UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A-1
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
BIOFILTRATION SYSTEMS, INC.
(Name of Small Business Issuer in its charter)
Florida 65-0382549
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
2341 Porter Lake Drive, Suite 101, Sarasota, Florida 34240
(Address of principal executive offices) (zip code)
Issuer's telephone number: (941) 343-9300
Securities to be registered under Section 12(g) of the Act:
Title of each class to Name of each exchange on which each class is to
be so registered be registered
- ------------------------- -----------------------------------------------
Common OTC Bulletin Board
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
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INTRODUCTORY STATEMENT
BioFiltration Systems, Inc. has elected to file this Form 10-SB registration
statement on a voluntary basis in order to become a reporting company under the
Securities Act of 1934. The primary purpose for this is that the Company intends
to be listed for trading on the OTC Electronic Bulletin Board. Under the current
NASD rules, in order to become listed on the OTC Electronic Bulletin Board, a
company now must be a reporting company under the Securities Act of 1934.
This registration statement, including the information that may be incorporated
by reference, contains forward-looking statements including, among other items,
statements regarding the Company's business and growth strategies and
anticipated trends in the Company's business and demographics. These
forward-looking statements are subject to a number of risks and uncertainties,
some of which are beyond the Company's control. Actual results could differ
materially from these forward-looking statements as a result of factors
described in the section "Risk Factors" including, among others, regulatory or
economic influences.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
A. Business Development and Summary
BioFiltration Systems, Inc., hereinafter referred to as the "Company", was
incorporated on December 17, 1992, under the laws of the state of Florida. The
Company is authorized to issue 5,000,000 shares of its common stock, $.001 par
value per share. The Company is currently traded on the National Daily Quotation
Bureau Pink Sheets and intends to become listed on the OTC Bulletin Board when
it becomes a fully reporting company.
The Company has acquired a patented technology under Patent number 5,205,935.
The technology provides a method and apparatus for the continuous degradation of
hazardous paint and organic solvent wastes. The apparatus includes a high
performance fixed film bioreactor system which remediates and purifies
contaminated waters.
With a wastewater disposal problem of both national and international magnitude,
the Company's market would encompass everything from Federal, State and local
government operations involving the disposal of organic and/or hazardous waste
to manufacturing companies producing everything from automobiles to silicon
chips. A growing international awareness of the severity of environmental
pollutants with a subsequent governmental need to address these issues creates a
tremendous marketing opportunity of which the Company intends to take advantage.
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Local, national and international economic conditions may have a substantial
adverse effect on the efforts of the Company. The Company cannot guarantee
against the possible eventuality of any potential adverse economic conditions.
B. Principal Products
The Company intends to offer its product under its Patent # 5,205,935. The
patent was issued on April 27, 1993 which covered part of the bioremediation
technology the Company intends to utilize in its operations. The Company
proposes to have modular biofiltration systems manufactured by outside sources
and to market these systems to various industries.
The biofiltration systems, which will be specifically tailored to each
customer's needs, may be utilized for treatment of a variety of waste waters
including, but not limited to:
o aircraft deicing fluids
o landfill leachates
o contaminated groundwater
o industrial effluents
o aluminum can plant solvent wastes
o food processing wastewater and other organic wastes.
C. Manufacturing
The Company does not intend to manufacture any of the products it sells. All
manufacturing will be subcontracted with manufacturing companies with
specialized fiberglass fabricating shops to manufacture the bioreactors to rigid
specifications. This will give the Company the flexibility to keep manufacturing
costs under control.
Under the direct supervision of the Company's engineers and designers,
specialized erection companies will assemble the larger bioreactors on-site. The
Company's control panels will be purchased from original equipment manufacturers
and will be installed by Company personnel. Packing media will be shipped
directly to the site and installed on-site.
Although the Company will not manufacture its own products, it will perform
supervision of assembly, redesigning, testing and servicing. Some of the
benefits of this strategy are:
o decrease in working capital required to conduct business
o ability to increase capacity quickly with reduced capital costs
o increased overall flexibility
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D. The Market and Product Distribution
An affiliate company intends to market and install all biofilters on behalf of
the Company. The affiliate will operate on a set fee commission basis which will
allow the Company to maintain a projected profit margin on each sale. The
affiliate has agents in place to represent the Company's products to the
nation's airports and is presently signing on agents to contact municipalities,
the beverage industry, canning and can manufacturing industries. Other potential
markets include landfill operations; food processing facilities; commercial
laundries; and chicken, cattle and swine farms.
E. Sales and Marketing Strategy
The Company's anaerobic biofiltration system will be marketed through an
affiliate company which currently has sales agents in place ready to begin an
information campaign directed at the above-mentioned industries.
The Company's sales and technical representatives will also attend trade shows
held by environment related associations to increase the overall awareness of
the product. Contacts made and requests developed through these sources will be
followed up by the marketing department.
Promotional materials such as brochures, CD ROM, documentation videos and an
Internet web page are currently being designed and prepared and will be
available for distribution by all sales staff. As well, there is a telephone
marketing program being contemplated that will generate leads for the sales
staff.
A professional exhibit will be designed and built for use at various conferences
and trade shows. This information exhibit will focus on the mechanics of the
biofiltration system, the problems the system resolves, and the spinoff benefits
and savings that result from the use of the system. Research papers supporting
these benefits will be made available.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATION
The following discussion and analysis of the Company's financial condition and
results of its operations for the years ended December 31, 1998 and 1997, should
be read in conjunction with the Company's financial statements included
elsewhere herein. When used in the following discussions, the words "believes,"
"anticipates," "intends," "expects," and similar expressions are intended to
identify forward-looking statements. Such statements are subject to certain
risks and uncertainties, which could cause results to differ materially from
those projected.
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A. General Discussion of the Company
BioFiltration Systems, Inc. was incorporated in December 1992 for the purpose of
purchasing, further developing and patenting a proven anaerobic/aerobic
remediation process for treating and disposing of organic effluent. The
bio-remediation technology purchased from an affiliate of the Company allows the
Company to enter into the business of manufacturing and marketing modular
biofiltration systems for the treatment of a variety of waste waters, including
aircraft deicing and anti-icing fluids, landfill leachates, contaminated
groundwater, industrial effluents, aluminum can plant solvent wastes, food
processing wastewater and other organic wastes. As the full impact of earth's
very serious environmental problems becomes more apparent with each passing
decade, the environmental remediation industry is expected to grow for the
foreseeable future. The Company's patented anaerobic/aerobic treatment of liquid
wastes renders it suitable for discharge into publicly owned treatment plants
and, if required, recycled for irrigation or for disposal directly into the
waterways (with appropriate permits).
The Company intends to market its products through commission compensated sales
representatives in the U.S. and Canada. It intends to contract with specialized
fiberglass and steel fabrication shops in the areas it makes sales to
manufacture bio-reactor vessels to its strict specifications. This eliminates
the need for the Company to carry large amounts of inventory and it keeps the
shipping costs to a minimum. The electrical control panels are purchased locally
and installed by Company personnel. By utilizing the fabrication shops in the
area of the sale, the talents of the most experienced professional technical
consultants and commission compensated sales representatives, the Company keeps
its fixed costs to a minimum thereby allowing it the flexibility to tackle
projects it determines feasible.
The Process and Its Advantage
Before a commercial airliner starts the take off roll in winter weather, deicing
solutions (glycols) are sprayed over the plane to prevent ice from forming and
destroying the plane's ability to fly. The amount of glycol used per mid-sized
plane requires as much treatment plant capacity as required to treat normal
sewage from a city of 5,000 people. Deicing operations are active every day,
somewhere in the world. The environmental problem with glycols is that they grab
any available oxygen molecules in water, resulting in death for plants and
animals that depend on water for survival. Grasses, fish, shellfish, and just
about all other life forms are effected. Year after year thousands of tons of
glycols soak into the ground and aquifers untreated due to airport deicing
operations. Glycol runoff could contain as much as 300,000 mg/I COD (Chemical
Oxygen Demand). Residential sewage only contains 250 mg/I COD. These heavy COD
loads can completely shut down a municipal owned treatment plant without
pre-treatment to a level of 250 mg/COD, or less. Many municipal plants are
refusing to accept glycols. Most do not have the capacity to handle it.
To address this problem, the Company has further developed and demonstrated the
ability to convert these glycol wastewater streams into liquid that can be
directly discharged into storm
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drains without further treatment. Many airports are seriously considering this
optional solution, allowing them to bypass the municipal treatment plants
entirely. Because the Environmental Protection Agency has recently informed all
national airports that they cannot deice aircraft without collecting and
treating deicing fluids, these airports are faced with the near term
construction of systems to collect and treat deicing fluids. Because of this
regulatory driver, and the fact that management has built operating systems to
treat other glycols, this is the first market sector that the Company has
focused upon.
The acclaimed NASA/AMES Research Laboratories declared at a recent meeting of
the American Association of Airport Executives, anaerobic bio-remediation is the
most cost effective method of treating spent deicing fluids. Another study done
by ARCO Chemical Company also concluded the most cost-effective method of
deicing fluid disposal was anaerobic bio- remediation. Investigation by
environmental personnel at one of the Nation's largest airports recently
concluded that the Company's bio-remediation system had the potential to save
the airport nearly $1,000,000 per year if the patented full-scale glycol
treatment system was installed on airport property near the glycol detention
basins. In addition, they concluded the Company's process would create recycled
usable water which can be used for airport irrigation purposes. The Company's
patented anaerobic bio-filter process will safely and effectively eliminate the
deicing and anti-icing spent fluid disposal problem at any airport.
How the Process Works
The Company's process is a cost-effective system that introduces selected
bacteria in combination with a superior filter mechanism such that glycol and
other solvents are efficiently converted into methane (CH4) and carbon dioxide
(CO2). Discharge levels into the storm water system with COD and BOD meets or
exceed EPA requirements. The amounts of sludge and other compounds which may
require further processing are minuscule. Finally, as a by-product, useful
energy - methane gas - is obtained.
The Company's bio-filter system is modular in design. Depending upon volume, a
series of in line prefabricated modular treatment vessels can be assembled. The
system consists of a fixed film, upflow-downflow bio-filter with superior
circulation capability, a heat exchanger where required to ensure proper
operational temperature, and appropriate biogas discharge capability. When
required, secondary biofilters and aerobic biofilters are utilized for optimum
treatment. The rapid, high volume movement of the contaminated water over the
anaerobic culture ensures high rates of both performance (reduction of COD) and
production (amount of waste treated). On the basis of COD, the anaerobic
bio-filter will reduce pollutant liability by greater than 99%. The remaining
fractional percentage of COD will be removed by aerobic treatment rendering the
essentially free glycol wastewater suitable for surface discharge. These
benefits are achieved at a most economical cost. The system's low initial
capitalization and ongoing costs for treatment are extremely attractive.
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Liquidity and Capital Resources
During the past three fiscal years, the Company has financed its operations
primarily through cash provided through various short and long term credit
facilities and through the private sale of its common stock. The Company intends
to complete its first public offering of shares during the second quarter of
fiscal 2000. The Company's management believes that sufficient funds will be
raised from future operations so as to minimize the need for future equity
capitalization.
In addition, management of the Company believes the need for additional capital
going forward will be derived from internal revenues and earnings generated from
the sale of its products and services. If the Company is unable to begin to
generate revenues from its anticipated products, management believes the Company
will need to raise additional funds to meet its cash requirements.
B. Segment Data
The Company has received no revenues from sales of its product since its
inception. Because no revenue has been received from sales of the Company's
product, no table showing percentage breakdown of revenue by business segment or
product line is included.
C. Governmental Approval, Regulation and Environmental Compliance
The operations of the Company are subject to regulations by the Environmental
Protection Agency ("EPA") as well as regulations normally incident to business
operations such as occupational safety and health acts, workmen's compensation
statutes, unemployment insurance legislation and income tax and social security
related regulations. Although the Company will make every effort to comply with
applicable regulations, it can provide no assurance of its ability to do so, nor
can it predict the effect of these regulations on its proposed activities.
Wastewater effluent and gaseous emissions from industrial, commercial and
governmental sources are subject to regulation by the EPA in the United States.
Of importance are:
o a final determination in 1991 of 20 mineral processing wastes
formerly exempt from the Resource Conservation and Recovery Act, the
Toxic Substances Control Act being established for only two -
phosphyogypsum and phosphoric acid process wastewater - and the
remaining 18 being regulated as RCRA Subtitle D wastes;
o under the Clean Water Act, regulations require national pollution
discharge elimination permits for storm water runoff from chemical
operations, dumps, organic and/or hazardous wastes, lumbering,
mining, recycling, transportation and publicly owned wastewater
treatment plants;
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o under Section 404 of the Clear Water Act, the EPA signed an
agreement with the Army Corps of Engineers setting a goal of "no net
loss" of wetlands;
o effective March 1992, benzene content in wastewater regulations
became effective under the National Emission Standard for Hazardous
Air Pollutants;
o 1985 standards by the EPA require control of sulfides, chromium and
acidity by the tanning industry - a $2.9 billion industry. Control
standards for the tanning industry under the Clean Air Act expected
to be published in 1994 requiring a 90% reduction in all volatile
organic compounds from the industry baseline recorded in 1987 Toxic
Release Inventory;
o the 1990 Clean Air Act requires utilities to invest an estimated $15
to $20 billion in order to comply.
D. Risks Associated with Operations
The Company's long-term success is partially predicated on the strength of
developing a comprehensive sales and marketing program and its ability to design
each product to the specifications of its customer's effluent or emissions
requirements.
Since the Company does not intend to manufacture its products, it will rely on
the use of outside manufacturers to manufacture its product to rigid
specifications. As such, there can be no assurance that the product will be
manufactured and delivered in a timely manner which would adversely affect the
Company's proposed operations.
While the Company's plan of operations is being developed thoroughly, there is
no assurance the plan will be accepted in or by the marketplace, nor, that if it
is accepted, that demand will be sufficient to make the Company profitable. The
Company cannot project with certainty the outcome of its operations, and there
are no assurances that the Company will operate profitably in either the near or
long term.
Local, national, and international economic conditions may have a substantial
adverse effect on the efforts of the Company. The Company cannot guarantee
against the possible eventuality of any potential adverse economic conditions.
E. Competition
There are a number of companies involved in this industry. The current and
prospective competitors include many large companies that have substantially
greater market presence and financial, technical, marketing and other resources
than the Company. The Company competes or expects to compete directly or
indirectly with the following companies:
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o Biothane of Camden, New Jersey, involved only in the larger "built
in place" anaerobic aspect of wastewater treatment;
o Baccardi Corporation of Puerto Rico;
o Pacques Lavatin of Canada;
o ORS of Massachusetts, a subsidiary of GTI;
o Biotrol of Minnesota.
There can be no assurance that the Company will have the financial resources,
technical expertise, or marketing and support capabilities to continue to
complete successfully.
F. Developing and Changing Market
The market conditions for the Company's product are evolving and changing with
respect to current and expected future legislative changes. The Company believes
the current conditions will continue favorably for this type of venture. There
can be no assurance that the Company's assessment of the situation is correct,
nor that the products it selects will be accepted by the consumer.
G. Employees
As of the current date, the Company has two full time employees. As the Company
increases its operations, additional employees will be required. The Company's
future success depends on its ability to attract and retain other qualified
personnel, for which competition is intense. The loss of Mr. Keyser or Mr.
Cannon or the Company's inability to attract and retain other qualified
employees could have a material adverse effect on the Company.
H. Year 2000 Issue
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates are processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and if not addressed the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers, suppliers, or
other third parties, will be fully resolved.
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I. Additional Information
The Company intends to provide an annual report to its security holders and to
make quarterly reports available for inspection by its security holders. The
annual report will include audited financial statements.
The Company will, as a result of this filing, become subject to the
informational requirements of the Securities Exchange Act of 1934 (the "Act")
and, in accordance with the Securities and Exchange Commission (the
"Commission"), such reports, proxy statements and other information may be
inspected at public reference facilities of the Commission at Judiciary Plaza,
450 Fifth Street N.W., Washington D.C. 20549; Northwest Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; 7 World Trade Center, New
York, New York, 10048; and 5670 Wilshire Boulevard, Los Angeles, California
90036. Copies of such material can be obtained from the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C.
20549, at prescribed rates. For further information, the Commission maintains a
website that contains reports, proxy and information statements, and other
information regarding reporting companies at http://www.sec.gov.
ITEM 3. DESCRIPTION OF PROPERTY
The Company maintains its principal business operations at 2341 Porter Lake
Drive, Suite 101, Sarasota, Florida 34240. The Company's telephone number is
(941) 343-9300.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of January 20, 2000, with
respect to the beneficial ownership of common stock by each person who, to the
knowledge of the Company, beneficially owned or had the right to acquire more
than 5% of the outstanding common stock; each director of the Company; and all
executive officers and directors of the Company as a group:
Name of Beneficial Owner(1) Number of Shares Percent of Class(2)
- --------------------------- ---------------- -------------------
Alpha J. And Victoria Keyser 2,825,000 63%
Thomas Cannon -0- 0%
The Baldridge Group(3) 250,000 6%
- ----------
(1) As used in this table "beneficial ownership" means the sole or shared
power to vote, or to direct the voting of a security or the sole or shared
investment power with respect to a security (i.e., the power to dispose
of, or to direct the disposition of, a security).
(2) Figures are rounded to the nearest percentage.
(3) Pursuant to an agreement with the Company, the Baldridge Group has the
right to acquire another 250,000 shares which are held in escrow by the
Company pending payment for said shares.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The following table sets forth the names and positions with the Company and ages
of the executive officers and directors of the Company. Directors will be
elected at the Company's annual meeting of shareholders and serve for one year
or until their successors are elected and qualify. Officers are elected by the
Board and their terms of office are at the discretion of the Board, except to
the extent governed by employment contract.
Name Age Title
---- --- -----
Alpha J. Keyser 62 President and Chief Executive Officer
Thomas Cannon 55 Director
Duties, Responsibilities and Experience
Alpha J. Keyser, President and Chief Executive Officer
Al Keyser currently serves as the Company's President, CEO and Director. Mr.
Keyser has more than 30 years experience in construction, heavy equipment
manufacture development operation and sales, oils and gas drilling operations,
and explorative hydrogeology. Mr. Keyser has started and served as CEO of a
number of successful small businesses in these areas. In 1989, he started AAA
Environmental Services Corp., an environmental services company formed for the
development and marketing of equipment, technology and services in wastewater
environmental clean up, solid and hazardous waste treatment and air emission
control. From 1985 to 1988, he was President and owner of Algasco, Inc., a
natural gas exploration and development company which drilled 19 gas wells in
the vicinity of Victoria, Texas. From 1978 to 1986, he was President and owner
of Alpha Gas Development, Inc., which was formed to do well exploration and
development in Kentucky. The company leased in excess of 35,000 acres in Whitley
County, Kentucky, resulting in the discovery of one of, if not the, largest gas
field in the state. In 1985, the company obtained a $500,000 grant from
Department of Energy to provide the extension of Devonian shale into southeast
Kentucky. Mr. Keyser sold the company in 1984 but remained as President and CEO
until late 1986. From 1973 to 1977, he was the owner and President of Al J.
Keyser, Inc., which marketed and installed more than 60 sewage pumping stations
in southwest Florida. From 1963 to 1972, he was Eastern Regional Sales Manager
for Hein-Wenner Corp. He assisted in the original controls design and pioneered
the concept and sale of the larger 1/2 yard and up hydraulic excavators through
the eastern U.S. and Canada. He became the number one producer in the company.
From 1960 to 1963, he was employed in the sales department of Bay City Shovels
and was responsible for installation, demonstration and troubleshooting for a
worldwide producer of heavy construction equipment, cranes, backhoes and
shovels.
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Thomas Cannon, Director
Tom Cannon currently serves as a Director of the Company. He has extensive
marketing expertise, especially to the nation's airports and to the military. He
is responsible for all marketing efforts and directs all sales agents. From 1991
to 1993, he was employed by Flow International, Inc., and was responsible for
sales and market development at their services division. From 1987 to 1991, Mr.
Cannon founded Rampart Water Blast, Inc., which developed technology to remove
rubber and paint from runways at commercial and military airports throughout the
U.S. He took the company from start-up to $3.5 million gross sales in four
years. He sold the company to Flow International. From 1980 to 1987, he formed
Coastal Striping, Inc., to paint roads and runways at military bases throughout
the U.S., reaching $4 million in gross sales. He closed the company when the
military changed its bidding procedures and funding. From 1976 to 1980 he
managed Safe Line, Inc., a company that painted highways in Ohio. From 1968 to
1976, he was employed by Standard Oil Co. Ohio (now known as BP). He started
there after graduating from college and progressed through marketing and real
estate departments to become project manager.
ITEM 6. EXECUTIVE COMPENSATION
Al Keyser has received no compensation for serving in the capacity of President
and Chief Executive Officer. Mr. Keyser is the beneficial owner of 2,825,000
shares of the Company's common stock.
Should the Company become profitable and produce commensurate cash flows from
operations, compensation may be paid to key additional personnel, however, this
will be subject to approval by the Company's Board of Directors. It is the
responsibility of the Company's officers and its Board of Directors to determine
the timing of any remuneration for key personnel. Such determination and timing
thereof will be based upon such factors as equity sales, operating cash flows,
capital requirements, and a positive cash flow balance. At the time cash flow
reaches this point, and appears to be sustainable, the officers and Board of
Directors will again readdress the compensation of its key personnel and set
forth a more formal and complete plan for remuneration in line with operations
of the Company. At present, the Company's management cannot accurately estimate
the point when revenues and operating cash flows will be sufficient enough to
implement this compensation plan, nor are they able to estimate the exact amount
of compensation at this time.
There are no annuity, pension, or retirement benefits proposed to be paid to
officers, directors, or employees of the Company in the event of retirement at a
normal date pursuant to any presently existing plan provided or contributed to
by the Company, or any of its subsidiaries, if any.
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Key Officer Employment Agreements
No employment contracts have been negotiated or signed as yet. However, the
Company plans on having all key employees and officers sign a detailed
employment contract as appropriate.
Compensation of Directors
All directors will be reimbursed for expenses incurred in attending Board or
committee meetings.
Stock Option Plan and Non-Employee Directors' Plan
No stock option plan has been set forth, and no non-employee directors' plan has
been instituted. The Company may decide, at a later date, and reserves the right
to, initiate these plans as deemed necessary by the Board.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain family members of the Company's President own shares of the Company's
common stock as set forth below:
Alpha J. Keyser, President and CEO, is related to the following shareholders:
Name # of Shares Relationship Date Acquired
- --------------- ----------- ------------ -------------
Victoria Keyser 2,825,000 Wife 1992 - 93
ITEM 8. DESCRIPTION OF SECURITIES
The Company's Articles of Incorporation authorizes the issuance of 5,000,000
shares of common stock, $.001 par value per share, of which 4,459,100 shares are
outstanding as of the date of this filing. The Company is not authorized to
issue shares of preferred stock. Holders of shares of common stock are entitled
to one vote for each share on all matters to be voted on by the stockholders.
Holders of common stock have no cumulative voting rights. Holders of shares of
common stock are entitled to share ratably in dividends, if any, as may be
declared, from time to time by the Board of Directors in its discretion, from
funds legally available therefor. In the event of liquidation, dissolution or
winding up of the Company, the holders of shares of common stock are entitled to
share, pro rata, all assets remaining after payment in full of all liabilities.
Holders of common stock have no preemptive rights to purchase the Company's
common stock. There are no conversion rights or redemption or sinking fund
provisions with respect to the common stock. All of the outstanding shares of
common stock are validly issued, fully paid and non-assessable. The Company has
not authorized any Preferred stock, Convertible stock, or Warrants as of the
date of this filing.
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Transfer Agent
The transfer agent for the common stock is Florida Atlantic Stock Transfer,
Inc., 7130 Nob Hill Road, Tamarac, Florida 33321.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
The common stock is currently quoted on the National Daily Quotation
Bureau Pink Sheets operated by The NASDAQ Stock Market, Inc. under the symbol
"BIFS." The following table sets forth the high and low last sale prices for the
common stock for each fiscal quarter, or interim period, in which the common
stock has been publicly traded. These prices do not reflect retail mark-ups,
markdowns or commissions and may not represent actual transactions.
Quarter Ended Low High
------------------- ------- -------
March 31, 1999 $2.00 $3.25
June 30, 1999 $1.875 $2.31
September 30, 1999 $0.594 $0.594
December 31, 1999 $0.50 $0.50
The Company's shares of common stock are not registered with the U.S. Securities
and Exchange Commission under the Securities Act of 1933, as amended
(hereinafter referred to as the "Act") and are restricted securities with the
exception of 500,000 shares issued pursuant to Rule 504, Regulation D.
Since its inception, the Company has not paid cash dividends on its common
stock. It is the present policy of the Company not to pay cash dividends and to
retain future earnings to support the Company's growth. Any payments of cash
dividends in the future will be dependent upon, among other things, the amount
of funds available therefor, the Company's earnings, financial condition,
capital requirements, and other factors which the Board of Directors deems
relevant.
As of January 20, 2000, there were approximately 28 common shareholders of
record.
ITEM 2. LEGAL PROCEEDINGS
The Company is not presently a party to any litigation nor to the knowledge of
management is any litigation threatened against the Company which would
materially affect the Company.
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ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There are no changes in or disagreements with accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Private Placements
On March 31, 1999, the Company entered into a special services agreement with an
unrelated active participation investor. Pursuant to this agreement, the
investor will provide various public relations and marketing services to the
Company in exchange for the right to purchase 875,000 shares of the Company's
stock for $1,000,000. The purchase of these shares will occur in stages, at
varying per share prices ranging from $.25 to $2.00 per share. At March 31,
1999, 250,000 shares were issued for a stock subscription receivable of $62,500.
For the six months ended June 30, 1999, the $812,500 difference between the fair
value of the stock issued and the purchase price has been recorded as stock
issue expenses.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Chapter 607 of the Florida Statutes provides for the indemnification of officers
and directors under certain circumstances against expenses incurred in
successfully defending against a claim and authorizes Florida corporations to
indemnify their officers and directors under certain circumstances against
expenses and liabilities incurred in legal proceedings involving such persons
because of their being or having been an officer or director.
Section 607.0850 of the Florida Statutes permits a corporation, by so providing
in its certificate of incorporation, to eliminate or to limit a director's
liability to the corporation and its stockholders for monetary damages arising
out of certain alleged breaches of their fiduciary duty. Section 607.0850
provides that no such limitation of liability may affect a director's liability
with respect to any of the following: (i) breaches of the director's duty of
loyalty to the corporation or its stockholders; (ii) acts or omissions not made
in good faith or which involve intentional misconduct of knowing violations of
law; (iii) liability for dividends paid or stock repurchased or redeemed in
violation of the Florida General Corporation Law; or (iv) any transaction from
which the director derived an improper personal benefit. Section 607 does not
authorize any limitation on the ability of the corporation or its stockholders
to obtain injunctive relief, specific performance or other equitable relief
against directors.
Article IX of the Company's Articles of Incorporation and the Company's By-laws
provide that all persons who the Company is empowered to indemnify pursuant to
the provisions of Section 607 of the Corporation laws of the State of Florida
(or any similar provision or provisions of applicable law at the time in
effect), shall be indemnified by the Company to the fullest extent permitted
thereby. The foregoing right of indemnification is not deemed to be exclusive of
any
14
<PAGE>
other rights to which those seeking indemnification may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors, or
otherwise.
Article IX of the Company's Articles of Incorporation provides that no director
of the Company will be personally liable to the Company or its stockholders; (i)
for any monetary damages for breaches of fiduciary duty of loyalty to the
Company or its stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) under
Section 607 of the Florida Statutes, or (iv) for any transaction from which the
director derived an improper personal benefit.
PART F/S
FINANCIAL STATEMENTS
The audited financial statements of the Company, prepared by Semago & Company,
P.A., Certified Public Accountants, 102 W. Whiting Street, Suite 600, Tampa,
Florida 33602, required by Regulation S-X commence on page F/S 1 hereof in
response to this Item of this Registration Statement on Form 10-SB and are
incorporated herein by this reference.
PART III
ITEM 1. INDEX TO EXHIBITS
2 Reorganization Agreement (not applicable)
3 (i) Articles of Incorporation and Amendments
3 (ii) By-Laws
4 Instruments defining the rights of holders (refer to exhibit 3)
9 Voting Trust agreement (not applicable)
10 Material contracts (not applicable)
11 Statement re: Computation of per share earnings (not applicable)
21 Subsidiary of the Registrant (not applicable)
24 Power of Attorney (not applicable)
27 Financial Data Schedule (not applicable)
99 Additional Exhibits (not applicable)
15
<PAGE>
SIGNATURE PAGE
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: January 21, 2000 BioFiltration Systems, Inc.
By: /s/ Alpha J. Keyser
-------------------------------------
Alpha J. Keyser, President and CEO
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange act of 1934, this
registration statement has been signed below by the followings persons on behalf
of the registrant and in the capacities and on the dates indicated.
Date: January 21, 2000 By: /s/ Alpha J. Keyser
-------------------------------------
Alpha J. Keyser, President and CEO
(Principal Executive Officer)
Date: January 21, 2000 By: /s/ Thomas Cannon
-------------------------------------
Thomas Cannon, Director
16
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
CONTENTS
Page
----
INDEPENDENT AUDITORS' REPORT 1 - 2
FINANCIAL STATEMENTS
BALANCE SHEETS 3 - 4
STATEMENTS OF OPERATIONS 5
STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY 6 - 10
STATEMENTS OF CASH FLOWS 11 - 12
NOTES TO FINANCIAL STATEMENTS 13 - 18
<PAGE>
[LETTERHEAD OF SEMAGO & COMPANY]
To the Stockholders
Biofiltration Systems, Inc.
(a development stage company)
Sarasota, Florida
Independent Auditors' Report
We have audited the accompanying balance sheets of Biofiltration Systems, Inc.
(a development stage company) as of December 31, 1999 and 1998, and the related
statements of operations and cash flows cumulative since inception (December 17,
1992) and for the years then ended and the statements of changes in
stockholders' equity for the period from inception (December 17, 1992) to
December 31, 1999. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide 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 Biofiltration Systems, Inc. (a
development stage company) as of December 31, 1999 and 1998, and the results of
its operations cumulative since inception (December 17, 1992) and cash flows for
the years then ended and the statements of changes in stockholders' equity for
the period from inception (December 17, 1992) to December 31, 1999, in
conformity with generally accepted accounting principles.
<PAGE>
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As explained in Note A, the Company is
in a development stage. Continued operations are dependent upon its ability to
generate sufficient cash flows to commence and sustain operations. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. The accompanying financial statements do not include any
adjustments that might result from this uncertainty.
/s/ SEMAGO & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
Tampa, Florida
March 1, 2000
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
1999 1998
-------- --------
CURRENT ASSET - CASH (NOTE A) $ 6 $ 9,120
-------- --------
OFFICE EQUIPMENT, NET OF
ACCUMULATED DEPRECIATION
OF $675 2,702 --
-------- --------
OTHER ASSETS
Patent (Notes A and D) 470,000 470,000
Prepaid sales commissions
to related company
(Note B) 465,910 465,910
Other 2,728 2,848
-------- --------
938,638 938,758
-------- --------
$941,346 $947,878
======== ========
The accompanying notes to financial statements
are an integral part of these statements.
-3-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
1999 1998
----------- -----------
CURRENT LIABILITIES
Accounts payable $ 16,607 $ 12,192
Accrued expenses 23,426 2,086
Current portion of related
party note payable 51,214 --
----------- -----------
TOTAL CURRENT LIABILITIES 91,247 14,278
----------- -----------
LONG-TERM LIABILITIES
Stockholder notes payable
(Note C) 348,900 348,900
Related party note payable,
less current portion
(Note D) 470,000 515,900
----------- -----------
818,900 864,800
----------- -----------
COMMITMENTS AND CONTINGENCIES
(NOTES B AND F) -- --
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value,
5,000,000 shares authorized,
4,209,100 and 3,959,100
shares issued and 4,141,600
and 3,866,600 shares out-
standing at December 31, 1999
and December 31, 1998,
respectively (Notes C and F) 4,209 3,959
Common stock, 625,000 shares
subscribed (Note F) 312,500 --
Stock subscription receivable
(Note F) (312,500) --
Additional paid-in capital
(Note F) 1,748,006 800,506
(Deficit) accumulated during
development stage (1,586,016) (550,665)
----------- -----------
166,199 253,800
Less treasury stock, at cost
(Note G) (135,000) (185,000)
----------- -----------
31,199 68,800
----------- -----------
$ 941,346 $ 947,878
=========== ===========
The accompanying notes to financial statements
are an integral part of these statements.
-4-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
CUMULATIVE AND FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
Cumulative
during
development
stage 1999 1998
----------- ----------- -----------
REVENUES $ 2,000 $ -- $ 2,000
----------- ----------- -----------
EXPENSES
Interest
(Notes C and D) 171,427 40,343 37,699
Professional fees 144,225 105,051 29,748
Telephone and utilities 19,060 9,663 8,477
Depreciation 675 675 --
Rent 25,723 13,616 8,897
Office expenses 31,098 16,365 11,239
Stock promotion expenses
(Notes A and F) 1,127,500 812,500 315,000
Miscellaneous 68,308 37,138 27,132
----------- ----------- -----------
1,588,016 1,035,351 438,192
----------- ----------- -----------
NET LOSS BEFORE PROVISION
FOR INCOME TAXES (1,586,016) (1,035,351) (436,192)
PROVISION FOR INCOME
TAXES (NOTE E) -- -- (21,750)
----------- ----------- -----------
NET LOSS $(1,586,016) $(1,035,351) $ (457,942)
=========== =========== ===========
NET LOSS PER COMMON
SHARE (NOTE A) $ (0.45) $ (0.23) $ (0.12)
=========== =========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 3,530,856 4,495,796 3,843,193
=========== =========== ===========
The accompanying notes to financial statements
are an integral part of these statements.
-5-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FROM INCEPTION (DECEMBER 17, 1992) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
Common stock (Deficit)
------------------ Common Treasury stock Additional Stock during
Par stock ----------------- paid-in subscription development
Shares value subscribed Shares Cost capital receivable stage
------ ----- ---------- ------ ---- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION
DECEMBER 17, 1992 -- $ -- $ -- -- $ -- $ -- $ -- $ --
STOCK ISSUED FOR CASH
($.001 PER SHARE),
DECEMBER 31, 1992 155,000 155 -- -- -- -- -- --
STOCK SUBSCRIPTION FOR
320,000 SHARES,
($.001 PER SHARE),
DECEMBER 1992 -- -- 320 -- -- -- (320) --
--------- --------- -------- ------ --------- --------- --------- ---------
BALANCE, DECEMBER 31, 1992 155,000 155 320 -- -- -- (320) --
STOCK ISSUED FOR CASH
($.001 PER SHARE),
JANUARY 1993 2,350,000 2,350 -- -- -- 49,755 -- --
STOCK ISSUED IN LIEU OF
INTEREST ($.001 PER
SHARE), JANUARY 1993 250,000 250 -- -- -- -- -- --
CONTRIBUTION OF ADDITIONAL
PAID-IN CAPITAL -- -- -- -- -- 15,000 -- --
COLLECTION OF STOCK
SUBSCRIPTION RECEIVABLE 320,000 320 (320) -- -- -- 120 --
NET LOSS -- -- -- -- -- -- -- ($ 2,765)
--------- --------- -------- ------ --------- --------- --------- ---------
BALANCE, DECEMBER 31, 1993 3,075,000 $ 3,075 $ -- -- $ -- $ 74,755 $ -- ($ 2,765)
</TABLE>
The accompanying notes to financial statements
are an integral of these statements.
-6-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FROM INCEPTION (DECEMBER 17, 1992) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
Common stock (Deficit)
------------------ Common Treasury stock Additional Stock during
Par stock ----------------- paid-in subscription development
Shares value subscribed Shares Cost capital receivable stage
------ ----- ---------- ------ ---- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STOCK ISSUED IN LIEU OF
INTEREST ($.001 PER
SHARE) -
MARCH 1994 16,000 $ 16 $ -- -- $ -- $ -- $ -- $ --
JUNE 1994 50,000 50 -- -- -- -- -- --
AUGUST 1994 50,000 50 -- -- -- -- -- --
OCTOBER 1994 100,000 100 -- -- -- -- -- --
CONTRIBUTION OF ADDITIONAL
PAID-IN CAPITAL -- -- -- -- -- 16,600 -- --
NET LOSS -- -- -- -- -- -- -- (5,486)
--------- --------- -------- ------ ------- -------- ------- --------
BALANCE, DECEMBER 31, 1994 3,291,000 3,291 -- -- -- 91,355 -- (6,261)
STOCK ISSUED IN LIEU OF
INTEREST ($.001 PER SHARE):
MARCH 1995 75,000 75 -- -- -- -- -- --
JUNE 1995 75,000 75 -- -- -- -- -- --
OCTOBER 1995 50,000 50 -- -- -- -- -- --
CONTRIBUTION OF ADDITIONAL
PAID-IN CAPITAL -- -- -- -- -- 20,000 -- --
NET LOSS -- -- -- -- -- -- -- (17,998)
--------- --------- -------- ------ ------- -------- ------- --------
BALANCE, DECEMBER 31, 1995 3,493,000 $ 3,493 $ -- -- $ -- $111,355 $ -- $(26,149)
</TABLE>
The accompanying notes to financial statements
are an integral of these statements.
-7-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FROM INCEPTION (DECEMBER 17, 1992) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
Common stock (Deficit)
------------------ Common Treasury stock Additional Stock during
Par stock ----------------- paid-in subscription development
Shares value subscribed Shares Cost capital receivable stage
------ ----- ---------- ------ ---- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STOCK ISSUED IN LIEU OF
INTEREST ($.003 PER
SHARE) -
MARCH 1996 50,000 $ 50 $ -- -- $ -- $ -- $ -- $ --
JULY 1996 25,000 25 -- -- -- -- -- --
CONTRIBUTION OF ADDITIONAL
PAID-IN CAPITAL -- -- -- -- -- 10,000 -- --
NET LOSS -- -- -- -- -- -- -- (29,759)
--------- --------- --------- ----- ------- --------- --------- ---------
BALANCE, DECEMBER 31, 1996 3,566,000 3,566 -- -- -- 121,355 -- (56,010)
STOCK ISSUED FOR CASH
($2.00 PER SHARE),
DECEMBER 1997 750 1 -- -- 1,499 -- --
STOCK ISSUED IN LIEU OF
INTEREST ($.001 PER
SHARE):
MARCH 1997 12,500 12 -- -- -- -- -- --
MAY 1997 15,000 25 -- -- -- -- -- --
JULY 1997 50,000 50 -- -- -- -- -- --
DECEMBER 1997 37,300 38 -- -- -- -- -- --
CONTRIBUTION OF ADDITIONAL
PAID-IN CAPITAL -- -- -- -- -- 15,450 -- --
NET LOSS -- -- -- -- -- -- -- (36,709)
--------- --------- --------- ----- ------- --------- --------- ---------
BALANCE, DECEMBER 31, 1997 3,691,750 $ 3,692 $ -- -- $ -- $ 138,201 $ -- $ (92,723)
</TABLE>
The accompanying notes to financial statements
are an integral of these statements.
-8-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FROM INCEPTION (DECEMBER 17, 1992) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
Common stock (Deficit)
------------------ Common Treasury stock Additional Stock during
Par stock ----------------- paid-in subscription development
Shares value subscribed Shares Cost capital receivable stage
------ ----- ---------- ------ ---- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STOCK ISSUED FOR CASH
($2.00 PER SHARE):
MARCH 1998 6,250 $ 7 $ -- -- $ -- $ 13,693 $ -- $ --
DECEMBER 1998 10,500 10 -- -- -- 20,990 -- --
STOCK ISSUED FOR SERVICES
($2.00 PER SHARE),
JUNE 1998 250,000 250 -- -- -- 499,750 -- --
CONTRIBUTION OF ADDITIONAL
PAID-IN CAPITAL -- -- -- -- -- 127,769 -- --
STOCK REDEEMED UPON
CANCELLATION OF SERVICES -- -- -- 92,500 (105,000) -- -- --
NET LOSS -- -- -- -- -- -- (457,942)
--------- --------- ------- ------ --------- --------- -------- ---------
BALANCE, DECEMBER 31, 1998 3,959,100 $ 3,959 $ -- 92,500 $(105,000) $ 600,506 $ -- $(550,565)
</TABLE>
The accompanying notes to financial statements
are an integral of these statements.
-9-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FROM INCEPTION (DECEMBER 17, 1992) TO DECEMBER 31, 1999
<TABLE>
<CAPTION>
Common stock (Deficit)
--------------- Common Treasury stock Additional Stock during
Par stock ----------------- paid-in subscription development
Shares value subscribed Shares Cost capital receivable stage
------ ----- ---------- ------ ---- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STOCK SUBSCRIPTION FOR
$75,000 SHARES (VARYING
PRICE PER SHARE),
MARCH 1999 -- $ -- $ 1,000,000 -- $ -- $ -- $ 1,000,000 $ --
STOCK ISSUED FOR SERVICES
($3.50 PER SHARE),
APRIL 1999 -- -- -- (25,000) 50,000 37,000 -- --
CONTRIBUTION OF ADDITIONAL
PAID-IN CAPITAL -- -- -- -- -- 35,250 -- --
COLLECTIONS OF STOCK
SUBSCRIPTION RECEIVABLE
AND ISSUE OF STOCK FOR
SERVICES 250,000 250 (62,500) -- -- 874,750 62,500 --
ADJUSTMENT TO STOCK
SUBSCRIPTION PRICE
PER SHARE -- -- (625,000) -- -- -- 625,000 --
NET LOSS -- -- -- -- -- -- -- (1,035,351)
---------- ------- ----------- ----- --------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1999 $4,209,100 $ 4,209 $ 312,500 7,500 $(135,000) $ 1,748,000 $ (312,500) $(1,586,016)
========== ======= =========== ===== ========= =========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral of these statements.
-10-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
CUMULATIVE AND FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
Cumulative
during
development
stage 1999 1998
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 2,000 $ -- $ 2,000
Cash paid for expenses (187,035) (89,798) (74,371)
Cash paid for interest (6,616) (6,253) (363)
--------- --------- ---------
Net cash used by
operations (191,651) (96,051) (72,734)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Advances to related company (453,410) -- (23,750)
Purchase of office equipment (3,377) (3,377) --
--------- --------- ---------
Net cash used by investing
activities (456,787) (3,377) (23,750)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common
stock 150,960 -- 34,700
Contributions of additional
paid-in capital 67,050 -- --
Collections on due from
stockholders 37,500 -- 25,000
Collections on stock subscription
receivable 320 62,500 --
Proceeds from related party
notes payable 51,214 5,314 45,900
Proceeds from stockholder
notes payable 318,900 -- --
Other 22,500 22,500 --
--------- --------- ---------
Net cash provided by
financing activities 648,444 90,314 105,600
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH 6 (9,114) 9,116
CASH, BEGINNING OF PERIOD -- 9,120 4
--------- --------- ---------
CASH, END OF PERIOD $ 6 $ 6 $ 9,120
========= ========= =========
The accompanying notes to financial statements are
an integral part of these statements.
-11-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
CUMULATIVE AND FOR THE YEARS ENDED
DECEMBER 31, 1999 AND 1998
Cumulative
during
development
stage 1999 1998
----------- ----------- -----------
RECONCILIATION OF NET LOSS TO
CASH FLOWS FROM OPERATING ACTIVITIES
NET LOSS $(1,586,016) $(1,035,351) $ (457,942)
RECONCILING ADJUSTMENTS
Provision for income taxe -- -- 21,750
(Increase) decrease in other
assets (2,728) 120 (1,070)
Depreciation 675 675 --
Increase in accounts payable 16,607 4,415 12,192
Increase in accrued expenses 926 (1,160) --
Stock issued in lieu of interest 866 -- --
Stock issued for expenses 1,400,000 900,000 500,000
Treasury stock acquired by way
of reduction of expenses (185,000) -- (185,000)
Contribution of accrued interest
to paid-in capital 163,019 35,250 37,336
----------- ----------- -----------
CASH FLOWS FROM OPERATING
ACTIVITIES $ (191,651) $ (96,051) $ (72,734)
=========== =========== ===========
NONCASH INVESTING AND FINANCING ACTIVITIES
INCREASE IN PAID-IN CAPITAL AND
STOCKHOLDER NOTES PAYABLE THROUGH
ADVANCES TO RELATED COMPANY $ 12,500 $ -- $ --
=========== =========== ===========
INCREASE IN PAID-IN CAPITAL AND
STOCKHOLDER NOTES PAYABLE THROUGH
INCREASE IN DUE FROM STOCKHOLDER $ 37,500 $ -- $ --
=========== =========== ===========
PURCHASE OF PATENT FOR RELATED
PARTY DEBT $ 470,000 $ -- $ --
DECREASE IN ACCRUED INTEREST
=========== =========== ===========
PAYABLE THROUGH CONTRIBUTION
TO PAID-IN CAPITAL $ 163,019 $ 35,250 $ 127,769
=========== =========== ===========
The accompanying notes to financial statements
are an integral part of these statements.
-12-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Company activities
Biofiltration Systems, Inc. (the Company) was incorporated in the state of
Florida in December 1992. The Company will operate as a manufacturer of modular
biofiltration systems for the treatment of a variety of wastewater. It is
management's intention to sell or lease these systems to customers worldwide.
Company offices are located in Sarasota, Florida.
For the period from inception (December 17, 1992) to December 31, 1999, the
Company has been in a development stage. During this time management has been
engaged in business planning activities and obtaining capital. Operations are
expected to commence in 2000.
Successful completion of the Company's development plan and its transition to
attaining profitable operations is dependent upon obtaining adequate working
capital and achieving a level of sales necessary to support its cost structure.
The recovery of the Company's assets is dependent upon the above future events.
The outcome of these events is uncertain.
Patent
The patent was purchased from a related company (see Note D) that originally
developed and recorded the patent. The patent is recorded at its purchase cost.
Amortization of the patent over its useful life will begin when the Company
commences operations.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and
liabilities and disclosure of contingent asset and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.
Start-up costs
Costs associated with the start-up costs of Company operations have been
expensed as incurred.
Advertising costs
Advertising costs are expensed as incurred.
-13-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Stock issue and promotion expenses
Costs associated with the offering of the Company's common stock to outside
investors will be capitalized. Such costs will be offset against the future
proceeds on sale of the stock. Offering costs incurred that have not resulted in
sales of stock have been expensed to stock promotion expense in the accompanying
financial statements (see Note F).
Deferred income taxes
Deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the period the
change is enacted.
Loss per common share
Loss per common share is computed using the weighted average of shares
outstanding during the periods presented in accordance with Statement of
Financial Accounting Standards No. 128 Earnings Per Share.
Cash
For the purpose of the statement of cash flows, cash includes time deposits with
original maturities of three months or less.
NOTE B - NATIONAL SALES AGREEMENT
The Company's majority stockholders own another company that provides services
as a national sales agent (see Note D).
In 1992, the Company entered into an agreement whereby the related company
provides exclusive national sales services. The term of the agreement is for a
one year period, automatically renewable for an additional one year period. This
agreement can be terminated with a one year notice by either party.
-14-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE B - NATIONAL SALES AGREEMENT (continued)
Terms of the national sales agreement provide for the related company to be paid
30% of the Company's retail sales and/or collected lease revenue, as defined.
Further, in accordance with the agreement and at its option, the Company may
advance funds against future commissions to the related company. At December 31,
1999 and 1998, this related company had been prepaid $465,910 against future
sales commissions.
Realization of prepaid sales commission is dependent upon the Company generating
adequate cash flows to commence and sustain operations. Additionally, the
national sales agent must generate sufficient sales to earn these prepaid sales
commissions. Management anticipates both of these conditions will be achieved.
NOTE C - STOCKHOLDER NOTES PAYABLE
Stockholder notes payable consist of non-interest bearing notes payable to
certain stockholders. Principal is payable from operating profits. However,
based on written representation from the Company's majority stockholder, these
notes payable will be repaid prior to payment of sales commissions due sales
agent (see Note B). Repayments will be limited to not more than 50% of all
earned sales commissions due sales agent.
In lieu of interest on the above notes, the stockholders received additional
stock certificates. An amount equal to the par value of the stock certificates
was recorded as interest expense in the year the stock was issued. Stockholder
notes and shares of stock issued in lieu of interest amounted to the following:
Common stock
------------
Stockholder Par
Period of issue notes value Shares
----------- ----------- -------
Year ended December 31, 1993 $ 102,500 $ 250 250,000
Year ended December 31, 1994 66,400 216 216,000
Year ended December 31, 1995 80,000 200 200,000
Year ended December 31, 1996 40,000 75 75,000
Year ended December 31, 1997 60,000 125 125,000
----------- ----------- -------
$ 348,900 $ 866 866,000
=========== =========== =======
-15-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE D - RELATED PARTY NOTES PAYABLE
The Company's majority stockholders own another company that developed and sold
a patent to the Company for $470,000 (see Note A). The Company issued a $470,000
note payable to this related company in conjunction with the purchase. Terms of
the note provide for interest at 7.5% per annum. Principal and unpaid interest
payments on this note shall be paid from no more than 50% of any Company net
profits, as defined.
Through December 31, 1999, the Company's majority stockholders have agreed to
assume the liability for the interest accrued on the above note through December
31, 1999. This assumption of the liability has been recorded as a contribution
to additional paid-in capital in the accompanying financial statements.
Additionally, the related corporation described above has advanced money to the
Company under an unsecured, revolving promissory note. Terms of this note
provide for interest at 8.5%, payable quarterly, with principal due on December
31, 2000. At December 31, 1999 and 1998, amounts outstanding on this note
payable are $51,214 and $45,900, respectively.
NOTE E - INCOME TAXES
The Company has a deferred tax asset of approximately $500,000 at December 31,
1999, due to net operating losses incurred since inception. Temporary
differences giving rise to deferred tax assets consist primarily of the deferral
of substantially all start-up expenses for income tax purposes. Management has
provided a valuation allowance equal to the amount of deferred tax assets at
December 31, 1999. This is due to the uncertainty of realization of the future
benefit of these deductions. Therefore, for the year ended December 31, 1999,
there is no benefit for income taxes recorded in the accompanying statement of
operations.
For the year ended December 31, 1998, a valuation allowance was recorded to
provide for the uncertainty of the realization of the previously recorded
deferred tax asset.
NOTE F - SPECIAL SERVICES AGREEMENTS
In June 1998, pursuant to a stock purchase agreement, the Company issued 250,000
shares of common stock for public relations and marketing services.
Subsequently, the purchaser defaulted on the terms of the agreement and 92,500
shares were returned to the Company. These shares of stock are reflected as
treasury stock in the accompanying financial statements. The fair value of the
shares issued, less the treasury stock, of $315,000 has been recorded as stock
promotion expenses for the year ended December 31, 1998.
-16-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE F - SPECIAL SERVICES AGREEMENTS (continued)
On March 31, 1999, the Company entered into a cancelable special services
agreement with an unrelated active participation investor. Pursuant to this
agreement, the investor will provide various public relations and marketing
services to the Company in exchange for the right to purchase 875,000 shares of
the Company's stock for $1,000,000. The purchase of these shares will occur in
stages, at varying per share prices ranging from $.25 to $2.00 per share. At
March 31, 1999, the shares associated with this agreement were recorded as
subscribed common shares.
In accordance with the above agreement, upon collection of the subscription
price for the first stage, 250,000 shares of common stock were issued. For these
shares, the $812,500 difference between the fair value of the stock at March 31,
1999, and its selling price, has been recorded as stock promotion expense.
On or about September 1, 1999, the Company was de-listed from the OTCBB.
Subsequently, the company reduced the subscription price on the remaining
625,000 shares to $.50 per share. In the accompanying financial statements the
stock subscription receivable was adjusted to reflect the revised subscription
price.
NOTE G- TREASURY STOCK
In December 1998, the Company canceled a stock purchase agreement with a
purchaser (see Note F). As a result, 92,500 shares of common stock were returned
to the Company. The treasury stock is recorded at the original cost per share of
the stock transaction. However, these shares are currently held in an escrow
account on behalf of the Company. It is the intention of the Company that these
shares be held for future issuance to new investors or for future services to be
provided.
-17-
<PAGE>
BIOFILTRATION SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE H - FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 Disclosure about Fair Values
of Financial Instruments requires disclosure of fair value to the extent
practicable for financial instruments which are recognized in the balance sheet.
The fair value disclosed herein is not necessarily representative of the amount
that could be realized or settled, nor does the fair value amount consider tax
consequences of realization or settlement. The following summarizes financial
instruments by individual balance sheet account at December 31, 1999 and 1998:
1999 1998
-------------------- --------------------
Carrying Fair Carrying Fair
amount value amount value
-------- -------- -------- --------
Financial assets
Cash $ 6 $ 6 $ 9,120 $ 9,120
======== ======== ======== ========
Financial liabilities
Accounts payable and
accrued expenses $ 40,033 $ 40,033 $ 14,278 $ 14,278
======== ======== ======== ========
Stockholder notes
payable $348,900 $ (B) $348,900 $ (B)
======== ======== ======== ========
Related party notes
payable $521,214 $ (A) $515,900 $ (A)
======== ======== ======== ========
The carrying values of cash and accounts payable approximate their fair values.
(A) The fair value of related party notes payable are not determinable. Due to
the involvement of the related party, no stated interest rate and no
specific repayment date, it is impracticable to estimate the fair value of
these financial instruments (see Notes B and D) .
(B) The fair value of the stockholder notes are not determinable because they
are noninterest bearing and have no specified repayment date. Therefore,
it is impracticable to value these notes at current market interest rates
(see Note C).
-18-
EXHIBIT 3 (i)
ARTICLES OF INCORPORATION
OF
BIOFILTRATION SYSTEMS, INC.
The undersigned, for the purpose of forming a corporation under the
Florida General Corporation Act, do hereby adopt the following Articles of
Incorporation:
ARTICLE I
The name of the corporation is: BIOFILTRATION SYSTEMS, INC.
ARTICLE II
The duration of the corporation is perpetual.
ARTICLE III
The general purpose for which the corporation is organized are to transact
any lawful business for which corporations may be incorporated under the Florida
General Corporation Act.
ARTICLE IV
The aggregate number of shares which the corporation is authorized to
issue is twenty four million (24,000,000). Such shares shall be of a single
class, of par value $0.001 per share.
ARTICLE V
The street address and mailing address of the initial registered office of
the corporation is: 400 Madison Drive, Sarasota, FL 34236. The registered agent
at the said office address is ROBERT A. BERGS, Esquire, Principal address is
same as registered.
<PAGE>
ARTICLE VI
The number of directors of this corporation shall be as set forth in the
bylaws. The names and residence addresses of the initial directors are:
ALPHA JOSEPH KEYSER Joseph J. Ruocco, Ph.D.
525 Sutton Place 601 Russell Street
Longboat Key, FL 34228 Longboat Key, FL 34228
ARTICLE VII
The name and address of the sole incorporator is:
ALPHA JOSEPH KEYSER
525 Sutton Place
Longboat Key, FL 34228
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation on this 16 th day of December, 1992.
/s/ Alpha Joseph Keyser
----------------------------------------
ALPHA JOSEPH KEYSER
STATE OF FLORIDA
COUNTY OF SARASOTA
THE FOREGOING INSTRUMENT was acknowledged before me this 16th day of December,
1992, by ALPHA JOSEPH KEYSER, who is personally known to me and who did not take
an oath.
My commission expires: /s/ Nora B. House
----------------------------------------
Notary Public
Nora B. House
----------------------------------------
Printed, typed or stamped name
ACCEPTANCE OF REGISTERED AGENT
I, ROBERT A. BERGS, do hereby accept the designation of Registered
Agent and acknowledge that I am familiar with, and accept the obligations of
this position, particularly as set forth in Section 607.0501 Florida Statutes.
/s/ Robert A. Bergs
----------------------------------------
Registered Agent
Signed on December 16th, 1992
<PAGE>
FIRST AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
BIOFILTRATION SYSTEMS, INC.
THE UNDERSIGNED OFFICERS CERTIFY that at a Special Meeting of Stockholders
and Directors called for that purpose and held on 5th day of February, 1996, at
the offices of the corporation, 1800 Second Street, Suite 808-13, Sarasota,
Florida 34236, all directors being present and all stockholders either present
or having assented affirmatively by written instruments which have been appended
to the Minutes of the said meeting, a Resolution was proposed, seconded and
unanimously adopted to amend the Articles of Incorporation of BIOFILTRATION
SYSTEMS, INC. by deleting entirely the original provisions of Article IV and in
their place substituting the following:
ARTICLE IV
The aggregate number of shares which the corporation is authorized
to issue is five million (5,000,000), which shall be of a single
class and of no par value.
Outstanding stock certificates will be exchanged for new ones on a
share-for-share basis.
WITNESS the signatures of the President and Secretary of this corporation
and the Corporate Seal affixed this 7th day of February, 1996.
/s/ Alpha Joseph Keyser
- -----------------------------------------
Alpha Joseph Keyser, President
[CORPORATE SEAL]
/s/ Victoria M. Keyser
- -----------------------------------------
Victoria M. Keyser, Secretary
STATE OF FLORIDA
COUNTY OF SARASOTA
The foregoing instrument was acknowledged before me this 7th day of
February, 1996, by Alpha Joseph Keyser and Victoria M. Keyser, respectively the
President and Secretary of BIOFILTRATION SYSTEMS, INC., both of whom are well
known to me and did not take an oath.
My commission expires: /s/ Robert A. Bergs
----------------------------------------
Notary Public
Printed Name: Robert A. Bergs
------------------------
<PAGE>
FLORIDA DEPARTMENT OF STATE
Sandra B. Mortham
Secretary of State
June 22, 1998
BIOFILTRATION SYSTEMS, INC.
1800 SECOND STREET
STE. 808-13
SARASOTA, FL 34236
Re: Document Number P92000012596
The Articles of Amendment to the Articles of Incorporation of BIOFILTRATION
SYSTEMS, INC., a Florida corporation, were filed on June 22, 1998.
This document was electronically received and filed under FAX audit number
H98000011582.
Should you have any questions regarding this matter, please telephone (850)
487-6050, the Amendment Filing Section.
Teresa Brown
Corporate Specialist
Division of Corporations Letter Number: 198A00034330
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
BIOFILTRATION SYSTEMS, INC.
The Articles of Incorporation of the above-named corporation (the
"Corporation"), filed with the Department of State on the 17th day of December,
1992 and assigned Document Number P92000012596, are hereby amended pursuant to a
written consent in lieu of meeting executed and approved by the holders of all
of the Corporation's common stock and all of the Corporation's Directors on the
17th day of June, 1998, as follows:
ITEM I
1. ARTICLE IV - is hereby amended to read as follows:
ARTICLE IV
The aggregate number of shares which the corporation is authorized
to issue is five million (5,000,000), which shall be of a single
class, of par value $0.001 per share.
This Articles of Amendment to the Articles of Incorporation was adopted by
the shareholders and Directors on the 17th day of June, 1998.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment to the Articles of Incorporation this 18th day of June, 1998.
By: /s/ Alpha Joseph Keyser
----------------------------------
Alpha Joseph Keyser, President
By: /s/ Victoria M. Keyser
----------------------------------
Victoria M. Keyser, Secretary
EXHIBIT 3 (ii)
BYLAWS
OF
BIOFILTRATION SYSTEMS, INC.
ARTICLE I
SHAREHOLDERS
SECTION 1. Annual Meetings
(a) The annual meeting of the shareholders of the Corporation, shall be
held at the principal office of the Corporation in the State of Florida or at
such other place within or without the State of Florida as may be determined by
the Board of Directors and as may be designated in the notice of such meeting.
The meeting shall be held on the third Tuesday of February of each year or on
such other day as the Board of Directors may specify. If said day is a legal
holiday, the meeting shall be held on the next succeeding business day not a
legal holiday.
(b) Business to be transacted at such meeting shall be the election of
directors to succeed those whose terms are expiring and such other business as
may be properly brought before the meeting.
(c) In the event that the annual meeting, by mistake or otherwise, shall
not be called and held as herein provided, a special meeting may be called as
provided for in Section 2 of this Article I in lieu of and for the purposes of
and with the same effect as the annual meeting.
SECTION 2. Special Meetings
(a) A special meeting of the shareholders of the Corporation may be called
for any purpose or purposes at any time by the President of the Corporation, by
the Board of Directors or by the holders of not less than 10% of the outstanding
capital stock of the Corporation entitled to vote at such meeting.
(b) At any time, upon the written direction of any person or persons
entitled to call a special meeting of the shareholders, it shall be the duty of
the Secretary to send notice of such meeting pursuant to Section 4 of this
Article I. It shall be the responsibility of the person or persons directing the
Secretary to send notice of any special meeting of shareholders to deliver such
direction and a proposed form of notice to the Secretary not less than 15 days
prior to the proposed date of said meeting.
(c) Special meetings of the shareholders of the Corporation shall be held
at such place, within or without the State of Florida, on such date, and at such
time as shall be specified in the notice of such special meeting.
<PAGE>
SECTION 3. Adjournment
(a) When the annual meeting is convened, or when any special meeting is
convened, the presiding officer may adjourn it for such period of time as may be
reasonably necessary to reconvene the meeting at another place and time.
(b) The presiding officer shall have the power to adjourn any meeting of
the Shareholders for any proper purpose, including, but not limited to, lack of
a quorum, securing a more adequate meeting place, electing officials to count
and tabulate votes, reviewing any shareholder proposals or passing upon any
challenge which may properly come before the meetings.
(c) When a meeting is adjourned to another time or place, it shall not be
necessary to give any notice of the adjourned meeting if the time and place to
which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and any business may be transacted at the adjourned
meeting that might have been transacted on the original date of the meeting. If,
however, after the adjournment the Board fixes a new record date for the
adjourned meeting, a notice of the adjourned meeting shall be given in
compliance with Section 4(a) of this Article I to each shareholder of record on
the new record date entitled to vote at such meeting.
SECTION 4. Notice of Meetings, Purpose of Meeting, Waiver
(a) Each shareholder of record entitled to vote at any meeting shall be
given in person, or by first class mail, postage prepaid, written notice of such
meeting which, in the case of a special meeting, shall set forth the purpose(s)
for which the meeting is called, not less than 10 or more than 60 days before
the date of such meeting. If mailed, such notice is to be sent to the
shareholder's address as it appears on the stock transfer books of the
Corporation, unless the shareholder shall be requested of the Secretary in
writing at least 15 days prior to the distribution of any required notice that
any notice intended for him or her be sent to some other address, in which case
the notice may be sent to the address so designated. Notwithstanding any such
request by a shareholder, notice sent to a shareholder's address as it appears
on the stock transfer books of this Corporation as of the record date shall be
deemed properly given. Any notice of a meeting sent by United States mail shall
be deemed delivered when deposited with proper postage thereon with the United
States Postal Service or in any mail receptacle under its control.
(b) A shareholder waives notice of any meeting by attendance, either in
person or by proxy, at such meeting or by waiving notice in writing either
before, during or after such meeting. Attendance at a meeting for the express
purpose of objecting that the meeting was not lawfully called or convened,
however, will not constitute a waiver of notice by a shareholder who states at
the beginning of the meeting, his or her objection that the meeting is not
lawfully called or convened.
(c) A waiver of notice signed by all shareholders entitled to vote at a
meeting of shareholders may also be used for any other proper purpose including,
but not limited to, designating any place within or without the State of Florida
as the place for holding such a meeting.
<PAGE>
(d) Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of shareholders need be specified in any written
waiver of notice.
SECTION 5. Closing of Transfer Books, Record Date, Shareholders' List
(a) In order to determine the holders of record of the capital stock of
the Corporation who are entitled to notice of meetings, to vote a meeting or
adjournment thereof, or to receive payment of any dividend, or for any other
purpose, the Board of Directors may fix a date not more than 60 days prior to
the date set for any of the above-mentioned activities for such determination of
shareholders.
(b) If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least 10 days immediately
preceding such meeting.
(c) In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the date for any such determination of
shareholders, such date in any case to be not more than 60 days prior to the
date on which the particular action, requiring such determination of
shareholders, is to be taken.
(d) If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice or to vote at a meeting
of shareholders, or to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders.
(e) When a determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this Section, such determination
shall apply to any adjournment thereof, unless the Board of Directors fixes a
new record date under this Section for the adjourned meeting.
(f) The officer or agent having charge of the stock transfer books of the
Corporation shall make, as of a date at least 10 days before each meeting of
shareholders, a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, with the address of each shareholder and the
number and class and series, if any, of shares held by each shareholder. Such
list shall be kept on file at the registered office of the Corporation, at the
principal place of business of the Corporation or at the office of the transfer
agent or registrar of the Corporation for a period of 10 days prior to such
meeting and shall be available for inspection by any shareholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of any meeting of shareholders and shall be subject to
inspection by any shareholder at any time during the meeting.
(g) The original stock transfer books shall be prima facie evidence as to
the shareholders entitled to examine such list or stock transfer books or to
vote any meeting of shareholders.
<PAGE>
(h) If the requirements of Section 5(f) of this Article I have not been
substantially complied with, then, on the demand of any shareholder in person or
by proxy, the meeting shall be adjourned until such requirements are complied
with.
(i) If no demand pursuant to Section 5(h) of this Article I is made,
failure to comply with the requirements of this Section shall not affect the
validity of any action taken at such meeting.
(j) Section 5(g) of this Article I shall be operative only at such time(s)
as the Corporation shall have 6 or more shareholders.
SECTION 6. Quorum
At any meeting of the shareholders of the Corporation, the presence, in
person or by proxy, of shareholders owning a majority of the issued and
outstanding shares of the capital stock of the Corporation entitled to vote
thereat shall be necessary to constitute a quorum for the transaction of any
business. If a quorum is present, the vote of a majority of the shares
represented at such meeting and entitled to vote on the subject matter shall be
the act of the shareholders. If there shall not be quorum at any meeting of the
shareholders of the Corporation, then the holders of a majority of the shares of
the capital stock of the Corporation who shall be present at such meeting, in
person or by proxy, may adjourn such meeting from time to time until holders of
all of the shares of the capital stock shall attend. At any such adjourned
meeting at which a quorum shall be present, any business may be transacted which
might have been transacted at the meeting as originally scheduled.
SECTION 7. Presiding Officer, Order of Business
(a) Meetings of the shareholders shall be presided over by the Chairman of
the Board, or, if he or she is not present or there is no Chairman of the Board,
by the President or, if he or she is not present, by the senior Vice President
present or, if neither the Chairman of the Board, the President, nor a Vice
President is present, the meeting shall be presided over by a chairman to be
chosen by a plurality of the shareholders entitled to vote at the meeting who
are present, in person or by proxy. The presiding officer of any meeting of the
shareholders may delegate his or her duties and obligations as the presiding
officer as he or she sees fit.
(b) The Secretary of the Corporation, or, in his or her absence, an
Assistant Secretary shall act as Secretary of every meeting of shareholders, but
if neither the Secretary nor an Assistant Secretary is present, the presiding
officer of the meeting shall choose any person present to act as secretary of
the meeting.
(c) The order of business shall be as follows:
<PAGE>
1. Call of meeting to order.
2. Proof of notice of meeting.
3. Reading of minutes of last previous shareholders'
meeting or a waiver thereof.
4. Reports of officers.
5. Reports of committees.
6. Election of directors.
7. Regular and miscellaneous business.
8. Special matters.
9. Adjournment.
(d) Notwithstanding the provisions of Section 7(c) of this Article I, the
order and topics of business to be transacted at any meeting shall be determined
by the presiding officer of the meeting in his or her sole discretion. In no
event shall any variation in the order of business or additions and deletions
from the order of business as specified in Section 7(c) of this Article I
invalidate any actions properly taken at any meeting.
SECTION 8. Voting
(a) Unless otherwise provided for in the Articles of Incorporation, each
shareholder shall be entitled, at each meeting and upon each proposal to be
voted upon, to one vote for each share of voting stock recorded in his name on
the books of the Corporation on the record date fixed as provided for in Section
5 of this Article I.
(b) The presiding officer at any meeting of the shareholders shall have
the power to determine the method and means of voting when any matter is to be
voted upon. The method and means of voting may include, but shall not be limited
to, vote by ballot, vote by hand or vote by voice. No method of voting may be
adopted, however, which fails to take account of any shareholder`s right to vote
by proxy as provided for in Section 10 of this Article I. In no event may nay
method of voting be adopted which would prejudice the outcome of the vote.
SECTION 9. Action Without Meeting
(a) Any action required to be taken at any annual or special meeting of
shareholders of the Corporation, or any action which may be taken at any annual
or special meeting of such shareholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of a majority of the
Corporation's outstanding stock.
(b) In the event that the action to which the shareholders consent is such
as would have required the filing of a certificate under the Florida General
Corporation Act is such action had been voted on by shareholders at a meeting
thereof, the certificate filed under such other section shall state that written
consent has been given in accordance with the provisions of Section 9 of this
Article I.
<PAGE>
(c) If shareholder action is taken by written consent in lieu of meeting
signed by less than all of the Corporation's shareholders, then all non
participating shareholders shall be provided with written notice of the action
taken within 10 days after the date of the written instrument taking such
action.
(d) No action by written consent in lieu of meeting shall be valid if it
is in contravention of applicable proxy or informational rules adopted pursuant
to the Securities Exchange Act of 1934, as amended, including, without
limitation, the requirements of Section 14 thereof.
SECTION 10. Proxies
(a) Every shareholder entitled to vote at a meeting of shareholders or to
express consent or dissent without a meeting, or his or her duly authorized
attorney-in-fact, may authorize another person or persons to act for him or her
by proxy.
(b) Every proxy must be signed by the shareholder or his or her
attorney-in-fact. No proxy shall be valid after the expiration of 11 months from
the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the shareholder executing it, except as otherwise
provided in this Section 10.
(c) The authority of the holder of a proxy to act shall not be revoked by
the incompetence or death of the shareholder who executed the proxy unless,
before the authority is exercised, written notice of any adjudication of such
incompetence or of such death is received by the corporate officer responsible
for maintaining the list of shareholders.
(d) Except when other provisions shall have been made by written agreement
between the parties, the record holder of shares held as pledges or otherwise as
security or which belong to another, shall issue to the pledgor or to such owner
of such shares, upon demand therefor and payment of necessary expenses thereof,
a proxy to vote or take other action thereon.
(e) A proxy which states that it is irrevocable is irrevocable when it is
held by any of the following or a nominee of any of the following: (i) a
pledgee; (ii) a person who has purchased or agreed to purchase the shares: (iii)
a creditor or creditors of the Corporation who extend or continue to extend
credit to the Corporation in consideration of the proxy, if the proxy states
that it was given in consideration of such extension or continuation of credit,
the amount thereof, and the name of the person extending or continuing credit;
(iv) a person who has contracted to perform services as an officer of the
Corporation, if a proxy is required by the contract of employment, if the proxy
states that it was given in consideration of such contract of employment and
states the name of the employee and the period of employment contracted for; and
(v) a person designated by or under an agreement as provided in Article XI
hereof.
(f) Notwithstanding a provision in a proxy stating that it is irrevocable,
the proxy becomes revocable after the pledge is redeemed, the debt of the
Corporation is paid, the period of
<PAGE>
employment provided for in the contract of employment has terminated, or the
agreement under Article XI hereof has terminated and, in a case provided for in
Section 10(e) (iii) or Section 10(e) (iv) of this Article I, becomes revocable
three years after the date of the proxy or at the end of the period, if any,
specified therein, whichever period is less, unless the period of irrevocability
of the proxy as provided in this Section 10. This Section 10(f) does not affect
the duration of a proxy under Section 10(b) of this Article I.
(g) A proxy may be revoked, notwithstanding a provision making it
irrevocable, by a purchaser of shares without knowledge of the existence of the
provisions unless the existence of the proxy and its irrevocability is noted
conspicuously on the face or back of the certificate representing such shares.
(h) If a proxy for the same shares confers authority upon two or more
persons and does not otherwise provide, a majority of such persons present at
the meeting, or if only one is present then that one, may exercise all the
powers conferred by the proxy. if the proxy holders present at the meeting are
equally divided as to the right and manner of voting in any particular case, the
voting of such shares shall be prorated.
(i) If a proxy expressly so provides, any proxy holder may appoint in
writing a substitute to act in his or her place.
(j) Notwithstanding anything in the Bylaws to the contrary, no proxy shall
be valid if it was obtained in violation of any applicable requirements of
Section 14 of the Securities Exchange Act of 1934, as amended, or the Rules and
Regulations promulgated thereunder.
SECTION 11. Voting of Shares by Shareholders
(a) Shares standing in the name of another corporation, domestic or
foreign, may be voted by the officer, agent, or proxy designated by the bylaws
of the corporate shareholder; or, in the absence of any applicable bylaw, by
such person as the board of directors of the corporate shareholder may
designate. Proof of such designation may be made by presentation of a certified
copy of the bylaws or other instrument of the corporate shareholder. In the
absence of any such designation, or in case of conflicting designation by the
corporate shareholder, the chairman of the board, president, any vice president,
secretary and treasurer of the corporate shareholder, in that order, shall be
presumed to possess authority to vote such shares.
(b) Shares held by an administrator, executor, guardian or conservator may
be voted by him or her, either in person or by proxy, without a transfer of such
shares into his or her name. Shares standing in the name of a trustee may be
voted as shares held by him or her without a transfer of such shares into his
name.
(c) Shares standing in the name of a receiver may be voted by such
receiver. Shares held by or under the control of a receiver but not standing in
the name of such receiver, may be voted by
<PAGE>
such receiver without the transfer thereof into his name if authority to do so
is contained in an appropriate order of the court by which such receiver was
appointed.
(d) A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee.
(e) Shares of the capital stock of the Corporation belonging to the
Corporation or held by it in a fiduciary capacity shall not be voted, directly
or indirectly, at any meeting, and shall not be counted in determining the total
number of outstanding shares.
ARTICLE II
DIRECTORS
SECTION 1. Board of Directors, Exercise of Corporate Powers
(a) 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, the Board of Directors except as may be otherwise provided in the
Articles of Incorporation or in Shareholder's Agreement. If any such provision
is made in the Articles of Incorporation or in Shareholder's Agreement, the
powers and duties conferred or imposed upon the Board of Directors shall be
exercised or performed to such extent and by such person or persons as shall be
provided in the Articles of Incorporation or Shareholders' Agreement.
(b) Directors need not be residents of this state or shareholders of the
Corporation unless the Articles of Incorporation so require.
(c) The Board of Directors shall have authority to fix the compensation of
directors unless otherwise provided in the Articles of Incorporation.
(d) A director shall perform his or her duties as a director, including
his or her duties as a member of any committee of the Board upon which he may
serve, in good faith, in a manner he or she reasonably believes to be in the
best interests of the Corporation, and with such care as an ordinarily prudent
person in a like position would use under similar circumstances.
(e) In performing his or her 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: (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 accountants or other persons as to matters which the director reasonably
believes to be within such persons' professional or expert competence; or (iii)
a committee of the Board upon which he or she does not serve, duly designated in
accordance with a provision of the Articles of Incorporation or these By-Laws,
as to matters within its designated authority, which committee the director
reasonably believes to merit confidence.
<PAGE>
(f) A director shall not be considered to be acting in good faith if he or
she has knowledge concerning the matter in question that would cause such
reliance described in Section 1(e) of this Article II to be unwarranted.
(g) A person who performs his or her duties in compliance with Section 1
of this Article II shall have no liability by reason of being or having been a
director of the Corporation.
(h) A director of the Corporation who is present at a meeting of the Board
of Directors at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless he or she votes against such action
or abstains from voting in respect thereto because of an asserted conflict of
interest.
SECTION 2. Number, Election, Classification of Directors, Vacancies
(a) The Board of Directors of this Corporation shall consist of not less
than one director. The Board shall have authority, from time to time, to
increase the number of directors or to decrease it to not less than one member,
provided that no decrease in the number of directors shall deprive a serving
director of the right to serve throughout the term of his or her election.
(b) Each person named in the Articles of Incorporation as a member of the
initial Board of Directors shall serve until his or her successor shall have
been elected and qualified or until his or her earlier resignation, removal from
office, or death.
(c) At the first annual meeting of shareholders and at each annual meeting
thereafter, the shareholders shall elect directors to hold office until the next
succeeding annual meeting, except in case of the classification of director as
permitted by the Florida General Corporation Act. Each Director shall hold
office for the term for which he or she is elected and until his or her
successor shall have been elected and qualified or until his or her earlier
resignation, removal from office, or death.
(d) The shareholders, by amendment to these Bylaws, may provide that the
directors be divided into not more than four classes, as nearly equal in number
as possible, whose terms of office shall respectively expire at different times,
but no such term shall continue longer than four years, and at least one fourth
of the directors shall be elected annually. If Directors are classified and the
number of directors is thereafter changed, any increase or decrease in
directorship shall be so apportioned among the classes as to make all classes as
nearly equal in number as possible.
(e) Any vacancy occurring in the Board of Directors, including any vacancy
created by reason of an increase in the number of directors, may be filled only
by the Board of Directors. A director elected to fill a vacancy shall hold
office only until the next election of directors by the shareholders.
<PAGE>
SECTION 3. Removal of Directors
At a meeting of shareholders called expressly for that purpose, directors
may be removed in the manner provided in this Section 3. Any director or the
entire Board of Directors may be removed, with or without cause, by the vote of
the holders of two-thirds of the shares then entitled to vote at an election of
directors.
SECTION 4. Director Quorum and Voting
(a) A majority of the directors fixed in the manner provided in these
Bylaws shall constitute a quorum for the transaction of business.
(b) A majority of the members of an Executive Committee or other committee
shall constitute a quorum for the transaction of business at any meeting of such
Executive Committee or other committee.
(c) The act of a majority of the directors present at a Board meeting at
which a quorum is present shall be the act of the Board of Directors.
(d) The act of a majority of the members of an Executive Committee present
at an Executive Committee meeting at which a quorum is present shall be the act
of the Executive Committee.
(e) The act of a majority of the members of any other committee present at
a committee meeting at which a quorum is present shall be the act of the
committee.
(f) Directors may, if not contrary to applicable law, vote either in
person or by proxy, provided that the proxy holder must be either another
director, an officer or a shareholder of the Corporation; however, any director
who elects to vote by proxy more than three times during any single fiscal year
shall, unless otherwise determined by the Board of Directors, be automatically
removed as a director.
SECTION 5. Director Conflicts of Interest
(a) No contract or other transaction between this Corporation and one or
more of its director or any other corporation, firm, association or entity in
which one or more of its directors are Directors or officers or are financially
interested shall be either void or voidable because of such relationship or
interest or because such director or directors are present at the meeting of the
Board of Directors or a committee thereof which authorizes, approves or ratifies
such contract or transaction or because their votes are counted for such
purpose, if:
(i) 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 the purpose
without counting the votes or consents of such interested directors; or
<PAGE>
(ii) 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
(iii) The contract or transaction is fair and reasonable as to the
Corporation at the time it is authorized by the Board, a committee, or the
shareholders.
(b) Interested directors, whether or not voting, 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.
SECTION 6. Executive and Other Committees, Designation, Authority
(a) The Board of Directors, by resolution adopted by the full Board of
Directors, may designate from among its directors an Executive Committee and one
or more other committees each of which, to the extent provided in such
resolution or in the Articles of Incorporation or these Bylaws, shall have and
may exercise all the authority of the Board of Directors, except that no such
committee shall have the authority to : (i) approve or recommend to shareholders
actions or proposals required by the Florida General Corporation Act to be
approved by shareholders; (ii) designate candidates for the office of director
for purposes of proxy solicitation or otherwise; (iii) fill vacancies on the
Board of Directors or any committee thereof; (iv) amend these Bylaws; (v)
authorize or approve the reacquisition of shares unless pursuant to a general
formula or method specified by the Board of Directors; or (vi) authorize or
approve the issuance or sale of, or any contract to issue or sell, shares or
designate the terms of a series of a class of shares, unless the Board of
Directors, having acted regarding general authorization for the issuance or sale
of shares, or any contract therefor, and, in the case of a series, the
designation thereof has specified a general formula or method by resolution or
by adoption of a stock option or other plan, authorized a committee to fix the
terms upon which such shares may be issued or sold, including, without
limitation, the price, the rate or manner of payment of dividends, provisions
for redemption, sinking fund, conversion, and voting or preferential rights, and
provisions for other features of a class of shares, or a series of a class of
shares, with full power in such committee to adopt any final resolution setting
forth all the terms of a series for filing with the Department of State under
the Florida General Corporation Act.
(b) The Board, by resolution adopted in accordance with Section 6(a) of
this Article II, may designate one or more directors as alternate members of any
such committee, who may act in the place and stead of any absent member or
members at any meeting of such committee.
(c) Neither the designation of any such committee, the delegation thereto
of authority, nor action by such committee pursuant to such authority shall
alone constitute compliance by a member of the Board of Directors, not a member
of the committee in question, with his
<PAGE>
responsibility to act in good faith, in manner he reasonably believes to be in
the best interests of the Corporation, and with such care as an ordinarily
prudent person in a like position would use under similar circumstances.
SECTION 7. Place, Time, Notice and Call of Directors' Meeting.
(a) Meetings of the Board of Directors, regular or special, may be held
either within or without the State of Florida.
(b) A regular meeting of the Board of Directors of the Corporation shall
be held for the election of officers of the Corporation and for the transaction
of such other business as may come before such meeting as promptly as
practicable after the annual meeting of the shareholders of this Corporation
without the necessity of notice other than this Bylaw. Other regular meetings of
the Board of Directors of the Corporation may be held at such places as the
Board of Directors of the Corporation may from time to time resolve without
notice other than such resolution. Special meetings of the Board of Directors
may be held at any time upon call of the Chairman of the Board of Directors or a
majority of the Directors of the Corporation, at such time and at such place as
shall be specified in the call thereof. Notice of any special meeting of the
Board of Directors must be given at least two days prior thereto, if by written
notice delivered personally; or at least five days prior thereto, if mailed; or
at least two days prior thereto, if by telegram; or at least two days prior
thereto, if by telephone. If such notice is given by mail, such notice shall be
deemed to have been delivered when deposited with the United States Postal
Service addressed to the business address of such Director with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed delivered
when the telegram is delivered to the telegraph company. If notice is given by
telephone, such notice shall be deemed delivered when the call is completed.
(c) Notice of a meeting of the Board of Directors need not be given to any
Director who signs a waiver of notice either before or after the meeting.
Attendance of a Director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a Director states, at the beginning of the meeting, any objection to
the transaction of business because the meeting is not lawfully called or
convened.
(d) Neither the business to be transacted at, nor the purpose of, any
regular of special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
(e) A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the Board of Directors to another time and place.
Notice of any such adjourned meeting shall be given to the Directors who were
not present at the time of the adjournment and, unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
Directors.
<PAGE>
(f) Members of the Board of Directors may participate in a meeting of such
Board by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute presence in person
at a meeting.
SECTION 8. Action by Directors Without a Meeting
(a) Any action required by the Florida General Corporation Act to be taken
at a meeting of the Directors of the Corporation, or any action which may be
taken at a meeting of the Directors or a committee thereof, may be taken without
a meeting if a consent in writing, setting forth the action so to be taken,
signed by all of the Directors, or all of the members of the committee, as the
case may be, and is filed in the minutes of the proceedings of the Board or of
the committee. Such consent shall have the same effect as a unanimous vote.
(b) If not contrary to applicable law, directors may take action as the
Board of Directors or committees thereof through a written consent to action
signed by a number of directors sufficient to have carried a vote of the Board
of Directors or committee thereof with all members present and voting; provided,
that all directors not joining in such written instrument shall be deemed for
all purposes to have cast dissenting votes, and that all directors not parties
to such instrument shall receive written notice of all action taken through such
instrument within three days after such instrument shall have been subscribed by
the requisite number of directors required for such action.
SECTION 9. Compensation
The Directors and members of the Executive and any other committee of the
Board of Directors shall be entitled to such reasonable compensation for their
services and on such basis as shall be fixed from time to time by resolution of
the Board of Directors. The Board of Directors and members of any committee of
that Board of Directors shall be entitled to reimbursement for any reasonable
expenses incurred in attending any Board or committee meeting. Any Director
receiving compensation under this Section shall not be prevented from serving
the Corporation in any other capacity and shall not be prohibited from receiving
reasonable compensation for such other services.
SECTION 10. Resignation
Any Director of the Corporation may resign at any time by providing the
Board of Directors with written notice indicating the Director's intention to
resign and the effective date thereof.
<PAGE>
ARTICLE III
OFFICERS
SECTION 1. Election, Number, Terms of Office
(a) The officers of the Corporation shall consist of a Chairman of the
Board, a Chief Executive officer, a President, a Chief Operating Officer, a
Chief Financial Officer, one or more Vice-Presidents, a Secretary and a
Treasurer, each of whom shall be elected by the Board of Directors at such time
and in such manner as may be prescribed by these Bylaws. Such other officers and
assistance officers and agents as may be deemed necessary may be elected or
appointed by the Board of Directors. The officers of the Corporation shall be
hereinafter collectively referred to as the "Officers."
(b) All officers and agents, as between themselves and the Corporation,
shall have such authority and perform such duties in the management of the
Corporation as are provided in these Bylaws, or as may be determined by
resolution of the Board of Directors not inconsistent with these Bylaws.
(c) Any two or more offices may be held by the same person, except for the
offices of President and Secretary.
(d) A failure to elect a Chairman of the Board, Chief Executive Officer,
President, Chief Operating Officer, Chief Financial Officer, a Vice President, a
Secretary or a Treasurer shall not affect the existence of the Corporation.
SECTION 2. Removal
An officer of the Corporation shall hold office until the election and
qualification of his successor; however, any Officer of the Corporation may be
removed from office by the Board of Directors whenever in its judgment the best
interests of the Corporation will be served thereby. Such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer shall not of itself create any contract
right to employment or compensation.
SECTION 3. Vacancies
Any vacancy in any office from any cause may be filled for the unexpired
portion of the term of such office by the Board of Directors.
SECTION 4. Powers and duties
(a) The Chairman of the Board of Directors shall preside over meetings of
the Board of Directors and the Shareholders. Unless a separate Chief Executive
Officer is elected, the Chairman
<PAGE>
shall exercise the powers hereafter granted to that office. Unless a Chairman of
the Board is specifically elected, the President shall be deemed to be the
Chairman of the Board.
(b) The Chief Executive Officer shall be the principal officer of the
Corporation to whom all other officers shall be subordinate. In the event no
Chief Executive Officer is separately elected, such office shall be assumed by
the Chairman of the Board, and if no such office has been filled, by the
President. Except where by law the signature of the President is required or
unless the Board of Directors shall rule otherwise, the Chief Executive Officer
shall possess the same power as the President to sign all certificates,
contracts and other instruments of the Corporation which may be authorized by
the Board of Directors.
(c) The Chief Operating Officer of the Corporation shall be responsible
for management of the day to day affairs of the Corporation, subject to
compliance with the directions of the Board of Directors and of the Chief
Executive Officer. He shall be responsible for the general day-to-day
supervision of the business and affairs of the Corporation. He shall sign or
countersign all certificates, contracts or other instruments of the Corporation
as authorized by the Board of Directors. He may, but need not, be a member of
the Board of Directors.
(d) Unless otherwise provided by specific resolution of the Board of
Directors, the President shall be the Chief Operating Officer of the
Corporation. In the absence of a separately elected or available Chief Executive
Officer or Chairman of the Board, the President shall be the Chief Executive
Officer of the Corporation and shall preside at all meetings of the shareholders
and the Board of Directors. He shall make reports to the Board of Directors. The
Board of Directors will at all times retain the power to expressly delegate the
duties of the President to any other Officer of the Corporation.
(e) The Chief Financial Officer shall be responsible for coordinating all
financial aspects of the Corporation's operations, including strategic financial
planning, supervision of the Corporation's Treasurer, Comptroller and outside
auditors. In the event an Audit Committee of the Board of Directors is
designated and serving, he shall be responsible for keeping such committee fully
and timely informed of all matters under its jurisdiction. In addition, the
Chief Financial Officer shall be responsible for overseeing preparation and
filing of all reports of the Corporation's activities required to be filed,
either periodically or on a special basis with the United States Internal
revenue Service and Securities and Exchange Commission and other federal and
state governmental agencies.
(f) The Vice President(s), if any, in the order designated by the Board of
Directors, shall exercise the functions of the President in the event of the
absence, disability, death, or refusal to act of the President. During the time
that any Vice President is properly exercising the functions of the President,
such Vice President shall have all the powers of and be subject to all
restrictions upon the President. Each Vice President shall have such other
duties as are assigned to him from time to time by the Board of Directors or by
the President of the Corporation.
<PAGE>
(g) The Secretary of the Corporation shall keep the minutes of the
meetings of the shareholders of the Corporation, and, unless provided otherwise
by the Chairman at any meeting of the Board of Directors, the Secretary shall
keep the minutes of the meetings of the Board of Directors of the Corporation.
The Secretary shall be the custodian of the minute books of the Corporation and
such other books and records of the Corporation as the Board of Directors of the
Corporation may direct. The Secretary of the Corporation shall have the general
responsibility for maintaining the stock transfer books of the Corporation, or
of supervising the maintenance of the stock transfer books of the Corporation by
the transfer agent, if any, of the Corporation. The Secretary shall be the
custodian of the corporate seal of the Corporation and shall affix the corporate
seal of the Corporation on contracts and other instruments as the Board of
Directors may direct. The Secretary shall perform such other duties as are
assigned to him from time by the Board of Directors or the President of the
Corporation.
(h) The Treasurer of the Corporation shall be directly subordinate to the
Chief Financial Officer. In the absence of a Chief Financial Officer, such
office shall be filled by the Treasurer. The Treasurer shall have custody of all
funds and securities owned by the Corporation. The Treasurer shall cause to be
entered regularly in the proper books of account of the Corporation full and
accurate accounts of the receipts and disbursements of the Corporation. The
Treasurer of the Corporation shall render a statement of the cash, financial and
other accounts of the Corporation whenever he is directed to render such a
statement by the Board of Directors or by the President of the Corporation. The
Treasurer shall at all reasonable times make available the Corporation's books
and financial accounts to any Director of the Corporation during normal business
hours. The Treasurer shall perform all other acts incident to the Office of
Treasurer of the Corporation, and he shall have such other duties as are
assigned to him from time to time by the Board of Directors or the President of
the Corporation.
(i) Other subordinate or assistant officers appointed by the Board of
Directors or by the President, if such authority is delegated to him by the
Board of Directors, shall exercise such powers and perform such duties as may be
delegated to them by the Board of Directors, the Chief Executive Officer or by
the President, as the case may be.
(j) In case of the absence or disability of any Officer of the Corporation
and of any person authorized to act in his place during such period of absence
or disability, the Board of Directors may from time to time delegate the powers
and duties of such Officer or any Director or any other person whom it may
select.
SECTION 5. Salaries
The salaries of all Officers of the Corporation shall, except as otherwise
determined or required by an agreement entered into among all the shareholders
of the Corporation, be fixed by the Board of Directors. No Officer shall be
ineligible to receive such salary by reason of the fact that he is also a
Director of the Corporation and receiving compensation therefor.
<PAGE>
ARTICLE IV
LOANS TO EMPLOYEES AND OFFICERS,
GUARANTEE OF OBLIGATIONS OF EMPLOYEES AND OFFICERS
This Corporation may lend money to, guarantee any obligation of, or
otherwise assist any Officer or other employee of the Corporation or of a
subsidiary, including any Officer or employee who is a Director of the
Corporation or of a subsidiary, whenever, in the judgment of the Directors, such
loan, guarantee or assistance may reasonably be expected to benefit the
Corporation. The loan, guarantee or other assistance may be with or without
interest, and may be unsecured, or secured in such manner as the Board of
Directors shall approve including, without limitation, a pledge of shares of
stock of the Corporation. Nothing in this Articles shall be deemed to deny,
limit or restrict the powers of guarantee or warranty of this Corporation at
common law or under any statute.
ARTICLE V
STOCK CERTIFICATES, VOTING TRUSTS, TRANSFERS
SECTION 1. Certificates Representing Shares
(a) Every holder of shares of this Corporation shall be entitled to one or
more certificates, representing all shares to which he is entitled and such
certificates shall be signed by the Chairman, Chief Executive Officer, the
President or a Vice President and the Secretary or an Assistant Secretary of the
Corporation and may be sealed with the seal of the Corporation or a facsimile
thereof. The signatures of the Chairman, the Chief Executive Officer, the
President or Vice President and the Secretary or Assistant Secretary may be
facsimiles if the certificate is manually signed on behalf of a transfer agent
or a registrar, other than the Corporation itself or an employee of the
Corporation. In case any Officer who signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such Officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if it were executed by the appropriate Officer at the date of its
issuance.
(b) Every certificate representing shares issued by this Corporation
shall, if shares are divided into one or more classes or series with differing
rights, state that the Corporation will furnish to any shareholder upon request
and without charge a full statement of: (i) the designations, preferences,
limitations, and relative rights of the shares of each class or series
authorized to be issued, and (ii) the variations in the relative rights and
preferences between the shares of each such series, if the Corporation is
authorized to issue any preferred or special class in series and so far as the
same have been fixed and determined, and the authority of the Board of Directors
to fix and determine, the relative rights and preferences of subsequent series.
(c) Every certificate representing shares which are restricted as to sale,
disposition or other transfer (including restrictions based on federal or state
securities and other laws) shall state that such shares are restricted as to
transfer and shall set forth or fairly summarize upon the
<PAGE>
certificate, or shall state that the Corporation will furnish to any shareholder
upon request and without charge a full statement of, such restrictions.
(d) Each certificate representing shares shall state upon the face
thereof: (i) the name of the Corporation; (ii) that the Corporation is organized
under the laws of the State of Nevada; (iii) the name of the person or persons
to whom issued; (iv) the number and class of shares, and the designation of the
series, if any, which such certificate represents; and (v) the par value of each
share represented by such certificate, or a statement that the shares are
without par value.
(e) No certificate shall be issued for any shares until they are fully
paid for.
SECTION 2. Transfer Books
The Corporation shall keep at its registered office or principal place of
business or in the office of its transfer agent or registrar, a book (or books
where more than one kind, class, or series of stock is outstanding) to be known
as the Stock Book, containing the names, alphabetically arranged, addresses and
Social Security numbers of every shareholder and the number of shares each kind,
class or series of stock held of record. Where the Stock Book is kept in the
office of the transfer agent, the Corporation shall keep at its office in the
State of Florida copies of the stock lists prepared from said Stock Book and
sent to it from time to time by said transfer agent. The Stock Book or stock
lists shall show the current status of the ownership of shares of the
Corporation provided that, if the transfer agent of the Corporation be located
elsewhere, a reasonable time shall be allowed for transit or mail.
SECTION 3. Transfer of Shares
(a) The name(s) and address(es) of the person(s) to whom shares of stock
of this Corporation are issued, shall be entered on the Stock Transfer Books of
the Corporation, with the number of shares and date of issue.
(b) Transfer of shares of the Corporation shall be made on the Stock
Transfer Books of the Corporation by the Secretary or the transfer agent,
subject to compliance with any restrictions specified on such certificate, only
when the holder of record thereof or the legal representative of such holder of
record or the attorney-in-fact of such holder of record, authorized by power of
attorney duly executed and filed with the Secretary or transfer agent of the
Corporation, shall surrender the Certificate representing such shares for
cancellation. Lost, destroyed or stolen Stock Certificates shall be replaced
pursuant to Section 5 of this Article V.
(c) The person or persons in whose names shares stand on the books of the
Corporation shall be deemed by the Corporation to be the owner of such shares
for all purposes, except as otherwise provided pursuant to Sections 10 and 11 of
Article I, or Section 4 of Article V.
<PAGE>
(d) Shares of the Corporation capital stock shall be freely transferable
without the required Board of Directors' consent, unless such consent
requirement has been imposed pursuant to a binding written contract subscribed
to by the holder or his or her predecessor in interest.
SECTION 4. Voting Trusts
(a) Any number of shareholders of the Corporation may create a voting
trust for the purpose of conferring upon a trustee or trustees the right to vote
or otherwise represent their shares, for a period not to exceed ten years, by:
(i) entering into a written voting trust agreement specifying the terms and
conditions of the voting trust; (ii) depositing a counterpart of the agreement
with the Corporation at its registered office; and (iii) transferring their
shares to such trustee or trustees for the purposes of this Agreement. Prior to
the recording of the agreement, the shareholder concerned shall render the stock
certificate(s) described therein to the Corporate Secretary who shall note on
each certificate:
"This Certificate is subject to the provisions of a voting
trust agreement dated ..........................., recorded in
Minute Book .............................., of the Corporation.
................................................"
Secretary
(b) Upon the transfer of such shares, voting trust certificates shall be
issued by the trustee or trustees to the shareholders who transfer their shares
in trust. Such trustee or trustees shall keep a record of the holders of voting
trust certificates evidencing a beneficial interest in the voting trust, giving
the names and addresses of all such holders and the number and class or the
shares in respect of which the voting trust certificates held by each are
issued, and shall deposit a copy of such record with the Corporation at its
registered office.
(c) The counterpart of the voting trust agreement and the copy of such
record so deposited with the Corporation shall be subject to the same right of
examination by a shareholder of the Corporation, in person or by agent or
attorney, as are the books and records of the Corporation, and such counterpart
and such copy of such record shall be subject to examination by any holder of
record of voting trust certificates either in person or by agent or attorney, at
any reasonable time for any proper purpose.
(d) At any time before the expiration of a voting trust agreement as
originally fixed or as extended one or more times under this Section 4(d), one
or more holders of voting trust certificates may, by agreement in writing,
extend the duration of such voting trust agreement, nominating the same or
substitute trustees, for an additional period not exceeding 10 years. Such
extension agreement shall not affect the rights or obligations or persons not
parties to the agreement, and such persons shall be entitled to remove their
shares from the trust and promptly to have their stock certificates reissued
upon the expiration of the original term of the voting trust agreement. The
extension agreement shall in every respect comply with and be subject to all the
provisions of this
<PAGE>
Section 4, applicable to the original voting trust agreement except that the 10
year maximum period of duration shall commence on the date of adoption of the
extension agreement.
(e) The trustees under the terms of the agreements entered into under the
provisions of this Section 4, shall not acquire the legal title to the shares
but shall be vested only with the legal right and title to the voting power
which is incident to the ownership of the shares.
(f) Notwithstanding generally applicable prohibitions against a
corporation's voting of treasury stock, if the Corporation is the trustee under
a voting trust, it shall have full authority to vote such shares in accordance
with the terms of the voting trust agreement, even if such agreement vests
absolute and unfettered voting discretion in the trustee and notwithstanding
that the voting trust was created at the prompting or direction of the
Corporation, its officers or directors.
SECTION 5. Lost, Destroyed, or Stolen Certificates
No Certificate representing shares of stock in the Corporation shall be
issued in place of any Certificate alleged to have been lost, destroyed, or
stolen except on production of evidence, satisfactory to the Board of Directors,
of such loss, destruction or theft, and, if the Board of Directors so requires,
upon the furnishing of an indemnity bond in such amount (but not to exceed twice
the fair market value of the shares represented by the Certificate) and with
such terms and with such surety as the Board of Directors may, in its
discretion, require.
ARTICLE VI
BOOKS AND RECORDS
(a) The Corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its shareholders, Board of
Directors and committees of Directors.
(b) Any books, records and minutes may be in written form or in any other
form capable of being converted into written form within a reasonable time.
(c) Any person who shall have been a holder of record of shares, or the
holder of record of voting trust certificates for, at least five percent of the
outstanding shares of any class or series of the Corporation, upon written
demand stating the purpose thereof, shall; subject to the qualifications
contained in subsection (d) hereof, have the right to examine, in person or by
agent or attorney, at any reasonable time or times, for any purpose, its
relevant books and records of account, minutes and records of shareholders and
to make extracts therefrom.
(d) No shareholder who within two years has sold or offered for sale any
list of shareholders or of holders of voting trust certificates for shares of
this Corporation or any other corporation; has aided or abetted any person in
procuring any list of shareholders or of holders of voting trust certificates
for any such purpose; or has improperly used any information secured through any
prior examination of the books and records of account, minutes, or record of
shareholders or of holders of voting trust certificates for shares of the
Corporation of any other corporation; shall be
<PAGE>
entitled to examine the documents and records of the Corporation as provided in
Section (c) of this Article VI. No shareholder who does not act in good faith or
for a proper purpose in making his demand shall be entitled to examine the
documents and records of the Corporation as provided in Section (c) of this
Article VI.
(e) Unless modified by resolution of the Shareholders, this Corporation
shall prepare not later than four months after the close of each fiscal year:
(i) A balance sheet showing in reasonable detail the financial
conditions of the Corporation as of the date of the close of its fiscal year.
(ii) A Profit and Loss statement showing the results of its
operation during its fiscal year.
(f) Upon the written request of any shareholder or holder of voting trust
certificates for shares of the Corporation, the Corporation shall mail to such
shareholder or holder of voting trust certificates a copy of its most recent
balance sheet and profit and loss statement.
(g) Such balance sheets and profit and loss statements shall be filed and
kept for at least five years in the registered office of the Corporation in the
State of Florida and shall be subject to inspection during business hours by any
shareholder or holder of voting trust certificates, in person or by agent.
ARTICLE VII
DIVIDENDS
The Board of Directors of the Corporation may, from time to time, declare,
and the Corporation may pay dividends on its own shares, except when the
Corporation is insolvent or when the payment thereof would render the
Corporation insolvent, subject to the following provisions:
(a) Dividends in cash or property may be declared and paid, except as
otherwise provided in this Article VII, only out of the unreserved and
unrestricted earned surplus of the Corporation or out of capital surplus,
however arising, but each dividend paid out of capital surplus shall be
identified as a distribution of capital surplus, and the amount per share paid
from such capital surplus shall be disclosed to the shareholders receiving the
same concurrently with the distribution.
(b) If the Corporation shall engage in the business of exploiting natural
resources or other wasting assets and if the Articles of Incorporation so
provide, dividends may be declared and paid in cash out of depletion or similar
reserves, but each such dividend shall be identified as distribution of such
reserves and the amount per share paid from such reserves shall be disclosed to
the shareholders receiving the same concurrently with the distribution thereof.
(c) Dividends may be declared and paid in the Corporation's treasury
shares.
<PAGE>
(d) Dividends may be declared and paid in the Corporation's authorized but
unissued shares, out of any unreserved and unrestricted surplus of the
Corporation, upon the following conditions:
(i) If a dividend is payable in the Corporations' own shares having
a par value, such shares shall be issued at not less than the par value thereof
and there shall be transferred to stated capital at the time such dividend is
paid an amount of surplus equal to the aggregate par value of the shares to be
issued as a dividend.
(ii) If a dividend is payable in the Corporations' own shares
without par value, such shares shall be issued at a stated value fixed by the
Board of Directors by resolution adopted at the time such dividend is declared,
and there shall be transferred to stated capital at the time such dividend is
paid an amount of surplus equal to the aggregate stated value so fixed and the
amount per share so transferred to stated capital shall be disclosed to the
shareholders receiving such dividend concurrently with the payment thereof.
(e) No dividend payable in shares of any class shall be paid to the
holders of shares of any other class unless the Articles of Incorporation so
provide or such payment is authorized by the affirmative vote or the written
consent of the holders of at least a majority of the outstanding shares of the
class which the payment is to be made.
(f) A split or division of the issued shares of any class into a greater
number of shares of the same class without increasing the stated capital of the
Corporation shall not be construed to be a stock dividend within the meaning of
this Article VII.
ARTICLE VIII
SEAL
The Board of Directors shall adopt a Corporate Seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation,
the state of incorporation and the year of incorporation.
ARTICLE IX
INDEMNIFICATION
This Corporation may, in its discretion, indemnify any director, officer,
employee, or agent in the following circumstances and in the following manner:
(a) The Corporation may indemnify any person who was or is a part, or is
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by, or in the right of, the Corporation) by reason of the
fact that he is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys' fees
at all trial and appellate levels), judgments, fines and amounts paid in
settlement
<PAGE>
actually and reasonably incurred by him in connection with such action, suit, or
proceeding, including any appeal thereof, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonable believed to be in, or not opposed to, the best interests of the
Corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) The Corporation may indemnify any person who was or is a party, or is
threatened to be made a party to any threatened, pending, or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee, or agent of
the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise against expenses (including attorneys' fees at all trial and
appellate levels), actually and reasonable incurred by him in connection with
the defense of settlement of such action or suit, including any appeal thereof,
if he acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interest of the Corporation, except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless, and only to
the extent that, the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is rarely and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
(c) To the extent that a Director, Officer, employee, or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in Sections (a) or (b) of this Article
IX, or in defense of any claim, issue, or matter therein, shall be indemnified
against expenses (including attorneys' fees at trial and appellate levels)
actually and reasonably incurred by him in connection therewith.
(d) Any indemnification under Sections (a) or (b) of this Article IX,
unless pursuant to a determination by a court, shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Sections (a) or (b) or this Article IX. Such determination shall initially be
made by the Board of Directors by a majority vote of a quorum consisting of
Directors who were not parties to such action, suit, or proceeding. If the Board
of Directors shall, for any reason, decline to make such a determination, then
such determination shall be made by the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties to such action, suit or
proceeding; provided, however, that a determination made by the Board of
Directors pursuant to this Section may be appealed to the shareholders by the
party seeking indemnification or any party entitled to call a special meeting of
the shareholders pursuant to Section 2 of Article I and, in such case, the
determination made by the majority vote of a quorum consisting of shareholders
who were not parties to such action, suit, or
<PAGE>
proceeding shall prevail over a contrary determination of the Board of Directors
pursuant to this Section.
(e) Expenses (including attorneys' fees at all trial and appellate levels)
incurred in defending a civil or criminal action, suit or proceeding may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding upon a preliminary determination following one of the procedures set
forth in this Article IX, that a Director, Officer, employee or agent met the
applicable standard of conduct set forth in this Article IX, and upon receipt of
an undertaking by or on behalf of the director, officer, employee or agent to
repay such amount, unless it shall ultimately be determined that he is entitled
to be indemnified by the Corporation as authorized in this section.
(f) The Corporation may make any other or further indemnification, except
an indemnification against gross negligence or willful misconduct, under any
agreement, vote of shareholders or disinterested Directors or otherwise, both as
to action in the indemnified party's official capacity and as to action in
another capacity while holding such office.
(g) Indemnification as provided in this Article IX may continue as to a
person who has ceased to be a director, officer, employee or agent and may inure
to the benefit of the heirs, executors and administrators of such a person upon
a proper determination initially made by the Board of Directors by a majority
vote of a quorum consisting of Directors who were not parties to such action,
suit, or proceeding. If the Board of Directors shall, for any reason, decline to
make such a determination, then such determination may be made by the
shareholders by a majority vote of a quorum consisting of shareholders who were
not parties to such action, suit or proceeding; provided, however, that a
determination made by the Board of Directors pursuant to this Section may be
appealed to the shareholders by the party seeking indemnification or his
representative or by any party entitled to call a special meeting of the
shareholders pursuant to Section 2 or Article I and in such case, the
determination made by the majority vote of quorum consisting of shareholders who
were not parties to such action, suit, or proceeding shall prevail over a
contrary determination of the Board of Directors pursuant to this Section (g).
(h) The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation,
or is or 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.
(i) If any expenses or other amounts are paid by way of indemnification,
otherwise than by court order or action by the shareholders or by an insurance
carrier pursuant to insurance maintained by the Corporation, the Corporation
shall, not later than the time of delivery to shareholders or written notice of
the next annual meeting of shareholders unless such meeting is held within three
months from the date of such payment, and, in any event, within 15 months from
the date of such payment, deliver either personally or by mail to each
shareholder of record at the time entitled to vote for the election of Directors
a statement specifying the persons paid, the amount paid, and the nature and
status at the time of such payment of the litigation of threatened litigation.
<PAGE>
(j) This Article IX shall be interpreted to permit indemnification to the
fullest extent permitted by law. If any part of this Article shall be found to
be invalid or ineffective in any action, suit of proceeding, the validity and
effect of the remaining part thereof shall not be affected. The provisions of
this Article IX shall be applicable to all actions, claims, suits, or
proceedings made or commenced after the adoption hereof, whether arising from
acts or omissions to act occurring before or after its adoption.
ARTICLE X
AMENDMENT OF BYLAWS
The Board of Directors shall have the power to amend, alter, or repeal
these Bylaws, and to adopt new Bylaws.
ARTICLE XI
FISCAL YEAR
The Fiscal Year of this Corporation shall be determined by the Board of
Directors.
ARTICLE XII
MEDICAL REIMBURSEMENT
SECTION 1. Benefits
The Corporation may, subject to approval of the Board of Directors
reimburse all employees for expenses incurred by themselves and their
dependents, as defined in Section 152 of the Internal Revenue Code of 1954, as
amended (the "IRC"), for medical care, as defined in IRC Section 213(e) or any
successor section thereto, subject to the conditions and limitations hereinafter
set forth.
It is the intention of the Corporation that the benefits payable to
employees hereunder will be excluded from their gross income pursuant IRC
Section 105 or any successor section thereto.
SECTION 2. Employees Defined
The term "employees" as used in this medical expense plan is hereby
defined to include all individuals employed by the corporation except the
following:
(a) Employees who have not completed three months of service as is
provided in IRC Section 105(h)(3) (b)(i), or any successor section thereto;
(b) Employees who have not attained the age of 25 years;
(c) Employees who are part-time or seasonal as is defined in IRC Section
105(h)(3)(B)(iii) or any successor section thereto;
<PAGE>
(d) Employees who are included in a unit of employees covered by an
agreement between employee representatives and one or more employers found to be
a collective bargaining agreement; where accident and health benefits were the
subject of good faith bargaining between such employee representatives and such
employer(s) as is defined in IRC Section 105(h)(3)(B)(iv) or any successor
section thereto;
(e) Employees who are nonresident aliens and who receive no earned income
from the employer which constitutes income from sources within the United States
as is further defined in IRC Section 105(h)(5)(B)(v) or any successor section
thereto.
SECTION 3. Limitations
(a) The Corporation will reimburse any employee no more than $5,000.00 in
any fiscal year for medical care expenses;
(b) Reimbursement or payment provided under this plan will be made by the
Corporation only in the event and to the extent that such reimbursement or
payment is not provided under any insurance policy(ies), whether owned by the
Corporation or the employee, or under any other health and accident or wage
continuation plan;
(c) In the event that there is such an insurance policy or plan in effect
providing for reimbursement in whole or in part, then to the extent of the
coverage under such policy or plan, the Corporation will be relieved of any and
all liability hereunder.
SECTION 4. Submission of Proof
Any employee applying for reimbursement under this plan will submit to the
Corporation, at least quarterly, all bills for medical care, including premium
notices for accident or health insurance, for verification by the Corporation
prior to payment. Failure to comply herewith, may at the discretion of the Board
of Directors, terminate such employee's right to said reimbursement.
SECTION 5. Discontinuation
This plan will be subject to termination at any time by vote of the Board
of Directors; provided, however, that medical care expenses incurred prior to
such termination will be reimbursed or paid in accordance with the terms of this
plan.
SECTION 6. Determination
The Chief Executive Officer will determine all questions arising from the
administration and interpretation of the Plan except where reimbursement is
claimed by the President. In such case determination will be made by the Board
of Directors.
* * *
<PAGE>
The Undersigned, being the duly elected and acting secretary of the Corporation,
hereby certifies that the foregoing constitute the validly adopted and true
Bylaws of the Corporation, as of the date set forth below.
Dated: _________________
--------------------------
Secretary
(Corporate Seal)
