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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
creditgroup.com, Inc.
(Name of Small Business Issuer in its charter)
Delaware 33-0732566
(State or Other Jurisdiction (IRS Employer Identification Number)
of Incorporation or Organization)
4425 Bayard Street
Suite 230
San Diego, CA
92109
(Address of principal executive offices)
(619) 272-8300
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act: None.
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(Title of Class)
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TABLE OF CONTENTS
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Page
PART I
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Item 1. Description of Business.................................................................................1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...........................................................................7
Item 3. Description of Property................................................................................10
Item 4. Security Ownership of Certain Beneficial Owners and Management.........................................10
Item 5. Directors, Executive Officers, Promoters and Control Persons...........................................11
Item 6. Executive Compensation.................................................................................13
Item 7. Certain Relationships and Related Transactions.........................................................13
Item 8. Description of Securities..............................................................................13
PART II
Item 1. Market price of and Dividends of the Registrant's Common Equity
and Other Shareholder Matters......................................................................14
Item 2. Legal Proceedings......................................................................................14
Item 3. Changes in and Disagreements with Accountants..........................................................15
Item 4. Recent Sales of Unregistered Securities................................................................15
Item 5. Indemnification of Directors and Officers..............................................................15
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PART F/S
Index to Financial Statements
PART III
Index to Exhibits
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Creditgroup.com, Inc. (the "Company"), is a financial services company
which acquires, manages, resells and collects accounts of delinquent consumer
debt throughout the United States and Canada. The Company was incorporated on
October 24, 1996 as Asset Retrieval Services, Inc. ("Asset") in the State of
California, and began operations in January 1998. The portfolios of charged-off
receivables, acquired from major banks and merchants, are primarily individual
VISA(R), MasterCard(R) and private label credit cards issued by the originating
institution. Due to its ability to acquire substantially large portfolios of
non-performing accounts, the Company can minimize losses and increase retained
earnings for those banks, lending institutions and credit card issuers by
allowing these institutions to recoup a portion of amounts that have already
been charged off.
On July 31, 1997, Asset merged, via reverse merger, with Angus
Corporation, a Delaware corporation. Pursuant to the reverse merger, Angus
Corporation's name was changed to Asset Retrieval Services, Inc. and the
California Corporation was discontinued. The Company's common stock has been
traded on the OTC Electronic Bulletin Board (the "Bulletin Board") of the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
under the symbol since March 1998.
In December 1998, the shareholders of the Company approved a 4 to 1
reverse stock split and a change in the Company's name to creditgroup.com, Inc.
The shareholder's also approved the Company acquiring other complimentary
companies in the industry. In January 1999, the Company name was changed to
"creditgroup.com, Inc." Subsequently, the Company entered into negotiations with
and completed the acquisition of Asset Retrieval Management, Inc., a California
portfolio management company, and Alliance Consumer Credit Solutions Inc., a
British Columbia, Canada company offering credit services to consumers with
sub-prime credit. On February 1, 1999, the Company's symbol on the NASDAQ
Bulletin Board was changed from ARST to CRCO.
PRINCIPAL BUSINESS ACTIVITIES
The Company has identified the following sectors of the financial
services market on which to focus:
(1) Acquisition and resolution of non-performing loans through our
Soft Recovery Program and third party collection efforts
programs;
(2) Acquisition and resolution of non-performing debt through
secured and unsecured Credit Card Issuance Programs;
(3) Acquisition and resolution of any or all of our clients
additional charged off debts;
(4) Resolution of non-performing debt through a mortgage program;
(5) The Company has recently begun operation of an Internet web
site for a credit card industry trade directory,
"creditcardindustry.com," and expects to generate revenues
from company listings, advertising and banner sales; and
(6) The Company anticipates pursuing acquisitions of commercial
judgments via joint ventures with judgment creditors on a
contingency basis.
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PURCHASE OF NON-PERFORMING DEBT
The Company's primary products are portfolios of delinquent consumer
loans which have been charged-off by the issuing financial institution. The
Company seeks ideally to purchase the underlying loans from issuers with
stringent credit granting criteria, which are unsecured, less than 48 months has
expired since charge off and with average loan balances of less than $2,000.
The Company purchases portfolios of various issuing banks'
non-performing loans at a significant discount. Generally non-performing
consumer loans are sold in packages by these institutions. Primarily, the
Company prefers to purchase credit card portfolios due to the increased
flexibility this type of portfolio provides. The Company utilizes its
proprietary evaluation software and techniques to determine which portfolios it
will acquire. Generally, the Company will not bid on numerous portfolios due to
several factors. These factors include (i) the inability of the seller to
deliver the portfolio as offered, (ii) the length of the bidding process, (iii)
auction hysteria, often resulting in a higher than normal price, (iv)
availability of portfolios through the bidding process, (v) established
relationships, and (vi) cash requirements associated with bidding. The Company
primarily purchases its portfolios from issuing banks and non-bank vendors with
whom the Company has established relationships. To date, the Company has
purchased loan portfolios at a cost of $.01(cent) to $.05(cent) on the dollar.
Once the Company performs its proprietary due diligence evaluation of
the portfolio, the acquired portfolio is segmented and, only those loans which
the Company believes it will have the greatest opportunity to produce acceptable
returns on the Company's initial investment are retained. The remaining accounts
are sold to individuals, such as attorneys and individual investors, as well as,
smaller specialized collection agencies.
The Company's management has extensive experience in analyzing and
valuing distressed financial portfolios and, with the companies proprietary
software system, is able to analyze which accounts to resell and which to retain
and manage. Of the accounts retained, the Company seeks to convert the
outstanding debt to performing loan status. Once the loan has been converted
into a performing loan, the Company receives a positive cash flow and has the
ability to re-market accounts to third party lenders at a substantial premium.
Once the accounts that are retained by the Company have been seasoned, the
Company then has the opportunity to sell these performing accounts at a premium
to institutional buyers.
TRANSFORMING DEBTORS INTO CLIENTS
Ultimately, the goal of the Company is to transform the debtor into a
client through the offering of debtor beneficial programs. The Company believes
that it is potentially profitable to continue to develop a client-service
provider relationship with debtors who accept one or more of the Company's
programs. The Company believes that these individuals have demonstrated the
desire, commitment and ability to bounce back from adversity and to make
significant changes in their lives. Demographically, they represent a very
dedicated client base for the Company. The Company believes that its prior
relationships with these debtors make them an optimum market to offer ongoing
newly created or licensed goods and services to.
This greatly impacts the total revenue stream generated from a
portfolio or pool of portfolios. In addition, the evolution of the relationship
from creditor/debtor to client/service provider will increase the life span of
the stream of revenue from a particular portfolio. This also allows the Company
to broaden the scope of companies or opportunities that it can acquire or
employ. This represents a dramatic shift in ideology
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compared to the pervasive collection industry attitudes. In contrast, the
traditional collection industry views a debtor with delinquent debt in a very
derogatory light. The resultant business practices are aggressive and
non-relationship building, requiring a constant infusion of new debtors to
maintain collection levels. The Company's position represents a dramatic shift
in ideology to the traditional collection industry.
SOFT RECOVERY PROPRIETARY PROGRAM
Most conventional collection agencies are not adequately equipped to
spend the time and money required to successfully liquidate a profitable
percentage of investor-purchased debt portfolios. Most collection agencies work
on a contingency basis. These agencies are strictly profit driven and rely on
high turnover volumes of monthly accounts. The Company believes that the typical
portfolio owner is not in a position to efficiently collect a distressed
portfolio and must rely on assistance from collection professionals. However,
these agencies generally do not respond well to the needs of the typical
portfolio owner. The Company believes that conventional collection methods
produce recovery rates of only four to nine percent on typical primary through
tertiary consumer loan and credit card portfolios. The Company anticipates that
it continue to obtain recoveries on such portfolios in amounts in excess of the
cost to purchase these portfolios.
Unlike the original issuers and third-party collection agencies, the
Company has flexibility in structuring repayment plans that accommodate the
needs of its customers. For example: (a) the Company is able to offer a
significant discount on the overall obligation, due to the substantial discount
the Company received on the purchase price of the portfolio; (b) the Company can
accommodate its customer with payments that fit the customer's monthly budget;
(c) the Company's decisions are unaffected by the normal constraints indigenous
to banks and savings and loan institutions, such as loan committees, loan loss
provisos, tax consequences and regulatory requirements imposed by banking
regulations for non-performing debt; and (d) the Company is not bound by the
limited time periods for collection faced by third-party collection agencies.
Therefore, the Company believes that it can acquire, manage and liquidate
portfolios profitability.
The Company plans to merge and/or form strategic alliances with similar
companies, such as collection agencies, database and skip tracing entities.
Although no assurances can be given, the Company's ultimate goal is to have
wholly and/or partially owned collection and skip tracing subsidiaries.
CREDIT CARD ISSUANCE PROGRAMS
In addition to the Company's successful soft recovery techniques, the
Company is in the process of developing two unique collection tools for
portfolio recovery: the Secured Credit Card Issuance Program (the "Secured
Program") and the Unsecured Credit Card Issuance Program the ("Unsecured
Program," and together with the Secured Program, the "Credit Card Issuance
Programs"). Both of these programs are based on issuing new credit cards,
(VISA(R) or Mastercard(R)), either secured or unsecured, depending on the
debtor's needs and qualifications. The Programs are only offered in conjunction
with the Company's soft recovery program and standard collection techniques.
The Company believes that its Credit Card Issuance Programs are an
efficient and inexpensive alternative to the under-performing servicing
procedures currently employed by banks and other lenders. The Company makes
available a national credit card (VISA(R) or Mastercard(R)) to qualified
debtors. These are individuals whom the Company believes have encountered some
form of financial distress, but have had sufficient time to financially
recuperate. The Company reaffirms the consumer's debt by receiving a payment
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or establishing an unsecured credit card account for consumers who meet the
Company's credit criteria, on terms acceptable to the consumer with payment
terms within their monthly budget. The consumer's agreed-to current outstanding
balance is reaffirmed, to conform to the underwriting standards required by the
Company to issue either a secured or unsecured credit card and/or installment
contract.
Using the Company's proprietary credit guidelines, the Company
processes application requests solicited via direct mail and telemarketing.
Credit applications that meet underwriting guidelines are then transferred to
the Company's issuing bank, which is a VISA(R) or Mastercard(R) principal
member. As the consumer reduces his or her principal balance, additional credit
becomes available to the consumer. Although no assurances can be given, the
Company anticipates that this program will yield a liquidation rate 15 to 20%
higher than current industry averages.
The Company believes that there are several advantages to the Programs,
including, remote serviceability of accounts, credit risk spread over many small
accounts, high consumer demand for credit cards as a "loan on demand" device,
high customer retention following repayment of initial debt, ability to provide
large scale automated servicing and liquidity.
An additional factor, which contributes to the success of the Programs,
is that credit cards are inexpensive to service in comparison to other
small-balance loans and can be easily monitored in an automated environment.
INDUSTRY OVERVIEW
According to the Nilson Report, May 1998, the aggregate indebtedness in
the United States totaled $5.572 trillion. Consumer debt alone, excluding home
mortgages amounted to $1.265 trillion. The Kaulkin Report, April 26, 1999,
reported that the "collection industry reached nearly $10 billion" and is
growing. This is shared among approximately 6,300 debt collection companies of
which only a small percentage of companies compete nationally. The Company
believes that the sale and purchase of debt instruments is evolving into a
specialized financial services product market. These assets can be purchased for
between $.01 cents to $.12 cents on the dollar, and, when processed efficiently
these assets can yield significant returns.
The growing interest in the sale and purchase of charged-off debt
portfolios is a result of rapid changes occurring in the collections industry.
Rather than creating a large, expensive in-house collection operation, issuers
of charged-off debt are finding it more cost efficient to sell these portfolios
to debt buyers and to focus on their more traditional business. As a result,
undercapitalized third party collection agencies have lost much of their
business.
While bankruptcy requirements are getting tougher, the courts are also
holding issuers more accountable for the actions of their agents. For this
reason, issuers with bad debts on their books may prefer to sell the accounts to
a highly qualified buyer such as the Company, rather than assign them to a
collection agency. As this trend develops, the Company believes that asset
retrieval specialists, like the Company, will work more aggressively with the
accounts, because they have a financial investment in them. They are also able
to offer greater flexibility in terms of settlement with the debtor.
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GEOGRAPHICAL
The Company anticipates initially operating on a national basis and
subsequently, on an international basis as the sub-prime market evolves. While
the sale of charged off financial assets is well developed in the United States,
companies in countries such as Canada are just entering the market place. The
Company, with its history and strong programs, believes that it will be able to
move into these markets and apply its experience effectively. The Company
believes that, technologically, there are no geographic barriers to operations.
PRODUCT SUPPLY
The supply of portfolios of charged-off consumer loans includes credit
cards, lines of credit and consumer retail loans. The November 1997 Nilson
Report reported that the precentage of credit card debt to total consumer
installment and open-end credit debt was expected to rise to 43% in 1997, 54% in
2000 and 59% in 2005. Correspondingly, credit card delinquencies on VISA(R) and
Mastercard(R) totaled $7.2 billion in 1993 and $17.7 billion in 1996, verifying
that as the amount of credit card debt has risen, so has the total amount of
delinquencies.
The following chart indicates the predicted growth of gross charge offs
of credit card debt and the corresponding growth in debt sold to portfolio
purchasers, as reported in Nilson Report, Number 645, June 1997:
All Types of Credit Cards
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Gross Charge-offs Purchasers Market
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2005 $51.80 billion $32.00 billion
2000 $38.76 billion $25.00 billion
1997 $31.29 billion $19.50 billion
1990 $ 9.10 billion $ 2.20 billion
COMPETITION
This is a new industry and while the number of competitors buying
consumer charged-off debt is small, the Company anticipates that competition
from new and existing competitors will intensify. The Company believes that the
number of competitors is growing as various Companies enter the industry,
including collections firms, repackaging firms and process firms.
The Company's main competitors are companies such as Creditrust Corp.,
Alegis, Sherman Financial, Access America, Data America, Asta Financial
Management and Performance Asset Management, which purchase distressed loans and
convert them to performing status. While the Company's competitors are well
capitalized and experienced in the industry, the Company believes that its
programs and integration of technology with a hands on approach will enable the
Company to compete effectively.
RECOVERIES
The following chart indicates the price paid and the expected recovery
for charged off portfolios as reported in the Nilson Report, Number 645, June
1997.
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AGE (in months) Price Paid Average Recovery
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24 2.5% 7.0%
30 1.8% 6.6%
36 1.3% 6.1%
42 1.1% 4.8%
48 0.9% 3.9%
54 0.7% 2.6%
60 0.5% 1.6%
While the yield generated from the servicing of any particular
portfolio cannot be guaranteed, based on the above chart, the Company believes
that based on industry statistics, portfolios purchased near or below average
market value can yield significant recoveries. In addition, the Company believes
that the chart indicates that older paper, specifically portfolios in the 36 to
48 month old range have the highest average yield. These are the type of
portfolios that the Company specializes in.
EMPLOYEES
Currently, the Company's only full time employees are its three
officers, Dr. Barry Lotz, Mr. Allen Kanerva and Ms. Crystal Foti. All process
and administrative employees are employed through one or more of the Company's
wholly-owned subsidiaries. In addition, contract personnel who perform limited
administrative duties on behalf of the Company are employed on an as needed
basis.
ASSET RETRIEVAL MANAGEMENT INC.
Asset Retrieval Management, Inc., a California corporation,
incorporated on November 21, 1996, is the managing member of Asset Retrieval and
Acquisition Fund, LLC, a California limited liability company, (the "Fund")
which was incorporated on November 23, 1996.
The Fund was created to participate in the financial services industry,
with a focus on acquiring, via purchase, assignment or joint venture, distressed
financial portfolios.
Asset Retrieval Management, Inc, as managing member is vested with full
authority as to the general management and supervision of the business and
affairs of the Fund.
The concept of the companies is to capture value in distressed
financial portfolios. Asset Retrieval Management, Inc. is entitled to a
management fee and a portion of the Fund's net cash available for distribution
as described in the Operating Agreement by and between the Fund and Asset
Retrieval Management, Inc., dated November 23, 1996.
ALLIANCE CONSUMER CREDIT SOLUTIONS, INC.
Alliance Consumer Credit Solutions, Inc. ("Alliance") is a financial
services company, incorporated in the province of British Columbia on December
8, 1997, that specializes in the assessment, purchasing and servicing of
portfolios of charged off debt. Alliance is registered as a telemarketing firm
and as a firm that offers credit card services in the United States.
The business objective of Alliance is to employ its proprietary
service, PAC Plus or Priority Asset
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Collection Plus, to portfolios of charged off debt. Alliance offers a secured
credit card as a soft recovery vehicle, in combination with up to date
technology and traditional collection methods to enhance traditional collection
rates.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
Creditgroup.com, Inc. (the "Company"), is a financial services company
which acquires, manages, resells and collects accounts of delinquent consumer
debt throughout the United States and Canada. The Company was incorporated on
October 24, 1996 as Asset Retrieval Services, Inc. ("Asset") in the State of
California, and began operations in January 1998. The portfolios of charged-off
receivables, acquired from major banks and merchants, are primarily individual
VISA(R), Mastercard(R) and private label credit cards issued by the originating
institution. Due to its ability to acquire substantially large portfolios of
non-performing accounts, the Company can minimize losses and increase retained
earnings for those banks, lending institutions and credit card issuers by
allowing these institutions to recoup a portion of amounts that have already
been charged off.
SELECTED FINANCIAL DATA
The following table sets forth-summary historical financial information
of the Company as of the dates and periods indicated in the following table. The
summary historical financial data as of and for the years ended June 30, 1994,
1995, 1996 and 1997 is derived from the financial statements of Angus
Corporation which have been audited by Carolyn J. Bunker, CPA, an independent
public accountant. The summary historical financial data as of and for the years
ended December 31, 1997 and December 31, 1998, is derived from the financial
statements of the Company which have been audited by Dennis M. McDevitt, CPA, an
independent public accountant. The financial statement for the three months
periods ended March 31, 1999, included herein, have not been audited, but are
believed by Management to contain all accruals and adjustments required for a
fair presentation of the financial condition and results of operations of the
Company in accordance with generally accepted accounting principles. The
information below should be read in conjunction with the Financial Statements
and related notes thereto of the Company and Angus Corporation.
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YEAR ENDED JUNE 30,
1994 1995 1996 1997(1)
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STATEMENT OF OPERATIONS DATA:
Revenues $ 0 $ 0 $ 0 $ 0
Expenses $ 126 $ 674 $ 74 $ 74
Other income (expense) $ 0 $ 0 $ 0 $ 0
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Net loss $ 126 $ 674 $ 74 $ 74
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Net loss per share $ 0 $ 0 $ 0 $ 0
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Weighted average shares outstanding $ 424,600 $ 500,000 $ 500,000 $ 500,000
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YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED
1997 1998 MARCH 31, 1999
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STATEMENT OF OPERATIONS DATA:
Revenues $ 0 $ 39,741 $ 11,764
Expenses $ 21,440 $ 68,419 $ 17,562
Other income (expense) $ 3,246 $ 3,258 $ 371
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Net loss $ 18,194 $ 25,420 $ 5,427
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Net loss per share $ 0.25 $ 0.27 $ 0
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Weighted average shares outstanding $7,380,980 $7,380,980 $5,334,973
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YEAR ENDED JUNE 30,
1994 1995 1996 1997(1)
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BALANCE SHEET DATA:
Working capital (deficit) $ 305 $ 0 $ 0 $ 0
Investments $ 0 $ 0 $ 0 $ 0
Property and equipment $ 116 $ 92 $ 68 $ 44
Total assets $ 421 $ 92 $ 68 $ 44
Total long-term debt $ 0 $ 0 $ 0 $ 0
Total liabilities $ 121 $ 366 $ 416 $ 466
Stockholders' equity $ 300 $ (274) $ (348) $ (422)
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YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED
1997 1998 MARCH 31, 1999
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BALANCE SHEET DATA:
Working capital (deficit) $ 0 $ 98,316 $ 93,245
Investments $ 0 $ 86,970 $ 86,970
Property and equipment $ 4,000 $ 3,000 $ 2,750
Total assets $ 4,000 $ 188,286 $ 182,965
Total long-term debt $ 0 $ 0 $ 0
Total liabilities $ 0 $ 0 $ 0
Stockholders' equity $ 4,000 $ 188,286 $ 182,965
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(1) To give effect to the July 1997 reverse merger, the Statement of Operations
Data and Balance Sheet Data include the operating results of Angus
Corporation and the Company as though the entities had been combined as of
January 1997.
On July 31, 1997, the Company merged, via reverse merger, with Angus
Corporation, a Delaware corporation. Pursuant to the reverse merger, Angus
Corporation's name was changed to Asset Retrieval Services, Inc. and the
California Corporation was discontinued. The Company's common stock has been
traded on the OTC Electronic Bulletin Board (the "Bulletin Board") of the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
under the symbol ARST since March 1998.
On December 28, 1998, the Company's shareholders approved a 4 to 1
reverse stock split and a change in the Company's name. Subsequently, the
Company's name was changed from Asset Retrieval Services, Inc. to
creditgroup.com, Inc. On February 1, 1999, the Company's symbol on the NASDAQ
Bulletin Board was changed from ARST to CRCO.
On February 12, 1999 the Company entered into an interim agreement to
acquire Asset Retrieval Management Inc., a California asset management
corporation and Alliance Consumer Credit Solutions, Inc., ("Alliance") a British
Columbia, Canada company offering credit services to consumers with sub-prime
credit. The agreement allows the Company to acquire both Asset Retrieval
management, Inc. and Alliance for an estimated 3 million shares of common stock
of the Company. The agreement was subject to an escrow provision requiring
certain financial undertakings by ACCS. The acquisitions were completed in April
1999.
PORTFOLIO MANAGEMENT
The initial step in the Company's methodology is an in-depth
segmentation of all accounts in a portfolio when acquire. Criteria used include,
but are not limited to, distribution by state, account balance, age since last
payment, quality of information, etc. This provides vital information in
developing a marketing campaign. The ultimate goal of the campaign is to provide
the highest possible return on each portfolio.
Management believes that a portion of every loan portfolio acquired may
be deemed suitable for issuance of a credit card under the Company's Credit Card
Issuance Programs and eventual "retail" reselling, while a higher portion of
these accounts, considered to be of a lower quality, will be immediately placed
into the Soft Recovery Program, repackaged and sold to collection agencies,
attorneys or other interested parties. Management believes that the Company has
considerable experience and technological expertise to determine which accounts
will be retained and which accounts will be sold.
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INTERNAL PROCESS
The Company's strategy is built around direct mail and predictive
dialer protocols. Both are designed to allow the Company's agents to make
contact with debtors; the direct mail campaign generates inboud calls and the
predictive dialer generates outbound calls. The Company's agents will attempt to
settle the previous debt using the non-traditional method of soft recovery. The
Company believes that this approach will motivate the debtor to pay because it
assists the debtor in re-establishing their credit. Certain debtors will be
offered one of the Credit Card Issuance Programs. Accounts of debtors who do not
respond to either soft recovery or the offer of one of the Credit Card Issuance
Programs are sent to outside third party agencies. Re-packaging of debt for
re-sale may include aggregating with other portfolios and segmenting based on
various criteria such as state or origin of debt, size of outstanding balance
and age since last payment.
THIRD PARTY AGENCIES
The Company's contracted third party agencies use and have access to
sophisticated computer systems to contact delinquent accounts. Under these
systems, an array of call center technologies is employed including but not
limited to, automated inbound call directors, a sophisticated computer software
designed specifically for receivables management and a high capacity outbound
predicative dialer, all of which are linked in real time at the agents desk to
the account database. The predictive dialer and telephony software are able to
differentiate between a busy signal, no answer, answering machine and a human
voice. When an answering machine is encountered the system can leave a recorded
message. Busy signals or disconnects are recorded automatically in the
customer's file. When a human voice is encountered, the system transfers the
call to the next available agent. The Company believes that using technology
driven, contingency-fee based outside third party agencies as part of its
overall strategy will assist in ensuring the highest possible liquidation rates
from portfolios.
RE-MARKETING OF DEBT TO SECONDARY INVESTORS AND COLLECTION AGENCIES
The Company maintains an extensive database of financial institutions,
attorneys, collection agencies and individual investors who regularly purchase
both performing and charged-off credit card portfolios. The Company believes
that it can re-package and resell the remaining accounts at a profit.
YEAR 2000 COMPLIANCE
The Year 2000 ("Y2K") issue is the result of computer programs using a
two-digit format, as opposed to four year digits, to indicate the year. Such
computer systems will be unable to interpret dates beyond the year 1999, which
could cause a system failure or other computer errors, leading to disruptions of
a company's operations.
The Company has developed a plan to ensure its computer programs and
those systems operated by its subsidiaries are compliant with system
requirements to process transaction after the year 1999. Although no assurances
can be given, the Company does not expect that any costs relating to the Y2K
issue will be material to its financial condition or result of operations.
The Company is working with its suppliers and processing banks to
ensure that their systems will be Y2K compliant. Such compliance costs will be
borne by those suppliers and processing banks. In the event that such suppliers
or processing banks are unable to convert their systems appropriately, the
Company
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anticipates, although no assurances can be given, that it will switch suppliers
and/or processing banks to new suppliers and/or processing banks which are fully
Y2K compliant.
FORWARD LOOKING STATEMENTS
Statements that are not historical facts included in this registration
statement are "forward-looking statements" (as that term is defined in the
Private Securities Litigation Reform Act of 1995) and involve risks and
uncertainties that could cause actual results to differ from projected results.
Such statements address activities, events or developments that the Company
expects, believes, projects, intends or anticipates will or may occur, including
such matters as future capital, business strategies, expansion and growth of the
Company's operations and future net cash flows. Factors that could cause actual
results to differ materially ("Cautionary Disclosures") are described throughout
this registration statement. Cautionary disclosures include, among others:
general economic conditions, the markets for and market price of the Company's
acquired properties, the Company's ability to find, acquire, market and sell
properties, the strength and financial resources of the Company's competitors,
the Company's ability to find and retain skilled personnel, the results of
financing efforts, and regulatory developments and compliance. All
forward-looking statements attributable to the Company are expressly qualified
in their entirety by the Cautionary Disclosures. The Company disclaims any
obligation to update or revise any forward-looking statement to reflect events
or circumstances occurring hereafter or to reflect the occurrence of anticipated
or unanticipated events.
ITEM 3. DESCRIPTION OF PROPERTY
The Company maintains its principal executive offices at 4425 Bayard
Street, Suite 230, San Diego, California. The premises are leased from an
unaffiliated third party at a current rate of approximately $739 per month. The
lease expires in August 31, 1999.
Alliance maintains offices at 1111 Melville Street, Suite 610,
Vancouver, BC. The space is leased from an unaffiliated third party at a current
rate of approximately $2,500 per month. The lease expires December 31, 2000.
At present, the Company owns portfolios consisting of charged-off
(non-performing) credit card receivables. The Company believes, although no
assurances can be given, that generally, the turnover of non-performing loans to
performing loan status is fairly quick at an average holding period of six to
nine months. In addition, all of the liquidation methodologies utilized by the
Company should take no longer than 36 months from the date of acquisition to
completion.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information relating to the beneficial
ownership of Company common stock by those persons beneficially holding more
than 5% of the Company's common stock, by the Company's directors and executive
officers, and by all of the Company's directors and executive officers as a
group as of June 15, 1999. The address of each person is care of the Company
unless noted:
10
<PAGE>
NAME AND ADDRESS OF NUMBER OF
BENEFICIAL OWNER SHARES OWNED PERCENT
- ------------------- ------------ -------
Barry Lotz 2,054,981 40.29%
P.O. Box C
La Jolla, California 92038
Allen Kanerva and
Allen Kanerva in Trust for
The Kanerva Family Trust 506,250 9.93%
Ardrail Services 750,000 14.71%
4th Floor Dollard House
Wellington Quay
Dublin 2, Ireland
Almond Corporation 300,000 5.88%
P.O. Box F-42544
Citybank Bldg., East Mall Dr.
Freeport, Bahamas
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth certain information about the directors,
executive officers and significant employees of the Company
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Dr. Barry Lotz, J.D., Ph.D. 52 Chief Executive Officer and Director
Mr. Allen Kanerva 44 President, Chief Operating Officer and Director
Ms. Crystal Foti 31 Vice President of Asset Management and Secretary
</TABLE>
DR. BARRY LOTZ has been Chief Executive Officer and a director of the
Company since inception. Prior to such time and since 1974, Dr. Lotz was
self-employed in the real estate field and as a lecturer on subjects covering
various financial businesses and services. He has also consulted with both
individuals and corporations to meet their specific financial needs. His prior
clients include the following corporations: McDonalds, American General
Insurance Company, La Quinta Motor Inns, BOATRACS, Inc., Pizza Hut, Safeway
Stores, US Home Corporation, and the Bass Brothers of Fort Worth.
Dr. Lotz is a former director of the Harvard Business School Club in
San Diego, Ca. He is Executive Director of the Commercial Factors Association, a
former bank director of Westside National Bank, a member of the San Diego County
Bar Association, and a Licensed Real Estate lecturer for the State of Texas,
where he holds a brokers license. He is also a Senior Commercial member of the
International Organization of Real Estate Appraisers and a member of the
American Society of Trial Consultants. Dr. Lotz attended law
11
<PAGE>
school both in South Africa and America and holds a Juris Doctorate degree.
Additionally, he is a graduate of the Harvard Business School and has a Ph.D. in
Business Management.
He has been featured in the Finance Week, The Houston Post, The
Financial Freedom Report, Business Credit, What's Working in Credit &
Collectors, SAJAC, California Woman's Magazine, The Secured Lender and The
Collector. Dr. Lotz writes and speaks for industry specific magazines and
corporations such as Faulkner Grey, Credit Card Management, Ink and Collections
& Credit Risk.
MR. ALLEN KANERVA has been President, Chief Operating Officer and
Director of the Company since April 1999. Mr. Kanerva is responsible for the
overall operations of the Company and its subsidiaries.
Mr. Kanerva founded in May 1997 and is the president of Alliance
Consumer Credit Solutions Inc., a Canadian company specializing in providing
credit services to the sub prime market. Prior to such time and since 1984, Mr.
Kanerva was a business development specialist and has participated in various
corporate fundings including private placements, limited partnerships and public
financing. He has held senior management positions in private, public and crown
corporations. Most recently, he was the Corporate Development Officer for a
group of companies that pioneered and specialized in the recovery of charged off
debt, having purchased approximately $500 million of charged off debt prior to
1996. In this capacity, Mr. Kanerva developed financial product marketing
campaigns, established internal skip tracing operations, financially modeled new
business proposals and developed a financial planner and investor management
system and it's subsequent integration with their accounting systems.
MRS. CRYSTAL FOTI has been Vice President of Asset Management and
Secretary of Alliance Consumer Credit Solutions Inc. since August 1997. Ms. Foti
is responsible for asset management including the debt restructuring and
portfolio evaluating processes.
From March 1996 to Aug 1997, Mrs. Foti was General Manager for
Financial Asset Management Tracing Services Inc. In that capacity, Mrs. Foti
managed portfolios with a face value of in excess of $500 million. She also
placed portfolios and maintained audit responsibilities for all portfolios
placed with third party agencies.
Prior to such time and since January 1993, Mrs. Foti was employed by D.
Appleton Group of Companies, Inc., as National Information Services Manager,
Director of Human Resources Manager, Collection Manager, Trace Manager, Business
Analyst and Inventory Manager of a $250 M collection portfolio. In addition, she
was the Director of the Colltrac Institute, a collector and skip tracer training
company. This training facility provided training of "rookies" as well as
advanced techniques for experienced agents. She managed up to 75 employees and
students in this position.
She has experience in the financial services industry including
collections, skip tracing and balance transfer and maintains well-established
industry contacts. She was named Business Analyst of the Year (1991) for Dun and
Bradstreet's information services division and one of the top ten legal skip
tracers by Collector magazine for four consecutive years.
Directors serve for a term of one year or until their successors are
elected and qualified. There are currently two vacancies on the Board of
Directors for which the Company is presently considering several candidates.
Executive officers are appointed by and serve at the will of the Board
of Directors.
12
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION
The following summary compensation table sets forth certain information
regarding compensation paid to the persons serving as the Company's Chief
Executive Officer and each executive officer whose annual compensation exceeds
$100,000.
SUMMARY COMPENSATION TABLE
--------------------------
NAME AND PRINCIPAL ANNUAL REMUNERATION
POSITION PERIOD SALARY OTHER
- --------------------------------------------------------------------------------
Dr. Barry Lotz, CEO 1997 N/A N/A
1998 N/A N/A
1999 N/A N/A
There is no employment agreement with any executive officer. The
Company anticipates entering into employment agreements with all officers prior
to the end of 1999.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable
ITEM 8. DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 20,000,000
shares of common stock, no par value (the "Common Stock"), of which 5,099,975
shares are currently issued and outstanding, and 1,000,000 shares of preferred
stock, no par value (the "Preferred Stock"), none of which are outstanding.
COMMON STOCK
Holders of shares of Common Stock are entitled to one vote for each
share on all matters to be voted on by the shareholders of the Company. Holders
of Common Stock have no cumulative voting rights, and are entitled to share
ratably in dividends, if any, as may be declared, from time to time by the Board
of Directors in its discretion, from funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities. Holders of Common Stock have no pre-emptive rights
to purchase the Company's Common Stock. All of the outstanding shares of Common
Stock are fully paid and non-assessable.
At a Special Shareholder Meeting held on December 30, 1998, a
resolution was passed allowing the Company's Common Stock to be consolidated on
a one for four share basis, if deemed necessary by the Board of Directors.
13
<PAGE>
PREFERRED STOCK
The Board of Directors of the Company is authorized to determine the
number and designation of one or more series of Preferred Stock, and the voting
powers, rights, preferences, qualifications, limitations or restrictions and the
number of shares of any such series.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
MARKET INFORMATION
The Company's Common Stock began trading on the OTC Electronic Bulletin
Board (the "Bulletin Board") of the National Association of Securities Dealers
Automated Quotation ("NASDAQ") under the symbol "ARST" in March 1998. As of
February 1, 1999, the Company's Symbol was changed to CRCO.
BID PRICE
HIGH LOW
March 1998 $5.00 $3.00
June 1998 $3.00 $3.00
September 1998 $3.00 $1.50
December 1998 $0.50 $1.50
March 1999 $1.00 $1.10
June 1999 $1.30 $1.40
HOLDERS
As of June 1999, there were approximately 249 holders of record of the
Company's Common Stock.
DIVIDENDS
The Company has never paid cash dividends on its Common Stock. The
Board of Directors does not anticipate paying cash dividends in the foreseeable
future, as it intends to retain future earnings to finance the growth of the
Company's business. The payment of future cash dividends will depend on such
factors as earnings levels, anticipated capital requirements, the operating and
financial condition of the Company and such other factors that the Board of
Directors of the Company may deem relevant.
ITEM 2. LEGAL PROCEEDINGS
There is pending litigation that was initiated by a separate entity for
breach of contract and monies due. As a result of that litigation, a cross
complaint was filed by the defendants naming the Company as a defendant. The
Company believes that there is no merit to this claim and intends to defend
vigorously against it.
14
<PAGE>
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
During 1997, the Company sold securities in exchange for services to
the following individuals without registration under the Securities Act of 1933,
as amended (the "Securities Act"). All transactions were effected in reliance
upon the exemption from registration afforded by Section 4(2) of the Securities
Act.
Name Securities No. of Shares
---- ---------- -------------
Michael Silverman Common stock 1,287*
Gary Levinson Common stock 332*
Barry Broomberg Common stock 500*
Solly Gross Common stock 1,287*
Leonard Lazurus Common stock 1,038*
* post reverse stock split
During 1999, the Company sold the following securities pursuant to Rule
504 of the Securities Act:
Name Securities No. of Shares
---- ---------- -------------
Redmist Limited Common Stock 250,000
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation limits the liability of its
directors and provides for the indemnification of its directors and officers to
the fullest extent permissible under the Delaware General Corporation Law. Under
the Company's Certificate of Incorporation, and as permitted under the Delaware
General Corporation Law, directors are not liable to the Company or its
stockholders for monetary damages arising from a breach of their fiduciary duty
of care as directors. Such provisions do not, however, relieve liability for
breach of a director's duty of loyalty to the Company or its stockholders,
liability for acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law, liability for transactions in which the
director derived an improper personal benefit or liability for the payment of a
dividend in violation of Delaware law. Further, the provisions do not relieve a
director's liability for violation of, or otherwise relieve the Company or its
directors from the necessity of complying with, federal or state securities laws
or affect the availability of equitable remedies such as injunctive relief or
recision.
15
<PAGE>
PART F/S
The following financial statements are filed as part of this
registration statement on Form 10-SB. The financial statements of Angus
Corporation, Inc. as of June 30, 1994, June 30, 1995, June 30, 1996 and June 30,
1997 have been audited by Carolyn J. Bunker, CPA, independent auditor, as stated
in her report appearing herein. The financial statements of the Company as of
and for the years ended December 31, 1997 and December 31, 1998 have been
audited by Denis M. McDevitt, CPA, independent auditor, as stated in his report
appearing herein. The financial statements for the three months periods ended
March 31, 1999, included herein, have not been audited, but are believed by
Management to contain all accruals and adjustments required for a fair
presentation of the financial condition and results of operations of the Company
in accordance with generally accepted accounting principles.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
MARCH 31, 1999
<S> <C>
Profit and Loss Statement for the three months period
ended March 31, 1999.............................................................F-1
Balance Sheet as of March 31, 1999.........................................................F-2
DECEMBER 31, 1998
Report of Independent Certified Public Accountants........................................F-4
Balance Sheet as of December 31, 1998.....................................................F-5
Statement of Income and Retained Earnings for the year
ended December 31, 1998.........................................................F-6
Statement of Cash Flows for the year
ended December 31, 1998...........................................................F-7
Schedule of Administrative and Overhead Expenses
for the year ended December 31, 1998..............................................F-8
Notes to Financial Statements.............................................................F-9
DECEMBER 31, 1997
Report of Independent Certified Public Accountants........................................F-11
Balance Sheet as of December 31, 1997.....................................................F-12
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Statement of Income and Retained Earnings for the year ended December 31, 1997............F-13
Statement of Cash Flows for the year ended December 31, 1997..............................F-14
Notes to Financial Statements.............................................................F-15
JUNE 30, 1994 THROUGH JUNE 30, 1997
Report of Independent Certified Public Accountants........................................F-16
Statements of Financial Position as of
June 30, 1994, 1995, 1996 and 1997........................................................F-17
Statement of Operations for the years ended
June 30, 1994, 1995, 1996 and 1997........................................................F-18
Statement of Changes in Stockholders' Equity
from April 20, 1994 to June 30, 1997......................................................F-19
Statements of Cash Flow for the years ended
June 30, 1994, 1995, 1996 and 1997........................................................F-20
Notes to Financial Statements.............................................................F-21
</TABLE>
<PAGE>
ASSET RETRIEVAL SERVICES INC.
06/07/99 Profit and Loss
January through March 1999
Jan - Mar '99
Ordinary Income/Exp...
Income
Gross Collect... 11,764.47
Total Income 11,764.47
Gross Profit 11,764.47
Expense
Amortization 250.00
Collection Comm... 4,702.21
Consulting Fee 300.00
Drawings 170.00
Dues and Subsc.. 29.99
Internet Expenses 978.34
Licenses and Pe... 224.00
Outside Services 1,609.90
Professional Fees
Accounting 500.00
Legal Fees 2,232.25
Total Professional 2,732.25
Rent 1,211.91
Stock Transfer ... 195.00
Telephone 57.00
Travel & Ent
Travel 5,087.00
Total Travel & Ent 5,087.00
Utilities
Gas and Electric 14.03
Total Utilities 14.03
Total Expense 17,561.63
Net Ordinary Income -5,797.16
Other Income/Expense
Other Income
Interest Income 371.35
Total Other Income 371.35
Net Other Income 371.35
Net Income -5,425.81
F-1
<PAGE>
ASSET RETRIEVAL SERVICES INC.
06/07/99 Balance Sheet
As of March 31, 1999
Mar 31, '99
ASSETS
Current Assets
Checking/Savings
SD National 0600045270 27,446.09
SD National 0138639570 40,613.66
SD National 0108622770 20,185.49
Total Checking/Savings 88,245.24
Other Current Assets
Loan due from ARAF 5,000.00
Total Other Current ... 5,000.00
Total Current Assets 93,245.24
Other Assets
Portfolio A 82,585.45
Portfolio B 8,961.65
Accum. Amortization-... -4,577.00
Organization Costs 5,000.00
Accum. Amortization-... -2,250.00
Total Other Assets 89,720.10
TOTAL ASSETS 182,965.34
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Other Current Liabi...
Collection Commis... 107.11
Total Other Current... 107.11
Total Current Liabil... 107.11
Total Liabilities 107.11
Equity
Paid in Capital 231,900.00
Retained Earnings -43,615.96
Net Income -5,425.81
Total Equity 182,858.23
TOTAL LIABILITIES & EQUITY 182,965.34
F-2
<PAGE>
ASSET RETRIEVAL SERVICES, INC.
FINANCIAL STATEMENTS
For the year ended December 31, 1998
F-3
<PAGE>
Denis M. McDevitt
CERTIFIED PUBLIC ACCOUNTANT
3550 CAMINO DEL RIO NORTH, SUITE 200
SAN DIEGO, CALIFORNIA 92108
TEL: (619) 285-9125
FAX: (619) 285-9124
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Asset Retrieval Services, Inc.
We have audited the accompanying balance sheet of Asset Retrieval
Services, Inc. as of December 31, 1998 and the related statements of
income, retained earnings, and cash flows for he year then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Asset
Retrieval Services, Inc., as of December 31, 1998 and the results of
its operations and its cash flows for the year then ended, in
conformity with generally accepted accounting principles.
/s/ Denis McDevitt
----------------------------
Denis McDevitt, CPA
San Diego, CA
March 19, 1999
F-4
<PAGE>
ASSET RETRIEVAL SERVICES, INC.
BALANCE SHEET
December 31, 1998
ASSETS
CURRENT ASSETS
Cash $ 93,316
Loan receivable-related party 5,000
---------
TOTAL CURRENT ASSETS 98,316
PORTFOLIO OF CREDIT (net of amortization) 86,970
ORGANIZATION COSTS (net of amortization) 3,000
---------
TOTAL ASSETS $ 188,286
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $ 0
STOCKHOLDERS' EQUITY
Common stock, no par value, 21,000,000
Shares authorized and 6,880,950 issued 231,900
Retained Earnings (43,614)
--------
188,286
--------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 188,286
=========
See accompanying notes and accountant's report
F-5
<PAGE>
ASSET RETRIEVAL SERVICES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
For The Year Ended December 31, 1998
REVENUES $ 39,741
EXPENSES
Administrative and overhead expense 41,528
Amortization 5,577
Commissions 21,314
---------
TOTAL EXPENSES 68,419
---------
ORDINARY INCOME (LOSS) (28,678)
OTHER INCOME
Interest 3,258
---------
NET INCOME (LOSS) (25,420)
BEGINNING RETAINED EARNINGS (18,194)
---------
ENDING RETAINED EARNINGS (43,614)
=========
See accompanying notes and accountant's report
F-6
<PAGE>
ASSET RETRIEVAL SERVICES, INC.
STATEMENT OF CASH FLOWS
For The Year Ended December 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (25,420)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,577
Increase in Portfolio acquisition (91,547)
-----------
NET CASH USED BY OPERATING ACTIVITIES (111,390)
CASH FLOW FROM INVESTING ACTIVITIES
Loan receivable-related party 61,251
Collection of subscription receivable 6,000
-----------
NET CASH PROVIDED BY INVESTING ACIVITIES 67,251
CASH FLOWS FROM FINANCING ACTIVITIES
NET CASH PROVIDED BY FINANCING ACTIVITIES 0
---------
NET DECREASE IN CASH (44,139)
CASH AT BEGINNING OF YEAR 137,455
---------
CASH AT END OF YEAR $ 93,316
=========
See accompanying notes and accountant's report
F-7
<PAGE>
ASSET RETRIEVAL SERVICES, INC.
SCHEDULE OF ADMINISTRATIVE AND OVERHEAD EXPENSES
For The Year Ended December 31, 1998
Bank service charges $ 24
Client meetings 701
Contract labor 3,121
Dues and subscriptions 706
Internet advertising 1,772
Licenses and permits 106
Office expenses 2,653
Outside services 1,467
Postage and delivery 943
Professional fees 9,505
Promotion 4,025
Rent 2,413
SEC Registration 6,500
Telephone 2,695
Travel and meals 4,793
Utilities 104
---------
Total Administrative and Overhead expenses $ 41,528
---------
See accompanying notes and accountant's report
F-8
<PAGE>
ASSET RETRIEVAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998
Note 1. Organization and Significant Accounting Policies.
The company was incorporated under the laws of the State of
California on October 24, 1996 and was later reincorporated in Delaware. The
Company is a financial services company that acquires via purchase, assignment
or joint venture, distress financial portfolios such as consumer loans,
commercial loans, bad checks and overdrafts and credit card accounts. The
profitability of the Company from such portfolios depends upon the ability to
collect overdue amounts in excess of the cash paid for the portfolio and
commissions payable. The company will provide new credit lines to consumers
who have experienced life events relegating them to sub-prime status. The
financial statements have been prepared on an accrual basis in accordance with
generally accepted accounting principles. Organization costs are amortized on
a straight-line basis over five years. The financial portfolios are amortized
based upon an estimate of income stream expected according to industry
experience rates.
Note 2. Cash and Cash Equivalents
The company currently holds its cash on deposit with San Diego
National Bank. All funds are held in short-term deposit accounts immediately
available for withdrawal.
Note 3. Related Party Transactions.
The Company is currently owed $5,000 by Asset Retrieval and
Acquisition Fund, LLC, a California limited liability company, whose
ownership is more than 50% identical to ownership in the company. This
amount is unsecured, has no specified interest rate, and is payable on demand.
Note 4. Pending Litigation
The Company has advised its shareholders that it has commenced
a lawsuit to recover overpayment of commissions and investment funds from a
former business associate. The amount sought is about $2,200. The Company is
also seeking information in the suit pertaining to business disparagement and
unfair business practices which could lead to further damages. The defendant
has counter-sued the Company, but in the opinion of counsel, such counter-suit
is without merit. The Company also is a defendant in a small claims matter
involving a $2,500 claim which in the opinion of legal counsel is without
merit.
F-9
<PAGE>
ASSET RETRIEVAL SERVICES, INC.
FINANCIAL STATEMENTS
For the year ended December 31, 1997
F-10
<PAGE>
Denis M. McDevitt
CERTIFIED PUBLIC ACCOUNTANT
3550 CAMINO DEL RIO NORTH, SUITE 200
SAN DIEGO, CALIFORNIA 92108
TEL: (619) 285-9125
FAX: (619) 285-9124
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Asset Retrieval Services, Inc.
We have audited the accompanying balance sheet of Asset Retrieval
Services, Inc. as of December 31, 1997 and the related statements of
income, retained earnings, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Asset
Retrieval Services, Inc., as of December 31, 1997 and the results of
its operations and its cash flows for the year then ended, in
conformity with generally accepted accounting principles.
/s/ Denis McDevitt
----------------------------
Denis McDevitt, CPA
San Diego, CA
June 16, 1998
F-11
<PAGE>
ASSET RETRIEVAL SERVICES, INC.
BALANCE SHEET
December 31, 1997
ASSETS
CURRENT ASSETS
Cash $ 137,455
Loan receivable-related party 66,251
Subscription receivable 6,000
---------
TOTAL CURRENT ASSETS 209,706
ORGANIZATION COSTS (net of amortization) 4,000
---------
TOTAL ASSETS $ 213,706
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $ 0
STOCKHOLDERS' EQUITY
Common stock, no par value, 21,000,000
Shares authorized and 6,880,950 issued 231,900
Retained Earnings (18,194)
---------
213,706
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 213,706
=========
See accompanying notes and accountant's report
F-12
<PAGE>
ASSET RETRIEVAL SERVICES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
For The Year Ended December 31, 1997
REVENUES $ 0
EXPENSES
Amortization expense 1,000
Bank charges 60
Commissions fees 10,360
Legal fees 10,020
---------
TOTAL EXPENSES 21,440
---------
ORDINARY INCOME (LOSS) (21,440)
OTHER INCOME
Interest 3,246
---------
NET INCOME (LOSS) (18,194)
BEGINNING RETAINED EARNINGS 0
---------
ENDING RETAINED EARNINGS (18,194)
=========
See accompanying notes and accountant's report
F-13
<PAGE>
ASSET RETRIEVAL SERVICES, INC.
STATEMENT OF CASH FLOWS
For The Year Ended December 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (18,194)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,000
Increase in Subscription receivable (6,000)
Increase in Organization costs (5,000)
--------
NET CASH USED BY OPERATING ACTIVITIES (28,194)
CASH FLOWS FROM INVESTING ACTIVITIES
Loan receivable-related party (66,251)
NET CASH USED BY INVESTING ACIVITIES (66,251)
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued 231,900
--------
NET CASH PROVIDED BY FINANCING ACTIVITIES 231,900
--------
NET INCREASE IN CASH 137,455
CASH AT BEGINNING OF YEAR 0
--------
CASH AT END OF YEAR $ 137,455
=========
See accompanying notes and accountant's report
F-14
<PAGE>
ASSET RETRIEVAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1997
Note 1. Organization and Significant Accounting Policies.
The company was incorporated under the laws of the State of
California on October 24, 1996. On July 31, 1997, the Company merged with
Angus Corporation and was reincorporated in Delaware. The Company is a
financial services company that will acquire via purchase, assignment or joint
venture, distress financial portfolios such as consumer loans, commercial
loans, bad checks and overdrafts and credit card accounts. The company will
provide new credit lines to consumers who have experienced life events
relegating them to sub-prime status. The size of the portfolios acquired and
nature of the joint ventures will be a direct function of the amount of
capital that the company is able to raise. The financial statements have been
prepared on an accrual basis in accordance with generally accepted accounting
principles. Organization costs are amortized on a straight-line basis over
five years.
Note 2. Cash and Cash Equivalents
The company currently holds its cash on deposit with San Diego
National Bank. All funds are held in short-term deposit accounts immediately
available for withdrawal.
Note 3. Related Party Transactions.
The Company currently owes to Asset Retrieval and Acquisition
Fund, LLC, a California limited liability company, whose ownership is more than
50% identical to ownership in the company, $66,251. This amount is unsecured,
has no specified interest rate, and is payable on demand.
F-15
<PAGE>
Carolyn J. Bunker
Certified Public Accountant
11300 West Olympic Blvd., Suite 650
Los Angeles, California 90064-1643
(310) 477-3612
To The Shareholders and
Board of Directors of
ANGUS CORPORATION, INC.
INDEPENDENT AUDITOR'S REPORT
----------------------------
I have audited the statement of financial position of Angus Corporation, Inc.
(a development stage company) as June 30, 1994, and the related statements of
operations, changes in stockholders' equity (deficiency) and cash flows for
the period from inception (April 20, 1994) to June 30, 1994. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. 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 principals used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis
for my opinion.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Angus Corporation, Inc. (a
development stage company) as of June 30, 1994, and the results of its
operations, changes in stockholders' equity and cash flows for the period from
inception (April 20, 1994) to June 30, 1994 all in conformity with generally
accepted accounting principles.
/s/ Carolyn J. Bunker
- ------------------------------
Carolyn J. Bunker, CPA
Los Angeles, California
August 24, 1994
F-16
<PAGE>
ANGUS CORPORATION
(A Development Stage Company) Statement of Financial Position
<TABLE>
<CAPTION>
ASSETS
------
June 30, June 30, June 30, June 30,
1994 1995 1996 1997
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Current Assets - Cash $ 305 $ - $ - $ -
----------- ----------- ----------- -----------
OTHER ASSETS
Organization costs,
Net of accumulated
Amortization of $5, $29,
$53, and $70 (Note 1) 116 92 68 44
TOTAL ASSETS $ 421 $ 92 $ 68 $ 44
----------- ----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES -
Accounts Payable $ 121 $ 336 $ 416 $ 446
----------- ----------- ------------ -----------
STOCKHOLDERS'S EQUITY
Preferred Stock,
$.001 par value:
1,000,000 shares
authorized: no shares
issued and outstanding -0- -0- -0- -0-
Common Stock, $.001
par value: 20,000,000 shares
authorized:424,600,
500,000, 500,000, and
500,000 shares
issued and outstanding 425 500 500 500
Additional paid-in Capital 1 26 26 26
Accumulated deficit during
the development stage (126) (800) (874) (948)
TOTAL STOCKHOLDERS' EQUITY 300 (274) (348) (422)
----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $ 421 $ 92 $ 68 $ 44
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements
F-17
<PAGE>
ANGUS CORPORATION Statement of Operations
(A Development Stage Company)
<TABLE>
<CAPTION>
FOR THE
FISCAL YEAR
FROM INCEPTION
(April 20, 1994) FOR THE YEAR ENDED
June 30, June 30 June 30 June 30
1994 1995 1996 1997
---------------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUES $ -0- $ -0- $ -0- $ -0-
---------------- ----------- ----------- -----------
OPERATING EXPENSES
General and Administrative 121 650 50 50
Amortization 5 24 24 24
---------------- ----------- ----------- -----------
TOTAL 126 674 74 74
NET (LOSS) $ (126) $ (674) $ (74) $ (74)
NET (LOSS) PER SHARE $ (NIL) $ (NIL) $ (NIL) $ (NIL)
================ =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 424,600 500,000 500,000 500,000
================ =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-18
<PAGE>
ANGUS CORPORATION Statement of Changes in Stockholders'
(A Development Stage Company) Equity from Inception April 20, 1994
Through June 30, 1997
<TABLE>
<CAPTION>
Accumulated
Deficit
Common Stock Additional During the
------------------------ Paid-in Development
Shares Amount Capital Stage Total
-------- -------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C>
Issuance of common stock 424,600 $ 425 $ 1 $ $ 426
for cash
Net (loss) (126) 126
-------- -------- ------------ ------------ --------
Balances at
June 30, 1994 $424,600 $ 425 $ 1 $ (126) $ 300
======== ======== ============ ============ ========
Issuance Common Stock
for services (unaudited) 75,400 75 25 100
Net loss, unaudited (674) (674)
Balance, June 30, 1995 500,000 500 26 (800) (274)
-------- -------- ------------ ------------ --------
Net loss, unaudited (74) (74)
Balances, June 30, 1996 500,000 500 26 (874) 348
-------- -------- ------------ ------------ --------
Net loss, unaudited (74) (74)
Balances, June 30, 1997 $ 500,000 $ 500 $ 26 $ (948) $ (422)
======== ======== ============ ============ ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-19
<PAGE>
ANGUS CORPORATION Statements of Cash Flows
(A Development Stage Company)
<TABLE>
<CAPTION>
FOR THE
FISCAL YEAR
FROM INCEPTION
(April 20, 1994) FOR THE YEAR ENDED
June 30, June 30 June 30 June 30
1994 1995 1996 1997
----------------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (126) $ (674) $ (74) $ (74)
----------------- ----------- ----------- -----------
Add item not requiring
the use of cash- Amortization 5 24 24 24
Issuance of common stock
for services -0- 100 -0- -0-
Increase (decrease) in accounts payable 121 245 50 50
----------------- ----------- ----------- -----------
Net flows from operating activities -0- 305 -0- -0-
----------------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Organization Costs (121)
----------------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 426
----------------- ----------- ----------- -----------
Net Cash flows from financing activities 426
NET (DECREASE) INCREASE IN CASH 426 305
CASH BALANCE AT BEGINNING OF PERIOD -0- 305 -0- -0-
----------------- ----------- ----------- -----------
CASH BALANCE AT END OF PERIOD $ 305 -0- -0- -0-
================= =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements
F-20
<PAGE>
ANGUS CORPORATION
(A Development Stage Company)
Notes to Financial Statements as of June 30, 1994
- -------------------------------------------------------------------------------
NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated under the laws of the State of
Delaware on June 11, 1992, for the purpose of seeking out
business opportunities, including acquisitions. The Company
is in the development stage and will be very dependent on
the skills, talents, and abilities of management to
successfully implement its business plan. Due to the
Company's lack of capital, it is likely that the Company
will not be able to compete with larger and more experienced
entities for business opportunities which are lower risk and
are more attractive for such entities. Business
opportunities in which the Company may participate will
likely be highly risky and speculative. Since inception, the
Company's activities have been limited to organizational
matters. Organizational costs are amortized on a
straight-line basis over five years.
NOTE 2 CASH AND CASH EQUIVALENTS
The company considers all short-term investments with an
original maturity of three months or less to be cash
equivalents.
NOTE 3 RELATED PARTY TRANSACTIONS
The Company currently receives the use of office space free
of charge from Jehu Hand, president of the Company. The fair
market value of the office space in the same geographic
region is $20 per month.
NOTE 4 INCOME TAXES
The fiscal year end of the Company is June 30th and an
income tax return has not been filed. However, if an income
tax return had been filed, the Company would have a net
operation loss carryforward of $486 that would begin
expiring in the year 2008.
NOTE 5 STOCK OPTION PLAN
The Company has stock option plans for directors, officers,
employees, advisors, and employees of companies that do business
with the Company, which provide for non-qualified and qualified stock
options. The Stock Option Committee of the Board determines the option
price which cannot be less than the fair market value at the date of
the grant of 110% of the fair market value if the Optionee holds 10%
or more of the Company's common stock. The price per share of share
subject to a Non-Qualified Option shall not be less than 85% of the
fair market value at the date of the grant. Options generally expire
either three months after termination of employment, or ten years
after date of grant (five years if the optionee holds 10% or more
of the Company's common stock at the time of grant).
F-21
<PAGE>
ANGUS CORPORATION
(A Development Stage Company) Notes to Financial Statements
Options outstanding:
Shares allocated 2,000,000
---------
Option price $ .50
---------
Balance at inception --
Granted 40,000
---------
Balance outstanding at
June 30, 1994 40,000
Granted --
---------
Year exercisable:
1999 40,000
---------
F-22
<PAGE>
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 this 30 day of July 1999.
Creditgroup.com, Inc.
BY: /s/ Barry Lotz
-------------------------------
Dr. Barry Lotz, Chief Executive Officer
<PAGE>
PART III
EXHIBIT NO. DOCUMENT DESCRIPTION
- ----------- --------------------
2.1 Agreement and Plan of Reorganization
2.2 Stockholder's Agreement of Angus Corporation
3.1 Articles of Incorporation of Asset Retrieval Services, Inc., as amended
3.2 Bylaws of Asset Retrieval Services, Inc.
3.3 Certificate of Incorporation of Angus Corporation, as amended
3.4 Bylaws of Angus Corporation
3.5 Certificate of Incorporation of Asset Retrieval Management, Inc.
3.6 Bylaws of Asset Retrieval Management, Inc.
3.7 Certificate of Incorporation of Alliance Consumer Credit Solutions,
Inc.
3.8 Articles of Incorporation of Alliance Consumer Credit Solutions, Inc.
4.1 Specimen Common Stock Certificate
<PAGE>
Exhibit 2.1
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is dated July
31, 1997, and is by and between Angus Corporation, a Delaware corporation (the
"Company") and Asset Retrieval Services, Inc., a California corporation
("ARS").
R E C I T A L S
WHEREAS, the shareholders of ARS ("Shareholders") own the shares of
capital stock of ARS as set forth in Schedule 1 attached hereto, constituting
all of the issued and outstanding stock of ARS (the "ARS Shares");
WHEREAS, the Company desires to acquire all, but in any event no less
than 80%, of the ARS Shares held by them, and the Shareholders desire to
exchange all of the ARS Shares for shares of voting common stock of the
Company, in a transaction that qualifies under Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended (the "Code").
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in reliance upon the representations and warranties
hereinafter set forth, the parties agree as follows:
I. EXCHANGE OF THE SHARES AND CONSIDERATION
1.01 Shares Being Exchanged. Effective at the closing of this Agreement
(the "Closing"), and subject to the terms and conditions of this Agreement the
Shareholders shall assign, transfer and deliver to the Company all of the ARS
Shares which they own.
1.02 Consideration. Subject to the terms and conditions of this Agreement
and in consideration of the assignment and delivery of ARS Shares to the
Company, the Company shall at Closing issue to the Shareholders a number of
shares of voting common stock ("Company Common Stock") $.001 par value per
share (the "Company Shares"), equal to the number of shares set forth opposite
the Shareholder's name on Schedule 1 attached hereto, at the rate of 16.6
shares of Company Common Stock for each one ARS share.
1.03 Closing. The Closing of the transaction contemplated by this
Agreement (the "Closing") shall take place on July 31, 1997 as to Shareholders
holding at least 80% of the ARS Shares. Thereafter, the Company shall issue
shares as the remaining Shareholders deliver ARS Shares.
1.04 Deliveries. Concurrently with the execution and delivery of this
Agreement, the parties are delivering the following documents:
1.04(a) The items and documents set forth in Sections 1.01
and 1.02.
1.03(a) Pursuant to Section 7.01 hereof, Company shall
deliver to Shareholders resolutions of the Company's Board of Directors,
electing Barry Lotz, Robert L. Wagaman, and C. Douglas Freeland, as members of
the Board of Directors, and the
<PAGE>
following persons as officers of the Company:
Barry Lotz, Chief Executive Officer and President
C. Douglas Freeland, V.P. Acquisitions
Robert L. Wagaman, V.P. Operations
1.04(c) The Company shall deliver the resignations of all of its
current officers and directors effective at Closing.
I. REPRESENTATIONS AND WARANTIES OF ARS
ARS represents and warrants to the Company as follows, as of the date of
this Agreement and as of the Closing:
2.01. Organization.
2.01(a). ARS is a corporation duly organized, validly existing and in
good standing under the laws of the State of California; ARS has the
corporate power and authority to carry on its business as presently
conducted; and ARS is qualified to do business in all jurisdictions where
the failure to be so qualified would have material adverse effect on its
business.
2.01(b). The copies of the Articles of Incorporation and all
amendments thereto of ARS as certified by the Secretary of State of
California, and the copy of the Bylaws as certified by the Secretary of
ARS, which have heretofore been delivered to the Company, are complete
and correct copies of such Articles of Incorporation as amended and in
effect on the date hereof. All minutes of meetings and actions in writing
without a meeting of the Board of Directors and shareholders of ARS are
contained in the minute book of ARS heretofore delivered to the Company
for examination and no minutes or actions in writing have been included
in such minute book since such delivery to the Company that have not also
been delivered to the Company.
2.02. Capitalization.
2.02(a). The authorized capital stock of ARS is ten million shares of
common stock and ten million shares of preferred stock. The issued and
outstanding shares of ARS is 396,885 shares of Common Stock, and no
shares of Preferred Stock. All of the issued and outstanding shares of
ARS are duly authorized, validly issued, fully paid and nonassessable.
2.02(b). Except as set forth in Exhibit 2.02(b) there are no
outstanding options, warrants, or rights to purchase any securities of
ARS.
2.03. Subsidiaries and Investments. ARS does not own any capital
stock or have any interest in any corporation, partnership or other form of
business organization.
2
<PAGE>
2.04. Financial Statements. The unaudited financial statements of ARS as
of and for the period inception to July 31, 1997 (the "Financial Statements")
present fairly the financial position and results of operations of ARS, on a
consistent basis. The financial records of ARS are of such a character and
quality that an unqualified (except as to going concern) audit of the ARS
Financial Statements may be performed within 75 days of the Closing.
2.05. No Undisclosed Liabilities. ARS is not subject to any material
liability or obligation of any nature, whether absolute, accrued, contingent,
or otherwise and whether due or to become due, which is not reflected or
reserved against in the Financial Statements, except those incurred in the
normal course of business.
2.06. Absence of Material Changes. Since July 31, 1997, except as
described in any Exhibit hereto or as required or permitted under this
Agreement, there has not been:
2.06(a). any material change in the condition (financial or
otherwise) of the properties, assets, liabilities or business of ARS,
except changes in the ordinary course of business which , individually
and in the aggregate, have not been materially adverse;
2.06(b). any redemption, purchase or other acquisition of any
shares of the capital stock of ARS, or any issuance of any shares of
capital stock or the granting, issuance or exercise of any rights,
warrants, options or commitments by ARS relating to their authorized or
issued capital stock; or
2.06(c). any change or amendment to the Articles of Incorporation
of ARS.
2.07. Litigation. There is no litigation, proceeding or investigation
pending or threatened against ARS affecting any of its properties or assets
against any officer, director, or stockholder of ARS that might result, either
in any case or in the aggregate, in any material adverse change in the
business, operations, affairs or condition of ARS or its properties or assets,
or that might call into question the validity of this Agreement, or any action
taken or to be taken pursuant hereto.
2.08. Title To Assets. ARS has good and marketable title to all of its
assets and properties now carried on its books including those reflected in
the balance sheets contained in the Financial Statements, free and clear of
all liens, claims, charges, security interests or other encumbrances.
2.09. Real Estate. ARS owns no real estate.
2.10 Contracts and Undertakings. Exhibit 2.10 attached hereto contains a
list of all contracts, agreements, leases, licenses, arrangements, commitments
and other undertakings to which ARS is a party or by which it or its property
is bound. Each of said contracts, agreements, leases, licenses, arrangements,
commitments and undertakings is valid, binding and in full force and effect.
ARS is not in material default, or alleged to be in material default, under
any contract, agreement, lease, license, commitment, instrument or obligation
to which ARS is a party is in default thereunder no does there exist any
condition or event which, after notice or
3
<PAGE>
lapse of time or both would constitute a default by any party to any such
contract, agreement, lease, license, commitment, instrument or obligation.
2.11. Underlying Documents. Copies of all documents described in any
Exhibit attached hereto (or a summary of any such contract, agreement or
commitment, of oral) have been made available to the Company and are complete
and correct and include all amendments, supplements or modifications thereto.
2.12. Transactions with Affiliates, Directors and Shareholders. Except as
set forth in exhibit 2.12 hereto, there are and have been no contracts,
agreements, arrangements or other transactions between ARS, and any officer,
director, or stockholder of ARS, or any corporation or other entity controlled
by the Shareholders, a member of the Shareholders' families, or any affiliate
of the Shareholders.
2.13. No Conflict. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with or
result in a breach or any term or provision of, or constitute a default under,
the Articles of Incorporation of Bylaws of ARS, or any agreement, contract or
instrument to which ARS is a party or by which it or any of its assets are
bound.
2.14. Ownership of Intellectual Property Rights. ARS owns or has valid
right or license to use all patents, patent rights, trade secrets, trademarks,
trademark rights, trade names, trade name rights, copyrights and other
intellectual property rights (collectively referred to as "Intellectual
Property Rights") which are necessary to operate its business as now operated
and as now proposed to be operated. A brief description of such Intellectual
Property Rights is set forth on Exhibit 2.14 attached hereto. Except as set
forth on Exhibit 2.14, ARS does not have any obligation to compensate any
person, firm, corporation or other entity for the use of any such Intellectual
Property Rights, nor has ARS granted to any person, firm, corporation or other
entity any license or other rights to use in any manner, or waived its rights
with respect to any Intellectual Property Rights of ARS.
2.15. Disclosure. Neither this Agreement, the Financial Statements nor
any other agreement, document, certificate or written or oral statement
furnished to the Company by or on behalf of ARS in connection with the
transactions contemplated hereby, contains any untrue statement of a material
fact or when taken as a whole omits to state a material fact necessary in
order to make the statements contained herein or therein no misleading.
2.16. Authority. ARS has full power and authority to enter into this
Agreement and to carry out the transactions contemplated herein. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, have been duly authorized and approved by the Board of
Directors of ARS and no other corporate proceedings on the part of ARS are
necessary to authorize this Agreement and the transactions contemplated
hereby.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to ARS and Shareholders as
follows, as of the date of this Agreement and as of Closing:
4
<PAGE>
3.01. Organizations.
3.01(a). The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Delaware; has the corporate power and authority to carry on its business
as presently conducted; and is qualified to do business in all
jurisdictions where the failure to be so qualified would have a material
adverse effect on the business of the Company.
3.01(b). The copies of the Certificate of Incorporation, of
the Company, as certified by the Secretary of State of Delaware, and the
Bylaws of the Company are complete and correct copies of the Certificate
of Incorporation and the Bylaws of the Company as amended and in effect
on the date hereof. All minutes of meetings and actions in writing
without a meeting of the Board of Directors and shareholders of the
Company are contained in the minute book of the Company and no minutes or
actions in writing without a meeting have been included in such minute
book since such delivery to ARS that have not also been delivered to ARS.
3.02. Capitalization of the Company. The authorized capital stock of the
Company consists of 20,000,000 shares of Common Stock, par value $.001 per
share, of which 500,000 shares are outstanding, and 1,000,000 shares of
preferred stock, none of which is outstanding. All outstanding shares are duly
authorized, validly issued, fully paid and non-assessable.
3.03. Subsidiaries and Investments. The Company does not own any capital
stock or have any interest in any corporation, partnership, or other form of
business organization.
3.04. Authority. The Company has full power and authority to enter into
this Agreement and to carry out the transactions contemplated herein. The
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby, and the issuance of the Company Common Stock in accordance
with the terms hereof, have been duly authorized and approved by the Board of
Directors of the Company and no other corporate proceedings on the part of
Company are necessary to authorize this Agreement, the transactions
contemplated hereby and the issuance of the Company stock in accordance with
the terms hereof.
3.05. No Undisclosed Liabilities. Other than as described in Exhibit 3.05
hereto, the Company is not subject to any material liability or obligation of
any nature, whether absolute, accrued, contingent, or otherwise and whether
due or to become due.
3.06. Litigation. There is no litigation, proceedings or investigation
pending or to the knowledge of the Company, threatened against the Company
affecting any of its properties or assets, or, to the knowledge of the
Company, against any officer, director, or stockholder of the Company that
might result, either in any case or in the aggregate, in any material adverse
change in the business, operation, affairs or condition of the Company or any
of its properties or assets, or that might call into question the validity of
this Agreement, or any action taken or to be taken pursuant hereto.
3.07. Title To Assets. The Company has good marketable title to all
of its assets and properties now carried on its books including those
reflected in the balance sheet contained
5
<PAGE>
in the Company's financial statements, free and clear of all liens, claims,
charges, security interests or other encumbrances, except as described in the
balance sheet included in the Company's financial statements or on any
Exhibits attached hereto.
3.08. Contracts and Undertakings. Exhibit 3.08 attached hereto contains a
list of all contracts, agreements, leases, licenses, arrangements commitments
and other undertakings to which the Company is a party or by which it or its
property is bound. Each of said contracts, agreements, leases, licenses,
arrangements, commitments and undertakings is valid, binding and in full force
and effect. The Company is not in material default, or alleged to be in
material default, under any contract, agreement, lease, license, commitment,
instrument or obligation and, to the knowledge of the Company, no other party
to any contract, agreement, lease, license, commitment, instrument or
obligation to which the Company is party is in default thereunder nor, to the
knowledge of the Company, does there exist any condition or event which, after
notice or lapse of time or both, would constitute a default by any party to
any such contract, agreement, lease, license, commitment, instrument or
obligation.
3.09. Underlying Documents. Copies of all documents described in any
Exhibit attached hereto (or a summary of any such contract, Agreement or
commitment, if oral) have been made available to ARS and are complete and
correct and include all amendments, supplements or modifications thereto.
3.10 Transactions with Affiliates, Directors and Shareholders. There are
and have been no contracts, agreements, arrangements or other transactions
between the Company, and any officer director, or 5% stockholder of the
Company, or any corporation or other entity controlled by any such officer,
director or 5% stockholder, a member of any such officer, director or 5%
stockholder's family, or any affiliate of any such officer, director or 5%
stockholder.
3.11. No Conflict. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with or
result in a breach of any term or provision of, or constitute a default
under, the Certificate of Incorporation or Bylaws of the Company, or any
agreement, contract or instrument to which the Company is a party or by which
it or any of its assets are bound.
3.12. Disclosure. Neither this Agreement nor any other agreement,
document, certificate or written or oral statement furnished to ARS and the
Shareholders by or on behalf of the Company in connection with the
transactions contemplated hereby, contains any untrue statement of a material
fact or when taken as a whole omits to state a material fact necessary in
order to make the statements contained herein or therein no misleading.
3.13. Financial Statements. The financial statements of the Company
present fairly the financial position and results of operations of the
Company, on a consistent basis. The financial records of the Company are of
such a character and quality that an unqualified may be performed within 75
days of the Closing. As of the Closing, Company shall have no liabilities.
3.14. Absence of Material Changes. Since July 31, 1997 except as
described in any Exhibit hereto or as required or permitted under this
Agreement, there has not been:
6
<PAGE>
3.14(a) any material change in condition (financial or
otherwise) of the properties, assets, liabilities or business of Company,
except changes in the ordinary course of business which, individually and
in the aggregate, have not been materially adverse.
3.14(b) any redemption, purchase or other acquisition of any
shares of capital stock of Company, or any issuance of any shares of
capital stock or the granting, issuance or exercise of any rights,
warrants, options or commitments by ARS relating to their authorized or
issued capital stock.
3.14(c) Any amendment to the Certificate of Incorporation of
Company.
IV. SURVIVAL OF REPRESENTATINS, WARRANTIES AND COVENANTS
All representations, warranties and covenants of the Company and ARS
contained herein shall survive the consummation of the transactions
contemplated herein and remain in full force and effect.
V. CONDITIONS TO CLOSING
5.01. Conditions to Obligation of ARS. The obligations of ARS and
Shareholders under this Agreement shall be subject to each of the following
conditions:
5.01(a) Representations and Warranties of Company to be
True. The representations and warranties of Company herein contained
shall be true in all material respects at the Closing with the same
effect as though made at such time. Company shall have performed in all
material respects all obligations and complied in all material respects
with all covenants required by this Agreement to be performed or complied
with by it at or prior to the Closing.
5.01(b) No Legal Proceedings. No injunction or restraining
order shall be in effect, and no action or proceeding shall have been
instituted and, at what would otherwise have been the Closing, remain
pending before a court to restrain or prohibit the transactions
contemplated by this Agreement.
5.01(c) Statutory Requirements. All statutory requirements
for the valid consummation by Company of the transactions contemplated by
this Agreement shall have been fulfilled. All authorizations, consents
and approvals of all Governments and other persons required to be
obtained in order to permit consummations by Company of the transactions
contemplated by this Agreement, to continue unimpaired in all material
respects immediately following the Closing shall have been obtained.
5.01(d) Closing Documents. Company shall have executed and
delivered all documents required to be executed and delivered by Company
pursuant to Section 1.04.
5.02. Conditions to Obligations of Company. The obligation
of Company under this Agreement shall be subject to the following
conditions:
7
<PAGE>
5.02(a) Representations and Warranties of ARS to be True. The
representations and warranties of ARS herein contained shall be true in
all material respects as of the Closing, and shall have the same effect
as though mad at the Closing; Purchaser shall have performed in all
material respects all obligations and complied in all material respects
with all covenants and conditions required by this Agreement to be
performed or complied with by it prior to the Closing.
5.02(b) No Legal Proceedings. No injunction or restraining order
shall be in effect prohibition this Agreement, and no action or
proceeding shall have been instituted and, at what would otherwise have
been the Closing, remain pending before the court to restrain or prohibit
the transactions contemplated by this Agreement.
5.02(c) Statutory and Other Requirements. All statutory requirements
for the valid consummation by ARS of the transactions contemplated by
this Agreement shall have been fulfilled; all authorizations, consents
and approvals of all Governmental agencies and authorities required to be
obtained in order to permit consummation by ARS of the transactions
contemplated by this Agreement shall have been obtained.
VI. TERMINATION OF OBLIGATIONS AND WAIVERS OF CONDITIONS; PAYMENT OF EXPENSES
6.01. Termination of Agreement. Anything herein to the contrary
notwithstanding, this Agreement, may be terminated at any time before the
Closing by mutual consent of ARS and Company.
6.02. Payment of Expenses; Waiver of Conditions. In the event that this
Agreement shall be terminated pursuant to Section 6.01 all obligations of the
parties under this Agreement shall terminate and there shall be no liability
of any party to the other. Each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and performance
of and compliance with all agreements and conditions contained herein or
therein on counsel. If any of the conditions specified in Section 5.01 hereof
has not been satisfied, Company may nevertheless at its election of ARS
proceed with the transactions contemplated hereby and if any of the conditions
specified in Section 5.02 hereof has not been satisfied, Company may
nevertheless at its election proceed with the transactions contemplated
hereby. In the event that the Closing shall be consummated, each party hereto
will pay all of its costs and expenses in connection therewith.
6.02(a) ARS shall have executed and delivered all documents required
to be executed and delivered by ARS pursuant to Section 1.04.
VII. MISCELLANEOUS
7.01. Finder's Fees, Investment Banking Fees. Neither ARS nor the Company
have retained or used the services of any person, firm or corporation in such
manner as to require the payment of any compensation as a finder or a broker
in connection with the transactions contemplated herein.
8
<PAGE>
7.02. Tax Treatment. The transactions contemplated hereby is intended to
qualify as a so-called "tax-free" reorganization under the provisions of
Section 368 of the Internal Revenue Code. Company and ARS acknowledge,
however, that they each have been represented by their own tax advisors in
connection with this transactions; that neither has made any representation or
warranty to the other with respect to the treatment of such transaction of the
effect thereof under applicable tax laws, regulations, or interpretations; and
that no attorney's opinion or private revenue ruling has been obtained with
respect to the effects thereof under the Internal Revenue Code of 1986, as
amended.
7.03. Further Assurances. From time to time, at the other party's request
and without further consideration, each of the parties will execute and
deliver to the others such documents and take such action as the other party
may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
7.04. Parties in Interest. Except as otherwise expressly provided herein,
all the terms and provisions of this Agreement shall be binding upon, shall
inure to the benefit of and shall be enforceable by the respective heirs,
beneficiaries, personal and legal representatives, successors and assigns of
the parties hereto.
7.05. Entire Agreement; Amendments. This Agreement, including the
Schedules, Exhibits and other documents and writings referred to herein or
delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to tits subject matter, There are no
restrictions, agreements, promises, warranties, covenants or undertakings
other than those expressly set forth herein or therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to its subject matter. This Agreement may be amended only by a written
instrument duly executed by the parties or their respective successors or
assigns.
7.06. Headings, Etc. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretations of this Agreement.
7.07. Pronouns. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
7.08. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
7.09. Governing Law. This Agreement shall be governed by the laws of
the State of California applicable to contracts to be performed in the State
of California.
9
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto as the date first above written.
ANGUS CORPORATION ASSET RETRIEVAL SERVICES, INC.
By: /s/ Jehu Hand By: /s/ Barry Lotz
------------------------ ------------------------
Name: Jehu Hand Name: Barry Lotz
---------------------- ----------------------
Title: President Title: President
--------------------- ---------------------
10
<PAGE>
SCHEDULE I
No. of
No. of Company
ARS Shares to
Shares Name be received
------ ----------- -----------
80 Bedker, Gary 1,920
80 Berger, Dr. Robert 1,920
80 Bloom, Eric 1,920
80 Brown, Howard 1,920
80 Gronemeier, Donald 1,920
80 Hanson, Pauline 1,920
80 Hedberg, Nancy 1,920
80 Hernandez, Anthony 1,920
80 Hull, Robert 1,920
80 Korobey, William 1,920
80 Levin, Arthur 1,920
80 Luckerath, Carl 1,920
80 McDonald, Malcolm 1,920
80 Orlich, Lucia 1,920
80 Partridge, Helen 1,920
80 Peterman, Earl 1,920
80 Rutherford, Morrison 1,920
133,715 Barry, Lotz 2,219,669
100,286 Douglas, Freeland 1,664,748
100,286 Robert L. Wagaman (D&B Asset Management) 1,664,748
37,142 Barry Lotz as Trustee for Paul Nicholson 616,557
160 Bitterman, Adolphe 3,840
160 Bunsah, Rointan 3,840
160 Frank, Jannealle 3,840
160 Gay, William 3,840
160 Hadley, Dr. Alan 3,840
160 Hoffman, Darol 3,840
160 Hassey, Carleton 3,840
160 Johnson, Robert 3,840
160 Lambert, Johnny 3,840
160 Mocilnikar, Gabriel 3,840
160 Murphy, Jerry 3,840
160 Overhoiser, Merlin 3,840
160 Paxton, Lester 3,840
160 Pflaum, William 3,840
160 Phillips, William 3,840
160 Ryerson, Theodore 3,840
160 Simmons, Jerry 3,840
160 Soule, Eugene 3,840
240 Gaynor, Wilena 5,760
320 Lesem, Rolf 7,680
<PAGE>
No. of
No. of Company
ARS Shares to
Shares Name be received
------ ----------- -----------
240 Fisch, A.
160 Sodle, Eugene J.
320 Lindsay, Mark 7,680
400 Cavin, L.F. 9,600
400 Davis, Walter 9,600
400 Furry, Dennis 9,600
400 Hammond, Richard 9,600
400 Huse, Wilfred 9,600
400 Karou, Richard 9,600
400 Lambeer, Peter 9,600
400 Magnus, Vernon 9,600
400 Morrison, James 9,600
400 Nicholson, Nick 9,600
400 Post, Jerome 9,600
416 Sherwood, William 9,984
480 Lessem, Rolph 11,520
640 Ledger, Peter 15,360
1,600 Girdis, John 38,400
1,600 Stains, George 38,400
100 Finnial, Charles 2,400
100 Morgan, Henry 2,400
100 Oliver, Frederick 2,400
100 Phinney, Barbara 2,400
100 Roy, David 2,400
100 Schmidt, Alvin 2,400
200 Anderson, Roy 4,800
200 Cumbaa, William 4,800
200 Dalquist, Howard 4,800
200 Hamm, Eugene 4,800
200 Jones, Richard 4,800
200 Linkletter, Patricia 4,800
200 Lita, Carlos 4,800
200 Roberts, James 4,800
300 Botti, Ralph 7,200
300 Carney, Michael 7,200
400 Culver, John 9,600
400 Rock, Robert 9,600
500 Letterman, Liana 12,000
500 Lorenzo, Timothy 12,000
800 Hardy, Thomas 19,200
<PAGE>
No. of
No. of Company
ARS Shares to
Shares Name be received
------ ----------- -----------
800 Huston, Craig 19,200
800 Pederson, Daniel 19,200
800 Roth, Hanna 19,200
800 Steiler, Richard 19,200
800 Stevens, Wayne 19,200
800 Takusaqawa, Kazuo 19,200
1,000 Evanoff, James 19,200
100 Throm, Drban 24,000
<PAGE>
EXHIBIT 2.02(b)
None
<PAGE>
EXHIBIT 2.10
Contracts of ARS
<PAGE>
EXHIBIT 2.12
ARS Interested Transactions
<PAGE>
EXHIBIT 2.14
ARS Intellectual Property Rights
<PAGE>
EXHIBIT 3.05
Undisclosed Company Liabilities
<PAGE>
EXHIBIT 3.08
Company Contracts
Only contract is Atlas Stock Transfer. See price list attached.
<PAGE>
ATLAS STOCK TRANSFER
CORPORATION
EFFECTIVE JUNE 17, 1996
A INITIAL FEE
Setup master files
(a) New issue - per 100 accounts...... $200.00
(b) Conversion - Dependent upon condition of
of existing records.....Variable
B. ISSUANCE AND TRANSFER OF CERTIFICATES:
1. Fee billed to purchasing broker or shareholders.
(a) For each prepaid certificate issued. $15.00
(b) Restricted certificates $25.00
C. REPORTS
1. Shareholder Report
(a) Accounts printed.....................$ .05
(b) Certificates printed.................$ .02
(c) Minimum charge.......................$35.00
2. Historical Report
(a) Accounts printed.....................$ .05
(b) Certificates printed.................$ .02
(c) Minimum charge...................... $35.00
3. Name and address labels
(a) Accounts printed....................$ .05
(b) Certificates printed................$ .02
(d) Minimum charge......................$35.00
D. ADDITIONAL SERVICES
(a) Audit Confirmation..................$10.00
(b) Faxes (per page)....................$ 1.00
(c) Fees for services such as dividends, mergers,
mailings, proxies, special reports, etc.,
will be set on the basis of an analysis of
costs and word performed.
This schedule does not include out-of-pocket expenses which are
reimbursable by the company such as postage, insurance, printing of
certificates, checks, envelopes, proxies and legal fees, etc.
5899 South State Street o Salt lake City, Utah 84107 o
Ph: (801) 266-7151 o Fax: (801)262-0907
<PAGE>
Exhibit 2.2
<PAGE>
STOCKHOLDER'S AGREEMENT
OF
ANGUS CORPORATION
THIS STOCKHOLDER'S AGREEMENT is made and entered into to be effective the
31st day of July, 1997, by and among Angus Corporation, a Delaware corporation
(the "Corporation"); Barry Lotz ("Lotz"), individually and as trustee,
residing at 5721 Caminito Empresa, La Jolla, California; C. Douglas Freeland
("Freeland"), residing at 8130 La Mesa Boulevard, Suite 155, La Mesa,
California 91941; D & B Asset Management ("D&B"), a General Partnership
located at 6965 El Camino Real, Suite 105-402, Carlsbad, California 92009, and
Robert L. Wagaman ("Wagaman"), the managing partner of D&B, with reference to
the following facts:
RECITALS
A. Asset Retrieval Services, Inc. ("ARS") has entered into an Agreement and
Plan of Reorganization (the "Plan") with the Corporation pursuant to which
shares of Common Stock of ARS have been exchanged for Shares at the rate of
16.6 Shares for each share of ARS Common Stock (the "Exchange Rate").
B. Lotz is the original holder of all of the 371,429 founding shares of
ARS, and had orally agreed to transfer certain shares of ARS set forth in
Column 1 below subject to the terms set forth in this Agreement. Lotz has
exchanged the ARS shares for shares and has directed the Corporation to issue
the Shares received in the Exchange in the denominations listed in Column 2.
Lotz has indicated to the Corporation he will deliver certificates for such
Shares to each other Stockholder upon execution of this Agreement by the
respective Stockholder.
1 2
ARS Corporation
Name Shares Shares
--------------------------- ------------------ ----------------------
Freeland 100,286 1,664,748
D&B 100,286 1,664,748
Barry Lotz, trustee for
Paul Nicholson 37,142 616,557
133,715 shares of Common Stock of ARS, equivalent to 2,219,669 Shares
of the Corporation, are being retained by Lotz. In addition, ARS is offering
up to 200,000 shares in a private offering at $5.00 per share, of which 25,456
shares have been sold and 174,544 shares are reserved for issuance to the
Stockholders; 422,570 Shares will be issuable to persons who have subscribed
1
<PAGE>
to date in the ARS offering; 2,897,430 Shares are reserved for issuance to
future subscribers in the ARS offering who may exchange their ARS Shares for
Corporation Shares at the Exchange Rate; and 10,014,278 Shares are reserved
for issuance by the Board of Directors of the Corporation for such lawful
consideration as the Board may determine.
C. The parties hereto, other than the Corporation, are the Original
Stockholders desire to insure the continuity of the business of the
Corporation and to promote their mutual interests and the interests of the
Corporation by imposing reasonable restrictions on, and making certain
arrangements with respect to, the disposition of the shares of the Corporation
held by them.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants hereinafter contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
For the purposes of this Agreement, the following terms shall have
the meanings indicated:
1.1 Agreed Value. "Agreed Value" shall mean the sum of (a) twelve
(12) times the average per quarter Earnings of the previous four (4) fiscal
quarters or such number of quarters as the Corporation shall have been in
business if less than four (4), plus (b) eight (8) times the average per
quarter Earnings of the next preceding eight (8) quarters or, if less than
eight (8) quarters, such number of preceding quarters as the Corporation and
Preferred Shares issued and outstanding.
1.2 Dispose Of. "Dispose Of" shall mean sell, assign, transfer, grant
an option with respect to, pledge, hypothecate, make gifts of or in any manner
whatsoever dispose of or encumber, whether voluntarily, involuntarily or by
operation of law.
1.3 Earnings. "Earnings" shall mean the net profit of the
Corporation, as compiled by the Corporation in the manner used for preparation
of its federal income tax return, prior to the accrual of corporate level
income taxes, In the event that Earnings shall be reviewed or audited by
independent certified public accountants, the net profit as so reviewed or
audited and approved by such accountant shall be used. In the event that the
provisions of this Agreement require that Earnings be determined for a period
other than a period considered by such accountants, the Earnings as certified
by such accountants shall be considered to have been earned equally in each
quarter of such period. In the event that Earnings shall be required to e
determined as of the end of any period other than a period which ends at the
end of a fiscal year, the Earnings for that portion of such period since the
end of the most recently ended fiscal year shall be approved by independent
certified public accountants with the same degree of professional review, if
any, as applied to the financial statements of the Corporation as of such most
recent fiscal year.
2
<PAGE>
1.4 Permitted Transferees. "Permitted Transferees" shall mean the
persons, other than the Corporation or the Original Stockholders, who may
become transferees of Shares by reason of any disposition made pursuant to
Paragraph 3.2 hereof.
1.5 Market Value. "Market Value" shall mean the average closing price
of the Company's Common Stock on the principal exchange on which such
securities are traded (inclusive of the NASDAQ Stock Market for this purpose)
for the five (5) trading days immediately prior to the date as of which such
determination is made. In the event that no such trading has been reported.
Market Value shall be deemed to be the Agreed Value.
1.6 Shares. "Share" or "Shares" shall mean the capital stock of the
Corporation as presently constituted and any stock or other securities of the
Corporation hereafter issued in respect of such capital stock by reason of any
merger, consolidation, sale of assets, stock dividend, stock subdivision or
combination , reclassification, reorganization, recapitalization or otherwise.
1.7 Stockholder. As used in this Agreement, "Stockholder" shall mean
any person, other than the Corporation, who is or becomes a party to this
Agreement, notwithstanding that persons not signatory to this Agreement may
acquire common stock of the Corporation through a public offering or
otherwise. Original Stockholder shall mean Lotz, Freeland, and D&B or any
other Stockholder designated as such by the Original Stockholders.
1.8 Termination. "Termination" shall mean the discharge, with or
without cause, or the voluntary resignation or withdrawal of a party to this
Agreement, other than the Corporation, who is then receiving or accruing
salary or other compensation from the Corporation for personal services,
whether as an employee or consultant, full time or part time, and whether or
not pursuant to any employment or consulting contract. The term "Cause" shall
be as defined in such party's employment or consulting agreement with the
Corporation, as the case may be, if any. In any event, Cause shall include a
breach of this Agreement. It is contemplated that nothing contained herein
shall be deemed to create any such employment or consulting contract nor to
imply any obligation on the part of the Corporation to employ, engage or
compensate any such person. For purposes of this Paragraph 1.8, the
Termination of Robert L. Wagaman ("Wagaman") shall be deemed to be the
Termination of D&B. It is anticipated that Lotz, Freeland, and Wagaman will
devote substantial time and effort to Corporation business in general and
will, in particular, provide those services as set forth in Article VIII.
1.9 Total Permanent Disability. "Total Permanent Disability" shall
mean a Stockholder's inability to perform the material duties of the position
he or she holds with the Corporation and for which he or she is reasonably
fitted by training, education or experience, and from which condition recovery
is unlikely, in the written opinion addressed to the Corporation of one or
more practicing physicians licensed to practice medicine in the state in which
such Stockholder resides (other than a physician Stockholder or any physician
with whom he or she is professionally associated). For purposes of this
paragraph 1.9, The Total Permanent Disability of Wagaman shall be deemed to be
the Total Permanent Disability of D&B.
3
<PAGE>
ARTICLE II
TERM OF AGREEMENT
This Agreement and all restrictions on the Shares created hereby
shall commence on the date hereof and shall terminate without further action
on the fist occurrence of any of the following events:
2.1 Single Stockholder. A single Stockholder becoming the owner of
all of the outstanding Shares which are then subject to this Agreement.
2.2 Written Agreement. The execution by the Corporation and
Stockholders owning more than two-thirds of the outstanding Shares then
subject to this Agreement of a written instrument which terminates this
Agreement.
2.3 Dissolution. The liquidation and dissolution of the Corporation.
2.4 Temporal Limitation. At the close of business on July 31, 1998.
ARTICLE III
TRANSFER RESTRICTIONS
3.1 Restrictions on Transfer. No Stockholder shall Dispose Of any
Shares, except as expressly permitted by, and in compliance with, the terms
and previsions of this Agreement. Any other purported disposition shall be
void.
3.2 Permitted Transfer. Notwithstanding the provisions of Paragraph
3.1 above, any Stockholder may, at any time and from time to time, Dispose Of
any Shares (a) to the Corporation, (b) to any one or more of the other
Stockholders, and (c) to any other person with the prior written consent of
each of the other Stockholders; provided that the Shares subject to any such
disposition shall be and remain subject to all of the terms and provisions of
this Agreement and provided further that it shall be a condition to any such
disposition that concurrently therewith (i) the Corporation and each of the
other Stockholders shall be notified in writing of the number of shares
Disposed Of, the name and address of each transferee or donee thereof and the
date and manner of such disposition, and (ii) each transferee or donee who is
not a party to this Agreement shall become a party to this Agreement and agree
in writing to e bound by all the terms an provisions of this Agreement in the
same manner as the transferror or donor Stockholder was bound.
4
<PAGE>
ARTICLE IV
TERMINATION, TOTAL PERMANENT DISABILITY,
DIVORCE OR DEATH OF A Stockholder
4.1 Corporation Right of First Refusal. In the event of the
Termination, Total Permanent Disability or death of an Original Stockholder,
the Corporation shall have the first right and option, but not the obligation,
to purchase from the Original Stockholder, or from his or her guardian,
conservator or other legal representatives or from the estate of the deceased
Stockholder, as the case may be, and from his Permitted Transferees, all or a
portion of the Shares held by them at a price per Share equal to the Market
Value (but in any event no less than $.25 per share) as of the date of such
Termination. Total Permanent Disability or death and upon the other terms and
conditions set forth herein, with payment to be made in accordance with the
provisions of Article VII, provided the Corporation gives written notice to
such Stockholder and/or such legal representatives and Permitted Transferees
of its election to purchase such Shares within ninety (90) days after the date
of such Termination, Disability or death, which notice shall also specify the
number of Shares to be purchased by the Corporation. Upon exercise of such
right and option, the Corporation shall, subject to the provisions of Article
VI, become obligated to purchase, and such legal representatives and
Permitted Transferees shall become obligated to sell, the number of Shares
stated in the Corporation's notice. If the foregoing option is not exercised
within the time permitted for the exercise thereof, then said option shall
automatically expire and lapse.
4.2 Stockholder's Right to Purchase/Agreed or Market Value. If the
Corporation does not elect, as provided in Paragraph 4.1, to purchase all of
the Shares held by the legal representatives of the deceased, Terminated or
Disabled Stockholder and his Permitted Transferees, then each of the other
Stockholders shall have the second right and option, but not the obligation,
to purchase that portion of such Shares that the Corporation has not elected
to purchase at a price per Share equal to the value at which the Company had
such option and upon the other terms and conditions set forth herein, with
payment to be made in accordance with the provisions of Article VII. Such
second option by the other Stockholders shall be in the proportion that the
number of Shares owned by each bears to the total number of Shares owned by
all of the other Stockholders, with successive proration among those other
Stockholders desiring to exercise the second option, or in such different
proportions as the other Stockholders desiring to exercise the second option
may agree among themselves. Each Stockholder who elects to purchase Shares as
provided in this Paragraph 4.2 shall give written notice to such legal
representatives and/or permitted Transferees, as the case may be, of his
exercise of such second option within ninety (90) days after the expiration of
the ninety (90) day period referred to in Paragraph 4.1, which notice shall
also specify the number of Shares which such Stockholder giving the notice
elects to purchase. Upon exercise of such right and option, the Stockholders
exercising the same shall become obligated to sell, the number of Shares
stated in the Stockholder's notice. If the foregoing option is not exercised
within the time permitted for the exercise thereof, then said option shall
automatically expire and lapse.
5
<PAGE>
4.3 First Option of Spouse After Marital Dissolution/Agreed Value. In
the event that Wagaman or Freeland marry and such marriage is subsequently
dissolved, they shall notify the Corporation and the other Stockholders of
such dissolution within thirty (30) days following the entry of the order of
dissolution. Such Stockholder shall have the first right and option, but not
obligation, to purchase from his spouse all or a portion of the Shares held by
such spouse as her separate or community property, if any, at a price per
share equal to the Market Value on the date of he entry of the order of
dissolution, with payment to be made in accordance with the provisions of
Article VII, provided such Stockholder gives written notice to his spouse of
his election to purchase such Shards within ninety (90) days after the date of
entry of the decree of dissolution, which notice shall also specify the number
of Shares to be purchased by such Stockholder. Upon exercise of such right and
option, such Stockholder shall become obligated to purchase, and such spouse
shall become obligated to sell, the number of Shares stated in such
Stockholder's notice. If the foregoing option is not exercised within the time
permitted for the exercise thereof, then said option shall automatically
expire and lapse.
4.4 Second Option of Corporation After Marital Dissolution. If such
Stockholder does not elect, as provided in Paragraph 4.3, to purchase all of
the Shares held by his spouse, then the Corporation shall have the second
right and option, but not the obligation, to purchase that portion of such
Shares that such Stockholder has not elected to purchase at the price per
Share equal to the Market Value on the date of the entry of the dissolution
order and upon the other terms and conditions set forth herein, with payment
to be made in accordance with the provisions of Article VII, provided the
Corporation gives written notice to such spouse of its elections to purchase
such Shares within sixty (60) days after the expiration of the ninety (90) day
period referred to in Paragraph 4.3, which notice shall also specify the
number of Shares to be purchased by the Corporation. Upon exercise of such
right and option, the Corporation shall, subject to the provisions of Article
VI, become obligated to sell, the number of Shares stated in the Corporation's
notice. If the foregoing option is not exercised within the time permitted for
the exercise thereof, then said option shall automatically expire and lapse.
4.5 Third Option of Other Stockholders After Marital Dissolution. If the
Corporation does not elect, as provided in Paragraph 4.4, to purchase all of
the Shares that such Stockholder has not elected to purchase, then each of the
other Stockholders shall have the third right and option, but not the
obligation, to purchase that portion of such Shares that neither such
Stockholder nor the Corporation has elected to purchase, at the price per
Share equal to the Market Value on the date of the entry of the dissolution
order and upon the other terms and conditions set forth herein, with payment
to be made in accordance with the provisions of Article VII. Such third option
by the other Stockholders shall be in the proportion that the number of Shares
owned by each bears to the total number of Shares owned by all or he other
Stockholder, with successive proration among those other Stockholders desiring
to exercise the third option, or in such different proportions as the other
Stockholders desiring to exercise the third option may agree among themselves.
Each Stockholder who elects to purchase Shares as provided in this Paragraph
4.5 shall give written notice to such spouse of his exercise of such third
option within thirty (30) days after the expiration of the sixty (60) day
period referred to Paragraph 4.4,
6
<PAGE>
which notice shall also specify the number of Shares which such Stockholder
giving the notice elects to purchase. Upon exercise of such right and option,
the Stockholders exercising the same shall become obligated to purchase, and
such spouse shall become obligated to sell, the number of Shares stated in the
Stockholder's notice. If the foregoing option is not exercised within the time
permitted for the exercise thereof, then said option shall automatically
expire and lapse.
ARTICLE V
RIGHT OF FIRST REFUSAL
5.1 Corporation Right of First Refusal. If at any time after the date
hereof any Stockholder desires to Dispose Of any or all Shares held by him,
other than as permitted pursuant to Paragraph 3.2, such Stockholder (the
"Offering Stockholder") shall first be required to obtain a bona fide written
offer from a third party for the purchase for cash of all or such part of his
Shares. Such Stockholder shall then give a written notice (the "Notice") to
the Corporation and the other Stockholders (a) advising them that he or she
has obtained a bona fide offer in writing for the purchase of all or a
specified number of his Shares (the "Offered Shares"), which offer he or she
is ready and willing to accept, (b) stating the name and address of the
proposed purchaser and describing the principal occupation or business of the
proposed purchaser and (c) enclosing a true copy of the bona fide offer,
signed by the proposed purchaser, containing the price, terms and conditions
of the propose purchase, The Corporation shall have the first option, but not
the obligation, to purchase all or, subject to Paragraph 5.4, a portion of
the Offered Shares at the price and upon the terms and conditions as specified
in the bona fide offer enclosed with the Notice, provided the Corporation
gives written notice to the Offering Stockholder of its election to purchase
within thirty (30) days after the Corporation receives the Notice. The notice
from the Corporation shall specify the number of Offered Shares to be
purchased pursuant to the exercise of such option.
5.2 Stockholder's Right to Purchase. If the Corporation does not
elect, as provided in Paragraph 5.1, to purchase all of the Offered Shares,
then each of the other Stockholders shall have the second right and option,
but not the obligation, to purchase from the Offering Stockholder that part of
the Offered Shares that the Corporation has not elected to purchase at a price
and upon the same terms and conditions as specified in the boa fide offering
enclosed with the Notice. Such second option by the other Stockholders shall
be in the proportion that the number of Shares owned by all of the
non-offering Stockholders, with successive proration among those other
Stockholders desiring to exercise the second option, or in such different
proportions as the other Stockholders desiring to exercise the second option
may agree among themselves. Each Stockholder who elects to purchase Offered
Shares as provided in this Paragraph 5.2 shall give written notice of such
election to the Offering Stockholder and to the other Stockholders within
sixty (60) days after the receipt of the Notice by the Corporation. Each such
notice shall specify the number of Offered Shares which the Stockholder giving
the notice elects to purchase.
7
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5.3 Obligation to Sell. The Corporation and each Stockholder giving
such notice of election to purchase pursuant to Paragraph 5.1 or 5.2,
respectively, shall be obligated severally and not jointly to purchase from
the Offering Stockholder and the Offering Stockholder, provided the
Corporation, such other Stockholders, or a combination of the Corporation and
such other Stockholders elect to purchase all of the Offered Shares, shall be
obligated to sell to the Corporation, such other Stockholders, or the
Corporation and such other Stockholder, as the case may be , the number of
Offered Shares stated therein, at the price and upon the terms and conditions
determined pursuant to Paragraphs 5.1 and 5.2.
5.4 Permitted Transfer Upon Failure to Buy All Shares. If an Offering
Stockholder gives Notice as provided in Paragraph 5.1 and the Corporation and
the other Stockholders do not elect, pursuant to Paragraphs 5.1 and 5.2, to
purchase all of the Offered Shares, then the Offered Shares may be sold,
subject to any applicable securities laws, during the thirty (30) day period
following the expiration of the option period set forth above to the proposed
purchaser designated in the Offering Stockholder's Notice at a price no lower
than the price and on terms no more favorable to the proposed purchase than
those set forth in the Notice; provided, however, that (a) the shares subject
to any such sale shall be and remain subject to all of he terms and provisions
of this Agreement; and (b) the purchase thereof shall agree in writing to be
legally bound hereby in the same manner as the offering Stockholder was bound.
If, however, the Offering Stockholder does not complete such sale within said
thirty (30) day period, no such Shares shall thereafter be Disposed Of without
first being re-offered to the Corporation and the other Stockholders in
accordance with the foregoing provisions of this Article V.
5.5 No Pre-emptive Right. Notwithstanding any provision in this
Agreement to the contrary, this Agreement does not confer upon any Stockholder a
pre-emptive right to subscribe for or purchase Shares of the Corporation.
ARTICLE VI
LIMITATION ON PURCHASES BY CORPORATION
Notwithstanding any other provision of this Agreement, the
Corporation shall not have the obligation or right to purchase any Shares
except out of funds legally available therefor. If, at the time the
Corporation is obligated or desires to purchase any Shares pursuant to Articles
III, IV, or V, it shall have insufficient retained earnings or shall other
wise be unable to comply with applicable laws relating to the purchase by a
corporation of its own Shares, all Stockholders each hereby agree to vote
their Shares to take such corporate action, to the fullest extent permitted by
law, as shall be necessary to permit such purchase, including but not limited
to, such action as may be permitted by law to reduce the capital of the
Corporation or to revalue its assets so as to increase its surplus to the
extent necessary to permit the Corporation to purchase all or as many of the
Shares it is obligated or desires to purchase.
ARTICLE VII
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FALLBACK METHOD OF PAYMENT AND CLOSING
7.1 Applicability of Fallback Terms and Conditions. In the absence of
an agreement or agreements to the contrary which would suffice otherwise as an
amendment or amendments to this Agreement, the terms and conditions of any
Dispostiion of Shares shall be determined in accordance wit the provisions of
this Article VII.
7.2 Terms and Conditions. In the absence of an agreement to the
contrary in a form which would suffice otherwise suffice as an amendment to
this Agreement, the Corporation and each Stockholder, if any, purchasing
Shares pursuant to Articles IV or V ("Buyer") shall pay for such Shares as
follows:
7.2.1 Payment of Down Payment. On the Closing Date
(hereinafter defined in Paragraph 7.4), the seller of the Shares shall receive
in cash or by certified, bank or cashiers check(s) payable to the order of
such seller, an amount equal to the greater of (i) the Down Payment
(hereinafter defined in Subparagraph 7.2.4) or (ii) in the case of a purchase
by the Corporation under Paragraph 4.1 such seller's "proportionate share" of
the total death benefits, if any, paid or payable to the Corporation under all
life insurance policies covering the life of the deceased Stockholder of which
the Corporation was or is the owner and beneficiary, provided that the amount
payable to such seller by the Corporation shall not exceed the purchase price
of the Shares being sold by such seller to the Corporation. The term
"proportionate share" shall mean an amount equal to that proportion of the
total death benefits paid or payable as aforesaid which the number of Shares
being sold by such seller to the Corporation bears to the total number of
Shares owned by the deceased Stockholder and his or her Permitted Transferees
at the time of his or her death.
7.2.2 Payment of Remainder of Purchase Price. On the Closing
Date, the Buyer shall deliver to the seller of the Shares a negotiable
promissory note payable to the order of such seller in the principal amount
equal to the balance, if any, of the purchase price for the Shares being sold
by such seller to the Buyer. Each such promissory note (hereinafter called a
"Note") shall (i) be dated as of the Closing Date, (ii) bear interest at the
rate per annum of, and which shall vary with, the prime lending rate then
offered by Bank of America from the Closing Date, (iii) be payable in
consecutive monthly installments of principal and interest so as to fully
amortize the Note over the Term (hereinafter defined in Subparagraph 7.2.4),
(iv) be prepayable at the option of the Buyer, at any time in whole or from
time to time in part, without penalty or premium, (v) contain an acceleration
clause permitting the holder to declare the remaining balance due and payable
in the event of default in the payment of any installment of principal or
interest for more than five (5) days after the same is due and (vi) contain a
provision for the payment of attorneys' fee in the event the holder refers the
note to an attorney for collection, whether or not suit is brought thereon,
and (vii) be secured by a pledge of the Shares sold.
7.2.3 Effect of Third Party Offer. In the case of a purchase
under Article V at the price and upon the terms offered by a third party, the
price and terms of payment shall be governed by the third party offer.
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7.2.4 Down Payment/Term/Effective Evaluation. For purposes
of Paragraph 7.2, the initial payment (the "Down Payment") to be made to the
selling Stockholder and the term (the "Term") over which the remainder of the
purchase price shall be paid are dependent upon the "Effective Valuation",
which shall b equal to the purchase price per Shares to the selling
Stockholder multiplied by the total number of issued and outstanding Shares as
follows:
a. If the Effective Valuation is more than One Million
Dollars ($1,000,000.00), the Down Payment shall be fifty percent (50%) of the
total purchase price and the Term shall be three (3) years.
b. If the Effective Valuation is more than One Million
Dollars ($1,000,000.00) and less than or equal to Two Million Dollars
($2,000,000.00), the Down Payment hall be forty percent (40%) of the total
purchase price and the Term shall be four (4) years.
c. If the Effective Valuation is more than Two Million
Dollars ($2,000,000.00) and less than or equal to Five Million Dollars
($5,000,000.00), the Down Payment shall be thirty percent (30%) of the total
purchase price and the Term shall be five (5) years.
d. If the Effective Valuation is more than Five Million
Dollars ($5,000,000.00) and less than or equal to Ten Million Dollars
($10,000,000.00), the Down Payment shall be twenty percent (20%) of the total
purchase percent price and the Term shall be five (5) years.
e. If the Effective Valuation is more than Ten Million
Dollars ($10,000,000.00), the Down Payment shall be ten percent (10%) of the
total purchase price and the Term shall be six (6) years.
7.3 Corporation Right of Offset. Notwithstanding any other
provision of this Agreement, the Corporation may offset from the purchase
price paid by it for any Shares under this Agreement the liquidated portion of
any amount owed to the Corporation by the selling Stockholder whose Shares are
being purchased by the Corporation.
7.4 Time and Place of Closing. The closing of any purchase
and sale of Shares pursuant to this Agreement (the "Closing") shall take place
at 10:00 am, local time, on the forty-fifth (45th) business day after the date
of giving written notice of election under Article IV or V, at the principal
office of the Corporation, or at such different time , date or place as the
parties to such purchase and sale agree in writing. The day of any such
Closing is herein called the "Closing Date".
7.5 Closing Documents. At any Closing under this Agreement,
the following instruments and documents shall be executed and delivered:
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7.51 Selling Stockholder Delivery. The selling Stockholder
shall deliver to the Buyer the stock certificates representing the Shares
being purchased and sold, free and clear of any and all security interests,
liens, pledges, adverse claims, shareholders' agreements, voting trusts,
preemptive rights and other encumbrances, other than those created by this
Agreement, and duly endorsed for transfer to the Buyer or accompanied by stock
powers duly endorsed for transfer tax stamps, if required, affixed thereto or
payment therefor provided for.
7.52 Buyer's Payment. The Buyer shall make payment for the
Shares purchased and sold pursuant to Paragraph 7.2.
7.53 Resignation of Selling Officer or Director. Any selling
Stockholder who shall be an officer and/or a director of the Corporation
shall, unless he or she will remain a Stockholder of he Corporation, deliver
to the Corporation his or her written resignation as such officer and/or
director effective on the Closing Date.
7.54 Other Documents. Any and all other documents and
instruments which may be reasonably required by any party to such purchase and
sale in order to carry out the intent and purposes of this Agreement.
ARTICLE VIII
OPERATIONS; PROXY
8.1 Ratification: Rights of First Refusal. The Stockholders shall
cause the Corporation to complete the formalities necessary to ratify the acts
undertaken for and on behalf of the Corporation in furtherance of the plans set
forth in the Recitals and shall thereafter pursue in good faith the objectives
set forth therein. The Corporation shall have the right of first review for
the period of 72 hours and the right for a period of 72 hours to enter into a
contract to purchase and close a contract to purchase any portfolio of loans
of which any of the Stockholders or Wagaman become aware during the term of
this Agreement.
8.2 Directors. The Stockholders shall vote their Shares to elect the
following as directors of the Corporation:
Barry Lotz
C. Douglas Freeland
Robert L. Wagaman
In the event that holders of the Corporation's stock other than parties to
this Agreement vote at any election of directors, the Stockholders agree to
vote their shares so that Lotz is elected a director in preference to Freeland
and Freeland is elected a director in preference to Wagaman.
Officers. Provided any two of the directors specified in Paragraph
8.2 are elected, the following persons shall be appointed to the offices
indicated:
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Barry Lotz President and Chief Executive
Officer
C. Douglas Freeland Vice President-Acquisition
Robert L. Wagaman Vice President-Operations
The Chief Financial Office and Secretary of the Corporation shall be elected
from nominees proposed by Lotz. This Paragraph 8.3 shall not be construed to
restrict the right of the Corporation to terminate any officer or employee for
cause nor to require the election of a person who has terminated his or her
employment with the Corporation voluntarily or who is Totally Permanently
Disabled.
8.4 Corporate Actions. Notwithstanding any provisions of the Bylaws
to the contrary, the following actions shall require the written consent of
the holders of not less than seventy-five percent of the issued and
outstanding Shares of the Corporation subject to this Agreement.
a. Amendment of the Certificate of Incorporation or Bylaws
of the Corporation;
b. Approval of a merger of the Corporation or sale of
substantially all of the assets of the Corporation in a single transaction or
related series of transactions;
c. Entry into an agreement with an entity, other than ARAF
or Asset Retrieval Management Services, Inc, affiliated with, or controlled by
one of the Stockholders or, regardless of the size of the transaction, entry
into an agreement with such an entity if the consideration to be transferred
by the Corporation is greater than that which would pass in an arms-length
transaction of a similar type with an unrelated third party;
d. Amendment to this Agreement;
e. Voluntary dissolution of the Corporation.
8.5 Banking. All checks written on accounts of the Corporation shall
require the signature of Lotz and either Wagaman or Freeland or their
delegates, except that Lotz may make disbursement on his signature alone for
individual amounts of less than Two Thousand Five Hundred Dollars ($2,500) to
payees other than to himself. Wagaman and Freeland agree to sign checks for
Lotz's monthly management fee within 24 hours of presentment and to sign other
checks in a timely manner.
8.6 Commitments of Founding Individuals. Both Freeland and Wagaman
individually agree to provide the following to the Corporation without further
consideration without approval of all parties to this Agreement other than
reimbursement for reasonable out of pocket costs and agree further that failure
so to provide such services shall be a material breach of this Agreement
sufficient for Termination:
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a. Make available to the Corporation databases of
purchasers and sellers of portfolios which are available to them;
b. Make reasonable efforts to identify and make available
for consideration by the Corporation portfolios of receivables which have
characteristics within those established by the Corporation as acceptable to it;
c. Be personally available to meet with investors and
market makers and to attend seminars and trade shows relevant to the business of
the Corporation.
d. Provide timely evaluations of portfolios available
for acquisition as and when appropriate;
e. Provide or assist the Corporation in obtaining and
setting the guidelines, policies and procedures which comprise programs for
the acquisition, disposition and collection of receivables similar to those
employed by the Credit Store; and
f. Establish a credit card reissuance and balance transfer
program in cooperation with Access America of Florida or other comparable
organization in the business of issuing credit cards within 60 days of this
Agreement.
8.7 Directors and Officers Insurance. The Corporation will seek a
policy of directors' and officers' liability insurance and errors and
omissions insurance providing for liability coverage of not less than
$1,000,000 and purchase such coverage if it can be obtained at a reasonable
premium.
ARTICLE IX
SHARE CERTIFICATES
9.1 Restrictive Legends. The parties each agree to cause a legend, in
the form set forth below, to be conspicuously noted on the face of all
certificates (or on the reverse thereof with a conspicuous reference thereto
on the face) representing Shares presently owned by them or which may
hereafter be issued to them during the term of this Agreement:
TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
CERTAIN RESTRICTIONS AND CONDITIONS SPECIFIED IN AN AGREEMENT ENTERED
INTO BY THE CORPORATION AND ITS STOCKHOLDERS, DATED AS OF JULY 31,
1997, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
CORPORATION.
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9.2 Restrictions on Issuance of New Certificates. The parties shall
not permit the issuance of any Shares to any Stockholder, or to any of their
respective transferees, unless the foregoing legends, as applicable, shall be
conspicuously noted as aforesaid, and shall not permit the transfer on the
Corporation's records of any such Shares, except upon presentation to the
Corporation of satisfactory proof of compliance with the provisions of this
Agreement.
9.3 Copy of Agreement. A copy of this Agreement shall at all times be
kept in the principal office of the Corporation.
ARTICLE X
MISCELLANEOUS
10.1 Duty of Loyalty and Good Faith; Cooperation. The Stockholders
and Wagaman duty of loyalty to this Corporation in all matters affecting this
Corporation's interest and are obligated to act in good faith in dealing with
the Corporation and each other. The parties shall each execute and deliver or
cause to be executed and delivered such further instruments and documents and
shall take such other action as may be reasonably required to more effectively
carry out the intent and purposes of this Agreement and the objectives of the
Corporation as set forth in the Recitals. Notwithstanding any other provisions
of this Agreement or of the Operating Agreement for ARAF, any opportunity to
acquire a portfolio of distressed loans or credit card receivables of which
any of the parties or Wagaman becomes aware shall be presented first to the
Corporation.
10.2 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Corporation and its successors and the Stockholders and
their respective transferees, estates, heirs, distributees, successors in
interest, assigns and legal representatives. The Stockholders, by executing
this Agreement, direct their legal representatives to open their estates
promptly in the courts of proper jurisdiction and to execute, procure and
deliver all documents, including but not limited to, appropriate court orders,
letters testamentary or letters of administration and estate and inheritance
tax waivers, as may be required to carry out the provisions of this Agreement.
10.3 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof, and
there are no terms other than contained herein. This Agreement cannot be
changed or terminated orally.
10.4 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware.
10.5 Severability. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules, and regulations. If any provision of this Agreement or the
application thereof to any person or circumstance shall, for any reason and to
any extent, be invalid or unenforceable, the remainder of the Agreement and
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the application of such provisions to other persons or circumstances shall not
be affected thereby, but rather shall be enforced to the greatest extent
permitted by law.
10.6 Equitable Remedies. Notwithstanding any other provision of this
Agreement, the parties agree that the Shares cannot be readily purchased, sold
or evaluated in the open market, that they have a unique and special value and
that the Stockholders would be irreparably damaged if the provisions of this
Agreement were not capable of being specifically enforced. Accordingly, the
parties agree that the provisions of this Agreement shall be specifically
enforceable, that any disposition of Shares in violation of any provision of
this Agreement may be enjoined or restrained and that such equitable relief
shall not in any way limit or deny any other remedy which the Corporation or
the Stockholders may have under this Agreement or at law.
10.7 Notices. All notices, offers, statements and other
communications provided for by this Agreement shall be in writing and shall be
deemed to have been given when personally delivered to the party to which
notice is given or upon receipt after mailing, postage prepaid, by registered
or certified mail, return receipt requested, addressed to the party to which
notice is given at its, his or her address written below or at its, his or her
address set forth in a notice given by such party in accordance with the
provisions hereof. Any notice required or permitted to be given, pursuant to
the provisions of the Act, the Certificate of Incorporation of the
Corporation or this Agreement, shall be effective as of the date personally
delivered, or if sent by mail, on the date deposited with United States Postal
Service, prepaid and addressed to the intended receiver at his last known
address as shown in the records of the Corporation.
10.8 Waiver. No waiver of any breach of any provision or condition of
this Agreement to be performed by any party hereto shall be deemed a waiver of
a breach of a similar or dissimilar provision or condition at the same time or
any prior or subsequent time or of the provisions or condition itself.
10.9 Interpretation. Whenever the context so indicates, the use
herein of (a) words in the singular number include the plural, and in the
plural include the singular, and (b) words of any gender, masculine, feminine,
or neuter, shall include all genders.
10.10 Attorney's Fees. In the event of any litigated controversy,
claim or dispute between or among any of the parties hereto arising out of or
relating to this Agreement or the breach thereof, the prevailing party or
parties shall be entitled to recover from the losing party or parties
reasonable expenses, attorneys' fees and costs.
10.11 Legal Counsel. Each Stockholder hereto acknowledges that he has
had an opportunity to seek and consult with independent legal and investment
counsel with respect to legal and investment consequences to him or her
arising from or connected with this Agreement and has freely and voluntarily
entered into this Agreement with knowledge of the legal consequences of such
action, including substantial restrictions on the transfer and marketability
of his interest in the Corporation, which in many instances lowers the value
of a Stockholder's interest. The parties to this Agreement further acknowledge
that this Agreement has been
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reviewed by Hand & Hand, a law corporation, an attorney (the "Law Firm"), on
behalf of the Corporation. There is an inherent potential for conflicts of
interest among the parties to this Agreement because this Agreement
establishes the rights and obligations of each of the parties to this
Agreement. Due to such potential conflicts of interest, the Law Firm has
advised and hereby advised each of the parties that it would be in their
interest to obtain the services of their own independent legal counsel to
review this document. Notwithstanding the fact that the Law Firm has prepared
this Agreement and has provided legal advice to Lotz in preparation of this
Agreement and in related matters, the parties hereby waive as evidenced by the
execution of this Agreement any potential conflicts of interest that may arise
as a result of the above actions by the Law Firm.
10.12 Headings. The descriptive headings of the several sections or
paragraphs of this Agreement are inserted for the convenience of reference
only and do not define, describe or limit the scope or intent of this
Agreement or any of the terms hereof. The headings in ths Agreement are
inserted for convenience of reference only and are not to be used in
construing or interpreting any of the previsions of this Agreement.
10.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but all of which, together, shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
to be effective on the day and year first above written.
CORPORATION: ANGUS CORPORATION
a Delaware corporation
Dated: July 31, 1997 By: /s/ Barry Lotz
----------------------
Barry Lotz, President
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CONTINUATION OF SIGNATURES TO STOCKHOLDER AGREEMENT OF ANGUS CORPORATION WITH
IT'S ORIGINAL STOCKHOLDERS
STOCKHOLDERS:
Dated: July 31, 1997 /s/ Barry Lotz
---------------------------------------
BARRY LOTZ, Individually and as Trustee
Dated: July 31, 1997 /s/ C. Douglas Freeland
---------------------------------------
C. DOUGLAS FREELAND
Dated: July 31, 1997 D & B ASSET MANAGEMENT
a General Partnership
Dated: July 31, 1997 By: /s/ Robert L. Wagaman
------------------------------
Robert L. Wagaman
Managing Partner
Dated: July 31, 1997 /s/ Robert L. Wagaman
---------------------------------------
ROBERT L. WAGAMAN
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Exhibit 3.1 1992216
ENDORSED
FILED
ARTICLES OF INCORPORATION IN THE OFFICE OF THE
OF SECRETARY OF STATE OF
THE STATE OF CALIFORNIA
ASSET RETRIEVAL SERVICES, INC. OCT. 24, 1996
/S/ BILL JONES
----------------------
BILL JONES, SECRETARY
I OF STATE
NAME
The name of this corporation is Asset Retrieval Services, Inc.
II
PURPOSE
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust
company business, or the practice of a profession permitted to be incorporated
under the California Corporations Code.
III
AGENT FOR SERVICE
The name and address in the State of California of this corporation's
initial agent for service of process are: William D. Evers, 155 Montgomery
Street, Suite 1212, San Francisco, California 94104.
IV
AUTHORIZED SHARES
(a) This corporation is authorized to issue two classes of shares
designated respectively as "Common Stock" and "Preferred Stock". This
corporation is authorized to issue ten million shares of Common Stock and ten
million shares of Preferred Stock.
(b) The Preferred Stock may be divided into such number of series as
the board of directors may determine. The board of directors is authorized to
determine and alter the rights, preferences, privileges, and restrictions
granted to or imposed upon any wholly unissued series of Preferred Stock, and
to fix the number of shares and the designation of any series of Preferred
Stock. The board of directors may, within the limits stated in any resolution
or resolutions of the board of directors originally fixing the number of
shares constituting any series, increase or decrease
ARTICLE OF INCORPORATION
Asset Retrieval Services, Inc.
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(but not below the number of shares of such series then outstanding) the number
of shares of any series subsequent to the issue of shares of that series.
V
INDEMNIFICATION
(a) Directors. The liability of the directors of this corporation for
monetary damages shall be eliminated to the fullest extent permissible under
California law.
(b) Agents. This corporation is authorized to provide indemnification
of agents (as defined in Section 317 of the California Corporations Code) for
breach of duty to the corporation and its stockholders through bylaw
provisions, agreements with agents, vote of shareholders or disinterested
directors, or otherwise, in excess of the indemnification otherwise permitted
by Section 317 of the California Corporations Code, subject only to the
applicable limits set forth in Section 204 of the California Corporations Code
with respect to actions for breach of duty to the corporation and its
shareholders.
Date: October 23, 1996 /s/ William D. Evers
---------------- ----------------------------------
William D. Evers, Incorporator
ARTICLE OF INCORPORATION
Asset Retrieval Services, Inc.
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BYLAWS FOR THE REGULATION, EXCEPT AS
OTHERWISE PROVIDED BY STATUTE OR ITS
CERTIFICATE OF INCORPORATION, OF
ASSET RETRIEVAL SERVICES, INC.
a Delaware corporation
ARTICLE I
OFFICES
Section 1. Principal Executive Office. The principal executive office
of the corporation shall be located as directed by the board of directors.
Section 2. Other Offices. Other business offices may at any time be
established by the board of directors at any place or places by them or where
the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of stockholders shall be
held at the principal executive office of the corporation, or at any other
place within or without the State of Delaware which may be designated either
by the board of directors or by the written consent of all persons entitled to
vote thereat and not present at the meeting, given either before or after the
meeting and filed with the secretary of the corporation.
Section 2. Annual Meetings. The annual meetings of stockholders shall
be fixed by the board of directors. At such meetings directors shall be
elected, reports of the affairs of the corporation shall be considered, and
any other business may be transacted which is within the powers of the
stockholders.
Section 3. Special Meetings. Special meetings of the stockholders,
for the purpose of taking any action permitted by the stockholders under the
Delaware General Corporation Law and the certificate of incorporation of the
corporation, may be called at any time by the chairman of the board or the
president, or by the board of directors, or by one or more holders of shares
entitled to cast in the aggregate not less than twenty percent (20%) of the
votes at the meeting. Upon request in writing that a special meeting of
stockholders be called for any proper purpose, directed to the chairman of the
board, president, vice president or secretary by any person (other than the
board of directors) entitled to call a special meeting of stockholders, the
officer forthwith shall cause notice to be given to stockholders entitled to
vote that a meeting will be held at a time requested by the person or persons
calling the meeting, not less than thirty-five (35) nor more than sixty (60)
days after receipt of the request.
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Section 4. Notice of Annual or Special Meeting. Written notice of
each annual or special meeting of stockholders shall be given not less than
ten (10) nor more than sixty (60) days before the date of the meeting to each
stockholder entitled to vote thereat. Such written notice shall be given
either personally or by mail or other means of written communication, charges
prepaid, addressed to such stockholder at his address appearing on the books
of the corporation or given by him to the corporation for the purpose of
notice. If any notice or report addressed to the stockholder at the address of
such stockholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service as unable to deliver the
notice or report to the stockholder at such address, all future notices or
reports shall be deemed to have been duly given without further mailing if the
same shall be available for the stockholder upon written demand of the
stockholder at the principal executive office of the corporation for a period
of one (1) year from the date of the giving of the notice or report to all
other stockholders. If a stockholder gives no address, notice shall be deemed
to have been given him if sent by mail or other means of written communication
addressed to the place where the principal executive office of the corporation
is situated, or if published at least once in some newspaper of general
circulation in the county in which said principal executive office is located.
Any such notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by other means of
written communication. An affidavit of mailing of any such notice in
accordance with the foregoing provisions, executed by the secretary, assistant
secretary or any transfer agent of the corporation, shall be prima facie
evidence of the giving of the notice.
Section 5. Quorum. The presence in person or by proxy of the holders
of a majority of the shares entitled to vote at any meeting shall constitute a
quorum for the transaction of business at any meeting of stockholders. The
stockholders present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum, if any action
taken (other than adjournment) is approved by at least a majority of the
shares required to constitute a quorum.
Section 6. Adjourned Meeting and Notice Thereof. Any stockholders'
meeting, annual or special, whether or not a quorum is present, may be
adjourned from time to time by the vote of a majority of the shares, the
holders of which are either present in person or represented by proxy thereat,
but in the absence of a quorum at the commencement of the meeting, no other
business may be transacted at such meeting.
When any stockholders' meeting, either annual or special, is
adjourned for thirty (30) days or more, or if after adjournment a new record
date is fixed for the adjourned meeting, notice of the adjourned meeting shall
be given as in the case of an original meeting. Except as provided above, it
shall not be necessary to give any notice of the time and place of the
adjourned meeting or of the business to be transacted thereat, other than by
announcement of the time and place thereof at the meeting at which such
adjournment is taken.
Section 7. Voting. The stockholders entitled to vote at any meeting
of stockholders shall
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be determined in accordance with the Delaware General Corporation Law
(relating to voting of shares held by a fiduciary, in the name of a
corporation, or in joint ownership). The stockholders may vote by voice vote
or by ballot; provided, however, that all elections for director shall be by
ballot. If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on any matter shall be
the act of the stockholders, unless the vote of a greater number of voting by
classes is required by the Delaware General Corporation Law or the certificate
of incorporation.
Section 8. Validation of Defectively Called or Noticed Meeting. The
transactions of any meeting of stockholders, either annual or special, however
called and noticed, shall be as valid as though had at a meeting duly held
after regular call and notice, if a quorum be present either in person or by
proxy, and if, either before or after the meeting, each of the persons
entitled to vote, not present in person or by proxy, or who, though present,
has, at the beginning of the meeting, properly objected to the transaction of
any business because the meeting was not lawfully called or convened, or to
particular matters of business legally required to be included in the notice,
but not so included, signs a written waiver of notice, or a consent to the
holding of such meeting, or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or
made a part of the minutes of the meeting. Neither the business to be
transacted at nor the purpose of any regular or special meeting of
stockholders need be specified in any written waiver of notice or consent,
except that if action is taken or proposed to be taken for approval of any of
those matters specified in paragraph (e) of Section 4 above, the waiver of
notice or consent shall state the general nature of the proposal.
Section 9. Action Without Meeting. Directors may be elected without a
meeting by a consent in writing, setting forth the action so taken, signed by
all of the persons who would be entitled to vote for the election of
directors, provided that, without prior notice except as hereinafter set
forth, a director may be elected at any time to fill a vacancy not filled by
the directors by the written consent of persons holding a majority of the
outstanding shares entitled to vote for the election of directors.
Any other action which, under any provision of the Delaware General
Corporation Law, may be taken at a meeting of the stockholders, may be taken
without a meeting, and without prior notice except as hereinafter set forth,
if a consent in writing, setting forth the action so taken, is signed by the
holders of outstanding shares having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted, unless the
consents of all stockholders entitled to vote have been solicited in writing.
Unless, as provided in Section 12 of this Article II, the board of
directors has fixed a record date for the determination of stockholders
entitled to notice of and to give such written consent, the record date for
such determination shall be the day on which the first written consent is
given. All such written consents shall be filed with the secretary of the
corporation.
Any stockholder giving a written consent, or the stockholder's proxy
holders, or a transferee
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of the shares or a personal representative of the stockholder or their
respective proxy holders, may revoke the consent by a writing received by the
corporation prior to the time that written consents of the number of shares
required to authorize the proposed action have been filed with the secretary
of the corporation, but may not do so thereafter. Such revocation is effective
upon its receipt by the secretary of the corporation.
Section 10. Proxies. Every person entitled to vote or execute
consents shall have the right to do so either in person or by one or more
agents authorized by a written proxy executed by such person or his duly
authorized agent and filed with the secretary of the corporation. Subject to
the Delaware General Corporation Law in the case of any proxy which states
that it is irrevocable, any proxy duly executed shall continue in full force
and effect until (i) an instrument revoking it or a duly executed proxy
bearing a later date is filed with the secretary of the corporation prior to
the vote pursuant thereto, (ii) the person executing the proxy attends the
meeting and votes in person, or (iii) written notice of the death or
incapacity of the maker of such proxy is received by the corporation before
the vote pursuant thereto is counted; provided that no such proxy shall be
valid after the expiration of three (3) years from the date of its execution,
unless otherwise provided for in the proxy. The dates contained on the forms of
proxy shall presumptively determine the order of execution of the proxies,
regardless of the postmark dates on the envelopes in which they are mailed.
Without limiting the manner in which a stockholder may authorize
another person or persons to act for him as proxy, the following shall
constitute a valid means by which a stockholder may grant such authority.
(a) A stockholder may execute a writing authorizing another
person or persons to act for him as proxy. Execution may be
accomplished by the stockholder or his authorized officer,
director, employee or agent signing such writing or causing
his or her signature to be affixed to such writing by any
reasonable means including, but not limited to, by facsimile
signature.
(b) A stockholder may authorize another person or persons to act
for him as proxy by transmitting or authorizing the
transmission of a telegram, cablegram, or other means of
electronic transmission to the person who will be the holder
of the proxy or to a proxy solicitation firm, proxy support
service organization or like agent duly authorized by the
person who will be the holder of the proxy to receive such
transmission, provided that any such telegram, cablegram or
other means of electronic transmission must either set forth
or be submitted with information from which it can be
determined that the telegram, cablegram or other electronic
transmission was authorized by the stockholder. If it is
determined that such telegrams, cablegrams or other
electronic transmissions are valid, the inspectors or, if
there are no inspectors, such other persons making that
determination shall specify the information upon which they
relied.
(c) Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission described in
Paragraphs (a) or (b) may be substituted or used in lieu
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of the original writing or transmission for any and all
purposes for which the original writing or transmission
could be used, provided that such copy, facsimile
telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission.
Section 11. Inspectors of Election. In advance of any meeting of
stockholders, the board of directors may appoint any person or persons other
than nominees for office as inspectors of election to act at such meeting or
any adjournment thereof. If inspectors of election be not so appointed, the
chairman of any such meeting may, and on the request of any stockholder or his
proxy shall, make such appointment at the meeting. The number of inspectors
shall be either one (1) or three (3). If appointed at a meeting on the request
of one or more stockholders or proxies, the majority of shares represented in
person or by proxy shall determine whether one (1) or three (3) inspectors are
to be appointed. In case any person appointed as inspector fails to appear or
fails or refuses to act, the vacancy may, and on the request of any
stockholder or a stockholder's proxy shall, be filled by appointment by the
board of directors in advance of the meeting, or at the meeting by the
chairman of the meeting.
The duties of such inspectors shall be as prescribed by the Delaware
General Corporation Law and shall include: determining the number of shares
outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, the authenticity, validity and effect of
proxies; receiving votes, ballots or consents; hearing and determining all
challenges and questions in any way arising in connection with the right to
vote; counting and tabulating all votes or consents; determining when the
polls shall close; determining the result; and such acts as may be proper to
conduct the election or vote with fairness to all stockholders.
The inspectors of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as is practical.
If there are three (3) inspectors of election, the decision, act or
certificate of a majority is effective in all respects as the decision, act or
certificate of all. Any report or certificate made by the inspectors of
election is prima facie evidence of the facts stated therein.
Section 12. Record Date for Stockholder Notice, Voting and Giving
Consents. For purposes of determining the stockholders entitled to notice of
any meeting or to vote or entitled to give consent to corporate action without
a meeting, the board of directors may fix, in advance, a record date, which
shall not be more than sixty (60) days nor less than ten (10) days before the
date of any such meeting nor more than sixty (60) days before any such action
without a meeting, and in this event only stockholders of record on the date
so fixed are entitled to notice and to vote or to give consents, as the case
may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date, except as otherwise provided in the
Delaware General Corporation Law.
If the board of directors does not so fix a record date:
(a) The record date for determining stockholders entitled to
notice of or to vote at a
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meeting of stockholders shall be at the close of business on
the business day next preceding the day on which notice is
given, or if notice is waived, at the close of business on
the business day next preceding the day on which the meeting
is held.
(b) The record date for determining stockholders entitled to
give consent to corporate action in writing without a
meeting, (i) when no prior action by the board has been
taken, shall be the day on which the first written consent
is given, or (ii) when prior action of the board is required
by the Delaware General Corporation Law, shall be at the
close of business on the day on which the board adopts the
resolution relating to that action, or the sixtieth (60th)
day before the date of such other action, whichever is
later.
ARTICLE III
DIRECTORS
Section 1. Powers. Subject to the provisions of the Delaware General
Corporation Law, and to any limitations in the certificate of incorporation
and these bylaws, relating to action required to be approved by the
stockholders or approved by the outstanding shares, all corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be managed by, the board of directors. Without prejudice to
such general powers, but subject to the same limitations, it is hereby
expressly declared that the board of directors shall have the following
powers, to wit:
(a) To select and remove all the officers, agents and employees
of the corporation, prescribe such powers and duties for
them as may not be inconsistent with law, with the
certificate of incorporation or with these bylaws, fix their
compensation and require from them security for faithful
service.
(b) To conduct, manage and control the affairs and business of
the corporation, and to make such rules and regulations
therefor not inconsistent with law, or with the certificate
of incorporation or with these bylaws, as they may deem
best.
(c) To change the principal executive office and principal
office for the transaction of the corporation from one
location to another; to fix and locate from time to time one
or more subsidiary offices of the corporation within or
without the State of Delaware; to designate any place within
or without the State of Delaware for the holding of any
stockholders' meeting or meetings; and to adopt, make and
use a corporate seal, and to prescribe the forms of
certificates of stock, and to alter the form of such seal
and of such certificates from time to time, as in their
judgment they may deem best, provided such seal and such
certificates shall at all times comply with the provisions
of law.
(d) To authorize the issuance of shares of stock of the
corporation from time to time,
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upon such terms as may be lawful.
(e) To borrow money and incur indebtedness for the purposes of
the corporation, and to cause to be executed and delivered
therefor, in the corporate name, promissory notes, bonds,
debentures, deeds of trust, mortgages, pledges,
hypothecations or other evidences of debt and securities
therefor.
Section 2. Number and Qualification of Directors. The authorized
number of directors shall be no less than one, and shall be such maximum
number of persons as may be determined from time to time by resolutions of the
board of directors.
Section 3. Election and Term of Office. The directors shall be
elected at each annual meeting of stockholders but, if any such annual meeting
is not held or the directors are not elected thereat, the directors may be
elected at any special meeting of stockholders held for that purpose. All
directors shall hold office until their respective successors are elected and
qualified, subject to the Delaware General Corporation Law and the provisions
of these bylaws with respect to vacancies on the board of directors.
Section 4. Vacancies. A vacancy in the board of directors shall be
deemed to exist in case of the death, resignation or removal of any director,
or if the board of directors by resolution declares vacant the office of a
director who has been declared of unsound mind by order of court or convicted
of a felony, or if the authorized number of directors be increased, or if the
stockholders fail, at any annual or special meeting of stockholders at which
any director or directors are elected, to elect the full authorized number of
directors to be voted for at that meeting.
Vacancies in the board of directors, except for a vacancy created by
the removal of a director, may be filled by a majority of the remaining
directors, though less than a quorum, or by a sole remaining director, and
each director so elected shall hold office until his successor is elected at
an annual or a special meeting of the stockholders. A vacancy in the board of
directors created by the removal of a director may only be filled by the vote
of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of the holders
of a majority of the outstanding shares entitled to vote.
The stockholders may elect a director or directors at any time to
fill any vacancy or vacancies not filled by the directors. Any such election
by written consent shall require the consent of holders of a majority of the
outstanding shares entitled to vote.
Any director may resign effective upon giving written notice to the
chairman of the board, the chief executive officer, the president, the
secretary or the board of directors of the corporation, unless the notice
specifies a later time for the effectiveness of such resignation. If the board
of directors accepts the resignation of a director tendered to take effect at
a future time, the board of directors or the stockholders shall have power to
elect a successor or take office when the resignation is to become effective.
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No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
Section 5. Place of Meeting. Regular meetings of the board of
directors shall be held at any place within or without the State of Delaware
which has been designated from time to time by resolution by the board or by
written consent of all members of the board of directors. In the absence of
such designation, regular meetings shall be held at the principal executive
office of the corporation. Special meetings of the board may be held either at
a place so designated or at the principal executiv office.
Section 6. Annual Meeting. Immediately following each annual meeting
of stockholders, the board of directors shall hold a regular meeting at the
place of said annual meeting or at such other place as shall be fixed by the
board of directors, for the purpose of organization, election of officers, and
the transaction of other business. Call and notice of such meetings are hereby
dispensed with.
Section 7. Other Regular Meetings. Other regular meetings of the
board of directors shall be held without call on the date and at the time
which the board of directors may from time to time designate; provided,
however, that should the day so designated fall upon a Saturday, Sunday or
legal holiday observed by the corporation at its principal executive office,
then said meeting shall be held at the same time on the next day thereafter
ensuing which is a full business day. Notice of all such regular meetings of
the board of directors is hereby dispensed with.
Section 8. Special Meetings. Special meetings of the board of
directors for any purpose or purposes shall be called at any time by the
chairman of the board, the president, any vice president, the secretary or by
any director.
Special meetings of the board of directors shall be held upon four
(4) days' written notice or forty-eight (48) hours' notice given personally or
by telephone, telegraph, telex or other similar means of communication. Any
such notice shall be addressed or delivered to each director at such
director's address as it is shown upon the records of the corporation or as
may have been given to the corporation by the director for purposes of notice
or, if such address is not shown on such records or is not readily
ascertainable, at the place in which the meetings of the directors are
regularly held.
Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mail, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means, to the recipient. Oral notice shall be deemed to have been
given at the time it is communicated to the recipient or to a person at the
office of the recipient who the person giving the notice has reason to believe
will promptly communicate it to the recipient.
Any notice shall state the date, place and hour of the meeting.
Notice given to a director in accordance with this section shall constitute
due, legal and personal notice to such director.
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Section 9. Action at a Meeting: Quorum and Required Vote. The
presence of a majority of the authorized number of directors at a meeting of
the board of directors constitutes a quorum for the transaction of business,
except as hereinafter provided. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the board of directors, unless a
greater number, or the same number, after disqualifying one or more directors
from voting, is required by law, by the certificate of incorporation or by
these bylaws. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, provided that
any action taken is approved by at least a majority of the required quorum for
such meeting.
Section 10. Validation of Defectively Called or Noticed Meetings. The
transactions of any meeting of the board of directors, however called and
noticed or wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum is present and if, either
before or after the meeting, each of the directors not present or who, though
present, has prior to the meeting or at its commencement, protested the lack
of proper notice to him, signs a written waiver of notice or a consent to
holding such meeting or an approval of the minutes thereof. All such waivers,
consents or approvals shall be filed with the corporate records or made a part
of the minutes or the meeting.
Section 11. Adjournment. A majority of the directors present, whether
or not constituting a quorum, may adjourn any board of directors' meeting to
another time or place.
Section 12. Notice of Adjournment. If a meeting is adjourned for more
than twenty-four (24) hours, notice of any adjournment to another time or
place shall be given prior to the time of the adjourned meeting to the
directors who were not present at the time of adjournment; otherwise, notice
of the time and place of holding an adjourned meeting need not be given to
absent directors if the time and place be fixed at the meeting adjourned.
Section 13. Participation in Meetings by Conference Telephone.
Members of the board of directors may participate in a meeting through use of
conference telephone or similar communications equipment, so long as all
members participating in such meeting can hear one another. Participating in a
meeting as permitted in this Section constitutes presence in person at such
meeting.
Section 14. Action Without Meeting. Any action by the board of
directors may be taken without a meeting if all members of the board shall
individually or collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the proceedings of the
board and shall have the same force and effect as a unanimous vote of such
directors.
Section 15. Fees and Compensation. Directors and members of
committees may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by resolution of the
board of directors.
Section 16. Committees. The board of directors may, by resolution
adopted by a majority of the authorized number of directors, designate an
executive and other committees, each consisting
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of two (2) or more directors, to serve at the pleasure of the board
of directors, and may prescribe the manner in which proceedings of
any such committee meetings of such committee may be regularly
scheduled in advance and may be called at any time by any two (2)
members thereof; otherwise, the provisions of these bylaws with
respect to notice and conduct of meetings of the board of directors
shall govern. Any such committee, to the extent provided in a
resolution of the board of directors, shall have all of the authority
of the board of directors, except as limited by the Delaware General
Corporation Law.
ARTICLE IV
OFFICERS
Section 1. Officers. The officers of the corporation shall be a chief
executive officer, a president, a secretary and a chief financial officer. The
corporation may also have, at the discretion of the board of directors, a
chairman of the board, one or more vice presidents, one or more assistant
secretaries, one or more assistant treasurers, and such other officers as may
be appointed in accordance with the provisions of Section 3 of this Article.
Any number of offices may be held by the same person.
Section 2. Election. The officers of the corporation, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 6 of this Article, shall be chosen annually by, and shall serve at the
pleasure of, the board of directors, and each shall hold his office until he
or she shall resign or shall be removed or otherwise disqualified to serve, or
his or her successor shall be elected and qualified.
Section 3. Subordinate Officer. The board of directors or the chief
executive officer may appoint such other officers as the business of the
corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in these bylaws or as
the board of directors may from time to time determine.
Section 4. Removal and Resignation. Subject to the rights, if any, of
an officer under any contract of employment, any officer may be removed,
either with or without cause, by the board of directors, at any regular or
special meeting thereof, or, except in case of an officer chosen by the board
of directors, by any officer upon whom such power or removal may be conferred
by the board of directors.
Any officer may resign at any time by giving written notice to the
board of directors, or to the president or to the secretary of the
corporation. Any resignation is without prejudice to the rights, if any, of
the corporation under any contract to which such officer is a party. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 5. Vacancies. A vacancy in any office because of death,
resignation, removal,
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disqualification or any other cause shall be filled in the manner prescribed
in these bylaws for regular election or appointment to such office.
Section 6. Chairman of the Board. The chairman of the board, if there
be such an office, shall preside at all meetings of the board of directors and
exercise and perform such other powers and duties as may be from time to time
assigned to him by the board of directors or prescribed by these bylaws.
Section 7. Chief Executive Officer. Subject to such supervisory
powers, if any, as may be given by the board of directors to the chairman of
the board, if there be such an officer, the chief executive officer shall be
the chief executive officer of the corporation and shall, subject to the
control of the board of directors, have general supervision, direction and
control of the business and officers of the corporation. He shall preside at
all meetings of the stockholders and at all meetings of the board of
directors. He shall be ex officio a member of all the standing committees,
including the executive committee, if any, and shall have the general power
and duties of management usually vested in the office of president of a
corporation, and shall have such other powers and duties as may be prescribed
by the board of directors or these bylaws.
Section 8. President. The president shall be the chief operating
officer of the corporation, and in the event of absence or disability of the
chief executive officer, or if no chief executive officer has been appointed
by the board of directors, shall perform all the duties of the chief executive
officer, and when so acting shall have all the powers of, and be subject to
all the restrictions upon, the chief executive officer.
Section 9. Vice Presidents. In the absence or disability of the
president, the vice presidents in order of their rank as fixed by the board of
directors or, if not ranked, a vice president designated by the board of
directors, if there be such an officer or officers, shall perform all the
duties of the president, and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents,
if there be such an officer or officers, shall have such other powers and
perform such other duties as from time to time may be prescribed for them
respectively by the board of directors or these bylaws.
Section 10. Secretary. The secretary shall record or cause to be
recorded, and shall keep or cause to be kept, at the principal executive
office or such other place as the board of directors may order, a book of
minutes of all meetings and actions, of the stockholders, the board directors
and all committees thereof, with the time and place of holding of meetings,
whether regular or special, and, if special, how authorized, the notice
thereof given, the names of those present at directors' meetings, the number
of shares present or represented at stockholders' meetings, and the
proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent, or
registrar, if one be appointed, a share register, or a duplicate share
register, showing the names of the stockholders and their addresses, the
number and classes of shares held by each, the number and date of certificates
issued for the same, and the number and date of cancellation of every
certificate surrendered for cancellation.
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Section 11. Chief Financial Officer. The chief financial officer
shall keep and maintain, or cause to be kept and maintained, adequate and
colored accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings and shares. The books
of account shall at all reasonable times be open to inspection by any
director.
The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors,
shall render to the president and directors, whenever they request it, an
account of all of his transactions as chief financial officer and of the
financial condition of the corporation, and shall have such other powers and
perform such other duties as may be prescribed by the board of directors or
these bylaws.
Section 12. Assistant Secretaries and Assistant Treasurers. In the
absence or disability of the secretary or the chief financial officer, their
duties shall be performed and their powers exercised, respectively, by any
assistant secretary or any assistant treasurer which the board of directors
may have elected or appointed. The assistant secretaries and the assistant
treasurers shall have such other duties and powers as may have been delegated
to them, respectively, by the secretary or the chief financial officer or by
the board of directors.
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ARTICLE V
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND OTHER AGENTS
Section 1. Definitions. For the purpose of this Article V, "agent"
means any person who is or was a director, officer, employee or other agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other enterprise, or was a
director, officer, employee or agent of a foreign or domestic corporation
which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation; "proceeding" means
any threatened, pending or completed action or proceeding, whether civil,
criminal, administrative or investigative; and "expenses" includes, without
limitation, attorneys' fees and any expenses of establishing a right to
indemnification under Section 4 or Section 5(c) of this Article V.
Section 2. Actions by Third Parties. The corporation shall indemnify
any person who was or is a party, or is threatened to be made a party, to any
proceeding (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was an agent of the corporation,
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding to the fullest extent
permitted by the laws of the State of Delaware as they may exist from time to
time.
Section 3. Actions by or in the Right of the Corporation. The
corporation shall indemnify any person who was or is a party, or is threatened
to be made a party, to any threatened, pending or completed action by or in
the right of the corporation to procure a judgment in its favor by reason of
the fact that such person is or was an agent of the corporation, against
expenses actually and reasonably incurred by such person in connection with
the defense or settlement of such action to the fullest extent permitted by
the laws of the State of Delaware as they may exist from time to time.
Section 4. Advance of Expenses. Expenses incurred in defending any
proceeding may be advanced by the corporation prior to the final disposition
of such proceeding upon receipt of a request therefor and an undertaking by or
on behalf of the agent to repay such amount unless it shall be determined
ultimately that the agent is not entitled to be indemnified as authorized in
this Article V.
Section 5. Contractual Nature. The provision of this Article V shall
be deemed to be a contract between the corporation and each director and
officer who serves in such capacity at any time while this Article is in
effect, and any repeal or modification thereof shall not affect any rights or
obligations then existing with respect to any state of facts then or
theretofore existing or any action, suit or proceeding theretofore existing or
any action, suit or proceeding theretofore or thereafter brought based in
whole or in part upon any such state of facts.
Section 6. Insurance. Upon and in the event of a determination by the
board of directors
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to purchase such insurance, the corporation shall purchase and maintain
insurance on behalf of any agent of the corporation against any liability
asserted against or incurred by the agent in such capacity or arising out of
the agent's status as such whether or not the corporation would have the power
to indemnify the agent against such liability under the provisions of this
Article V. All amounts received by an agent under any such policy of insurance
shall be applied against, but shall not limit, the amounts to which the agent
is entitled pursuant to the foregoing provisions of this Article V.
Section 7. ERISA. To assure indemnification under this provision of
all such persons who are or were "fiduciaries" of an employee benefit plan
governed by the Employee Retirement Income Security Act of 1974, as amended
from time to time ("ERISA"), the provisions of this Article V shall, except as
limited by Section 410 of ERISA, be interpreted as follows: an "other
enterprise" shall be deemed to include an employee benefit plan; the
corporation shall be deemed to have requested a person to serve as an employee
of an employee benefit plan where the performance by such person of his duties
to the corporation also imposes duties on, or otherwise involves services by ,
such person to the plan or participants or beneficiaries of the plan; excise
taxes assessed on a person with respect to an employee benefit plan in the
performance of such person's duties for a purpose reasonably believed by such
person to be in compliance with ERISA and the terms of the plan shall be
deemed to be for a purpose which is not opposed to the best interests of the
corporation.
ARTICLE VI
GENERAL CORPORATE MATTERS
Section 1. Record Date for Purposes Other Than Notice and Voting. For
purposes of determining the stockholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any right in respect of any other lawful action (other than as
provided in Section 12 of Article II of these bylaws), the board of directors
may fix, in advance, a record date, which shall not be more than sixty (60)
days before any such action, and in that case only stockholders of record on
the date so fixed are entitled to receive the dividend, distribution, or
allotment of rights or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation
after the record date so fixed, except as otherwise provided in the Delaware
General Corporation Law.
If the board of directors does not so fix a record date, the record
date for determining stockholders for any such purpose shall be at the close
of business on the day on which the board adopts the applicable resolution or
the sixtieth (60th) day before the date of that action, whichever is later.
Section 2. Inspection of Corporate Records. The accounting books and
records, the records of stockholders, and minutes of proceedings of the
stockholders and the board and committees of the board of directors of the
corporation and any subsidiary of the corporation shall be open to inspection
upon the written demand on the corporation of any stockholder or holder of a
voting trust certificate at any reasonable time during usual business hours,
for a purpose reasonably
-14-
<PAGE>
related to such holder's interests as a share- holder or as the holder of such
voting trust certificate. Such inspection by a stockholder or holder of a
voting trust certificate may be made in person or by an agent or attorney, and
the right of inspection includes the right to copy and make extracts.
A stockholder or stockholders holding at least five percent (5%) in
the aggregate of the outstanding voting shares of the corporation or who hold
at least one percent (1%) of such voting shares and have filed a Schedule 14B
with the United States Securities and Exchange Commission relating to the
election of directors of the corporation shall have (in person, or by agent or
attorney) the right to inspect and copy the record of stockholders' names and
addresses and shareholdings during usual business hours upon five (5) business
days' prior written demand upon the corporation and to obtain from the
transfer agent, if any, for the corporation, upon written demand and upon the
tender of its usual charges, a list of the stockholders' names and addresses,
who are entitled to vote for the election of directors, and their
shareholdings, and of the most recent record date for which it has been
compiled or as of a date specified by the stockholder subsequent to the date
of demand. The list shall be made available on or before the later of five (5)
business days after the demand is received or the date specified therein as
the date as of which the list is to be compiled.
Every director shall have the absolute right at any reasonable time
to inspect and copy all books, records and documents of every kind and to
inspect the physical properties of the corporation. Such inspection by a
director may be made in person or by agent or attorney, and the right of
inspection includes the right to copy and make extracts.
Section 3. Inspection of Bylaws. The corporation shall keep in its
principal executive office in California, or if its principal executive office
is not in California, then at its principal business office in California (or
otherwise provide upon written request of any stockholder) the original or a
copy of the bylaws as amended or otherwise altered to date, certified by the
secretary, which shall be open to inspection by the stockholders at all
reasonable times during office hours.
Section 4. Checks, Drafts, Etc. All checks, drafts or other orders
for payment of money, notes or other evidences of indebtedness, issued in the
name of or payable to the corporation, shall be signed or endorsed by such
person or persons and in such manner as, from time to time, shall be
determined by resolution of the board of directors.
Section 5. Contracts and Instruments; How Executed. The board of
directors, except as in these bylaws otherwise provided, may authorize any
officer or officers, agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances; and, unless so
authorized or ratified by the board of directors, no officer, agent or
employee shall have any power or authority to bind the corpora tion by any
contract or engagement or to pledge its credit or to render it liable for any
purpose or to any amount.
Section 6. Certificate for Shares. Every holder of shares in the
corporation shall be entitled to have a certificate signed in the name of the
corporation by the chairman of the board or the
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<PAGE>
president or a vice president and by the chief financial officer or an
assistant treasurer or the secretary or any assistant secretary, certifying
the number of shares and the Class or series of shares owned by the
stockholder. Any of the signatures on the certificate may be facsimile. In
case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued,
it may be issued by the corporation with the same effect as if such person
were an officer, transfer agent or registrar at the date of issue.
Any such certificate shall also contain such legend or other
statement as may be required by applicable state securities laws, the federal
securities laws, and any agreement between the corporation and the
stockholders thereof.
Certificates for shares may be issued prior to full payment under
such restrictions and for such purposes as the board of directors or these
bylaws may provide; provided, however, that on any certificate issued to
represent any partly paid shares, the total amount of the consideration to be
paid therefor and the amount paid thereon shall be stated.
Except as provided in this Section 6, no new certificate for shares
shall be issued in lieu of an old one unless the latter is surrendered and
canceled at the same time. The board of directors may, however, in case any
certificate for shares is alleged to have been lost, stolen, or destroyed,
authorize the issuance of a new certificate in lieu thereof, and the
corporation may require that the corporation be given a bond or other adequate
security sufficient to indemnify it against any claim that may be made against
it (including expense or liability) on account of the alleged loss, theft, or
destruction of such certificate of the issuance of such new certificate.
Section 7. Representation of Shares of Other Corporations. The
president or any other officer or officers authorized by the board of
directors or the president are each authorized to vote, represent and exercise
on behalf of the corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of the corporation. The
authority herein granted may be exercised either by any such officer in person
or by any other person authorized so to do by proxy or power of attorney duly
executed by said officer.
Section 8. Construction and Definitions. Unless the context otherwise
requires, the general provisions, rules of construction and definitions
contained in the Delaware General Corporation Law shall govern the
construction of these bylaws. Without limiting the generality of the
foregoing, the masculine gender includes the feminine and neuter, the singular
number includes the plural and the plural number includes the singular, and
the term "person" includes a corporation as well as a natural person.
ARTICLE VII
AMENDMENTS TO BYLAWS
Section 1. Amendment by Stockholders. New bylaws may be adopted or
these bylaws
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<PAGE>
may be amended or repealed by the vote or written consent of
holders of a majority of the outstanding shares entitled to vote; provided,
however, that if the certificate of incorporation of the corporation sets
forth the number of authorized directors of the corporation, the authorized
number of directors may be changed only by an amendment of the certificate of
incorporation.
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<PAGE>
EXHIBIT 3.3
<PAGE>
State of Delaware
PAGE 1
Office of the Secretary of State
-------------------------------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE,
DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE
OF INCORPORATION OF "ANGUS CORPORATION" FILED IN THIS OFFICE ON THE TWENTIETH
DAY OF APRIL, A.D. 1994, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ William T. Quillen
--------------------------------------
William T. Quillen, Secretary of State
2396668 8100 AUTHENTICATION: 7096317
944068652 DATE: 04-21-94
<PAGE>
State of Delaware
Secretary of State
Division of Corporations
Filed 09:00 AM 04/20/1994
944068652 - 2396668
CERTIFICATE OF INCORPORATION
OF
ANGUS CORPORATION
(a Delaware corporation)
- ------------------------------------------------------------------------------
The undersigned, in order to form a corporation pursuant to the
General Corporation Law of the State of Delaware, does hereby certify as
follows:
FIRST: The name of the Corporation is Angus Corporation.
SECOND: The address of the registered office of the Corporation in
the State of Delaware is WXYZ, Inc., 3640-A Concord Pike, in the City of
Wilmington, County of Newcastle, 19803. The name of its registered agent at
the address is WXYZ, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes which the Corporation is
authorized to have outstanding is Twenty One Million (21,000,000) shares of
which stock Twenty Million ($20,000,000) shares in the par value of $.001 each,
amounting in the aggregate of Twenty Thousand Dollars ($20,000) shall be common
stock and of which One Million (1,000,000) shares in the par value of $.001
each, amounting in the aggregate to One Thousand Dollars ($1,000) shall be
preferred stock. The board of directors is authorized, subject to limitations
prescribed by law, to provide for the issuance of the authorized shares of
preferred stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series and the qualifications,
limitations, or restrictions thereof. The authority of the board with respect to
each series shall include, but not be limited to, determination of the
following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date
or dates, and that relative rights of priority, if any, of
payment of dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of
such voting rights;
<PAGE>
(d) Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion,
including provision for adjustment of the conversion rate in
such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such
redemption, including the date or date upon or after which
they shall be redeemable, and the amount per share payable
in case of redemption, which amount may very under different
conditions, and at different redemption rates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so,
the terms and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding
up of the corporation, and the relative rights of priority,
if any, of payment of shares of that series;
(h) Any other relative rights, preferences and limitations of
that series, unless otherwise provided by the certificate of
determination.
FIFTH: Election of directors at an annual or special meeting of
stockholders need not be by written ballot unless the bylaws of the
corporation shall otherwise provide. The number of directors of the
corporation which shall constitute the whole board of directors shall be such
as from time to time shall be fixed by or in the manner provided in the
bylaws.
SIXTH: In furtherance and not in limitation of the powers conferred
by statute, the board of directors is expressly authorized to make, repeal,
alter, amend and rescind the bylaws of the corporation.
SEVENTH: A director or officer of the corporation shall not be
personally liable for monetary damages to the corporation or its stockholders
for breach of any fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders: (ii) under Section 174 of the Delaware General Corporation Law;
(iii) under Section 174 of the Delaware General Corporation Law or (iv) for
any transaction from which the director derives an improper personal benefit.
EIGHTH: A director or officer of the corporation shall not be
disqualified by his or her office from dealing or contracting with the
corporation as a vendor, purchaser, employee, agent or otherwise. No
transaction, contract or act of the corporation shall be void or voidable or
in any way affected or invalidated by reason of the fact that any director or
officer of the Corporation is a member of any firm, a stockholder, director or
officer of any corporation or trustee or beneficiary of any trust that is in
any way interested in such transaction, contract or act. No director or
officer shall be accountable or responsible to the corporation for or in
respect to any transaction, contract or act of the corporation or for any gain
or profit directly or indirectly
<PAGE>
realized by him or her by reason of the fact that he or she or any firm in
which he or she is a member or any corporation of which he or she is a
stockholder, director, or officer, or any trust of which he or she is a
trustee, or beneficiary, is interested in such transaction, contract or act;
provided the fact that such director or officer or such firm, corporation,
trustee or beneficiary of such trust, is so interested shall have been
disclosed or shall have been known to the members of the board of directors as
shall be present at any meeting at which action upon such contract,
transaction or act shall have been taken. Any director may be counted in
determining the existence of a quorum at any meeting of the board of directors
which shall authorize or take action in respect to any such contract,
transaction or act, and any officer of the corporation may take any action
within the scope of his or her authority, respecting such contract,
transaction or act with like force and effect as if he or she or any firm of
which he or she is a member, or any corporation of which he or she is a
stockholder, director or office, or any trust of which he or she is a trustee
or beneficiary, were not interested in such transaction, contract or act.
Without limiting or qualifying the foregoing, if any judicial or other
inquiry, suit, cause or proceeding, the question of whether a director or
officer of the corporation has acted in good faith is material, and
notwithstanding any statue or rule of law or equity to the contrary (if any
there be) his or her good faith shall be presumed in the absence of proof to
the contrary by clear and convincing evidence.
NINTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for the corporation under the provisions of Section 279 of Title 8
of the Delaware Code, order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors of
class of creditors, and/or the stockholders or class of stockholders of the
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the creditors or
class or creditors, and/or on all the stockholders or class of stockholders,
of the corporation, as the case may be, and also on the corporation.
TENTH: The corporation reserves the right to amend and repeal any
provision contained in this certificate of incorporation in the manner
prescribed by the laws of the State of Delaware. All rights herein conferred
are granted subject to this reservation.
<PAGE>
ELEVENTH: The incorporator is Jehu Hand whose mailing address is
25431 Cabot Road, Suite 207, Laguna Hills, California 92653.
I, the undersigned, being the incorporator, for the purpose of
forming a corporation under the laws of the State of Delaware do make, file
and record this Certificate of Incorporation, do certify that the facts herein
stated are true, and, accordingly, have hereunto set my hand this 18th day of
April, 1994.
/s/ Jehu Hand
----------------------------
Jehu Hand
Incorporator
<PAGE>
EXHIBIT 3.4
<PAGE>
BYLAWS FOR THE REGULATION, EXCEPT
AS OTHERWISE PROVIDED BY STATUTE OR ITS
CERTIFICATE OF INCORPORATION, OF
ANGUS CORPORATION
a Delaware corporation
- --------------------------------------------------------------------------------
ARTICLE I
OFFICES
-------
Section 1. Principal Executive Office. The principal executive office
of the corporation shall be located as directed by the board of directors.
Section 2. Other Offices. Other business offices may at any time be
established by the board of directors at any place or places by them or where
the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place of Meetings. All meetings of stockholders shall be
held at the principal executive office of the corporation, or at any other
place within or without the State of Delaware which may be designated either
by the board of directors or by the written consent of all persons entitled to
vote thereat and not present at the meeting, given either before or after the
meeting and filed with the secretary of the corporation.
Section 2. Annual Meetings. The annual meetings of stockholders shall
be fixed by the board of directors. At such meetings directors shall be
elected, reports of the affairs of the corporation shall be considered, and
any other business may be transacted which is within the powers of the
stockholders.
Section 3. Special Meetings. Special meetings of the stockholders,
for the purpose of taking any action permitted by the stockholders under the
Delaware General Corporation Law and the certificate of incorporation of the
corporation, may be called at any time by the chairman of the board or the
president, or by the board of directors, or by one or more holders of shares
entitled to cast in the aggregate not less than twenty percent (20%) of the
votes at the meeting. Upon request in writing that a special meeting of
stockholders be called for any proper purpose, directed to the chairman of the
board, president, vice president or secretary by any person (other than the
board of directors) entitled to vote that a meeting will be held at a time
requested by the person or persons calling the meeting, not less than
thirty-five (35) nor more than sixty (60) days after receipt of the request.
2
<PAGE>
Section 4. Notice of Annual or Special Meeting. Written notice of
each annual or special meeting of stockholders shall be given not less than
ten (10) nor more than sixty (60) days before the date of the meeting to each
stockholder entitled to vote thereat. Such written notice shall be given
either personally or by mail or other means of written communication, charges
prepaid, addressed to such stockholder at his address appearing on the books
of the corporation or given by him to the corporation for the purpose of
notice. If any notice or report addressed to the stockholder at the address of
such stockholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service as unable to deliver the
notice or report to the stockholder at such address, all future notices or
reports shall be deemed to have been duly given without further mailing if the
same shall be available for the stockholder upon written demand of the
stockholder at the principal executive office of the corporation for a period
of one (1) year from the date of the giving of the notice or report to all
other stockholders. If a stockholder gives no address, notice shall be deemed
to have been given him if sent by mail or other means of written communication
addressed to the place where the principal executive office of the corporation
is situated, or if published at least once in some newspaper of general
circulation in the county in which said principal executive office is located.
Any such notice shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by other means of
written communication. An affidavit of mailing of any such notice in
accordance with the foregoing provisions, executed by the secretary, assistant
secretary or any transfer agent of the corporation, shall be prima facie
evidence of the giving of the notice.
Section 5. Quorum. The presence in person or by proxy of the holders
of a majority of the shares entitled to vote at any meeting shall constitute a
quorum for the transaction of business at any meeting of stockholders. The
stockholders present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment, not withstanding the
withdrawal of enough stockholders to leave less than a quorum, if any action
taken (other than adjournment) is approved by at least a majority of the
shares required to constitute a quorum.
Section 6. Adjourned Meeting and Notice Thereof. Any stockholders'
meeting, annual or special, whether or not a quorum is present, may be
adjourned from time to time by the vote of a majority of the shares, the
holders of which are either present in person or represented by proxy thereat,
but in the absence of a quorum at the commencement of the meeting, no other
business may be transacted at such meeting.
When any stockholders' meeting, either annual or special, is
adjourned for thirty (30) days or more, or if after adjournment a new record
date is fixed for the adjourned meeting, notice of the adjourned meeting shall
be given as in the case of an original meeting. Except as provided above, it
shall not be necessary to give any notice of the time and place of the
adjourned meeting or of the business to be transacted thereat, other than by
announcement of the time and place thereof at the meeting at which such
adjournment is taken.
Section 7. Voting. The stockholders entitled to vote at any meeting
of stockholders shall be determined in accordance with the Delaware General
Corporation Law (relating to voting of shares held by a fiduciary, in the name
of a corporation, or in joint ownership). The stockholders
3
<PAGE>
may vote by voice vote or by ballot; provided, however, that all elections for
director shall be by ballot. If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting and entitled to vote on any
matter shall be the act of the stockholders, unless the vote of a greater number
of voting by classes is required by the Delaware General Corporation Law or the
certificate of incorporation.
Section 8. Validation of Defectively Called or Noticed Meeting. The
transactions of any meeting of stockholders, either annual or special, however
called and noticed, shall be as valid as though had at a meeting duly held
after regular call and notice, if a quorum be present either in person or by
proxy, and if, either before or after the meeting each of the persons entitled
to vote, not present in person or by proxy, or who, though present, has, at
the beginning of the meeting, properly objected to the transaction of any
business because the meeting was not lawfully called or convened, or no
particular matters of business legally required to be included in the notice,
but not so included, signs a written waiver of notice, or a consent to the
holding of such meeting, or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or
made a part of the minutes of the meeting. Neither the business to be
transacted at nor the purpose of any regular or special meeting of
stockholders need be specified in any written waiver of notice or consent,
except that if action is taken or proposed to be taken for approval of any of
those matters specified in paragraph (e) of Section 4 above, the waiver of
notice or consent shall state the general nature of the proposal.
Section 9. Action Without Meeting. Directors may be elected without a
meeting by a consent in writing, setting forth the action so taken, signed by
all of the persons who would be entitled to vote for the election of
directors, provided that, without prior notice except as hereinafter set
forth, a director may be elected at any time to fill a vacancy not filled by
the directors by the written consent of persons holding a majority of the
outstanding shares entitled to vote for the election of directors.
Any other action which, under any provision of the Delaware General
Corporation Law, may be taken at a meeting of the stockholders, may be taken
without a meeting, and without prior notice except as hereinafter set forth,
if a consent in writing, setting forth the action so taken, is signed by the
holders of outstanding shares having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted, unless the
consents of all stockholders entitled to vote have been solicited in writing.
Unless, as provided in Section 12 of this Article II, the board of
directors has fixed a record date for the determination of stockholders
entitled to notice of and to give such written consent, the record date for
such determination shall be the day on which the first written consent is
given. All such written consents shall be filed with the secretary of the
corporation.
Any stockholder giving a written consent, or the stockholder's proxy
holders, or a transferee of the shares or a personal representative of the
stockholder or their respective proxy holders, may revoke the consent by a
writing received by the corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the secretary of the corporation, but may not do so thereafter. Such
revocation is effective upon its receipt by the secretary of the corporation.
4
<PAGE>
Section 10. Proxies. Every person entitled to vote or execute
consents shall have the right to do so either in person or by one or more
agents authorized by a written proxy executed by such person or his duly
authorized agent and filed with the secretary of the corporation. Subject to
the Delaware General Corporation Law in the case of any proxy which states
that it is irrevocable, any proxy duly executed shall continue in full force
and effect until (i) an instrument revoking it or a duly executed proxy
bearing a later date is filed with the secretary of the corporation prior to
the vote pursuant thereto, (ii) the person executing the proxy attend the
meeting and votes in person, or (iii) written notice of the death or
incapacity for he maker of such proxy is received by the corporation before
the vote pursuant thereto is counted; provided that no such proxy is received
by the corporation before the vote pursuant thereto is counted; provided that
no such proxy shall be valid after the expiration of three (3) years from the
date of its execution, unless otherwise provided for in the proxy. The dates
contained on the forms of proxy shall presumtivley determine the order of
execution of the proxies, regardless of the postmark-dates on the envelopes in
which they are mailed.
Without limiting the manner in which a stockholder may authorize
another person or persons to act for him as proxy, the following shall
constitute a valid means by which a stockholder may grant such authority.
(a) A stockholder may execute a writing authorizing another
person or persons to act for him as proxy. Execution may be
accomplished by the stockholder or his authorized officer,
director, employee or agent signing such writing or causing
his or her signature to be affixed to such writing by any
reasonable means including, but not limited to, by facsimile
signature.
(b) A stockholder may authorize another person or persons to act
for him as proxy by transmitting or authorizing the
transmission of a telegram, cablegram, or other means of
electronic transmission to the person who will be the holder
of the proxy or to a proxy solicitation firm, proxy support
service organization or like agent duly authorized by the
person who will be the holder of the proxy to receive such
transmission, provided that any such telegram, cablegram or
other means of electronic transmission must either set forth
or be submitted with information from which it can be
determined that the telegram, cablegram or other electronic
transmission was authorized by the stockholder. If it is
determined that such telegrams, cablegrams or other electronic
transmissions are valid, the inspectors or, if there are no
inspectors, such other persons making that determination shall
specify the information upon which they relied.
(c) Any copy, facsimile telecommunication or other reliable
reproduction fo the writing or transmission described in
Paragraphs (a) or (b) may be substituted or used in lieu of
the original writing or transmission could be used, provided
that such copy, facsimile telecommunication or other
reproduction shall be a complete reproduction of the entire
original writing or transmission.
Section 11. Inspectors of Election. In advance of any meeting of
stockholders, the board of directors may appoint any person or persons other
than nominees for office as inspectors of election to act at such meeting or
any adjournment thereof. If
5
<PAGE>
inspectors of election be not so appointed, the chairman of any such meeting
may, and on the request of any stockholder or his proxy shall, make such
appointment at the meeting. The number of inspectors shall be either one (1) or
three (3). If appointed at a meeting on the request of one or more stockholders
or proxies, the majority of shares represented in person or by proxy shall
determine whether one (1) or three (3) inspectors are to be appointed. In case
any person appointed as inspector fails to appear or fails or refuses to act,
the vacancy may, and on the request of any stockholder or a stockholder's proxy
shall, be filled by appointment by the board of directors in advance of the
meeting, or at the meeting by the chairman of the meeting.
The duties of such inspectors shall be as prescribed by the Delaware
General Corporation Law and shall include: determining the number of shares
outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, the authenticity, validity and effect of
proxies; receiving votes, ballots or consents; hearing and determining all
challenges and questions in any way arising in connection with the right to
vote; counting and tabulating all votes or consents; determining when the
polls shall close; determining the result; and such acts as may be proper to
conduct the election or vote with fairness to all stockholders.
The inspectors of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as is practical.
If there are three (3) inspectors of election, the decision, act or
certificate of a majority is effective in all respects as the decision, act or
certificate of all. Any report or certificate made by the inspectors of
election is prima facie evidence of the facts stated therein.
Section 12. Record Date for Stockholder Notice, Voting and Giving
Consents. For purposes of determining the stockholders entitled to notice of
any meeting or to vote or entitled to give consent to corporate action without
a meeting, the board of directors may fix, in advance, a record date, which
shall not be more than sixty (60) days nor less than (10) days before the date
of any such meeting nor more than sixty (60) days before any such action
without a meeting, and in this event only stockholders of record on the date
so fixed are entitled to notice and to vote or to give consents, as the case
may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date, except as otherwise provided in the
Delaware General Corporation Law.
If the board of directors does not so fix a record date:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at
the close of business on the business day next preceding the
day on which notice is given, or if notice is waived, at the
close of business on the business day next preceding the day
on which the meeting is held.
(b) The record date for determining stockholders entitled to give
consent to corporate action in writing without a meeting, (i)
when no prior action by the board has been taken, shall be the
day on which the first written consent is given or (ii) when
prior action of the board is required by the Delaware General
Corporation Law, shall be at the close of business on the day
on which the board adopts the resolution relating to that
action, or the sixtieth (60th) day before the date of such
other action, whichever is later.
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ARTICLE III
DIRECTORS
---------
Section 1. Powers. Subject to the provisions of the Delaware
General Corporation Law, and to any limitations in the certificate of
incorporation and these bylaws, relating to action required to be
approved by the stockholders or approved by the outstanding shares,
all corporate powers shall be exercised by or under the authority of,
and the business and affairs of the corporations shall be managed by,
the board of directors. Without prejudice to such general powers, but
subject to the same limitations, it is hereby expressly declared that
the board of directors shall have the following powers, to wit:
(a) To select and remove all the officers, agents and employees of
the corporation, prescribe such powers and duties for them as
may not be inconsistent with law, with the certificate of
incorporation or with these bylaws, fix their compensation and
require from them security for faithful service.
(b) To conduct, manage and control the affairs and business of the
corporation, and to make such rules and regulations therefor
not inconsistent with law, with the certificate of
incorporation or with these bylaws, as they may deem best.
(c) To change the principal executive office and principal office
for the transaction of the corporation from one location to
another; to fix and locate from time to time one or more
subsidiary offices of the corporation within or without the
State of Delaware; to designate any place within or without
the State of Delaware for the holding of any stockholders'
meeting or meetings; and to adopt, make and use a corporate
seal, and to prescribe the forms of certificates of stock, and
to alter the form of such seal and of such certificates from
time to time, as in their judgement they may deem best,
provided such seal and such certificates shall at all times
comply with the provision of law.
(d) To authorize the issuance of shares of stock of the
corporation from time to time, upon such terms as may be
lawful.
(e) To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered
therefor, in the corporate name, promissory notes bonds,
debentures, deeds of trust, mortgages, pledges, hypothecations
or other evidences of debt and securities therefor.
Section 2. Number and Qualification of Directors. The authorized
number of directors shall be no less than one, and shall be such maximum
number of persons as may be determined from time to time by resolutions of the
board of directors.
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Section 3. Election and Term of Office. The directors shall be
elected at each annual meeting of stockholders but, if any such annual meeting
is not held or the directors are not elected thereat, the directors may be
elected at any special meeting of stockholders held for that purpose. All
directors shall hold office until their respective successors are elected and
qualified subject to the Delaware General Corporation Law and the provisions
of these bylaws with respect to vacancies on the board of directors.
Section 4. Vacancies. A vacancy in the board of directors shall be
deemed to exist in case of the death, resignation or removal of any director,
or if the board of directors by resolution declares vacant the office of a
director who has been declared of unsound mind by order of court or convicted
of a felony, or if the authorized number of directors be increased, or if the
stockholders fail, at any annual or special meeting of stockholders at which
any director or directors are elected, to elect the full authorized number of
directors to be voted for at that meeting.
Vacancies in the board of directors, except for a vacancy created by
the removal of a director, may be filled by a majority of the remaining
directors, though less than a quorum, or by a sole remaining director, and
each director so elected shall hold office until his successor is elected at
an annual or a special meeting of the stockholders. A vacancy in the board of
directors created by the removal of a director may only be filled by the vote
of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of the holders
of a majority of the outstanding shares entitled to vote.
The stockholders may elect a director or directors at any time to
fill any vacancy or vacancies not filled by the directors. Any such election
by written consent shall require the consent of holders of a majority of the
outstanding shares entitled to vote.
Any director may resign effective upon giving written notice to the
chairman of the board, the chief executive officer, the president, the
secretary or the board of directors of the corporation, unless the notice
specifies a later time for the effectiveness of such resignation. If the board
of directors accepts the resignation of a director tendered to take effect at
a future time, the board of directors or the stockholders shall have power to
elect a successor or take office when the resignation is to become effective.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
Section 5. Place of Meeting. Regular meetings of the board of
directors shall be held at any place within or without the State of Delaware
which has been designated from time to time by resolution by the board or by
written consent of all members of the board of directors. In the absence of
such designation, regular meetings shall be held at the principal executive
office of the corporation. Special meetings of the board may be held either at
a place so designated or at the principal executive office.
Section 6. Annual Meeting. Immediately following each annual meeting
of stockholders, the board of directors shall hold a regular meeting at the
place of said annual meeting or at such other place as shall be fixed by the
board of directors, for the purpose of organization election of officers, and
the transaction of other business. Call and notice of such meetings are hereby
dispensed with.
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Section 7. Other Regular Meetings. Other regular meetings of the
board of directors shall be held without call on the date and at the time
which the board of directors may from time to time designate; provided,
however, that should the day so designated fall upon a Saturday, Sunday or
legal holiday observed by the corporation at its principal executive office,
then said meeting shall be held at the same time on the net day thereafter
ensuing which is a full business day. Notice of all such regular meetings of
the board of directors is hereby dispensed with.
Section 8. Special Meetings. Special meetings of the board of
directors for any purpose or purpose shall be called at any time by the chairman
of the board, the president, any vice president, the secretary or by any
director.
Special meetings of the board of directors shall be held upon four
(4) days' written notice for forty-eight (48) hours' notice given personally
or by telephone, telegraph, telex or other similar means of communication. Any
such notice shall be addressed or delivered to each director at such
director's address as it is shown upon the records of the corporation or as
may have been given to the corporation by the director for purposes of notice
or, if such address is not shown on such records or is not readily
ascertainable, at the place in which the meetings of the directors are
regularly held.
Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mail, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier for
transmission, or actually transmitted by the person giving the notice by
electronic means, to the recipient or to a person at the office of the
recipient who the person giving the notice has reason to believe will promptly
communicate it to the recipient.
Any notice shall state the date, place and hour of the meeting.
Notice given to a director in accordance with this section shall constitute
due, legal and personal notice to such director.
Section 9. Action at a Meeting: Quorum and Required Vote. The
presence of a majority of the authorized number of directors at a meeting of
the board of directors constitutes a quorum for the transaction of business,
except as hereinafter provided. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the board of directors, unless a
greater number, or the same number, after disqualifying one or more directors
from voting, is required by law, by the certificate of incorporation or by
these bylaws. A meeting at which a quorum is initially present may continue to
transact business nothwithstanding the withdrawal of directors, provided that
any action taken is approved by at least a majority of the required quorum for
such meeting.
Section 10. Validation of Defectively Called or Noticed Meetings. The
transactions of any meeting of the board of directors, however called and
noticed or wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum is present, has a prior to the
meeting or at its commencement, protested the lack of proper notice to him,
signs a written waiver of notice or a consent to holding such meeting or an
approval of the minutes thereof. All such waivers, consents
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or approvals shall be filed with the corporate records or made a part of the
minutes or the meeting.
Section 11. Adjournment. A majority of the directors present, whether
or not constituting a quorum, may adjourn any board of directors' meeting to
another time or place.
Section 12. Notice of Adjournment. If a meeting is adjourned for more
than twenty-four (24) hours, notice of any adjournment to another time or
place shall be given prior to the time of the adjourned meeting to the
directors who were not present at the time of adjournment; otherwise, notice
of the time and place of holding an adjourned meeting need not be given to
absent directors if the time and place be fixed at the meeting adjourned.
Section 13. Participation in Meetings by Conference Telephone.
Members of the board of directors may participate in a meeting through use of
conference telephone or similar communications equipment, so long as all
members participating in such meeting can hear one another. Participating in a
meeting as permitted in this Section constitutes presence in person at such
meeting.
Section 14. Action Without Meeting. Any action by the board of
directors may be taken without a meeting if all members of the board shall
individually or collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the proceedings of the
board and shall have the same force and effect as a unanimous vote of such
directors.
Section 15. Fees and Compensation. Directors and members of
committees may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by resolution of the
board of directors.
Section 16. Committees. The board of directors may, by resolution
adopted by a majority of the authorized number of directors, designate an
executive and other committees, each consisting of two (2) or more directors,
to serve at the pleasure of the board of directors, and may prescribe the
manner in which proceedings of any such committee, to the extent provided in a
resolution of the board of directors, shall have all of the authority of the
board of directors, except as limited by the Delaware General Corporation Law.
ARTICLE IV
OFFICERS
--------
Section 1. Officers. The officers of the corporation shall be a chief
executive officer, a president, a secretary and a chief financial officer. The
corporation may also have, at the discretion of the board of directors, a
chairman of the board, one or more vice presidents, one or more assistant
secretaries, one or more assistant treasurers, and such other officers as may
be appointed in accordance with the provisions of Section 3 of this Article.
Any number of offices may be held by the same person.
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Section 2. Election. The officers of the corporation, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 6 of this Article, shall be chosen annually by, and shall serve at the
pleasure of, the board of directors, and each shall hold his office until he
or she shall resign or shall be removed or otherwise disqualified to serve, or
his or her successor shall be elected and qualified.
Section 3. Subordinate Officer. The board of directors or the chief
executive officer may appoint such other officers as the business of the
corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in these bylaws or as
the board of directors may from time to time determine.
Section 4. Removal and Resignation. Subject to the rights, if any, of
an officer under any contract of employment, any officer may be removed,
either with or without cause, by the board of directors, at any regular or
special meeting thereof, or except in case of an officer chosen by the board
of directors, by any officer upon whom such power or removal may be conferred
by the board of directors.
Any officer may resign at any time by giving written notice to the
board of directors, or to the president or to the secretary of the
corporation. Any resignation is without prejudice to the rights, if any, of
the corporation under any contract to which such officer is a party. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 5. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in
the manner prescribed in these bylaws for regular election or appointment to
such office.
Section 6. Chairman of the Board. The chairman of the board, if there
be such an office, shall preside at all meetings of the board of directors and
exercise and perform such other powers and duties as may be from time to time
assigned to him by the board of directors or prescribed by these bylaws.
Section 7. Chief Executive Officer. Subject to such supervisory
powers, if any, as may be given by the board of directors to the chairman of
the board, if there be such an officer, the chief executive officer shall be
the chief executive officer of the corporation and shall, subject tot he
control of the board of directors, have general supervision, direction and
control of the business and officers of the corporation. He shall preside at
all meetings of the stockholders and at all meeting of the board of directors.
He shall be ex officio a member of all the standing committees, including the
executive committee, if any, and shall have the general power and duties of
management usually vested in the office of president of a corporation, and
shall have such other powers and duties as may be prescribed by the board of
directors or these bylaws.
Section 8. President. The president shall be the chief operating
officer of the corporation, and in the event of absence or disability of the
chief executive officer, or if no chief executive officer has been appointed
by the board of directors, shall perform all the duties of the chief executive
officer, and when so acting shall have all the powers of, and be subject to
all the restrictions upon, the chief executive officer.
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Section 9. Vice Presidents. In the absence or disability of the
president, the vice presidents in order of their rank as fixed by the board of
directors or, if not ranked, a vice president designated by the board of
directors, if there be such an officer or officers, shall perform all the
duties of the president, and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents,
if there be such an officer or officers, shall have such other powers and
perform such other duties as from time to time may be prescribed for them
respectively by the board of directors or these bylaws.
Section 10. Secretary. The secretary shall record or cause to be
recorded, and shall keep or cause to be kept, at the principal executive
office or such other place as the board of directors may order, a book of
minutes of all meetings and actions, of the stockholders, the board of
directors and all committees thereof, with the time and place of holding of
meetings, whether regular or special, and, if special, how authorized, the
notice thereof given, the names of those present at directors' meetings, the
number of shares present or represented at stockholders' meetings, and the
proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent, or
registrar, if one be appointed, a share register, or a duplicate share
register, showing the names of the stockholders and their addresses, the
number and classes of shares held by each, the number and date of certificates
issued for the same, and the number and date of cancellation of every
certificate surrendered for cancellation.
Section 11. Chief Financial Officer. The chief financial officer
shall keep and maintain, or cause to be kept and maintained, adequate and
colored accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings and shares. The books
of account shall at all reasonable times be open to inspection by any
director.
The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. He shall disburse
the funds of the corporation as may be ordered by the board of directors,
shall render to the president and directors, whenever they request it, an
account of all of his transactions as chief financial officer and of the
financial condition of the corporation, and shall have such other powers and
perform such other duties as may be prescribed by the board of directors or
these bylaws.
Section 12. Assistant Secretaries and Assistant Treasurers. In the
absence or disability of the secretary or the chief financial officer, their
duties shall be performed and their powers exercised, respectively, by any
assistant secretary or any assistant treasurer which the board of directors
may have elected or appointed. The assistant secretaries and the assistant
treasurers shall have such other duties and powers as may have been delegated
to them, respectively, by the secretary or the chief financial officer or by
the board of directors.
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ARTICLE V
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND OTHER AGENTS
------------------------------------
Section 1. Definitions. For the purpose of this article V. "agent"
means any person who is or was a director, officer, employee or other agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, or was a director,
officer, employee or agent of a foreign or domestic corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation; "proceeding" means any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expenses" includes, without limitation,
attorney's fees and any expenses of establishing a right to indemnification
under Section 4 or Section 5(c) of this Article V.
Section 2. Actions by Third Parties. The corporation shall indemnify
any person who was or is a party, or is threatened to be made a party, to any
proceeding (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was an agent of the corporation,
against; expenses, judgments, fines, settlements and other amounts actually
and reasonably incurred in connections with such proceeding to the fullest
extent permitted by laws of the State of Delaware as they may exist from time
to time.
Section 3. Actions by or in the Right of the Corporation. The
corporation shall indemnify any person who was or is a party, or is threatened
to be made a party, to any threatened, pending or completed action by or in
the right of the corporation to procure a judgment in its favor by reason of
the fact that such person is or was an agent of the corporation, against
expenses actually and reasonably incurred by such person in connection with
the defense or settlement of such action to the fullest extent permitted by
the laws of the State of Delaware as they may exist from time to time.
Section 4. Advance of Expenses. Expenses incurred in defending any
proceeding may be advanced by the corporation prior to the final disposition
of such proceeding upon receipt of a request therefor and an undertaking by or
on behalf of the agent to repay such amount unless it shall be determined
ultimately that the agent is not entitled to be indemnified as authorized in
the Article V.
Section 5. Contractual Nature. The provision of this Article V shall
be deemed to be a contract between the corporation and each director and
officer who serves in such capacity at any time while this Article is in
effect, and any repeal or modification thereof shall not affect any rights or
obligations then existing with respect to any state of facts then or
theretofore existing or any action, suit or proceeding theretofore existing or
any action, suit or proceeding theretofore or thereafter brought based in
whole or in part upon any state of facts.
Section 6. Insurance. Upon and in the event of a determination by
the board of directors to purchase such insurance, the corporation
shall purchase and maintain insurance on behalf of any agent of the
corporation against any liability asserted against or incurred by the
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agent in such capacity or arising out of the agent's status as such whether or
not the corporation would have the power to indemnify the agent such liability
under the provisions of this Article V. All amounts received by an agent under
any such policy of insurance shall be applied against, but shall not limit,
the amounts to which the agent is entitled pursuant to the foregoing
provisions of this Article V.
Section 7. ERISA. To assure indemnification under this provision of
all such persons who are or were "fiduciaries" of an employee benefit plan
governed by the Employee Retirement Income Security Act of 1974, as amended
from time to time ("ERISA"), the provisions of this Article V shall, except as
limited by Section 410 of ERISA, be interpreted as follows: an "other
enterprise" shall be deemed to include an employee benefit plan; the
corporation shall be deemed to have requested a person to serve as an employee
of an employee benefit plan where the performance by such person of his duties
to the corporation also imposes duties on, or otherwise involves services by,
such person to the plan or participants or beneficiaries of the plan; excise
taxes assessed on a person with respect to an employee benefit plan in the
performance of such person's duties for a purpose reasonably believe by such
person to be in compliance with ERISA and the terms of the plan shall be
deemed to be for a purpose which is not opposed to the best interests of the
corporation.
ARTICLE VI
GENERAL CORPORATE MATTERS
-------------------------
Section 1. Record Date for Purposes Other Than Notice and Voting. For
purposes of determining the stockholders entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any right in respect of any other lawful action (other than as
provided in Section 12 of Article II of these bylaws), the board of directors
may fix, in advance, a record date, which shall not be more than sixty (60)
days before any such action, and in that case only stockholders of record on
the fate so fixed are entitled to receive the dividend, distribution, or
allotment of rights or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation
after the record date so fixed, except as otherwise provided in the Delaware
General Corporation Law.
If the board of directors does not so fix a record date, the record
date for determining stockholders for any such purpose shall be at the close
of business on the day on which the board adopts the applicable resolution or
the sixtieth (60th) day before the date of that action, whichever is later.
Section 2. Inspection of Corporate Records. The accounting books and
records, the records of stockholders, and minutes of proceedings of the
stockholders and the board and committees of the board of directors of the
corporation and any subsidiary of the corporation shall be open to inspection
upon the written demand on the corporation of any stockholder or holder of a
voting trust certificate at any reasonable time during usual business hours,
for a purpose reasonably related to such holder's interests as a share-holder
or as the holder of such voting trust certificate. Such inspection by a
stockholder or holder of a voting trust certificate may be made in person
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or by an agent or attorney, and the right of inspection includes the right to
copy and make extracts.
A stockholder or stockholders holding at least five percent (5%) in
the aggregate of the outstanding voting shares of the corporation or who hold
at least one percent (1%) of such voting shares and have filed a Schedule 14B
with the United States Securities and Exchange Commission relating to the
election of directors of the corporation shall have (in person, or by agent or
attorney) the right to inspect and copy the record of stockholders' names and
addresses and shareholdings during usual business hours upon five (5) business
days' prior written demand upon the corporation and to obtain from the
transfer agent, if any, for the corporation, upon written demand and upon the
tender of its usual charges, a list of the stockholders' names and addresses,
who are entitled to vote for the election of directors, and their
shareholdings, and of the most recent record dated for which it has been
compiled or as of a date specified by the stockholder subsequent to the date
for demand. The list shall be made available on or before the later of five
(5) business days after the demand is received or the date specified therein
as the date as of which the list is to be compiled.
Every director shall have the absolute right at any reasonable time
to inspect and copy all books, records and documents of every kind and to
inspect the physical properties of the corporation. Such inspection by a
director may be made in person or by agent or attorney, and the right of
inspection includes the right to copy and make extracts.
Section 3. Inspection of Bylaws. The corporation shall keep in its
principal executive office in California, or if its principal executive office
is not in California, then at its principal business office in California (or
otherwise provide upon written request of any stockholder) the original or a
copy of he bylaws as amended or otherwise altered to date, certified by the
secretary, which shall be open to inspection by the stockholders at all
reasonable times during office hours.
Section 4. Checks, Drafts, Etc. All checks, drafts or other orders
for payment of money, notes or other evidences of indebtedness, issued in the
name of or payable to the corporation, shall be signed or endorsed by such
person or persons and in such manner as, from time to time, shall be
determined by resolution of the board of directors.
Section 5. Contracts and Instruments; How Executed. The board of
directors, except as in these bylaws other wise provided, may authorize any
officer or officers, agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances; ;and, unless so
authorized or ratified by the board of directors, no officer, agent or emplyee
shall have any power or authority to bind the corporation by any contract or
engagement or to pledge its credit or to render it liable for any purpose or
to any amount.
Section 6. Certificate for Shares. Every holder of shares in the
corporation shall be entitled to have a certificate signed in the name of the
corporation by the chairman of the board or the president or a vice president
and by the chief financial officer or an assistant treasurer or the secretary
or an assistant secretary, certifying the
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number of shares and the Class or series of shares owned by the stockholder. Any
of the signatures on the certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
corporation with the same effects as if such person were an officer, transfer
agent or registrar at the date of issue.
Any such certificate shall also contain such legend or other statement
as may be required by applicable state securities laws, the federal securities
laws, and any agreement between he corporation and the stockholders thereof.
Certificates for shares may be issued prior to full payment under
such restrictions and for such purposes as the board of directors or these
bylaws may provide; provided, however, that on any certificate issued to
represent any partly paid shares, the total amount of the consideration to be
paid therefore and the amount paid thereon shall be stated.
Except as provided in this Section 6, no new certificate for shares
shall be issued in lieu of an old one unless the latter is surrendered and
canceled at the same time. The board of directors may, however, in case any
certificate for shares is alleged to have been lost, stolen, or destroyed,
authorize the issuance of a new certificate in lieu thereof, and the
corporation may require that the corporation be given a bond or other adequate
security sufficient to indemnify it against any claim that may be made against
it (including expense or liability) on account of the alleged loss, theft, or
destruction of such certificate of the issuance of such new certificate.
Section 7. Representation of Shares of Other Corporations. The
president or any other officer or officers authorized by the board of
directors or the president are each authorized to vote, represent and exercise
on behalf of the corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of the corporation. The
authority herein granted may be exercised either by any such officer in person
or by any other person authorized so to do by proxy or power of attorney duly
executed by said officer.
Section 8. Construction and Definitions. Unless the context otherwise
requires, the general provisions, rules of construction and definitions
contained in the Delaware General Corporation Law shall govern the
construction of these bylaws. Without limiting the generality of the
foregoing, the masculine gender includes the feminine and neuter, the singular
number includes the plural and the plural number includes the singular, and
the term "person" includes a corporation as well as a natural person.
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ARTICLE VII
AMENDMENTS TO BYLAWS
--------------------
Section 1. Amendment by Stockholders. New bylaws may be adopted or
these bylaws may be amended or repealed by the vote or written consent of
holders of a majority of the outstanding shares entitled to vote; provided,
however, that if the certificate of incorporation of the corporation sets
forth the number of authorized directors of the corporation, the authorized
number of directors may be changed only by an amendment of the certificate of
incorporation.
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Exhibit 3.5 1994237
ENDORSED - FILED
ARTICLES OF INCORPORATION IN THE OFFICE OF THE
SECRETARY OF STATE
OF OF THE STATE OF
CALIFORNIA
ASSET RETRIEVAL MANAGEMENT, INC. NOV. 21, 1996
BILL JONES, SECRETARY
I OF STATE
The name of the corporation is Asset Retrieval
Management, Inc.
II
The purpose of the corporation is to engage in any lawful act of
activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust
company business or the practice of profession permitted to be incorporated by
the California Corporation Code.
III
The name and address in the State of California of this corporation's
initial agent for service of process is Barry Lotz, 7660 Fay Avenue, Suite
345, La Jolla, California 92037.
IV
The corporation is authorized to issue only one class of shares of
stock, which shall be common stock, and the total number of shares which this
corporation is authorized to issue is One Million (1,000,000).
V
The liability of the directors of the corporation for monetary
damages shall be eliminated to the fullest extend permissible under California
law.
The Corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the Corporations Code) for breach of duty to the
Corporation and its stockholders through bylaw provisions or through
agreements with the agents, or both, in excess of the indemnification
otherwise permitted by Section 317 of the Corporations Code, subject to the
limits on such excess indemnification set forth in section 204 of the
Corporations Code.
The undersigned declares that the undersigned has executed the
foregoing Articles of Incorporation and that this instrument is the act and
deed of the undersigned.
Dated: November 19, 1996 /s/ Barry Lotz
-------------------------
Barry Lotz
Sole Incorporator
<PAGE>
EXHIBIT 3.6
<PAGE>
BYLAWS
OF
ASSET RETRIEVAL MANAGEMENT, INC.
A California Corporation
ARTICLE I
OFFICES
Section 1. PRINCIPAL EXECUTIVE OR BUSINESS OFFICES. The board of
directors shall fix the location of the principal executive office of the
corporation at any place within or outside the State of California. If the
principal executive office is located outside California and the corporation has
one or more business offices in California, the board shall fix and designate a
principal business office in California.
Section2. OTHER OFFICES. Branch or subordinate offices may be
established at any time and at any place by the board of directors.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of shareholders shall be held at
any place within or outside the State of California designated by the board of
directors. In the absence of a designation by the board, shareholders' meetings
shall be held at the corporation's principal executive office.
Section 2. ANNUAL MEETING. The annual meeting of shareholders shall be
held each year on a date and at a time designated by the board of directors. At
each annual meeting, directors shall be elected and any other proper business
within the power of the shareholders may be transacted.
Section 3. SPECIAL MEETING. A special meeting of the shareholders may
be called at any time by the board of directors, by the chair of the board, by
the president or vice president, or by one or more shareholders holding shares
that in the aggregate are entitled to cast ten percent or more of the votes at
that meeting.
If a special meeting is called by anyone other than the board of
directors, the person or persons calling the meeting shall make a request in
writing, delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission, to the chair of the board or the president, vice
president, or secretary, specifying the time and date of the meeting (which is
not less than 35 nor more than 60 days after receipt of the request) and the
general nature of the business proposed to be transacted. Within 20 days after
receipt, the officer receiving the request shall
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shall cause notice to be given to the shareholders entitled to vote, in
accordance with bylaw provisions regarding notice, e.g., Sections 4 and 5 of
this Article II, stating that a meeting will be held at the time requested by
the person(s) calling the meeting, and stating the general nature of the
business proposed to be transacted. If notice is not given within 20 days after
receipt of the request, the person or persons requesting the meeting may give
the notice. Nothing contained in this paragraph shall be construed as limiting,
fixing, or affecting the time when a meeting of shareholders called by action of
the board may be held.
Section 4. NOTICE OF SHAREHOLDERS' MEETINGS All notices of meetings of
shareholders shall be sent or otherwise given in accordance with Section 5 of
this Article II not fewer than 10 nor more than 60 days before the date of the
meeting. Shareholders entitled to notice shall be determined in accordance with
Section 11 of this Article II. The notice shall specify the place, date, and
hour of the meeting, and (i) in the case of a special meeting, the general
nature of the business to be transacted, or (ii) in the case of the annual
meeting, those matters that the board of directors, at the time of giving the
notice, intends to present for action by the shareholders. If directors are to
be elected, the notice shall include the names of all nominees whom the board
intends, at the time of the notice, to present for election.
The notice shall also state the general nature of any proposed action
to be taken at the meeting to approve any of the following matters:
(i) A transaction in which a director has a financial interest, within the
meaning of ss.310 of the California Corporations Code;
(ii) An amendment of the articles of incorporation under ss.902 of that Code:
(iii) A reorganization under ss.1201 of that Code;
(iv) A voluntary dissolution under ss.1900 of that Code; or
(v) A distribution in dissolution that requires approval of the outstanding
shares under ss.2007 of that Code.
Section 5. MANNER OF GIVING NOTICE: AFFIDAVIT OF NOTICE.
Notice of any shareholders' meeting shall be given either personally or by
first-class mail or telegraphic or other written communication, charges prepaid,
addressed to the shareholder at the address appearing on the corporation's books
or given by the shareholder to the corporation for purposes of notice. If no
address appears on the corporation's books or has been given as specified above,
notice shall be either (1) sent by first-class mail addressed to the shareholder
at the corporation's principal executive office, or (2) published at least once
in a newspaper of general circulation in the county where the corporation's
principal executive office is located. Notice is deemed to have been given at
the time when delivered personally or deposited in the mail or sent by other
means of written communication.
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If any notice or report mailed to a shareholder at the address appearing on the
corporation's books is returned marked to indicate that the United States Postal
Service is unable to deliver the document of the shareholder at that address,
all future notices or reports shall be deemed to have been duly given without
further mailing if the corporation holds the document available for the
shareholder on written demand at the corporation's principal executive office
for a period of one year from the date the notice or report was given to all
other shareholders.
An affidavit of the mailing, or other authorized means of giving notice
or delivering a document, of any notice of shareholders' meeting, report, or
other document sent to shareholders, may be executed by the corporation's
secretary, assistant secretary, or transfer agent, and, if executed, shall be
filed and maintained in the minute book of the corporation.
Section 6. QUORUM. The presence in person or by proxy of the holders of
a majority of the shares entitled to vote at any meeting of the shareholders
shall constitute a quorum for the transaction of business. The shareholders
present at a duly called or held meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum, if any action taken (other than
the adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. ADJOURNED MEETING; NOTICE. Any shareholders' meeting, annual
or special, whether or not a quorum is present, may be adjourned from time to
time by the vote of the majority of the shares represented at that meeting,
either in person or by proxy, but in the absence of a quorum, no other business
may be transacted at that meeting, except as provided in Section 6 of this
Article II.
.When any meeting of shareholders, either annual or special, is
adjourned to another time or place, notice of the adjourned meeting need not be
given if the time and place are announced at the meeting at which the
adjournment is taken, unless a new record date for the adjourned meeting is
fixed, or unless the adjournment is for more than 45 days from the date set for
the original meeting, in which case the board of directors shall set a new
record date. Notice of any such adjourned meeting, if required, shall be given
to each shareholder of record entitled to vote at the adjourned meeting, in
accordance with Sections 4 and 5 of this Article II. At any adjourned meeting,
the corporation may transact any business that might have been transacted at the
original meeting.
Section 8. VOTING. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with Section 11 of this Article
II, subject to the provisions of section 702 through 704 of the California
Corporations Code relating to voting shares held by a fiduciary, or in joint
ownership. The shareholders' vote may be by voice vote or by ballot, provided,
however, that any election for directors must by ballot if demanded by any
shareholder before the voting has begun. On any matter other than the election
of directors, any shareholder may vote part of the shares the shareholder is to
vote in favor of the proposal and refrain from voting the remaining shares or
vote them against the proposal, but, if the shareholder fails to specify the
number of shares that the shareholder is voting affirmatively, it will be
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conclusively presumed that the shareholder's approving vote is with respect to
all shares that the shareholder is entitled to vote. If a quorum is present (or
if a quorum has been present earlier at the meeting but some shareholders have
withdrawn), the affirmative vote of a majority of the shares represented and
voting, provided such shares voting affirmatively also constitute a majority of
the number of shares required for a quorum, shall be the act of the shareholders
unless the vote of a greater number of voting by classes is required by law or
by the articles of incorporation.
At a shareholders' meeting at which directors are to be elected, no
shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes which that shareholder normally
would be entitled to cast), unless the candidates' names have been placed in
nomination before commencement of the voting and a shareholder has given notice
at the meeting, before the voting has begun, of the shareholder's intention to
cumulate votes. If any shareholder has given such a notice, then all
shareholders entitled to vote may cumulate their votes for candidates in
nomination, and may give one candidate a number of votes equal to the number of
directors to be elected multiplied by the number of votes to which that
shareholder's shares are normally entitled, or distribute the shareholder's
votes on the same principle among any or all of the candidates, as the
shareholder thinks fit. The candidates receiving the highest number of votes, up
to the number of directors to be elected, shall be elected.
Section 9. WAIVER OF NOTICE OF CONSENT BY ABSENT SHAREHOLDERS. The
transactions of any meeting of shareholders, either annual or special, however
called and noticed and wherever held, shall be as valid as though they were had
at a meeting duly held after regular call and notice, if a quorum is present
either in person or by proxy, and if each person entitled to vote who was not
present in person or by proxy, either before or after the meeting, signs a
written waiver of notice or a consent to holding the meeting or an approval of
the minutes of the meeting. The waiver of notice or consent need not specify
either the business to be transacted or the purpose of any annual or special
meeting of the shareholders, except that if action is taken or proposed to be
taken for approval of any of those matters specified in section 601(f) of the
California Corporations Code, i.e.,
(i) A transaction in which a director has a financial interest, within the
meaning of ss.310 of the California Corporations Code;
(ii) An amendment of the articles of incorporation under ss.902 of that Code:
(iii) A reorganization under ss.1201 of that Code;
(iv) A voluntary dissolution under ss.1900 of that Code;
or
(v) A distribution in dissolution that requires approval of the outstanding
shares under ss.2007 of that Code.
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The waiver of notice of consent is required to state the general nature
of the action or proposed action. All waivers, consents, and approvals shall be
filed with the corporate records or made a part of the minutes of the meeting.
A shareholder's attendance at a meeting also constitutes a waiver of
notice of that meeting, unless the shareholder at the beginning of the meeting
objects to the transaction of any business on the ground that the meeting was
not lawfully called or convened. In addition attendance at a meeting does not
constitute a waiver of any right to object to consideration of matters required
by law to be included in the notice of the meeting which were not so included,
if that objection is expressly made at the meeting.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Any action that could be taken at an annual or special meeting of shareholders
may be taken without a meeting and without prior notice, if a consent in
writing, setting forth the action so taken, is signed by the holders or
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take that action at a meeting at which all shares
entitled to vote on that action were present and voted.
Directors may be elected by written consent of the shareholders without
a meeting only if the written consents of all outstanding shares entitled to
vote are obtained, except that vacancies on the board (other than vacancies
created by removal) not filled by the board may be filled by the written consent
of the holders of a majority of the outstanding shares entitles to vote.
All consents shall be filed with the secretary of the corporation and
shall be maintained in the corporate records. Any shareholder or other
authorized person who has given a written consent may revoke it by a writing
received by the secretary of the corporation before written consents of the
number of shares required to authorize the proposed action have been filed with
the secretary.
Unless the consents of all shareholders entitled to vote have been
solicited in writing, prompt notice shall be given of any corporate action
approved by shareholders without a meeting by less than unanimous consent, to
those shareholders entitled to vote who have not consented in writing. As to
approvals required by California Corporations Code section 310 (transactions in
which a director has a financial interest), section 317 (indemnification of
corporate agents), section 1201 (corporate reorganization), or section 2007
(certain distributions of dissolution), notice of the approval shall be given at
least ten days before the consummation of any action authorized by the approval.
Notice shall be given in the manner specified in Section 5 of this Article II.
Section 11. RECORD DATE FOR SHAREHOLDER NOTICE OF MEETING, VOTING, AND
GIVING CONSENT.
(a) For purposes of determining the shareholders entitled to receive
notice of and vote at a shareholders' meeting or give written
consent to corporate action without a meeting, the board
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may fix in advance a record date that is not more than 60 nor less than 10 days
before the date of a shareholders' meeting, or not more than 60 days before any
other action.
(b) If no record date is fixed:
(i) The record date for determining shareholders entitled to receive
notice of and vote at a shareholders' meeting shall be the business day next
preceding the day on which notice is given, or if notice is waived as provided
in Section 9 of this Article II the business day next preceding the day on which
the meeting is held.
(ii) The record date for determining shareholders entitled to
give consent to corporate action in writing without a meeting, if no prior
action has been taken by the board, shall be the day on which the first written
consent is given.
(iii) The record date for determining shareholders for any
other purpose shall be as set forth in Section 1 of Article VIII of these
bylaws.
(c) A determination of shareholders of record entitled to receive
notice of and vote at a shareholders' meeting shall apply to any adjournment of
the meeting unless the board fixes a new record date for the adjourned meeting.
However, the board shall fix a new record date if the adjournment is to a date
more than 45 days after the date set for the original meeting.
(d) Only shareholders of record on the corporation's books at the
close of business on the record date shall be entitled to any of the notice and
voting rights listed in subsection (a) of this section, notwithstanding any
transfer of shares on the corporation's books after the record date, except as
otherwise required by law.
Section 12. PROXIES. Every person entitled to vote for directors or on
any other matter shall have the right to do so either in person or by one or
more agents authorized by a written proxy signed by the person and field with
the secretary of the corporation. A proxy shall be deemed signed if the
shareholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission, or otherwise) by the shareholder or the
shareholder's attorney in fact. A validly executed proxy that does not state
that it is irrevocable shall continue in full force and effect unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by a
writing delivered to the corporation stating that the proxy is revoked, or by
attendance at the meeting and voting in person by the person executing the proxy
or by a subsequent proxy executed by the same person and presented at the
meeting; or (ii) written notice of the death or incapacity of the maker of that
proxy is received by the corporation before the vote pursuant to that proxy is
counted; provided, however, that no proxy shall be valid after the expiration of
11 months from the date of the proxy, unless otherwise provided in the proxy.
The revocability of a proxy that states on its face that it is irrevocable shall
be governed by the provisions of sections 705(e) and 705(f) of the Corporations
Code of California.
Section 13. INSPECTORS OF ELECTION. Before any meeting of
shareholders, the
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board of directors may appoint any persons other than nominees for office to act
as inspectors of election at the meeting or its adjournment. If no inspectors of
election are so appointed, the chair of the meeting may, and on the request of
any shareholder or a shareholder's proxy shall, appoint inspectors of election
at the meeting. The number of inspectors shall be either one or three. If
inspectors are appointed at a meeting on the request of one or more shareholders
or proxies, the holders of a majority of shares of their proxies present at the
meeting shall determine whether one or three inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
the chair of the meeting may, and upon the request of any shareholder or a
shareholder's proxy shall, appoint a person to fill that vacancy.
These inspectors shall: (a) determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, and the authenticity, validity, and effect of
proxies; (b) receive votes, ballots, or consents; (c) hear and determine all
challenges and questions in any way arising in connection with the right to
vote; (d) count and tabulate all votes or consents; (e) determine when the polls
shall close; (f) determine the result; and (g) do any other acts that may be
proper to conduct the election or vote with fairness to all shareholders.
ARTICLE III
DIRECTORS
Section 1. POWERS. Subject to the provisions of the California General
Corporation Law and any limitations in the articles of incorporation and these
bylaws relating to action required to be approved by the shareholders or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all corporate powers shall be exercised by or under the direction of the
board of directors.
Without prejudice to these general powers, and subject to the same
limitations, the board of directors shall have the power to:
(a) Select and remove all officers, agents, and
employees of the corporation; prescribe any powers and duties for them that are
consistent with law, with the articles of incorporation, and with these bylaws;
fix their compensation; and require from them security for faithful service.
(b) Change the principal executive office or the
principal business office in the State of California from one location to
another; cause the corporation to be qualified to do business in any other
state, territory, dependency, or country and conduct business within or outside
the State of California; and designate any place within or outside the State of
California for holding any shareholders' meeting or meetings, including annual
meetings.
(C) Adopt, make, and use a corporate seal; prescribe the
forms of certificates of stock; and alter the form of the seal and certificates.
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(d) Authorize the issuance of shares of stock of the
corporation on any lawful terms, in consideration of money paid, labor done,
services actually rendered, debts or securities canceled, or tangible property
actually received.
(e) Borrow money and incur indebtedness on behalf of the
corporation, and cause to executed and delivered for the corporation's purposes,
in the corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages pledges, hypothecations, and other evidences of debt and securities.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number
of directors shall be no fewer than one nor more than five. The exact number of
authorized directors shall be one until changed, within the limits specified
above, by a bylaw amending this section, duly adopted by the board of directors
or by the shareholders. The maximum or minimum number of directors cannot 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 or
by an amendment to this bylaw duly approved by a majority of the outstanding
shares entitled to vote. An amendment that would reduce the minimum number to
fewer than five, however, cannot be adopted if the votes cast against its
adoption at a shareholders' meeting or the shares not consenting to an action by
written consent are equal to more than one-sixth (16 2/3%) of the outstanding
shares entitled to vote. No amendment may change the stated maximum number of
authorized directors to a number greater than two times the stated minimum
number minus one.
Section 3. ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors shall be
elected at each annual meeting of the shareholders to hold office until the next
annual meeting. Each director, including a director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
Section 4. VACANCIES. A vacancy in the board of directors shall be
deemed to exist: (a) if a director dies, resigns, or is removed by the
shareholders or an appropriate court, as provided in sections 303 or 304 of the
California Corporations Code; (b) if the board of directors declares vacant the
office of a director who has been convicted of a felony or declared of unsound
mind by an order of court; (c) if the authorized number of directors is
increased; or (d) if at any shareholders' meeting at which one or more directors
are elected the shareholders fail to elect the full authorized number of
directors to be voted for at that meeting.
Any director may resign effective on giving written notice to the chair
of the board, the president, the secretary, or the board of directors, unless
the notice specifies a later effective date. If the resignation is effective at
a future time, the board may elect a successor to take office when the
resignation becomes effective.
Except for a vacancy caused by the removal of a director, vacancies on
the board may be
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filled by approval of the board or, if the number of directors then in office is
less than a quorum, by (1) the unanimous written consent of the directors then
in office, (2) the affirmative vote of a majority of the directors then in
office at a meeting held pursuant to notice or waivers of notice complying with
section 307 of the Corporations Code, or (3) a sole remaining director. A
vacancy on the board caused by the removal of a director may be filled only by
the shareholders, except that a vacancy created when the board declares the
office eof a director vacant as provided in clause (b) of the first paragraph of
this section of the bylaws may be filled by the board of directors.
The shareholders may elect a director at any time to fill a vacancy not
filled by the bard of directors.
The term of office of a director elected to fill a vacancy shall run
until the next annual meeting of the shareholders, and such a director shall
hold office until a successor is elected and qualified.
Section 5. PLACE OF MEETINGS; TELEPHONE MEETINGS. Regular meetings of
the board of directors may be held at any place within or outside the State of
California as designated from time to time by the board. In the absence of a
designation, regular meetings hall be held at the principal executive office of
the corporation. Special meetings of the board shall be held at any place within
or outside the State of California designated in the notice of the meeting, or
if the notice does not state a place, or if there is no notice, at the principal
executive office of the corporation. Any meeting, regular or special, may be
held by conference telephone or similar communication equipment, provided that
all directors participating can hear one another.
Section 6. ANNUAL DIRECTORS' MEETING. Immediately after each annual
shareholders' meeting, the board of directors shall hold a regular meeting at
the same place, or at any other place that has been designated by the board of
directors, to consider matters of organization, election of officers, and other
business as desired. Notice of this meeting shall not be required unless some
place other than the place of the annual shareholders' meeting has been
designated.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the board
of directors shall be held without call at times to be fixed by the board of
directors from time to time. Such regular meetings may be held without notice.
Section 8. SPECIAL MEETINGS. Special meetings of the board of directors
may be called for any purpose or purposes at any time by the chair of the board,
the president, any vice president, the secretary, or any two directors.
Special meetings shall be held on four days' notice by mail or
forty-eight hours' notice delivered personally or by telephone or telegraph.
Oral notice given personally or by telephone may be transmitted either to the
director or to a person at the director's office who can reasonably be expected
to communicate it promptly to the director. Written notice, if used, shall be
addressed
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to each director at the address shown on the corporation's records. The notice
need not specify the purpose of the meeting, nor need it specify the place if
the meeting is to be held at the principal executive office of the corporation.
Section 9. QUORUM. A majority of the authorized number of directors
shall constitute a quorum for the transaction of business, except to adjourn as
provided in Section 11 of this Article III. Every act or decision done or made
by a majority of the directors present at a meeting duly held at which a quorum
is present shall be regarded as the act of the board of directors, subject to
the provisions of California Corporations Code section 310 (as to approval of
contracts or transactions in which a director has a direct or indirect material
financial interest); section 311 (as to appointment of committees), and section
317(e) (as to indemnification of directors). A meeting at which a quorum is
initially present may continue to transact business, despite the withdrawal of
directors, if any action taken is approved by at least a majority of the
required quorum for that meeting.
Section 10. WAIVER OF NOTICE. Notice of a meeting, although otherwise
required, need not be given to any director who (i) either before or after the
meeting signs a waiver of notice of a consent to holding the meeting without
being given notice; (ii) signs an approval of the minutes of the meeting; or
(iii) attends the meeting without protesting the lack of notice before or at the
beginning of the meeting. Waivers of notice or consents need not specify the
purpose of the meeting. All waivers, consents, and approvals of the minutes
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Section 11. ADJOURNMENT TO ANOTHER TIME OR PLACE. Whether or not a
quorum is present, a majority of the directors present may adjourn any meeting
to another time or place.
Section 12. NOTICE OF ADJOURNED MEETING. Notice of the time and place
of resuming a meeting that has been adjourned need not be given unless the
adjournment is for more than 24 hours, in which case notice shall be give,
before the time set for resuming the adjourned meeting, to the directors who
were not present at the time of the adjournment.
Section 13. ADTION WITHOUT A MEETING. Any action required or permitted
to be taken by the board of directors may be taken without a meeting, if all
members of the board of directors individually or collectively consent in
writing to that action. Any action by written consent shall have the same force
and effect as a unanimous vote of the board of directors. All written consents
shall be filed with the minutes of the proceedings of the board of directors.
Section 14. FEES AND COMPENSATION OF DIRECTORS. Directors and members
of committees of the board may be compensated for their services, and shall be
reimbursed for expenses, as fixed or determined by resolution of the board of
directors. This section shall not be construed to preclude any director from
serving the corporation in any other capacity, as an officer, agent, employee,
or otherwise, and receiving compensation for those services.
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ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF THE BOARD. The board of directors may, by resolution
adopted by a majority of the authorized number of directors, designate one or
more committees, each consisting of two or more directors. The board may
designate one or more directors as alternate members of any committee, to
replace any absent member at a committee meeting. The appointment of committee
members or alternate members requires the vote of a majority of the authorized
number of directors. A committee may be granted any or all of the powers and
authority of the board, to the extent provided in the resolution of the board of
directors establishing the committee, except with respect to:
(a) Approving any action for which the California Corporations Code
also requires the approval of the shareholders or of the
outstanding shares;
(b) Filling vacancies on the board of directors or any committee of
the board;
(c) Fixing directors' compensation for serving on the board or a
committee of the board;
(d) Adoption, amending, or repealing bylaws;
(e) Amending or repealing any resolution of the board of directors
that by its express terms is not so amendable or repealable;
(f) Making distributions to shareholders, except at a rate or in a
periodic amount or within a price range determined by the board of
directors; or
(g) Appointing other committees of the board or their members.
Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and action of committees
shall be governed by, and held and taken in accordance with, bylaw provisions
applicable to meetings and actions of the board of directors, with such changes
in the context of those bylaws as are necessary to substitute the committee and
its members for the board of directors and its members, except that (a) the time
of regular meetings of committees may be determined either by resolution of the
board of directors of by resolution of the committee; (b) special meetings of
committees may also be called by resolution of the board of directors; and (c)
notice of special meetings of committees shall also be given to all alternative
members who shall have the right to attend all meetings of the committee. The
board of directors may adopt rules for the governance of any committee not
inconsistent with these bylaws.
ARTICE V
OFFICERS
11
<PAGE>
Section 1. OFFICERS. The officers of the corporation shall be a
president, a secretary, and a chief financial officer. The corporation may also
have, at the discretion of the board of directors, a chair of the board, one or
more vice presidents, one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be appointed in accordance with
Section 3 of this Article V. Any number of offices may be held by the same
person.
Section 2. APPOINTMENT OF OFFICERS. The officers of the corporation,
except for subordinate officers appointed in accordance with Section 3 of this
Article V, shall be appointed by the board of directors, and shall serve at the
pleasure of the board of directors.
Section 3. SUBORDINATE OFFICERS. The board of directors may appoint,
and may empower the president to appoint other officers as required by the
business of the corporation, whose duties shall be as provided in the bylaws, or
as determined from time to time by the board of directors or the president.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Any officer chosen by
the board of directors may be removed at any time, with or without cause or
notice, by the board of directors. Subordinate officers appointed by persons
other than the board under Section 3 of this Article V may be removed at any
time, with or without cause or notice, by the board of directors or by the
officer by whom appointed. Officers may be employed for a specified term under a
contract of employment if authorized by the board of directors; such officers
may be removed from office at any time under this section, and shall have no
claim against the corporation or individual officers of board members because of
the removal except any right to monetary compensation to which the officer may
be entitled under the contract of employment.
Any officer may resign at any time by giving written notice to the
corporation. Resignations shall take effect on the date of receipt of the
notice, unless a later time is specified in the notice. Unless otherwise
specified in the notice, acceptance of the resignation is not necessary to make
it effective. Any resignation is without prejudice to the rights, if any, of the
corporation to monetary damages under any contract of employment to which the
officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office resulting from
an officer's death, resignation, removal, disqualification, or from any other
cause shall be filled in the manner prescribed in these bylaws for regular
election or appointment to that office.
Section 6. CHAIR OF THE BOARD. The board of directors may elect a
chair, who shall preside, if present, at board meetings and shall exercise and
perform such other powers and duties as may be assigned from time to time by the
board of directors. If there is no president, the chair of the board shall in
addition be the chief executive officer of the corporation, and shall have the
powers and duties as set forth in Section 7 of this Article V.
Section 7. PRESIDENT. Except to the extent that the bylaws or the board
of directors assign specific powers and duties to the chair of the board (if
any), the president shall be the corporation's general manager and chief
executive officer and, subject to the control of the board
12
<PAGE>
Of directors, shall have general supervision, direction, and control over the
corporation's business and its officers. The managerial powers and duties of the
president shall include, but are not limited to, all the general powers and
duties of management usually vested in the office of president of a corporation,
and the president shall have other powers and duties as prescribed by the board
of directors or the bylaws. The president shall preside at all meetings of the
shareholders and, in the absence of the chair of the board or if there is no
chair of the board, shall also preside at meetings of the board of directors.
Section 7. CHIEF EXECUTIVE OFFICER. The chair of the board of directors
shall be the corporation's general manager and chief executive officer and
subject to the control of the board of directors, shall have general
supervision, direction, and control over the corporation's business and its
officers. These managerial powers and duties include, but are not limited to,
all the general powers and duties of management usually vested in the office of
president of a corporation, and the chair of the board shall have other powers
and duties as prescribed by the board of directors or the bylaws. The chair of
the board shall preside at all meetings of the shareholders, as well as all
meetings of the board of directors.
Section 8. VICE PRESIDENTS. If desired, one or more vice presidents may
be chosen by the board of directors in accordance with the provisions for
appointing officers set forth in Section 2 of this Article V. In the absence or
disability of the president, the president's duties and responsibilities shall
be carried out by the highest ranking available vice president if vice
presidents are ranked or, if not, by a vice president designated by the board of
directors. When so action, a vice president shall have all the powers of and be
subject to all the restrictions on the president. Vice presidents of the
corporation shall have such other powers and perform such other duties as
prescribed from time to time by the board of directors, the bylaws, or the
president (or chair of the board if there is no president).
Section 9. SECRETARY
(a) Minutes.
The secretary shall keep, or cause to be kept, minutes of all
of the shareholders' meetings and of all other board meetings. If the secretary
is unable to be present, the secretary or the presiding officer of the meeting
shall designate another person to take the minutes of the meeting.
The secretary shall keep, or cause to be kept, at the
principal executive office of such other place as designated by the board of
directors, a book of minutes of all meetings and actions of the shareholders, of
the board of directors, and of committees of the board. The minutes of each
meeting shall state the time and place the meeting was held; whether it was
regular or special; if special, how it was called or authorized; the names of
directors present at board or committee meetings; the number of shares present
or represented at shareholders' meetings; an accurate account of the
proceedings; and when it was adjourned.
13
<PAGE>
(b) Record of Shareholders.
The secretary shall keep, or cause to be kept, at the
principal executive office or at the office of the transfer agent or registrar,
a record or duplicate record of shareholders. This record shall show the names
of all shareholders and their addresses, the number and classes of shares held
by each, the number and date of share certificates issued to each shareholder,
and the number and date of cancellation of any certificates surrendered for
cancellation.
(c) Notice of Meetings.
The secretary shall give notice, or cause notice to be given,
of all shareholders' meetings, board meetings, and meetings of committees of the
board for which notice is required by statute or by the bylaws. If the secretary
or other person authorized by the secretary to give notice fails to act, notice
of any meeting may be given by any other officer of the corporation.
(d) Other Duties.
The secretary shall keep the seal of the corporation, if any,
in safe custody. The secretary shall have such other powers and perform other
duties as prescribed by the board of directors or by the bylaws.
Section 10. CHIEF FINANCIAL OFFICER. The chief financial officer shall
keep, of cause to be kept, adequate and correct books and records of accounts of
the properties and business transactions of the corporation, including accounts
of its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall (1) deposit corporate funds and other
valuables in the corporation's name and to its credit with depositaries
designated by the board of directors; (2) make disbursements of corporate funds
as authorized by the board; (3) render a statement of the corporation's
financial condition and an account of all transactions conducted as chief
financial officer whenever requested by the president or the board of directors;
and (4) have other powers and perform other duties as prescribed by the board of
directors or the bylaws.
Unless the board of directors has elected a separate treasurer, the
chief financial officer shall be deemed to be the treasurer for purposes of
giving any reports or executing any certificates or other documents.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES, AND OTHER AGENTS
14
<PAGE>
The corporation shall, to the maximum extent permitted by the
California General Corporation Law, have power to indemnify each of its agents
against expenses, judgments, fines, settlements, and other amounts actually and
reasonable incurred in connection with any proceeding arising by reason of the
fact that any such person is or was an agent of the corporation, and shall have
power to advance to each such agent expenses incurred in defending any such
proceeding to the maximum extent permitted by that law. For purposes of this
article, an "agent" of the corporation includes any person who is or was serving
at the request of the corporation as a director, officer, employee, or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, or was a director, officer, employee, or
agent of a corporation which was a predecessor corporation of the corporation or
of another enterprise serving at the request of such predecessor corporation.
ARTICLE VII
RECORDS AND REPORTS
Section 1. MAINTENANCE OF SHAREHOLDER RECORD AND INSPECTION BY
SHAREHOLDERS. The corporation shall keep at its principal executive office or at
the office of its transfer agent or registrar, as determined by resolution of
the board of directors, a record of the names and addresses of all shareholders
and the number and class of shares held by each shareholder.
A shareholder or shareholders holding at least 5 percent in the
aggregate of the outstanding voting shares of the corporation have the right to
do either or both of the following:
(a) Inspect and copy the record of shareholders'
names and addresses and shareholdings during usual business hours, on five days'
prior written demand on the corporation, or
(b) Obtain from the corporation's transfer agent, on
written demand and tender of the transfer agent's usual charges for this
service, a list of the names and addresses of shareholders who are entitled to
vote for the election of directors, and their shareholdings, as of the most
recent record date for which a list has been compiled or as of a specified date
later than the date of demand. This list shall be made available within five
days after (i) the date of demand or (ii) the specified later date as of which
the list is to be compiled. The record of shareholders shall also be open to
inspection on the written demand of any shareholder or holder of a voting trust
certificate, at any time during usual business hours, for a purpose reasonable
related to the holder's interests as a shareholder or holder of a voting trust
certificate. Any inspection and copying under this section may be made in person
or by an agent or attorney of the shareholder of holder of a voting trust
certificate making the demand.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS. The corporation shall
keep at its principal executive office, or if its principal executive office is
not in the State of
15
<PAGE>
California, at is principal business office in this state, the original or a
copy of the bylaws as amended to date, which shall be open to inspection by the
shareholders at all reasonable times during office hours. If the principal
executive office of the corporation is outside the State of California and the
corporation has no principal business office in this state, the secretary shall,
on the written request of any shareholder, furnish to that shareholder a copy of
the bylaws as amended to date.
Section 3. MAINTENANCE AND INSPECTION OF MINUTES AND ACCOUNTING
RECORDS. The minutes of proceedings of the shareholders, board of directors, and
committees of the board, and the accounting books and records, shall be kept at
the principal executive office of the corporation, or at such other place or
places as designated by the board of directors. The minutes shall be kept in
written form, and the accounting books and records shall be kept either in
written form or in a form capable of being converted into written form. The
minutes and accounting books and records shall be open to inspection on the
written demand of any shareholder or holder of a voting trust certificate at any
reasonable time during usual business hours, for a purpose reasonable related to
the holder's interests as a shareholder or holder of a voting trust certificate.
The inspection may be made in person or by an agent or attorney, and shall
include the right to copy and make extracts. These rights of inspection shall
extend to the records of each subsidiary of the corporation.
Section 4. INSPECTION BY DIRECTORS. Every director shall have the
absolute right at any reasonable time to inspect all books, records, and
documents of every kind and the physical properties of the corporation and each
of its subsidiary corporations. This inspection by a director may be made in
person or by an agent or attorney and the right of inspection includes the right
to copy and make extracts of documents.
Section 5. ANNUAL REPORT TO SHAREHOLDERS. Inasmuch as, and for as long
as, there are fewer than 100 shareholders, the requirement of an annual report
to shareholders referred to in section 1501 of the California Corporations Code
is expressly waived. However, nothing in this provision shall be interpreted as
prohibiting the board of directors from issuing annual or other periodic reports
to the shareholders, as the board considers appropriate.
Section 6. FINANCIAL STATEMENTS. The corporation shall keep a copy of
each annual financial statement, quarterly or other periodic income statement,
and accompanying balance sheets prepared by the corporation on file in the
corporation's principal executive office for 12 months; these documents shall be
exhibited at all reasonable times, or copies provided, to any shareholder on
demand.
If no annual report for the last fiscal year has been sent to
shareholders, on written request of any shareholder made more than 120 days
after the close of the fiscal year the corporation shall deliver or mail to the
shareholder, within 30 days after receipt of the request, a balance sheet as of
the end of that fiscal year and an income statement and statement of changes in
financial position for that fiscal year.
16
<PAGE>
A shareholder or shareholders holding 5 percent or more of the outstanding
shares of any class of stock of the corporation may request in writing an income
statement for the most recent three-month, six-month, or nine-month period
(ending more than 30 days before the date of the request) of the current fiscal
year, and a balance sheet of the corporation as of the end of that period. If
such documents are not already prepared, the chief financial officer shall cause
them to be prepared and shall deliver the documents personally or mail them to
the requesting shareholders within 30 days after receipt of the request. a
balance sheet, income statement, and statement of changes in financial position
for the last fiscal year shall also be included, unless the corporation has sent
the shareholders an annual report for the last fiscal year.
Quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of independent accountants
engaged by the corporation or the certificate of an authorized corporate officer
stating that the financial statements were prepared without audit from the
corporation's books and records.
Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION.
(a) Every year, during the calendar month in which the original
articles of incorporation were filed with the California Secretary of State, or
during the preceding five calendar months, the corporation shall file a
statement with the Secretary of State on the prescribed form, setting forth the
authorized number of directors; the names and complete business or residence
addresses of all incumbent directors; the names and complete business or
residence addresses of the chief executive officer, the secretary, and the chief
financial officer; the street address of the corporation's principal executive
office or principal business office in this state; a statement of the general
type of business constituting the principal business activity of the
corporation; and a designation of the agent of the corporation for the purpose
of service of process, all in compliance with section 1502 of the Corporations
Code of California.
(b) Notwithstanding the provisions of paragraph (a) of this section,
if there has been no change in the information in the corporation's last
annual statement on file in the Secretary of State's office, the
corporation may, in lieu of filing the annual statement described in
paragraph (a) of this section, advise the Secretary of State, on the
appropriate form, that no changes in the required information have occurred
during the applicable period.
ARTICLE VIII
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. For
purposes of determining the shareholders entitled to receive payment of
dividends or other distributions or allotment of rights, or entitled to exercise
any rights in respect of any other lawful action (other than voting at and
receiving notice of shareholders' meetings and giving written consent of the
shareholders without a meeting), the board of directors may fix in advance a
record date, which shall be not more than 60 nor less than 10 days before the
date of the dividend
17
<PAGE>
payment, distribution, allotment, or other action. If a record date is so fixed,
only shareholders of record at the close of business on that date shall be
entitled to receive the dividend, distribution, or allotment of rights, or to
exercise the other rights, as the case may be, notwithstanding any transfer of
shares on the corporation's books after the record date, except as otherwise
provided by statute.
If the board of directors does not so fix a record date in advance, the
record date shall be at the close of business on the later of (1) the day on
which the board of directors adopts the applicable resolution or (2) the 60th
day before the date of the dividend payment, distribution, allotment of rights,
or other action.
Section 2. AUTHORIZED SIGNATORIES FOR CHECKS. All checks, drafts, other
orders for payment of money, notes, or other evidences of indebtedness issued in
the name of or payable to the corporation shall be signed or endorsed by such
person or persons and in such manner authorized from time to time by resolution
of the board of directors.
Section 3. EXECUTING CORPORATE CONTRACTS AND INSTRUMENTS. Except as
otherwise provided in the articles or in these bylaws, the board of directors by
resolution may authorize any officer, officers, agent, or agents to enter into
any contract or to execute any instrument in the name of and on behalf of the
corporation. This authority may be general or it may be confined to one or more
specific matters. No officer, agent, employee, or other person purporting to act
on behalf of the corporation shall have any power or authority to bind the
corporation in any way, to pledge the corporation's credit or to render the
corporation liable for any purpose or in any amount, unless that person was
action with authority duly granted by the board of directors as provided in
these bylaws, or unless an unauthorized act was later ratified by the
corporation.
Section 4. CERTIFICATES FOR SHARES. A certificate or certificates for
shares of the capital stock of the corporation shall be issued to each
shareholder when any of the shares are fully paid.
All certificates shall certify the number of shares and the class or
series of shares represented by the certificate. All certificates shall be
signed in the name of the corporation by (1) either the chair of the board of
directors, the vice chair of the board of directors, the president, or any vice
president, and (2) either the chief financial officer, any assistant treasurer,
the secretary, or any assistant secretary.
None of the signatures on the certificate may be facsimile. If any
officer, transfer, agent, or registrar who has signed a certificate shall have
ceased to be that officer, transfer agent, or registrar before that certificate
is issued, the certificate may be issued by the corporation with the same effect
as if that person were an officer, transfer agent, or registrar at the date of
issue.
Section 5. LOST CERTIFICATES. Except as provided in this Section 5, no
new certificates for shares shall be issued to replace old certificates unless
the old certificate is
18
<PAGE>
surrrendered to the corporation for cancellation at the same time. If share
certificates or certificates for any other security have been lost, stolen, or
destroyed, the board of directors may authorize the issuance of replacement
certificates on terms and conditions as required by the board, which may include
a requirement that the owner give the corporation a bond (or other adequate
security) sufficient to indemnify the corporation against any claim that may be
made against it (including any expense or liability) on account of the alleged
loss, theft, or destruction of the old certificate or the issuance of the
replacement certificate.
Section 6. REIMBURSEMENT OF CORPORATION IF PAYMENT NOT TAX DEDUCTIBLE.
If all or part of the compensation, including expenses, paid by the corporation
to a director, officer, employee, or agent is finally determined not to be
allowable to the corporation as a federal or state income tax deduction, the
director, officer, employee, or agent to whom the payment was made shall repay
to the corporation the amount disallowed. The board of directors shall enforce
repayment of each such amount disallowed by the taxing authorities.
Section 7. CONSTRUCTION AND DEFINITIONS. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions in
sections 100 through 195 of the California Corporations Code shall govern the
construction of these bylaws. Without limiting the generality of this provision,
the singular number includes the plural, the plural number includes the
singular, and the term "person" includes both corporation and a natural person.
ARTICLE IX
AMENDMENTS
Section 1. AMENDMENT BY BOARD OF DIRECTORS OR SHAREHOLDERS. Except as
otherwise required by law or by the articles of incorporation, these bylaws may
be amended or repealed, and new bylaws may be adopted, by the board of directors
or by the holders of a majority of the outstanding shares entitled to vote.
CERTIFICATE OF ADOPTION BY-LAWS
The undersigned person named in the Articles of Incorporation as the
Incorporator or first Director of the above-named corporation hereby adopt the
same as the By-Laws of said corporation.
Executed this 24 day of October, 1996.
/s/ Barry Lotz
------------------------------------------
Barry Lotz, Ph.D., J.D.
<PAGE>
NUMBER: 543705
[COAT OF ARMS] CERTIFIED A TRUE COPY
THIS 8TH DAY OF
COMPANY ACT DECEMBER, 1997
CANADA /s/ ILLEGIBLE
PROVINCE OF BRITISH COLUMBIA ----------------------
SIGNATURE OF SOLICITOR
CERTIFICATE OF INCORPORATION
I Hereby Certify that
ALLIANCE CONSUMER CREDIT SOLUTIONS INC.
has this day been incorporated under the Company Act
Issued under my hand at Victoria, British Columbia
on May 29, 1997
[SEAL] /s/ J S Powell
JOHN S. POWELL
Registrar of Companies
<PAGE>
ARTICLES CERTIFIED A TRUE COPY
THIS 25TH DAY OF JUNE 1,
OF 1999
/S/ BARRY D. GALBRAITH
ALLIANCE CONSUMER CREDIT SOLUTIONS INC. -------------------------
SIGNATURE OF SOLICITOR
TABLE OF CONTENTS
BARRY D. GALBRAITH
BARRISTER & SOLICITOR
1150-625 HOWE STREET
VANCOUVER BRITISH COLUMBIA
V6C 2T6
TEL: (604) 669-4004
FAX: (604) 669-4224
<TABLE>
<CAPTION>
PART ARTICLES PAGES
<S> <C> <C> <C>
1 DEFINITIONS AND CONSTRUCTION 1 - 3 1
2 SHARE CAPITAL 4 - 8 1 - 2
3 REGISTRATION OF MEMBERS AND
SHARE CERTIFICATES 9 - 13 2
4 TRANSFER AND TRANSMISSION OF
SHARES AND DEBENTURES 14 - 22 3 - 5
5 GENERAL MEETINGS 23 - 41 5 - 9
6 DIRECTORS 42 - 61 9 - 12
7 MANAGEMENT OF THE COMPANY 62 12 - 13
8 BORROWING AND MORTGAGING 63 - 65 13
9 SAFEGUARDING, INDEMNITY, ETC.
OF DIRECTORS 66 - 72 13 - 14
10 EXECUTION OF DOCUMENTS 73 - 76 15
11 DIVIDENDS 77 - 83 15 - 16
12 NOTICES 84 - 87 16
13 PROHIBITIONS 88 - 89 17
</TABLE>
<PAGE>
"COMPANY ACT"
ARTICLES
OF
ALLIANCE CONSUMER CREDIT SOLUTIONS INC.
PART 1 - DEFINITIONS AND CONSTRUCTION
-------------------------------------
1. In these Articles, except as the context otherwise requires:
(a) "board" means the board of directors for the time being of the
Company;
(b) "Company Act" means the Company Act (British Columbia) and
regulations thereunder from time to time in force;
(c) "registered address" of a member means the address of the
member as recorded in the Company's register of members;
(d) "registered address" of a director means the address of the
director as recorded in the Company's register of directors;
(e) words or expressions contained in these Articles bear the same
meaning as in the Company Act or any statutory modification
thereof in force on the date on which these Articles come into
effect;
(f) expressions referring to writing include printing,
typewriting, lithography, photography and any other means of
presenting language in visible and lasting form; and
(g) words importing the singular include the plural and vice
versa, words importing a male person include a female, and
words importing an individual include a corporation.
2. If any provision of these Articles is in whole or in part void, illegal
or invalid, the remaining provisions will be construed and take effect as if
every provision or part thereof which so offends had been omitted.
3. If there is any conflict between the provisions of these Articles and
the Memorandum of the Company, the provisions of the Memorandum will govern.
PART 2 - SHARE CAPITAL
----------------------
4. The Company may allot and issue its shares at such times, in such
manner and to such person, or class of persons, as the board determines.
<PAGE>
-2-
5. The board will determine the price or consideration at or for which the
shares are to be allotted and issued.
6. The Company may by resolution of the board purchase any of its issued
shares.
7. The Company many by special resolution alter its Memorandum to increase
its authorized capital by:
(a) creating shares with par value or shares without par value or
both;
(b) increasing the number of shares of any class with par value or
shares of any class without par value or both; or
(c) increasing the par value of a class of shares with par value,
if no shares of that class are issued.
8. The Company may, to the extent permitted by law, pay a commission or
allow a discount to any person in consideration of his subscribing or agreeing
to subscribe, whether absolutely or conditionally, or procuring or agreeing to
procure subscriptions, whether absolute or conditional, for shares in the
capital of the Company.
PART 3 - REGISTRATION OF MEMBERS AND SHARE CERTIFICATES
-------------------------------------------------------
9. Except as these Articles otherwise provide, the Company and its
directors, officers and agents may treat the registered holder of a share as the
absolute owner thereof, and will not, except as required by statute or as
ordered by a court of competent jurisdiction, be bound to recognize even when
having notice thereof, any claim to, interest in, or right in respect of such
share on the part of any other person.
10. A share held in the names of two or more persons will be deemed to be
held jointly.
11. Except in the case of the personal representatives of, or trustees of
the estate of, a deceased member, the Company may refuse to register more than
three persons as joint holders of a share.
12. A share certificate may be delivered to a member entitled thereto by
mailing it by prepaid registered post in the manner provided in these Articles
for the giving of notices, or otherwise as directed by the member in writing,
and neither the Company nor its transfer agent will be liable for any loss
occasioned to a member or person claiming through a member by reason that a
share certificate so mailed or so otherwise sent is not received by the
addressee.
13. A certificate for a share registered in the names of two or more
persons may be delivered to or to the direction of any one of them.
<PAGE>
-3-
PART 4 - TRANSFER AND TRANSMISSION OF SHARES AND DEBENTURES
14. For the purpose of countersigning, issuing, registering, transferring,
cancelling and certifying the shares and share certificates of the Company, the
Company may appoint:
(a) a registrar;
(b) one or more transfer agents, one of whom may be the registrar;
and
(c) one or more branch transfer agencies and securities registrars
both in and outside British Columbia;
15. For the purpose of these Articles "instrument of transfer" means:
(a) such form of transfer as may appear on the back of the share
certificate representing the share proposed to be transferred;
or
(b) such form of separate transfer document as may from time to
time be in general use.
16. (1) In order to effect a transfer of a share:
(a) an instrument of transfer must be executed by the registered
holder of the share, or his attorney duly authorized in
writing;
(b) unless the proposed transferee has acquired the share through
a registrant, he will, if not a member, execute an
acknowledgment that he agrees to become a member;
(c) the execution of the instrument of transfer and any
acknowledgment must be attested and validated as in either
case the board from time to time reasonably requires; and
(d) the certificate representing the share to be transferred, the
instrument of transfer and the acknowledgment, if required,
will be delivered to the Company's transfer agent or, if the
Company has no transfer agent, to the records office of the
Company.
(2) There shall be a separate instrument of transfer for each
class of shares proposed to be transferred.
(3) When the transfer agent or the Company receives for the purpose of
a proposed share transfer a duly executed instrument of transfer, the Company
and its directors, officers and agents, will:
(a) where the instrument of transfer designates the transferee; or
(b) where the instrument of transfer was executed and is delivered
in blank, and the person by or on whose behalf the instrument
of transfer is delivered designates in writing a transferee;
be entitled to treat the person so designated as the beneficial owner of:
<PAGE>
-4-
(c) if the instrument of transfer is endorsed on a share
certificate, the number of shares represented by the
certificate or such lesser number as may be specified in the
instrument of transfer; or
(d) if the instrument of transfer is not so endorsed, such number
of shares registered in the name of the transferor as are
represented by every unendorsed certificate deposited with the
Company or its transfer agent for the purpose of the transfer,
or such lesser number as may be specified in the instrument of
transfer;
and upon compliance with, and subject to all other provisions of these Articles,
the Company will cause the name of the proposed transferee to be entered in the
register of members of the Company as holder of each such share.
17. A share may be registered in the name of a person as executor,
administrator, guardian, committee, curator or trustee of, or otherwise as
fiduciary for, a named person, trust or estate, and
(a) where application is made to issue or transfer a share to a
fiduciary, the Company will not be obliged to enquire into the
authority of the fiduciary, who will be presumed, as against
the Company, to be acting in accordance with his authority
unless, in the case of a transfer of a share, the transfer
proposed is from the person whose estate or interest is sought
to be represented;
(b) in the case of transfer by a fiduciary, including a transfer
by a fiduciary to himself, the Company will not be obligated
to enquire into the authority of the fiduciary or the
propriety of the transaction or to ascertain whether the
fiduciary continues to occupy his office at the time of
transfer;
(c) in all cases the Company will be entitled to act on an order
of a court of record, wherever constituted or having
jurisdiction in proceedings to which the registered holder
appears from the order to have been subject, directing a
vesting or declaring the ownership of shares, as evidenced by
a copy of the order of the court certified as such in
accordance with the practice of the court;
(d) any grant of letters probate or letters of administration or
order appointing a trustee, guardian, committee, curator or
directing a vesting or declaring the ownership of shares,
dated not more than one year before the date on which a copy
of the grant or order, certified in accordance with the
practice of the authority issuing the grant or order, received
by the Company or its transfer agent, will be deemed to be in
full force and effect and not to have been amended, revoked or
reversed, unless and until there is delivered to the transfer
agent of the Company or, if the Company has no transfer agent,
to the records office of the Company:
(i) a certificate of a court of record appearing to have
the required jurisdiction, certified in accordance
with the practice of such court, that proceedings
have been commenced by way of appeal or otherwise to
amend, revoke or reserve the grant or order, or
<PAGE>
-5-
(ii) a copy of an order of a court of record appearing to
have the necessary jurisdiction certified as
aforesaid, by which the earlier grant or order is
amended, revoked or reversed; and
(e) any certificate of a court of record, certified as aforesaid,
and delivered to the transfer agent of the Company or, if the
Company has no transfer agent, to the records office of the
Company, to the effect that any grant or order of that court
of the nature described in clause (d) remains in full force
and effect, and has not been amended, revoked or reversed and
that there is not outstanding with respect to the grant or
order any proceeding of the nature referred to in subclause
(d)(i), will create the same presumption as to the validity of
the grant or order as though the grant or order bore the same
date as the certificate.
18. The Company or its registrar or transfer agent may refuse to recognize
the transfer of a share to an infant, bankrupt or person suffering mental
infirmity.
19. Where a transfer of a share is completed by registration in the
register of members of the Company, the instrument of transfer and any
accompanying acknowledgment will be retained by the Company or its transfer
agent but where the Company declines to complete a proposed transfer of a share
the instrument of transfer, share certificate and other documentation deposited
for the purpose of the transfer will, on demand, be returned to the person
depositing the same, or other person entitled thereto.
20. There must be paid to the Company or its transfer agent in respect of
the registration of any transfer or transmission such fee as the board
determines.
21. (1) The personal representative of a deceased member (not being one of
several joint holders) will be the only person recognized by the Company as
having any title to a share registered in the name of the deceased.
(2) On the death of one of joint registered holders of a share, the
survivor or survivors will be the only person or persons recognized by the
Company as having any title or interest in the share.
22. The Company may, if authorized by a debenture or any trust indenture
pursuant to which a registered debenture has been issued, cause to be kept one
or more branch registers of its debenture holders.
PART 5 - GENERAL MEETINGS
-------------------------
23. General meetings of the Company will be held at such time and place, in
accordance with the Company Act and these Articles, as the board determines.
<PAGE>
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24. (1) Notice of a meeting is sufficient if it specifies the place, the
day and the hour of the meeting and the general nature of any business to be
considered at the meeting.
(2) Notice of a meeting will be deemed to be delivered on the next
business day following the day on which it was mailed or forwarded.
25. The accidental omission to give notice of a general meeting to, or the
non-receipt of such notice by, any of the persons entitled to receive the notice
will not invalidate any proceedings of that meeting or any meeting adjourned
therefrom.
26. A quorum for the transaction of business at a general meeting shall be:
(a) one member of the Company, if the Company has only one member,
or
(b) two members or proxy holder(s) representing two members, or
one member and a proxy holder representing another member,
personally present at the commencement of the meeting and
holding or representing by proxy the majority of the issued
shares of a class of shares, the holders of which are entitled
to attend and to vote at such meeting.
27. Unless a quorum is present at the commencement of a general meeting, no
business may be transacted other than the selection of the chairman and the
adjournment or termination of the meeting.
28. If by half an hour after the time appointed for a general meeting a
quorum is not present, the meeting, if convened upon requisition, will be
terminated, and in any other case will stand adjourned to the same day in the
next week at the same time and place, or to such later date, other time or other
place as the chairman specifies on the adjournment, and if at the adjourned
meeting a quorum is not present by half an hour after the time appointed for the
meeting, the members present will be a quorum.
29. The chairman of a general meeting will be:
(a) the chairman of the board, if any; or
(b) if there is no such chairman or if he is absent or unwilling
to act, the president; or
(c) so failing the president, a director present chosen by the
directors present; or
(d) if no such director is chosen and willing to act, any
individual present as a member, proxy holder, or
representative of a corporate member or another person present
who is duly chosen by the individuals so present.
30. (1) The chairman may, with the consent of the meeting at which a quorum
is present, and will in pursuance of a resolution to that effect, adjourn the
meeting from time to time and from place to place, but no business will be
transacted at an adjourned meeting other than the business left unfinished at
the meeting from which the adjournment takes place.
<PAGE>
-7-
(2) No notice need be given of an adjournment or from the business to
be conducted at an adjourned meeting unless the meeting is adjourned for more
than 31 days, in which case not less than 10 days' notice of the adjourned
meeting must be given.
31. (1) All business at meetings will be conducted by poll unless a show of
hands is specified.
(2) A member entitled to vote at a general meeting may, by means of a
proxy, appoint a proxy holder and such proxy holder will be entitled to attend,
speak, act and vote on a show of hands and on a poll for the member and on his
behalf at the meeting subject only to any limitation imposed on the authority of
the proxy holder by the proxy.
(3) A proxy must be in writing, dated the date on which it is executed,
must be executed by the member or his attorney authorized in writing or if the
member is a corporation, by a duly authorized officer or attorney of the
corporation and, if to apply to less than all the shares registered in the name
of the member, must specify the number of shares to which it is to apply.
(4) A proxy holder may be appointed to act for a member at every annual
or other general meeting, or at one or more annual or other general meetings
that may be held within such period of time from the date of the proxy,
accordingly as the proxy specifies.
(5) A proxy will, to the extent that it is inconsistent with another
proxy of an earlier date, be deemed to revoke such other proxy.
(6) A vote given in accordance with the terms of a proxy is not
invalidated by the previous death, bankruptcy or mental infirmity of the member
giving the proxy unless written notice of the death, bankruptcy or infirmity is
received by the chairman before the declaration of the result to vote.
(7) The board may make regulations providing for the deposit of proxies
at specified places and at specified times before meetings and adjourned
meetings of the Company, and providing for particulars of such proxies to be
cabled or telegraphed or sent in writing before the meeting or adjourned meeting
to the Company or to any agent of the Company appointed for the purpose of
receiving such particulars, and providing that particulars so received will be
as effective as though the proxies themselves were deposited.
(8) Every proxy may be revoked by an instrument in writing executed by
the member or his attorney authorized in writing or, where the member is a
corporation, by a duly authorized officer or attorney of the corporation, and
delivered to the records office of the Company at any time up to and including
the last business day preceding the day of the meeting or any adjournment
thereof at which the proxy is to be used, or to the chairman of the meeting or
any adjournment thereof.
32. A proxy, other than one required by law to be in particular form, will
be substantially in the following form:
<PAGE>
-8-
"The undersigned here appoints ,
of (or failing him , of ) as proxy holder for the undersigned
to attend, speak and vote for and on behalf of the undersigned in respect of all
(or ) shares registered in the name of the undersigned at the general meeting of
the Company to be held on the day of , 19 , and at any adjournment thereof.
Signed this day of , 19 .
(Signature of Member)"
33. A corporation which is a member and is not a subsidiary of the Company
may, by instrument under the hand of its duly authorized officer or attorney,
appoint a representative who, until his appointment is in like manner
terminated, will be entitled to attend meetings, act and vote, both on a show of
hands and on a poll, either in person or by proxy, and otherwise exercise the
rights of membership of the corporation appointing him and will, for all
purposes in connection with any meeting of the Company other than the giving of
notice, be reckoned as a member holding the shares registered in the name of
such corporation.
34. Any one of the joint holders of a share may vote in respect of the
share at a general meeting, either personally or by proxy holder, as if he were
solely entitled thereto, and if more than one of the joint holders is present or
represented by proxy holder or corporate representative that one of them whose
name appears first on the register of members in respect of the share, or his
proxy holder or representative, will alone be entitled to vote in respect
thereof.
35. A member for whom a committee has been duly appointed may vote, whether
on a show of hands or on a poll, by his committee and the committee may appoint
a proxy holder.
36. (1) A poll demanded on the election of a chairman or on a question of
adjournment will be taken forthwith and without an intervening adjournment.
(2) The demand for a poll and the carrying out of a poll will not,
unless the chairman so rules, prevent the continuance of a meeting for the
transaction of business other than that on which the poll is demanded.
37. On a poll a person entitled to more than one vote need not use all his
votes or cast all the votes he uses in the same way.
38. In the case of an equality of votes, whether on a show of hands or on a
poll, the chairman may exercise a casting vote in addition to any other vote
which he may have exercised.
39. The chairman may move, propose or second a resolution.
40. The chairman of a meeting of shareholders will have regard to accepted
rules of parliamentary procedure, except that
(a) the chairman will have absolute authority over matters of
procedure and there will be no appeal from his ruling, but if
the chairman deems it advisable to dispense with the rules of
<PAGE>
-9-
parliamentary procedure at any general meeting or part
thereof, he must state and must state clearly the rules under
which the meeting or the appropriate part thereof will be
conducted;
(b) any dispute as to the admission or rejection of a vote will be
determined by the chairman and his determination will be final
and conclusive;
(c) if disorder arises which prevents continuation of the business
of the meeting, the chairman may quit the chair and announce
the adjournment of the meeting, and upon his so doing, the
general meeting is, notwithstanding Article 30, immediately
adjourned;
(d) the chairman may require anyone to leave the meeting who is
not a registered shareholder entitled to vote at the meeting
or proxy holder for or corporate representative of such a
shareholder;
(e) a resolution or motion will be considered for vote only if
proposed by a shareholder, proxy holder or representative of a
corporate shareholder and (except for a nomination for
election of directors or appointment of auditors) seconded by
a shareholder, proxy holder, or representative other than the
person who proposed the resolution or motion.
41. The Company by ordinary resolution may from time to time adopt any
Rules of Order which shall, insofar as not inconsistent with the Company Act or
these Articles, govern the conduct of general meetings.
PART 6 - DIRECTORS
------------------
42. The subscriber(s) to the Memorandum shall be the first director(s). The
directors to succeed the first director(s) and number of directors may be
determined in writing by the subscriber to the Memorandum. The number of
directors may be changed from time to time by ordinary resolution, at an annual
general meeting, or by special resolution at any other meeting at which
directors are to be elected, but shall never be less than one while the Company
is not a reporting company and three if the Company is or becomes a reporting
company.
43. (1) At each annual general meeting of the Company directors will be
elected to hold office commencing at the termination, or earlier adjournment, of
the meeting at which they have been elected.
(2) If the number of eligible persons nominated for election as
directors is equal to or less than the number of directors to be elected, no
vote will be required and those nominated will be deemed elected by acclamation.
(3) A retiring director is eligible for re-election.
44. The office of a director will terminate:
(a) on his resignation;
<PAGE>
-10-
(b) on his removal from office as provided in the Company Act;
(c) on his ceasing to be qualified as a director under the Company
Act; or
(d) on the adjournment or termination of the annual general
meeting which next follows his election or appointment and at
which a director is elected but he is not appointed.
45. (1) The board may appoint any individual qualified to act as a director
to the board to fill any casual vacancy on the board.
(2) A vacancy resulting from an increase in the number of directors
will be deemed not to be a casual vacancy unless, but will be deemed to be a
casual vacancy if, the vacancy is not filled by the shareholders at the meeting
at which the increase is authorized.
(3) Any vacancy on the board that has not been filled by an appointment
made by the board may be filled by an appointment made by ordinary resolution.
(4) The board may, between annual general meetings, appoint one or more
additional directors of the Company but the number of additional directors so
appointed shall not exceed one-third of the number of directors elected or
appointed at the last annual general meeting.
46. A person who is not a member who becomes a director is deemed to have
agreed to be bound by the provisions of these Articles to the same extent as a
member.
47. (1) A director will be paid such reasonable travelling, lodging,
subsistence and other expenses as he incurs in or about the business of the
Company.
(2) The remuneration of the directors may from time to time be fixed by
the board subject to any limitations established by ordinary resolution, and
may, in the case of a director who is also an officer or employee of the
Company, be in addition to any remuneration to which he is entitled as such an
officer or employee.
(3) If a director performs any professional or other service for the
Company that, in the opinion of the board, is outside the ordinary duties of a
director, or if he is otherwise specially occupied in or about the Company's
business, he may be paid a special remuneration to be fixed by the board or, at
the option of the director, by the Company at a general meeting.
(4) Remuneration of a director payable on a periodic basis will be
deemed to accrue from day to day.
(5) Except as restricted by ordinary resolution, the board may cause
the Company to pay a gratuity, pension or allowance on retirement to any
director who has held any salaried office or place of profit with the Company,
or to his widow or dependents and may make contributions to any fund for, and
pay premiums for the purchase or provision of, any such gratuity, pension or
allowance.
<PAGE>
-11-
48. (1) A director (in this Article called "appointer") may appoint any
other director, member or non-member as an alternate director.
(2) An appointment of an alternate will not be effective until an
instrument in writing signed by the appointer, or a telegram, telecopy, fax,
telex or cable dispatched by the appointer, declaring the appointment, is
received by the Company.
(3) An appointer may revoke an appointment of his alternate by notice
in writing by telegram, telecopy, fax, telex or cable delivered to the Company.
(4) The appointment of an alternate terminates if the appointer or the
alternate ceases to be a director.
(5) A director may act as alternate for more than one director and will
be entitled at a meeting of the board to cast one vote for each director for
whom he is the alternate in addition to the vote to which he is entitled as a
director in his own right.
(6) Unless otherwise determined by the board, an alternate will not be
counted as representing his appointer in determining whether a quorum is
present.
49. The directors may meet together at such places, or convene meetings by
telephone, and adjourn and otherwise regulate their meetings and proceedings as
they see fit.
50. A director may at any time, and the secretary upon the request of the
director will, convene a meeting of the board.
51. (1) Notice of a meeting of the board must be given to each director at
least forty-eight (48) hours before the time fixed for the meeting.
(2) Notice may be given verbally, personally or by telephone, or in
writing, personally or by delivery through the post, telegraph, fax, telex or by
any other means of communication in common usage.
(3) When notice of a meeting is given to a director other than
personally, it will be addressed to him at his registered address as shown in
the Company's register of directors.
(4) Where the board has established a fixed time and place for holding
regular meetings of the board and holds such a meeting accordingly, no notice of
the next meeting to be so held need be given to any director.
(5) No notice need be given to a director of a meeting of the board at
which he is appointed or which immediately follows a general meeting at which he
is elected or appointed.
52. The board may act notwithstanding any vacancy in its body, so long as
the number of directors in office is not reduced below the number fixed as the
quorum of the board.
<PAGE>
-12-
53. The board may from time to time fix the quorum necessary for the
transaction of business and until so fixed the quorum will be a majority of the
number last elected at the annual general meeting.
54. The chairman of the board, if any, or in his absence or if there is no
chairman of the board, the president, will be chairman of each meeting of the
board, but if at any meeting neither the chairman of the board nor the president
is, within fifteen minutes after the time appointed for holding the meeting,
present and willing to act, the directors present may choose one of their number
to be chairman of the meeting.
55. A meeting of directors at which a quorum is present is competent to
exercise all or any of the authorities, powers and discretions for the time
being vested in or exercisable by the board generally.
56. Questions arising at a meeting of the board will be decided by a
majority of votes.
57. In the case of an equality of votes, the chairman will have a second or
casting vote.
58. A director who is interested in a proposed contract or transaction or
other business to be considered or conducted at a meeting of the board and who
has disclosed his interest in accordance with the provisions of the Company Act
will be counted in the quorum at any meeting of the board at which the proposed
contract or transaction or such other business is considered, approved or
otherwise acted upon.
59. The board may on such terms as it sees fit, delegate any of its powers
to committees each consisting of one or more directors, which will function in
such manner as the board from time to time directs.
60. (1) The board may elect annually from among its number an audit
committee to be composed of at least two directors, and, if only two directors
are so elected, one of whom shall not be an officer or employee of the Company
or its affiliates or, if more than two directors are so elected, a majority of
whom shall not be officers or employees of the Company or its affiliates.
(2) The audit committee will review the annual audited financial
statements of the Company before, and will comment thereon when, such statements
are submitted to the board for its approval.
61. (1) All appointments of officers will be made upon such terms and
conditions and at such remuneration, whether by way of salary, fee, commission,
participation in profits, or otherwise as the board determines, and every such
appointment will be subject to termination at the pleasure of the board, but
without prejudice to any right that may thereby arise under any contract.
(2) The appointment of an officer will not terminate merely by reason
that all or any of the members of the board by which he was appointed have
ceased to be directors at an annual general meeting or otherwise, unless he has
thereby ceased to hold the qualification for his office.
<PAGE>
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PART 7 - MANAGEMENT OF THE COMPANY
----------------------------------
62. (1) The board may exercise all such powers and do all such acts and
things as the Company may exercise and do and which are not by these Articles or
otherwise lawfully directed or required to be exercised or done by the Company
in general meeting, but subject nevertheless to the provision of these Articles
and all laws affecting the Company and to any rules, not inconsistent with these
Articles, made from time to time by the Company in general meeting; but no such
rule will invalidate any prior act of the board that would have been valid if
the rule had not been made.
(2) The board may appoint a management committee from among its members
to conduct certain matters on its behalf.
PART 8 - BORROWING AND MORTGAGING
---------------------------------
63. The board may from time to time at its discretion authorize the Company
to borrow any sum of money for the purposes of the Company and may raise or
secure the repayment of such sum or the performance of any other obligation of
the Company in such manner and upon such terms and conditions in all respects as
the board thinks fit, and without limiting the generality of the foregoing, by
the issue of bonds, debentures, or other instruments, or any mortgage or charge,
whether specific of floating, or other security on the undertaking of the whole
or any part of the property of the Company, both present and future.
64. The board may make any such bond, debenture, or other instrument,
mortgage or charge, or any other security by its terms assignable free from any
equity between the Company and the person to whom it is issued, or any other
person who lawfully acquires the same by assignment, purchase or otherwise.
65. The board may authorize the issue of any such bond, debenture, or other
instrument, or mortgage or charge or other security at a discount, premium or
otherwise, and with special or other rights or privileges as to redemption,
surrender, drawings, allotment of or conversion into or exchange for shares,
attendance at general meetings of the Company, and otherwise as the board
determines at or before the time of issue.
PART 9 - SAFEGUARDING, INDEMNITY, ETC. OF DIRECTORS
---------------------------------------------------
66. A director of the Company may be or become a director or officer of, or
otherwise interested in, any corporation promoted by the Company or in which the
Company is interested, as shareholder or otherwise, or any corporation which
owns or controls shares of the Company, and will not be liable to account to the
Company for any remuneration or other benefit received by him as a director or
officer of, or from his interest in, such other corporation.
67. A director may hold any office or place of profit under the Company in
conjunction with his directorship for such period and on such arrangement as to
remuneration and otherwise as the board determines, and no director or proposed
director is disqualified by that relationship from contracting with the Company
either with regard to his tenure of such other office or place of profit, or as
vendor, purchaser or otherwise, nor is a director so contracting or being so
interested liable to account to the Company for any
<PAGE>
-14-
profit realized by any such arrangement or contract, by reason only that the
director holds that office or of the fiduciary relationship thereby established.
68. (1) The Company will indemnify every person who is or was a director of
the Company or is or was serving at the request of the Company as a director of
another corporation of which the Company is or was a shareholder, and may to the
extent that the board determines indemnify any person who is or was an officer,
employee or agent of the Company or is or was serving at the request of the
Company as the officer, employee or agent of another corporation or partnership,
joint venture, trust or other enterprise, and the heirs and personal
representatives of any such person, against all costs, charges and expenses
actually incurred by him, including an amount paid to settle an action or
satisfy a judgment in a civil, criminal or administrative action or proceeding
whether brought by the Company, by such other corporation, partnership, joint
venture, trust or other enterprise, or by any other person, and whether or not
he is made a party by reason of his having so been or having so served as a
director, officer, employee or agent, if
(a) he act honestly and in good faith with a view to the best
interests of the Company or such other corporation,
partnership, joint venture, trust or other enterprise, and
(b) in the case of a criminal or administrative action or
proceeding, he had reasonable grounds for believing that his
conduct was lawful.
(2) The Company may also indemnify any such person or any other
person in such other circumstances and to such extent as the law allows.
69. The indemnification provided by this Part is applicable only to the
extent that is does not duplicate any right, indemnity or reimbursement which
the person claiming such indemnification has received or will receive otherwise
than under this Part.
70. No director and, to the extent approved by the directors, no officer,
employee or agent for the time being of the Company, will be liable for the act,
receipt, neglect or default of any other director, officer, employee or agent,
or for joining in any receipt or act for the sake of conformity, or for any
loss, damage or expense sustained or incurred by the Company through the
insufficiency or deficiency of any security in or upon which any of the monies
of or belonging to the Company are placed out or invested, or for any loss or
damage arising from the bankruptcy, insolvency or wrongful act of any person,
firm or corporation with whom or which any monies, securities or effects are
lodged or deposited, or for any other loss, damage or misfortune whatever which
may happen in the execution of the duties of his office or trust or in relation
thereto, unless the same happens by or through his own wilful neglect or
default.
71. The directors may rely upon the accuracy of any statement of fact
represented by an officer of the Company to be correct or upon statements in a
written report of the auditor of the Company, and will not be liable for any
loss or damage resulting from their authorizing payment of any dividend or
otherwise acting or declining to act in good faith in reliance on any such
statement.
72. The directors may cause the Company to purchase and maintain insurance
for the benefit of any person who is or may be entitled to indemnification under
Article 68 against any expense or liability from
<PAGE>
-15-
which he is or may be so entitled to be indemnified and may secure such right of
indemnification by mortgage or other charge upon all or any part of the real and
personal property of the Company, and any action taken by the board under this
paragraph will not require approval or confirmation by the members.
PART 10 - EXECUTION OF DOCUMENTS
--------------------------------
73. The board may adopt a common seal for the Company and may, from time to
time, adopt a new common seal and will provide for the safe custody of the
common seal.
74. The Company may have an official seal for use in any other province,
territory, state or country.
75. Neither the common seal nor an official seal will be impressed on any
document or instrument except:
(a) in the presence of any one director or officer of the Company
by the authority of a resolution of the board, or by such
person or persons as may be authorized by such resolution; and
such person or persons shall sign every instrument to which
the seal of the Company is affixed in his or their presence;
provided that a resolution of the board directing the general
use of the seal, if any, may at any time be passed by the
board and shall apply to the use of the seal until
countermanded by another resolution of the board; or
(b) by the secretary or an assistant secretary for the purpose of
certifying copies of or extracts from the Memorandum or
Articles of the Company, minutes of meetings or resolutions of
the shareholders or board or committees of the board or any
instrument executed or issued by the Company.
76. The signature of any officer or director of the Company that is, by
authority of the board, printed, lithographed, engraved or otherwise reproduced
upon any instrument or document (including any negotiable instrument) to be
signed, executed or issued by the Company or by any of its officers or
directors, and any instrument or document on which the signature of any such
person is so reproduced, will be as valid as if the signature had been affixed
manually by such person, and will be so valid notwithstanding that, at the time
of the issue or delivery of the instrument or document, the person whose
signature is so reproduced is deceased, has ceased to hold the office giving
rise to his authority or is otherwise incapacitated from personally signing such
instrument or document.
PART 11 - DIVIDENDS
-------------------
77. Except as otherwise provided by special rights or restrictions attached
to any shares, all dividends will be declared according to the number of shares
held.
78. Dividends may be paid out of the surplus accounts of the Company.
<PAGE>
-16-
79. No notice of the declaration of any dividend need be given to any
member, and no dividend will bear interest against the Company.
80. A resolution declaring a dividend may direct payment of the dividend
wholly or partly by the distribution of specific assets or of paid-up shares,
bonds, debentures or debenture stock of the Company, or in any one or more such
ways, and where any difficulty arises in regard to the distribution, the board
may settle the same as it thinks expedient, and in particular may fix the value
for distribution of specific assets, and may determine that cash payments shall
be made to members upon the footing of the values so fixed or in lieu of
fractional shares, bonds debentures or debenture stock, in order to adjust the
rights of all parties, and may vest any such specific assets in trustees upon
such trusts for the persons entitled as may seem expedient to the board.
81. The Company may retain the dividends payable on a share in respect of
which a fiduciary is entitled to become a member until the fiduciary becomes the
registered holder of such share.
82. Any dividend or other monies payable in cash in respect of a share may
be paid by cheque or warrant sent through the post to the registered holder of
the share in like manner as provided in these Articles for the giving of
notices, or to such person and to such address as the holder or joint holders,
as the case may be, in writing direct.
83. Any one of two or more joint holders may give effectual receipts for
any dividend or other monies payable or assets distributable in respect of a
share held by them as joint holders.
PART 12 - NOTICES
-----------------
84. A notice may be given or a document delivered by the Company to a
member or director, either personally, or by sending it by facsimile
transmission to his last known fax number, or through the post to him in a
prepaid letter, envelope or wrapper addressed to the member or director at his
registered address.
85. Notice may be given or a document delivered by the Company to the joint
holders of a share by giving the notice or delivering the document to the joint
holder first named in the register of members in respect of the share.
86. A notice may be given or a document delivered by the Company to a
person claiming entitlement to a share in consequence of the death, bankruptcy
or mental infirmity of a member, by sending it through the post in a prepaid
letter, envelope or wrapper addressed to such person by name, or by suitable
title as representing the deceased, bankrupt or mentally infirm member, at the
address, if any, supplied to the Company for the purpose by such person, or,
until an address has been so supplied, by giving the notice or delivering the
document in any manner in which the same might have been given or delivered if
the death, bankruptcy or mental infirmity had not occurred.
87. A notice or document sent through the post to or left at the registered
address of a member will, notwithstanding that the member is then deceased and
whether or not the Company or its agent has notice of his decease, be deemed to
have been duly given or delivered in respect of any share registered in the name
of the member and will for all purposes of these Articles be deemed sufficiently
given or delivered to his personal representative and to any person jointly
interested with the member in any such share.
<PAGE>
-17-
PART 13 - PROHIBITIONS
----------------------
88. So long as the Company is a non-reporting Company, no shares may be
transferred except with the consent of the board who may in their absolute
discretion refuse to register the transfer of any share and no transfer shall be
entered in the register of members without prior approval of the board.
89. So long as the Company is a non-reporting Company, no invitation will
be made to the public to subscribe for any share or securities of the Company
and the number of members shall be limited to fifty.
- ----------------------------------------------------------------------------
NAME, ADDRESS AND OCCUPATION OF SUBSCRIBER
- ----------------------------------------------------------------------------
- ---------------------------------------
Allen Kanerva
Businessman
870 - 57th Street
Delta, B.C.
V4L 1Y1
- -------------------------------------------------------
DATED the 28th day of May, 1997.
