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
Centennial Banc Share Corp.
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(Exact Name of Small Business Issuer as specified in its charter)
Colorado 84-1374481
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(State or other (IRS Employer File Number)
jurisdiction of incorporation)
6970 South Holly Circle, #105, Englewood, CO 80112
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(Address of principal executive offices) (zip code)
(303) 840-2000
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(Registrant's telephone number, including area code)
Securities to be Registered Pursuant to Section 12(b) of the Act:
None
Securities to be Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.0000001 per share par value
DOCUMENTS INCORPORATED BY REFERENCE
Documents incorporated by reference are found in Item 15.
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Item 1. Description of Business.
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(a) General Development of Business
Centennial Banc Share Corp. (the "Company" or the "Registrant"), is a
Colorado corporation. The principal business address is 6970 South Holly Circle,
#105, Englewood, Colorado 80112. Its telephone number is (303) 840-2000.
The Company was originally incorporated under the laws of the State of
Colorado on November 8, 1996. The Company spent several months of preparation
and research before beginning formal operations on March 10, 1997. Since
beginning operations in March, 1997, the Company has been marginally
unprofitable. At the present time, the Company should be considered to be in the
development stage because it is only minimally capitalized. The Company has not
engaged in any substantial business activity over a sustained period of time,
and thus cannot be said to have a successful operating history.
The present management has been involved with the Company since its
inception., with the exception of Michael J. Delaney, who joined the Company in
August, 1997. As of March 10, 1998 the Company had a total of 1,149,300 common
shares issued and outstanding. The Company has not been subject to any
bankruptcy, receivership or similar proceeding.
(b) Narrative Description of the Business
General
From the Company's inception to the present, the Company has acted as a
mortgage banking operation. From 1996 until 1997, the Company had minimal
activities and carried no substantial inventories or accounts receivable. In
March, 1997, the Company expanded its operations and completed a private
placement in January, 1998, which permitted it to expand to its present level of
operations. No independent market surveys have ever been conducted to determine
demand for the Company's products and services.
Organization
The Company presently comprises one corporation with no subsidiaries or
parent entities. stage. The Company is a Colorado corporation organized for the
purpose of developing and maintaining the business associated with mortgage
banking. The Company name has been approved by the State of Colorado division of
banking. The Company is an approved broker which has a correspondent
relationship with several large wholesale banks including, Countrywide Mortgage,
Fleet Mortgage, Monument Mortgage of California, National Consumer Services, and
Bank United, among others. The Company maintains an office in the Southeast
Denver metropolitan area and a correspondent office in Colorado Springs. See
"Plan of Operations" below.
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The Company lends to all markets in the mortgage business. However the main
thrust of the Company's business is concentrated in the niche market lending to
borrowers whose credit is less than perfect. This market is known in the
industry as the B & C grade market.
The Company has discovered what it perceives as a great need for this type
of financing and is aggressively pursuing these customers. It appears to the
Company that the future of the B & C grade clientele is not necessarily affected
by changing interest rates but thereby affords a substantial opportunity for the
Company.
(c) Plan of Operations
It is the intention of the Company to pursue financing through this private
placement to secure a position with the Federal Housing Administration (FHA) as
an approved lender. The Company plans to make itself eligible to handle the
transactions associated with FHA qualified financing. The Company currently has
a VA excepted status through several of its affiliated wholesale banking
relations.
During the latter part of 1998, the Company plans to examine the
feasibility of a public offering to expand its operations. No definitive plans
currently exist for a public offering at this time.
The Company will first attempt to establish an effective client lending
base for which it will provide services. The Company plans to utilize the
expertise of its principal officers, Messrs. Gregarek and Burden and Ms.
Kimminau, to develop lending opportunities. Each individual will utilize his
previous contacts in business to develop potential opportunities. Otherwise, the
Company plans to sell its services through Company employees and authorized
representatives. All operational decisions will be made solely by the management
of the Company. The management of the Company has had extensive experience in
the mortgage business. See "Directors, Executive Officers, Promoters and Control
Persons".
The Company has had operational activity and has generated revenues and a
modest profit from time to time but has most recently been marginally
unprofitable. It should be noted, however, that the Company does not have an
extensive history of operations. To the extent that management is unsuccessful
in keeping expenses in line with income, failure to effect the events and goals
listed herein would result in a general failure of the business. This would
cause management to consider liquidation or merger.
The Company was formed to develop the new and emerging markets in the
mortgage banking business, particularly in the area of "B & C" grade lending.
The Company is presently planning to develop and implement full system
applications for the electronic exchange of data in new and existing markets
within the mortgage banking industry. One of the base technologies for these
systems is the Internet system, which can provide information such as changing
interest and bond market rates and other economic indicators.
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The Company plans to take advantage of the emerging market in the U.S. and
around the world created by the Internet. The Company plans to equip its offices
with a network of personal computers, which will allow staff to access e-mail,
the Internet, and a collection of applications designed to optimize the
productivity of the Company's staff. The Company also plans to utilize high
speed modem communications and the most current loan processing software which
interfaces directly with the Fannie Mae System and several credit reporting
software companies. The Company believes that this technology will expedite loan
processing and closings.
In addition, the Company has developed a secure web site, known as
www.mortgage2000.com, which will allow realtors to send loan applications
directly to the Company for processing. In the future, the Company plans to
develop enhancements to the web site to permit realtors to use the site to fill
out loan applications for prospective borrowers, to check the status of a
previously submitted application, and to generally otherwise interact with the
Company during the loan process.
The Company believes that the advance of the on-line industry alone will
have potential for a new and untapped market in the industry of on-line banking
services provided at home. It is the intent of the Company to fully explore and
develop all avenues in the information processing field connected to the banking
industry and its numerous applications as this new system matures in the United
States and through out the world..
The Company's proposed system must be established to operate at maximum
efficiency to control administrative and associated costs. Therefore, the
Company plans to develop a system which will allow for individual
identification, appointment scheduling, credit history records, payment records,
itemized expenses as well as associated fees and payment processing. With all
data stored on the individuals customized electronic record disk formulated by
the Company at the time of processing., the system would also allow the periodic
review of the client's current condition of the loan and offer alternative
solutions to loans that are structured for the short term.
It is the belief of the Company that sophisticated electronics data
exchange systems will be a significant part of the future of mortgage banking
and many various other forms of banking that exist now and the ones to be
created by needs of the future.
The Company also has plans to utilize a Visa card program for its customers
and realtors utilizing the Company's system. The program is planned to provide
the Company's clients and selected brokers with a Visa card at the time of the
closing and funding their loans. The Company would also use this program as a
means of paying individual realtors for generating loan applications using the
Company's Internet web page. The realtors would complete a two page informal
application for their clients and then e-mail that information directly to the
Company's main office for acceptance and preparation of the loan. When the loan
is funded, the Company would transfer a fee to the visa account of the
individual realtor. The fee to the individual realtor has not been specifically
arranged, so the fee may vary in the amount among individual realtors. A future
enhancement to the system would permit brokers to view the status of their VISA
accounts.
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In addition to its office in the Denver Metropolitan area and correspondent
office in Colorado Springs, the Company plans to pursue the opening of other
offices in locations such as Fort Collins, Colorado. Other offices for expansion
would involve the Western United States as well as into markets throughout North
America. No specific plans have been devised at this point for such additional
offices. It is anticipated that these branch offices would function as separate
and independent agencies, with all communications and processing of the loans
conducted by the main office in Denver. However, at present, the Colorado
Springs office operates under an oral agreement as a correspondent facility. The
lessors of the office, who are minority shareholders of the Company, provide the
Company with free space but have the right to broker mortgages on behalf of the
Company. In exchange, the Company receives twenty-five percent of the net
income, after defined expenses, of this operation through April 30, 1998.
Thereafter, the Company will receive ten percent of the net income, after
defined expenses, of this operation.
(d) Markets
The Company's initial marketing plan will be focused completely on
developing a share of the residential mortgage business. As of the date of this
Registration Statement, the Company has made initial efforts toward this
marketing plan. The Company plans, at this point, to utilize the expertise of
its principal officers, Messrs. Gregarek and Burden and Ms. Kimminau, to develop
lending opportunities. Each individual will utilize his previous contacts in
business to develop potential opportunities. Otherwise, the Company plans to
sell its services through Company employees and authorized representatives.
(e) Raw Materials
The use of raw materials is not now material factor in the Company's
operations at the present time.
(f) Customers and Competition
The mortgage banking business is highly competitive, with hundreds of
brokers and wholesalers competing for the same consumer dollar. The Company's
operational activities centers primarily in the mortgage loan origination
business, in which there is a great deal of competition. It is anticipated that
competition will come from a number of sources, many of whom will have greater
resources and experience than the Company. All lenders in the Rocky Mountain
United States region are potential competitors. There can be no guarantee that
the Company will be able to compete successfully over the short or long term.
(g) Employees
Currently, the Company has six employees. The Company's directors and
officers are currently managing the affairs of the Company. The Company plans to
hire employees in the future but has formulated no definite plans at this point.
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(h) Backlog
At December 31, 1997, the Company had no backlogs.
(i) Proprietary Information
The Company owns and has applied for the tradename "Mortgage 2000" and owns
proprietary computer software which it uses in its operations. Otherwise, the
Company has no proprietary information.
(j) Government Regulation
The Company is expected to be subject to material governmental regulation
and approvals customarily incident to the operation of a mortgage company. The
Company will be regulated by applicable Federal and state regulation It will be
the policy of the Company to fully comply with all governmental regulation.
(k) Research and Development
The Company has never spent any amount in research and development
activities.
(l) Environmental Compliance
The Company is not expected to be subject to any material environmental
compliance.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations.
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Results of Operations
The Company has had operational activity and has generated revenues to
date. However, the Company does not have an extensive history of operations and
is marginally unprofitable. The Company's primary activity for the coming fiscal
year will be to internally expand its business by processing increasing amounts
of mortgage banking business. The Company plans to work with its established
contacts and to attempt to develop new contacts to increase its business.
As in the past, the Company plans to concentrate its activities in Colorado
and particularly in the Denver and Colorado Springs Metropolitan areas. As the
Company expands, it will focus next on markets within the Rocky Mountain states.
The Company also plans, as a secondary matter, to search for and to
identify potential acquisition candidates in businesses related to or compatible
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with the Company's core business of mortgage banking. Because the Company has
limited capital, any such acquisition would most likely result in a change of
control of the Company. As of the date of this Registration Statement, the
Company has not engaged in any preliminary efforts intended to identify such
possible potential acquisition candidates and has neither conducted negotiations
nor entered into a letter of intent concerning any such candidates.
The principal criteria for evaluating such acquisitions which the Company
may engage in will be the amount of investment required by the Company, the
degree of risk to the Company, the potential return on investment to the
Company, the Company's expertise in each situation and the expertise and
reliability of the acquiree in any such situation.
Liquidity and Capital Resources
As of the end of the reporting period, the Company had no material cash or
cash equivalents. There was no significant change in working capital during this
fiscal year. In January, 1998, the Company completed a private placement and
raised $100,000, which it plans to utilize in its operations.
As of the date of this Registration Statement, there are no plans,
proposals, arrangements, or understandings with respect to the sale or issuance
of additional securities by the Company. During the latter part of 1998, the
Company plans to examine the feasibility of a public offering to expand its
operations. No definitive plans currently exist for a public offering at this
time.
Management feels that the Company has inadequate working capital to pursue
most of its business opportunities other than to internally expand the
operations of its existing offices or to effect an acquisition with third
parties. The Company's capital requirements for the foreseeable future will be
supplied through internally generated s, if any, and borrowings. The opening of
additional offices will require a substantial infusion of capital, which the
Company feels can only be accomplished by additional equity financing through
either a public or private offering, or both.
The Company does not intend to pay dividends in the foreseeable future.
Item 3. Description of Properties
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The Company's executive offices are located at 6970 South Holly Circle,
#105, Englewood, Colorado 80112. The Company rents this office on a one year
lease at a cost of $1,828 per month from an unaffiliated third party. The
Company also has a correspondent office located in the Colorado Springs area
which it rents at no cost from a minority shareholder of the Company. The
Company also owns office equipment to furnish both offices. The Company owns and
has applied for the tradename "Mortgage 2000" and owns proprietary computer
software which it uses in its operations. Otherwise, the Company owns no
properties.
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Item 4. Security Ownership of Certain Beneficial Owners and Management
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The following sets forth the number of shares of the Registrant's $.0000001
per share par value common stock beneficially owned by (I) each person who, as
of March 10, 1998, was known by the Company to own beneficially more than five
percent (5%) of its common stock; (ii) the individual Directors of the
Registrant and (iii) the Officers and Directors of the Registrant as a group. As
of March 10, 1998, there were 1,149,300 common shares issued and outstanding.
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership (1)(2) Class
- ------------------- --------------------------- -----
J. Dean Burden 525,000 45.68%
6970 South Holly Circle, #105
Englewood, Colorado 80112.
David J. Gregarek 475,000 41.33%
6970 South Holly Circle, #105
Englewood, Colorado 80112.
Michael J. Delaney 50,000 4.35%
6970 South Holly Circle, #105
Englewood, Colorado 80112.
Will Pirkey 25,000 2.18%
6970 South Holly Circle, #105
Englewood, Colorado 80112.
Pat Kimminau 5,000 .436%
6970 South Holly Circle, #105
Englewood, Colorado 80112.
Richard Schreck 5,000 .436%
6970 South Holly Circle, #105
Englewood, Colorado 80112.
Officers and Directors 1,085,000 94.41%
as a Group (6 Persons)
(1) All ownership is beneficial and of record, unless indicated otherwise.
(2) Beneficial owner listed above has sole voting and investment power with
respect to the shares shown, unless otherwise indicated.
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Item 5. Directors, Executive Officers, Promoters and Control Persons.
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The Directors and Executive Officers of the Company, their ages and present
positions held in the Company are as follows:
NAME AGE POSITION HELD
- ---- --- -------------
David J. Gregarek 43 President, Director
Pat Kimminau 53 Executive Vice President, Director of
Compliance, Director
J. Dean Burden 46 Vice President, Director of Operations,
Director
Michael J. Delaney 39 Secretary, Treasurer, Chief Financial
Officer
Richard Schreck 45 Director
Will Pirkey 79 Director
The Company's Directors will serve in such capacity until the next annual
meeting of the Company's shareholders and until their successors have been
elected and qualified. The officers serve at the discretion of the Company's
Directors. There are no family relationships among the Company's officers and
directors, nor are there any arrangements or understandings between any of the
directors or officers of the Company or any other person pursuant to which any
officer or director was or is to be selected as an officer or director.
David J. Gregarek
Mr. Gregarek has served as President and a Director of the Company since
November, 1996. For the past ten years, he has been a private investor. Mr.
Gregarek is the President and founder of Clear Ridge Realty, Inc. of Englewood,
Colorado, which he organized in 1976. Mr. Gregarek has served as an officer and
director of a number of public companies, including as President of JNS
Marketing, Inc. since August, 1997, as President of Parkway Capital, Inc. from
1988 to 1994, and as President of Maui Capital, Inc. from 1988 to 1995. He is
also a principal shareholder of Huntington Capital Corporation, a company which
was formed to acquire other businesses or entities. Mr. Gregarek shall devote
such time as is necessary to carry out his responsibilities as an Officer and
Director of the Company.
Pat Kimminau
Ms. Kimminau has been a Director, Executive Vice President, and Director of
Company for the Company since its inception in November, 1996. She has been
involved in the mortgage industry for the past twenty-eight years. She has
extensive experience and knowledge of the various regulatory requirements and
documentation required under FNMA, FHLMC, GNMA, RESPA, Truth In Lending, ECOA,
HMDA, Fair Lending, FHA, and VA programs for both the origination and servicing
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of mortgages. From 1991 to the present she has been an independent consultant to
a number of mortgage companies. She has assisted these mortgage companies with
the development of quality control procedures, audits of origination loan
servicing, due diligence on lending, and compliance control. Ms. Kimminau has
had experience as a supervisor and manager and was responsible for training and
establishing policies and procedures for mortgage company operations. She has
been invited by FNMA to join the Quality Control Liaison Committee for its
Southwest Region. She shall devote a minimum of twenty hours per week to the
business of the Company.
J. Dean Burden
Mr. Burden has served as a Director, Vice President, and Director of Operations
of the Company since its inception in November 1996. Mr. Burden has been
involved in the mortgage business since 1994. Mr. Burden has worked with
Mortgage Loan specialists, a California based company from September, 1994 to
November, 1996, when he joined the Company. For the past five years, Mr. Burden
has also worked as a private consultant. He was principally a merger and
acquisition specialist. He also designed an on-line computer system which was
eventually sold to Ralston Purina. His background also includes a wide range of
functions connected with the structure and formulation of companies that intend
to become public. He attended Western State College and the University of the
Americas. He is on the Board of Directors of the Southeast Denver-Douglas County
Economic Development Council and a member of the Colorado Mortgage Lenders'
Association. He declared bankruptcy under Chapter 7 of the Bankruptcy Code in
1994. Mr. Burden shall devote a minimum of forty hours per week to the business
of the Company.
Michael J. Delaney
Mr. Delaney has served as Secretary of the Company since August, 1997 and as
Treasurer and Chief Financial Officer since March, 1998. In January, 1998, he
became President, Secretary and sole Director of Boulder Capital Opportunities
II, Inc., a public company. Since 1980, Mr. Delaney has also been the owner and
president of MD Sales, a sales representative and consulting firm for various
companies in product development, sales, and marketing. Mr. Delaney has served
as a Director of Maui Capital Corporation from 1988 to 1995 and of Parkway
Capital Corporation from 1988 to 1994. He will devote such time as is necessary
to carry out his responsibilities as an Officer of the Company.
Richard Schreck
Mr. Schreck has been a Director of the Company since its inception in November,
1996. He is a real estate broker with a wide variety of contacts and financial
knowledge in the real estate business. For the past year, he has been a Vice
President, Brokerage, for Fuller and Company, a real estate brokerage firm in
Denver, Colorado. Prior to that, he was associated with Grubb & Ellis, The Broe
Companies, and Vantex Properties, among others. He has a Bachelors Degree in
Organizational Behavior from Miami University. He is involved in numerous
charitable activities. Mr. Schreck shall devote such time as may be necessary to
carry out his responsibilities as a Director of the Company.
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Dr. Will Pirkey
Dr. Pirkey has been a Director of the Company since its inception in November,
1996. He has practiced medicine for over 40 years in the Denver area and is a
surgeon specializing in ear, nose & throat. He is Board Certified by the
American Board of Otolaryngology. Dr. Pirkey has been a professor at the
University of Colorado Medical School. He received his Bachelors of Arts and
Medical Doctor degrees from the University of Texas. He also has a Masters of
Medical Science from the University of Pennsylvania. He is the past President of
the International Neurosensory Research Foundation. Dr. Pirkey has been
associated with investments for the last 25 years. He shall devote such time as
may be necessary to carry out his responsibilities as a Director of the Company.
The Board of Directors has established no committees. Members of the Board
of Directors receive no additional compensation for their service on the Board
of Directors.
Item 6. Executive Compensation
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The Officers and Directors of the Company have received the common shares
which they own as their sole compensation for being involved with the Company.
Mr. Burden, an Officer and Director of the Company, was paid an aggregate of
$40,104 in total compensation for fiscal year 1997.
Otherwise, none of the Company's officers and/or directors receive any
compensation for their respective services rendered to the Company, nor have
they received such compensation in the past.
The Company has no retirement, pension, sharing, stock option, insurance or
other similar programs but plans to establish such programs in the future,
although there are no definitive plans to do so at this time.
Item 7. Certain Relationships and Related Transactions
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The Company's Colorado Springs office operates under an oral agreement as a
correspondent facility. The lessors of the office, who are minority shareholders
of the Company, provide the Company with free space but have the right to broker
mortgages on behalf of the Company. In exchange, the Company receives
twenty-five percent of the net income, after defined expenses, of this operation
through April 30, 1998. Thereafter, the Company will receive ten percent of the
net income, after defined expenses, of this operation.
The Company has a note payable to J. Dean Burden, an officer and director
of the Company. This note is for the sum of $5,000 at ten percent per annum
interest and was due and payable with accrued interest and principal on February
3, 1998. This note has been paid in full.
Mr. Burden also secured a $25,000 note of the Company to an independent
third party. This note has been paid in full.
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Item 8. Description of Securities.
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General.
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The Company is authorized to issue 50,000,000 Common Shares, $.0000001 par
value per share, and 1,000,000 Preferred Shares, $.0000001 par value per share.
As of the date hereof, 1,149,300 Common Shares are outstanding. No Preferred
Shares are issued or outstanding.
Common Shares.
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The holders of Common Shares are entitled to one vote for each share held
of record by them and may not cumulate votes. This means that the holders of
more than 50% of the shares voting for the election of directors can elect all
of the directors if they choose to do so; and, in such event, the holders of the
remaining shares will not be able elect any person to the Board of Directors.
The present holders of Common Shares of the Company will continue to own enough
Common Shares after the placement to elect the entire Board of Directors. The
holders of Common Shares are entitled to receive dividends when and if declared
by the Board of Directors out of funds legally available therefor, and in the
event of liquidation, dissolution or winding up of the Company, to share ratably
in all assets remaining after payment of liabilities. Holders of Common Shares,
as such, have conversion, preemptive or other subscription rights, and there are
no redemption or sinking fund provisions applicable to the Common Shares.
Preferred Shares
----------------
The Board of Directors has the authority, without further shareholder
approval, to issue up to 1,000,000 shares of Preferred Stock from time to time
in one or more series, to establish the number of shares to be included in each
such series, and to fix the par value, designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations or
restrictions thereof. No Preferred Stock is outstanding at this time.
Dividend Policy
---------------
The Company has never paid a dividend on its Common Shares, and it
currently intends to retain earnings, if any, for use in its business and to
finance future growth. Accordingly, the Company anticipates that no dividends
will be paid to holders of Common Shares in the foreseeable future. Any future
determination as to the distribution of the cash dividends will depend upon the
earnings and financial position of the Company at that time and such other
factors as the Board of Directors may deem appropriate.
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PART II
Item 1. Market for Common Equity and Related Stockholder Matters.
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(a) Principal Market or Markets
The Company's securities have never been listed for trading on any market
and are not quoted at the present time. At the present time, the Company does
not know where secondary trading will eventually be conducted. The place of
trading, to a large extent, will depend upon the eventual size of the Company..
To the extent, however, that trading will be conducted in the over-the-counter
market in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board,"
a shareholder may find it more difficult to dispose of or obtain accurate
quotations as to price of the Company's securities. In addition, The Securities
Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure
and documentation related to the market for penny stock and for trades in any
stock defined as a penny stock.
(b) Approximate Number of Holders of Common Stock
As of the date hereof, a total of 1,149,300 of shares of the Company's
Common Stock were outstanding and the number of holders of record of the
Company's common stock at that date was approximately thirteen. Three of the
Company's shareholders acquired their respective shares in the Company in 1998
at a cash price of $2.50 per share. These shares were issued under Rule 504 of
the Securities Act of 1933, as amended. The remaining shareholders acquired
their shares in 1996 for cash and services at par value. All of these shares
were issued in accordance with the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended, in that these were
private offerings to individuals who were sophisticated investors and received
all pertinent information relative to this investment.
(c) Dividends
Holders of common stock are entitled to receive such dividends as may be
declared by the Company's Board of Directors. No dividends on the common stock
were paid by the Company during the periods reported herein nor does the Company
anticipate paying dividends in the foreseeable future.
(d) The Securities Enforcement and Penny Stock Reform Act of 1990
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure and documentation related to the market for penny stock
and for trades in any stock defined as a penny stock. Unless the Company can
acquire substantial assets and trade at over $5.00 per share on the bid, it is
more likely than not that the Company's securities, for some period of time,
would be defined under that Act as a "penny stock." As a result, those who trade
in the Company's securities may be required to provide additional information
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related to their fitness to trade the Company's shares. Also, there is the
requirement of a broker-dealer, prior to a transaction in a penny stock, to
deliver a standardized risk disclosure document that provides information about
penny stocks and the risks in the penny stock market. Further, a broker-dealer
must provide the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the
transaction, and monthly account statements showing the market value of each
penny stock held in the customer's account. These requirements present a
substantial burden on any person or brokerage firm who plans to trade the
Company's securities and would thereby make it unlikely that any liquid trading
market would ever result in the Company's securities while the provisions of
this Act might be applicable to those securities.
(e) Blue Sky Compliance
The trading of penny stock companies may be restricted by the securities
laws ("Blue Sky" laws) of the several states. Management is aware that a number
of states currently prohibit the unrestricted trading of penny stock companies
absent the availability of exemptions, which are in the discretion of the
states' securities administrators. The effect of these states' laws would be to
limit the trading market, if any, for the shares of the Company and to make
resale of shares acquired by investors more difficult.
Item 2. Legal Proceedings.
- --------------------------
No legal proceedings of a material nature to which the Company is a party
were pending during the reporting period, and the Company knows of no legal
proceedings of a material nature pending or threatened or judgments entered
against any director or officer of the Company in his capacity as such.
Item 3. Changes In and Disagreements With Accountants On Accounting and
- --------------------------------------------------------------------------------
Financial Disclosure.
---------------------
The Company did not have any disagreements on accounting and financial
disclosures with its accounting firm during the reporting period.
Item 4. Recent Sales of Unregistered Securities.
- ------------------------------------------------
The Company has issued the following common stock during the period
commencing in November, 1996 and ending with the date of this Registration
Statement.
The following shares were issued in November, 1996 at a price of par value,
or $.0000001 per share:
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Name Number of Shares
- ---- ----------------
J. Dean Burden 525,000
David J. Gregarek 475,000
Michael J. Delaney 50,000
Will Pirkey 25,000
David Wagner 15,000
Pat Kimminau 5,000
Veronica Brownell 5,000
Richard Schreck 5,000
Carlton L. Pirkey 2,500 (these shares were canceled on
March 6, 1998)
Total 1,107,500
All of the above shares of common stock of the Registrant have been issued
for investment purposes in a "private transaction" and are restricted securities
as defined under the Securities Act of 1933, as amended. These shares may not be
offered for public sale except if registered or pursuant to an exemption from
registration, such as Rule 144. The Company has issued stop transfer orders
concerning the transfer of certificates representing all the common stock issued
and outstanding.
The following shares were issued in January, 1998 at a price of $2.50 per
share:
Name Number of Shares
- ---- ----------------
Sheryl K. Fitzgerald 28,000
Carrie A. Bailey 6,000
Melissa J. Davidson 6,000
Total 40,000
The following shares were issued in February, 1998 at a price of $2.50 per
share:
Name Number of Shares
- ---- ----------------
Marie-Louise Burkybile 800
Connie R. Pettijean 3,500
Total 4,300
The foregoing two groups of shares of common stock of the Registrant have
been issued pursuant to Section 3(b) and Rule 504 of the Securities Act of 1933,
as amended. These shares may only be offered for public sale pursuant to an
applicable exemption from registration.
Item 5. Indemnification of Directors and Officers.
- --------------------------------------------------
The Company's Articles of Incorporation authorize the Board of Directors,
on behalf of the Company and without shareholder action, to exercise all of the
15
<PAGE>
Company's powers of indemnification to the maximum extent permitted under the
applicable statute. Title 7 of the Colorado Revised Statutes, 1986 Replacement
Volume ("CRS"), as amended, permits the Company to indemnify its directors,
officers, employees, fiduciaries, and agents as follows:
Section 7-109-102 of CRS permits a corporation to indemnify such persons
for reasonable expenses in defending against liability incurred in any legal
proceeding if:
(a) The person conducted himself or herself in good faith;
(b) The person reasonably believed:
(1) In the case of conduct in an official capacity with the
corporation, that his or her conduct was in the corporation's best interests;
and
(2) In all other cases, that his or her conduct was at least not
opposed to the corporation's best interests; and
(c) In the case of any criminal proceeding, the person had no reasonable
cause to believe that his or her conduct was unlawful.
A corporation may not indemnify such person under this Section 7-109-102 of CRS:
(a) In connection with a proceeding by or in the right of the corporation
in which such person was adjudged liable to the corporation; or
(b) In connection with any other proceeding charging that such person
derived an improper benefit, whether or not involving action in an official
capacity, in which proceeding such person was adjudged liable on the basis that
he or she derived an improper personal benefit.
Unless limited by the Articles of Incorporation, and there are not such
limitations with respect to the Company, Section 7-109-103 of CRS requires that
the corporation shall indemnify such a person against reasonable expenses who
was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which the person was a party because of his status with the
corporation.
Under Section 7-109-104 of CRS, the corporation may pay reasonable fees in
advance of final disposition of the proceeding if:
(a) Such person furnishes to the corporation a written affirmation of the
such person's good faith belief that he or she has met the Standard of Conduct
described in Section 7-109-102 of CRS;
16
<PAGE>
(b) Such person furnishes the corporation a written undertaking, executed
personally or on person's behalf, to repay the advance if it is ultimately
determined that he or she did not meet the Standard of Conduct in Section
7-109-102 of CRS; and
(c) A determination is made that the facts then known to those making the
determination would not preclude indemnification.
Under Section 7-109-106 of CRS, a corporation may not indemnify such
person, including advanced payments, unless authorized in the specific case
after a determination has been made that indemnification of such person is
permissible in the circumstances because he met the Standard of Conduct under
Section 7-109-102 of CRS and such person has made the specific affirmation and
undertaking required under the statute. The required determinations are to be
made by a majority vote of a quorum of the Board of Directors, utilizing only
directors who are not parties to the proceeding. If a quorum cannot be obtained,
the determination can be made by a majority vote of a committee of the Board,
which consists of at least two directors who are not parties to the proceeding.
If neither a quorum of the Board nor a committee of the Board can be
established, then the determination can be made either by the Shareholders or by
independent legal counsel selected by majority vote of the Board of Directors.
The corporation is required by Section 7-109-110 of CRS to notify the
shareholders in writing of any indemnification of a director with or before
notice of the next shareholders' meeting. Under Section 7-109-105 of CRS, such
person may apply to any court of competent jurisdiction for a determination that
such person is entitled under the statute to be indemnified from reasonable
expenses.
Under Section 7-107(1)(c) of CRS, a corporation may also indemnify and
advance expenses to an officer, employee, fiduciary, or agent who is not a
director to a greater extent than the foregoing indemnification provisions, if
not inconsistent with public policy, and if provided for in the corporation's
bylaw, general or specific action of the Board of Directors, or shareholders, or
contract. Section 7-109-108 of CRS permits the corporation to purchase and
maintain insurance to pay for any indemnification of reasonable expenses as
discussed herein.
The indemnification discussed herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under the Articles of
Incorporation, any Bylaw, 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, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of
heirs, executors, and administrators of such a person.
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
17
<PAGE>
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expense incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
18
<PAGE>
CENTENNIAL BANC SHARES, CORP.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Centennial Banc Shares Corporation, Inc.
Denver, Colorado
We have audited the accompanying balance sheet of Centennial Banc Shares
Corporation as of December 31, 1997 and the related statements of operations,
stockholders' equity, and cash flows for the year then ended. 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.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Centennial Banc Shares
Corporation, Inc., as of December 31, 1997 and the results of their operations
and their cash flows for the year then ended in conformity with generally
accepted accounting principles.
Michael B. Johnson & Co., P.C.
Denver, Colorado
February 24, 1998
<PAGE>
CENTENNIAL BANC SHARES CORPORATION
BALANCE SHEET
DECEMBER 31, 1997
ASSETS:
Current Assets:
Cash $ 111,093
Notes Receivables 4,700
---------
Total Current Assets: 115,793
Property & Equipment:
Net of accumlated depreciation of $200 3,274
Other Assets:
Deposit 25,000
---------
TOTAL ASSETS: $ 144,067
=========
LIABILITIES & STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts Payable $ 524
Accured Expenses 3,730
Notes Payable 34,382
---------
Total Current Liabilities 38,636
Stockholders' Equity:
Preferred stock, $.0000001 Par Value
1,000,000 Shares Authorized, None Issued
Common stock, $.0000001 Par Value
50,000,000 Shares Authorized, 1,151,800
Issued and outstanding 1
Additional Paid-in Capital 108,510
Retained Earnings (deficit) (3,080)
---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY: $ 144,067
=========
The accompanying notes are an integral part of the financial statements.
<PAGE>
CENTENNAIL BANC SHARES CORPORATION
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
REVENUE:
Brokerage Fees $ 145,647
Misc.Income 367
---------
Total Revenue 146,014
OPERATING EXPENSES:
Salary & Wages 22,308
Payroll Taxes 1,975
Advertising 2,145
Marketing 5,829
Telemarketing 2,666
Contract Labor 73,813
Office Expenses 7,234
Professional Fees 5,722
Maintainance & Repairs 280
Office Supplies 4,014
Equipment Lease 1,121
Rent 3,250
Telephone 3,064
Dues & Subscriptions 1,600
Travel 852
Meals & Entertainment 3,603
Postage 352
Printing 1,083
Appraisal Fees 3,200
Credit Reports 1,206
Processing Fees 1,159
Bank Charges 474
Interest Expense 320
Licenses 1,240
Misc. Expense 384
Depreciation Expense 200
---------
Total Operating Expenses 149,094
---------
NET DEFICIT $ (3,080)
=========
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
CENTENNIAL BANC SHARES CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
DECEMBER 31, 1997
COMMON STOCKS Additional Retained Total
----------------------- Paid-in Earnings Stockholders'
Shares Amount Capital (Deficit) Equity
------ ------ ------- --------- ------
<S> <C> <C> <C> <C> <C>
Issuance of Stock for Cash & Services 1,151,800 1 108,510 -- 108,511
Net Deficit 12/31/97 -- -- -- (3,080) (3,080)
--------- --------- --------- --------- ---------
Balance December 31, 1997 1,151,800 1 108,510 (3,080) 105,431
========= ========= ========= ========= =========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
CENTENNIAL BANC SHARES CORPORATION
STATEMENT OF CASH FLOW
FOR YEAR ENDED DECEMBER 31, 1997
CASH FLOW FROM OPERATING ACTIVITIES
Net Income (Loss) $ (3,080)
Depreciation 200
CHANGES IN ASSETS & LIABILITIES:
Notes Receivable (4,700)
Deposits (25,000)
Accounts Payable 524
Notes Payable 34,382
Accured Expenses 3,730
---------
Net Cash Provided by Operating Activities 6,056
CASH FLOWS USED FOR INVESTING ACTIVITIES
Capital Expenditures (3,474)
---------
Net Cash Used for Investing Activities (3,474)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Ordinary Shares 108,511
---------
Net Cash Provided by Financing 108,511
Net Increase In Cash & Cash Equivalents 111,093
Cash & Cash Equivalents at Beginning of Period --
---------
Cash & Cash Equivalents at End of Period $ 111,093
=========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest 50
Income Taxes --
The accompanying notes are an integral part of the financial statements.
<PAGE>
CENTENNIAL BANC SHARES, CORP.
Notes to Financial Statements
December 31, 1997
Note 1 - Organization and Summary of Significant Accounting Policies:
------------------------------------------------------------
Organization:
- -------------
On November 8, 1996, Centennial Banc Shares, Corp. (the Company) was
incorporated under the laws of Colorado. The Company's fiscal year end is
December 31.
Basis of Presentation:
- ----------------------
The Company is primarily engaged in brokeraging mortgages. The authorized
capital stock of the corporation is 50,000,000 shares of common stock $.0000001
and 1,000,000 shares of preferred stock at $.0000001 par value. No preferred
stock has been issued.
Cash and Cash Equivalents:
- --------------------------
The Company considers all highly-liquid debt instruments, purchased with an
original maturity of three months, to be cash equivalents.
Property and Equipment:
- -----------------------
Property and equipment is stated at cost. The cost of ordinary maintenance and
repairs is charged to operations while renewals and replacements are
capitalized. Depreciation is computed on the straight -line method over the
following estimated useful lives:
Furniture and fixtures 5 years
Notes Payable:
- --------------
All notes payable are due within the year; therefore, are classified as current
liabilities.
Revenue Recognition:
- --------------------
Revenue is recognized when earned and expenses are recognized when they occur.
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 of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Note 2 - Federal Income Taxes:
---------------------
The Company adopted statement of financial Accounting Standards No. 109,
Accounting For Income Taxes. FAS 109 requires the recognition of deferred tax
liabilities and assets for the anticipated future tax effects of temporary
differences that arise as a result of differences in the carrying amounts and
tax bases of assets and liabilities. There was no material effect on the
financial statements as a result of adopting FAS 109.
<PAGE>
Note 3 - Notes Payable
--------------
The following is a summary of notes payable.
Note payable to Peggie Beattie payable in a lump sum due
April 1, 1998. Interest rate is ten percent.
Note is secured by an officer and director of the corporation. $25,000
Note payable to Jerrold Burden, officer and director of the
corporation. Payable in a lump sum due February 3, 1998.
Interest rate is ten percent. This note is unsecured. 5,000
Note payable to Metrum Commercial Credit Union. Interest
rate is six percent, and the note is secured by shares in
the credit union. Payments of interest and principal are due
monthly. 4,382
-------
Total: $34,382
=======
Note 4 - Related Party Transactions
--------------------------
Jerrold Burden, an officer and director of the corporation has loaned and
secured loans for the corporation. During the organizational meeting of the
corporation 1,107.500 shares were issued to officers and directors of the
company at par value for past services rendered.
<PAGE>
PART III
Item 1. Index to Exhibits.
- --------------------------
Exhibit
Number Description
------ -----------
3A Articles of Incorporation
3B Bylaws
Item 2. Description of Exhibits
- -------------------------------
Not Applicable
19
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Centennial Banc Share Corp..
Dated: 3-10-98 By: /s/ David J. Gregarek
---------------------------------
David J. Gregarek
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Dated: 3-10-98 By: /s/ Michael J. Delaney
--------------------------------
Michael J. Delaney
Chief Financial and Accounting
Officer and Director
Dated: 3-10-98 By: /s/ Pat Kimminau
--------------------------------
Pat Kimminau
Director
Dated: 3-10-98 By: /s/ J. Dean Burden
--------------------------------
J. Dean Burden
Director
Dated: 3-10-98 By: /s/ Richard Shreck
--------------------------------
Richard Shreck
Director
Dated: 3-10-98 By: /s/ Will Pirkey
--------------------------------
Will Pirkey
Director
Mail to : Secretary of State
Corporations Section
Please include a typed 1560 Broadway, Suite 200
self-addressed envelope Denver, CO 80202
(303) 894-2251
MUST BE TYPED Fax (303) 894-2242
FILING FEE: $50.00
MUST SUBMIT TWO COPIES
---
ARTICLES OF INCORPORATION
Corporation Name Centennial Banc Share Corp.
----------------------------------------------------------------
Principal Business Address 5675 DTC Blvd. Suite 110, Englewood, Colorado 80111
------------------------------------------------------
(Include City, State, Zip)
Cumulative voting shares of stock is authorized. Yes [ ] No [ X ]
If duration is less than perpetual enter number of years perpetual
------------------------
Preemptive rights are granted to shareholders. Yes [ ] No [ X ]
Stock information: (If additional space is needed, continue on a separate sheet
of paper.)
Stock Class common Authorized Shares 50,000,000 Par Value .0000001
--------------- ------------------ ----------
Stock Class preferred Authorized Shares 1,000,000 Par Value .0000001
--------------- ------------------ ----------
The name of the initial registered agent and the address of the registered
office is: (If another corporation, use last name space)
Last Name Burden First & Middle Name Jerrold Dean
------------------------- ---------------------------
Street Address 5675 DTC Blvd. Englewood, Colorado Suite 110 80111
------------------------------------------------------------------
(Include City, State, Zip)
The undersigned consents to the appointment as the initial registered agent.
Signature of Registered Agent /s/ Jerrold D. Burden
---------------------------------------------------
These articles are to have a delayed effective date of:
-------------------------
Incorporators: Names and addresses: (If more than two, continue on a separate
sheet of paper.
NAME ADDRESS
Jerrold D. Burden 5675 DCT Blvd. Englewood, CO, ST. 110 80111
- -------------------------------- ---------------------------------------------
Incorporators who are natural persons must be 18 years or more. The undersigned,
acting as incorporator(s) of a corporation under the Colorado Business
Corporation Act, adopt the above Articles of Incorporation.
Signature /s/ Jerrold D. Burden Signature
------------------------------- ---------------------------
BYLAWS
OF
CENTENNIAL BANC SHARE CORP.
as of November 9, 1998
- --------------------------------------------------------------------------------
ARTICLE I
Offices
The principal office of the Corporation shall be located at such places
within or without the State of Colorado as the Board of Directors may from time
to time establish.
ARTICLE II
Registered Office and Agent
The registered office of the Corporation in Colorado shall be located at
7535 East Hampden Avenue, Suite 401, Denver, Colorado 80231 and the registered
agent shall be J. Dean Burden. The Board of Directors may, by appropriate
resolution from time to time, change the registered office and/or agent.
ARTICLE III
Meetings of Stockholders
Section 1. Annual Meetings. The annual meeting of the Stockholders for the
election of Directors and for the transaction of such other business as may
properly come before such meeting shall be held at such time and date as the
Board of Directors shall designate from time to time by resolution duly adopted.
Section 2. Special Meetings. A special meeting of the Stockholders may be
called at any time by the President or the Board of Directors, and shall be
1
<PAGE>
called by the President upon the written request of Stockholders of record
holding in the aggregate twenty per cent (20%) or more of the outstanding shares
of stock of the Corporation entitled to vote, such written request to state the
purpose or purposes of the meeting and to be delivered to the President.
Section 3. Place of Meetings. All meetings of the Stockholders shall be
held at the principal office of the Corporation or at such other place, within
or without the State of Colorado, as shall be determined from time to time by
the Board of Directors or the Stockholders of the Corporation.
Section 4. Change in Time or Place of Meetings. The time and place
specified in this Article III for annual meetings shall not be changed within
thirty (30) days next before the day on which such meeting is to be held. A
notice of any such change shall be given to each Stockholder at least twenty
(20) days before the meeting, in person or by letter mailed to his last known
post office address.
Section 5. Notice of Meetings. Written notice, stating the place, day and
hour of the meeting, and in the case of a special meeting, the purposes for
which the meeting is called, shall be given by or under the direction of the
President or Secretary at least ten (10) days but not more than fifty (50) days
before the date fixed for such meeting; except that if the number of the
authorized shares of the Corporation are to be increased, at least thirty (30)
days' notice shall be given. Notice shall be given to each Stockholder entitled
to vote at such meeting, of record at the close of business on the day fixed by
the Board of Directors as a record date for the determination of the
Stockholders entitled to vote at such meeting, or if no such date has been
fixed, of record at the close of business on the day next preceding the day on
which notice is given. Notice shall be in writing and shall be delivered to each
Stockholder in person or sent by United States Mail, postage prepaid, addressed
as set forth on the books of the Corporation. A waiver of such notice, in
writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent to such notice.
Except as otherwise required by statute, notice of any adjourned meeting of the
Stockholders shall not be required.
2
<PAGE>
Section 6. Quorum. Except as may otherwise be required by statute, the
presence at any meeting, in person or by proxy, of the holders of record of a
majority of the shares then issued and outstanding and entitled to vote shall be
necessary and sufficient to constitute a quorum for the transaction of business.
In the absence of a quorum, a majority in interest of the Stockholders entitled
to vote, present in person or by proxy, or, if no Stockholder entitled to vote
is present in person or by proxy, any Officer entitled to preside or act as
secretary of such meeting, may adjourn the meeting from time to time for a
period not exceeding sixty (60) days in any one case. At any such adjourned
meeting at which a quorum may be present, any business may be transacted which
might have been transacted at the meeting as originally called. The Stockholders
present at a duly organized meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough Stockholders to leave less
than a quorum.
Section 7. Voting. Except as may otherwise be provided by statute or these
Bylaws, including the provisions of Section 4 of Article VIII hereof, each
Stockholder shall at every meeting of the Stockholders be entitled to one (1)
vote, in person or by proxy, for each share of the voting capital stock held by
such Stockholder. However, no proxy shall be voted on after eleven (11) months
from its date, unless the proxy provides for a longer period. At all meetings of
the Stockholders, except as may otherwise be required by statute, the Articles
of Incorporation of this Corporation, or these Bylaws, if a quorum is present,
the affirmative vote of the majority of the shares represented at the meeting
and entitled to vote on the subject matter shall be the act of the Stockholders.
Persons holding stock in a fiduciary capacity shall be entitled to vote the
shares so held, and persons whose stock is pledged shall be entitled to vote,
unless in the transfer by the pledgor on the books of the Corporation he shall
have expressly empowered the pledgee to vote thereon, in which case only the
pledgee or his proxy may represent said stock and vote thereon.
Shares of the capital stock of the Corporation belonging to the Corporation
shall not be voted directly or indirectly.
3
<PAGE>
Section 8. Consent of Stockholders in Lieu of Meeting. Whenever the vote of
Stockholders at a meeting thereof is required or permitted to be taken in
connection with any corporate action, by any provision of statute, these Bylaws,
or the Articles of Incorporation, the meeting and vote of Stockholders may be
dispensed with if all the Stockholders who would have been entitled to vote upon
the action if such meeting were held shall consent in writing to such corporate
action being taken.
Section 9. Telephonic Meeting. Any meeting held under this Article III may
be held by telephone, in accordance with the provisions of the Colorado Business
Corporation Act.
Section 10. List of Stockholders Entitled to Vote. The Officer who has
charge of the stock ledger of the Corporation shall prepare and make, at least
ten (10) days before every annual meeting, a complete list of the Stockholders
entitled to vote at such meeting, arranged in alphabetical order and showing the
address of each Stockholder and the number of shares registered in the name of
each Stockholder. Such list shall be open to the examination of any Stockholder
during ordinary business hours, for a period of at least ten (10) days prior to
election, either at a place within the city, town or village where the election
is to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where said meeting is to be held. The list
shall be produced and kept at the time and place of election during the whole
time thereof and be subject to the inspection of any Stockholder who may be
present.
ARTICLE IV
Board of Directors
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by the Board of Directors, except as otherwise provided by
statute, the Articles of Incorporation of the Corporation, or these Bylaws.
4
<PAGE>
Section 2. Number and Qualifications. The Board of Directors shall consist
of at least three (3) members, and not more than seven (7) members, as shall be
designated by the Board of Directors from time to time, and in the absence of
such designation, the Board of Directors shall consist of three (3) members.
This number may be changed from time to time by resolution of the Board of
Directors. However, no such change shall have the effect of reducing the number
of members below three (3). Directors need not be residents of the State of
Colorado or Stockholders of the Corporation. Directors shall be natural persons
of the age of eighteen (18) years or older.
Section 3. Election and Term of Office. Members of the initial Board of
Directors of the Corporation shall hold office until the first annual meeting of
Stockholders. At the first annual meeting of Stockholders, and at each annual
meeting thereafter, the Stockholders shall elect Directors to hold office until
the next succeeding annual meeting. Each Director shall hold office until his
successor is duly elected and qualified, unless sooner displaced. Election of
Directors need not be by ballot.
Section 4. Compensation. The Board of Directors may provide by resolution
that the Corporation shall allow a fixed sum and reimbursement of expenses for
attendance at meetings of the Board of Directors and for other services rendered
on behalf of the Corporation. Any Director of the Corporation may also serve the
Corporation in any other capacity, and receive compensation therefor in any
form, as the same may be determined by the Board in accordance with these
Bylaws.
Section 5. Removals and Resignations. Except as may otherwise be provided
by statute, the Stockholders may, at any special meeting called for the purpose,
by a vote of the holders of the majority of the shares then entitled to vote at
an election of Directors, remove any or all Directors from office, with or
without cause.
A Director may resign at any time by giving written notice to the Board of
Directors, the President or the Secretary of the Corporation. The resignation
shall take effect immediately upon the receipt of the notice, or at any later
period of time specified therein. The acceptance of such resignation shall not
be necessary to make it effective, unless the resignation requires acceptance
for it to be effective.
5
<PAGE>
Section 6. Vacancies. Any vacancy occurring in the office of a Director,
whether by reason of an increase in the number of directorships or otherwise,
may be filled by a majority of the Directors then in office, though less than a
quorum. A Director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office, unless sooner displaced.
When one or more Directors resign from the Board, effective at a future
date, a majority of the Directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective.
Each Director so chosen shall hold office as herein provided in the filling of
other vacancies.
Section 7. Executive Committee. By resolution adopted by a majority of the
Board of Directors, the Board may designate one or more committees, including an
Executive Committee, each consisting of one (1) or more Directors. The Board of
Directors may designate one (1) or more Directors as alternate members of any
such committee, who may replace any absent or disqualified member at any meeting
of such committee. Any such committee, to the extent provided in the resolution
and except as may otherwise be provided by statute, shall have and may exercise
the powers of the Board of Directors in the management of the business and
affairs of the Corporation and may authorize the seal of the Corporation to be
affixed to all papers which may require the same. The designation of such
committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed
upon it or him by law. If there be more than two (2) members on such committee,
a majority of any such committee may determine its action and may fix the time
and place of its meetings, unless provided otherwise by the Board. If there be
only two (2) members, unanimity of action shall be required. Committee action
may be by way of a written consent signed by all committee members. The Board
6
<PAGE>
shall have the power at any time to fill vacancies on committees, to discharge
or abolish any such committee, and to change the size of any such committee.
Except as otherwise prescribed by the Board of Directors, each committee
may adopt such rules and regulations governing its proceedings, quorum, and
manner of acting as it shall deem proper and desirable.
Each such committee shall keep a written record of its acts and proceedings
and shall submit such record to the Board of Directors. Failure to submit such
record, or failure of the Board to approve any action indicated therein will
not, however, invalidate such action to the extent it has been carried out by
the Corporation prior to the time the record of such action was, or should have
been, submitted to the Board of Directors as herein provided.
ARTICLE V
Meetings of Board of Directors
Section 1. Annual Meetings. The Board of Directors shall meet each year
immediately after the annual meeting of the Stockholders for the purpose of
organization, election of Officers, and consideration of any other business that
may properly be brought before the meeting. No notice of any kind to either old
or new members of the Board of Directors for such annual meeting shall be
necessary.
Section 2. Regular Meetings. The Board of Directors from time to time may
provide by resolution for the holding of regular meetings and fix the time and
place of such meetings. Regular meetings may be held within or without the State
of Colorado. The Board need not give notice of regular meetings provided that
the Board promptly sends notice of any change in the time or place of such
meetings to each Director not present at the meeting at which such change was
made.
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Section 3. Special Meetings. The Board may hold special meetings of the
Board of Directors at any place, either within or without the State of Colorado,
at any time when called by the President, or two or more Directors. Notice of
the time and place thereof shall be given to and received by each Director at
least three (3) days before the meeting. A waiver of such notice in writing,
signed by the person or persons entitled to said notice, either before or after
the time stated therein, shall be deemed equivalent to such notice. Notice of
any adjourned special meeting of the Board of Directors need not given.
Section 4. Quorum. The presence, at any meeting, of a majority of the total
number of Directors shall be necessary and sufficient to constitute a quorum for
the transaction of business. Except as otherwise required by statute, the act of
a majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors; however, if only one (1) Director is
present, unanimity of action shall be required. In the absence of a quorum, a
majority of the Directors present at the time and place of any meeting may
adjourn such meeting from time to time until a quorum is present.
Section 5. Consent of Directors in Lieu of Meeting. Unless otherwise
restricted by statute, the Board may take any action required or permitted to be
taken at any meeting of the Board of Directors without a meeting, if a written
consent thereto is signed by all members of the Board, and such written consent
is filed with the minutes of proceedings of the Board.
Section 6. Telephonic Meeting. Any meeting held under this Article V may be
held by telephone, in accordance with the provisions of the Colorado Business
Corporation Act.
Section 7. Attendance Constitutes Waiver. Attendance of a Director at a
meeting constitutes a waiver of any notice to which the Director may otherwise
have been entitled, except where a Director attends a meeting for the express
purpose of objecting the transaction of any business because the meeting is not
lawfully called or convened.
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ARTICLE VI
Officers
Section 1. Number. The Corporation shall have a President, one or more Vice
Presidents as the Board may from time to time elect, a Secretary and a
Treasurer, and such other Officers and Agents as may be deemed necessary. One
person may hold any two offices except the offices of President and Secretary.
Section 2. Election, Term of Office and Qualifications. The Board shall
choose the Officers specifically designated in Section 1 of this Article VI at
the annual meeting of the Board of Directors and such Officers shall hold office
until their successors are chosen and qualified, unless sooner displaced.
Officers need not be Directors of the Corporation.
Section 3. Subordinate Officers. The Board of Directors, from time to time,
may appoint other Officers and Agents, including one or more Assistant
Secretaries and one or more Assistant Treasurers, each of whom shall hold office
for such period, and each of whom shall have such authority and perform such
duties as are provided in these Bylaws or as the Board of Directors from time to
time may determine. The Board of Directors may delegate to any Officer the power
to appoint any such subordinate Officers and Agents and to prescribe their
respective authorities and duties.
Section 4. Removals and Resignations. The Board of Directors may, by vote
of a majority of their entire number, remove from office any Officer or Agent of
the Corporation, appointed by the Board of Directors.
Any Officer may resign at any time by giving written notice to the Board of
Directors. The resignation shall take effect immediately upon the receipt of the
notice, or any later period of time specified therein. The acceptance of such
resignation shall not be necessary to make it effective, unless the resignation
requires acceptance for it to be effective.
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Section 5. Vacancies. Whenever any vacancy shall occur in any office by
death, resignation, removal, or otherwise, it shall be filled for the unexpired
portion of the term in the manner prescribed by these Bylaws for the regular
election or appointment to such office, at any meeting of Directors.
Section 6. The President. The President shall be the chief executive
officer of the Corporation and, subject to the direction and under the
supervision of the Board of Directors, shall have general charge of the
business, affairs and property of the Corporation, and shall have control over
its Officers, Agents and Employees. The President shall preside at all meetings
of the Stockholders and of the Board of Directors at which he is present. The
President shall do and perform such other duties and may exercise such other
powers as these Bylaws or the Board of Directors from time to time may assign to
him.
Section 7. The Vice President. At the request of the President or in the
event of his absence or disability, the Vice President, or in case there shall
be more than one Vice President, the Vice President designated by the President,
or in the absence of such designation, the Vice President designated by the
Board of Directors, shall perform all the duties of the President, and when so
acting, shall have all the powers of, and be subject to all the restrictions
upon, the President. Any Vice President shall perform such other duties and may
exercise such her powers as from time to time these Bylaws or by the Board of
Directors or the President be assign to him.
Section 8. The Secretary. The Secretary shall:
a. record all the proceedings of the meetings of the Corporation and
Directors in a book to be kept for that purpose;
b. have charge of the stock ledger (which may, however, be kept by any
transfer agent or agents of the Corporation under the direction of the
Secretary), an original or duplicate of which shall be kept at the
principal office or place of business of the Corporation in the State
of Colorado;
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c. see that all notices are duly and properly given;
d. be custodian of the records of the Corporation and the Board of
Directors, and the and of the seal of the Corporation, and see that
the seal is affixed to all stock certificates prior to their issuance
and to all documents for which the Corporation has authorized
execution on its behalf under its seal;
e. see that all books, reports, statements, certificates, and other
documents and records required by law to be kept or filed are properly
kept or filed;
f. in general, perform all duties and have all powers incident to the
office of Secretary, and perform such other duties and have such other
powers as these Bylaws, the Board of Directors or the President from
time to time may assign to him; and
g. prepare and make, at least ten (10) days before every election of
Directors, a complete list of the Stockholders entitled to vote at
said election, arranged in alphabetical order.
Section 9. The Treasurer. The Treasurer shall:
a. have supervision over the funds, securities, receipts and
disbursements of the Corporation;
b. cause all moneys and other valuable effects of the Corporation to be
deposited in its name and to its credit, in such depositories as the
Board of Directors or, pursuant to authority conferred by the Board of
Directors, its designee shall select;
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c. cause the funds of the Corporation to be disbursed by checks or drafts
upon the authorized depositaries of the Corporation, when such
disbursements shall have been duly authorized;
d. cause proper vouchers for all moneys disbursed to be taken and
preserved;
e. cause correct books of accounts of all its business and transactions
to be kept at the principal office of the Corporation;
f. render an account of the financial condition of the Corporation and of
his transactions as Treasurer to the President or the Board of
Directors, whenever requested;
g. be empowered to require from the Officers or Agents of the Corporation
reports or statements giving such information as he may desire with
respect to any and all financial transactions of the Corporation; and
h. in general, perform all duties and have all powers incident to the
office of Treasurer and perform such other duties and have such other
powers as from time to time may be assigned to him by these Bylaws or
by the Board of Directors or the President.
Section 10. Salaries. The Board of Directors shall from time to time fix
the salaries of the Officers of the Corporation. The Board of Directors may
delegate to any person the power to fix the salaries or other compensation of
any Officers or Agents appointed, in accordance with the provisions of Section 3
of this Article VI. No Officer shall be prevented from receiving such salary by
reason of the fact that he is also a Director of the Corporation. Nothing
contained in this Bylaw shall be construed so as to obligate the Corporation to
pay any Officer a salary, which is within the sole discretion of the Board of
Directors.
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Section 11. Surety Bond. The Board of Directors may in its discretion
secure the fidelity of any or all of the Officers of the Corporation by bond or
otherwise.
ARTICLE VII
Execution of Instruments
Section 1. Checks, Drafts, Etc. The President and the Secretary or
Treasurer shall sign all checks, drafts, notes, bonds, bills of exchange and
orders for the payment of money of the Corporation, and all assignments or
endorsements of stock certificates, registered bonds or other securities, owned
by the Corporation, unless otherwise directed by the Board of Directors, or
unless otherwise required by law. The Board of Directors may, however, authorize
any Officer to sign any of such instruments for and on behalf of the Corporation
without necessity of countersignature, and may designate Officers or Employees
of the Corporation other than those named above who may, in the name of the
Corporation, sign such instruments.
Section 2. Execution of Instruments Generally. Subject always to the
specific direction of the Board of Directors, the President shall execute all
deeds and instruments of indebtedness made by the Corporation and all other
written contracts and agreements to which the Corporation shall be a party, in
its name, attested by the Secretary. The Secretary, when necessary required,
shall affix the corporate seal thereto.
Section 3. Proxies. The President and the Secretary or an Assistant
Secretary of the Corporation or by any other person or persons duly authorized
by the Board of Directors may execute and deliver proxies to vote with respect
to shares of stock of other corporations owned by or standing in the name of the
Corporation from time to time on behalf of the Corporation.
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ARTICLE VIII
Capital Stock
Section 1. Certificates of Stock. Every holder of stock in the Corporation
shall be entitled to have a certificate, signed in the name of the Corporation
by the President and by the Secretary of the Corporation, certifying the number
of shares owned by that person in the Corporation.
Certificates of stock shall be in such form as shall, in conformity to law,
be prescribed from time to time by the Board of Directors.
Section 2. Transfer of Stock. Shares of stock of the Corporation shall only
be transferred on the books of the Corporation by the holder of record thereof
or by his attorney duly authorized in writing, upon surrender to the Corporation
of the certificates for such shares endorsed by the appropriate person or
persons, with such evidence of the authenticity of such endorsement, transfer,
authorization and other matters as the Corporation may reasonably require.
Surrendered certificates shall be canceled and shall be attached to their proper
stubs in the stock certificate book.
Section 3. Rights of Corporation with Respect to Registered Owners. Prior
to the surrender to the Corporation of the certificates for shares of stock with
a request to record the transfer of such shares, the Corporation may treat the
registered owner as the person entitled to receive dividends, to vote, to
receive notifications, and otherwise to exercise all the rights and powers of an
owner.
Section 4. Closing Stock Transfer Book. The Board of Directors may close
the Stock Transfer Book of the Corporation for a period not exceeding fifty (50)
days preceding the date of any meeting of Stockholders, the date for payment of
any dividend, the date for the allotment of rights, the date when any change,
conversion or exchange of capital stock shall go into effect or for a period of
not exceeding fifty (50) days in connection with obtaining the consent of
Stockholders for any purpose. However, in lieu of closing the Stock Transfer
Book, the Board of Directors may in advance fix a date, not exceeding fifty (50)
days preceding the date of any meeting of Stockholders, the date for the payment
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of any dividend, the date for the allotment of rights, the date when any change
or conversion or exchange of capital stock shall go into effect, or a date in
connection with obtaining such consent, as a record date for the determination
of the Stockholders entitled to notice of, and to vote at, any such meeting and
any adjournment thereof, or entitled to receive payment of any such dividend, or
to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, or to give such consent.
In such case such Stockholders of record on the date so fixed, and only such
Stockholders shall be entitled to such notice of, and to vote at, such meeting
and any adjournment thereof, or to receive payment of such dividend, or to
receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid.
Section 5. Lost, Destroyed and Stolen Certificates. The Corporation may
issue a new certificate of shares of stock in the place of any certificate
theretofore issued and alleged to have been lost, destroyed or stolen. However,
the Board of Directors may require the owner of such lost, destroyed or stolen
certificate or his legal representative, to: (a) request a new certificate
before the Corporation has notice that the shares have been acquired by a bona
fide purchaser; (b) furnish an affidavit as to such loss, theft or destruction;
(c) file with the Corporation a sufficient indemnity bond; or (d) satisfy such
other reasonable requirements, including evidence of such loss, destruction, or
theft as may be imposed by the Corporation.
ARTICLE IX
Dividends
Section 1. Sources of Dividends. The Directors of the Corporation, subject
to the Colorado Business Corporation Act, may declare and pay dividends upon the
shares of the capital stock of the Corporation.
Section 2. Reserves. Before the payment of any dividend, the Directors of
the Corporation may set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose, and the
Directors may abolish any such reserve in the manner in which it was created.
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Section 3. Reliance on Corporate Records. A Director in relying in good
faith upon the books of account of the Corporation or statements prepared by any
of its officials as to the value and amount of the assets, liabilities, and net
profits of the Corporation, or any other facts pertinent to the existence and
amount of surplus or other funds from which dividends might properly be declared
and paid shall be fully protected.
Section 4. Manner of Payment. Dividends may be paid in cash, in property,
or in shares of the capital stock of the Corporation.
ARTICLE X
Seal and Fiscal Year
Section 1. Seal. The corporate seal, subject to alteration by the Board of
Directors, shall be in the form of a circle, shall bear the name of the
Corporation, and shall indicate its formation under the laws of the State of
Colorado and the year of incorporation. Such seal may be used by causing it or a
facsimile thereof to be impressed, affixed, or otherwise reproduced.
Section 2. Fiscal Year. The Board of Directors shall, in its sole
discretion, designate a fiscal year for the Corporation.
ARTICLE XI
Amendments
Except as may otherwise be provided herein, a majority vote of the whole
Board of Directors at any meeting of the Board shall be sufficient to amend or
repeal these Bylaws.
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ARTICLE XII
Indemnification of Officers and Directors
Section 1. Exculpation. No Director or Officer of the Corporation shall be
liable for the acts, defaults, or omissions of any other Director or Officer, or
for any loss sustained by the Corporation, unless the same has resulted from his
own willful misconduct, willful neglect, or gross negligence.
Section 2. Indemnification. Each Director and Officer of the Corporation
and each person who shall serve at the Corporation's request as a director or
officer of another corporation in which the Corporation owns shares of capital
stock or of which it is a creditor shall be indemnified by the Corporation
against all reasonable costs, expenses and liabilities (including reasonable
attorneys' fees) actually and necessarily incurred by or imposed upon him in
connection with, or resulting from any claim, action, suit, proceeding,
investigation, or inquiry of whatever nature in which he may be involved as a
party or otherwise by reason of his being or having been a Director or Officer
of the Corporation or such director or officer of such other corporation,
whether or not he continues to be a Director or Officer of the Corporation or a
director or officer of such other corporation, at the time of the incurring or
imposition of such costs, expenses or liabilities, except in relation to matters
as to which he shall be finally adjudged in such action, suit, proceeding,
investigation, or inquiry to be liable for willful misconduct, willful neglect,
or gross negligence toward or on behalf of the Corporation in the performance of
his duties as such Director or Officer of the Corporation or as such director or
officer of such other corporation. As to whether or not a Director or Officer
was liable by reason of willful misconduct, willful neglect, or gross negligence
toward or on behalf of the Corporation in the performance of his duties as such
Director or Officer of the Corporation or as such director or officer of such
other corporation, in the absence of such final adjudication of the existence of
such liability, the Board of Directors and each Director and Officer may
conclusively rely upon an opinion of independent legal counsel selected by or in
the manner designated by the Board of Directors. The foregoing right to
indemnification shall be in addition to and not in limitation of all other
rights which such person may be entitled as a matter of law, and shall inure to
the benefit of the legal representatives of such person.
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Section 3. Liability Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation or 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, association, 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 he is indemnified against such
liability by this Article XII.
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