law, the Company's Articles of Incorporation
provide that the Company will indemnify its Directors and Officers against
expenses and liabilities they incur to defend, settle, or satisfy any civil
or criminal action brought against them on account of their being or having
been Company Directors or Officers unless, in any such action, they are
adjudged to have acted with gross negligence or willful misconduct.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Directors, Officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable.
EXCLUSION OF LIABILITY
- ----------------------
Pursuant to the Colorado Business Corporation Act, the Company's
Articles of Incorporation exclude personal liability for its directors for
monetary damages based upon any violation of their fiduciary duties as
directors, except as to liability for any breach of the duty of loyalty,
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, acts in violation of Section 7-106-401 of
the Colorado Business
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Corporation Act, or any transaction from which a director receives an
improper personal benefit. This exclusion of liability does not limit any
right which a director may have to be indemnified and does not affect any
director's liability under federal or applicable state securities laws.
OTHER PUBLIC SHELL ACTIVITIES
- -----------------------------
During the past five (5) years, Mr. Kavanagh was the President of
Ogden McDonald & Company from October 1987 to September 1996. Ogden
McDonald was sold in September 1996 to American Petromoly, Inc. of Houston,
Texas, a manufacturer of oil derivative products. Mr. Kavanagh resigned as
an Officer and Director upon the sale of the corporation. Mr. Griffin was
President of Beneficial Capital Financial Services, Inc. from January 1992
to November 1994 when it merged with Golden Eagle International Corp. Mr.
Griffin resigned as an Officer and Director of that corporation upon the
close of the merger.
No other Officer and/or Director of the Company has any prior
involvement with public shell companies or experience in identifying
emerging companies for investment and/or business combinations.
CONFLICTS OF INTEREST
- ---------------------
The Officers and Directors of the Company will devote only a small
portion of their time to the affairs of the Company, estimated to be no
more than approximately 10 hours per month. There will be occasions when
the time requirements of the Company's business conflict with the demands
of their other business and investment activities. Such conflicts may
require that the Company attempt to employ additional personnel. There is
no assurance that the services of such persons will be available or that
they can be obtained upon terms favorable to the Company.
The Company's Officers and Directors may elect, in the future, to form
one or more additional shell companies with a business plan similar or
identical to that of the Company. Any such additional shell companies
would also be in direct competition with the Company for available business
opportunities.
There is no procedure in place which would allow the Officers and
Directors to resolve potential conflicts in an arms-length fashion.
Accordingly, they will be required to use their discretion to resolve them
in a manner which they consider appropriate.
The Company's Officers and Directors may actively negotiate or
otherwise consent to the purchase of a portion of their common stock as a
condition to, or in connection with, a proposed merger or acquisition
transaction. It is anticipated that a substantial premium over the initial
cost of such shares may be paid by the purchaser in conjunction with any
sale of shares by the Company's Officers and Directors which is made as a
condition to, or in connection with, a proposed merger or acquisition
transaction. The fact that a substantial premium may be paid to the
Company's Officers and Directors to acquire their shares creates a
potential conflict of interest for them in satisfying their fiduciary
duties to the Company and its other shareholders. Even though such a sale
could result in a substantial profit to them, they would be legally
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required to make the decision based upon the best interests of the Company
and the Company's other shareholders, rather than their own personal
pecuniary benefit.
ITEM 6. EXECUTIVE COMPENSATION.
In January 1995, Matthew J. Kavanagh and Anthony M. Griffin, Officers
and Directors of the Company, received 256,000 shares of Common Stock
valued at $.0001 per share in consideration of services rendered to the
Company related to investigating and developing the Company's proposed
business plan and completion of the initial organization of the Company.
Nine other persons received a total of 244,000 shares each, which were also
valued at $.003 per share in consideration of services rendered to the
Company related to investigating and developing the Company's proposed
business plan and capital structure. No Officer or Director has received
any other remuneration. Although there is no current plan in existence, it
is possible that the Company will adopt a plan to pay or accrue
compensation to its Officers and Directors for services related to seeking
business opportunities and completing a merger or acquisition transaction.
See "Certain Relationships and Related Transactions."
The Company has no stock option, retirement, pension, or profit-sharing
programs for the benefit of Directors, Officers or other employees,
but the Board of Directors may recommend adoption of one or more such
programs in the future.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Prior to the date of this Registration Statement, the Company issued
to two of its Officers and Directors, and to other founding shareholders,
a total of 500,000 shares of Common Stock for a total of $1,500 in services
valued at $1,500. Certificates evidencing the Common Stock issued by the
Company to these persons have all been stamped with a restrictive legend,
and are subject to stop transfer orders by the Company. In addition, these
shares have been placed in escrow with the Company only to be released upon
the successful completion of a merger or business combination as described
herein.
No Officer, Director, promoter, or affiliate of the Company has or
proposes to have any direct or indirect material interest in any asset
proposed to be acquired by the Company through security holdings,
contracts, options, or otherwise.
The Company will adopt a policy under which any consulting or finder's
fee that may be paid to a third party for consulting services to assist
management in evaluating a prospective business opportunity would be paid
in stock or in cash. Any such issuance of stock would be made on an ad hoc
basis. Accordingly, the Company is unable to predict whether or in what
amount such a stock issuance might be made.
Although there is no current plan in existence, it is possible that
the Company will adopt a plan to pay or accrue compensation to its Officers
and Directors for services related to seeking business opportunities and
completing a merger or acquisition transaction.
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The Company maintains a mailing address at the office of its
President, but otherwise does not maintain an office. As a result, it pays
no rent and incurs no expenses for maintenance of an office and does not
anticipate paying rent or incurring office expenses in the future. It is
likely that the Company will establish and maintain an office after
completion of a business combination.
Although management has no current plans to cause the Company to do
so, it is possible that the Company may enter into an agreement with an
acquisition candidate requiring the sale of all or a portion of the Common
Stock held by the Company's current stockholders to the acquisition
candidate or principals thereof, or to other individuals or business
entities, or requiring some other form of payment to the Company's current
stockholders, or requiring the future employment of specified Officers and
payment of salaries to them. It is more likely than not that any sale of
securities by the Company's current stockholders to an acquisition
candidate would be at a price substantially higher than that originally
paid by such stockholders. Any payment to current stockholders in the
context of an acquisition involving the Company would be determined
entirely by the largely unforeseeable terms of a future agreement with an
unidentified business entity.
ITEM 8. DESCRIPTION OF SECURITIES.
COMMON STOCK
- ------------
The Company's Articles of Incorporation authorize the issuance of
500,000,000 shares of Common Stock. Each record holder of Common Stock is
entitled to one vote for each share held on all matters properly submitted
to the stockholders for their vote. Cumulative voting for the election of
directors is not permitted by the Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors
out of legally available funds; and, in the event of liquidation,
dissolution or winding up of the affairs of the Company, holders are
entitled to receive, ratably, the net assets of the Company available to
stockholders after distribution is made to the preferred stockholders, if
any, who are given preferred rights upon liquidation. Holders of
outstanding shares of Common Stock have no preemptive, conversion or
redemptive rights. All of the issued and outstanding shares of Common
Stock are, and all unissued shares when offered and sold will be, duly
authorized, validly issued, fully paid, and nonassessable. To the extent
that additional shares of the Company's Common Stock are issued, the
relative interests of then existing stockholders may be diluted.
PREFERRED STOCK
- ---------------
The Company's Articles of Incorporation authorize the issuance of
100,000,000 shares of preferred stock. The Board of Directors of the
Company is authorized to issue the preferred stock from time to time in
series and is further authorized to establish such series, to fix and
determine the variations in the relative rights and preferences as between
series, to fix voting rights, if any, for each series, and to allow for the
conversion of preferred stock into Common
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Stock. No preferred stock has been issued by the Company. The Company
anticipates that preferred stock may be utilized in making acquisitions.
TRANSFER AGENT
- --------------
The Company is currently serving as its own transfer agent, and plans
to continue to serve in that capacity until such time as management
believes it is necessary or appropriate to employ an independent transfer
agent in order to facilitate the creation of a public trading market for
the Company's securities. Since the Company does not currently expect any
public market to develop for its securities until after it has completed a
business combination, it does not currently anticipate that it will seek to
employ an independent transfer agent until it has completed such a
transaction.
REPORTS TO STOCKHOLDERS
- -----------------------
The Company plans to furnish its stockholders with an annual report
for each fiscal year containing financial statements audited by its
independent certified public accountants. In the event the Company enters
into a business combination with another company, it is the present
intention of management to continue furnishing annual reports to
stockholders. Additionally, the Company may, in its sole discretion, issue
unaudited quarterly or other interim reports to its stockholders when it
deems appropriate. The Company intends to comply with the periodic
reporting requirements of the Securities Exchange Act of 1934 for so long
as it is subject to those requirements.
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<PAGE>
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
No public trading market exists for the Company's securities and all
of its outstanding securities are restricted securities as defined in Rule
144 of the Securities Act of 1933, as amended. There were eleven (11)
holders of record of the Company's common stock on September 30, 1997. No
dividends have been paid to date and the Company's Board of Directors does
not anticipate paying dividends in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings, and no
such proceedings are known to be contemplated.
No Director, Officer or affiliate of the Company, and no owner of
record or beneficial owner of more than 5.0% of the securities of the
Company, or any associate of any such Director, Officer or security holder
is a party adverse to the Company or has a material interest adverse to the
Company in reference to pending litigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Since the Company's inception, the Company has sold its Common Stock
to the persons listed in the table below in transactions summarized as
follows:
Aggregate Purchase
Date of Purchase Price
Name Sale Shares Price(1)(2) per Share
- ---- ---- ------ ----------- ----------
Matthew J. Kavanagh 06/13/95 255,000 $675 $.0003
Anthony Griffin 06/13/95 1,000 $ 3 $.0003
Terry Whiteside 06/13/95 50,000 $150 $.0003
Marshal Griffin 06/13/95 50,000 $150 $.0003
Duane Peterson 06/13/95 25,000 $ 75 $.0003
Alex Herman 06/13/95 25,000 $ 75 $.0003
Equitas, Corp. 06/13/95 90,000 $270 $.0003
Richard Ellis 06/13/95 1,000 $ 3 $.0003
Mark Hogan 06/13/95 1,000 $ 3 $.0003
Michael Ferm 06/13/95 1,000 $ 3 $.0003
Keith Johnson 06/13/95 1,000 $ 3 $.0003
-25-
<PAGE>
___________________
(1) Consideration consisted of services rendered to the Company related to
investigating and developing the Company's proposed business plan and
capital structure and completing the organization of the Company.
(2) Total aggregate consideration consisted of services valued by the
Company's Board of Directors at $1,500.00
Each of the sales listed above was made for services. All of the
listed sales were made in reliance upon the exemption from registration
offered by Section 4(2) of the Securities Act of 1933, as amended. Based
upon Subscription Agreements completed by each of the shareholders and the
pre-existing relationship between the shareholders and the Company, the
Company believes it had reasonable grounds to believe immediately prior to
making an offer to the private investors, and did in fact believe, when
such subscriptions were accepted, that such purchasers (1) were purchasing
for investment and not with a view to distribution, and (2) had such
knowledge and experience in financial and business matters that they were
capable of evaluating the merits and risks of their investment and were
able to bear those risks. The purchasers had access to pertinent
information enabling them to ask informed questions. The shares were
issued without the benefit of registration. An appropriate restrictive
legend is imprinted upon each of the certificates representing such shares,
and stop-transfer instructions have been entered in the Company's transfer
records. All such sales were effected without the aid of underwriters, and
no sales commissions were paid.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation and the Bylaws of the Company, filed as
Exhibits 3.1 and 3.2, respectively, provide that the Company will indemnify
its Officers and Directors for costs and expenses incurred in connection
with the defense of actions, suits, or proceedings where the Officer or
Director acted in good faith and in a manner he reasonably believed to be
in the Company's best interest and is a party by reason of his status as an
Officer or Director, absent a finding of negligence or misconduct in the
performance of duty.
-26-
<PAGE>
INTERNATIONAL CAPITAL FUNDING, INC.
Audited Financial Statements
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 1997 AND 1996
AND THE PERIOD JUNE 10, 1991 (INCEPTION)
THROUGH SEPTEMBER 30, 1997
-27-
<PAGE>
International Capital Funding, Inc.
TABLE OF CONTENTS
PAGE
----
Independent Auditors' Report 1
Financial Statements
Balance Sheet 2
Statement of Operations 3
Statement of Cash Flow 4
Statement of Shareholders' Equity 5
Notes to the Financial Statements 6 to 8
-28-
<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
----------------------------
We have audited the accompanying balance sheet of International Capital
Funding, Inc. (a Developmental Stage Company), as of September 30, 1997 and
the related statements of income, shareholders' equity, and cash flows for
the fiscal years ended September 30, 1997 and 1996 and period June 10, 1991
(Inception) through September 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of International Capital
Funding, Inc. at September 30, 1997 and the results of its operations and
its cash flows for the fiscal years ended September 30, 1997 and 1996 and
the period June 10, 1991 (Inception) through September 30, 1997 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 5, the
Company is in the development stage and has no operations as of September
30, 1997. The deficiency in working capital as of September 30, 1997
raises substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are described in Note 5. The
financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
/s/ KISH, LEAKE & ASSOCIATES, P.C.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
October 2, 1997
-1-
29
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Balance Sheet
- -------------------------------------------------------------------------
NOTES September
----- 30, 1997
--------
ASSETS
Current Assets $0
--
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES $0
--
SHAREHOLDERS' EQUITY 1,2
Preferred Stock, $.01Par Value
Authorized 100,000,000 shares;
Issued And Outstanding At
September 30, 1997 -0- Shares
Common Stock, $.0001Par Value
Authorized 500,000,000 shares;
Issued And Outstanding At
September 30, 1997 500,000 Shares 50
Capital Paid In Excess Of Par Value 1,450
Deficit Accumulated During
The Development Stage (1,500)
------
TOTAL SHAREHOLDERS' EQUITY 0
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $0
--
The Accompanying Notes Are An Integral Part Of These Financial Statements.
-2-
30
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Statement Of Operations
- -------------------------------------------------------------------------
June 10,
1991
(Inception)
Year Ended Year Ended Through
September September September
Notes 30, 1997 30, 1996 30, 1997
----- -------- -------- --------
Revenue $0 $0 $0
-- -- --
Expenses:
Administrative 0 0 1,500
- - -----
Total Expenses 0 0 1,500
- - -----
Net (Loss) $0 0 (1,500)
-- - ------
Net (Loss) Per Common Share 1 $0.00 $0.00 ($0.00)
----- ----- ------
Common Shares Outstanding 2 500,000 500,000 500,000
------- ------- -------
The Accompanying Notes Are An Integral Part Of These Financial Statements.
-3-
31
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Statement Of Cash Flow
- --------------------------------------------------------------------------
June 10,
1991
(Inception)
Year Ended Year Ended Through
September September September
Notes 30, 1997 30, 1996 30, 1997
----- -------- -------- --------
Net (Loss) $0 $0 ($1,500)
-- -- ------
Plus Items Not Affecting
Cash Flow: 0 0 0
Services Rendered For Stock 0 0 1,500
- - -----
Net Cash Flows From Operations 0 0 0
- - -
Cash Flows From Investing
Activities:
Net Cash Flows From Investing: 0 0 0
- - -
Cash Flows From Financing
Activities:
0 0 0
- - -
Net Cash Flows From Financing: 0 0 0
- - -
Net Increase (Decrease) In Cash 0 0 0
Cash At Beginning Of Period 0 0 0
- - -
Cash At End Of Period $0 $0 $0
-- -- --
Summary Of Non-Cash Investing
And Financing Activities:
Common Stock Issued For services $0 $0 $1,500
-- -- ------
The Accompanying Notes Are An Integral Part Of These Financial Statements.
-4-
32
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Statement Of Shareholders' Equity
- -------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net (Loss)
Number Number Capital Accumulated
Of Of Paid In During
Shares Shares Common Excess Of Preferred Development
NOTES Common Preferred Stock Par Value Stock Stage Total
----- ------ --------- ----- --------- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance At June 10, 1991 2 0 0 $0 $0 $0 $0 $0
January 13, 1995 issued
500,000 Shares Of $.0001
Par Value Common Stock
for services valued at
$1,500 or $.003 per share 500,000 0 50 1,450 0 1,500
Net (Loss) (1,500) (1,500)
------- ------- ------- ------- ------- ------- -------
Balance At September 30,
1995, 1996 And 1997 500,000 0 $50 $1,450 $0 ($1,500) $0
------- - --- ------ -- ------- --
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
-5-
33
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended September 30, 1997 and 1996
- ------------------------------------------------------
Note 1 - Organization and Summary of Significant Accounting Policies
- --------------------------------------------------------------------
Organization:
On May 10, 1993, International Capital Funding, Inc. (the Company) was
incorporated under the laws of Colorado to engage in any lawful business
allowed by the state of Colorado.
Development Stage:
The company entered the Development stage in accordance with SFAS No. 7 on
January 13, 1995. Its purpose is to evaluate, structure and complete a
merger with, or acquisition a privately owned corporation.
Statement of Cash Flows:
For the purpose of the 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 fiscal year ended September 30, 1997 and 1996 was
$-0-. Cash paid for income taxes in fiscal year ended September 30, 1997
and 1996 was $-0-.
Net (Loss) per Common Share:
Net (Loss) per common share is computed by dividing the net loss for the
period by the number of shares outstanding at September 30, 1997 and 1996.
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.
6
34
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended September 30, 1997 and 1996
- ------------------------------------------------------
Note 2 - Capital Stock and Capital in Excess of Par Value
- ---------------------------------------------------------
The Company initially authorized 500,000,000 shares of $.0001 par value
common stock and 100,000,000 shares of $.01 par value preferred stock. On
January 13, 1995, the company issued 500,000 shares of common stock valued
at $1,500 for services and cash advances paid on behalf of the Company.
Note 3 - Related Party Events
- -----------------------------
The Company maintains a mailing address at a shareholders place of
business. This address is located at 3140 S Peoria Street - K230, Aurora,
Colorado 80014. At this time the Company has no need for an office other
than to maintain a mailing address. Management has incurred a minimal
amount of time and expense on behalf of the Company.
Note 4 - Income Taxes
- ---------------------
At September 30, 1997, the company had net operating loss carryforwards
available for financial statement and Federal income tax purposes of
approximately $1,500 which, if not used, will expire in the year 2008.
The Company follows Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109), which requires, among other
things, an asset and liability approach to calculating deferred income
taxes. As of September 30, 1997, the Company has a deferred tax asset of
$300 primarily for its net operating loss carryforward which has been fully
reserved through a valuation allowance. The change in the valuation
allowance for September 30, 1997 is $-0-.
Note 5 - Basis of Presentation
- ------------------------------
In the course of its development activities the Company has sustained
continuing losses and expects such losses to continue for the foreseeable
future. The Company's management plans on advancing funds on an as needed
basis and in the longer term, revenues from the operations of a merger
candidate, if found. The Company's ability to continue as a going concern
is dependent on these additional management advances, and, ultimately, upon
achieving profitable operations through a merger candidate.
7
35
<PAGE>
International Capital Funding, Inc.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended September 30, 1997 and 1996
- ------------------------------------------------------
Note 6 - Subsequent Events
- --------------------------
The Company will be filing a Form 10 with the Securities and Exchange
Commission to become a 34 Act reporting company.
8
36
<PAGE>
PART III
ITEMS 1 AND 2. INDEX AND DESCRIPTION TO EXHIBITS
The Exhibits listed below are filed as part of this Registration
Statement.
Exhibit
No. Document
- ------- --------
EX-3.(i) Articles of Incorporation dated June 11, 1991.
EX-3.(ii) Bylaws of the Company
EX-27 Financial Data Schedule
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
INTERNATIONAL CAPITAL FUNDING, INC.
By: /s/ MATTHEW J. KAVANAGH
-------------------------------------
Matthew J. Kavanagh III, President,
Treasurer and Director (Principal
Executive Officer and Principal
Financial Officer)
Date: November 17, 1997
By: /s/ ANTHONY GRIFFIN
-------------------------------------
Anthony Griffin, Secretary
Date: November 17, 1997
-37-
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
INTERNATIONAL CAPITAL FUNDING, INC.
---------------------------------------------
(Name of small business issuer in its charter)
COLORADO 84-1434313
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3140 SO. PEORIA STREET, SUITE K230
AURORA, CO 80114
--------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 755-9832
----------------
EXHIBIT INDEX
-------------
Exhibit Page Number in
No. Document Sequentially Numbered System
- ------- -------- ----------------------------
EX-3.(i) Articles of Incorporation 39
EX-3.(ii) Bylaws 47
EX-27 Financial Data Schedule 67
-38-
EXHIBIT 3.(i)
ARTICLES OF INCORPORATION
INTERNATIONAL CAPITAL FUNDING, INC.
--------------------
KNOW ALL MEN BY THESE PRESENTS, that 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 in duplicate to the Secretary of State of
the State of Colorado these Articles of Incorporation:
ARTICLE I. NAME. The name of the Corporation is International
Capital Funding, Inc.
ARTICLE II. DURATION. The Corporation shall have perpetual
existence.
ARTICLE III. PURPOSES. The nature of the business of the Corporation
and the objects and purposes and business thereof proposed to be
transacted, promoted or carried on are as follows:
Section 1. SPECIFIC PURPOSES.
A. To engage in any lawful act or activity for which
corporations may be organized under the Colorado Corporation Code.
ARTICLE IV. CAPITAL STRUCTURE.
Section 1. AUTHORIZED CAPITAL. The total number of shares of
all classes which the Corporation shall have authority to issue is
600,000,000 of which 100,000,000 shall be Preferred Shares, par value $.01
per share, and 500,000,000 shall be Common Shares, par value $.0001 per
share, and the designations, preferences, limitations and relative rights
of the shares of each class are as follows:
Section 2. PREFERRED SHARES. The Corporation may divide and
issue the Preferred Shares in series. Preferred Shares of each series when
issued shall be designated to distinguish them from the shares of all other
series. The Board of Directors is hereby expressly vested with authority
to divide the class of Preferred Shares into series and to fix and
determine the relative rights and preferences of the shares of any such
series so established to the full extent permitted by these Articles of
Incorporation and the Colorado Corporation Code in respect to the
following:
A. The number of shares to constitute such series, and
the distinctive designations thereof;
39
<PAGE>
B. The rate and preference of dividends, if any, the
time of payment of dividends, whether dividends are cumulative
and the date from which any dividend shall accrue;
C. Whether shares may be redeemed and, if so, the
redemption price and the terms and conditions of redemption;
D. The amount payable upon shares in event of
involuntary liquidation;
E. The amount payable upon shares in 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 rights 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 future series shall be subject.
Section 3. COMMON SHARES.
A. The rights of holders of 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 be entitled
to one vote for each Common Share held by them of record at the
time for determining the holders thereof entitled to vote.
ARTICLE V. BOARD OF DIRECTORS. The business and affairs of the
Corporation shall be managed by the Board of Directors. The number of
directors constituting the Board of Directors shall be fixed in the manner
provided in the Bylaws of the Corporation, subject to the limitation that
the initial Board of Directors of
-2-
40
<PAGE>
the Corporation shall consist of two persons. Those persons shall serve as
directors of the Corporation until the first annual meeting of shareholders
or until their successors shall have been elected and qualified. The names
and addresses of the initial Board of Directors are as follows:
Walter F. Goodwin Gary Griffin
4582 S. Ulster St., Ste. 1203 5290 E. Yale Cr., Ste. 206
Denver, CO 80237 Denver, CO 80222
In accordance with the Bylaws of the Corporation, the Board of
Directors may thereupon be divided into three classes, each class to be as
nearly equal in number as possible, the term of office of directors of the
first class to expire at the first annual meeting of shareholders after
their election, that of the second class to expire at the second annual
meeting after their election, and that of the third class to expire at the
third annual meeting after their election. At each annual meeting
following such classification and division of the members of the Board of
Directors, a number of directors equal to the number of directorships in
the class whose term expires at the time of such meeting shall be elected
to hold offices until the third succeeding annual meeting of shareholders
of the Corporation.
ARTICLE VI. POWERS OF BOARD OF DIRECTORS. The following provisions
are inserted for the management of the business and for the conduct of the
affairs of the Corporation, and its is expressly provided that they are
intended to be in furtherance and not in limitation or exclusion of the
powers conferred by the statutes of the State of Colorado.
Section 1. The number of directors of the Corporation shall be
fixed from time to time by, or in the manner provided in, the Bylaws, but
in not case shall the number be less than three.
Section 2. The Board of Directors shall have the power from time
to time to fix and to determine and vary the amount of the working capital
of the Corporation and to direct and determine the use and disposition of
any surplus or net profits over and above the capital as determined
pursuant to, and subject to, the provisions of the Colorado Corporation
Code; and in its discretion the Board of Directors may use and apply any
such surplus or accumulative profits in purchasing or acquiring bonds,
debentures, notes, or other obligations or securities of the Corporation or
shares of its own stock or any class so far as may be permitted by law, to
such extent and in such manner and upon such terms as the Board of
Directors shall deem expedient, but any such bonds, debentures, notes,
obligations, securities or stock so purchased or acquired (together with
any stock or securities acquired in satisfaction of a debt or otherwise),
may be resold. Nothing herein contained, however, shall be held to limit
the general power of the Corporation to apply any other funds or assets to
the purchase or acquisition or retirement of its stock, bonds,
-3-
41
<PAGE>
debentures, notes or other obligations or securities.
Section 3. The Board of Directors, subject to the applicable
provisions of the Colorado Corporation Code, may from time to time
determine whether and to what extent, and at what times and places and
under what conditions and regulations the accounts and books of the
Corporation or any of them shall be open to the inspection of the
stockholders; and no stockholder shall have any right to inspect any
account, book or document of the Corporation, except as conferred by law or
as authorized by the Board of Directors or by resolutions of the
stockholders.
Section 4. The books of the Corporation may be kept within or
without the State of Colorado at such place or places as may be designated
from time to time by the Board of Directors. Elections of directors need
not be by written ballot unless the Bylaws of the Corporation shall so
provide.
Section 5. The Board of Directors may authorize and cause to be
executed mortgages, deeds of trust, pledges and liens upon the real and
personal property of the Corporation, without limitation as to amount or
otherwise.
Section 6. Except as otherwise provided by law and, subject to
any limitations contained in the Bylaws adopted by the holders of the
Corporation's Common Stock, the Board of Directors may, by the favorable
vote of a majority of the directors present at a meeting at which a quorum
is present, or as otherwise specified in the Bylaws, adopt, amend, alter or
repeal Bylaws from time to time; Bylaws, including Bylaws adopted by the
Board of Directors, may also be altered, amended or repealed by the holders
of the Corporation's Common Stock entitled to vote thereon as specified in
the Bylaws.
Section 7. Special meetings of the stockholders of the
Corporation may be called by the Board of Directors, and shall be called by
the Corporation at the request of any stockholder or group of stockholders
holding not less than 10% of the then outstanding shares of Common Stock
and at the request of such other person or persons as may be authorized by
the Bylaws.
Section 8. The Board of Directors may determine, from time to
time, the amount of compensation which shall be paid to its members. The
Board shall also have power, in its discretion, to provide for and to pay
directors rendering unusual or exceptional services to the Corporation
special compensation appropriate to the value of such services as
determined by the Board of Directors from time to time.
Section 9. In addition to the powers and authorities
hereinbefore or by statute expressly conferred upon it, the Board of
Directors is hereby empowered to exercise all such powers and to do all
such acts and things as may be exercised or done by the
-4-
42
<PAGE>
Corporation; subject, nevertheless, to the provisions of the statues of the
State of Colorado, of this Certificate of Incorporation and of any Bylaws
from time to time made by the stockholders; provided, however, that no
Bylaws so made shall invalidate any prior act of the Board of Directors
which would have been valid if such Bylaws had not been made.
ARTICLE VII. VOTING BY SHAREHOLDERS.
Section 1. CUMULATIVE VOTING. Cumulative voting shall not be
allowed in the election of directors of the Corporation and every
shareholder entitled to vote at such election shall have the right to vote
the number of shares owned by him for as many persons as there are
directors to be elected, and for whose election he has a right to vote.
Section 2. DENIAL OF PREEMPTIVE RIGHTS. No shareholder of the
Corporation shall by reasons of his holding shares of any class or series
have any preemptive or preferential rights of purchase or subscribe to any
shares of any class or series of the Corporation now or hereafter to be
authorized, or any notes, debentures, bonds or other securities convertible
into or carrying options or warrants to purchase shares of any class or
series now or hereafter to be authorized, whether or not the issuance of
any such shares or notes, debentures, bonds or other securities would
adversely effect the dividend or voting rights of such stockholder, other
than such rights, if any, as the Board of Directors, in its discretion from
time to time, may grant, and at such price as the Board of Directors, in
its discretion, may fix; and the Board of Directors, if otherwise
authorized by the provisions of this Certificate of Incorporation may issue
shares of any class or series of the Corporation or any notes, debentures,
bonds or other securities convertible into or carrying options or warrants
to purchase shares of any class or series, without offering any such shares
of any class or series either in whole or in part to the existing
stockholders of any class or series.
Section 3. MAJORITY VOTE. When, with respect to any action to
be taken by the shareholders of the Corporation, the Colorado Corporation
Code requires the vote or concurrence of the holders of greater than a
majority of the outstanding shares, or of any class or series entitled to
vote thereon, any and every such action shall be taken, notwithstanding the
requirements of the Colorado Corporation Code, by the affirmative vote or
concurrent of the holders of a majority of the outstanding shares, or of
any class or series entitled to vote thereon.
ARTICLE VIII. RIGHT OF DIRECTORS TO CONTRACT WITH CORPORATION.
Section 1. 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
-5-
43
<PAGE>
the directors of the Corporation are directors or officers or are
financially interested, shall be either void or voidable solely because
such directors are present at the meeting of the Board of Directors or a
committee thereof which authorizes or approves such contract or transaction
or solely because their votes are counter for such purpose if:
A. The fact of such relationship or interest is
disclosed or known to the Board of Directors or committee which
authorizes, approves or ratifies the contract or transaction by
a vote or consent sufficient for that purpose without counting
the votes or consents of the 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 or reasonable
to the Corporation.
Section 2. Common of interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors
or a committee thereof which authorizes, approves or ratifies such contract
or transaction.
ARTICLE IX. INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS. The
Board of Directors of the Corporation shall have the power to:
Section 1. Indemnify any director, officer, employee or agent of
the Corporation to the fullest extent permitted by the Colorado Corporation
Code as presently existing or as hereafter amended.
Section 2. Authorize payment of expenses (including attorney's
fees) incurred in defending a civil or criminal action, suit or proceeding
in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount unless it is ultimately determined
that he is entitled to be indemnified by the Corporation as authorized in
this Article IX.
Section 3. Purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the
Corporation or who is or was serving at the request of the Corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such 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 this Article
IX.
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The indemnification provided by this Article IX shall not be deemed
exclusive of any other rights to which those indemnified may be entitled
under these Articles of Incorporation, and Bylaws, agreement, vote of
shareholders or disinterested directors or otherwise, and any procedure
provided for by any of the foregoing, both as to action in his official
capacity and as to action in another capacity while holding such office,
shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
ARTICLE X. CORPORATE OPPORTUNITY. The officers, directors and other
members of management of this Corporation shall be subject to the doctrine
of "corporate opportunities" only insofar as it applies to business
opportunities in which this Corporation has expressed an interest as
determined from time to time by this Corporation's Board of Directors as
evidenced by resolutions appearing in the Corporation's minutes. Once such
areas of interest are delineated, all such business opportunities within
such areas of interest which come to the attention of the Officers,
directors, and other members of management of this Corporation shall be
disclosed promptly to this Corporation and made available to it. The Board
of Directors may reject any business opportunity presented to it and
thereafter any officers, directors of other member of management may avail
himself of such opportunity. Until such time as this Corporation, through
its Board of Directors, has designated an area of interest, the officers,
directors and other members of management of this Corporation shall be free
to engage in such areas of interest on their own and this doctrine shall
not limit the right of any officer, director or other member of management
of this Corporation to continue a business existing prior to the time that
such area of interest is designated by the Corporation. This provision
shall be construed to release any employee of this Corporation (other than
an officer, director of member of management) from any duties which he may
have to this Corporation.
ARTICLE XI. LIMITATIONS ON DIRECTOR LIABILITY. To the fullest extent
permitted by the Colorado Corporation Code as the same exists or may
hereafter be amended, a director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.
ARTICLE XII. POWERS AND LIMITATIONS. The powers and limitations of
the Corporation shall be those set forth by the Colorado Corporation Code,
under which this Corporation is formed.
ARTICLE XIII. REGISTERED OFFICE AND REGISTERED AGENT. The registered
office of the Corporation is 4582 S. Ulster St., Ste. 1203, Denver,
Colorado 80237; the name of the registered agent of the Corporation at such
address is Walter F. Goodwin.
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ARTICLE XIV. INCORPORATOR. The name and address of the Incorporator
is as follows:
Walter F. Goodwin 4582 S. Ulster St., Ste. 1203
Denver, Colorado 80237
ARTICLE XV. RIGHTS TO AMEND, ALTER, CHANGE OR REPEAL. The
Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation in the manner now or
hereinafter prescribed herein or by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 6 day of
June, 1991.
/s/ WALTER F. GOODWIN JUNE 6, 1991
----------------------------------------
Walter F. Goodwin, Incorporator
STATE OF COLORADO )
)ss.
COUNTY OF DENVER )
The undersigned, a Notary Public, hereby certifies that on this 6 day
of June, 1991, personally appeared Walter F. Goodwin, who, 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.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 6 day of
June, 1991.
Witness my hand and official seal.
My commission expires: 6-24-94
-----------------
/s/
----------------------------------------
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EXHIBIT 3.(ii)
BYLAWS
OF
INTERNATIONAL CAPITAL FUNDING, INC.
ARTICLE I
OFFICES
The principal office of the corporation shall be designated from time
to time by the corporation and may be within or outside of Colorado.
The corporation may have such other offices, either within or outside
Colorado, as the board of directors may designate or as the business of the
corporation may require from time to time.
The registered office of the corporation required by the Colorado
Business Corporation Act to be maintained in Colorado may be, but need not
be, identical with the principal office, and the address of the registered
office may be changed from time to time by the board of directors.
ARTICLE II
Shareholders
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders
shall be held during the month of 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 1997, for the purpose of electing directors and for the
transaction of such other business as may come before the meeting. If the
election of directors is not held on the day fixed as provided herein for
any annual meeting of the shareholders, or any adjournment thereof, the
board of directors shall cause the election to be held at a special meeting
of the shareholders as soon thereafter as it may conveniently be held.
A shareholder may apply to the district court in the county in
Colorado where the corporation's principal office is located or, if the
corporation has no principal office in Colorado, to the district court of
the county in which the corporation's registered office is located to seek
an order that a shareholder meeting be held (i) if an annual meeting was
not held within six months after the close of the corporation's most
recently ended fiscal year or fifteen months after its last annual meeting,
whichever is earlier, or (ii) if the shareholder participated in a proper
call of or proper demand for a special meeting and notice of the special
meeting was not given within thirty days after the date of the call or the
date the last of the demands necessary to require calling of the meeting
was received by the corporation pursuant to C.R.S. Section 7-107-102(1)(b),
or the special meeting was not held in accordance with the notice.
SECTION 2. SPECIAL MEETINGS. Unless otherwise prescribed by statute,
special meetings of the shareholders may be called for any purpose by the
president or by the board of directors.
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The president shall call a special meeting of the shareholders if the
corporation receives one or more written demands for the meeting, stating
the purpose or purposes for which it is to be held, signed and dated by
holders of shares representing at least ten percent of all the votes
entitled to be cast on any issue proposed to be considered at the meeting.
SECTION 3. PLACE OF MEETING. The board of directors may designate
any place, either within or outside Colorado, as the place for any annual
meeting or any special meeting called by the board of directors. A waiver
of notice signed by all shareholders entitled to vote at a meeting may
designate any place, either within or outside Colorado, as the place for
such meeting. If no designation is made, or if a special meeting is called
other than by the board, the place of meeting shall be the principal
office of the corporation.
SECTION 4. NOTICE OF MEETING. Written notice stating the place,
date, and hour of the meeting shall be given not less than ten nor more
than sixty days before the date of the meeting, except that (i) if the
number of authorized shares is to be increased, at least thirty days'
notice shall be given, or (ii) any other longer notice period is required
by the Colorado Business Corporation Act. Notice of a special meeting
shall include a description of the purpose or purposes of the meeting.
Notice of an annual meeting need not include a description of the purpose
or purposes of the meeting except the purpose or purposes shall be stated
with respect to (i) an amendment to the articles of incorporation of the
corporation, (ii) a merger or share exchange in which the corporation is a
party and, with respect to a share exchange, in which the corporation's
shares will be acquired, (iii) a sale, lease, exchange or other
disposition, other than in the usual and regular course of business, of all
or substantially all of the property of the corporation or of another
entity which this corporation controls, in each case with or without the
goodwill, (iv) a dissolution of the corporation, or (v) any other purpose
for which a statement of purpose is required by the Colorado Business
Corporation Act. Notice shall be given personally or by mail, private
carrier, telegraph, teletype, electronically transmitted facsimile or other
form of wire or wireless communication by or at the direction of the
president, the secretary, or the officer or persons calling the meeting, to
each shareholder of record entitled to vote at such meeting. If mailed and
if in a comprehensible form, such notice shall be deemed to be given and
effective when deposited in the United States mail, addressed to the
shareholder at his address as it appears in the corporation's current
record of shareholders, with postage prepaid. If notice is given other
than by mail, and provided that such notice is in a comprehensible form,
the notice is given and effective on the date received by the shareholder.
If requested by the person or persons lawfully calling such meeting,
the corporation shall give notice thereof at corporation expense. No
notice need be sent to any shareholder if three successive notices mailed
to the last known address of such shareholder have been returned as
undeliverable until such time as another address for such shareholder is
made known to the corporation by such shareholder. In order to be entitled
to receive notice of any meeting, a shareholder shall advise the
corporation in writing of any change in such shareholder's mailing address
as shown on the corporation's books and records.
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When a meeting is adjourned to another date, time or place, notice
need not be given of the new date, time or place if the new date, time or
place of such meeting is announced before adjournment at the meeting at
which the adjournment is taken. At the adjourned meeting the corporation
may transact any business which may have been transacted at the original
meeting. If the adjournment is for more than 120 days, or if a new record
date is fixed for the adjourned meeting, a new notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at
the meeting as of the new record date.
A shareholder may waive notice of a meeting before or after the time
and date of the meeting by a writing signed by such shareholder. Such
waiver shall be delivered to the corporation for filing with the corporate
records. Further, by attending a meeting either in person or by proxy, a
shareholder waives objection to lack of notice or defective notice of the
meeting unless the shareholder objects at the beginning of the meeting to
the holding of the meeting or the transaction of business at the meeting
because of lack of notice or defective notice. By attending the meeting,
the shareholder also waives any objection to consideration at the meeting
of a particular matter not within the purpose or purposes described in the
meeting notice unless the shareholder objects to considering the matter
when it is presented.
SECTION 5. FIXING OF RECORD DATE. For the purposes of determining
shareholders entitled to (i) notice of or vote at any meeting of
shareholders or any adjournment thereof, (ii) receive distributions or
share dividends, or (ii) demand a special meeting, or to make a
determination of shareholders for any other proper purpose, the board of
directors may fix a future date as the record date for any such
determination of shareholders, such date in any case to be not more than
seventy days, and, in case of a meeting of shareholders not less than ten
days, prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If no record date is fixed
by the directors, the record date shall be the date on which notice of the
meeting is mailed to shareholders, or the date on which the resolution of
the board of directors providing for a distribution is adopted, as the case
may be. When a determination of shareholders entitled to vote at any
meeting of shareholders is made as provided in this Section, such
determination shall apply to any adjournment thereof unless the board of
directors fixes a new record date, which it must do if the meeting is
adjourned to a date more than 120 days after the date fixed for the
original meeting.
Notwithstanding the above, the record date for determining the
shareholders entitled to take action without a meeting or entitled to be
given notice of action so taken shall be the date a writing upon which the
action is taken is first received by the corporation. The record date for
determining shareholders entitled to demand a special meeting shall be the
date of the earliest of any of the demands pursuant to which the meeting is
called.
SECTION 6. VOTING LISTS. The secretary shall make, at the earlier of
ten days before each meeting of shareholders or two business days after
notice of the meeting has been given, a complete list of the shareholders
entitled to be given notice of such meeting or any adjournment thereof.
The list shall be arranged by voting groups and within each voting group
by class or series of shares, shall be in alphabetical order within each
class or series, and shall show the
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address of and the number of shares of each class or series held by each
shareholder. For the period beginning the earlier of ten days prior to the
meeting or two business days after notice of the meeting is given and
continuing through the meeting and any adjournment thereof, this list shall
be kept on file at the principal office of the corporation, or at a place
(which shall be identified in the notice) in the city where the meeting
will be held. Such list shall be available for inspection on written
demand by any shareholder (including for the purpose of this Section 6 any
holder of voting trust certificates) or his agent or attorney during
regular business hours and during the period available for inspection. The
original stock transfer books shall be prima facie evidence as to the
shareholders entitled to examine such list or to vote at any meeting of
shareholders.
Any shareholder, his agent or attorney may copy the list during
regular business hours and during the period it is available for
inspection, provided (i) the shareholder has been a shareholder for at
least three months immediately preceding the demand or holds at least five
percent of all outstanding shares of any class of shares as of the date of
the demand, (ii) the demand is made in good faith and for a purpose
reasonably related to the demanding shareholder's interest as a
shareholder, (iii) the shareholder describes with reasonable particularity
the purpose and the records the shareholder desires to inspect, (iv) the
records are directly connected with the described purpose and (v) the
shareholder pays a reasonable charge covering the costs of labor and
material for such copies, not to exceed the estimated cost of production
and reproduction.
SECTION 7. RECOGNITION PROCEDURE FOR BENEFICIAL OWNERS. The board of
directors may adopt by resolution a procedure whereby a shareholder of the
corporation may certify in writing to the corporation that all or a portion
of the shares registered in the name of such shareholder are held for the
account of a specified person or persons. The resolution may set forth (i)
the types of nominees to which it applies, (ii) the rights or privileges
that the corporation will recognize in a beneficial owner, which may
include rights and privileges other than voting; (iii) the form of
certification and the information to be contained therein, (iv) if the
certification is with respect to a record date, the time within which the
certification must be received by the corporation, (v) the period for which
the nominee's use of the procedure is effective, and (vi) such other
provisions with respect to the procedure as the board deems necessary or
desirable. Upon receipt by the corporation of a certificate complying with
the procedure established by the board of directors, the persons specified
in the certification shall be deemed, for the purpose or purposes set forth
in the certification, to be the registered holders of the number of shares
specified in place of the shareholder making the certification.
SECTION 8. QUORUM AND MANNER OF ACTING. One-third of the votes
entitled to be cast on a matter by a voting group shall constitute a quorum
of that voting group for action on the matter. If less than one-third of
such votes are represented at a meeting, a majority of the votes so
represented may adjourn the meeting from time to time without further
notice, for a period not to exceed 120 days for any one adjournment. If a
quorum is present at such adjourned meeting, any business may be transacted
which might have been transacted at the meeting as originally noticed. The
shareholders present at a duly organized meeting may continue to transact
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business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, unless the meeting is adjourned
and a new record date is set for the adjourned meeting.
If a quorum exists, action on a matter other than the election of
directors by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast within the voting group
opposing the action, unless the vote of a greater number or voting by
classes is required by law or the articles of incorporation.
SECTION 9. PROXIES. At all meetings of shareholders, a shareholder
may vote by proxy by signing an appointment form or similar writing, either
personally or by his duly authorized attorney-in-fact. A shareholder may
also appoint a proxy by transmitting or authorizing the transmission of a
telegram, teletype, or other electronic transmission providing a written
statement of the appointment to the proxy, a proxy solicitor, proxy support
service organization, or other person duly authorized by the proxy to
receive appointments as agent for the proxy, or to the corporation. The
transmitted appointment shall set forth or be transmitted with written
evidence from which it can be determined that the shareholder transmitted
or authorized the transmission of the appointment. The proxy appointment
form or similar writing shall be filed with the secretary of the
corporation before or at the time of the meeting. The appointment of a
proxy is effective when received by the corporation and is valid for eleven
months unless a different period is expressly provided in the appointment
form or similar writing.
Any complete copy, including an electronically transmitted facsimile,
of an appointment of a proxy may be substituted for or used in lieu of the
original appointment for any purpose for which the original appointment
could be used.
Revocation of a proxy does not affect the right of the corporation to
accept the proxy's authority unless (i) the corporation had notice that the
appointment was coupled with an interest and notice that such interest is
extinguished is received by the secretary or other officer or agent
authorized to tabulate votes before the proxy exercises his authority
under the appointment, or (ii) other notice of the revocation of the
appointment is received by the secretary or other officer or agent
authorized to tabulate votes before the proxy exercises his authority
under the appointment. Other notice of revocation may, in the discretion
of the corporation, be deemed to include the appearance at a shareholders'
meeting of the shareholder who granted the proxy and his voting in person
on any matter subject to a vote at such meeting.
The death or incapacity of the shareholder appointing a proxy does not
affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other
officer or agent authorized to tabulate votes before the proxy exercises
his authority under the appointment.
The corporation shall not be required to recognize an appointment made
irrevocable if it has received a writing revoking the appointment signed by
the shareholder (including a shareholder who is a successor to the
shareholder who granted the proxy) either personally or by
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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 and by the
resolution of the board of directors authorizing the issuance of the shares
of any particular class, as permitted by the Colorado Business Corporation
Act. Cumulative voting shall not be permitted in the election of directors
or for any other purpose. Each record holder of shares of common stock
shall be entitled to vote in the election of directors and shall have as
many votes for each of the shares owned by him as there are directors to be
elected and for whose election he has the right to vote.
At each election of directors, that number of candidates equaling the
number of directors to be elected, having the highest number of votes cast
in favor of their election, shall be elected to the board of directors.
Except as otherwise ordered by a court of competent jurisdiction upon
a finding that the purpose of this Section would not be violated in the
circumstances presented to the court, the shares of the corporation are not
entitled to be voted if they are owned, directly or indirectly, by a second
corporation, domestic or foreign, and the first corporation owns, directly
or indirectly, a majority of the shares entitled to vote for directors of
the second corporation except to the extent the second corporation holds
the shares in a fiduciary capacity.
Redeemable shares are not entitled to be voted after notice of
redemption is mailed to the holders and a sum sufficient to redeem the
shares has been deposited with a bank, trust company or other financial
institution under an irrevocable obligation to pay the holders the
redemption price on surrender of the shares.
SECTION 11. CORPORATION'S ACCEPTANCE OF VOTES. If the name signed on
a vote, consent, waiver, proxy appointment, or proxy appointment revocation
corresponds to the name of a shareholder, the corporation, if acting in
good faith, is entitled to accept the vote, consent, waiver, proxy
appointment or proxy appointment revocation and give it effect as the act
of the shareholder. If the name signed on a vote, consent, waiver, proxy
appointment or proxy appointment revocation does not correspond to the name
of a shareholder, the corporation, if acting in good faith, is nevertheless
entitled to accept the vote, consent, waiver, proxy appointment or proxy
appointment revocation and to give it effect as the act of the shareholder
if:
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(i) the shareholder is an entity and the name signed purports to be
that of an officer or agent of the entity;
(ii) the name signed purports to be that of an administrator,
executor, guardian or conservator representing the shareholder and, if the
corporation requests, evidence of fiduciary status acceptable to the
corporation has been presented with respect to the vote, consent, waiver,
proxy appointment or proxy appointment revocation;
(iii) the name signed purports to be that of a receiver or trustee
in bankruptcy of the shareholder and, if the corporation requests, evidence
of this status acceptable to the corporation has been presented with
respect to the vote, consent, waiver, proxy appointment or proxy
appointment revocation;
(iv) the name signed purports to be that of a pledgee, beneficial
owner or attorney-in-fact of the shareholder and, if the corporation
requests, evidence acceptable to the corporation of the signatory's
authority to sign for the shareholder has been presented with respect to
the vote, consent, waiver, proxy appointment or proxy appointment
revocation;
(v) two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of
the co-tenants or fiduciaries, and the person signing appears to be acting
on behalf of all the co-tenants or fiduciaries; or
(vi) the acceptance of the vote, consent, waiver, proxy appointment or
proxy appointment revocation is otherwise proper under rules established by
the corporation that are not inconsistent with this Section 11.
The corporation is entitled to reject a vote, consent, waiver, proxy
appointment or proxy appointment revocation if the secretary or other
officer or agent authorized to tabulate votes, acting in good faith, has
reasonable basis for doubt about the validity of the signature on it or
about the signatory's authority to sign for the shareholder.
Neither the corporation nor its officers nor any agent who accepts or
rejects a vote, consent, waiver, proxy appointment or proxy appointment
revocation in good faith and in accordance with the standards of this
Section is liable in damages for the consequences of the acceptance or
rejection.
SECTION 12. INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without
a meeting if a written consent (or counterparts thereof) that sets forth
the action so taken is signed by all of the shareholders entitled to vote
with respect to the subject matter thereof and received by the
corporation. Such consent shall have the same force and effect as a
unanimous vote of the shareholders and may be stated as such in the
document. Action taken under this Section 12 is effective as of the date
the last writing necessary to effect this action is received by the
corporation, unless all of the writings specify a different effective date,
in which case such specified date shall be the effective
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date for such action. If any shareholder revokes his consent as provided
for herein prior to what would otherwise be the effective date, the action
proposed in the consent shall be invalid. The record date for determining
shareholders entitled to take action without a meeting is the date the
corporation receives a writing upon which the action is taken.
Any shareholder who has signed a writing describing and consenting to
action taken pursuant to this Section 12 may revoke such consent by a
writing signed by the shareholder describing the action and stating that
the shareholder's prior consent thereto is revoked, if such writing is
received by the corporation before the effectiveness of the action.
SECTION 13. MEETINGS BY TELECOMMUNICATION. Any or all of the
shareholders may participate in an annual or special shareholders' meeting
by, or the meeting may be conducted through the use of, any means of
communication by which all persons participating in the meeting may hear
each other during the meeting. A shareholder participating in a meeting by
this means is deemed to be present in person at the meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. All corporate powers shall be exercised
by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of its board of directors,
except as otherwise provided in the Colorado Business Corporation Act or
the articles of incorporation.
SECTION 2. NUMBER, QUALIFICATIONS AND TENURE. The number of
directors of the corporation shall be fixed from time to time by resolution
of the board of directors, within a range of no less than one or more than
five. A director shall be a natural person who is eighteen years of age
or older. A director need not be a resident of Colorado or a shareholder
of the corporation.
Directors shall be elected at each annual meeting of shareholders.
Each director shall hold office until the next annual meeting of
shareholders following his election and thereafter until his successor
shall have been elected and qualified. Directors shall be removed in the
manner provided by the Colorado Business Corporation Act.
SECTION 3. VACANCIES. Any director may resign at any time by giving
written notice to the corporation. Such resignation shall take effect at
the time the notice is received by the corporation unless the notice
specifies a later effective date. Unless otherwise specified in the notice
of resignation, the corporation's acceptance of such resignation shall not
be necessary to make it effective. Any vacancy on the board of directors
may be filled by the affirmative vote of a majority of the shareholders or
the board of directors. If the directors remaining in office constitute
fewer than a quorum of the board, the directors may fill the vacancy by the
affirmative vote of a majority of all the directors remaining in office.
If elected by the directors, the director shall hold office until the next
annual shareholder's meeting at which directors are elected. If
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elected by the shareholders, the director shall hold office for the
unexpired term of his predecessor in office; except that, if the director's
predecessor was elected by the directors to fill a vacancy, the director
elected by the shareholders shall hold office for the unexpired term of the
last predecessor elected by the shareholders.
SECTION 4. REGULAR MEETINGS. A regular meeting of the board of
directors shall be held without notice immediately after and at the same
place as the annual meeting of shareholders. The board of directors may
provide by resolution the time and place, either within or outside
Colorado, for the holding of additional regular meetings without other
notice.
SECTION 5. SPECIAL MEETINGS. Special meetings of the board of
directors may be called by or at the request of the president or chief
executive officer, or any director. The person or persons authorized to
call special meetings of the board of directors may fix any place, either
within or outside Colorado, as the place for holding any special meeting of
the board of directors called by them, provided that no meeting shall be
called outside the State of Colorado unless a majority of the board of
directors has so authorized.
SECTION 6. NOTICE. Notice of any special meeting shall be given at
least two days prior to the meeting by written notice either personally
delivered or mailed to each director at his business address, or by notice
transmitted by telegraph, telex, electronically transmitted facsimile or
other form of wire or wireless communication. If mailed, such notice shall
be deemed to be given and to be effective on the earlier of (i) three days
after such notice is deposited in the United States mail, properly
addressed, with postage prepaid, or (ii) the date shown on the return
receipt, if mailed by registered or certified mail return receipt
requested. If notice is given by telex, electronically transmitted
facsimile or other similar form of wire or wireless communication, such
notice shall be deemed to be given and to be effective when sent, and with
respect to a telegram, such notice shall be deemed to be given and to be
effective when the telegram is delivered to the telegraph company. If a
director has designated in writing one or more reasonable addresses or
facsimile numbers for delivery of notice to him, notice sent by mail,
telegram, telex, electronically transmitted facsimile or other form of wire
or wireless communication shall not be deemed to have been given or to be
effective unless sent to such addresses or facsimile numbers, as the case
may be.
A director may waive notice of a meeting before or after the time and
date of the meeting by a writing signed by such director. Such waiver
shall be delivered to the corporation for filing with the corporate
records. Further, a director's attendance at or participation in a meeting
waives any required notice to him of the meeting unless at the beginning of
the meeting, or promptly upon his arrival, the director objects to holding
the meeting or transacting business at the meeting because of lack of
notice or defective notice and does not thereafter vote for or assent to
action taken at the meeting. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the board of directors
need be specified in the notice or waiver of notice of such meeting.
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SECTION 7. QUORUM. A majority of the number of directors fixed by
the board of directors pursuant to Section 2 or, if no number is fixed, a
majority of the number in office immediately before the meeting begins,
shall constitute a quorum for the transaction of business at any meeting of
the board of directors. If less than such majority is present at a
meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice, for a period not to exceed sixty days
at any one adjournment.
SECTION 8. MANNER OF ACTING. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the
act of the board of directors. No director may vote or act by proxy at any
meeting of directors.
SECTION 9. COMPENSATION. By resolution of the board of directors,
any director may be paid any one or more of the following: his expenses,
if any, of attendance at meetings, a fixed sum for attendance at each
meeting, a stated salary as director, or such other compensation as the
corporation and the director may reasonably agree upon. No such payment
shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
SECTION 10. PRESUMPTION OF ASSENT. A director of the corporation who
is present at a meeting of the board of directors or committee of the board
at which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless (i) the director objects at the
beginning of the meeting, or promptly upon his arrival, to the holding of
the meeting or the transaction of business at the meeting and does not
thereafter vote for or assent to any action taken at the meeting, (ii) the
director contemporaneously requests that his dissent or abstention as to
any specific action taken be entered in the minutes of the meeting, or
(iii) the director causes written notice of his dissent or abstention as to
any specific action to be received by the presiding officer of the meeting
before its adjournment or by the corporation promptly after the adjournment
of the meeting. A director may dissent to a specific action at a meeting,
while assenting to others. The right to dissent to a specific action taken
at a meeting of the board of directors or a committee of the board shall
not be available to a director who voted in favor of such action.
SECTION 11. COMMITTEES. By resolution adopted by a majority of all
the directors in office when the action is taken, the board of directors
may designate from among its members an executive committee and one or more
other committees, and appoint one or more members of the board of directors
to serve on them. To the extent provided in the resolution, each committee
shall have all the authority of the board of directors, except that no such
committee shall have the authority to (i) authorize distributions, (ii)
approve or propose to shareholders actions or proposals required by the
Colorado Business Corporation Act to be approved by shareholders, (iii)
fill vacancies on the board of directors or any committee thereof, (iv)
amend articles of incorporation, (v) adopt, amend or repeal the bylaws,
(vi) approve a plan of merger not requiring shareholder approval, (vii)
authorize or approve the reacquisition of shares unless pursuant to a
formula or method prescribed by the board of directors, or (viii) authorize
or approve the issuance or sale of shares, or contract for the sale of
shares or determine the designations and relative rights, preferences and
limitations of a class or series of shares, except
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that the board of directors may authorize a committee or officer to do so
within limits specifically prescribed by the board of directors. The
committee shall then have full power within the limits set by the board of
directors to adopt any final resolution setting forth all preferences,
limitations and relative rights of such class or series and to authorize an
amendment of the articles of incorporation stating the preferences,
limitations and relative rights of a class or series for filing with the
Secretary of State under the Colorado Business Corporation Act.
Sections 4, 5, 6, 7, 8 and 12 of Article III, which govern meetings,
notice, waiver of notice, quorum, voting requirements and action without a
meeting of the board of directors, shall apply to committees and their
members appointed under this Section 11.
Neither the designation of any such committee, the delegation of
authority to such committee, nor any action by such committee pursuant to
its authority shall alone constitute compliance by any member of the board
of directors or a member of the committee in question with his
responsibility to conform to the standards of care set forth in Article
III, Section 14 of these bylaws.
SECTION 12. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken at a meeting of the directors or any committee
designated by the board of directors may be taken without a meeting if a
written consent (or counterparts thereof) that sets forth the action so
taken is signed by all of the directors entitled to vote with respect to
the action taken. Such consent shall have the same force and effect as a
unanimous vote of the directors or committee members and may be stated as
such in any document. Unless the consent specifies a different effective
date, action taken under this Section 12 is effective at the time the last
director signs a writing describing the action taken, unless, before such
time, any director has revoked his consent by a writing signed by the
director and received by the president or secretary of the corporation.
SECTION 13. TELEPHONIC MEETINGS. The board of directors may permit
any director (or any member of a committee designated by the board) to
participate in a regular or special meeting of the board of directors or a
committee thereof through the use of any means of communication by which
all directors participating in the meeting can hear each other during the
meeting. A director participating in a meeting in this manner is deemed to
be present in person at the meeting.
SECTION 14. STANDARD OF CARE. A director shall perform his duties as
a director, including, without limitation his duties as a member of any
committee of the board, in good faith, in a manner he reasonably believes
to be in the best interests of the corporation, and with the care an
ordinarily prudent person in a like position would exercise under similar
circumstances. In performing his duties, a director shall be entitled to
rely on information, opinions, reports or statements, including financial
statements and other financial data, in each case prepared or presented by
the persons herein designated. However, he shall not be considered to be
acting in good faith if he has knowledge concerning the matter in question
that would cause such reliance to be unwarranted. A director shall not be
liable to the corporation or its shareholders for any
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action he takes or omits to take as a director if, in connection with such
action or omission, he performs his duties in compliance with this Section
14.
The designated persons on whom a director is entitled to rely are (i)
one or more officers or employees of the corporation whom the director
reasonably believes to be reliable and competent in the matters presented,
(ii) legal counsel, public accountant, or other person as to matters which
the director reasonably believes to be within such person's professional or
expert competence, or (iii) a committee of the board of directors on which
the director does not serve if the director reasonably believes the
committee merits confidence.
ARTICLE IV
OFFICERS AND AGENTS
SECTION 1. GENERAL. The officers of the corporation shall be as
determined by the board of directors from time to time, and may include a
president, one or more vice presidents, a secretary, a treasurer, and such
other officers, assistant officers, committees and agents, including a
chairman of the board, assistant secretaries and assistant treasurers, as
the board may consider necessary. Each officer shall be a natural person
eighteen years of age or older. The board of directors or the officer or
officers authorized by the board shall from time to time determine the
procedure for the appointment of officers, their term of office, their
authority and duties and their compensation. One person may hold more than
one office. In all cases where the duties of any officer, agent or
employee are not prescribed by the bylaws, or by the board of directors,
such officer, agent or employee shall follow the orders and instructions of
the president of the corporation.
SECTION 2. APPOINTMENT AND TERM OF OFFICE. The officers of the
corporation shall be appointed by the board of directors at each annual
meeting of the board held after each annual meeting of the shareholders.
If the appointment of officers is not made at such meeting or if an officer
or officers are to be appointed by another officer or officers of the
corporation, such appointment shall be made as soon thereafter as
conveniently may be. Each officer shall hold office until the first of the
following occurs: his successor shall have been duly appointed and
qualified, his death, his resignation, or his removal in the manner
provided in Section 3.
SECTION 3. RESIGNATION AND REMOVAL. An officer may resign at any
time by giving written notice of resignation to the corporation. The
resignation is effective when the notice is received by the corporation
unless the notice specifies a later effective date.
Any officer or agent may be removed at any time with or without cause
by the board of directors or an officer or officers authorized by the
board. Such removal does not affect the contract rights, if any, of the
corporation or of the person so removed. The appointment of an officer or
agent shall not in itself create contract rights.
SECTION 4. VACANCIES. A vacancy in any office, however occurring,
may be filled by the board of directors, or by the officer or officers
authorized by the board, for the unexpired portion
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of the officer's term. If an officer resigns and his resignation is made
effective at a later date, the board of directors, or officer or officers
authorized by the board, may permit the officer to remain in office until
the effective date and may fill the pending vacancy before the effective
date if the board of directors or officer or officers authorized by the
board provide that the successor shall not take office until the effective
date. In the alternative, the board of directors, or officer or officers
authorized by the board of directors, may remove the officer at any time
before the effective date and may fill the resulting vacancy.
SECTION 5. PRESIDENT. Subject to the direction and supervision of
the board of directors, and unless otherwise determined by the board of
directors in its designation of officers from time to time, the president
shall be the chief executive officer of the corporation, and shall have
general and active control of its affairs and business and general
supervision of its officers, agents and employees. Unless otherwise
directed by the board of directors, the president shall attend in person or
by substitute appointed by him, or shall execute on behalf of the
corporation written instruments appointing a proxy or proxies to represent
the corporation, at all meetings of the stockholders of any other
corporation in which the corporation holds any stock. On behalf of the
corporation, the president may in person or by substitute or by proxy
execute written waivers of notice and consents with respect to any such
meetings. At all such meetings and otherwise, the president, in person or
by substitute or proxy, may vote the stock held by the corporation, execute
written consents and other instruments with respect to such stock, and
exercise any and all rights and powers incident to the ownership or said
stock, subject to the instructions, if any, of the board of directors. The
president shall have custody of the treasurer's bond, if any.
SECTION 6. VICE PRESIDENTS. Any vice presidents designated by the
board of directors as officers of the corporation shall assist the
president and shall perform such duties as may be assigned to them by the
president or by the board of directors. In the absence of the president,
the vice president, if any (or, if more than one, the vice presidents in
the order designated by the board of directors, or if the board makes no
such designation, then the vice president designated by the president, or
if neither the board nor the president makes any such designation, the
senior vice president as determined by first election to that office),
shall have the powers and perform the duties of the president.
SECTION 7. SECRETARY. In the event a secretary is designated by the
board of directors as an officer of the corporation, the secretary shall
(i) prepare and maintain as permanent records the minutes of the
proceedings of the shareholders and the board of directors, a record of all
actions taken by the shareholders or board of directors without a meeting,
a record of all actions taken by a committee of the board of directors in
place of the board of directors on behalf of the corporation, and a record
of all waivers of notice of meetings of shareholders and of the board of
directors or any committee thereof, (ii) see that all notices are duly
given in accordance with the provisions of these bylaws and as required by
law, (iii) serve as custodian of the corporate records and of the seal of
the corporation and affix the seal to all documents when authorized by the
board of directors, (iv) keep at the corporation's registered office or
principal place of business a record containing the names and addresses of
all shareholders in a form that permits preparation of a list of
shareholders arranged by voting group and by class or series of
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shares within each group, that is alphabetical within each class or series
and that shows the address of, and the number of shares of each class or
series held by each shareholder, unless such a record shall be kept at the
office of the corporation's transfer agent or registrar, (v) maintain at
the corporation's principal office the originals or copies of the
corporation's articles of incorporation, bylaws, minutes of all
shareholders' meetings and records of all action taken by shareholders
without a meeting for the past three years, all written communications
within the past three years to shareholders as a group or to the holders of
any class or series of shares as a group, a list of the name and business
addresses of the current directors and officers, a copy of the
corporation's most recent corporate report filed with the Secretary of
State, and financial statements showing in reasonable detail the
corporation's assets and liabilities and results of operations for the
last three years, (vi) have general charge of the stock transfer books of
the corporation, unless the corporation has a transfer agent, (vii)
authenticate records of the corporation, and (vii) in general, perform all
duties incident to the office of secretary and such other duties as from
time to time may be assigned to him by the president or by the board of
directors. Assistant secretaries, if any, shall have the same duties and
powers subject to supervision by the secretary. The directors and/or
shareholders may however respectively designate a person other than the
secretary or assistant secretary to keep the minutes of their respective
meetings.
Any books, records, or minutes of the corporation may be in written
form or in any form capable of being converted into written form within a
reasonable time.
SECTION 8. TREASURER. In the event a treasurer is designated by the
board of directors as an officer of the corporation, the treasurer shall be
the principal financial officer of the corporation, shall have the care and
custody of all funds, securities, evidences of indebtedness and other
personal property of the corporation and shall deposit the same in
accordance with the instructions of the board of directors. He shall
receive and give receipts and acquittances for money paid in on account of
the corporation, and shall pay out of the corporation's funds on hand all
bills, payrolls and other just debts of the corporation of whatever nature
upon maturity. He shall perform all other duties incident to the office of
the treasurer and, upon request of the board, shall make such reports to it
as may be required at any time. He shall, if required by the board, give
the corporation a bond in such sums and with such sureties as shall be
satisfactory to the board, conditioned upon the faithful performance of his
duties and for the restoration to the corporation of all books, papers,
vouchers, money and other property of whatever kind in his possession or
under his control belonging to the corporation. He shall have such other
powers and perform such other duties as may from time to time be prescribed
by the board of directors or the president. The assistant treasurers, if
any, shall have the same powers and duties, subject to the supervision of
the treasurer.
The treasurer shall also be the principal accounting officer of the
corporation. He shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account as
required by the Colorado Business Corporation Act, prepare and file all
local, state and federal tax returns, prescribe and maintain an adequate
system of internal
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audit and prepare and furnish to the president and the board of directors
statements of account showing the financial position of the corporation and
the results of its operations.
ARTICLE V
STOCK
SECTION 1. CERTIFICATES. The board of directors shall be authorized
to issue any of its classes of shares with or without certificates. The
fact that the shares are not represented by certificates shall have no
effect on the rights and obligations of shareholders. If the shares are
represented by certificates, such shares shall be represented by
consecutively numbered certificates signed, either manually or by
facsimile, in the name of the corporation by one or more persons designated
by the board of directors. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased
to be such officer before such certificate is issued, such certificate may
nonetheless be issued by the corporation with the same effect as if he were
such officer at the date of its issue. Certificates of stock shall be in
such form and shall contain such information consistent with law as shall
be prescribed by the board of directors. If shares are not represented by
certificates, within a reasonable time following the issue or transfer of
such shares, the corporation shall send the shareholder a complete written
statement of all of the information required to be provided to holders of
uncertificated shares by the Colorado Business Corporation Act.
SECTION 2. CONSIDERATION FOR SHARES. Certificated or uncertificated
shares shall not be issued until the shares represented thereby are fully
paid. The board of directors may authorize the issuance of shares for
consideration consisting of any tangible or intangible property or benefit
to the corporation, including cash, promissory notes, services performed or
other securities of the corporation. Future services shall not constitute
payment or partial payment for shares of the corporation. The promissory
note of a subscriber or an affiliate of a subscriber shall not constitute
payment or partial payment for shares of the corporation unless the note
is negotiable and is secured by collateral, other than the shares being
purchased, having a fair market value at least equal to the principal
amount of the note. For purposes of this Section 2, "promissory note"
means a negotiable instrument on which there is an obligation to pay
independent of collateral and does not include a non-recourse note.
SECTION 3. LOST CERTIFICATES. In case of the alleged loss,
destruction or mutilation of a certificate of stock, the board of directors
may direct the issuance of a new certificate in lieu thereof upon such
terms and conditions in conformity with law as the board may prescribe.
The board of directors may in its discretion require an affidavit of lost
certificate and/or a bond in such form and amount and with such surety as
it may determine before issuing a new certificate.
SECTION 4. TRANSFER OF SHARES. Upon surrender to the corporation or
to a transfer agent of the corporation of a certificate of stock duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, and receipt of such documentary stamps as may be
required by law and evidence of compliance with all applicable securities
laws and other restrictions, the corporation shall issue a new certificate
to the person entitled thereto, and cancel
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the old certificate. Every such transfer of stock shall be entered on the
stock books of the corporation which shall be kept at its principal office
or by the person and at the place designated by the board of directors.
Except as otherwise expressly provided in Article II, Sections 7 and
11, and except for the assertion of dissenters' rights to the extent
provided in Article 113 of the Colorado Business Corporation Act, the
corporation shall be entitled to treat the registered holder of any shares
of the corporation as the owner thereof for all purposes, and the
corporation shall not be bound to recognize any equitable or other claim
to, or interest in, such shares or rights deriving from such shares on the
part of any person other than the registered holder, including without
limitation any purchaser, assignee or transferee of such shares or rights
deriving from such shares, unless and until such other person becomes the
registered holder of such shares, whether or not the corporation shall have
either actual or constructive notice of the claimed interest of such other
person.
SECTION 5. TRANSFER AGENT, REGISTRARS AND PAYING AGENTS. The board
may at its discretion appoint one or more transfer agents, registrars and
agents for making payment upon any class of stock, bond, debenture or other
security of the corporation. Such agents and registrars may be located
either within or outside Colorado. They shall have such rights and duties
and shall be entitled to such compensation as may be agreed.
ARTICLE VI
INDEMNIFICATION OF CERTAIN PERSONS
SECTION 1. INDEMNIFICATION. For purposes of Article VI, a "Proper
Person" means any person who was or is a party or is threatened to be made
a party to any threatened, pending, or complete action, suit or proceeding,
whether civil, criminal, administrative or investigative, and whether
formal or informal, by reason of the fact that he is or was a director,
officer, employee, fiduciary or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee, fiduciary or agent of any foreign or domestic profit or
nonprofit corporation or of any partnership, joint venture, trust, profit
or nonprofit unincorporated association, limited liability company, or
other enterprise or employee benefit plan. The corporation shall indemnify
any Proper Person against reasonably incurred expenses (including any
attorneys' fees), judgments, penalties, fines (including any excise tax
assessed with respect to an employee benefit plan) and amounts paid in
settlement reasonably incurred by him in connection with such action, suit
or proceeding if it is determined by the groups set forth in Section 4 of
this Article that he conducted himself in good faith and that he reasonably
believed (i) in the case of conduct in his official capacity with the
corporation, that his conduct was in the corporation's best interests, or
(ii) in all other cases (except criminal cases), that his conduct was at
least not opposed to the corporation's best interests, or (iii) in the case
of any criminal proceeding, that he had no reasonable cause to believe his
conduct was unlawful. A Proper Person will be deemed to be acting in his
official capacity while acting as a director, officer, employee or agent on
behalf of this corporation and not while acting on this corporation's
behalf for some other entity.
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No indemnification shall be made under this Article VI to a Proper
Person with respect to any claim, issue or matter in connection with a
proceeding by or in the right of a corporation in which the Proper Person
was adjudged liable to the corporation or in connection with any proceeding
charging that the Proper Person derived an improper personal benefit,
whether or not involving action in an official capacity, in which he was
adjudged liable on the basis that he derived an improper personal benefit.
Further, indemnification under this Section in connection with a proceeding
brought by or in the right of the corporation shall be limited to
reasonable expenses, including attorneys' fees, incurred in connection with
the proceeding.
SECTION 2. RIGHT TO INDEMNIFICATION. The corporation shall indemnify
any Proper Person who was wholly successful, on the merits or otherwise, in
defense of any action, suit, or proceeding as to which he was entitled to
indemnification under Section 1 of this Article VI against expenses
(including attorneys' fees) reasonably incurred by him in connection with
the proceeding without the necessity of any action by the corporation other
than the determination in good faith that the defense has been wholly
successful.
SECTION 3. EFFECT OF TERMINATION OF ACTION. The termination of any
action, suit or proceeding by judgment, order, settlement or conviction, or
upon a plea of nolo contendere or its equivalent, shall not of itself
create a presumption that the person seeking indemnification did not meet
the standards of conduct described in Section 1 of this Article VI. Entry
of a judgment by consent as part of a settlement shall not be deemed an
adjudication of liability, as described in Section 2 of this Article VI.
SECTION 4. GROUPS AUTHORIZED TO MAKE INDEMNIFICATION DETERMINATION.
Except where there is a right to indemnification as set forth in Sections
1 or 2 of this Article or where indemnification is ordered by a court in
Section 5, any indemnification shall be made by the corporation only as
authorized in the specific case upon a determination by a proper group that
indemnification of the Proper Person is permissible under the circumstances
because he has met the applicable standards of conduct set forth in Section
1 of this Article. This determination shall be made by the board of
directors by a majority vote of those present at a meeting at which a
quorum is present, which quorum shall consist of directors not parties to
the proceeding ("Quorum"). If a Quorum cannot be obtained, the
determination shall be made by a majority vote of a committee of the board
of directors designated by the board, which committee shall consist of two
or more directors not parties to the proceeding, except that directors who
are parties to the proceeding may participate in the designation of
directors for the committee. If a Quorum of the board of directors cannot
be obtained and the committee cannot be established, or even if a Quorum is
obtained or the committee is designated and a majority of the directors
constituting such Quorum or committee so directs, the determination shall
be made by (i) independent legal counsel selected by a vote of the board of
directors or the committee in the manner specified in this Section 4, or,
if a Quorum of the full board of directors cannot be obtained and a
committee cannot be established, by independent legal counsel selected by
a majority vote of the full board (including directors who are parties to
the action) or (ii) a vote of the shareholders.
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SECTION 5. COURT-ORDERED INDEMNIFICATION. Any Proper Person may
apply for indemnification to the court conducting the proceeding or to
another court of competent jurisdiction for mandatory indemnification under
Section 2 of this Article, including indemnification for reasonable
expenses incurred to obtain court-ordered indemnification. If the court
determines that such Proper Person is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not
he met the standards of conduct set forth in Section 1 of this Article or
was adjudged liable in the proceeding, the court may order such
indemnification as the court deems proper except that if the Proper Person
has been adjudged liable, indemnification shall be limited to reasonable
expenses incurred in connection with the proceeding and reasonable expenses
incurred to obtain court-ordered indemnification.
SECTION 6. ADVANCE OF EXPENSES. Reasonable expenses (including
attorneys' fees) incurred in defending an action, suit or proceeding as
described in Section 1 may be paid by the corporation to any Proper Person
in advance of the final disposition of such action, suit or proceeding upon
receipt of (i) a written affirmation of such Proper Person's good faith
belief that he has met the standards of conduct prescribed by Section 1 of
this Article VI, (ii) a written undertaking, executed personally or on the
Proper Person's behalf, to repay such advances if it is ultimately
determined that he did not meet the prescribed standards of conduct (the
undertaking shall be an unlimited general obligation of the Proper Person
but need not be secured and may be accepted without reference to financial
ability to make repayment), and (iii) a determination is made by the proper
group (as described in Section 3 of this Article VI) that the facts as then
known to the group would not preclude indemnification. Determination and
authorization of payments shall be made in the same manner specified in
Section 4 of this Article VI.
SECTION 7. WITNESS EXPENSES. The sections of this Article VI do not
limit the corporation's authority to pay or reimburse expenses incurred by
a director in connection with an appearance as a witness in a proceeding at
a time when he has not been a named defendant or respondent in the
proceeding.
SECTION 8. REPORT TO SHAREHOLDERS. Any indemnification of or advance
of expenses to a director in accordance with this Article VI, if arising
out of a proceeding by or on behalf of the corporation, shall be reported
in writing to the shareholders with or before the notice of the next
shareholders' meeting. If the next shareholder action is taken without a
meeting at the instigation of the board of directors, such notice shall be
given to the shareholders at or before the time the first shareholder signs
a writing consenting to such action.
ARTICLE VII
PROVISION OF INSURANCE
By action of the board of directors, notwithstanding any interest of
the directors in the action, the corporation may purchase and maintain
insurance, in such scope and amounts as the board of directors deems
appropriate on behalf of any person who is or was a director, officer,
employee, fiduciary or agent of the corporation, or who, while a director,
officer, employee, fiduciary or agent of the corporation, is or was serving
at the request of the corporation as a
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director, officer, partner, trustee, employee, fiduciary or agent of any
other foreign or domestic corporation or of any partnership, joint venture,
trust, profit or nonprofit unincorporated association, limited liability
company or other enterprise or employee benefit plan, against any liability
asserted against, or incurred by, him in that capacity arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of Article VI or
applicable law. Any such insurance may be procured from any insurance
company designated by the board of directors of the corporation, whether
such insurance company is formed under the laws of Colorado or any other
jurisdiction of the United States or elsewhere, including any insurance
company in which the corporation has an equity interest or any other
interest, through stock ownership or otherwise.
ARTICLE VIII
MISCELLANEOUS
SECTION 1. SEAL. The corporate seal of the corporation shall be
circular in form and shall contain the name of the corporation and the
words, "Seal, Colorado."
SECTION 2. FISCAL YEAR. The fiscal year of the corporation shall be
as established by the board of directors.
SECTION 3. AMENDMENTS. The board of directors shall have power, to
the maximum extent permitted by the Colorado Business Corporation Act, to
make, amend and repeal the bylaws of the corporation at any regular or
special meeting of the board unless the shareholders, in making, amending
or repealing a particular bylaw, expressly provide that the directors may
not amend or repeal such bylaw. The shareholders also shall have the power
to make, amend or repeal the bylaws of the corporation at any annual
meeting or at any special meeting called for that purpose.
SECTION 4. GENDER. The masculine gender is used in these bylaws as
a matter of convenience only and shall be interpreted to include the
feminine and neuter genders as the circumstances indicate.
SECTION 5. CONFLICTS. In the event of any irreconcilable conflict
between these bylaws and either the corporation's articles of incorporation
or applicable law, the latter shall control.
SECTION 6. DEFINITIONS. Except as otherwise specifically provided
in these bylaws, all terms used in these bylaws shall have the same
definition as in the Colorado Business Corporation Act.
THE FOREGOING BYLAWS, consisting of twenty (20) pages, including this
page, constitute the bylaws of International Capital Funding, Inc. adopted
by the board of directors of the corporation as of January 13, 1995.
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/s/ MATTHEW J. KAVANAGH III
--------------------------------------
Matthew J. Kavanagh III
President
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<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
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0
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