SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form For Registration of Securities
of Small Business Issuers Under
Section 12(b) or (g) of
the Securities Exchange Act of 1934
Monument Galleries, Inc.
(Exact Name of Small Business Issuer as specified in its charter)
Colorado 84-1461919
--------------- --------------------------
(State or other (IRS Employer File Number)
jurisdiction of
incorporation)
3225 East 2nd Ave.
Denver, Colorado 80206
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(Address of principal executive offices) (zip code)
(303) 393-1600
(Registrant's telephone number, including area code)
Securities to be Registered Pursuant to Section 12(b) of the Act:
None
Securities to be Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.0.001 per share par value
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References in this document to "us," "we," or "the Company" refer to
Monument Galleries, Inc.
Item 1. Description of Business.
------------------------
(a) General Development of Business
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We are a Colorado corporation. Our principal business address is 3225 East
2nd Ave., Denver, Colorado 80206. Our business plan is to develop, own and
operate a chain of Western art galleries. At the present time, our first
proposed operation is at 3225 East 2nd Ave., Denver, Colorado 80206, which is
our principal business address.
We were incorporated under the laws of the State of Colorado on May 15,
1998. We are presently in the development stage and have not commenced active
operations.
In 1998, we acquired the trade name "Santa Fe Trail Art Gallery" and the
assets and inventory of the Santa Fe Art Gallery and Museum Store (the
"Gallery"). As of January 31, 1999, we sold this Gallery to a third party entity
for the assumption of debt of the assets of the Gallery.
We have not been subject to any bankruptcy, receivership or similar
proceeding.
(b) Narrative Description of the Business
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General
-------
We have had limited activity since inception. However, currently, we carry
no material inventories and have no accounts receivable. No independent market
surveys have ever been conducted to determine demand for our products and
services. Since inception,we have had only limited operations and generated
limited revenues through January 31, 1999. We had no profit. Our fiscal year end
is January 31st.
Organization
------------
We are comprised of one corporation with no subsidiaries or parent
entities.
We are filing this Form 10-SB on a voluntary basis because we plan to
engage in equity and/or debt financing in the foreseeable future and believe
that our fund raising will be enhanced by having a record of regular disclosure
under the Securities Exchange Act of 1934 (the "1934 Act"). We have no plans in
the foreseeable future, under any circumstances, to terminate our registration
under the 1934 Act.
(c) Operations
-------------------
Since inception, we have been dedicated to developing a chain of art
galleries specializing in Southwestern Art. We plan to begin with one gallery
and to refine our concept. Once we have gained experience with our first
gallery, we plan to open additional galleries. We do not know at this time
whether our concept will prove to be successful and whether we can develop this
concept into a chain of galleries.
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We will test our concept with our first location (the "Store"). The Store
is planned to carry the art and sculpture works of a variety of Southwestern
artists, as wells as Native American tools and artifacts, storyteller dolls, and
furniture and accessories. The Store also plans to do framing of art, with the
actual work being contracted out to an unaffiliated third party. We may also
publish the art work of artists.
Our plan in publishing the art work of artists will be to find new or
unknown artists, place them under exclusive contract, publish their works
through prints or similar reproductive media, and to seek to profit from the
increased recognition of and demand for these artists' works.
A typical project would involve signing an exclusive contract with an
artist, printing an art work in an edition of approximately two thousand prints,
and retailing the prints at approximately $150 per print. As the artist becomes
more recognized, the price of the prints would increase, along with profits to
us.
During this fiscal year, we plan, in addition to developing the Store, to
search for and to identify potential artists and to publish their art works. As
of the date of this Registration Statement, we are not negotiating any rights to
publish art works. In fact, to date, our primary activity has been directed
solely towards organizational efforts.
In addition we plan to expand through acquisition. We will not only look at
our present industry but will reserve the right to investigate and, if
warranted, merge with or acquire the assets or common stock of an entity
actively engaged in business which generates revenues. We will seek
opportunities for long-term growth potential as opposed to short-term earnings.
As of the date hereof, we have no business opportunities under investigation.
None of our officers, directors, promoters or affiliates have engaged in any
preliminary contact or discussions with any representative of any other company
regarding the possibility of an acquisition or merger between us and such other
company.
We have two part-time employees, our President and our Secretary-Treasurer.
Our employees have agreed to allocate a portion of their time to our activities,
without compensation. These officers anticipate that our business plan can be
implemented by their collectively devoting approximately twenty hours per month
to our business affairs. Consequently, conflicts of interest may arise with
respect to the limited time commitment of such officers. These officers will use
their best judgements to resolve all such conflicts.
(d) Markets
----------------
Our marketing plan is focused initially on developing our first Store and
the activities surrounding this Store. We will use the efforts of our officers
and directors to market our services.
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(e) Raw Materials
----------------------
The use of raw materials is not material factor in our operations and is
not expected to be material factor in the future.
(f) Customers and Competition
----------------------------------
At the present time, we expect to be an insignificant participant among art
galleries. There are a number of established galleries, virtually all of which
are larger and better capitalized than we are and/or have greater personnel
resources and technical expertise. In view of our combined extremely limited
financial resources and limited management availability, we believe that we will
continue to be at a significant competitive disadvantage compared to our
competitors. There can be no guarantee that we will ever generate substantial
revenues or ever be profitable.
(g) Backlog
----------------
At October 31, 1999, we had no backlogs.
(h) Employees
------------------
At as of the date hereof, we have two part-time employees who receive no
salaries. We do not plan to hire employees in the future.
(i) Proprietary Information
--------------------------------
We own no proprietary information.
(j) Government Regulation
------------------------------
We are not subject to any material governmental regulation or approvals.
(k) Research and Development
---------------------------------
We have never spent any amount in research and development activities.
(l) Environmental Compliance
---------------------------------
We are not subject to any costs for compliance with any environmental laws.
Item 2. Management's Discussion and Analysis or Plan of Operations.
-----------------------------------------------------------
Forward-Looking Statements
- --------------------------
The following discussion contains forward-looking statements regarding our
Company, its business, prospects and results of operations that are subject to
certain risks and uncertainties posed by many factors and events that could
cause our actual business, prospects and results of operations to differ
materially from those that may be anticipated by such forward-looking
statements. Factors that may affect such forward-looking statements include,
without limitation: our ability to successfully develop new products for new
markets; the impact of competition on our revenues, changes in law or regulatory
requirements that adversely affect or preclude customers from using our products
for certain applications; delays our introduction of new products or services;
and our failure to keep pace with emerging technologies.
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When used in this discussion, words such as "believes", "anticipates",
"expects", "intends" and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
report. Our Company undertakes no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may subsequently
arise. Readers are urged to carefully review and consider the various
disclosures made by us in this report and other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect our business.
Results of Operations
- ---------------------
For the fiscal year ended January 31, 1999, we generated total revenues of
$46,087. We had a net loss of $51,406, or $0.18 per share for this period. As of
January 31, 1999, we sold our Gallery to a third party entity for the assumption
of debt of the assets of the Gallery. For the interim period ended October 31,
1999, we have generated no revenues and had a $3,701 net loss, or $0.01 per
share. We have never been profitable. We try to operate with minimal overhead.
Our business does not require a substantial overhead, so that we can continue
our present operations indefinitely. Our primary activity will be to seek to
develop our Store and, consequently, to begin generating revenues again. If we
succeed in opening our Store and generating sufficient revenues, we may become
profitable. We cannot guarantee that this will ever occur. Our plan is to build
our Company in any manner which will be successful. To that end, we may also
look for an acquisition candidate, as well as developing our Store, although we
have concluded no acquisitions and have spoken with no potential candidates.
Liquidity and Capital Resources
- -------------------------------
As of the end of our fiscal year, we had cash or cash equivalents of $140.
As of the interim period ended September 30, 1999, we had cash or cash
equivalents of $21,252. This change in cash or cash equivalents as a direct
result of the cash investment of $30,000 by our principal shareholder.
We feel that we have inadequate working capital to pursue any business
opportunities other than opening the first Store. During the next twelve months,
we plan to investigate an offering of our securities, whether through a private
placement or a public offering. At the present time, we have no firm
arrangements with regard to either type of offering. We do not intend to pay
dividends in the foreseeable future.
Item 3. Description of Property
Our business office is located at 3225 East 2nd Ave., Denver, Colorado
80206. We pay $300 per month in rent for this office space, which is occupied by
our President, F. Jeffrey Krupka, under month-to-month lease plus the actual
expenses of telephone and fax and $200 per month for accounting services. We
have no properties.
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Item 4. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The following sets forth the number of shares of the Registrant's $.0.001
par value common stock beneficially owned by (i) each person who, as of October
1, 1999, was known by the Company to own beneficially more than five percent
(5%) of its common stock; (ii) the individual Directors of the Registrant and
(iii) the Officers and Directors of the Registrant as a group. A total of
751,750 common shares were issued and outstanding as of October 1, 1999.
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership (1)(2) Class
- --------------------------------------------------------------------------------
La Fond Duex Mille Premier LLC 400,000 53.21%
3225 East 2nd Ave.
Denver, Colorado 80206
F. Jeffrey Krupka -0-(3) -0-
3225 East 2nd Ave.
Denver, Colorado 80206
Zonni Bernstein 63,000 8.38%
3225 East 2nd Ave.
Denver, Colorado 80206
Cynthia Kettl -0-(3) -0-
3225 East 2nd Ave.
Denver, Colorado 80206
All Officers and Directors as a Group 63,000 8.38%
(three persons)
(1) All ownership is beneficial and on record, unless indicated otherwise.
(2) Beneficial owners listed above have sole voting and investment power
with respect to the shares shown, unless otherwise indicated.
(3) Mr. Krupka is the Manager of La Fond Duex Mille Premier LLC. La Fond
Duex Mille Premier LLC.is owned 98% by Platinum Financial Fund, LLC,
which, in turn, is owned 90% by Mr. Krupka., who is also the Manager of
Platinum Financial Fund, LLC. Ms. Kettl is a 1% owner of La Fond Duex
Mille Premier LLC. Mr. Krupka's father, Frank Krupka, owns the
remaining 1% of La Fond Duex Mille Premier LLC. Mr. Krupka disclaims
any beneficial ownership in his father's interest.
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Item 5. Directors, Executive Officers, Promoters and Control Persons.
-------------------------------------------------------------
Our Directors and Executive Officers, their ages and present positions held
are as follows:
NAME AGE POSITION HELD
F. Jeffrey Krupka 44 President, Chief Executive Officer
And Director
Zonni Bernstein 38 Secretary and Director
Cynthia Kettl 52 Treasurer
Our Directors will serve in such capacity until our next annual meeting of
shareholders and until their successors have been elected and qualified. The
officers serve at the discretion of our Directors. There are no family
relationships among our officers and directors, nor are there any arrangements
or understandings between any of our directors or officers or any other person
pursuant to which any officer or director was or is to be selected as an officer
or director.
F. Jeffrey Krupka. Mr. Krupka has been our President and a Director since
September 13, 1999. He has also been the Chief Executive Officer of Platinum
Financial Fund, LLC, a private investment company, since 1998. From October,
1995 to 1998, he was the owner of Krupka and Associates, LLC., a private
investment company. He has been involved in real estate as well as securities
investment activities since 1981.
Zonni Bernstein. Ms. Bernstein been our Secretary since September 13, 1999.
She has been one of our Directors since inception and was our President from
inception to September 13, 1999. She has been principally involved in the
restaurant business from 1983 to 1997 in different capacities. Since 1997, she
has worked for Cranel, Inc., a private storage solutions company as an
administrative assistant. She also has worked part-time during the period 1997
to the present at Guiry's, a private home decorating center. Ms. Bernstein has
attended Arizona State University and The Fashion Institute of Technology, in
New York City.
Cynthia Kettl. Ms. Kettl been our Treasurer since September 13, 1999. She
has been involved with Platinum Financial Fund, LLC, a private investment
company, since 1998. From October, 1995 to 1998, she was employed by Krupka and
Associates, LLC., a private investment company. Ms. Kettl received a Bachelor's
degree in Business Management from Metropolitan State College in 1981, a
Bachelor's degree in Accounting from Metropolitan State College in 1998 , and an
Associates Degree in Business from Community College North Denver in 1978.
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Item 6. Executive Compensation
----------------------
None of our executive officers received compensation in excess of $100,000
during the fiscal year ended December 31, 1998. We were formed in May, 1998.
Compensation does not include minor business-related and other expenses paid by
us. Such amounts in the aggregate do not exceed $1,000. Our Treasurer, Ms.
Kettl, receives compensation of $200 per month, commencing October 1, 1999, for
accounting services. Mr. Krupka receives no compensation. Our President and
Treasurer serve on a part-time basis.
We have granted no shares of our capital stock as additional compensation
and have no plans to do so.
We have no plans or agreements which provide health care, insurance or
compensation on the event of termination of employment or change in our control.
We do not pay members of our Board of Directors any fees for attendance or
similar remuneration, but reimburse them for any out-of- pocket expenses
incurred by them in connection with our business.
Item 7. Certain Relationships and Related Transactions
----------------------------------------------
Our business office is located at 3225 East 2nd Ave., Denver, Colorado
80206. We pay no rent for this office space, which is occupied by our President,
F. Jeffrey Krupka, under month-to-month lease. Otherwise, there have been no
related party transactions, or any other transactions or relationships required
to be disclosed under Item 404 of Regulation S-B.
Item 8. Description of Securities.
--------------------------
We are authorized to issue 10,000,000 shares of Common Stock, par value
$.0.001 per share, and 1,000,000 shares of non-voting Preferred Stock, par value
$1.00 per share, to have such classes and preferences as our Board of Directors
may determine from time to time.. As of October 31, 1999, we had 751,750 shares
of Common Stock issued and outstanding. No Preferred Stock has ever been issued
or outstanding.
Common Stock
------------
The holders of Common Stock have one vote per share on all matters
(including election of Directors) without provision for cumulative voting. Thus,
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors, if they choose to do so. The Common Stock is not
redeemable and has no conversion or preemptive rights.
The Common Stock currently outstanding is validly issued, fully paid and
non-assessable. In the event of liquidation of the Company, the holders of
Common Stock will share equally in any balance of the Company's assets available
for distribution to them after satisfaction of creditors and the holders of the
Company's senior securities, whatever they may be. The Company may pay
dividends, in cash or in securities or other property when and as declared by
the Board of Directors from funds legally available therefor, but has paid no
cash dividends on its Common Stock.
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Preferred Stock
---------------
Under the Articles of Incorporation, the Board of Directors has the
authority to issue non-voting Preferred Stock and to fix and determine its
series, relative rights and preferences to the fullest extent permitted by the
laws of the State of Colorado and such Articles of Incorporation. As of the date
of this Registration Statement, no shares of Preferred Stock are issued or
outstanding. The Board of Directors has no plan to issue any Preferred Stock in
the foreseeable future.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
-------------------------------------------------------------------
Other Stockholder Matters.
--------------------------
(a) Principal Market or Markets
------------------------------------
Our securities have never been listed for trading on any market and are not
quoted at the present time. At the present time, we do not know where secondary
trading will eventually be conducted. Because of our size, we believe that we
could potentially begin trading on the NASD's "Electronic Bulletin Board." To
the extent, however, that trading will be conducted in the over-the-counter
market in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board,"
a shareholder may find it more difficult to dispose of or obtain accurate
quotations as to price of our securities. In addition, The Securities
Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure
related to the market for penny stock and for trades in any stock defined as a
penny stock.
(b) Approximate Number of Holders of Common Stock
------------------------------------------------------
As of the date hereof, a total of 751,750 of shares of our Common Stock
were outstanding and the number of holders of record of our common stock at that
date was approximately fifty-three.
(c) Dividends
------------------
Holders of common stock are entitled to receive such dividends as may be
declared by our Board of Directors. No dividends on the common stock were paid
by us during the periods reported herein nor do we anticipate paying dividends
in the foreseeable future.
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(d) The Securities Enforcement and Penny Stock Reform Act of 1990
----------------------------------------------------------------------
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure and documentation related to the market for penny stock
and for trades in any stock defined as a penny stock. Unless we can acquire
substantial assets and trade at over $5.00 per share on the bid, it is more
likely than not that our securities, for some period of time, would be defined
under that Act as a "penny stock." As a result, those who trade in our
securities may be required to provide additional information related to their
fitness to trade our shares. These requirements present a substantial burden on
any person or brokerage firm who plans to trade our securities and would thereby
make it unlikely that any liquid trading market would ever result in our
securities while the provisions of this Act might be applicable to those
securities.
Item 2. Legal Proceedings.
------------------
No legal proceedings of a material nature to which we are a party were
pending during the reporting period, and we know of no legal proceedings of a
material nature pending or threatened or judgments entered against any of our
directors or officers in their capacity as such.
Item 3. Changes In and Disagreements With Accountants.
----------------------------------------------
We did not have any disagreements on accounting and financial disclosures
with its accounting firm during the reporting period.
Item 4. Recent Sales of Unregistered Securities.
----------------------------------------
On June 5, 1998, we issued the following common shares to the individuals
named below at par value per share consideration.
Name Number of Shares
----------------------- ----------------
Christine Steffans Roe 78,000*
Zonni Bernstein 63,000
Ross Bernstein 25,000
Neil Bernstein 25,000
David Wagner 25,000
* These shares were subsequently canceled.
All of these shares of our common stock were issued in accordance with the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933, as amended. All of the investors are considered to be sophisticated
investors because of their previous investment experience and access to
information on us necessary to make an informed investment decision.
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On June 10, 1998, we issued the following common shares to the individuals
or entities named below at a price of $0.20 per share.
Name Number of Shares
-------------------------- ----------------
Robert Carusa 500
Jack Resch 500
Robert Wiese 500
Albert D. Taylor 500
Brian Murray 500
Norton Handler 5,000
Westfield Investments, LLC 5,000
Sheldon Stillman 10,000
Robert Sutherland 1,000
Stanley Green 100
Matthew J. and Marcella E.
Neimes 2,500
Mary Ann McMillan 1,000
Clemencia Christensen 500
William T. Barry 100
William J. Barry 100
Judith A. Calver 100
Daniel Green 100
Jeff Green 200
Linda Green 100
Marilyn B. Gula 100
Annette Paul 100
Andrew Astrove 5,000
Ayn Brink 500
Gina Abegg 2,500
Patty Jones 500
In August, 1998, we issued 8,000 shares to Jeff Orkin at $.001 per share.
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The following shareholders acquired their respective shares in September
and October, 1998 at prices ranging from $.15 to $.50 per share:
Name Number of Shares
------------------------- ----------------
Anthony Artal & Carolyn Bartal JTTEN 8,000
Albert Belsky 4,000
R.J. Berllin 4,000
Juana B. Cardenas 6,000
Michsael Policastro 12,000
Alvin Eglow 2,500
Frequent Flier Service 2,500
Larry Knighten & Jean Knighten JTTEN 5,000
John Koller 10,000
Charles C. McDaniels 2,000
Marcia McKenzie 6,000
William L. Mengel 10,000
Carmella Mercado 18,000
Marcella Neimes 10,000
Doug Radford & Dana Radford JTTEN 10,000
Dave Reigel 4,000
Lavern Reimer & Janet Reimer JTTEN 5,000
Gates S. Roe 2,500
Robert Sutherland 20,000
Grant St. Joint Venture 5,000
Joan Wagenti 21,000
Janet L. Ware 1,250
We believe that the offers and sales described above on June 10, 1998 and
in September and October, 1998 were exempt from registration under Rule 504 of
Regulation D under the Securities Act because those offers and sales met all the
conditions of Rule 504 as then in effect, including the dollar limitation, and
we were not at the time of such transactions within any of the categories of
issuers prohibited from using Rule 504.
On September 13, 1999, we issued 400,000 shares to Le Fonds Duex Mille
Premier LLC for a total consideration of $30,000. These shares of our common
stock were issued in accordance with the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended. This investor is
considered to be sophisticated because of its previous investment experience and
access to information on us necessary to make an informed investment decision.
Item 5. Indemnification of Directors and Officers.
The Company's Articles of Incorporation authorize the Board of Directors,
on behalf of the Company and without shareholder action, to exercise all of the
Company's powers of indemnification to the maximum extent permitted under the
applicable statute. Title 7 of the Colorado Revised Statutes, 1986 Replacement
Volume ("CRS"), as amended, permits the Company to indemnify its directors,
officers, employees, fiduciaries, and agents as follows:
Section 7-109-102 of CRS permits a corporation to indemnify such persons
for reasonable expenses in defending against liability incurred in any legal
proceeding if:
(a) The person conducted himself or herself in good faith;
(b) The person reasonably believed:
(1) In the case of conduct in an official capacity with the
corporation, that his or her conduct was in thewas in the
corporation's best interests; and
(2) In all other cases, that his or her conduct was at least
not opposed to the corporation's best interests; and
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(c) In the case of any criminal proceeding, the person had no
reasonable cause to believe that his or her conduct was
unlawful.
A corporation may not indemnify such person under this Section 7-109-102 of
CRS:
(a) In connection with a proceeding by or in the right of the
corporation in which such person was adjudged liable to the
corporation; or
(b) In connection with any other proceeding charging that such
person derived an improper benefit, whether or not involving
action in an official capacity, in which proceeding such
person was adjudged liable on the basis that he or she
derived an improper personal benefit.
Unless limited by the Articles of Incorporation, and there are not such
limitations with respect to the Company, Section 7-109-103 of CRS requires that
the corporation shall indemnify such a person against reasonable expenses who
was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which the person was a party because of his status with the
corporation.
Under Section 7-109-104 of CRS, the corporation may pay reasonable fees in
advance of final disposition of the proceeding if:
(a) Such person furnishes to the corporation a written
affirmation of the such person's good faith belief that he or
she has met the Standard of Conduct described in Section
7-109-102 of CRS;
(b) Such person furnishes the corporation a written undertaking,
executed personally or on person's behalf, to repay the
advance if it is ultimately determined that he or she did not
meet the Standard of Conduct in Section 7-109-102 of CRS; and
(c) A determination is made that the facts then known to those
making the determination would not preclude indemnification.
Under Section 7-109-106 of CRS, a corporation may not indemnify such
person, including advanced payments, unless authorized in the specific case
after a determination has been made that indemnification of such person is
permissible in the circumstances because he met the Standard of Conduct under
Section 7-109-102 of CRS and such person has made the specific affirmation and
undertaking required under the statute. The required determinations are to be
made by a majority vote of a quorum of the Board of Directors, utilizing only
directors who are not parties to the proceeding. If a quorum cannot be obtained,
the determination can be made by a majority vote of a committee of the Board,
which consists of at least two directors who are not parties to the proceeding.
If neither a quorum of the Board nor a committee of the Board can be
established, then the determination can be made either by the Shareholders or by
independent legal counsel selected by majority vote of the Board of Directors.
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The corporation is required by Section 7-109-110 of CRS to notify the
shareholders in writing of any indemnification of a director with or before
notice of the next shareholders' meeting.
Under Section 7-109-105 of CRS, such person may apply to any court of
competent jurisdiction for a determination that such person is entitled under
the statute to be indemnified from reasonable expenses.
Under Section 7-107(1)(c) of CRS, a corporation may also indemnify and
advance expenses to an officer, employee, fiduciary, or agent who is not a
director to a greater extent than the foregoing indemnification provisions, if
not inconsistent with public policy, and if provided for in the corporation's
bylaw, general or specific action of the Board of Directors, or shareholders, or
contract.
Section 7-109-108 of CRS permits the corporation to purchase and maintain
insurance to pay for any indemnification of reasonable expenses as discussed
herein.
The indemnification discussed herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under the Articles of
Incorporation, any Bylaw, agreement, vote of shareholders, or disinterested
directors, or otherwise, and any procedure provided for by any of the foregoing,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of
heirs, executors, and administrators of such a person.
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expense incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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PART F/S
Monument Galleries, Inc.
TABLE OF CONTENTS
Page
Independent Auditors' Report F-1
Financial Statements
Balance Sheet F-2
Statement of Operations F-3
Statement of Cash Flows F-4
Statement of Shareholder's Equity F-5
Notes to the Financial Statements F-6
<PAGE>
Independent Auditor's Report
We have audited the accompanying balance sheet of Monument Galleries, Inc.
(a Developmental Stage Company), at October 31, 1999 and January 31, 1999, and
the related statement of operations, shareholders' equity, and cash flows for
the nine month interim period ended October 31, 1999 and the initial period May
15, 1998 through January 31, 1999 and the period February 1, 1999 (inception)
through October 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Monument Galleries, Inc. at
October 31, 1999 and January 31, 1999 and the results of its operations and its
cash flows for the nine month interim period ended October 31, 1999 and for the
initial period May 15, 1998 through January 31, 1999 and the period February 1,
1999 (inception) through October 31, 1999, in conformity with generally accepted
accounting principles.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
December 6, 1999
F-1
<PAGE>
Monument Galleries, Inc.
(A Development Stage Company)
Balance Sheet
<TABLE>
<CAPTION>
January October
31, 1999 31, 1999
-------- --------
<S> <C> <C>
ASSETS
Current Assets - Cash $140 $21,252
Other Assets-Organization Costs(Less Amortization of $600 and $1,367) 3,400 7,633
-------- --------
TOTAL ASSETS 3,540 28,885
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Accounts Payable 2,150 196
Advances from Shareholder 6,000 6,000
-------- --------
Total Current Liabilities 8,150 6,196
-------- --------
Long-Term Liabilities 0 0
-------- --------
TOTAL LIABILITIES 0 0
-------- --------
SHAREHOLDERS' EQUITY
Preferred Stock $1 Par Value
Authorized 1,000,000 Shares; Issued and Outstanding
0 at January 31, 1999 and 0 at October 31, 1999 0 0
Common Stock, $.001 Par Value
Authorized 10,000,000 Shares; Issued and Outstanding
351,750 at January 31, 1999 and 751,750 at October 31, 1999 352 752
Capital Paid In Excess Of
Par Value Of Common Stock 46,444 77,044
Retained (Deficit) (51,406) (51,406)
Retained (Deficit) Accumulated During The
Development Stage 0 (3,701)
-------- --------
TOTAL SHAREHOLDERS' EQUITY (4,610) 22,689
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,540 $28,885
======== ========
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-2
<PAGE>
Monument Galleries, Inc.
(A Development Stage Company)
Statement Of Operations
<TABLE>
<CAPTION>
February 1
Nine Month 1999
Interim (Inception)
Year Ended Period Ended Through
January October October
31, 1999 31, 1999 31, 1999
---------- ------------ -----------
<S> <C> <C> <C>
Sales $46,087 $0 $0
Cost of Goods Sold
Purchases 20,972 0 0
Consignment 13,002 0 0
Framing 1,345 0 0
Freight 130 0 0
--------- ------------ -----------
Total Cost of Goods Sold 35,449 0 0
--------- ------------ -----------
Gross Profit 10,638 0 0
--------- ------------ -----------
General and Administrative Expenses
Commissions and Consulting 23,472 600 600
Wages 16,498 0 0
General and Administrative Expenses 51,406 3,101 3,101
--------- ------------ -----------
Total General and Administrative Expenses 91,376 3,701 3,701
--------- ------------ -----------
(Loss) Before Extraordinary Income (80,738) (3,701) (3,701)
--------- ------------ -----------
Extraordinary Item
Extinguishment of Debt 29,332 0 0
--------- ------------ -----------
Total Extraordinary Income 29,332 0 0
--------- ------------ -----------
(Loss) Before Taxes (51,406) (3,701) (3,701)
Provision for Income Taxes 0 0 0
--------- ------------ -----------
Net (Loss) ($51,406) ($3,701) ($3,701)
========= ============ ===========
Basic Earnings (Loss) Per Share ($0.15) ($0.01)
========= ============
Weighted Average Common Shares
Outstanding 343,375 396,194
--------- ------------
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-3
<PAGE>
Monument Galleries, Inc.
(A Development Stage Company)
Statement Of Cash Flows
<TABLE>
<CAPTION>
Inception
Nine Month Feburary 1
Interim 1999
Year Ended Period Ended Through
January October October
31, 1999 31, 1999 31, 1999
---------- ------------ ----------
<S> <C> <C> <C>
Net (Loss) ($51,406) ($3,701) ($3,701)
Adjustments To Reconcile Net Loss To Net Cash
Used In Operating Activities:
Items Not Affecting Cash Flows:
Amortization Expense 600 767 767
Stock Issued for Services 224 0 0
(Increase) in Organization Costs (4,000) (5,000) (5,000)
Increase (Decrease) in Accounts Payable 2,150 (1,954) (1,954)
---------- ------------ ----------
Net Flows From Operations (52,432) (9,888) (9,888)
---------- ------------ ----------
Cash Flows From Investing Activities: 0 0 0
Cash Flows From Financing Activities:
Issuance of Common Stock 206 30,000 30,000
Acquisition of Common Stock (78) 0 0
Advances from Shareholder 6,000 0 0
Additional Paid in Capital 46,444 1,000 1,000
---------- ------------ ----------
Net Cash Provided By Financing Activities 52,572 31,000 31,000
---------- ------------ ----------
Net Increase In Cash 140 21,112 21,112
Cash At Beginning Of Period 0 140 140
---------- ------------ ----------
Cash At End Of Period $140 $21,252 $21,252
========== ============ ==========
Non-Cash Activities:
Common Stock Issued For Services $224 $0 $0
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-4
<PAGE>
Monument Galleries, Inc.
(A Development Stage Company)
Statement Of Shareholders' Equity
<TABLE>
<CAPTION>
Accumulated
Number Of Capital Paid During The
Common Common In Excess Of Development Retained
Shares Stock Par Value Stage (Deficit) Total
--------- ------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance At January 31,1998 0 $0 $0 $0 $0 $0
June 5, 1998 For Services @ $.001 Per Share 216,000 216 216
June 19, 1998 For Cash @ $.20 Per Share 37,000 37 7,363 7,400
August 1998 For Services @ $.001 Per Share 8,000 8 8
September and October 1998 For Cash @ Average
Price Per Share of $.23 168,750 169 39,081 39,250
January 1999 Cancellation @ $.001 Per Share (78,000) (78) (78)
Net (Loss) At Janaury 31, 1999 (51,406) (51,406)
Balance At January 31, 1999 351,750 352 46,444 0 (51,406) (4,610)
========= ====== ============ ============ ========= ========
August 31, 1999 Cash 1,000 1,000
September 23, 1999 For Cash @ $.075 Per Share 400,000 400 29,600 30,000
Net (Loss) At October 31, 1999 (3,701) (3,701)
Balance At October 31, 1999 751,750 $752 $77,044 $3,701) ($51,406) $22,689
========= ====== ============ ============ ========= ========
</TABLE>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-5
<PAGE>
Monument Galleries, Inc.
(A Development Stage Company)
Notes to Financial Statements
Period Ended October 31, 1999 and January 31, 1999
Note 1 - Organization and Summary of Significant Accounting Policies
- --------------------------------------------------------------------
Organization:
On May 15, 1998, Monument Galleries, Inc. (the Company) was incorporated
under the laws of Colorado, to engage in the business of art galleries. The
Company may also engage in any business which is permitted by the Colorado
Business Corporation Act, as designated by the board of directors of the
Company. On February 1, 1999 management decided to enter the development stage
and try to proceed with the Company's focus on an art gallery focusing on
Southwestern art and unkown artists.
Developmental Stage:
The Company is currently in the developmental stage and has no significant
operations to date.
Statement of Cash Flows:
For purposes of the statement of cash flows, the Company considers demand
deposits and highly liquid-debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Cash paid for interest and taxes for the period ended January 31, 1999 and
the interim period ended October 31, 1999 was $-0-.
Fiscal Year End:
The Company has chosen January 31st as its fiscal year end.
Revenue Recognition:
When operations commence the Company will recognize revenue when the art
work is sold.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts. Actual results could differ from
those estimates.
F-6
<PAGE>
Monument Galleries, Inc.
(A Development Stage Company)
Notes to Financial Statements
Period Ended October 31, 1999 and January 31, 1999
Note 2 - Capital Stock
- -----------------------
The Company authorized 10,000,000 shares of $.001 par value Common Stock
and 1,000,000 shares of $1 par value non-voting Preferred Stock where the
Directors of the Company have the right to assign preferences.
Common Stock:
On June 5, 1998 the Company issued 216,000 shares of $.001 par value common
stock for services valued at $216 or $.001 per share. On June 19, 1998 the
Company issued 37,000 shares of $.001 par value common stock valued at $7,400 or
$.20 per share. In August 1998 the Company issued 8,000 shares of $.001 par
value common stock for services valued at $8 or $.001 per share. In September
and October the Company issued 168,750 shares of $.001 par value common stock
for cash of $39,250 or an average price of $.23 per share. In January 1999 the
Company canceled 78,000 shares of $.001 par value common stock originally valued
at $78.
In August 1999 the Company issued 400,000 shares of $.001 par value common
stock for cash of $30,000 or $.075 per share.
Preferred Stock:
There is no issued preferred stock.
The Company has declared no dividends through January 31, 1999 and the
interim period ended October 31, 1999.
F-7
<PAGE>
Monument Galleries, Inc.
(A Development Stage Company)
Notes to Financial Statements
Period Ended October 31, 1999 and January 31, 1999
Note 3 - Income Taxes
- ---------------------
The Company follows Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109), which requires, among other things,
an asset and liability approach to calculating deferred income taxes. As of
January 31, 1999 and for the interim period October 31, 1999 the Company has a
deferred tax asset of $10,280 and $11,020, respectively, primarily for its net
operating loss carry forward which has been fully reserved through a valuation
allowance. The change in the valuation allowance for October 31, 1999 is $740.
The net operating loss carryover will expire in varying amount in the years 2014
and 2015.
Note 4 - Related Party Events
- -----------------------------
The Company presently maintains its principal offices at an address
provided by a related party at a monthly rental of $300 per month, plus any
expense of telephone and fax and $200 a month for accounting services,
commencing October 1, 1999. The office is located at 3225 E. 2nd Ave., Denver,
CO 80206.
An Officer of the Company is also an Officer of a related Company which is
a 53% shareholder.
F-8
<PAGE>
Monument Galleries, Inc.
(A Development Stage Company)
Notes to Financial Statements
Period Ended October 31, 1999 and January 31, 1999
Note 5 - Extraordinary Item
- ---------------------------
On January 31, 1999 the Company sold the Gallery to a third party entity
for the assumption of debt of the assets of the Gallery. The transaction
resulted in an extraordinary gain of $29,332 against the operating loss. The
release of debt decreased the net operating loss from $80,738 to $51,406,
therefore, there was no effect on income tax.
The impact of the extraordinary item on basic loss per share was as
follows:
Basic Loss
Per Share
--------------------
Loss before extraordinary item ($80,738) ($.24)
Extraordinary gain 29,332 $.09
--------------------
Net Loss ($51,406) ($.15)
Note 6 - Loss Contingency
- -------------------------
When the Company sold the Gallery to a third party in January 1999 the
third party assumed a noncancelable equipment lease containing an unconditional
guarantee. Management has determined the possibility of a loss arising from this
lease is remote. The estimated amount of a possible loss as of October 31, 1999
is $1,476.
Note 7 - Subsequent Events
- --------------------------
The Company plans on filing a Form 10-SB with the Securities and Exchange
Commission.
F-9
<PAGE>
PART III
Item 1. Index to Exhibits.
------------------
Exhibit Page or
Number Description Cross Reference
----------------------------------------------------------------------------
3A Articles of Incorporation 1
3B Bylaws 6
Item 2. Description of Exhibits.
------------------------
Original Articles of Incorporation, filed on May 15, 1998.
Bylaws of The Company, approved on June 5, 1998.
16
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Monument Galleries, Inc.
Dated: 12/10/99 By:/s/F. Jeffrey Krupka
--------------------
F. Jeffrey Krupka
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
CHIEF FINANCIAL OFFICER
Dated: 12/10/99 By:/s/Cynthia Kettl
----------------
Cynthia Kettl
Treasurer
Dated: 12/10/99 By:/s/F. Jeffrey Krupka
-----------------
F. Jeffrey Krupka
Director
Dated: 12/10/99 By:/s/Zonni Bernstein
---------------
Zonni Bernstein
Director
17
Exhibit 3A Articles of Incorporation
ARTICLES OF INCORPORATION
OF
Monument Galleries, Inc.
KNOW ALL MEN BY THESE PRESENTS: That the undersigned, being a natural
person of the age of eighteen (18) years or more and desiring to form a body
corporate under the laws of the State of Colorado, does hereby sign, verify and
deliver in duplicate to the Secretary of State of the State of Colorado these
Articles of Incorporation.
ARTICLE I
Name
----
The name of the Corporation shall be Monument Galleries, Inc.
ARTICLE II
Authorized Shares
-----------------
Section 1: Number. The aggregate number of shares which the Corporation
shall have authority to issue is Ten Million (10,000,000) Common Shares of one
class, with unlimited voting rights, all with a par value of $0.001 per share
and One Million(1,000,000) Preferred Shares, all with a par value of $1.00 per
share, to have such classes and preferences as the Board of Directors may
determine from time to time.
Section 2: Dividends. Dividends in cash, property or shares of the
Corporation may be paid upon the stock, as and when declared by the Board of
Directors, out of funds of the Corporation to the extent and in the manner
permitted by law.
ARTICLE III
Preemptive Rights
-----------------
The holders of the capital stock of this Corporation shall not have the
preemptive right to acquire additional unissued shares or treasury shares of the
capital stock of this Corporation, or securities convertible into shares of
capital stock or carrying capital purchase warrants or privileges.
ARTICLE IV
Cumulative Voting
-----------------
Cumulative voting of shares of stock of the Corporation shall not be
allowed or authorized in the election of the Board of Directors of the
Corporation.
1
<PAGE>
ARTICLE V
Provisions for Regulation of the
Internal Corporate Affairs
--------------------------------
The following provisions are inserted for the management of the business
and for the regulation of the internal affairs of the Corporation, and the same
are in furtherance of and not in limitation or exclusion of the powers conferred
by law.
Section 1: Bylaws. The Board of Directors shall have the power to adopt,
alter, amend or repeal, from time to time, such Bylaws as it deems proper for
the management of the affairs of the Corporation, according to these Articles
and the laws in such cases made and provided.
Section 2: Executive Committee. The Bylaws may provide for designation by
the Board of Directors of an Executive Committee and one or more other
committees, the personnel and authority of which and the other provisions
relating to which shall be as may be set forth in the Bylaws.
Section 3: Place of Meetings. Both Stockholders' and Directors' meetings
may be held either within or without the State of Colorado, as may be provided
in the Bylaws.
Section 4: Compensation to Directors. The Board of Directors is authorized
to make provisions for reasonable compensation to its members for their services
as Directors. Any Director of the Corporation may also serve the Corporation in
any other capacity and receive compensation therefor in any form.
Section 5: Conflicts of Interest. No contract or other transaction of the
Corporation with any other person, firm or corporation, or in which this
Corporation is interested, shall be affected or invalidated solely by: (a) the
fact that any one or more of the Directors or Officers of this Corporation is
interested in or is a director or officer of another corporation; or (b) the
fact that any Director or Officer, individually or jointly with others, may be a
party to or may be interested in any such contract or transaction.
Section 6: Registered Owner of Stock. The Corporation shall be entitled to
treat the registered holder of any shares of the Corporation as the owner
thereof for all purposes, including all rights deriving from such shares, on the
part of any other person, including, but not limited to, a purchaser, assignee
or transferee of such shares or rights deriving from such shares, unless and
until such purchaser, assignee, transferee or other person becomes the
registered holder of such shares, whether or not the Corporation shall have
either actual or constructive notice of the interest of such purchaser,
assignee, transferee or other person. The purchaser, assignee or transferee of
any of the shares of the Corporation shall not be entitled to: (a) receive
notice of the meetings of the Shareholders; (b) vote at such meetings;
(c)examine a list of the Shareholders; (d) be paid dividends or other sums
payable to Shareholders, or (e) own, enjoy or exercise any other property or
rights deriving from such shares against the Corporation, until such purchaser,
assignee or transferee has become the registered holder of such shares.
2
<PAGE>
Section 7: Conduct of Business. The Corporation may conduct part or all of
its business, not only in the State of Colorado, but also in every other state
of the United States and the District of Columbia, and in any territory,
district and possession of the United States, and in any foreign country, and
the Corporation may qualify to do business in any of such locations and appoint
an agent for service of process therein. The Corporation may hold, purchase,
mortgage, lease and convey real and personal property in any of such locations.
Part or all of the business of the Corporation may be carried on beyond the
limits of the State of Colorado, and the Corporation may have one or more
offices out of the State of Colorado.
Section 8: Vote of the Shareholders. To the fullest extent now or hereafter
permitted by the Colorado Business Corporation Act, the vote of a majority of
the issued and outstanding shares of the Corporation entitled to vote on such
matter shall be sufficient to approve any matter to come before the shareholders
of the Corporation, including, but not limited to, the right from time to time,
to amend, alter or repeal, or add any provisions to, the Corporation's Articles
of Incorporation.
Section 9: Quorum For Voting. A quorum of Shareholders for any matter to
come before any meeting of Shareholders of the Corporation shall consist of
one-third of the issued and outstanding shares entitled to vote on the matter.
Section 10: Restrictions on Stock. The Directors shall have the right, from
time to time, to impose restrictions or to enter into agreements on behalf of
the Corporation imposing restrictions on the transfer of all or a portion of the
Corporation's shares, provided that no restrictions shall be imposed on the
transfer of shares outstanding at the time the restrictions are adopted unless
the holder of such shares consents to the restrictions.
Section 11: Indemnification of Directors. A director of the Corporation
shall not be personally liable to the Corporation or to its shareholders for
damages for breach of fiduciary duty as a director of the Corporation or to its
shareholders for damages otherwise existing for (I) any breach of the director's
duty of loyalty to the Corporation or to its shareholders; (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law; (iii) acts specified in Section 7-108-403 of the Colorado
Business Corporation Act; or (iv) any transaction from which the director
directly or indirectly derived any improper personal benefit. If the Colorado
Business Corporation Act is hereafter amended to eliminate or limit further the
liability of a director, then, in addition to the elimination and limitation of
liability provided by the foregoing, the liability of each director shall be
eliminated or limited to the fullest extent permitted under the provisions of
the Colorado Business Corporation Act as so amended. Any repeal or modification
of the indemnification provided in these Articles shall not adversely affect any
right or protection of a director of the Corporation under these Articles, as in
effect immediately prior to such repeal or modification, with respect to any
liability that would have accrued, but for this limitation of liability, prior
to such repeal or modification.
Section 12: Indemnification. The Corporation shall indemnify, to the
fullest extent permitted by applicable law in effect from time to time, any
person, and the estate and personal representative of any such person, against
all liability and expense (including, but not limited to, attorneys' fees)
incurred by reason of the fact that he is or was a director or officer of the
Corporation, he is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee, fiduciary, or agent of, or in any
similar managerial or fiduciary position of, another domestic or foreign
corporation or other individual or entity or of an employee benefit plan. The
Corporation shall also indemnify any person who is serving or has served the
Corporation as director, officer, employee, fiduciary, or agent, and that
person's estate and personal representative, to the extent and in the manner
provided in any bylaw, resolution of the shareholders or directors, contract, or
otherwise, so long as such provision is legally permissible.
ARTICLE VI
Registered Office and Agent
---------------------------
The address of the initial registered office of the Corporation is
Penthouse Suite, 8400 East Prentice Ave., Englewood, Colorado 80111, and the
name of the registered agent at such address is Corporate Filing Corp., a
Colorado corporation. Books of accounts, records, documents and other papers may
be kept at the registered office of the Corporation or at such other place as
may be determined by the Board of Directors.
4
<PAGE>
ARTICLE VII
Initial Principal Office
------------------------
The address of the initial principal office of the Corporation is Penthouse
Suite, 8400 East Prentice Ave., Englewood, Colorado 80111. The principal office
of the Corporation may be relocated to such other place or places from time to
time as may be determined by the Board of Directors.
ARTICLE VIII
Data Respecting Incorporator
----------------------------
The name and address of the Incorporator of this Corporation is as follows:
David J. Wagner, Penthouse Suite, 8400 E. Prentice Ave., Englewood, Colorado
80111.
ARTICLE IX
Effective Date
--------------
The existence of the Corporation shall begin on the date of filing of these
Articles of Incorporation with the Colorado Secretary of State.
DATED this 14th day of May, 1998.
By: Signed
------------------------
David J. Wagner
Incorporator
CONSENT OF INITIAL REGISTERED AGENT
The Undersigned hereby consents to the appointment as the Initial
Registered Agent of Monument Galleries, Inc., a Colorado Corporation.
CORPORATE FILING CORP.
By Signed
---------------------
Authorized Officer
5
Exhibit 3B Bylaws
BYLAWS
OF
MONUMENT GALLERIES, INC.
as of June 5, 1998
ARTICLE I
Offices
-------
The principal office of the Corporation shall initially be located 230
Chapala Plaza, Monument, Colorado 80132. The Corporation may have other offices
at such places within or without the State of Colorado as the Board of Directors
may from time to time establish.
ARTICLE II
Registered Office and Agent
---------------------------
The registered office of the Corporation in Colorado shall be located at
Penthouse Suite, 8400 East Prentice Ave, Englewood, Colorado 80111, and the
registered agent shall be Corporate Filing Corp. The Board of Directors may, by
appropriate resolution from time to time, change the registered office and/or
agent.
ARTICLE III
Meetings of Stockholders
------------------------
Section 1. Annual Meetings. The annual meeting of the Stockholders for the
election of Directors and for the transaction of such other business as may
properly come before such meeting shall be held at such time and date as the
Board of Directors shall designate from time to time by resolution duly adopted.
Section 2. Special Meetings. A special meeting of the Stockholders may be
called at any time by the President or the Board of Directors, and shall be
called by the President upon the written request of Stockholders of record
holding in the aggregate twenty per cent (20%) or more of the outstanding shares
of stock of the Corporation entitled to vote, such written request to state the
purpose or purposes of the meeting and to be delivered to the President.
Section 3. Place of Meetings. All meetings of the Stockholders shall be
held at the principal office of the Corporation or at such other place, within
or without the State of Colorado, as shall be determined from time to time by
the Board of Directors or the Stockholders of the Corporation.
Section 4. Change in Time or Place of Meetings. The time and place
specified in this Article III for annual meetings shall not be changed within
thirty (30) days next before the day on which such meeting is to be held. A
notice of any such change shall be given to each Stockholder at least twenty
(20) days before the meeting, in person or by letter mailed to his last known
post office address.
6
<PAGE>
Section 5. Notice of Meetings. Written notice, stating the place, day and
hour of the meeting, and in the case of a special meeting, the purposes for
which the meeting is called, shall be given by or under the direction of the
President or Secretary at least ten (10) days but not more than fifty (50) days
before the date fixed for such meeting; except that if the number of the
authorized shares of the Corporation are to be increased, at least thirty (30)
days' notice shall be given. Notice shall be given to each Stockholder entitled
to vote at such meeting, of record at the close of business on the day fixed by
the Board of Directors as a record date for the determination of the
Stockholders entitled to vote at such meeting, or if no such date has been
fixed, of record at the close of business on the day next preceding the day on
which notice is given. Notice shall be in writing and shall be delivered to each
Stockholder in person or sent by United States Mail, postage prepaid, addressed
as set forth on the books of the Corporation. A waiver of such notice, in
writing, signed by the person or persons entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent to such notice.
Except as otherwise required by statute, notice of any adjourned meeting of the
Stockholders shall not be required.
Section 6. Quorum. Except as may otherwise be required by statute, the
presence at any meeting, in person or by proxy, of the holders of record of a
majority of the shares then issued and outstanding and entitled to vote shall be
necessary and sufficient to constitute a quorum for the transaction of business.
In the absence of a quorum, a majority in interest of the Stockholders entitled
to vote, present in person or by proxy, or, if no Stockholder entitled to vote
is present in person or by proxy, any Officer entitled to preside or act as
secretary of such meeting, may adjourn the meeting from time to time for a
period not exceeding sixty (60) days in any one case. At any such adjourned
meeting at which a quorum may be present, any business may be transacted which
might have been transacted at the meeting as originally called. The Stockholders
present at a duly organized meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough Stockholders to leave less
than a quorum.
Section 7. Voting. Except as may otherwise be provided by statute or these
Bylaws, including the provisions of Section 4 of Article VIII hereof, each
Stockholder shall at every meeting of the Stockholders be entitled to one (1)
vote, in person or by proxy, for each share of the voting capital stock held by
such Stockholder. However, no proxy shall be voted on after eleven (11) months
from its date, unless the proxy provides for a longer period. At all meetings of
the Stockholders, except as may otherwise be required by statute, the Articles
of Incorporation of this Corporation, or these Bylaws, if a quorum is present,
the affirmative vote of the majority of the shares represented at the meeting
and entitled to vote on the subject matter shall be the act of the Stockholders.
Persons holding stock in a fiduciary capacity shall be entitled to vote the
shares so held, and persons whose stock is pledged shall be entitled to vote,
unless in the transfer by the pledgor on the books of the Corporation he shall
have expressly empowered the pledgee to vote thereon, in which case only the
pledgee or his proxy may represent said stock and vote thereon.
Shares of the capital stock of the Corporation belonging to the Corporation
shall not be voted directly or indirectly.
7
<PAGE>
Section 8. Consent of Stockholders in Lieu of Meeting. Whenever the vote of
Stockholders at a meeting thereof is required or permitted to be taken in
connection with any corporate action, by any provision of statute, these Bylaws,
or the Articles of Incorporation, the meeting and vote of Stockholders may be
dispensed with if all the Stockholders who would have been entitled to vote upon
the action if such meeting were held shall consent in writing to such corporate
action being taken.
Section 9. Telephonic Meeting. Any meeting held under this Article III may
be held by telephone, in accordance with the provisions of the Colorado Business
Corporation Act.
Section 10. List of Stockholders Entitled to Vote. The Officer who has
charge of the stock ledger of the Corporation shall prepare and make, at least
ten (10) days before every annual meeting, a complete list of the Stockholders
entitled to vote at such meeting, arranged in alphabetical order and showing the
address of each Stockholder and the number of shares registered in the name of
each Stockholder. Such list shall be open to the examination of any Stockholder
during ordinary business hours, for a period of at least ten (10) days prior to
election, either at a place within the city, town or village where the election
is to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where said meeting is to be held. The list
shall be produced and kept at the time and place of election during the whole
time thereof and be subject to the inspection of any Stockholder who may be
present.
ARTICLE IV
Board of Directors
------------------
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by the Board of Directors, except as otherwise provided by
statute, the Articles of Incorporation of the Corporation, or these Bylaws.
Section 2. Number and Qualifications. The Board of Directors shall consist
of at least one (1) member, and not more than five (5) members, as shall be
designated by the Board of Directors from time to time, and in the absence of
such designation, the Board of Directors shall consist of one (1) member. This
number may be changed from time to time by resolution of the Board of Directors.
However, no such change shall have the effect of reducing the number of members
below one (1). Directors need not be residents of the State of Colorado or
Stockholders of the Corporation. Directors shall be natural persons of the age
of eighteen (18) years or older.
8
<PAGE>
Section 3. Election and Term of Office. Members of the initial Board of
Directors of the Corporation shall hold office until the first annual meeting of
Stockholders. At the first annual meeting of Stockholders, and at each annual
meeting thereafter, the Stockholders shall elect Directors to hold office until
the next succeeding annual meeting. Each Director shall hold office until his
successor is duly elected and qualified, unless sooner displaced. Election of
Directors need not be by ballot.
Section 4. Compensation. The Board of Directors may provide by resolution
that the Corporation shall allow a fixed sum and reimbursement of expenses for
attendance at meetings of the Board of Directors and for other services rendered
on behalf of the Corporation. Any Director of the Corporation may also serve the
Corporation in any other capacity, and receive compensation therefor in any
form, as the same may be determined by the Board in accordance with these
Bylaws.
Section 5. Removals and Resignations. Except as may otherwise be provided
by statute, the Stockholders may, at any special meeting called for the purpose,
by a vote of the holders of the majority of the shares then entitled to vote at
an election of Directors, remove any or all Directors from office, with or
without cause.
A Director may resign at any time by giving written notice to the Board of
Directors, the President or the Secretary of the Corporation. The resignation
shall take effect immediately upon the receipt of the notice, or at any later
period of time specified therein. The acceptance of such resignation shall not
be necessary to make it effective, unless the resignation requires acceptance
for it to be effective.
Section 6. Vacancies. Any vacancy occurring in the office of a Director,
whether by reason of an increase in the number of directorships or otherwise,
may be filled by a majority of the Directors then in office, though less than a
quorum. A Director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office, unless sooner displaced.
When one or more Directors resign from the Board, effective at a future
date, a majority of the Directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective.
Each Director so chosen shall hold office as herein provided in the filling of
other vacancies.
9
<PAGE>
Section 7. Executive Committee. By resolution adopted by a majority of the
Board of Directors, the Board may designate one or more committees, including an
Executive Committee, each consisting of one (1) or more Directors. The Board of
Directors may designate one (1) or more Directors as alternate members of any
such committee, who may replace any absent or disqualified member at any meeting
of such committee. Any such committee, to the extent provided in the resolution
and except as may otherwise be provided by statute, shall have and may exercise
the powers of the Board of Directors in the management of the business and
affairs of the Corporation and may authorize the seal of the Corporation to be
affixed to all papers which may require the same. The designation of such
committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed
upon it or him by law. If there be more than two (2) members on such committee,
a majority of any such committee may determine its action and may fix the time
and place of its meetings, unless provided otherwise by the Board. If there be
only two (2) members, unanimity of action shall be required. Committee action
may be by way of a written consent signed by all committee members. The Board
shall have the power at any time to fill vacancies on committees, to discharge
or abolish any such committee, and to change the size of any such committee.
Except as otherwise prescribed by the Board of Directors, each committee
may adopt such rules and regulations governing its proceedings, quorum, and
manner of acting as it shall deem proper and desirable.
Each such committee shall keep a written record of its acts and proceedings
and shall submit such record to the Board of Directors. Failure to submit such
record, or failure of the Board to approve any action indicated therein will
not, however, invalidate such action to the extent it has been carried out by
the Corporation prior to the time the record of such action was, or should have
been, submitted to the Board of Directors as herein provided.
10
<PAGE>
ARTICLE V
Meetings of Board of Directors
------------------------------
Section 1. Annual Meetings. The Board of Directors shall meet each year
immediately after the annual meeting of the Stockholders for the purpose of
organization, election of Officers, and consideration of any other business that
may properly be brought before the meeting. No notice of any kind to either old
or new members of the Board of Directors for such annual meeting shall be
necessary.
Section 2. Regular Meetings. The Board of Directors from time to time may
provide by resolution for the holding of regular meetings and fix the time and
place of such meetings. Regular meetings may be held within or without the State
of Colorado. The Board need not give notice of regular meetings provided that
the Board promptly sends notice of any change in the time or place of such
meetings to each Director not present at the meeting at which such change was
made.
Section 3. Special Meetings. The Board may hold special meetings of the
Board of Directors at any place, either within or without the State of Colorado,
at any time when called by the President, or two or more Directors. Notice of
the time and place thereof shall be given to and received by each Director at
least three (3) days before the meeting. A waiver of such notice in writing,
signed by the person or persons entitled to said notice, either before or after
the time stated therein, shall be deemed equivalent to such notice. Notice of
any adjourned special meeting of the Board of Directors need not given.
Section 4. Quorum. The presence, at any meeting, of a majority of the total
number of Directors shall be necessary and sufficient to constitute a quorum for
the transaction of business. Except as otherwise required by statute, the act of
a majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors; however, if only one (1) Director is
present, unanimity of action shall be required. In the absence of a quorum, a
majority of the Directors present at the time and place of any meeting may
adjourn such meeting from time to time until a quorum is present.
Section 5. Consent of Directors in Lieu of Meeting. Unless otherwise
restricted by statute, the Board may take any action required or permitted to be
taken at any meeting of the Board of Directors without a meeting, if a written
consent thereto is signed by all members of the Board, and such written consent
is filed with the minutes of proceedings of the Board.
Section 6. Telephonic Meeting. Any meeting held under this Article V may be
held by telephone, in accordance with the provisions of the Colorado Business
Corporation Act.
Section 7. Attendance Constitutes Waiver. Attendance of a Director at a
meeting constitutes a waiver of any notice to which the Director may otherwise
have been entitled, except where a Director attends a meeting for the express
purpose of objecting the transaction of any business because the meeting is not
lawfully called or convened.
11
<PAGE>
ARTICLE VI
Officers
--------
Section 1. Number. The Corporation shall have a President, one or more Vice
Presidents as the Board may from time to time elect, a Secretary and a
Treasurer, and such other Officers and Agents as may be deemed necessary. One
person may hold any two offices except the offices of President and Secretary.
Section 2. Election, Term of Office and Qualifications. The Board shall
choose the Officers specifically designated in Section 1 of this Article VI at
the annual meeting of the Board of Directors and such Officers shall hold office
until their successors are chosen and qualified, unless sooner displaced.
Officers need not be Directors of the Corporation.
Section 3. Subordinate Officers. The Board of Directors, from time to time,
may appoint other Officers and Agents, including one or more Assistant
Secretaries and one or more Assistant Treasurers, each of whom shall hold office
for such period, and each of whom shall have such authority and perform such
duties as are provided in these Bylaws or as the Board of Directors from time to
time may determine. The Board of Directors may delegate to any Officer the power
to appoint any such subordinate Officers and Agents and to prescribe their
respective authorities and duties.
Section 4. Removals and Resignations. The Board of Directors may, by vote
of a majority of their entire number, remove from office any Officer or Agent of
the Corporation, appointed by the Board of Directors.
Any Officer may resign at any time by giving written notice to the Board of
Directors. The resignation shall take effect immediately upon the receipt of the
notice, or any later period of time specified therein. The acceptance of such
resignation shall not be necessary to make it effective, unless the resignation
requires acceptance for it to be effective.
Section 5. Vacancies. Whenever any vacancy shall occur in any office by
death, resignation, removal, or otherwise, it shall be filled for the unexpired
portion of the term in the manner prescribed by these Bylaws for the regular
election or appointment to such office, at any meeting of Directors.
Section 6. The President. The President shall be the chief executive
officer of the Corporation and, subject to the direction and under the
supervision of the Board of Directors, shall have general charge of the
business, affairs and property of the Corporation, and shall have control over
its Officers, Agents and Employees. The President shall preside at all meetings
of the Stockholders and of the Board of Directors at which he is present. The
President shall do and perform such other duties and may exercise such other
powers as these Bylaws or the Board of Directors from time to time may assign to
him.
12
<PAGE>
Section 7. The Vice President. At the request of the President or in the
event of his absence or disability, the Vice President, or in case there shall
be more than one Vice President, the Vice President designated by the President,
or in the absence of such designation, the Vice President designated by the
Board of Directors, shall perform all the duties of the President, and when so
acting, shall have all the powers of, and be subject to all the restrictions
upon, the President. Any Vice President shall perform such other duties and may
exercise such her powers as from time to time these Bylaws or by the Board of
Directors or the President be assign to him.
Section 8. The Secretary. The Secretary shall:
a. record all the proceedings of the meetings of the Corporation
and Directors in a book to be kept for that purpose;
b. have charge of the stock ledger (which may, however, be kept
by any transfer agent or agents of the Corporation under the
direction of the Secretary), an original or duplicate of
which shall be kept at the principal office or place of
business of the Corporation in the State of Colorado;
c. see that all notices are duly and properly given;
d. be custodian of the records of the Corporation and the Board
of Directors, and the and of the seal of the Corporation, and
see that the seal is affixed to all stock certificates prior
to their issuance and to all documents for which the
Corporation has authorized execution on its behalf under its
seal;
e. see that all books, reports, statements, certificates, and
other documents and records required by law to be kept or
filed are properly kept or filed;
f. in general, perform all duties and have all powers incident
to the office of Secretary, and perform such other duties and
have such other powers as these Bylaws, the Board of
Directors or the President from time to time may assign to
him; and
g. prepare and make, at least ten (10) days before every
election of Directors, a complete list of the Stockholders
entitled to vote at said election, arranged in alphabetical
order.
13
<PAGE>
Section 9. The Treasurer. The Treasurer shall:
a. have supervision over the funds, securities, receipts and
disbursements of the Corporation;
b. cause all moneys and other valuable effects of the
Corporation to be deposited in its name and to its credit, in
such depositories as the Board of Directors or, pursuant to
authority conferred by the Board of Directors, its designee
shall select;
c. cause the funds of the Corporation to be disbursed by checks
or drafts upon the authorized depositaries of the
Corporation, when such disbursements shall have been duly
authorized;
d. cause proper vouchers for all moneys disbursed to be taken
and preserved;
e. cause correct books of accounts of all its business and
transactions to be kept at the principal office of the
Corporation;
f. render an account of the financial condition of the
Corporation and of his transactions as Treasurer to the
President or the Board of Directors, whenever requested;
g. be empowered to require from the Officers or Agents of the
Corporation reports or statements giving such information as
he may desire with respect to any and all financial
transactions of the Corporation; and
h. in general, perform all duties and have all powers incident
to the office of Treasurer and perform such other duties and
have such other powers as from time to time may be assigned
to him by these Bylaws or by the Board of Directors or the
President.
Section 10. Salaries. The Board of Directors shall from time to time fix
the salaries of the Officers of the Corporation. The Board of Directors may
delegate to any person the power to fix the salaries or other compensation of
any Officers or Agents appointed, in accordance with the provisions of Section 3
of this Article VI. No Officer shall be prevented from receiving such salary by
reason of the fact that he is also a Director of the Corporation. Nothing
contained in this Bylaw shall be construed so as to obligate the Corporation to
pay any Officer a salary, which is within the sole discretion of the Board of
Directors.
Section 11. Surety Bond. The Board of Directors may in its discretion
secure the fidelity of any or all of the Officers of the Corporation by bond or
otherwise.
14
<PAGE>
ARTICLE VII
Execution of Instruments
------------------------
Section 1. Checks, Drafts, Etc. The President and the Secretary or
Treasurer shall sign all checks, drafts, notes, bonds, bills of exchange and
orders for the payment of money of the Corporation, and all assignments or
endorsements of stock certificates, registered bonds or other securities, owned
by the Corporation, unless otherwise directed by the Board of Directors, or
unless otherwise required by law. The Board of Directors may, however, authorize
any Officer to sign any of such instruments for and on behalf of the Corporation
without necessity of countersignature, and may designate Officers or Employees
of the Corporation other than those named above who may, in the name of the
Corporation, sign such instruments.
Section 2. Execution of Instruments Generally. Subject always to the
specific direction of the Board of Directors, the President shall execute all
deeds and instruments of indebtedness made by the Corporation and all other
written contracts and agreements to which the Corporation shall be a party, in
its name, attested by the Secretary. The Secretary, when necessary required,
shall affix the corporate seal thereto.
Section 3. Proxies. The President and the Secretary or an Assistant
Secretary of the Corporation or by any other person or persons duly authorized
by the Board of Directors may execute and deliver proxies to vote with respect
to shares of stock of other corporations owned by or standing in the name of the
Corporation from time to time on behalf of the Corporation.
ARTICLE VIII
Capital Stock
-------------
Section 1. Certificates of Stock. Every holder of stock in the Corporation
shall be entitled to have a certificate, signed in the name of the Corporation
by the President and by the Secretary of the Corporation, certifying the number
of shares owned by that person in the Corporation.
Certificates of stock shall be in such form as shall, in conformity to law,
be prescribed from time to time by the Board of Directors.
Section 2. Transfer of Stock. Shares of stock of the Corporation shall only
be transferred on the books of the Corporation by the holder of record thereof
or by his attorney duly authorized in writing, upon surrender to the Corporation
of the certificates for such shares endorsed by the appropriate person or
persons, with such evidence of the authenticity of such endorsement, transfer,
authorization and other matters as the Corporation may reasonably require.
Surrendered certificates shall be canceled and shall be attached to their proper
stubs in the stock certificate book.
Section 3. Rights of Corporation with Respect to Registered Owners. Prior
to the surrender to the Corporation of the certificates for shares of stock with
a request to record the transfer of such shares, the Corporation may treat the
registered owner as the person entitled to receive dividends, to vote, to
receive notifications, and otherwise to exercise all the rights and powers of an
owner.
15
<PAGE>
Section 4. Closing Stock Transfer Book. The Board of Directors may close
the Stock Transfer Book of the Corporation for a period not exceeding fifty (50)
days preceding the date of any meeting of Stockholders, the date for payment of
any dividend, the date for the allotment of rights, the date when any change,
conversion or exchange of capital stock shall go into effect or for a period of
not exceeding fifty (50) days in connection with obtaining the consent of
Stockholders for any purpose. However, in lieu of closing the Stock Transfer
Book, the Board of Directors may in advance fix a date, not exceeding fifty (50)
days preceding the date of any meeting of Stockholders, the date for the payment
of any dividend, the date for the allotment of rights, the date when any change
or conversion or exchange of capital stock shall go into effect, or a date in
connection with obtaining such consent, as a record date for the determination
of the Stockholders entitled to notice of, and to vote at, any such meeting and
any adjournment thereof, or entitled to receive payment of any such dividend, or
to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, or to give such consent.
In such case such Stockholders of record on the date so fixed, and only such
Stockholders shall be entitled to such notice of, and to vote at, such meeting
and any adjournment thereof, or to receive payment of such dividend, or to
receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation after any such record date fixed as aforesaid.
Section 5. Lost, Destroyed and Stolen Certificates. The Corporation may
issue a new certificate of shares of stock in the place of any certificate
theretofore issued and alleged to have been lost, destroyed or stolen. However,
the Board of Directors may require the owner of such lost, destroyed or stolen
certificate or his legal representative, to: (a) request a new certificate
before the Corporation has notice that the shares have been acquired by a bona
fide purchaser; (b) furnish an affidavit as to such loss, theft or destruction;
(c) file with the Corporation a sufficient indemnity bond; or (d) satisfy such
other reasonable requirements, including evidence of such loss, destruction, or
theft as may be imposed by the Corporation.
ARTICLE IX
Dividends
---------
Section 1. Sources of Dividends. The Directors of the Corporation, subject
to the Colorado Business Corporation Act, may declare and pay dividends upon the
shares of the capital stock of the Corporation.
Section 2. Reserves. Before the payment of any dividend, the Directors of
the Corporation may set apart out of any of the funds of the Corporation
available for dividends a reserve or reserves for any proper purpose, and the
Directors may abolish any such reserve in the manner in which it was created.
Section 3. Reliance on Corporate Records. A Director in relying in good
faith upon the books of account of the Corporation or statements prepared by any
of its officials as to the value and amount of the assets, liabilities, and net
profits of the Corporation, or any other facts pertinent to the existence and
amount of surplus or other funds from which dividends might properly be declared
and paid shall be fully protected.
Section 4. Manner of Payment. Dividends may be paid in cash, in property,
or in shares of the capital stock of the Corporation.
16
<PAGE>
ARTICLE X
Seal and Fiscal Year
--------------------
Section 1. Seal. The corporate seal, subject to alteration by the Board of
Directors, shall be in the form of a circle, shall bear the name of the
Corporation, and shall indicate its formation under the laws of the State of
Colorado and the year of incorporation. Such seal may be used by causing it or a
facsimile thereof to be impressed, affixed, or otherwise reproduced.
Section 2. Fiscal Year. The Board of Directors shall, in its sole
discretion, designate a fiscal year for the Corporation.
ARTICLE XI
Amendments
----------
Except as may otherwise be provided herein, a majority vote of the whole
Board of Directors at any meeting of the Board shall be sufficient to amend or
repeal these Bylaws.
17
<PAGE>
ARTICLE XII
Indemnification of Officers and Directors
-----------------------------------------
Section 1. Exculpation. No Director or Officer of the Corporation shall be
liable for the acts, defaults, or omissions of any other Director or Officer, or
for any loss sustained by the Corporation, unless the same has resulted from his
own willful misconduct, willful neglect, or gross negligence.
Section 2. Indemnification. Each Director and Officer of the Corporation
and each person who shall serve at the Corporation's request as a director or
officer of another corporation in which the Corporation owns shares of capital
stock or of which it is a creditor shall be indemnified by the Corporation
against all reasonable costs, expenses and liabilities (including reasonable
attorneys' fees) actually and necessarily incurred by or imposed upon him in
connection with, or resulting from any claim, action, suit, proceeding,
investigation, or inquiry of whatever nature in which he may be involved as a
party or otherwise by reason of his being or having been a Director or Officer
of the Corporation or such director or officer of such other corporation,
whether or not he continues to be a Director or Officer of the Corporation or a
director or officer of such other corporation, at the time of the incurring or
imposition of such costs, expenses or liabilities, except in relation to matters
as to which he shall be finally adjudged in such action, suit, proceeding,
investigation, or inquiry to be liable for willful misconduct, willful neglect,
or gross negligence toward or on behalf of the Corporation in the performance of
his duties as such Director or Officer of the Corporation or as such director or
officer of such other corporation. As to whether or not a Director or Officer
was liable by reason of willful misconduct, willful neglect, or gross negligence
toward or on behalf of the Corporation in the performance of his duties as such
Director or Officer of the Corporation or as such director or officer of such
other corporation, in the absence of such final adjudication of the existence of
such liability, the Board of Directors and each Director and Officer may
conclusively rely upon an opinion of independent legal counsel selected by or in
the manner designated by the Board of Directors. The foregoing right to
indemnification shall be in addition to and not in limitation of all other
rights which such person may be entitled as a matter of law, and shall inure to
the benefit of the legal representatives of such person.
Section 3. Liability Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation or who is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, association, or other enterprise against any
liability asserted against him and incurred by him in any such capacity or
arising out of his status as such, whether or not he is indemnified against such
liability by this Article XII.
18
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