UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
UNDER SECTION 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
SOUND DESIGNS, INC.
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(Name of Small Business Issuer in Its Charter)
NEVADA 88-0412455
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6436 LABURNUM STREET, VANCOUVER, B.C. V6M 3S9
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(Address of Principal Executive Offices) (Zip Code)
604-266-3943
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(Issuer's Telephone Number, Including Area Code)
SECURITIES TO BE REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT: None
Securities to be registered under Section 12(g) of the Exchange Act:
TItle of Each Class to be So Registered: Common Stock ($0.001 Par Value)
Name of Each Exchange On Which Each Class is to be Registered: None
TOTAL NUMBER OF PAGES: 68
INDEX TO EXHIBITS MAY BE FOUND ON PAGE: 15
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TABLE OF CONTENTS
PART I.........................................................................1
ITEM 1. DESCRIPTION OF BUSINESS..........................................1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.......4
PLAN OF OPERATION................................................4
RESULTS OF OPERATIONS............................................6
ITEM 3. DESCRIPTION OF PROPERTY .........................................8
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...8
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.....9
ITEM 6. EXECUTIVE COMPENSATION..........................................10
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................11
ITEM 8. DESCRIPTION OF SECURITIES.......................................11
PART II.......................................................................12
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS....................12
ITEM 2. LEGAL PROCEEDINGS...............................................12
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS...................13
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.........................13
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.......................13
PART F/S......................................................................13
ITEM 1. FINANCIAL STATEMENTS............................................13
PART III - EXHIBITS...........................................................23
ITEM 1. INDEX TO EXHIBITS. ............................................23
SIGNATURES....................................................................23
INDEX TO EXHIBITS.............................................................24
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
"Sound Designs, Inc." (the "Company") was incorporated in the state of Nevada on
September 21, 1998 for the purpose of designing and installing custom audio and
visual systems into residential and/or commercial locations. The Company's
operations now consist of the exclusive Canadian distribution of a single
supplemental television component, although the Company is also seeking to
distribute and manufacture other consumer electronic products.
ISCAN PLUS VIDEO LINE DOUBLER
The sole operating activity of the Company is the exclusive Canadian
distribution of a video line doubler, known as the "Iscan Plus," manufactured by
DVDO, Inc. a California corporation ("DVDO"). A video line doubler is a device
approximately 6" x 8" x 1" which attaches to a television which is "high
definition ready," or HDTV ready, to enhance picture quality and refine
resolution by creating smoother visual edges and better color.
On September 14, 1999 ("Effective Date"), the Company signed a Reseller
Agreement with DVDO ("Reseller Agreement"), incorporated by reference and
attached hereto as Exhibit 6(a), to market and distribute the Iscan Plus video
line doubler in Canada. Immediately upon the Effective Date, the Company issued
a prepaid order for one hundred units of the Iscan Plus video line doubler and
DVDO granted the Company exclusive distribution rights in Canada. The initial
grant of exclusivity ("Initial Period") is for a period of six months from the
Effective Date. In the event that, within this initial period, the Company
collectively orders an additional 200 Iscan Plus video line doublers, the
Initial Period will be extended for another six month period ("Second Period").
If the Company fails to order the requisite units, DVDO will have the right to
revoke the grant of exclusivity. After this Second Period, the grant of
exclusivity may become conditional upon a future agreement between DVDO and the
Company. If the Company and DVDO do not reach such an agreement or, if an
agreement is executed and the Company fails to achieve the new sales goals, DVDO
may also revoke the grant of exclusivity.
During any period of exclusivity, DVDO has agreed not to sell Iscan Plus video
line doublers directly to Canadian distributors and dealers, but instead to
refer such to the Company. DVDO may, however, sell the Iscan Plus video line
doubler to any end user who purchases units at the then current product
manufacturer suggested retail price ("MSRP"). The Company retains the right to
set its own resale price for the Iscan Plus video line doubler and advertise it
by any public means, provided the Company does not advertise a price below that
listed on DVDO's current Price List ("Price List"). The average price Canadian
consumers pay for the iScan Plus, according to the Company's estimate, is
approximately $800.
Pursuant to the reseller agreement, the price the company pays for the Iscan
Plus video line doubler is based on the quantity of each shipment in accordance
with DVDO's Price List. The Company is prohibited from disclosing any of the
information contained in the Price List unless it is publicly announced by DVDO,
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or DVDO gives the Company written authorization to release such information. The
Company was required to prepay for the first one hundred units ordered, although
it is now on net 30 day credit terms. DVDO retains the right to reimpose the
prepaid cash terms by written notice to the Company in the event the Company
fails to pay any invoice within thirty (30) days of the invoice date.
To increase exposure of the Iscan Plus video line doubler, the Company will sell
discounted demonstration units to dealers if they also buy two full priced
units. The Company currently has approximately 200 dealer contacts, all of whom
would be eligible to purchase a demonstration unit. Demonstration units are sold
at reduced prices to encourage dealers and distributors to display the product
and to familiarize the consumer with the product, which typically increases
dealer knowledge and consumer interest in such products.
In addition to distributing and selling the Iscan Plus video line doubler, the
Company provides troubleshooting and replacement units to end users, but only
after the selling dealer has failed to adequately address such problems, and
only if the DVDO one year product warranty, is still applicable. DVDO provides
second level technical support to the Company during the term of the Reseller
Agreement. If the problem cannot be corrected by the Company, the Iscan Plus
video line doubler is shipped back to DVDO for warranty repair. DVDO provides a
warranty against defects in materials and workmanship for a period of twelve
(12) months after receipt by the Company's end user customer but not longer than
fifteen (15) months after shipment by DVDO to the Company (excepting the initial
one hundred unit shipment which is warranted for not longer than eighteen (18)
months after shipment by DVDO to Company). In addition, DVDO will, for a period
of ninety (90) days from the Effective Date, accept returns of unopened units
from Company's initial one hundred (100) unit purchase order. End user returns
are effected through dealers. While the Company does not expect to handle many
returns, it may choose to do so to promote goodwill. Consumers desiring to
return the Iscan Plus for reasons unrelated to defects will be subject to a 15%
restocking fee charged by DVDO. The Company intends to attempt to resell
repaired units at a 10-15% discount. The Company has just begun to distribute
the Iscan Plus video line doubler and, in the Company's opinion, the sales are
favorable.
ISCAN PLUS COMPETITION
As outlined in an outstanding review of the Iscan Plus video line doubler in the
September 1999 issue of Home Theater Magazine, the competitive business
conditions for the Iscan Plus video line doubler are its price, performance and
packaging relative to other line doublers. The article reported that the retail
price for the product most similar to the Iscan Plus video line doubler was
approximately five times as expensive, and the cheapest unit to exceed the IScan
Plus's performance costs approximately ten times as much. The Iscan Plus video
line doubler was tested by Home Theater Magazine against three other line
doublers: the Deuce video scaler ("Deuce"), the Dwin transcanner ("Dwin"), and
the Faroudja DVP-2200 ("FAROUDJA"). The images on the Iscan Plus video line
doubler were "perfectly clean", while the Deuce and the Dwin produced "mediocre
images." The Faroudja, at ten times the price, was reported to be the only line
doubler that exceeded the Iscan Plus's performance. The article went on to state
that the packaging plan of the Iscan Plus video line doubler markets the product
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as an accessory to the consumer's digital-television purchase, allowing it to
offer a compact product with high performance at a low cost.
The article identified a some of the Iscan Plus video line doubler's
shortcomings. These shortcomings include: (i) the lack of a component video
input; (ii) source selection is performed automatically when the input senses an
active signal; (iii) a priority switch on the product's front allows the
consumer to give priority to one input over another. According to the Article,
There is Also No Remote Feature, But the ISCAN PLUS video line doubler allows
the consumer to use a priority switch to change inputs. The only other feature
mentioned By Home Theater Magazine as missing from the ISCAN PLUS video line
doubler is picture control (i.e., contrast, brightness, color and tint),
although the article concluded that "theoretically, you don't need it. If the
source is accurate, the picture will be accurate." As a result, the Company
believes that the Iscan Plus video line doubler maintains a very competitive
position in the line doubler industry.
SUBWOOFER SPEAKER PROJECT
Although the Company is not currently involved in the manufacturing sector of
the consumer electronics industry, it is considering designing and manufacturing
a subwoofer speaker for sale to the general public. The Company has spent
nominal time and money developing initial subwoofer prototypes for the entry
level market segment. However, although the current prototypes could be
competitively priced in this market segment, the Company will only manufacture a
prototype if it can be offered at a price 25% below the current products,
approximately $100 per speaker. The Company believes that it may eventually
successfully negotiate with suppliers for a lower cost on the raw materials, and
that the desired price point can eventually be achieved.
The development of future prototypes is contingent upon the Company's generation
of meaningful revenues, and the distribution of the Iscan Plus video line
doubler remains the Company's first priority. No assurances can be given that
the Company will attempt to refine its subwoofer, or that if it attempts
refinement, that it will be successful or profitable.
SUBWOOFER SPEAKER COMPETITION
The subwoofer speaker market is a large industry, but if the Company can offer a
quality product at a substantially reduced price, it believes this competitive
advantage will allow it to enter the market and obtain a small market segment.
However, the Company has not yet met the sought price, and cannot assure that it
will.
EMPLOYEES
At present, the Company has no employees other than the principals. Although no
assurances can be given regarding any future sales results of the Iscan Plus
video line doubler, the Company has established an internal goal of selling 100
units within three months. If the Company is able to sell approximately 100
units, it anticipates hiring an additional sales agent. In the event the Company
sells in excess of one hundred units of the Iscan Plus, which again cannot be
assured, it will then revisit its staffing needs.
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GOVERNMENT REGULATION
BECAUSE THE ISCAN PLUS is an electrical device it must comply with requirements
of the Canadian Standards Association ("CSA") certification which regulates
consumer electronic devices in Canada. This certification has already been
obtained by DVDO and the Company therefore does not expect to experience
negative effects of such regulation.
As the Company is selling in Canada a product manufactured primarily in the
United States, which qualifies it for treatment under NAFTA (North American Free
Trade Agreement), the Company is not subject to Canadian import regulations.
Therefore, the Company does not expect to incur material costs to satisfy
Canadian import regulations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
The Company has had revenues from operations for only a few months. Accordingly,
its plan of operation is discussed herein and followed by a brief discussion of
its results from operation.
PLAN OF OPERATION
Since it recently began operations which consist of distributing another
entity's product, DVDO's ISCAN PLUS video line doubler, the Company's activities
are predominantly limited to the personal services of Barry L. Wosk, the
Company's president and one of its directors. The Company has no employees,
although it has utilized the services of other professionals to facilitate
operations. Additionally, Barry L. Wosk is providing the Company with office
space on a rent-free basis. For more information on Barry L. Wosk, see Part 1,
Item 7 - Certain Relationships and Related Transactions.
The limited nature of the Company's operations are ideal for the Company's
development stage. With its low overhead expenses the Company has the ability to
expand or contract its marketing and advertising efforts when revenues from the
Company's distribution of the Iscan Plus dictate. The timely control of such
expenses are a key aspect for the Company since currently it has few costs other
than those directly related to processing orders of the Iscan Plus. In the event
the Company is successful in distributing the Iscan Plus, it may seek to
increase its overhead by hiring one or more employees and rent warehouse space
for its operations.
The Company is marketing DVDO's product directly to Canadian audio/video dealers
and custom commercial installers. However, as of November 19, 1999, little
marketing has been undertaken other than a recent mailer to approximately 200
consumer electronics dealers. This introductory mailer identified the Company's
exclusive Canadian distribution of the Iscan Plus video line doubler. As a sales
representative for both the Company and other entities, Barry Wosk, the
Company's president, sells to approximately 100 of these companies, while he
is in the formative stages of sales contacts with the remaining 100 companies.
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Although typical responses to mailer advertising is believed to be approximately
1-2%, the Company's recent mailer has received approximately 10%. The higher
than expected response is in the Company's opinion, the result of a positive
review of the Iscan Plus video line doubler contained in the September 1999
edition of Home Theater Magazine. in the Company's opinion, Home Theater
Magazine is one of the foremost periodical authorities in the audio/video
industry.
A Sales Commission Agreement ("Commission Agreement") between the Company and
Barry L. Wosk became effective on September 15, 1999. Pursuant to the Commission
Agreement, Barry L. Wosk serves as the Company's sole and exclusive salesperson
of the Iscan Plus video line doubler and agrees to sell the Iscan Plus video
line doubler exclusively for the Company for a term of one year. As compensation
for his services, Barry l. wosk will receive a commission of ten percent (10%)
of the net sales of the Iscan Plus video line doubler sold to customers whether
procured by Barry L. Wosk himself, the Company, or other parties. Net sales are
defined by the Commission Agreement as gross sales less returns and allowances
when made.
Initial sales of the Iscan Plus have been encouraging as approximately 85 units
have been sold since the DVDO Reseller Agreement was executed on September 14,
1999 through November 19, 1999. Payment terms standard in the electronic
industry are 30 days credit. While the Company has received payment for only
approximately 20 units, it has no reason to expect nonpayment or excessively
delayed payment for the remaining 65 units.
The target market for the Company are Canadian consumers who own televisions
which are HDTV ready and thus compatible with the Iscan Plus video line doubler.
This market is estimated by the Company to include approximately 10% of all
televisions sold. These televisions are most commonly the more expensive models,
but most televisions made by Toshiba are HDTV ready, so some moderately priced
televisions are also HDTV compatible. The Company believes the advances in audio
and video technology have resulted in most television manufacturers increasing
their production of HDTV ready televisions Recognizing that the market for video
line doublers is relatively new, the Company is encouraged by an article in the
September 1999 issue of Home Theater Magazine stating that "based on the price,
performance, and packaging of the new DVDO video processor, line doublers might
just become the next hot commodity."
DVDO granted the Company a license to use DVDO's trademarks, including but not
limited to, DVDO, PureProgressive (which is the trademark for DVDO's video
enhancement technology), and Iscan Plus in the Company's advertising. The
Company's advertising currently consists of promotional print material developed
and provided to the Company by DVDO. DVDO agreed to indemnify and hold the
Company harmless against any and all claims that the Iscan Plus video line
doubler infringes any United States patent, copyright, trademark, or trade
secret of any third party provided that DVDO is given immediate notice of any
such claim and complete control of the defense against such claims.
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Distribution of New Products
As the exclusive Canadian distributor of the Iscan Plus video line doubler, the
Company expects and hopes to be the exclusive Canadian distributor of any future
DVDO products. Although the Company believes it is the intention of DVDO to use
the Company as the exclusive Canadian distributor of future products, the
Company has not yet secured any such rights or received commitments for such.
In the event the company is successful in distributing the Iscan Plus, it will
renew its focus in the development of its subwoofer prototype and possibly
expand into the distribution of additional, similarly value-oriented or
one-of-a-kind technology products and services. In search of new products that
require distribution in Canada, the president of the Company, Barry L. Wosk,
will be attending future events such as CEDIA and CES in hopes of meeting with
manufacturers whose products the Company would like to distribute. No assurances
can be given that the Company will be successful in securing any other such
distribution relationships.
Subwoofer Speaker Project
At this time, the development of a subwoofer speaker prototype to meet the
desired price point is contingent upon the Company's generation of meaningful
revenues. For more information on the desired price point, see Part I, Item 1 -
Description of Business, Subwoofer Speaker Project. As a result, the
distribution of the Iscan Plus video line doubler remains the Company's first
priority.
The subwoofer speaker manufacturing and sales will then occur only if
commercially viable quantities, approximately 300 units. The manufacture of less
than 300 units would not be expected to allow the Company to recover the capital
investment required. The subwoofer speaker prototype project requires an initial
investment of $50,000-$100,000 in order to create enough product inventory,
provide for warehousing, and hire employees. At the January 2000 CES convention,
Barry L. Wosk and Marvin S. Wosk plan to meet with suppliers of subwoofer raw
materials to discuss costs and strategies. However, no assurances can be given
that the Company will undertake material activity to refine its subwoofer, or
that if it attempts refinement, that it will be successful or profitable.
In the event the company cannot self-finance the subwoofer speaker project from
the Iscan Plus sales, it may seek to obtain financing from third parties. Such
financing could possibly involve an offering of debt or equity securities which
may have a dilutive impact on current shareholders. The Company may also pursue
various Canadian governmental agencies for grants or low interest loans, and any
other financing options that may become available for the subwoofer project.
However, no assurances can be given that the Company will ever successfully
obtain independent financing from any source for any reason.
RESULTS OF OPERATIONS
From its inception until the execution of the Reseller Agreement on September
14, 1999, the Company did not engage in any active operations nor realize any
cash flow, and is still considered in the development stage. Current operations
consist of the exclusive Canadian distribution of a premium supplemental
television component, the Iscan Plus video line doubler. The Company also seeks
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to distribute and manufacture other consumer electronic products in the future,
but it currently Is only actively involved in the distribution of the ISCAN PLUS
video line doubler. Aside from its officers and directors, the Company does not
have any full or part time employees.
Revenue from operations for the nine months ending September 30, 1999 was $1,467
as compared to no revenues for the period from inception to December 31, 1998.
The increase is attributable to the acquisition of DVDO'S exclusive Canadian
distribution of the ISCAN PLUS, and commencement of distribution pursuant to the
Reseller Agreement executed on September 14, 1999. (See Part I, Item 1 -
Description of Business, for more information on the Reseller Agreement).
The costs and expenses for the nine months ending september 30, 1999 totaled
$13,776 which is a 72% increase when compared to the total costs and expenses
incurred for the period from september 21, 1998 to december 31, 1998. The
largest single increase in costs occurred in professional fees relating to an
audit of the company's operations and other legal services. The total loss for
the period ending September 30, 1999 was $11,082, while the total loss for the
period from September 21, 1998 to December 31, 1998 was only $500. The increase
in loss to the company can be attributed to the additional costs incurred as a
result of the distribution of the ISCAN PLUS video line doubler. In the event
sales of the iscan plus video line doubler are twenty (20) units per month, the
company expects to be able to satisfy its cash requirements. Conversely, if
sales of the iscan plus video line doubler do not meet this threshold, the
company does not expect to be able to satisfy its cash requirements. All
comparative figures have changed materially because of the company's initiation
of operations.
CAPITAL RESOURCES AND LIQUIDITY
During the nine months ending September 30, 1999 the Company generated a total
of $1,569 in accounts receivable, a total of $2,440 in goods and services taxes
recoverable, a total of $34,595 in inventory, and a total of $350 in accounts
payable. During the period from September 21, 1998 to December 31, 1998 the
Company generated a total of $500 in accounts payable.
YEAR 2000 ISSUES
The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. The "Year 2000" problem
is concerned with whether computer systems will properly recognize date
sensitive information when the year changes to 2000. Systems that do not
properly recognize such information could generate erroneous data or cause a
system to fail. The Year 2000 problem is pervasive and complex as virtually
every company's computer operation may be affected in some way.
The Company believes that the Year 2000 problem will not pose material
operational problems for the Company's existing computer hardware and software.
To the Company's knowledge, after investigation, no "imbedded technology" (such
as microchips in an electronic control system) of the Company's equipment poses
a material Year 2000 problem.
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It is possible, however, that Year 2000 problems incurred by the clients or
suppliers of the Company could have a negative impact on future operations and
financial performance of the Company, although the Company has not specifically
identified any such problems among its clients or suppliers. Furthermore, the
Year 2000 problem may impact other entities with whom the Company transacts
business and the Company cannot predict the effect of the Year 2000 problem on
such entities or the resulting effect on the Company. The Company does not plan
to have a contingency plan to operate in the event that any noncompliant client
or supplier systems that materially impact the Company are not remedied by
January 1, 2000. As a result, if preventive and/or corrective actions by the
Company or those entities with which the Company does business are not made in a
timely manner, the Year 2000 issue could have a material adverse effect on the
Company's business, financial condition and results of operations.
Because the Company believes that it has no material internal Year 2000
problems, the Company has not expended and does not expect to expend a
significant amount of funds to address Year 2000 issues. It is Company policy to
continue to review its suppliers' Year 2000 compliance and require assurance of
Year 2000 compliance from new suppliers; however, such monitoring does not
involve a significant cost to the Company.
ITEM 3. DESCRIPTION OF PROPERTY
The Company is currently occupying the office of its President at 6436 Laburnum
Street, Vancouver, BC, V6M 3S9 on a rent-free basis. In the event the Company
generates meaningful revenues, which may never occur, the Company plans to rent
a small office/warehouse to coordinate the DVDO distribution, manufacturing of
the subwoofer prototype, and general administrative tasks. The Company has met
with several realtors to search the Vancouver market for a 3000 square foot
facility.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the stock of the Company as of November 15, 1999, by each
shareholder who is known by the Company to beneficially own more than 5% of the
outstanding Common Stock, by each director and by all executive officers and
directors as a group.
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<TABLE>
<CAPTION>
Title of Name and Address of Amount and Nature of Percent
Class Beneficial Ownership Beneficial Ownership of Class
<S> <C> <C> <C>
Common Barry L. Wosk 500,000 22.7%
Stock 6436 Laburnum Street
Vancouver, BC, Canada V6M 3S9
Common Marvin S. Wosk 500,000 22.7%
Stock 2103-6055 Nelson Avenue
Burnaby, BC, Canada V5H 4L4
Common 1,000,000 45.5%
Stock All Officers and Directors as a Group
</TABLE>
CHANGE IN CONTROL
Since the Company is still a development stage company, it will consider and
entertain any and all offers relating to a merger, acquisition, or buy out,
although the Company currently has not received any such offers. Additionally,
no parameters of evaluation for any such offers have been defined by the
Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The Officers and Directors of the Company as of November 15, 1999 are as
follows:
NAME AGE POSITION
Barry L. Wosk 29 President and Director
Marvin S. Wosk 69 Secretary, Treasurer, and Director
BARRY L. WOSK has been a Director and President of the Company since inception.
He is the son of Marvin S. Wosk who is a Director, Secretary and Treasurer of
the Company. For more information on Barry L. Wosk and Marvin S. Wosk, see Part
1, Item 7 - Certain Relationships and Related Transactions. He attended the
University of British Columbia in Vancouver and received a Bachelor of Commerce
degree with a specialization in Urban Land Economics in 1991. There is very
little opportunity for formal education in the consumer electronics industry.
Mr. Wosk has acquired his skills primarily from work experience and training
events sponsored by industry groups such as the Electronics Industries
Association ("EIA") and Custom Electronics Design and Installation Association
("CEDIA"). He has worked at various levels of retail for audio/video products in
addition to three years as an independent manufacturers' agent for several
American audio manufacturers in Canada. From 1994-1996, Mr. Wosk provided custom
installation services to consumers as an independent contractor. He contracted
his services mainly to home builders through advertising and cold calling. Since
1996, Mr. Wosk has been a sales representative for several audio/video products
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manufacturers. Barry L. Wosk intends to devote a substantial amount of his time
to the business of the Company while still maintaining his sole proprietorship
as a sales representative. Mr. Wosk no longer performs custom installation as an
independent contractor and none of the products which he sells as an independent
contractor are in direct competition with the Company.
MARVIN S. WOSK has been a Director, Secretary and Treasurer of the Company since
inception. He is the father of the Company's President and one of its directors,
Barry L. Wosk. For more information on Barry L. Wosk and Marvin S. Wosk, see
Part 1, Item 7 - Certain Relationships and Related Transactions. From 1979 to
the present, he has been a businessman in British Columbia, with interests in
night clubs, a pub, and a sports photography company. Mr. Wosk also has previous
experience in real estate, securities, and taxation. He is currently developing
a gaming joint venture proposal for the British Columbia government. Marvin S.
Wosk intends to devote his time as required to the business of the Company.
ITEM 6. EXECUTIVE COMPENSATION
No compensation in excess of $100,000 was awarded to, earned by, or paid to any
executive officer of the Company during the fiscal years 1999 and 1998. The
following table provides summary information for the years 1999 and 1998
concerning cash and noncash compensation paid or accrued by the Company to or on
behalf of Barry L. Wosk, the Company's current president and one of its
directors. The officers and directors of the Company have never received cash
remuneration or salaries for their services, although they are reimbursed for
all expenses incurred on behalf of the Company.
ANNUAL COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS($) OTHER($)
- --------------------------- ---- ---------- -------- --------
BARRY L. WOSK, PRESIDENT 1999 $0 - 0-(1) -0-
AND DIRECTOR 1998 $0 - 0- -0-
(1) On September 15, 1999, the Company executed a Sales Commission Agreement
("Commission Agreement") with the president of the Company, Barry L. Wosk.
Pursuant to the Commission Agreement, Barry L. Wosk serves as the Company's sole
and exclusive salesperson of the Iscan Plus video line doubler for a term of one
year, and receives a commission of ten percent (10%) of the net sales of the
Iscan Plus video line doubler. In the event the Company generates meaningful
revenues, it may choose to pay Barry L. Wosk a salary in addition to
commissions. For more information on the commission structure of Barry L. Wosk,
see Part I, Item 2 - Management's Discussion and Analysis and Plan of Operation
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The principals of the Company, Barry L. Wosk and Marvin S. Wosk, are related to
one another as father and son. This is the only business in which they are both
involved.
Barry L. Wosk and Marvin S. Wosk are and may in the future become directors
and/or principal shareholders of other entities, none of whom are currently
reporting companies. As a result of such involvement, they may participate in
business ventures which could be deemed to compete directly with the Company.
No officer, director, or affiliate of the Company has or proposes to have any
direct or indirect material interest in any asset proposed to be acquired by the
Company through security holdings, contracts, options, or otherwise.
Although there is no current plan in existence, it is possible that the Company
will adopt a plan to pay or accrue compensation to its officers and directors
for services related to seeking business opportunities and completing a merger
or acquisition transaction.
Although management has no current plans to cause the Company to do so, it is
possible that the Company may enter into an agreement with an acquisition
candidate requiring the sale of all or a portion of the Common Stock held by the
Company's current stockholders to the acquisition candidate or principals
thereof, or to other individuals or business entities, or requiring some other
form of payment to the Company's current stockholders, or requiring the future
employment of specified officers and payment of salaries to them. It is likely
that any sale of securities by the Company's current stockholders to an
acquisition candidate would be at a price substantially higher than that
originally paid by such stockholders. Any payment to current stockholders in the
context of an acquisition involving the Company would be determined entirely by
the largely unforeseeable terms of a future agreement with an unidentified
business entity.
It is possible that persons associated with management may refer a prospective
merger or acquisition candidate to the Company. In the event the Company
consummates a transaction with any entity referred by an associate of
management, it is possible that such associate will be compensated for their
referral in the form of a finder's fee, which may be in a variety of forms not
deviating from consideration normally paid in like transactions.
ITEM 8. DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 25,000,000 shares of
Common Stock ("Common Stock"), par value $0.001. The holders of Common Stock (i)
have equal ratable rights to dividends from funds legally available therefor,
when, as and if declared by the Board of Directors of the Company; (ii) are
entitled to share ratably in all of the assets of the Company available for
distribution to holders of Common Stock upon liquidation, dissolution or winding
up of the affairs of the Company; (iii) do not have preemptive, subscription or
conversion rights and there are no
11
<PAGE>
redemption or sinking fund provisions or rights applicable thereto; and (iv) are
entitled to one non-cumulative vote per share on all matters on which
stockholders may vote. All shares of Common Stock now outstanding are fully paid
for and non-assessable.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
Record Holders
The Company's Common Stock is currently not publicly traded. As of October 13,
1999, there were 2,200,000 shares of the Company's Common Stock issued and
outstanding, held by approximately 36 record holders. The holders of the Common
Stock are entitled to one vote for each share held of record on all matters
submitted to a vote of stockholders. Holders of the Common Stock have no
preemptive rights and no right to convert their Common Stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
Common Stock.
Dividends
The Company has not declared any cash dividends since inception and does not
anticipate paying any dividends in the foreseeable future. The Company currently
intends to retain future earnings, if any, to fund the development and growth of
its business. The payment of dividends is within the discretion of the Board of
Directors and will depend on the Company's earnings, capital requirements,
financial condition and other relevant factors.
Transfer Agent
The Company's transfer agent is Signature Stock Transfer, Inc. which is located
at 14675 Midway Road, Suite 221, Dallas, Texas 75244. Their phone number is
(972) 788-4193.
Reports to Stockholders
The Company plans to furnish its stockholders with an annual report for each
fiscal year containing financial statements audited by its independent public
accountants and to otherwise comply with the reporting requirements of the
Securities Exchange Act of 1934.
ITEM 2. LEGAL PROCEEDINGS
The Company is not currently, nor has it ever been, a party to any legal
proceedings, nor does it believe any are threatened or imminent.
12
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company appointed Parker & Co, Chartered Accountants to audit its financial
statements from inception through September 30, 1999. No other auditor has ever
been retained by the Company.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On or before March 1, 1999, the Board of Directors of the Company sold for $0.05
per share one million two hundred thousand (1,200,000) shares of the Company's
common stock, par value $0.001 ("Common Stock"), pursuant to exemptions from
registration including, but not limited to, Rule 504 under the Securities Act of
1933, as amended (the "Act"). The Company thus received sixty thousand dollars
($60,000) in sale proceeds pursuant to this offering.
Pursuant to Stock Subscription Agreements signed September 22, 1998,
("Subscription Agreements"), attached hereto as Exhibits 6(b)(1) and 6(b)(2) and
incorporated by reference, the Company sold five hundred thousand (500,000)
shares of Common Stock for $0.0025 per share to Barry L. Wosk and Marvin S.
Wosk, resulting in a total purchase price of One Thousand Two- Hundred Fifty
Dollars ($1,250) each. Barry L. Wosk serves as a Director and President of the
Company and Marvin S. Wosk serves as a Director, Secretary and Treasurer of the
Company. For more information on Barry L. Wosk and Marvin S. Wosk, see Part I,
Item 7 - Certain Relationships and Related Transactions. These shares were sold
by the Company pursuant to exemptions from registration, including, but not
limited to, Section 4(2) of the Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws and certain sections of Nevada Revised Statutes provide for
indemnification of the Company's officers and directors in certain situations
where they might other personally incur liability, judgments, penalties, fines
and expenses in connection with a proceeding or lawsuit to which they might
become parties because of their position with the Company. To the extent that
indemnification may be related to liability arising under the Securities Act,
the Securities and Exchange Commission takes the position that indemnification
is against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
PART F/S
ITEM 1. FINANCIAL STATEMENTS
Unless otherwise indicated, the term "Company" refers to Sound Designs, Inc. An
audited statement of financial position of Company from inception through
September 30, 1999, and the related audited statements of losses and deficit,
cash flows, changes in stockholders' equity, and accompanying notes to the
financial statements from inception through September 30, 1999, are attached
hereto as Pages 14 through 22 which are incorporated herein by this reference,
and may be found on the immediately subsequent pages.
13
SOUND DESIGNS, INC.
F I N A N C I A L S T A T E M E N T S FOR THE NINE MONTHS ENDING 30 SEPTEMBER
1999 AUDITED - SEE AUDITORS' REPORT
- --------------------------------------------------------------------------------
14
SOUND DESIGNS, INC.
F I N A N C I A L S T A T E M E N T S FOR THE NINE MONTHS ENDING 30 SEPTEMBER
1999 AUDITED - SEE AUDITORS' REPORT
- --------------------------------------------------------------------------------
C O N T E N T S
PAGE
AUDITORS' REPORT ............................................................16
STATEMENT OF FINANCIAL POSITION ..............................................17
STATEMENT OF LOSSES AND DEFICIT...............................................18
STATEMENT OF CASH FLOWS.......................................................19
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY..................................20
NOTES TO THE FINANCIAL STATEMENTS ............................................21
15
<PAGE>
P A R K E R & C O.
CHARTERED ACCOUNTANTS PAGE 1 OF 7
- -------------------------------------------------------------------------------
200 - 2560 SIMPSON ROAD, RICHMOND BC V6X 2P9
TEL:(604) 276-9920 FAX: (604) 276-4577
A U D I T O R S' R E P O R T
To the stockholders of Sound Designs, Inc.
We have audited the statements of financial position of Sound Designs, Inc. as
at 30 September 1999 and 31 December 1998 and the statements of losses and
deficit, of cash flows and of changes in stockholder's equity for the period
from 21 September 1998 (the date of inception) to 31 December 1998 and for the
period from 1 January 1999 to 30 September1999. 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 in Canada, which
are in substantial agreement with those in the United States of America. Those
standards require that we plan and perform an audit to obtain reasonable
assurances 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 presentation. In our opinion, these
financial statements present fairly, in all material respects, the financial
position of the Company as at 30 September 1999 and 31 December 1998 and the
result of its operations, cash flows and changes in stockholder's equity for the
period 21 September 1998 to 31 December 1998 and for the period from 1 January
1999 to 30 September 1999 in accordance with generally accepted accounting
principles in the United States of America. These financial statements have been
prepared assuming that the Company will continue as a going concern. As stated
in Note 2 to the financial statements, the Company will require an infusion of
capital to sustain itself. This requirement for additional capital raises
substantial doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
RIchmond, British Columbia, Canada
22 November
1999
/S/ PARKER & CO.
- --------------------
PARKER & CO.
CHARTERED ACCOUNTANTS
16
<PAGE>
SOUND DESIGNS, INC.
S T A T E M E N T O F F I N A N C I A L P O S I T I O N
AUDITED - SEE AUDITORS' REPORT PAGE 2 OF 7
AS AT AS AT
30 31
SEPTEMBER DECEMBER
1999 1998
--------- ---------
CURRENT ASSETS
Cash $12,431 $2,500
Accounts receivable 1,569 -
Goods and services taxes recoverable 2,440 -
Inventory, Note 3 34,595 -
----------- ---------
Total current assets 51,035 2,500
----------- ---------
----------- ---------
TOTAL ASSETS $51,035 $2,500
AS AT AS AT
30 31
SEPTEMBER DECEMBER
1999 1998
--------- ---------
CURRENT LIABILITIES
Accounts payable $ 850 $500
----------- ---------
Total current liabilities 850 500
----------- ---------
STOCKHOLDERS' EQUITY
Share capital, Note 5 2,200 1,000
Additional paid-in capital 60,300 1,500
----------- ---------
Total share capital 62,500 2,500
Deficit (12,315) (500)
----------- ---------
Total stockholders' equity 50,185 2,000
----------- ---------
----------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $51,035 $2,500
DIRECTOR'S APPROVAL: __/S/ MARVIN S. WOSK ____________________________
17
<PAGE>
SOUND DESIGNS, INC.
- ---------------------------------------------------- ---------------------------
S T A T E M E N T O F L O S S E S A N D D E F I C I T
- --------------------------------------------------------------------------------
FOR THE NINE MONTHS ENDING 30
SEPTEMBER 1999 PAGE 3 OF 7
- ---------------------------------------------------- ---------------------------
AUDITED - SEE AUDITORS' REPORT
- ---------------------------------------------------- ---------------------------
FROM THE DATE OF
- ----------------------------- ---------------------------
FOR THE INCORPORATION,
NINE MONTHS 21 SEPTEMBER, 1998
ENDED TO
30 SEPTEMBER 31 DECEMBER
- ----------------------------- --------------------------------------------------
1999 1998
- ----------------------------- --------------------------------------------------
REVENUE
Sales $1,467 $0
Interest earned 494 -
-------------- --------------
Total revenue 1,961 -
-------------- --------------
EXPENSES
Cost of goods sold 1,070 -
Advertising and promotion 933 -
Travel 2,218 -
Accounting 1,152 400
Legal 6,541 -
Bank charges 136 -
Finders fees 70 -
Miscellaneous 151 -
Registration and filing fees 840 100
Transfer agents fees 665 -
-------------- --------------
Total expenses 13,776 500
-------------- --------------
LOSSES (11,815) (500)
INCOME TAXES, NOTE 7 0 0
-------------- --------------
NET LOSS (11,815) (500)
DEFICIT, BEGINNING (500) 0
-------------- --------------
DEFICIT, ENDING ($12,315) ($500)
======== ========
LOSS PER SHARE, NOTE 6 ($0.01) ($0.00)
======== ======== =
- ---------------------------------------------------- ---------------------------
18
<PAGE>
Sound Designs, Inc.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDING 30 SEPTEMBER 1999
Audited - See Auditors' Report Page 4 of 7
--------------------------------------------------
FROM THE
DATE OF
INCORPORATION,
FOR THE 21 SEPTEMBER
NINE MONTHS 1998
ENDED TO
30 SEPTEMBER 31 DECEMBER
1999 1998
CASH PROVIDED (USED) FROM OPERATIONS ____________ ____________
From operation
Net loss ($11,815) ($500)
-------------- -------------
Changes in working capital other than cash
Accounts receivable (1,569) -
Goods and services sales taxes recoverable (2,440) -
Inventory (34,595) -
Accounts payable 350 500
-------------- -------------
(38,254) 500
-------------- -------------
Total cash provided (used) from operations (50,069) -
-------------- -------------
CASH PROVIDED (USED) BY INVESTMENT ACTIVITY - -
-------------- -------- ----
CASH PROVIDED (USED) BY FINANCING ACTIVITY
Shares issued 60,000 2,500
-------------- -------------
Total cash provided by financing 60,000 2,500
-------------- -------------
CASH CHANGE 9,931 2,500
CASH BEGINNING 2,500 -
-------------- -------------
CASH ENDING $12,431 $2,500
======== ========
COMPRISED OF:
Cash $12,431 $2,500
======== ========
19
<PAGE>
Sound Designs, Inc.
STATEMENT OF CHANGES IN STOCKHOLDERS'
EQUITY
FOR THE NINE MONTHS ENDING 30 SEPTEMBER 1999
Audited - See Auditors' Report Page 5 of 7
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON COMMON ADDITIONAL RETAINED
STOCK STOCK PAID IN EARNINGS
CONSIDERATION ISSUED AMOUNT CAPITAL (DEFICIT)
<S> <C> <C> <C> <C>
Private placement for cash on date of
incorporation, 21 September 1998 1,000,000 $1,000 $1,500
Net loss from date of incorporation to
31 December 1998 ($500)
------------- ------------- ------------ ------------
Balance as at 31 December 1998 1,000,000 1,000 1,500 (500)
Private placement for cash on
24 February 1999 1,200,000 1,200 58,800
Net loss for the nine months ended
30 September 1999 (11,815)
------------- ------------- ------------ ------------
Balance as at 30 September 1999 2,200,000 $2,200 $60,300 ($12,315)
============= ============= ============ ============
</TABLE>
20
<PAGE>
Sound Designs, Inc.
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FOR THE NINE MONTHS ENDING 30 SEPTEMBER 1999
- --------------------------------------------------------------------------------
Audited - See Auditors' Report Page 6 of 7
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------
- --------------------------------------------------------------------------------
Note 1 THE CORPORATION AND ITS BUSINESS
- --------------------------------------------------------------------------------
Sound Designs, Inc. was incorporated in the State of Nevada, United States of
America on 21 September 1998 under the Nevada Revised Statutes, Chapter 78,
Private Corporations.
The Company has offices in Vancouver, British Columbia, Canada. The Company has
been organized to engage in the sale of electronic sound distribution equipment.
The Company is presently establishing itself as a going concern. Operations
started in the month of September 1999. The fiscal year end of the Company is 31
December.
The Company has entered into a buyer seller agreement with a supplier which
gives the Company an exclusive marketing right to all of Canada provided certain
sales target are achieved. This sales agreement can be cancelled by either party
on 30 days written notice. 100% of the Company's sales have been a result of
this agreement.
- -------------------------------------------------------------------------------
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
- --------------------------------------------------------------------------------
These financial statements have been prepared in United States of America
dollars, which have been rounded to the nearst whole dollar except for the net
loss per share which has been rounded to the nearest cent, using United States
of America Generally Accepted Accounting Principles. These accounting principles
are applicable to a going concern, which contemplates the realization and
liquidation of liabilities in the normal course of business. Current business
activity has just begun and insufficient revenue has been generated to sustain
the Company as a going concern without the infusion of additional capital.
- --------------------------------------------------------------------------------
Revenue is recorded as a sale at the time the goods are shipped from the
Company's warehouse. Costs are recorded at the time an obligation to pay occurs
and are expensed at the time the benefit to the Company is matched to revenue
or, if there is no matching revenue, to the period in which the benefit is
realized.
- --------------------------------------------------------------------------------
The inventory is valued at the lower of cost and net realizable value.
- --------------------------------------------------------------------------------
NOTE 3 INVENTORIES
- --------------------------------------------------------------------------------
The finished product purchased for resale inventory consist of electronic
communication devises that improve the distribution of sound and video
information in a residential facility.
- --------------------------------------------------------------------------------
Note 4 RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------------------------
The Company neither owns nor leases any real property. Office services are
provided by the President of the Company. Such costs are immaterial to the
financial statements and accordingly have not been reflected therein. The
officers and directors of the Company are involved in other business activities,
and may, in the future become active in other business activities. If a specific
business opportunity becomes available, such persons may face a conflict in
selecting between the Company and their own business interests. The Company has
not formulated a policy for the resolution of such conflicts.
- --------------------------------------------------------------------------------
21
<PAGE>
Sound Designs, Inc.
- ----------------------------------------- ----------------- --------------------
NOTES TO THE FINANCIAL
STATEMENTS
FOR THE NINE MONTHS ENDING 30 SEPTEMBER 1999
Audited - See Auditors' Report Page 7 of 7
- --------------------------------------------------------------------------------
Note 5 SHARE CAPITAL
- ----------------------------------------- ----------------- --------------------
The authorized capital stock is 25,000,000 shares of common stock with a par
value of $0.001.
2,200,000 shares of common stock have been issued as follows:
<TABLE>
<CAPTION>
ADDITIONAL
SHARE PAID IN
CONSIDERATION DATE ISSUED CAPITAL CAPITAL TOTAL
- --------------------- --------------- -------------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Private placement
For cash 21 September 1,000,000 $1,000 $1,500 $2,500
1998
- -------------------- --------------- ----------- ----------- ---------- ---------
Balance as at 31 December 1,000,000 1,000 1,500 2,500
1998
- -------------------- --------------- ----------- ----------- ---------- ---------
Private placement
Cash 24 February 1,200,000 1,200 58,800 60,000
1999
- ------------------- --------------- ----------- ----------- ---------- ---------
BALANCE AS AT 30 SEPTEMBER 2,200,000 $2,200 $60,300 $62,500
1999 ========== ======== ========== =========
</TABLE>
- ------------------------------------ -------------------------- --------------
On 21 September 1998 the Company issued 1,000,000 common shares with a par value
of $0.001 for $0.0025 per share. These shares are "control securities" which
cannot be sold except pursuant to certain limitations and restrictions.
- --------------------------------------------------------------------------------
On 24 February 1999 the Company issued 1,200,000 common shares with a par value
of $0.001 for $0.05 per share.
- ------------------------ -------------------------- ------------- -------------
Note 6 LOSS PER SHARE
----- ----------------- -------------------------- ------------- -------------
Basic loss per share is computed by dividing losses available to common
stockholders by the weighted-average number of common shares during the period.
Diluted loss per share amounts that would have resulted if dilutive common stock
equivalents had been converted to common stock. No stock options were available
or granted during the period presented. Accordingly, basic and diluted loss per
share are the same for all periods presented.
- --------------------------------------------------------------------------------
Note 7 INCOME TAXES
- ----------------------------------------- ----------------- --------------------
Income taxes on losses have not been reflected in these financial statement as
it is not vertually certain that these losses will be recovered before the
expiry period of the loss carry forwards.
- ----------------------------------------- ----------------- --------------------
22
<PAGE>
PART III - EXHIBITS
ITEM 1. INDEX TO EXHIBITS.
Exhibits required to be attached hereto are listed in the Index to
Exhibits beginning on page 24 of this Form 10-SB, which is incorporated herein
by reference.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Sound Designs, Inc.
/s/ Barry L. Wosk
- ------------------------------------ Date: November 23, 1999
Barry L. Wosk, President & Director
/s/ Marvin S. Wosk
- ----------------------------------- Date: November 23, 1999
Marvin S. Wosk, Secretary, Treasurer, and Director
23
<PAGE>
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NO. DESCRIPTION
3.(I) 25 Articles of Incorporation
3 (II) 30 Bylaws
10(a) 54 Reseller Agreement entered into on September 14, 1999 by
and between the Company and DVDO, Inc.
10(b)(1) 56 Subscription Agreement entered into on September 22, 1998
by and between Barry L. Wosk and the Company.
10(b)(2) 60 Subscription Agreement entered into on September 22, 1998
by and between Marvin S. Wosk and the Company.
10(c) 64 Sales Commission Agreement entered into on September 15,
1999 by and between Barry L. Wosk and the Company.
23 67 Consent of Accountant
27 68 Financial Data Schedule
24
Exhibit 3 (I)
ARTICLES OF INCORPORATION
OF
SOUND DESIGNS, INC.
The undersigned, to form a Nevada corporation, CERTIFIES THAT:
I. NAME: THE NAME OF THE CORPORATION IS: SOUND DESIGNS, INC.
II. REGISTERED OFFICE: RESIDENT AGENT: The location of the registered
office of this corporation within the State of Nevada is 711 S. Carson St. Suite
4, Carson City, Nevada 89701; this corporation may maintain an office or offices
in such other place within or without the State of Nevada as may be from time to
time designated by the Board of Directors or by the By-Laws of the corporation;
and this corporation may conduct all corporation business of every kind or
nature, including the holding of any meetings of directors or shareholders,
inside or outside the State of Nevada, as well as without the State of Nevada.
The Resident Agent for the corporation shall be Resident Agents of Nevada,
Inc., 711 S. Carson St. Suite 4, Carson City, Nevada 89701.
III. PURPOSE: The purpose for which this corporation is formed is: To
engage in any lawful activity.
IV. AUTHORIZATION OF CAPITAL STOCK: The amount of the total authorized
CAPITAL STOCK OF THE CORPORATION SHALL BE TWENTY-FIVE THOUSAND DOLLARS
($25,000.00), CONSISTING OF TWENTY-FIVE MILLION (25,000,000) SHARES OF COMMON
STOCK, PAR VALUE $.001 per share.
V. INCORPORATOR: The name and post office address of the Incorporator
signing these Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
Resident Agents of 711 S. Carson St. Suite 4
Nevada, Inc. Carson City, Nevada 89701
VI. DIRECTORS: The governing board of this corporation shall be
directors, and the first Board shall consist of two(2).
The number of directors may, pursuant to the By-Laws, be increased or
decreased by the Board of Directors, provided there shall be no less than one
(1) nor more than nine (9) Directors.
25
<PAGE>
The name and post office addresses of the directors constituting the
first Board of Directors is as follows:
NAME POST OFFICE ADDRESS
BARRY WOSK 6436 Laburnum St.
Vancouver, BC
Canada V6M 3S9
MARVIN WOSK 6055 Nelson Ave.
Suite #2103
Burnaby, BC
Canada V5H 4L4
VII. STOCK NON-ASSESSABLE: The capital stock, or the holders thereof,
after the amount of the subscription price has been paid in, shall not be
subject to any assessment whatsoever to pay the debts of the corporation.
VIII. TERM OF EXISTENCE: This corporation shall have perpetual
existence.
IX. CUMULATIVE VOTING: No cumulative voting shall be permitted in the
election of directors.
X. PREEMPTIVE RIGHTS: Shareholders shall not be entitled to preemptive
rights.
XI. LIMITED LIABILITY: No officer or director of the Corporation shall
be personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as an officer or director, except for liability (i)
for any breach of the officer or directors duty of loyalty to the Corporation or
its Stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, or (iii) for any
transaction from which the officer or director derived any improper personal
benefit. If the Nevada General Corporation Law is amended after the date of
incorporation to authorize corporate action further eliminating or limiting the
personal liability of officers or directors, then the liability of an officer or
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the Nevada General Corporation Law, or amendments thereto. No
repeal or modification of this paragraph shall adversely affect any right or
protection of an officer or director of the Corporation existing at the time of
such repeal or modification.
XII. INDEMNIFICATION: Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a proceeding), by reason of the fact that he or she, or a person
for whom he or she is the legal representative, is or was an officer or director
of the Corporation or is or was serving at the request of the Corporation as an
officer or director of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
26
<PAGE>
plans whether the basis of such proceeding is alleged action in an official
capacity as an officer or director shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Nevada General Corporation
Law, as the same exists or may hereafter be amended, (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights and said law permitted the Corporation
to provide prior to such amendment), against all expense, liability and loss
(including attorneys fees, judgments, fines, excise taxes or penalties and
amounts to be paid in settlement) reasonably incurred or suffered by such person
in connection therewith and such indemnification shall continue as to a person
who has ceased to be an officer or director and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that except
as provided herein with respect to proceedings seeking to enforce rights to
indemnification, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors of the Corporation. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided however, that, if the Nevada General
Corporation Law requires the payment of such expenses incurred by an officer or
director in his or her capacity as an officer or director (and not in any other
capacity in which service was or is rendered by such person while an officer or
director, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, payment shall be made only
upon delivery to the Corporation of an undertaking, by or on behalf of such
officer or director, to repay all amounts so advanced if it shall ultimately be
determined that such officer or director is not entitled to be indemnified under
the Section or otherwise.
If a claim hereunder is not paid in full by the Corporation within
ninety days after a written claim has been received by the Corporation, the
claimant may, at any time thereafter, bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful, in whole or in part,
the claimant shall be entitled to be paid the expense of prosecuting such claim.
It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any, is required, has
been tendered to the corporation) that the claimant has not met the standards of
conduct which make it permissible under the Nevada General Corporation Law for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Nevada General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders)that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Section shall not be exclusive of any other right
27
<PAGE>
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-Law, agreement, vote of stockholders or
disinterested directors or otherwise.
The Corporation may maintain insurance, at its expense, to protect
itself and any officer, director, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Nevada General Corporation Law.
The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification to any employee or agent of
the Corporation to the fullest extent of the provisions of this Section with
respect to the indemnification and advancement of expenses of officers and
directors of the Corporation or individuals serving at the request of the
Corporation as an officer, director, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise.
THE UNDERSIGNED, being the Incorporator hereinafter named for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Nevada, does make and file these Articles of Incorporation, hereby
declaring and certifying the facts herein stated are true, and, ACCORDINGLY, HAS
HEREUNTO SET HIS HAND THIS 21ST day of September, 1998.
/S/ PATRICIA BOZIN
------------------
Patricia A. Bozin Sole Incorporator for Resident
Agents of Nevada, Inc.
STATE OF NEVADA )
) SS.
COUNTY OF CARSON )
ON THIS 21ST day of September, 1998, before me, a Notary
Public, personally appeared Patricia A. Bozin who acknowledged to me that she
executed the above instrument.
------------------------------
Notary Public
28
<PAGE>
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
In the matter of Sound Designs, Inc., I, Alan Teegardin on behalf of
Resident Agents of Nevada, Inc., with address at 711 S. Carson St. Suite 4,
Carson City, Nevada 89701, hereby accept the appointment as Resident Agent of
the above-entitled corporation in accordance with NRS 78.090.
Furthermore, that the mailing address for the above registered office
is 711 S. Carson St. Suite 4, Carson City, Nevada 89701.
IN WITNESS WHEREOF, I HEREUNTO SET MY HAND THIS 21ST day of September,
1998.
/S/ ALAN TEEGARDIN
------------------
Alan Teegardin for
Resident Agents of Nevada, Inc.
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Exhibit 3.(II)
BYLAWS
OF
SOUND DESIGNS, INC.
ARTICLE 1.
OFFICERS
1. BUSINESS OFFICE
The principal business office ("principal office") of the corporation
shall be located at any place either within or without the state of Nevada as
designated in the corporation's most current Annual Report filed with the Nevada
Secretary of State. The corporation may have such other offices, either within
or without the State of Nevada, as the Board of Directors may designate or as
the business of the corporation may require from time to time. The corporation
shall maintain at its principal office a copy of certain records, as specified
in Section 2.14 of Article 2.
1.2 REGISTERED OFFICE
The registered office of the corporation shall be located within Nevada
and may be, but need not be, identical with the principal office, provided the
principal off is located within Nevada. The address of the registered office may
be changed from time to time by the Board of Directors.
ARTICLE 2.
SHAREHOLDERS
2.1 ANNUAL SHAREHOLDER MEETING
THE ANNUAL MEETING OF THE SHAREHOLDERS SHALL BE HELD ON THE 21ST day of
September, each year, beginning with the 1999, at the hour of 1 o'clock p.m., or
at such other time on such other day within such month as shall be fixed by the
Board of Directors, for the purpose of electing directors and for the
transaction of such other business as may come before the meeting. If the day
fixed for the annual meeting shall be a legal holiday in the State of Nevada,
such meeting shall be held on the next succeeding business day.
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If the election of directors shall not be held on the day designated
herein for any annual meeting of the shareholders, or at any subsequent
continuation after adjournment thereof, the Board of Directors shall cause the
election to be held at a special meeting of the shareholders as soon thereafter
as convenient.
2.2 SPECIAL SHAREHOLDER MEETING
Special meetings of the shareholders, for any purpose or purposes
described in the notice of meeting, may be called by the president, or by the
Board of Directors, and shall be called by the president at the request of the
holders of not less than one-tenth of all outstanding shares of the corporation
entitled to vote on any issue at the meeting.
2.3 PLACE OF SHAREHOLDER MEETINGS
The Board of Directors may designate any place, either within or
without the State of Nevada, as the place for any annual or any special meeting
of the shareholders, unless by written consent, which may be in the form of
waivers of notice or otherwise, all shareholders entitled to vote at the meeting
designate a different place, either within or without the State of Nevada, as
the place for the holding of such meeting. If no designation is made by either
the Board of Directors of unanimous action of the voting shareholders, the place
of meeting shall be the principal office of the corporation in the State of
Nevada.
2.4 NOTICE OF SHAREHOLDER MEETINGS
O REQUIRED NOTICE Written notice stating the place, day and hour of
any --------------- annual or special shareholder meeting shall
be delivered not less than 10 nor more than 60 days before the
date of the meeting, either personally or by mail, by or at the
direction of the president, the Board of Directors, or other
persons calling the meeting, to each shareholder of record
entitled to vote at such meeting and to any other shareholder
entitled by the laws of the State of Nevada governing
corporations (the "Act") or the Articles of Incorporation to
receive notice of the meeting. Notice shall be deemed to be
effective at the earlier of: (1) when deposited in the United
States mail, addressed to the shareholder at his address as it
appears on the stock transfer books of the corporation, with
postage thereon prepaid; (2) on the date shown on the return
receipt if sent by registered or certified mail, return receipt
requested, and the receipt is signed by or behalf of the
addressee; (3) when received; or (4) 5 days after deposit in the
United States mail, if mailed postpaid and correctly addressed to
an address, provided in writing by the shareholder, which is
different from that shown in the corporation's current record of
shareholders.
O ADJOURNED MEETING If any shareholder meeting is adjourned to a
different date, time, or place, notice need not be given at the
new date, time, and place
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if the new date, time, and place is announced at the meeting
before adjournment. But if a new record date for the adjourned
meeting is, or must be fixed (see Section 2.5 of this Article
2) then notice must be given pursuant to the requirements of
paragraph (a) of the Section 2.4, to those persons who are
shareholders as of the new record date.
O WAIVER OF NOTICE A shareholder may waive notice of the meeting
(or any notice required by the Act, Articles of Incorporation,
or Bylaws), by a writing signed by the shareholder entitled to
the notice, which is delivered to the corporation (either
before or after the date and time stated in the notice) for
inclusion in the minutes of filing with the corporate records.
A shareholders' attendance at a meeting:
o Waives objection to lack of notice or defective
notice of the meeting unless the shareholder, at the
beginning of the meeting, objects to holding the
meeting or transacting business at the meeting; and
o Waives objection to consideration of a particular
matter at the meeting that is not within the purpose
or purposes described in the meeting notice, unless
the shareholder objects to consideration of the
matter when it is presented.
(D) CONTENTS OF NOTICE The notice of each special shareholder
meeting shall include a description of the purpose or purposes
for which the meeting is called. Except as provided in this
Section 2.4(d), or as provided in the corporation's articles,
or otherwise in this Act, the notice of an annual shareholder
meeting need not include a description of the purpose or
purposes for which the meeting is called.
If a purpose of any shareholder meeting is to consider either: (1) a
proposed amendment to the Articles of Incorporation (including any restated
articles requiring shareholder approval); (2) a plan of merger or share
exchange; (3) the sale, lease, exchange or other disposition of all, or
substantially all of the corporation's property; (4) the dissolution of the
corporation; or (5) the removal of a director, the notice must so state and be
accompanied by, respectively, a copy or summary of the: (a) articles of
amendment; (b) plan of merger or share exchange; and (c) transaction for
disposition of all, or substantially all, of the corporation's property. If the
proposed corporate action creates dissenters' rights, as provided in the Act,
the dissenters' rights, and must be accompanied by a copy of relevant provisions
of the Act. If the corporation issues, or authorizes the issuance of shares for
promissory notes or for promises to render services in the future, the
corporation shall report in writing to all the shareholders the number of shares
authorized or issued, and the consideration received with or before the notice
of the next shareholder meeting. Likewise, if the corporation indemnifies or
advances expenses to an officer or director, this shall be reported
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to all the shareholders with or before notice of the next shareholder meeting.
2.5 FIXING OF RECORD DATE
For the purpose of determining shareholders of any voting group
entitled to notice of or to vote at any meeting of shareholders, or shareholders
entitled to receive payment of any distribution or dividend, or in order to make
a determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date. Such record date shall
not be more than 70 days prior to the date on which the particular action
requiring such determination of shareholders entitled to notice of, or to vote
at a meeting of shareholders, or shareholders entitled to receive a share
dividend or distribution. The record date for determination of such shareholders
shall be at the close of business on:
(a) With respect to an annual shareholder meeting or any special
shareholder meeting called by the Board of Directors or any
person specifically authorized by the Board of Directors or
these Bylaws to call a meeting, the day before the first
notice is given to shareholders;
(b) With respect to a special shareholder meeting demanded by the
shareholders, the date the first shareholder signs the demand;
(c) With respect to the payment of a share dividend, the date
Board of Directors authorizes the share dividend;
(d) With respect to actions taken in writing without a meeting
(pursuant to Article 2, Section 2.12, the first date any
shareholder signs a consent; and
(e) With respect to a distribution to shareholders, (other than
one involving a repurchase or reacquisition of shares), the
date the Board of Directors authorizes the distribution.
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 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, which it must do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting.
If no record date has been fixed, the record date shall be the date the
written notice of the meeting is given to shareholders.
2.6 SHAREHOLDER LIST
The officer or agent having charge of the stock transfer books for
shares of the corporation shall, at least ten (10) days before each meeting of
shareholders, make a complete record of the
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shareholders entitled to vote at each meeting of shareholders, arranged in
alphabetical order, with the address of and the number of shares held by each.
The list must be arranged by class or series of shares. The shareholder list
must be available for inspection by a shareholder beginning two business days
after notice of the meeting is given for which the list was prepared and
continuing through the meeting. The list shall be available at the corporation's
principal office or at a place in the city where the meeting is to be held, as
set forth in the notice of meeting. A shareholder, his agent, or attorney is
entitled, on written demand, to inspect and, subject to the requirements of
Section 2.14 of this Article 2, to copy the list during regular business hours
and at his expense, during the period it is available for inspection. The
corporation shall maintain the shareholder list in written form or in another
form capable of conversion into written form within a reasonable time.
2.7 SHAREHOLDER QUORUM AND VOTING REQUIREMENTS
A majority of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of shareholders. If less than a majority of the outstanding shares are
represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting, unless a new record date is or must be set for that
adjourned meeting.
If a quorum exists, a majority vote of those shares present and voting
at a duly organized meeting shall suffice to defeat or enact any proposal unless
the Statutes of the State of Nevada, the Articles of Incorporation or these
Bylaws require a greater-than-majority vote, in which event the higher vote
shall be required for the action to constitute the action of the corporation.
2.8 INCREASING EITHER QUORUM OR VOTING REQUIREMENTS
For purposes of this Section 2.8, a "supermajority" quorum is a
requirement that more than a majority of the votes of the voting group be
present to constitute a quorum; and a "supermajority" voting requirement is any
requirement that requires the vote of more than a majority of the affirmative
votes of a voting group at a meeting.
The Shareholders, but only if specifically authorized to do so by the
Articles of Incorporation, may adopt, amend, or delete a Bylaw which fixes a
"supermajority" requirement.
The adoption or amendment of a Bylaw that adds, changes, or deletes a
"supermajority" quorum or voting requirement for shareholders must meet the same
quorum requirement and be
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adopted by the same vote required to take action under the quorum and voting
requirement then in effect or proposed to be adopted, whichever is greater.
A Bylaw that fixes a supermajority quorum or voting requirement for
shareholders may not be adopted, amended, or repealed by the Board of Directors.
2.9 PROXIES
At all meetings of shareholders, a shareholder may vote in person, or
vote by written proxy executed in writing by the shareholder or executed by his
duly authorized attorney-in-fact. Such proxy shall be filed with the secretary
of the corporation or other person authorized to tabulate votes before or at the
time of the meeting. No Proxy shall be valid after eleven (11) months from the
date of its execution unless otherwise specifically provided in the proxy or
coupled with an interest.
2.10 VOTING OF SHARES
Unless otherwise provided in the articles, each outstanding share
entitled to vote shall be entitled to one vote upon each matter submitted to a
vote at a meeting of shareholders.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without the transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
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.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares are transferred into the name of the pledgee, and
thereafter, the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock 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
at any given time.
Redeemable shares are not entitled to vote after notice of redemption
is mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company, or other financial institution under an
irrevocable obligation to pay the holders the redemption price on surrender of
the shares.
2.11 CORPORATION'S ACCEPTANCE OF VOTES
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(a) If the name of signed on a vote, consent, waiver, or proxy
appointment corresponds to the name of a shareholder, the
corporation, if acting in good faith, is entitled to accept
the vote, consent, waiver, or proxy appointment and give it
effect as the act of the shareholder.
(b) If the name signed on a vote, consent, waiver, or proxy
appointment does not correspond to the name of its
shareholder, the corporation, if action gin good faith, is
nevertheless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as of the act of the
shareholder if:
(1) the shareholder is an entity, as defined in the Act,
and the name signed purports to be that of an officer
or agent of the entity;
(2) the name signed purports to be that of an
administrator, executor, guardian or conservator
representing the shareholder and, if the corporation
requests, evidence of fiduciary status acceptable to
the corporation has been presented with respect to
the vote, consent, waiver, or proxy appointment;
(3) the name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the
corporation requests, evidence of this status
acceptable to the corporation has been presented with
respect to the vote, consent, waiver or proxy
appointment;
(4) the name signed purports to be that of a pledgee,
beneficial owner, or attorney-in-fact of the
shareholder and, if the corporation of the
signatory's authority to sign for the shareholder has
been presented with respect to the vote, consent,
waiver, or proxy appointment; or
(5) the shares are hold in the name of two or more
persons as co- tenants or fiduciaries and the name
signed purports to be the name of at least one of the
co-owners and the person signing appears to be acting
on behalf of all the co-owners.
(c) The corporation is entitled to reject a vote, consent, waiver,
or proxy appointment if the secretary or other officer or
agent authorized to tabulate votes, acting in good faith, has
reasonable basis for doubt about the validity of the signature
on it or about the signatory's authority to sign for the
shareholder.
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(d) The corporation and its officer or agent who accepts or
rejects a vote, consent, waiver, or proxy appointment in good
faith and in accordance with the standards of this Section
2.11 are not liable in damages to the shareholder for the
consequences of the acceptance or rejection.
(e) Corporation action based on the acceptance or rejection of a
vote, consent, waiver, or proxy appointment under this section
is valid unless a court of competent jurisdiction determines
otherwise.
2.12 INFORMAL ACTION BY SHAREHOLDERS
Any action required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting if one or more written consents,
setting forth the action so taken, shall be signed by shareholders holding a
majority of the shares entitled to vote with respect to the subject matter
thereof, unless a "supermajority" vote is required by these Bylaws, in which
case a "supermajority vote" will be required. Such consent shall be delivered to
the corporation secretary for inclusion in the minute book. A consent signed
under this section has the effect of a vote at a meeting and may be described as
such in any document.
2.13 VOTING FOR DIRECTORS
Unless otherwise provided in the Articles of Incorporation, directors
are elected by a plurality of the votes cast by the shares entitled to vote in
the election at a meeting at which a quorum is present.
2.14 SHAREHOLDERS' RIGHTS TO INSPECT CORPORATE RECORDS
Shareholders shall have the following rights regarding inspection of
corporate records:
(A) MINUTES AND ACCOUNTING RECORDS - The corporation shall keep,
as permanent records, minutes of all meetings of its
shareholders and Board of Directors, a record of all actions
taken by the shareholders or Board of Directors without a
meeting, and a record of all actions taken by a committee of
the Board of Directors in place of the Board of Directors on
behalf of the corporation. The corporation shall maintain
appropriate accounting records.
(A) ABSOLUTE INSPECTION RIGHTS OF RECORDS REQUIRED AT PRINCIPAL
OFFICE - If a shareholder gives the corporation written notice
of his demand at least five business days before the date on
which he wishes to inspect and copy, he, or his agent or
attorney, has the right to inspect and copy, during regular
business hours, any of the following records, all of which the
corporation is required to keep at its principal office:
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(1) its Articles of Incorporation and all amendments to
them currently in effect;
(2) its Bylaws or restated Bylaws and all amendments to
them
currently in effect;
(3) resolutions adopted by its Board of Directors
creating one or more classes or series of shares, and
fixing their relative rights, preferences and
limitations, if shares issued pursuant to those
resolutions are outstanding;
(4) the minutes of all shareholders' meetings, and record
of all action taken by shareholders without a meeting,
for the past three years;
(5) all written communications to shareholders within the
past three years, including the financial statements
furnished for the past three years to the shareholders;
(6) a list of the names and business addresses of its
current directors and officers; and
(7) its most recent annual report delivered to the Nevada
Secretary of State.
(C) CONDITIONAL INSPECTION RIGHT - In addition, if a shareholder
gives the ---------------------------- corporation a written
demand, made in good faith and for a proper purpose, at least
five business days before the date on which he wishes to inspect
and copy, describes with reasonable particularity his purpose and
the records he desires to inspect, and the records are directly
connected to his purpose, a shareholder of a corporation, or his
duly authorized agent or attorney, is entitled to inspect and
copy, during regular business ours at a reasonable location
specified by the corporation, any of the following records of the
corporation:
(1) excerpts from minutes of any meeting of the Board of
Directors; records of any action of a committee of the
Board of Directors on behalf of the corporation;
minutes of any meeting of the shareholders; and records
of action taken by the shareholders or Board of
Directors without a meeting, to the extent not subject
to inspection under paragraph (a) of this Section 2.14;
(2) accounting records of the corporation; and
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(3) the record of shareholders (compiled no earlier than
the date of the shareholder's demand).
(D) COPY COSTS - The right to copy records includes, if
reasonable, the right to receive copies made by photographic,
xerographic, or other means. The corporation may impose a
reasonable charge, to be paid by the shareholder on terms set
by the corporation, covering the costs of labor and material
incurred in making copies of any documents provided to the
shareholder.
(E) "SHAREHOLDER" INCLUDES BENEFICIAL OWNER - For purposes of this
Section 2.14, the term "shareholder" shall include a
beneficial owner whose shares are held in a voting trust or by
a nominee on his behalf.
2.15 FINANCIAL STATEMENTS SHALL BE FURNISHED TO THE SHAREHOLDERS
(a) The corporation shall furnish its shareholders annual financial
statements, which may be consolidated or combined statements of
the corporation and one or more of its subsidiaries, as
appropriate, that include a balance sheet as of the end of the
fiscal year, an income statement for that year, and a statement
of changes in shareholders' equity for the year, unless that
information appears elsewhere in the financial statements. If
financial statements are prepared for the corporation on the
basis of generally accepted accounting principles, the annual
financial statements for the shareholders must also be prepared
on that basis.
(b) If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the
statements must be accompanied by a statement of the president or
the person responsible for the corporation's accounting records:
(1) stating his reasonable belief that the statements
were prepared on the basis of generally accepted
accounting principles and, if not, describing the
basis of preparation; and
(2) describing any respects in which the statements were
not prepared on a basis o accounting consistent with
statements prepared for the preceding year.
(c) A corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year.
Thereafter, on written request from a shareholder who was not mailed
the statements, the corporation shall mail him the latest financial statements.
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2.16 DISSENTERS' RIGHTS
Each shareholder shall have the right to dissent from and obtain
payment for his shares when so authorized by the Act, Articles of Incorporation,
the Bylaws, or a resolution of the Board of Directors.
2.17 ORDER OF BUSINESS
The following order of business shall be observed at all meetings of
the shareholders, as applicable and so far as practicable:
(a) Calling the roll of officers and directors present and
determining shareholder quorum requirements;
(b) Reading, correcting and approving of minutes of previous meeting;
(c) Reports of officers;
(d) Reports of Committees;
(e) Election of Directors;
(f) Unfinished business;
(g) New business; and
(h) Adjournment.
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ARTICLE 3.
BOARD OF DIRECTORS
3.1 GENERAL POWERS
Unless the Articles of Incorporation have dispensed with or limited the
authority of the Board of Directors by describing who will perform some or all
of the duties of a Board of Directors, 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.
3.2 NUMBER, TENURE AND QUALIFICATIONS OF DIRECTORS
Unless otherwise provided in the Articles of Incorporation, the
authorized number of directors shall be not less than 1 (minimum number) nor
more than 9 (maximum number). The initial number of directors was established in
the original Articles of Incorporation. The number of directors shall always be
within the limits specified above, and as determined by resolution adopted by
the Board of Directors. After any shares of this corporation are issued, neither
the maximum nor minimum number of directors can be changed, nor can a fixed
number be substituted for the maximum and minimum numbers, except by a duly
adopted amendment to the Articles of Incorporation duly approved by a majority
of the outstanding shares entitled to vote. Each director shall hold office
until the next annual meeting of shareholders or until his successor shall have
been elected and qualified, or until there is a decrease in the number of
directors. Unless required by the Articles of Incorporation, directors do not
need to be residents of Nevada or shareholders of the corporation.
3.3 REGULAR MEETINGS OF THE BOARD OF DIRECTORS
A regular meeting of the Board of Directors shall be held without other
notice than this Bylaw immediately after, and at the same place as, the annual
meeting of shareholders. The Board of Directors may provide, by resolution, the
time and place for the holding of additional regular meetings without other
notice than such resolution. (If permitted by Section 3.7, any regular meeting
may be held by telephone).
3.4 SPECIAL MEETING OF THE BOARD OF DIRECTORS
Special meetings of the Board of Directors may be called by or at the
request of the president or any one director. The person or persons authorized
to call special meetings of the Board of Directors may fix any place, either
within or without the State of Nevada, as the place for holding any special
meeting of the Board of Directors or, if for holding any special meeting of the
Board of Directors or, if permitted by Section 3.7, any special meeting may be
held by telephone.
3.5 NOTICE OF, AND WAIVER OF NOTICE OF, SPECIAL MEETINGS OF THE BOARD
OF DIRECTORS
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Unless the Articles of Incorporation provide for a longer or shorter
period, notice of any special meeting of the Board of Directors shall be given
at least two days prior thereto, either orally or in writing. If mailed, notice
of any director meeting shall be deemed to be effective at the earlier of: (l)
when received; (2) five days after deposited in the United States mail,
addressed to the director's business office, with postage thereon prepaid; or
(3) the date shown on the return receipt, if sent by registered or certified
mail, return receipt requested, and the receipt is signed by or on behalf of the
director. Notice may also be given by facsimile and, in such event, notice shall
be deemed effective upon transmittal thereof to a facsimile number of a
compatible facsimile machine at the director's business office. Any director may
waive notice of any meeting. Except as otherwise provided herein, the waiver
must be in writing, signed by the director entitled to the notice, and filed
with the minutes or corporate records. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting to the transaction of any
business and at the beginning of the meeting, or promptly upon his arrival,
objects to holding the meeting or transacting business at the meeting, and does
not thereafter vote for or assent to action taken at the meeting. Unless
required by the Articles of Incorporation or the Act, neither the business to be
transacted at, nor the purpose of, any special meeting of the Board of Directors
need be specified in the notice or waiver of notice of such meeting.
3.6 DIRECTOR QUORUM
A majority of the number of directors, fixed, pursuant to Section 3.2
of this Article 3, shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors, unless the Articles of Incorporation or
the Act require a greater number for a quorum.
Any amendment to this quorum requirement is subject to the provisions
of Section 3.8 of this Article 3.
Once a quorum has been established at a duly organized meeting, the
Board of Directors may continue to transact corporate business until
adjournment, notwithstanding the withdrawal of enough directors to leave less
than a quorum.
3.7 ACTIONS BY DIRECTORS
The act of the majority of the directors present at a meeting which a
quorum is present when the vote is taken shall be the act the Board of
Directors, unless the Articles of Incorporation or the Act require a greater
percentage. Any amendment which changes the number of directors needed to take
action is subject to provisions of Section 3.8 of this Article 3.
Unless the Articles of Incorporation provide otherwise, any or all
directors may participate in a regular or special meeting by, or conduct the
meeting through the use of, any means of communication by which all directors
participating may simultaneously hear each other during the meeting. Minutes of
any such meeting shall be prepared and entered into the records of the
corporation. A director participating in a meeting by this means is deemed to be
present in person at the meeting.
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A director who is present at a meeting of the Board of Directors or a
committee of the Board of Directors when corporate action is taken is deemed to
have assented to the action taken unless: (l) he objects at the beginning of the
meeting, or promptly upon his arrival, to holding it or transacting business at
the meeting; or (2) his dissent or abstention from the action taken is entered
in the minutes of the meeting; or (3) he delivers written notice of his dissent
or abstention to the presiding officer of the meeting before its adjournment or
to the corporation within 24 hours after adjournment of the meeting. The right
of dissent or abstention is not available to a director who votes in favor of
the action taken.
3.8 ESTABLISHING A "SUPERMAJORITY" QUORUM OR VOTING REQUIREMENT FOR THE BOARD OF
DIRECTORS
For purposes of this Section 3.8, a "supermajority" quorum is a
requirement that more than a majority of the directors in office constitute a
quorum; and a "supermajority" voting requirement is one which requires the vote
of more than a majority of those directors present at a meeting at which a
quorum is present to be the act of the directors.
A Bylaw that fixes a supermajority quorum or supermajority voting
requirement may be amended or repealed:
(1) if originally adopted by the shareholders, only by the
shareholders (unless
otherwise provided by the shareholders); or
(2) if originally adopted by the Board of Directors, either by the
shareholders or by the Board of Directors.
A Bylaw adopted or amended by the shareholders that fixes a
supermajority quorum or supermajority voting requirement for the Board of
Directors may provide that it may be amended or repealed only by a specified
vote of either the shareholders or the Board of Directors.
Subject to the provisions of the preceding paragraph, action by the
Board of Directors to adopt, amend, or repeal a Bylaw that changes the quorum or
voting requirements for the Board of Directors must meet the same quorum
requirement and be adopted by the same vote required to take action under the
quorum and voting requirement then in effect or proposed to be adopted,
whichever is greater.
3.9 DIRECTION ACTION WITHOUT A MEETING
Unless the Articles of Incorporation provide otherwise, any action
required or permitted to be taken by the Board of Directors at a meeting may be
taken without a meeting if all the directors sign a written consent describing
the action taken. Such consents shall be filed with the records of the
corporation. Action taken by consent is effective when the last director signs
the consent, unless the
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consent specifies a different effective date. A signed consent has the effect of
a vote at a duly noticed and conducted meeting of the Board of Directors and may
be described as such in any document.
3.10 REMOVAL OF DIRECTORS
The shareholders may remove one or more directors at a meeting called
for that purpose if notice has been given that a purpose of the meeting is such
removal. The removal may be with or without cause unless the Articles of
Incorporation provide that directors may only be removed for cause. If
cumulative voting is not authorized, a director may be removed only if the
number of votes cast in favor of removal exceeds the number of votes cast
against removal.
Unless the Articles of Incorporation provide otherwise, if a vacancy
occurs on the Board of Directors, excluding a vacancy resulting from an increase
in the number of directors, the director(s) remaining in office shall fill the
vacancy. If the directors remaining in office constitute fewer than a quorum of
the Board of Directors, they may fill the vacancy by the affirmative vote of a
majority of all the directors remaining in office.
If a vacancy results from an increase in the number of directors, only
the shareholders may fill the vacancy.
A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date) may be filled by the Board of Directors
before the vacancy occurs, but the new director may not take office until the
vacancy occurs.
The term of a director elected to fill a vacancy expires at the next
shareholders' meeting at which directors are elected. However, if his term
expires, he shall continue to serve until his successor is elected and qualifies
or until there is a decrease in the number of directors.
3.12 DIRECTOR COMPENSATION
Unless otherwise provided in the Articles of Incorporation, by resolution of the
Board of Directors, each director may be paid his expenses, if any, of
attendance at each meeting of the Board of Directors, and may be paid a stated
salary as director or a fixed sum for attendance at each meeting of the Board of
Directors, or both. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
3.13 DIRECTOR COMMITTEES
(A) CREATION OF COMMITTEES Unless the Articles of Incorporation
provide otherwise, the Board of Directors may create one or
more committees and appoint members of the Board of Directors
to serve on them. Each committee must have two or more
members, who serve at the pleasure of the Board of Directors.
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(B) SELECTION OF MEMBERS The creation of a committee and
appointment of members to it must be approved by the greater
of (1) a majority of all the directors if office when the
action is taken or (2) the number of directors required by the
Articles of Incorporation to take such action.
(C) REQUIRED PROCEDURES Sections 3.4, 3.5, 3.6, 3.7, 3.8 and 3.
of this Article 3 apply to committees and their members.
(D) AUTHORITY Unless limited by the Articles of Incorporation or
the Act, each committee may exercise those aspects of the
authority of the Board of Directors which the Board of
Directors confers upon such committee in the resolution
creating the committee. Provided, however, a committee may
not:
(1) authorize distribution to shareholders;
(2) approve or propose to shareholders any action that
the Act requires be approved by shareholders;
(3) fill vacancies on the Board of Directors or on any of
its committees;
(4) amend the Articles of Incorporation;
(5) adopt, amend, or repeal Bylaws;
(6) approve a plan or merger not requiring shareholder
approval;
(7) authorize or approve reacquisition of shares, except
according to a formula or method prescribed by the
Board of Directors; or
(8) authorize or approve the issuance or sale, or
contract for sale of shares, or determine the
designation and relative rights, preferences, and
limitations of a class or series of shares; except
that the Board of Directors may authorize a committee
to do so within limits specifically prescribed by the
Board of Directors.
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ARTICLE 4.
OFFICERS
4.1 DESIGNATION OF OFFICERS
The officers of the corporation shall be a president, a secretary, and
a treasurer, each of whom shall be appointed by the Board of Directors. Such
other officers and assistant officers as may be deemed necessary, including any
vice-presidents, may be appointed by the Board of Directors. The same individual
may simultaneously hold more than one office in the corporation.
4.2 APPOINTMENT AND TERM OF OFFICE
The officers of the corporation shall be appointed by the Board of
Directors for a term as determined by the Board of Directors. If no term is
specified, they shall hold office until the first meeting of the directors held
after the next annual meeting of shareholders. If the appointment of officers is
not made at such meeting, such appointment shall be made as soon thereafter as
is convenient. Each officer shall hold office until his successor has been duly
appointed and qualified, until his death, or until he resigns or has been
removed in the manner provided in Section 4.3 of this Article 4.
The designation of a specified term does not grant to the officer any
contract rights, and the Board of Directors can remove the officer at any time
prior to the termination of such term.
Appointment of an officer shall not of itself create any contract
rights.
4.3 REMOVAL OF OFFICERS
Any officer may be removed by the Board of Directors at any time, with
or without cause. Such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
4.4 PRESIDENT
The president shall be the principal executive officer of the
corporation and, subject to the control of the Board of Directors, shall
generally supervise and control all of the business and affairs of the
corporation. He shall, when present, preside at all meetings of the
shareholders. He may sign, with the secretary or any other proper officer of the
corporation thereunto duly authorized by the Board of Directors, certificates
for shares of the corporation and deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be executed, except
in cases where the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these Bylaws to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed or executed. The
president shall generally perform all duties incident to the office of the
president and such other duties as may be prescribed by the Board of Directors
from time to time.
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4.5 VICE-PRESIDENT
If appointed, in the absence of the president or in the event of the
president's death, inability or refusal to act, the vice-president (or in the
event there be more than one vice-president, the vice-presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their appointment) shall perform 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. If there is no vice-president, then the
treasurer shall perform such duties of the president. Any vice-president may
sign, with the secretary or an assistant secretary, certificates for shares of
the corporation the issuance of which have been authorized by resolution of the
Board of Directors. A vice-president shall perform such other duties as from
time to time may be assigned to him by the president or by the Board of
Directors.
4.6. SECRETARY
The secretary shall (a) keep the minutes of the proceedings of the
shareholders and of the Board of Directors in one or more books provided for
that purpose; (b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and of any seal of the corporation and, if there is a seal of
the corporation, see that it is affixed to all documents, the execution of which
on behalf of the corporation under its seal is duly authorized; (d) when
requested or required, authenticate any records of the corporation; (e) keep a
register of the post office address of each shareholder, as provided to the
secretary by the shareholders; (f) sign with the president, or vice-president,
certificates for shares of the corporation, the issuance of which has been
authorized by resolution of the Board of Directors; (g) have general charge of
the stock transfer books of the corporation; and (h) generally perform all
duties incident to the office of secretary and such other duties as from time to
time may be assigned to him by the president or by the Board of Directors.
4.7 TREASURER
The treasurer shall (a) have charge and custody of and be responsible
for all funds and securities of the corporation; (b) receive and give receipts
for moneys due and payable to the corporation; (b) receive and give receipts for
moneys due and payable to the corporation from any source whatsoever, and
deposit all such moneys in the name of the corporation in such banks, trust
companies, or other depositories as may be selected by the Board of Directors;
and (c) generally perform all of the duties incident to the office of treasurer
and such other duties as from time to time may be assigned to him by the
president or by the Board of Directors.
If required by the Board of Directors, the treasurer shall give a bond
for the faithful discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine.
4.8 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS
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The assistant secretaries, when authorized by the Board of Directors,
may sign with the president, or a vice-president, certificates for shares of the
corporation, the issuance of which has been authorized by a resolution of the
Board of Directors. The assistant treasurers shall respectively, if required by
the Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine.
The assistant secretaries and assistant treasurers, generally, shall
perform such duties as may be assigned to them by the secretary or the
treasurer, respectively, or by the president or the Board of Directors.
4.9 SALARIES
The salaries of the officers, if any, shall be fixed from time to time
by the Board of Directors.
ARTICLE 5.
INDEMNIFICATION OF DIRECTORS, OFFICERS, AGENTS,
AND EMPLOYEES
5.1 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
Unless otherwise provided in the Articles of Incorporation, the
corporation shall indemnify any individual made a party to a proceeding because
he is or was an officer, director, employee or agent of the corporation against
liability incurred in the proceeding, all pursuant to and consistent with the
provisions of 78.751, as amended from time to time.
5.2 ADVANCE EXPENSES FOR OFFICERS AND DIRECTORS
The expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding shall be paid by the corporation as they are
incurred and in advance of the final deposition of the action, suit or
proceeding, but only after receipt by the corporation of an undertaking by or on
behalf of the officer or director on terms set by the Board of Directors, to
repay the expenses advanced if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation.
5.3 SCOPE OF INDEMNIFICATION
The indemnification permitted herein is intended to be to the fullest
extent permissible under the laws of the State of Nevada, and any amendments
thereto.
ARTICLE 6.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 CERTIFICATES FOR SHARES
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(A) CONTENT
Certificates representing shares of the corporation shall at
minimum, state on their face the name of the issuing
corporation; that the corporation is formed under the laws of
the State of Nevada; the name of the person to whom issued;
the certificate number; class and par value of shares; and the
designation of the series, if any, the certificate represents.
The form of the certificate shall be as determined by the
Board of Directors. Such certificates shall be signed (either
manually or by facsimile) by the president or a vice-president
and by the secretary or an assistant secretary and may be
sealed with a corporate seal or a facsimile thereof. Each
certificate for shares shall be consecutively numbered or
otherwise identified.
(B) LEGEND AS TO CLASS OR SERIES
If the corporation is authorized to issue different classes of
shares or different series within a class, the designations,
relative rights, preferences, and limitations applicable to
each class and the variations in rights, preferences, and
limitations determined for each series (and the authority of
the Board of Directors to determine variations for future
series) must be summarized on the front or back of the
certificate indicating that the corporation will furnish the
shareholder this information on request in writing and without
charge.
(C) SHAREHOLDER LIST
The name and address of the person to whom the shares are
issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation.
(D) TRANSFERRING SHARES
All certificates surrendered to the corporation for transfer
shall be canceled and no new certificate shall be issued until
the former certificate for a like number of shares shall have
been surrendered and canceled, except that in case of a lost,
destroyed, or mutilated certificate, a new one may be issued
therefore upon such terms as the Board of Directors may
prescribe, including indemnification of the corporation and
bond requirements.
6.2 REGISTRATION OF THE TRANSFER OF SHARES
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Registration of the transfer of shares of the corporation shall be made
only on the stock transfer books of the corporation. In order to register a
transfer, the record owner shall surrender the share certificate to the
corporation for cancellation, properly endorsed by the appropriate person or
persons with reasonable assurances that the endorsements are genuine and
effective. Unless the corporation has established a procedure by which a
beneficial owner of shares held by a nominee is to be recognized by the
corporation as the owner, the person in whose name shares stand on the books of
the corporation shall be deemed by the corporation to be the owner thereof for
all purposes.
6.3 RESTRICTIONS ON TRANSFER OF SHARES PERMITTED
The Board of Directors may impose restrictions on the transfer or
registration of transfer of shares, including any security convertible into, or
carrying a right to subscribe for or acquire shares. A restriction does not
affect shares issued before the restriction as adopted unless the holders of the
shares are parties to the restriction agreement or voted in favor of the
restriction.
A restriction on the transfer or registration of transfer of shares may
be authorized:
(1) to maintain the corporation's status when it is
dependent on the number or identity of its
shareholders;
(2) to preserve exemptions under federal or state
securities law; or
(3) for any other reasonable purpose.
A restriction on the transfer or registration of transfer of shares
may:
(1) obligate the shareholder first to offer the corporation
or other persons (separately, consecutively, or
simultaneously) an opportunity to acquire the
restricted shares;
(2) obligate the corporation or other persons (separately,
consecutively, or simultaneously) to acquire the
restricted shares;
(3) require the corporation, the holders of any class of
its shares, or another person to approve the transfer
of the restricted shares, if the requirement is not
manifestly unreasonable; or
(4) prohibit the transfer of the restricted shares to
designated persons or classes of persons, if the
prohibition is not manifestly unreasonable.
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A restriction on the transfer or registration shares is valid and
enforceable against the holder or the holder if the restriction is authorized by
this Section 6.3 and its existence is noted conspicuously on the front or back
of the certificate. Unless so noted, a restriction is against a person without
knowledge of the restriction.
6.4 ACQUISITION OF SHARES
The corporation may acquire its own shares and unless otherwise
provided in the Articles of Incorporation, the shares so acquired constitute
authorized but unissued shares.
If the Articles of Incorporation prohibit the reissue of shares
acquired by the corporation, the number of authorized shares is reduced by the
number of shares acquired, effective upon amendment of the Articles of
Incorporation, which amendment shall be adopted by the shareholders, or the
Board of Directors without shareholder action (if permitted by the Act). The
amendment must be delivered to the Secretary of State and must set forth:
(1) the name of the corporation;
(2) the reduction in the number of authorized shares, itemized by
class and series; and
(3) the total number of authorized shares, itemized by class and series,
remaining after reduction of the shares.
ARTICLE 7.
DISTRIBUTIONS
7.1 DISTRIBUTIONS
The Board of Directors may authorize, and the corporation may make
distributions (including dividends on its outstanding shares) in the manner and
upon the terms and conditions provided by law.
ARTICLE 8.
CORPORATE SEAL
8.1 CORPORATE SEAL
The Board of Directors may adopt a corporate seal which may be circular
in form and have inscribed thereon any designation, including the name of the
corporation, Nevada as the state of incorporation, and the words "Corporate
Seal."
ARTICLE 9
EMERGENCY BYLAWS
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9.1 EMERGENCY BYLAWS
Unless the Articles of Incorporation provide otherwise, the following
provisions shall be effective during an emergency, which is defined as a time
when a quorum of the corporation's directors cannot be readily assembled because
of some catastrophic event. During such emergency:
(A) NOTICE OF BOARD MEETINGS
Any one member of the Board of Directors or any one of the
following officers: president, any vice-president, secretary,
or treasurer, may call a meeting of the Board of Directors.
Notice of such meeting need be given only to those directors
whom it is practicable to reach, any may be given in any
practical manner, including by publication and radio. Such
notice shall be given at least six hours prior to commencement
of the meeting.
(B) TEMPORARY DIRECTORS AND QUORUM
One or more officers of the corporation present at the
emergency board meeting, as is necessary to achieve a quorum,
shall be considered to be directors for the meeting, and shall
so serve in order of rank, and within the same rank, in order
of seniority. In the event that less than a quorum (as
determined by Section 3.6 of Article 3) of the directors are
present (including any officers who are to serve as directors
for the meeting), those directors present (including the
officers serving as directors) shall constitute a quorum.
(C) ACTIONS PERMITTED TO BE TAKEN
The Board of Directors, as constituted in paragraph (b), and
after notice as set forth in paragraph (a), may:
(1) OFFICERS' POWERS
Prescribe emergency powers to any officer of the
corporation;
(2) DELEGATION OF ANY POWER
Delegate to any officer or director, any of the powers
of the Board of Directors;
(3) LINES OF SUCCESSION
Designate lines of succession of officers and agents,
in the event that any of them are unable to discharge
their duties;
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(4) RELOCATE PRINCIPAL PLACE OF BUSINESS
Relocate the principal place business, or designate
successive simultaneous principal places business
(5) ALL OTHER ACTION
Take any other action which is convenient, helpful,
or necessary to carry on the business of corporation.
10.1 AMENDMENTS
The Board of Directors may amend or repeal the corporation's Bylaws
unless:
(1) the Articles of Incorporation or the Act reserve this power
exclusively to the shareholders, in whole or in part; or
(2) the shareholders, in adopting, amending, or repealing a
particular Bylaw, provide expressly that the Board of
Directors may not amend or repeal that Bylaw; or
(3) the Bylaw either establishes, amends or deletes a
"supermajority" shareholder quorum or voting requirement, as
defined in Section 2.8 of Article 2.
Any amendment which changes the voting or quorum requirement for the
Board of Directors must comply with Section 3.8 of Article 3, and for the
shareholders, must comply Section 2.8 of Article 2.
The corporation's shareholders may also amend or repeal the
corporation's Bylaws at any meeting held pursuant to Article 2.
CERTIFICATE OF THE SECRETARY ;A
I hereby certify that I am the Secretary of Sound Designs, Inc. and
that the forgoing Bylaws, consisting of twenty-nine (29) pages, constitutes the
code of Sound Designs, Inc. as duly adopted by THE BOARD OF DIRECTORS OF THE
CORPORATION ON THIS 21ST day of September, 1998.
IN WITNESS WHEREOF, I HAVE HEREUNTO SUBSCRIBED MY NAME THIS 21ST day
of September, 1998.
/S/ MARVIN S. WOSK
-------------------
Secretary
53
Exhibit 10(a)
DVDO RESELLER AGREEMENT
This Agreement is executed between DVDO, Inc. (a California
corporation) with offices at 1129 Dell Avenue, Campbell, California 95008, and
Sound Designs, Inc. ("Reseller") Nevada corporation with offices at 6436
Laburnum Street, Vancouver, BC, Canada V6M 3S9. The Effective Date of this
Agreement is September 14, 1999.
DVDO wishes to sell iScan(TM) products ("Product") to Reseller and
Reseller wishes to buy such Product from DVDO for resale under the terms and
conditions contained herein.
SELLER:
BY /S/ DAVID C. BUUCK BY /S/ BARRY WOSK
---------------- ------------------------
NAME BARRY WOSK NAME BARRY WOSK
TITLE PRESIDENT TITLE PRESIDENT
1. Term and Termination. The term of this Agreement shall be from the Effective
Date until terminated by either party with 30 days written notice. Immediate
termination will result from any of the following (i) an uncured breach of a
term hereof, (ii) an unauthorized disclosure of DVDO confidential information as
defined in Section 10 hereof, (iii) or the cessation of either party to conduct
business in the normal fashion (bankruptcy, etc.).
2. Purchase, Pricing and Shipment. Reseller shall purchase Product either by a
credit card accepted by DVDO or by written purchase order. Pricing shall be
based on the quantity of each shipment in accordance with the then effective
DVDO Reseller price list ("Price List"), a copy of which, current as of the
Effective Date, is attached hereto. The first one hundred (100) units of Product
purchased hereunder must be prepaid by Reseller. Upon approval of Reseller's
credit by DVDO, subsequent purchases may be made with Net 30 day terms provided,
however, that DVDO shall have the right to re-impose prepaid cash terms, by
written notice and effective upon Reseller's next purchase, in the event that
Reseller fails to pay any invoice within thirty (30) days of the invoice date.
All payments shall be made in U.S. dollars. Shipment shall be FOB point of
origin and the ship method shall be that specified by Reseller from the options
offered by DVDO. DVDO shall make every effort to ship Product according to the
lead times specified in the then effective Price List and will notify Reseller
of any unavoidable delay. BUYER:
3. Minimum Advertised Pricing. While Reseller shall retain the right to set its
own resale price for Product, the minimum price for each type of Product which
Reseller may display by an public means, including but not limited to any
advertising or Internet forums or chat rooms, shall be that specified in the
then effective Price List. Further, Reseller agrees to impose this requirement
on any of its customers who will resell Products to end users. Failure to comply
with this term shall be a material breach of this Agreement.
4. Relationship of the Parties. The relationship of the parties hereto shall be
that of seller and buyer. No form of agency or other special relationship is
created hereby. Neither party may obligate the other party to any condition
whatsoever.
5. Exclusivity. In consideration of Reseller's issuance of a prepaid purchase
order for one hundred (100) units of Product to be shipped in a single lot
immediately upon the execution of this Agreement, DVDO grants to Reseller
exclusive distribution rights in the country of Canada as further defined in
this Section. The initial grant of exclusivity shall be for a period of six (6)
months from the Effective Date. In the event that, within this initial
exclusivity period, Reseller places additional non-cancelable purchase orders
with DVDO for a minimum of 200 units of Product, then the exclusivity defined
herein will be extended for another six (6) month period. During that second
exclusivity period, DVDO and Reseller may determine a mutually agreeable Product
sales goal, the achievement of which will extend the exclusivity defined herein
for additional period(s). During any period of exclusivity, DVDO agrees to refer
Reseller all Canadian distributors and dealers and not to sell Product to them
directly. DVDO may, however, sell Product directly to any Canadian end user who
purchases units at the then current Product MSRP. Further,
54
<PAGE>
DVDO will make no effort to monitor purchases of Canadian distributors or
dealers from non-Canadian resellers.
6. Returned Units. Other than units of Product returned under the warranty
provisions hereof, all other returns are limited to Products returned by end
users to Reseller within fifteen (15) days of the date of purchase from a
reselling customer of Reseller. In addition, DVDO will, for a period of ninety
(90) days from the Effective Date, accept returns of unopened units of Product
from Reseller's initial one hundred (100) piece purchase order. All non-
warranty returns shall be subject to a fifteen percent (15%) restocking charge
to be calculated by DVDO against the most recent price(s) paid by Reseller for
the Product. Prior to any return of Product, Reseller must obtain a Return
Authorization from DVDO. Failure to obtain such Authorization may result in the
refusal by DVDO of Reseller's shipment.
7. Technical Support. Reseller agrees to provide technical support to the end
users who are its customers. End users who DVDO directly will be referred to
their Reseller. DVDO will provide second level technical support to Resellers
during the term of this Agreement.
8. Grant of License. With the following exception, DVDO makes no grant of
license of any of its intellectual property to Reseller. During the term of this
Agreement, DVDO grants to Reseller a license to use DVDO's trademarks, including
but not limited to DVDO, PureProgressive and iScan, in Product advertising
prepared by Reseller. DVDO shall have the right to inspect Reseller's use of the
licensed trademarks and may, in its sole judgment, require Reseller to
immediately suspend such use.
9. Product Warranty. The Products are warranted against defects in materials and
workmanship for a period of twelve (12) months after receipt by Reseller's end
user customers but not longer than fifteen (15) months after shipment by DVDO to
Reseller, except the initial one hundred (100) unit shipment which shall be so
warranted for not longer than eighteen (18) months after shipment by DVDO to
Reseller. EXCEPT FOR THE WARRANTIES SET FORTH IN THIS SECTION, SELLER DISCLAIMS
ALL WARRANTIES WITH REGARD TO THE PRODUCT, INCLUDING ALL IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND THAT STATED EXPRESS
WARRANTIES ARE IN LIEU OF ALL OBLIGATIONS OR LIABILITIES ON THE PART OF SELLER
FOR DAMAGES, INCLUDING BUT NOT LIMITED TO SPECIAL, INDIRECT, OR CONSEQUENTIAL
DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE SALE, LICENSE, USE OR
PERFORMANCE THEREOF FOR WHICH SELLER SHALL HAVE NO LIABILITY.
10. Indemnification. DVDO agrees to indemnify and hold harmless Reseller against
any and all claims that the unmodified Product delivered to Buyer by Seller
pursuant to this Agreement constitutes an infringement of any United States
patent, copyright, trademark or trade secret of any third party provided that
DVDO is given immediate notice of any alleged infringement and complete control
of the defense against such claims.
11. Confidential Information. From time to time, DVDO may provide confidential
information to Reseller, including but not limited to new product information
and the Price List, which Reseller agrees to hold in strict confidence until
such information is publicly announced by DVDO or until Reseller is given
written authorization by DVDO to release such information. Failure to comply
with this term shall be a material breach of this Agreement and will result in
its immediate termination.
12. General Terms and Conditions. With the exception of Section 10, the total
liability of DVDO to Reseller for any obligation contained herein shall be
limited to the total of all monies paid by Reseller to DVDO as of the date such
liability is incurred. All notices shall be in writing, sent to the address
provided above by overnight courier, and shall be considered to have been given
when picked up by the courier. If either party fails to perform an obligation
hereunder and is given notice of such non-performance by the other party, the
party in breach shall have thirty (30) days to cure the non-performance. All
durations specified herein are in calendar days. If any provision of this
Agreement is held to be invalid, the remaining provisions will in no way be
affected or impaired. The waiver or failure of either party to exercise any
right provided hereunder will not be deemed a waiver of any further right
hereunder. This Agreement expresses the complete understanding of the parties
with respect to the subject matter hereof and supersedes all prior proposals or
agreements, whether oral or written. Each executed copy of this Agreement shall
be deemed to be an original and, taken together, shall comprise one and the same
instrument. This Agreement may not be modified or altered except by a written
instrument duly executed by both parties.
55
Exhibit 6(b)(1)
STOCK SUBSCRIPTION OFFER
SOUND DESIGNS, INC.
TO: BOARD OF DIRECTORS:
1. SUBSCRIPTION: Barry Wosk (the "Undersigned"), whose address is 6436
Laburnum Street, VANCOUVER, BC V6M 3S9, HEREBY OFFERS TO SUBSCRIBE FOR FIVE
HUNDRED THOUSAND (500,000) Shares of Common Stock ( the "Stock") of Sound
Designs, Inc., a Nevada corporation ("the Company") whose address is 6436
Laburnum Street, Vancouver, BC, Canada V6M 3S9. The par value of the Common
Stock is $.001. The UNDERSIGNED AGREES TO PAY $.0025 PER SHARE FOR SUCH SHARES
FOR AN AGGREGATE PURCHASE PRICE OF ONE THOUSAND TWO HUNDRED FIFTY Dollars
(U.S.$1,250.00), payable at the time of subscription.
2. REPRESENTATION AND WARRANTIES OF THE UNDERSIGNED: The undersigned
hereby represents and warrants that:
A. The Undersigned is financially responsible, able to meet his/her/its
obligations hereunder, and acknowledges this investment may be long
term and is by its nature speculative; further, the Undersigned
acknowledges he/she/its if financially capable of bearing the risk of
this investment.
B. The Undersigned has had substantial experience in business or
investments in one or more of the following:
(I) Knowledge of and investment experience with securities,
such as stocks and bonds.
(ii) Ownership of interests in new ventures and/or start-up
companies.
(iii) Experiences in business and financial dealings and
parlance, and the Undersigned can protect his/her/its
own interest in an investment of this nature and does
not have a "Purchaser Representative", as defined in
Regulation D of the Securities Act of 1933, as
amended, (the "Securities Act") and does not need
such a Representative.
C. The Undersigned is capable of bearing the high degree of economic
risks and burdens of this investment, including, but not limited to,
the possibility of complete loss of all hi/her/its investment capital
and the lack of a liquid public market, such that he/she/it may not be
able to readily liquidate the investment whenever desired or at the
then current asking price of the Stock.
D. The Undersigned has had access to the information set forth in
Paragraph 4 hereof and was able to request copies of such information,
ask questions of and receive answers from the Company regarding such
information and any other information he/she/it desired concerning the
terms and conditions of this transaction and such questions have been
answered to his/her/its full satisfaction. The Undersigned understands
that the Stock has not been registered under the Securities Act and the
applicable state securities laws in reliance on the exemption provided
by Section 4 (2) of the Securities
STOCK SUBSCRIPTION OFFER
- -------------------------------------------------------------------------------
56
<PAGE>
Act and Regulation D relating to transactions not involving a public
offering. The Undersigned further understands that he/she/it is
purchasing the Stock without being furnished any offering literature,
prospectus or private offering memorandum, other than that supplied
under or identified in this Offer.
E. At no time was the Undersigned presented with or solicited by any
leaflet, public promotional meeting, circular, newspaper or magazine
article, radio or television advertisement, or any other form of
general advertising otherwise than in connection and concurrently with
this Offer.
F. The Stock which the Undersigned hereby subscribes is being acquired
solely for his/her/its own account, for investment and is not being
purchased with a view to or for the resale or distribution thereof and
the Undersigned has no present plans to enter into any contract,
undertaking, agreement or arrangement for such resale or distribution.
G. The Undersigned is aware of the following:
(i) The Company's financial and operating history.
(ii) The existence of substantial restrictions on the
transferability of Stock.
(iii) The Stock will not be, and the Undersigned will have
no rights to require that the Company register the
Stock under the Securities Act or any state
securities laws.
(iv) The Undersigned may not be able to avail
himself/herself/itself of the provisions of Rule 144
adopted by the Securities and Exchange Commission
under the Securities Act or any applicable state
securities acts with respect to the release of the
Stock, and accordingly it may not be possible for the
Undersigned to liquidate part or all of hi/her/its
investment in the Company or liquidate at the then
current asking price of the Stock, if any.
H. It has at not time been represented, guaranteed, or warranted to the
Undersigned by an officer or director of the Company, or agents or
employees thereof, or any other person expressly or impliedly, any of
the following:
(i) An exact or approximate length of time that the
Undersigned will or will not remain as owner of the
Stock.
(ii) A percentage of profit and/or amount or type of
consideration, profit, loss, credits or deductions to
be realized, if any, as a result of the Undersigned's
ownership of the Stock.
(iii) Past performance on the part of any director or
officer of the Company, or the agents or employees
thereof, that will in any way indicate the
predictable results according from the ownership of
the Stock.
STOCK SUBSCRIPTION OFFER
- --------------------------------------------------------------------------------
57
<PAGE>
(I) The Company in under no duty to register the Stock or comply with
any exemption from registration under the Securities Act or any state
securities law, including supplying to the appropriate agency or to the
Undersigned any information required in connection with transfers under
appropriate rules and regulations.
The foregoing representations and warranties shall be true and accurate
as of the date hereof and as of the date of any acceptance of this Offer by the
Company and shall survive the date of such acceptance by the Company.
3. INDEMNIFICATION: The Undersigned acknowledges that he/she/it
understands the meaning and legal consequence of the representations and
warranties contained in Paragraph 2 hereof and the Undersigned hereby agrees to
indemnify and hold harmless all loss, damage or liability due to or arising out
of (I) a breach of any such representation or warranty, or (ii) a breach of any
warranty of the Undersigned contained in this Offer.
4. ACCESS TO FURNISHING INFORMATION: The Company has provided the
Undersigned access to and furnished to the Undersigned, if requested, all
corporate records, including Articles of Incorporation, ByLaws, Minute and Stock
Books, and agreements with Officers, Directors, Stockholders and Employees, and
information related to the business of the Company dated on or before this
Offer. The Undersigned hereby acknowledges that he/she/it has had aan
opportunity to review and understand the forgoing and has, if he/she/it deemed
necessary, consulted with a legal and/or tax advisor.
5. TRANSFERABILITY: The Undersigned agrees no to transfer or assign the
Offer, or any of the Undersigned's interest therein, and further agrees that the
assignment and transferability of the Stock acquired pursuant hereto shall be
made only in accordance with this offer. The Company shall issue stop transfer
instructions to its transfer agent for its common stock with respect to the
Stock and shall place the following legend on the certificates representing the
Stock:
"The shares represented by this certificate have been acquired pursuant
to a transaction effected in reliance upon Section 4(2) of the
Securities Act of 1933, as amended, (the "Act") and have not been the
subject of a Registration Statement under the Act or any state
securities act. These securities may not be sold or otherwise
transferred in the absence of such registration or applicable exemption
therefrom under the Act or any applicable state securities act.
6. REVOCATION: The undersigned agrees that he/she/it shall not cancel,
terminate or revoke this Agreement or any provisions hereof or any agreement of
the Undersigned made hereunder.
7. NOTICES: All notices or other communications given or made hereunder
shall be in writing and shall be delivered or mailed by registered or certified
mail, return receipt requested, postage prepaid, to the Undersigned or to the
Company at their respective addresses set forth below.
8. GOVERNING LAW: This Agreement and other transactions contemplated
hereunder shall be construed in accordance with and governed by the laws of the
State of Nevada.
STOCK SUBSCRIPTION OFFER
- --------------------------------------------------------------------------------
58
<PAGE>
9. ENTIRE AGREEMENT: This Offer constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof and may be amended
only by a writing executed by all parties.
IN WITNESS WHEREOF, the parties hereto have executed this Offer as of
the date and year set forth below.
DATED THIS 22ND DAY OF SEPTEMBER, 1998.
/S/ BARRY WOSK
-------------------------
Signature
/S/ BARRY WOSK
-----------------
6436 LABURNUM STREET
Address
VANCOUVER BC V6M 3S9
City State Zip Code
604-266-3943
Telephone
STOCK SUBSCRIPTION OFFER
- --------------------------------------------------------------------------------
59
Exhibit 10(b)(2)
STOCK SUBSCRIPTION OFFER
SOUND DESIGNS, INC.
TO: BOARD OF DIRECTORS:
1. SUBSCRIPTION: Marvin Wosk (the "Undersigned"), whose address is 6055
Nelson Ave., Suite #2103, BURNABY, BC, CANADA V5H 4L4, HEREBY OFFERS TO
SUBSCRIBE FOR FIVE HUNDRED THOUSAND (500,000) Shares of Common Stock ( the
"Stock") of Sound Designs, Inc., a Nevada corporation ("the Company") whose
address is 6436 Laburnum Street, Vancouver, BC, Canada V6M 3S9. The par value of
the Common Stock is $.001. THE UNDERSIGNED AGREES TO PAY $.0025 PER SHARE FOR
SUCH SHARES FOR AN AGGREGATE PURCHASE PRICE OF ONE THOUSAND TWO HUNDRED FIFTY
Dollars (U.S.$1,250.00), payable at the time of subscription.
2. REPRESENTATION AND WARRANTIES OF THE UNDERSIGNED: The undersigned
hereby represents and warrants that:
A. The Undersigned is financially responsible, able to meet his/her/its
obligations hereunder, and acknowledges this investment may be long
term and is by its nature speculative; further, the Undersigned
acknowledges he/she/its if financially capable of bearing the risk of
this investment.
B. The Undersigned has had substantial experience in business or
investments in one or more of the following:
(i) Knowledge of and investment experience with securities,
such as stocks and bonds.
(ii) Ownership of interests in new ventures and/or start-up
companies.
(iii)Experiences in business and financial dealings and
parlance, and the Undersigned can protect his/her/its
own interest in an investment of this nature and does
not have a "Purchaser Representative", as defined in
Regulation D of the Securities Act of 1933, as amended,
(the "Securities Act") and does not need such a
Representative.
C. The Undersigned is capable of bearing the high degree of economic
risks and burdens of this investment, including, but not limited to,
the possibility of complete loss of all hi/her/its investment capital
and the lack of a liquid public market, such that he/she/it may not be
able to readily liquidate the investment whenever desired or at the
then current asking price of the Stock.
D. The Undersigned has had access to the information set forth in
Paragraph 4 hereof and was able to request copies of such information,
ask questions of and receive answers from the Company regarding such
information and any other information he/she/it desired concerning the
terms and conditions of this transaction and such questions have been
answered to his/her/its full satisfaction. The Undersigned understands
that the Stock has not been registered under the Securities Act and the
applicable state securities laws in reliance on the exemption provided
by Section 4 (2) of the Securities
STOCK SUBSCRIPTION OFFER
- --------------------------------------------------------------------------------
60
<PAGE>
Act and Regulation D relating to transactions not involving a public
offering. The Undersigned further understands that he/she/it is
purchasing the Stock without being furnished any offering literature,
prospectus or private offering memorandum, other than that supplied
under or identified in this Offer.
E. At no time was the Undersigned presented with or solicited by any
leaflet, public promotional meeting, circular, newspaper or magazine
article, radio or television advertisement, or any other form of
general advertising otherwise than in connection and concurrently with
this Offer.
F. The Stock which the Undersigned hereby subscribes is being acquired
solely for his/her/its own account, for investment and is not being
purchased with a view to or for the resale or distribution thereof and
the Undersigned has no present plans to enter into any contract,
undertaking, agreement or arrangement for such resale or distribution.
G. The Undersigned is aware of the following:
(i) The Company's financial and operating history.
(ii) The existence of substantial restrictions on the
transferability of Stock.
(iii) The Stock will not be, and the Undersigned will have
no rights to require that the Company register the
Stock under the Securities Act or any state
securities laws.
(iv) The Undersigned may not be able to avail
himself/herself/itself of the provisions of Rule 144
adopted by the Securities and Exchange Commission under
the Securities Act or any applicable state securities
acts with respect to the release of the Stock, and
accordingly it may not be possible for the Undersigned
to liquidate part or all of hi/her/its investment in
the Company or liquidate at the then current asking
price of the Stock, if any.
H. It has at not time been represented, guaranteed, or warranted to the
Undersigned by an officer or director of the Company, or agents or
employees thereof, or any other person expressly or impliedly, any of
the following:
(i) An exact or approximate length of time that the
Undersigned will or will not remain as owner of the
Stock.
(ii) A percentage of profit and/or amount or type of
consideration, profit, loss, credits or deductions to
be realized, if any, as a result of the Undersigned's
ownership of the Stock.
(iii) Past performance on the part of any director or
officer of the Company, or the agents or employees
thereof, that will in any way indicate the
predictable results according from the ownership of
the Stock.
STOCK SUBSCRIPTION OFFER
- --------------------------------------------------------------------------------
61
<PAGE>
(I) The Company in under no duty to register the Stock or comply with
any exemption from registration under the Securities Act or any state
securities law, including supplying to the appropriate agency or to the
Undersigned any information required in connection with transfers under
appropriate rules and regulations.
The foregoing representations and warranties shall be true and accurate
as of the date hereof and as of the date of any acceptance of this Offer by the
Company and shall survive the date of such acceptance by the Company.
3. INDEMNIFICATION: The Undersigned acknowledges that he/she/it
understands the meaning and legal consequence of the representations and
warranties contained in Paragraph 2 hereof and the Undersigned hereby agrees to
indemnify and hold harmless all loss, damage or liability due to or arising out
of (I) a breach of any such representation or warranty, or (ii) a breach of any
warranty of the Undersigned contained in this Offer.
4. ACCESS TO FURNISHING INFORMATION: The Company has provided the
Undersigned access to and furnished to the Undersigned, if requested, all
corporate records, including Articles of Incorporation, ByLaws, Minute and Stock
Books, and agreements with Officers, Directors, Stockholders and Employees, and
information related to the business of the Company dated on or before this
Offer. The Undersigned hereby acknowledges that he/she/it has had aan
opportunity to review and understand the forgoing and has, if he/she/it deemed
necessary, consulted with a legal and/or tax advisor.
5. TRANSFERABILITY: The Undersigned agrees no to transfer or assign the
Offer, or any of the Undersigned's interest therein, and further agrees that the
assignment and transferability of the Stock acquired pursuant hereto shall be
made only in accordance with this offer. The Company shall issue stop transfer
instructions to its transfer agent for its common stock with respect to the
Stock and shall place the following legend on the certificates representing the
Stock:
"The shares represented by this certificate have been acquired pursuant
to a transaction effected in reliance upon Section 4(2) of the
Securities Act of 1933, as amended, (the "Act") and have not been the
subject of a Registration Statement under the Act or any state
securities act. These securities may not be sold or otherwise
transferred in the absence of such registration or applicable exemption
therefrom under the Act or any applicable state securities act.
6. REVOCATION: The undersigned agrees that he/she/it shall not cancel,
terminate or revoke this Agreement or any provisions hereof or any agreement of
the Undersigned made hereunder.
7. NOTICES: All notices or other communications given or made hereunder
shall be in writing and shall be delivered or mailed by registered or certified
mail, return receipt requested, postage prepaid, to the Undersigned or to the
Company at their respective addresses set forth below.
8. GOVERNING LAW: This Agreement and other transactions contemplated
hereunder shall be construed in accordance with and governed by the laws of the
State of Nevada.
STOCK SUBSCRIPTION OFFER
- --------------------------------------------------------------------------------
62
<PAGE>
9. ENTIRE AGREEMENT: This Offer constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof and may be amended
only by a writing executed by all parties.
IN WITNESS WHEREOF, the parties hereto have executed this Offer as of
the date and year set forth below.
DATED THIS 22ND DAY OF SEPTEMBER, 1998.
/S/ MARVIN WOSK
-----------------
Signature
MARVIN WOSK
Name (Please Print)
6055 NELSON, AVENUE, SUITE 2103
Address
VANCOUVER BC V5H 4L4
City State Zip Code
604-434-0766
Telephone
STOCK SUBSCRIPTION OFFER
- --------------------------------------------------------------------------------
63
Exhibit 10(c)
SALES COMMISSION AGREEMENT
THIS SALES COMMISSION AGREEMENT IS EFFECTIVE THIS 15TH day of September
1999 ("Agreement") by and between Sound Designs, Inc., a Nevada corporation (the
"Employer"), and Barry Wosk ("Salesperson") (for purposes of this Agreement,
Employer and Salesperson may be collectively referred to as the "Parties").
PREMISES
WHEREAS, EMPLOYER HAS CANADIAN DISTRIBUTION RIGHTS TO THE ISCAN PLUS
VIDEO LINE DOUBLER ("ISCAN PLUS") and desires that Salesperson undertake to
market and sell such product, and Salesperson desires to MARKET AND SELL THE
ISCAN PLUS for Employer in exchange for the compensation as set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the promises and the mutual
covenants hereinafter set forth, it is mutually agreed as follows:
1 EXCLUSIVE SALES AGENT. Employer hereby retains Salesperson as its
sole and exclusive sales AGENT OF THE ISCAN PLUS video line
doubler and Salesperson agrees to serve as Employer's EXCLUSIVE
SALES AGENT FOR THE ISCAN PLUS pursuant to the terms contained
herein.
2 COMPENSATION OF SALESPERSON. As compensation for the services
rendered by him under this AGREEMENT, SALESPERSON SHALL BE
ENTITLED TO A COMMISSION OF 10% OF THE NET SALES OF ISCAN PLUS
video line doublers sold to customers, whether such sales are
procured through the efforts of Salesperson, other employees of
Employer, or Employer itself. "Net Sales," as used in this
paragraph, shall be defined as gross sales less returns and
allowances when made. COMMISSION SHALL BE DEEMED EARNED WHEN
PAYMENT FOR ISCAN PLUS video line doublers sold is received by
Employer from the respective customers, and accrued commissions
shall be paid to Salesperson on the last business day of each
month.
3 TERM OF AGREEMENT. The term of this Agreement shall be one (1)
year or until otherwise agreed; provided, however, this Agreement
may be terminated earlier as otherwise provided herein or upon
written notice provided to the other thirty (30) days prior to
the effective date of such termination.
4 BEST EFFORTS BASIS. Employer acknowledges and understands
Salesperson will be engaging in activities other than those
envisioned by this Agreement and that Salesperson makes no
REPRESENTATIONS REGARDING HIS ABILITY TO GENERATE SALES OF THE
ISCAN PLUS video line doubler.
5 BUSINESS EXPENSES. It is acknowledged by the Parties that
Salesperson, in connection with the services to be performed by
him pursuant to the terms of this Agreement, will be required to
make payments for travel, entertainment of customers, and similar
business expenses. In order to reimburse Salesperson for all such
business expenses, Employer shall pay to
64
<PAGE>
Salesperson the sum of such expenses incurred in addition to
the compensation provided in paragraph 2 of this Agreement.
This additional amount shall be paid within ten (10) days
following Salesperson's submission of receipts of such
expenses, which are to be made on or about the last business
day of each month during the term of this Agreement. The
Parties agree that in the event Salesperson incurs a single
expense exceeding $500 without the express written consent of
Employer, Employer has sole discretion whether to reimburse
Salesperson.
6 OWNERSHIP OF CUSTOMER RECORDS. All records of the accounts of
customers, customer lists, route books, and any other records
and books relating in any manner whatsoever to the customers
of Employer, whether prepared by Salesman or coming into his
possession in any other manner, shall be the exclusive
property of Employer. All such books and records shall be
immediately returned by Salesperson to Employer on the
termination of this Agreement.
7 OBLIGATIONS OF EMPLOYER. Salesperson shall have the right,
either personally or by a representative, to examine the books
and accounts of Employer at times mutually convenient to
Employer and Salesperson, but in any event at least once
during each half of the calendar year. However, it is agreed
by the Parties that the right of inspection under this
Paragraph shall be limited to those books and accounts of
Employer that relate to transactions affecting the amount of
Salesperson's compensation.
8 TERMINATION. This Agreement shall terminate on the occurrence
of any one of the following events:
A. The death of Salesperson;
B. Discontinuance of Employer's operations of business
at Vancouver, B.C., Canada, in which case this
Agreement shall cease and terminate on the last day
of the month in which Employer ceases operations at
Vancouver, B.C., Canada.
C. The willful breach of duty, the habitual neglect, or
the continued incapacity on the part of Salesperson
to perform his duties, unless waived by Employer;
D. The willful or continuing breach of duties by
Employer to Salesperson under this Agreement, unless
waived by Salesperson; or
E. The mutual written agreement of the Parties.
In the event of termination of this Agreement prior to the
completion of the term of employment specified in Paragraph 3
herein, pursuant to the provisions in this Paragraph,
Salesperson shall be entitled to the compensation earned by
him through the date of termination as provided in this
Agreement in Paragraph 2, computed pro rata up to and
including that date.
9 MISCELLANEOUS.
A. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada.
B. This Agreement supercedes all other agreements,
either oral or written, between the Parties with
respect to Salesperson's sales duties for Employer
and contains all of the
65
<PAGE>
covenants and agreements between the Parties with
respect to such aspect of Salesperson's activities
with Employer, which is separate and distinct from
his activities as Employer's president and one of its
directors.
C. If any provisions of this Agreement are held by a
Court of competent jurisdiction to be invalid, void
or unenforceable, the remaining provisions of the
Agreement will remain in full force and effect.
D. This Agreement may be amended only in a writing
signed by Employer and Salesperson. Any waiver by any
party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a
waiver of any subsequent breach by any party or any
other provision hereof.
IN WITNESS WHEREOF, the signatures below of the parties hereto evidence
their present execution of this Agreement.
Sound Designs, Inc. - Employer Barry Wosk - Salesperson
/S/ MARVIN WOSK /S/ BARRY WOSK
--------------- -----------------
Marvin Wosk, Secretary Barry Wosk
66
Exhibit 23
P A R K E R & C O.
CHARTERED ACCOUNTANTS
200 - 2560 SIMPSON ROAD, RICHMOND, B.C. V6X 2P9
TEL: (604) 276-9920: FAX: (604) 276-4577
NOVEMBER 30, 1999
SOUND DESIGNS INC.
6436 LABURNUM STREET
VANCOUVER, B.C.
V6M 3S9
ATTENTION: THE BOARD OF DIRECTORS
SOUND DESIGNS INC.
REFERENCE: COMFORT LETTER ON SOUND DESIGNS INC.
FORM 10 SB REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
GENTLEMEN:
WE HAVE AUDITED THE FINANCIAL STATEMENTS FOR SOUND DESIGNS, INC. FOR THE PERIOD
FROM ITS INCORPORATION, SEPTEMBER 21, 1998 TO DECEMBER 31, 1998 AND FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1999. WE ARE AWARE THAT THESE FINANCIAL STATEMENTS
HAVE BEEN INCLUDED IN THE FORM 10-SB REGISTRATION STATEMENT OF SMALL BUSINESS
ISSUERS. WE HAVE READ THE DRAFT COPIES OF THIS REGISTRATION FORM AND HAVE
CHECKED THE FINANCIAL INFORMATION CONTAINED THEREIN TO THE AUDITED FINANCIAL
STATEMENTS.
WE CONSENT TO THE USE IN THE ABOVE MENTIONED REGISTRATION FORM OF MY REPORT
DATED NOVEMBER 24, 1999 TO THE SHAREHOLDERS OF SOUND DESIGNS INC. ON THE
FOLLOWING FINANCIAL STATEMENTS:
O STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 1998 AND SEPTEMBER 30, 1999
AND O STATEMENTS OF LOSS AND DEFICIT, CASH FLOW AND OF CHANGES IN STOCKHOLDERS'
EQUITY FOR THE PERIOD FROM
INCORPORATION, SEPTEMBER 21, 1998 TO DECEMBER 31, 1998 AND FROM JANUARY
1, 1999 TO SEPTEMBER 30, 1999.
WE REPORT THAT WE HAVE READ THE REGISTRATION FORM 10-SB AND HAVE NO REASON TO
BELIEVE THAT THERE ARE ANY MISREPRESENTATIONS IN THE INFORMATION CONTAINED
THEREIN THAT IS DERIVED FROM THE FINANCIAL STATEMENTS UPON WHICH WE HAVE
REPORTED OR THAT IS WITHIN MY KNOWLEDGE AS A RESULT OF MY AUDIT OF SUCH
FINANCIAL STATEMENTS.
YOURS TRULY,
/S/ PARKER & CO.
PARKER & CO.
CHARTERED ACCOUNTANTS
67
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED AUDITED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S
FORM 10-SB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001081418
<NAME> Sound Designs, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 3-MOS
<FISCAL-YEAR-END> Dec-31-1999 Dec-31-1998
<PERIOD-START> Jan-1-1999 Sep-21-1998
<PERIOD-END> Sep-30-1999 Dec-31-1998
<EXCHANGE-RATE> 1 1
<CASH> 12,431 2,500
<SECURITIES> 0 0
<RECEIVABLES> 4,009 0
<ALLOWANCES> 0 0
<INVENTORY> 34,595 0
<CURRENT-ASSETS> 51,035 2,500
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 51,035 2,500
<CURRENT-LIABILITIES> 850 500
<BONDS> 0 0
0 0
0 0
<COMMON> 62,500 2,500
<OTHER-SE> (12,315) (500)
<TOTAL-LIABILITY-AND-EQUITY> 51,035 2,500
<SALES> 1,467 0
<TOTAL-REVENUES> 1,961 0
<CGS> 1,070 0
<TOTAL-COSTS> 13,776 500
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (11,815) (500)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (11,815) (500)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (11,815) (500)
<EPS-BASIC> (.01) 0.00
<EPS-DILUTED> (.01) 0.00
</TABLE>
