U.S. 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
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(Name of Small Business Issuer in its charter)
California 68-0406331
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(State or other jurisdiction of IRS Employer
incorporation or organization) Identification No.)
3197 Boeing Road
Cameron Park, California 95682
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code 530-677-3233
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None N/A
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Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, No par value
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(Title of class)
<PAGE>
Item 1. DESCRIPTION OF BUSINESS
Business Development
The Company was incorporated in the State of California on February 5, 1998,
engaged in the business of designing, manufacturing and marketing energy
efficiency and conservation products. The Company's first product, which is
currently in production, is a patented evaporator fan controller for walk-in
refrigerators, which can save the consumer from 30-40% in energy costs. The
Company is currently marketing this product, the ART(TM) Series 4000 Evaporator
Fan Controller, in California, and plans on expanding its marketing operations
to cover the entire United States, as well as developing other products
currently in research and development. The Company's mailing address is 3197
Boeing Road, Cameron Park, California 95682, and its telephone number is (530)
677-3233. The Company's E-mail address is: [email protected]. The Company
also maintains an office/warehouse at 78365 Terra Cotta Court, La Quinta,
California 92253, telephone number (760) 345-7196.
General
The Company is engaged in the business of designing, manufacturing and marketing
energy efficiency and conservation products. The Company's first product, which
is currently in production, is a patented evaporator fan controller for walk-in
refrigerators, which can save the consumer from 30-40% in energy costs. The
Company is currently marketing this product, the ART(TM) Series 4000 Evaporator
Fan Controller, in California, and plans on expanding its marketing operations
to cover the entire United States, as well as developing other products
currently in research and development.
The Products
The Company's first product, the ART(TM) Series 4000 Evaporator Fan Controller,
is an energy saving device which can be easily integrated into existing or new
walk-in refrigerator systems. Current contemporary refrigeration systems consist
of an insulated chamber or "box", an electrically driven compressor, a
condenser, and an evaporator. The compressor has a controller, which turns the
compressor on and off, according to the temperature inside the box, but the
evaporator fans run full speed 24 hours per day. The Company's product acts as a
controller for the evaporator fans, regulating their speed to a lower level when
the refrigerant is not flowing through the system, and thus saving electrical
energy. It also reduces the actual refrigeration load because of the reduced
amount of heat introduced into the refrigerated box by the evaporator fan motors
when they run at a lower speed. The product is designed to easily retrofit into
an existing system. Original Equipment Manufacturer (OEM) customers can provide
the product in new construction.
<PAGE>
The Company has spent the last six months evaluating how the product works as
seen by the customer, and what are the best ways to sell it. The testing has
shown that the product saves the customer from 30% to 40% on their present
refrigeration electric bill. However, the Company has experienced resistance
from customers who have been exposed to other highly touted energy savings
devices which, when independently tested, were determined not to save any
energy. Because of this, potential customers tend to question the Company's
representations of energy savings that are possible with ART controllers. The
Company has faced this problem by adding the capability to monitor and report
the energy used by the system, and by giving customers added safety features,
consisting of critical system data reporting to alert them to problems in their
entire system. These new features encourage customers to buy the ART 5000 and
6000 products for their safety features, rather than just for the energy saving
capabilities.
The ART 4000 has been evaluated by the National Institute of Standards and
Technology's (NIST) Office of Technology Innovation in accordance with the
United States Department of Energy (DOE) Energy Related Inventions Program
(ERIP), which resulted in a recommendation of the product by the ERIP. Tests
monitored by the Pacific Gas and Electric Company confirmed refrigeration energy
savings potential at the national level equal to 305,000 barrels of oil per
year, assuming only a 10% market penetration. The Company estimates the
refrigeration energy cost savings to the consumer to be between 30-40%.
Additionally, the product has been evaluated by the Federal Energy Management
Program (FEMP), and has received a positive recommendation and has been approved
for installation in federal facilities. The product is also featured in the
January, 1999 Department of Energy (DOE) "Impacts" report, which tracks and
reports on commercially successful technologies developed with the assistance of
DOE programs.
Description of Technology
The use of the ART Evaporator Fan Controller is an extremely effective and
economical method to decrease the power consumption of a medium temperature
walk-in refrigerator. The controller is designed for such walk-in refrigerators
as are found in commissaries and other grocery selling facilities of all sizes,
in food service facilities of all types, such as military dining halls, clubs,
restaurants, hospitals, correctional institutions, cafeterias, large ship
galleys, and also in laboratories.
The ART Evaporator Fan Controller works by regulating the evaporator fan power.
The fan motor speed used at any given time is regulated to meet only the needs
of that particular phase of the refrigeration cycle. Motor speed is reduced by
taking advantage of the slip characteristic of induction motors. During
compressor run times, the evaporator fans operate at normal full speed. When the
compressor is off, the fan speed is reduced to the minimum required for
defrosting and preventing stratification. This eliminates wasted horsepower used
to run fans at high speed when this is not needed. This also reduces the heat
generated by the evaporator fan motors, slowing the temperature rise in the
walk-in refrigerator and keeping the compressor off-line for a longer period of
time. The combined effect of reduced fan energy consumption and longer
compressor off time has produced energy savings up to 50% in properly designed
refrigeration systems.
<PAGE>
The controller is designed for use in medium temperature walk-in refrigerated
chambers and is applicable both as a retrofit and in new construction. By
design, it has a simple installation which requires only an electrical
connection and the external placement of two thermal sensors on the evaporator
unit. There is no need to shut down the refrigeration unit to make the
installation. No refrigerant lines need to be opened or affected in any way.
This eliminates the possibility of degrading the refrigerant system, which is a
major concern of maintenance engineers and technicians. The ART Evaporator Fan
Controller is a small (less than 6" cubed) unobtrusive unit that is usually
placed on the side of the evaporator or near it on a wall. Wiring is very
simple. In case of controller default, the system is designed to return the
evaporator fans to normal full speed. Additionally, it is a sealed unit and can
be installed with Torx screws, which makes it a viable energy saving product for
correctional facility installations. It does not replace any other technology or
any other piece of equipment in a refrigerated chamber.
The ART Evaporator Fan Controller maintains the natural moisture of open
produce, meat, or flowers, so that they stay fresh longer naturally. They are
not dried out by more air movement than is necessary to maintain proper
coolness. The ART Evaporator Fan Controller was developed in 1992, by two
founders of the company, Mervin W. Howenstine and Allan E. Schrum. It has been
through multiple design changes to evolve to the present state. Some prototypes
of the product have been in service in test sites for over six years,
demonstrating both the advantages of the concept and the strength of the design.
The device has CSA and NRTL/C safety approvals.
The ART Evaporator Fan Controller is not designed for and cannot be used with
centrifugal start or capacitor start motors, or with any system where
temperature is controlled by the constant spraying of liquid Freon. It is
designed for single-phase applications only.
Specific Product Lines
ART 4000
This product is the basic unit designed for the best price to performance ratio
to deal with OEM customers and sophisticated end-users. This is the "bare bones"
unit that can save from 30% to 40% on refrigeration electric bills.
<PAGE>
ART 5000
This product is a microprocessor-based version of the same proven design, which
saves the same amount of refrigeration energy as the ART 4000, and additionally,
keeps track of and stores the data of the amount of energy consumed and saved on
a day-to-day basis, holding this data in memory for up to 120 days. With all
this data now stored in the microprocessor, special algorithms are used to
analyze the raw data. This analysis will cause warnings if the evaporator is
icing, the temperature is not holding, or the compressor is running longer than
normal, all of which indicate a problem with the refrigerator or freezer system.
These warnings will be indicated by two flashing lights built into the ART 5000
unit. In addition, the ART 5000 has a serial port for local download to any
personal computer (PC) for keeping records of the refrigeration energy savings
and of any alarm warnings.
ART 6000
This product has the same proven design as the ART 4000, with the same
refrigeration energy savings, and the microprocessor-based record keeping and
alarm functions of the ART 5000, with the addition of a built-in modem for
remote communications to corporate offices or maintenance contractors. The
communications port allows for cost saving information and detected alarms to be
sent to all concerned parties by utilizing the Company's secure data link. The
Company offers a full-time, 24-hour per day service to monitor and inform our
customers of problems immediately and to provide notification of impending
failures in their refrigerator or freezer systems. This service is available to
users of the ART 6000 for a monthly fee.
Patents
The product holds United States Patent, No. 5,488,835, issued February 6, 1996,
and U.S. Patent No. 5,797,276, issued August 25, 1998, described as "Methods and
devices for energy conservation to be retrofitted to refrigerated chambers or
boxes of the type comprising an insulated chamber and an associated compression
type refrigeration system. The energy conservation devices disclosed are adapted
to be mounted within the refrigerated chamber, on or within the evaporator, or
within the evaporator, and connected to the thermostatic switch and the
evaporator fans located within the refrigerated chamber."
The Market
The potential market for the Company's current product is approximately $800
million for upgrading existing installed coolers and freezers. The market for
new systems being installed presently is $36 million per year. With this kind of
existing market, the Company believes it will not be limited by market size.
This data pertains to the United States market only. The following table gives a
breakdown on market segments:
TABLE 1
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TYPE OF FACILITY SALES POTENTIAL IN UNITS
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Fast Food Restaurants 735,062
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Convenience Stores 195,700
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Grocery Stores (3 per store) 1,058,735
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Florists 52,271
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Liquor Stores 40,197
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Food Contractors 19,117
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Bars and Taverns 36,435
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Health Care Related 13,045
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Retail Hosts 123,937
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Other Hosts 6,439
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Lodging Establishments 127,251
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Recreation & Sporting Establishments 14,627
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Misc. Nursing Homes, Clubs, etc. 31,568
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Employer Operated 7,370
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Educationally Related 97,106
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Penal System 4,153
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Other 236,177
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TOTAL 2,799,190
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(source of data: U.S. Dept. Of Commerce, Bureau of the Census, Census of Retail
Trade and Wholesale Trade, 1992; National Restaurant Association Report, "The
Food Service Industry: 1993 in Review.")
The overall market for the product is any facility which uses a medium
temperature walk-in type refrigeration system. See the preceding Table for
specific applications. The Company's products will be marketed to refrigeration
contractors for incorporation of the product into new construction, and to
owners of existing systems. Estimates from sales and marketing representatives
in the commercial refrigeration industry place new walk-in refrigerator unit
sales at approximately 120,000 units annually. Estimates from the National
Restaurant Association and the U.S. Department of Commerce indicate the
potential market for retrofitting existing systems is nearly 2.8 million units
in the United States alone. Some public utilities have taken an active role in
promoting energy-efficient technologies to their customers by offering direct
rebates to consumers who install energy-efficient technologies. While the recent
deregulation of the electric power industry in the state of California has
affected these programs, there are still major city-owned public utilities whose
programs would not be affected by this development. The Company is presently
working with Sacramento Municipal Utility District (SMUD) and Roseville Electric
Department to qualify for their incentive programs.
Raw Materials and Principal Suppliers and Vendors
There are no raw materials used in the composition of the product. All parts
used, including the custom case and transformer, are readily available from
multiple sources. The company has determined that subcontract product assembly
is the most viable and economical production method for the product. It does not
make economic sense to create an in-house production facility due to the readily
available subcontract facilities.
<PAGE>
Competition
The Company has virtually no competition for its product. However, a group of
former marketing consultants to the inventors have formed a company called
"Energy Control Equipment, Inc." Energy Control Equipment, Inc. has produced a
product which is a "rip off" of the ART 4000, but which has none of the new
features that have been developed. This competing product is a violation of the
Company's patent rights, as well as a covenant not to compete. The Company has
taken steps to protect its patent rights to the product and, further, intends to
quash this patent infringement. Other competition exists in that manufacturers
of motors have been producing more energy efficient designs which would slow the
payback period of the product in new applications. For example, GE Motors has
introduced a refrigeration motor which uses 50% less energy than conventional
units. However, the ART controller is compatible with these energy efficient
motors and reduces their power usage just as it does with standard motors.
Additionally, other companies are developing higher efficiency compressors,
parallel compressors, higher efficiency door seals, improved wall panel
construction, plastic air shields, new refrigerants and total facility energy
management systems. However, since the Company's products are complementary to
these new technologies, the Company believes that the potential market is
unaffected by these developments.
Marketing
The Company employs one marketing Vice President in charge of all marketing and
sales functions. The Company presently employs no other salespersons, but it has
devised a unique method to build a sales force of independent sales contractors
to handle all sales, excluding OEM and major accounts, which will be handled by
the Vice President of Marketing. These sales contractors will be paid on a
commission basis only, which saves the Company potential costs of employment
taxes and fringe benefits. The Company also plans to hire a public relations
firm and an advertising firm, if earnings permit, or the Company is successful
in raising additional working capital, but there can be no assurance that this
will be achieved. The Company has begun active test marketing of its current
product through industry trade shows, and direct discussions and installations
in schools, restaurants, grocery retailers and convenience stores. The Company
plans to continue its marketing efforts for the retrofit application of the
product directly to these facilities. Current commercial refrigeration systems
are put together by local refrigeration contractors. The Company also plans a
marketing campaign targeted to these contractors. Additionally, the Company
intends to expand its marketing efforts in the Original Equipment Manufacturer
(OEM) area.
The Company has also developed a unique after market "niche" for future
potential revenue through product support. The newest model of the ART motor
controller, the ART 6000, has a microprocessor computer to handle some if its
more complicated functions. In the Company's test marketing program, it has
installed 45 units in various businesses and has discovered a wealth of
knowledge of what can be done to make the cooler or freezer more economical and
maintenance-friendly. The Company has found that it can also know when something
may be going wrong with the cooler or freezer, and issue warnings to the store
or business telling them about the problem. With this ability to issue warnings,
the next step is to put the units on-line in order to warn the maintenance
people of a particular failure over the telephone. The Company intends to offer
this dial-up service to major store chains and maintenance companies that do
their servicing.
Employees
The Company presently employs four employees, all of whom are working management
employees.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
Plan of Operations
The Company is engaged in the business of product development, manufacturing,
marketing and sale of energy efficiency and conservation products to OEM sources
and end-users of walk-in refrigeration units. The Company has financed its
operations to date through the sale of its securities. See Item 10 - "Recent
Sales of Unregistered Securities."
The Company will continue test marketing its product and actively soliciting new
orders. In the meantime, the Company intends to secure additional working
capital by commencing a private placement of its restricted common stock.
<PAGE>
Forward Looking Statements
This registration statement contains forward-looking statements. The Company's
expectation of results and other forward-looking statements contained in this
registration statement involve a number of risks and uncertainties. Among the
factors that could cause actual results to differ materially from those expected
are the following: business conditions and general economic conditions;
competitive factors, such as pricing and marketing efforts; and the pace and
success of product research and development. These and other factors may cause
expectations to differ.
Year 2000 Compliance
With respect to Year 2000 compliance, the Company manufactures a product which
contains microprocessors. The source code for the microprocessors has been
written so that it is not dependent on dates, but, instead, functions on a
24-hour internal timing routine. To this extent, all products currently being
manufactured by the Company are Year 2000 compliant.
The Company has performed an audit of all of its computer hardware, internal
accounting and software applications and found all to be Year 2000 compliant or
capable. As of this date, the Company has been given assurances from its banking
institution and transfer agent that they are working toward compliance or are in
compliance. In the beginning of the second quarter of 1999, the Company shall
conduct an audit of its vendors and suppliers to identify relevant Year 2000
issues. At this time, the Company cannot give a reasonable estimate of the costs
associated with Year 2000 compliance, due to an absence of data from its vendors
and suppliers, nor can assurances be offered with respect to third party
compliance. Upon assessment of the answers generated by the Company's Year 2000
questionnaires, a more realistic picture of the scope and impact of the Year
2000 compliance challenges, if any, should allow sufficient time for appropriate
remediation without significant effect on the Company's business, financial
condition or results of operation.
ITEM 3. DESCRIPTION OF PROPERTY
The Company previously leased its executive offices at 3031 Alhambra Drive,
Cameron Park, California, Suite 201 from March 6, 1998 through February 28,
1999. The Company has since relocated its executive offices to property owned by
the Company's Vice President and Secretary, and occupies same on a
month-to-month basis. The Company also leases office/warehouse space at 78365
Terra Cotta Court, La Quinta, California, from a non-affiliate of the Company.
The Company holds United States Patent Nos.5,488,835, issued February 6, 1996,
and 5,797,276, issued August 25, 1998 for its products.
<PAGE>
ITEM 4. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the shares of Common Stock of the Company as of the end of the
fiscal year, 1998, by (i) each person who is known by the Company to be the
beneficial owner of more than five percent (5%) of the issued and outstanding
shares of common stock, (ii) each of the Company's directors and executive
officers, and (iii) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Name and Address Number of Shares Percentage Owned
- ---------------- ---------------- ----------------
<S> <C> <C>
Charles McEwan 600,000 40.1%
Rancho Mirage, CA 92270
David Kimber 100 0%
La Quinta, CA 92253
Allan Schrum(4) 400,000 26.7%
Cameron Park, CA 95682
Clare Schrum(4) 60,000 4%
Cameron Park, CA 95682
Officers and Directors Total 1,060,100 70.8%
Mervin Wade Howenstine(1) 200,000 13.4%
Terry Koelzer(2) 100,000 6.7%
Charles Price(3) 100,000 6.7%
</TABLE>
(1) Mr. Howenstine is a former officer of NECSI and a co-inventor of the
product.
(2) Mr. Koelzer is a former officer of NECSI.
(3) Mr. Price is a former officer of NECSI.
(4) Mr. and Mrs. Schrum are husband and wife.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The Executive Officers of the Company, and their ages, are as follows:
Name Age Position
- ---- --- --------
Charles E. McEwan 63 President, Director
David J. Kimber 40 Vice President/Marketing, Director
Allan E. Schrum 58 Vice President/Engineering, Director
Clare C. Schrum 57 Secretary, Chief Financial Officer
Charles E. McEwan. Mr. McEwan is the President and Director of the Company.
Since 1972, he has been successful in founding small companies and making them
successful through management and private and public financing. From 1994
through 1997, he founded and was President of AirWave Corporation. In 1987, Mr.
McEwan was a member of the Board of Directors and a founder of RasterOps. From
1972 through 1988, he founded and was President of Ramtek Corporation. Mr.
McEwan was employed as the marketing manager of Data Disk in Palo Alto,
California, from 1969 through 1972, and was a computer programmer for Ford
Aerospace from 1959 through 1969. He served from 1953 through 1955 in the United
States Army, and completed 2 years of City College in San Francisco and one year
of courses at the University of New Mexico, Albuquerque.
David J. Kimber. Mr. Kimber is the Vice President, Marketing and Director of the
Company. Mr. Kimber has directed the Company's marketing efforts since April,
1995. He served as Director of Marketing for Nevada Energy Control Systems,
Inc., the Company's predecessor ("NECSI"), from June, 1995 through March, 1998.
From 1990 through 1997, he was a self employed marketing consultant. Mr. Kimber
has experience in general business management, strategic planning, project
development, budgeting and advertising. He holds a BS in Business Administration
and Finance from California State University, Hayward.
<PAGE>
Allan E. Schrum. Mr. Schrum is the Vice President, Engineering, and Director of
the Company. He is the co-inventor of the Company's product, and was responsible
for obtaining the U.S. patent on the product. Mr. Schrum's professional
experience spans more than 30 years as an innovative manager and engineer in the
electronic and electromechanical industries. He has been responsible for the
direction of research and development, engineering, manufacturing and new
product introduction as well as corporate budget planning and staffing. Mr.
Schrum also serves as the Vice President of Engineering for Varatouch
Technology, and has done so since March, 1997. He was Vice President,
Engineering of NECSI from February, 1992 through January, 1996, and was
President of NECSI from January 1996 through March, 1998.
Clare C. Schrum. Ms. Schrum is the Secretary and Chief Financial Officer of the
Company. She has also served as the Office Manager of Gnosis Consulting since
1982. Ms. Schrum was the corporate Secretary and Treasurer of NECSI and Office
Manager from April, 1997 through March, 1998. She is the wife of the Vice
President, Engineering, Allan Schrum.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth the cash and non-cash compensation paid by the
Company to its Chief Executive Officer and all other executive officers for
services rendered during the fiscal year ended December 31, 1998. The only
salary being paid at the present time is to the Vice President/Marketing. The
salaries of the other executive officers for the fiscal year ended 1998 are
accruing and owed by the Company. There were no grants of options or SAR grants
given to any executive officers during the last fiscal year.
Annual Compensation
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Name and Position Salary Bonus Annual Deferred Salary
Charles E. McEwan -0- -0- $60,000
President
David J. Kimber $31,200 -0- -0-
Vice President/Marketing
Allan E. Schrum -0- -0- $12,000
Vice President/Engineering
Clare C. Schrum -0- -0- $40,000
Secretary, Chief Financial Officer
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no transactions since the beginning of fiscal year 1998, or any
currently proposed transactions, or series of similar transactions, to which the
Company was or is to be a party, in which the amount involved exceeds $60,000,
and in which any of the officers, or directors, or holders of over 5% of the
Company's stock have or will have any direct or indirect material interest. The
Company does not currently have any policy toward entering into any future
transactions with related parties.
ITEM 8. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company is a party or to
which the property interests of the Company are subject.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
The Company's common stock is not listed or quoted at the present time, and
there is no present public market for the Company's common stock. The Company's
Market Maker, National Capital, had a Form 211 pending with the National
Association of Securities Dealers to quote the Company's securities on the NASD
OTC Bulletin Board, but it was withdrawn due to changes in NASD Rules requiring
companies to report financial information to the SEC. It will be resubmitted
after the effective date of this Registration Statement.
The Company has not paid any cash dividends since its inception and does not
contemplate paying any in the foreseeable future. It is anticipated that
earnings, if any, will be retained for the operation of the Company's business.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Since its inception, the Company has sold unregistered securities in a
Regulation D, Rule 504 exempt offering, which was commenced on June 5, 1998, and
extended on March 15, 1999. The offering closed on April 6, 1999, and resulted
in the sale of 403,100 shares, resulting in gross offering proceeds of $111,200.
<PAGE>
ITEM 11. DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 20,000,000 shares of Common Stock, no par
value, of which, as of December 31, 1998, 1,497,200 shares were issued and
outstanding and held of record by 50 stockholders. Holders of shares of Common
Stock are entitled to one vote per share on all matters to be voted upon by the
stockholders generally. The approval of proposals submitted to stockholders at a
meeting other than for the election of directors requires the favorable vote of
a majority of the shares voting, except in the case of certain fundamental
matters (such as certain amendments to the Certificate of Incorporation, and
certain mergers and reorganizations), in which cases California law and the
Company's Bylaws require the favorable vote of at least a majority of all
outstanding shares. Stockholders are entitled to receive such dividends as may
be declared from time to time by the Board of Directors out of funds legally
available therefor, and in the event of liquidation, dissolution or winding up
of the Company to share ratably in all assets remaining after payment of
liabilities. The holders of shares of Common Stock have no preemptive,
conversion, subscription or cumulative voting rights.
Voting Rights. Holders of shares of regular Common Stock are entitled to one
vote per share on all matters submitted to a vote of the shareholders. Shares of
Common Stock do not have cumulative voting rights, which means that the holders
of a majority of the shareholder votes eligible to vote and voting for the
election of the Board of Directors can elect all members of the Board of
Directors. There are a total of 20,000,000 authorized regular common shares.
Under current California law, a shareholder is afforded dissenters' rights
which, if properly exercised, may require the Company to purchase his shares.
Dissenters' rights commonly arise in extraordinary transactions such as mergers,
consolidations, reorganizations, substantial asset sales, liquidating
distributions, and certain amendments to the Company's Certificate of
Incorporation. The current officers and directors of the Company have granted
the President, Charles McEwan, the right to vote their shares until March 4,
2000.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 317 of the California Corporations Code, as amended, provides for the
indemnification of the Company's officers, directors, employees and agents under
certain circumstances, as follows:
"(a) For the purposes of this section, "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 the 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 subdivision (d) or paragraph (4)
of subdivision (e).
(b) A corporation shall have power to 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 to procure a judgment in its favor)
by reason of the fact that the person is or was an agent of the corporation,
against expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with the proceeding if that person acted in
good faith and in a manner the person reasonably believed to be in the best
interests of the corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of the person was unlawful. The
termination of any proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which the
person reasonably believed to be in the best interests of the corporation or
that the person had reasonable cause to believe that the person's conduct was
unlawful.
<PAGE>
(c) A corporation shall have power to 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 the person is or was an agent of the
corporation, against expenses actually and reasonably incurred by that person in
connection with the defense or settlement of the action if the person acted in
good faith, in a manner the person believed to be in the best interests of the
corporation and its shareholders.
No indemnification shall be made under this subdivision for any of the
following:
(1) In respect of any claim, issue or matter as to which the
person shall have been adjudged to be liable to the corporation in the
performance of that person's duty to the corporation and its shareholders,
unless and only to the extent that the court in which the proceeding is or was
pending shall determine upon application that, in view of all the circumstances
of the case, the person is fairly and reasonably entitled to indemnity for
expenses and then only to the extent that the court shall determine.
(2) Of amounts paid in settling or otherwise disposing of a
pending action without court approval.
(3) Of expenses incurred in defending a pending action which
is settled or otherwise disposed of without court approval.
(d) To the extent that an agent of a corporation has been successful on
the merits in defense of any proceeding referred to in subdivision (b) or (c) or
in defense of any claim, issue, or matter therein, the agent shall be
indemnified against expenses actually and reasonably incurred by the agent in
connection therewith.
(e) Except as provided in subdivision (d), any indemnification under
this section shall be made by the corporation only if authorized in the specific
case, upon a determination that indemnification of the agent is proper in the
circumstances because the agent has met the applicable standard of conduct set
forth in subdivision (b) or (c), by any of the following:
(1) A majority vote of a quorum consisting of directors who
are not parties to such proceeding.
(2) If such a quorum of directors is not obtainable, by
independent legal counsel in a written opinion.
(3) Approval of the shareholders (Section 153), with the
shares owned by the person to be indemnified not being entitled to vote thereon.
<PAGE>
(4) The court in which the proceeding is or was pending upon
application made by the corporation or the agent or the attorney or other person
rendering services in connection with the defense, whether or not the
application by the agent, attorney or other person is opposed by the
corporation.
(f) Expenses incurred in defending any proceeding may be advanced by
the corporation prior to the final disposition of the proceeding upon receipt of
an undertaking by or on behalf of the agent to repay that amount if it shall be
determined ultimately that the agent is not entitled to be indemnified as
authorized in this section. The provisions of subdivision (a) of Section 315 do
not apply to advances made pursuant to this subdivision.
(g) The indemnification authorized by this section shall not be deemed
exclusive of any additional rights to indemnification for breach of duty to the
corporation and its shareholders while acting in the capacity of a director or
officer of the corporation to the extent the additional rights to
indemnification are authorized in an article provision adopted pursuant to
paragraph (11) of subdivision (a) of Section 204. The indemnification provided
by this section for acts, omissions, or transactions while acting in the
capacity of, or while serving as, a director or officer of the corporation but
not involving breach of duty to the corporation and its shareholders shall not
be deemed exclusive of any other rights to which those seeking indemnification
may be entitled under any bylaw, agreement, vote of shareholders or
disinterested directors, or otherwise, to the extent the additional rights to
indemnification are authorized in the articles of the corporation. An article
provision authorizing indemnification "in excess of that otherwise permitted by
Section 317" or "to the fullest extent permissible under California law" or the
substantial equivalent thereof shall be construed to be both a provision for
additional indemnification for breach of duty to the corporation and its
shareholders as referred to in, and with the limitations required by, paragraph
(11) of subdivision (a) of Section 204 and a provision for additional
indemnification as referred to in the second sentence of this subdivision. The
rights to indemnity hereunder shall continue as to a person who has ceased to be
a director, officer, employee, or agent and shall inure to the benefit of the
heirs, executors, and administrators of the person. Nothing contained in this
section shall affect any right to indemnification to which persons other than
the directors and officers may be entitled by contract or otherwise.
(h) No indemnification or advance shall be made under this section,
except as provided in subdivision (d) or paragraph (4) of subdivision (e), in
any circumstance where it appears:
(1) That it would be inconsistent with a provision of the
articles, bylaws, a resolution of the shareholders, or an agreement in effect at
the time of the accrual of the alleged cause of action asserted in the
proceeding in which the expenses were incurred or other amounts were paid, which
prohibits or otherwise limits indemnification.
(2) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
<PAGE>
(i) A corporation shall have power to purchase and maintain insurance
on behalf of any agent of the corporation against any liability asserted against
or incurred by the agent in that 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 that liability under this section. The fact that a corporation
owns all or a portion of the shares of the company issuing a policy of insurance
shall not render this subdivision inapplicable if either of the following
conditions are satisfied: (1) if the articles authorize indemnification in
excess of that authorized in this section and the insurance provided by this
subdivision is limited as indemnification is required to be limited by paragraph
(11) of subdivision (a) of Section 204; or (2) (A) the company issuing the
insurance policy is organized, licensed, and operated in a manner that complies
with the insurance laws and regulations applicable to its jurisdiction of
organization, (B) the company issuing the policy provides procedures for
processing claims that do not permit that company to be subject to the direct
control of the corporation that purchased that policy, and (C) the policy issued
provides for some manner of risk sharing between the issuer and purchaser of the
policy, on one hand, and some unaffiliated person or persons, on the other, such
as by providing for more than one unaffiliated owner of the company issuing the
policy or by providing that a portion of the coverage furnished will be obtained
from some unaffiliated insurer or reinsurer.
(j) This section does not apply to any proceeding against any trustee,
investment manager, or other fiduciary of an employee benefit plan in that
person's capacity as such, even though the person may also be an agent as
defined in subdivision (a) of the employer corporation. A corporation shall have
power to indemnify such a trustee, investment manager, or other fiduciary to the
extent permitted by subdivision (f) of Section 207."
ITEM 13. FINANCIAL STATEMENTS
Report of Independent Certified Public Accountant
Financial Statements
Balance Sheet
Statement of Operations
Statement of Shareholder's Equity
Statement of Changes in Financial Position
Notes to Financial Statements
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no changes in or disagreements with accountants on accounting or
financial disclosure from the inception of the company to the date of this
registration.
ITEM 15. EXHIBITS, FINANCIAL STATEMENTS
(a) Report of Independent Certified Public Accountant
Financial Statements
Balance Sheet
Statement of Operations
Statement of Shareholder's Equity
Statement of Changes in Financial Position
Notes to Financial Statements
(b) Reports on Form 8-K: Not Applicable
(c) Exhibits
<PAGE>
Exhibit No. Description
---------- -----------
3.(I) Articles of Incorporation and Amendment
3.(II) By-laws
4 Specimen common stock certificate
27 Financial Data Sheet
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
/s/ Charles E. McEwan
- -----------------------------------------
CHARLES E. McEWAN, President and Director
Date: May 3, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
/s/ Allan E. Schrum
- -----------------------------------------------------
ALLAN E. SCHRUM, Vice President/Engineering, Director
Date: May 3, 1999
/s/ David J. Kimber
- ---------------------------------------------------
DAVID J. KIMBER, Vice President/Marketing, Director
Date: May 3, 1999
/s/ Clare C. Schrum
- ---------------------------------------------------
CLARE C. SCHRUM, Secretary, Chief Financial Officer
Date: May 3, 1999
<PAGE>
WILLIAM D. LINDBERG
CERTIFIED PUBLIC ACCOUNTANT
935 NEWHALL ST.
COSTA MESA, CA. 92627
To the Board of Directors and Stockholders
of Advanced Refrigeration Technologies, Inc.
I have audited the accompanying balance sheet of Advanced Refrigeration
Technologies, Inc. (a California corporation), as of December 31, 1998, and the
related statements of operations, shareholders' equity, and changes in financial
position for the period March 5, 1998 (date of inception) through December 31,
1998. 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 the 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
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Advanced Refrigeration
Technologies, Inc., as of December 31, 1998, and the results of its operations
and its changes in financial position for the period then ended in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 the Company is
in the development stage and has filed an initial public offering under
Regulation D Rule 504 of the Securities and Exchange Commission in order to
raise additional capital. The Company's ability to achieve the foregoing
financing, which may be necessary to permit the realization of assets and
satisfaction of liabilities in the ordinary course of business is uncertain.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
William D. Lindberg
March 3, 1999
Costa Mesa, CA
<PAGE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1998
SEE AUDITOR'S REPORT
ASSETS
------
CURRENT ASSETS
--------------
CASH $ 360
INVENTORY 3,584
-----------
TOTAL CURRENT ASSETS $ 3,944
EQUIPMENT AND FURNITURE 25,542
-----------
TOTAL ASSETS $ 29,486
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
-------------------
ACCOUNTS PAYABLE $ 17,166
ACCRUALS 772
LOANS 2,560
-----------
TOTAL CURRENT LIABILITIES $ 20,498
NOTE PAYABLE-NON CURRENT 55,000
SHAREHOLDERS' EQUITY
--------------------
COMMON STOCK-NO PAR VALUE
20,000,000 SHARES AUTHORIZED
1,497,200 ISSUED 61,623
DEFICIT ACCUMULATED DURING
DEVELOPMENT STAGE (107,635)
-----------
TOTAL SHAREHOLDERS' EQUITY $ (46,012)
-----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 29,486
============
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THIS
STATEMENT.
<PAGE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FROM INCEPTION MARCH 5, 1998
THROUGH YEAR END DECEMBER 31, 1998
SEE AUDITOR'S REPORT
INCOME $ 2,737
EXPENSES
PAYROLL 25,466
PATENT 890
RESEARCH 1,116
MARKETING 3,824
TRAVEL 10,158
OFFICE 2,819
POSTAGE 932
UTILITIES 1,480
TELEPHONE 2,813
RENT 6,300
PROFESSIONAL FEES 13,325
PUBLIC OFFERING EXPENSES 2,691
GRANT FROM U. S. DEPT. OF ENERGY (5,297)
---------
TOTAL EXPENSES 66,535
---------
(LOSS) FROM OPERATIONS (63,798)
INTEREST EXPENSE 1,079
---------
NET (LOSS) ($64,877)
=========
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF
THIS STATEMENT.
<PAGE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FROM INCEPTION MARCH 5, 1998
THROUGH YEAR END DECEMBER 31, 1998
SEE AUDITOR'S REPORT
<TABLE>
<CAPTION>
COMMON STOCK
NUMBER OF
SHARES AMOUNT DEFICIENCY
---------------------- ------------------- -----------------
<S> <C> <C> <C>
COMMON STOCK ISSUED TO
ACQUIRE NEVADA ENERGY
CONTROL SYSTEMS RESEARCH AND 400,000 0 ($42,758)
DEVELOPMENT ON EVAPORATOR
FAN CONTROLLERS
COMMON STOCK ISSUED
AFTER ACQUISITION 1,085,100 $37,423
COMMON STOCK ISSUED UNDER
504 PUBLIC OFFERING 12,100 24,200
NET (LOSS) DURING DEVELOPMENT STAGE (64,877)
---------------------- ------------------- -----------------
1,497,200 $61,623 ($107,635)
</TABLE>
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF
THIS STATEMENT.
<PAGE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN FINANCIAL POSITION
FROM INCEPTION MARCH 5, 1998
THROUGH YEAR END DECEMBER 31, 1998
SEE AUDITOR'S REPORT
FUNDS PROVIDED FROM (USED FOR) OPERATIONS
NET (LOSS) DURING DEVELOPMENT STAGE ($64,877)
FUNDS PROVIDED BY (USED FOR) WORKING CAPITAL
INVENTORY (1,684)
ACCOUNTS PAYABLE 16,629
ACCRUALS (263)
SHAREHOLDER LOANS 2,560
FUNDS PROVIDED BY (USED FOR) CAPITAL ACTIVITIES
ADDITIONS TO EQUIPMENT (2,653)
FUNDS PROVIDED FROM (USED FOR) FINANCING ACTIVITIES
DECREASE IN LONG TERM DEBT (16,173)
PROCEEDS FROM SALE OF STOCK 61,623
---------
NET FUNDS PROVIDED FROM (USED FOR) ALL ACTIVITIES (4,838)
CASH BALANCE START OF PERIOD 5,198
---------
CASH BALANCE AT END OF YEAR 360
=========
THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF
THIS STATEMENT
<PAGE>
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION MARCH 5, 1998
THROUGH YEAR END DECEMBER 31, 1998
SEE AUDITOR'S REPORT
GENERAL
THE COMPANY HAS BEEN IN THE DEVELOPMENT STAGE SINCE IT ACQUIRED THE
DEFICIT ACCUMULATED BY NEVADA ENERGY CONTROL SYSTEMS, INC., IN DEVLOPING AN
EVAPORATOR FAN CONTROL SYSTEM. THE COMPANY'S ACTIVITIES HAVE CONSISTED OF
OBTAINING FINANCING AND CAPITAL AND INITIATING MARKETING OF THE PRODUCT. THE
COMPANY HAS FILED A PUBLIC OFFERING AS OF JUNE 5, 1998, IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE FEDERAL AND STATE SECURITIES LAWS PROVIDED
BY REGULATION D, RULE 504 OF THE SECURITIES AND EXCHANGE COMMISSION IN ORDER TO
RAISE $500,000.
INVENTORY
INVENTORY CONSISTS OF FINISHED EVAPORATOR FAN CONTROLLERS AND PARTS FOR
ASSEMBLING ADDITIONAL UNITS AT HISTORICAL COST.
THE COMPANY HAS YET TO DETERMINE THE METHOD OF VALUATION OF ITS
INVENTORIES. WHATEVER METHOD IS ELECTED WOULD HAVE NO EFFECT ON THE FINANCIAL
STATEMENTS.
NOTES PAYABLE - NON CURRENT
THE PAYEE ON THE NOTE PAYABLE OF $55,000 HAS GIVEN A SPECIAL POWER OF
ATTORNEY TO THE PRESIDENT OF THE COMPANY. IT IS NOT PAYABLE UNTIL SO DEEMED BY
THE COMPANY. IT IS THE INTENTION OF THE COMPANY NOT TO PAY THE NOTE FOR THREE
YEARS. INTEREST IS AT 3% PER ANNUM.
GRANT
THE U. S. DEPARTMENT OF ENERGY MADE A GRANT OF $98,279 TO THE COMPANY,
OF WHICH THE FINAL $5,279 IS INCLUDED AS A REDUCTION OF EXPENSES IN THE STATEMNT
OF OPERATIONS. THE $98,279 EXPENDED FOR RESEARCH AND DEVELOPMENT IS IN ADDITION
TO THE FUNDS EXPENDED BY THE COMPANY, NONE OF WHICH HAS BEEN DEFERRED.
INCOME TAXES
THE COMPANY HAS A LOSS TAX CARRYFORWARD RESULTING FROM THE ACQUISITION
OF NEVADA ENERGY CONTROL SYSTEMS, INC., OF APPROXIMATELY $42,000. THE COMPANY
HAS ADOPTED A CALENDAR YEAR. CURRENT YEAR LOSSES WILL BE CARRIED FORWARD.
<PAGE>
ARTICLES OF INCORPORATION
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
ONE: The name of this corporation is:
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
TWO: The purpose of the 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 by the California
Corporations Code.
THREE: The liability of the directors of the corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
Law.
FOUR: 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.
FIVE: The name and address in this state of the Corporation's initial
agent for service of process is:
STEPHEN C. HAAS
Attorney at Law
10563 Brunswick Road, Suite 7
Grass Valley, CA 95945
SIX: This corporation is authorized to issue only one class of shares,
which shall be designated "common" shares. The total number of such shares
authorized to be issued is:
ONE MILLION (1,000,000) SHARES.
DATED: February 3,1998 By /s/ Stephen C. Haas
-----------------------
STEPHEN C. HAAS
I declare that I am the person who executed the above Articles of
Incorporation, and that this instrument is my act and deed.
By /s/ Stephen C. Haas
-----------------------
STEPHEN C. HAAS
<PAGE>
CERTIFICATE OF AMENDMENT TO
---------------------------
ARTICLES OF INCORPORATION
-------------------------
OF
--
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
-----------------------------------------
A California Corporation
The undersigned hereby certifies as follows:
ONE: That they are the President and Secretary, respectively, of
ADVANCED REFRIGERATION TECHNOLOGIES, INC., a California Corporation.
TWO: That at a meeting of the Board of Directors on May 14, 1998, the
Corporation made the following resolution:
RESOLVED, that the Corporation amend its Articles of Incorporation
Article Six as follows:
SIX: This corporation is authorized to issue only one class of shares,
which shall be designated "common" shares. The total number of shares authorized
to be issued is: Twenty Million (20,000,000) shares.
THREE: This Resolution was approved by the required vote of
shareholders in accordance with Section 902, 903 or 904 of the corporations
code. The total number of outstanding shares of each class entitled to vote for
the amendment is Five Hundred Thousand (500,000). The number of shares of each
class voting for the amendment equaled or exceeded the vote required, that being
fifty (50%) percent. The amendment was approved by a vote of four hundred
thousand (400,000) shares, equaling 80% of all shares entitled to vote.
Dated: June 17, 1998
By /s/ Charles E. McEwan
---------------------------
CHARLES E. McEWAN, President
Dated: June 17, 1998
By /s/ Clare C. Schrum
---------------------------
CLARE C. SCHRUM, Secretary
We, the undersigned, hereby declare, under penalty of perjury, in
accordance with the laws of the State of California, that we are the President
and Secretary of the above-referenced corporation, that we executed the
above-referenced Certificate of Amendment to Articles of Incorporation, that we
have personal knowledge of the information contained therein, and that the
information contained therein is true and correct.
By /s/ Charles E. McEwan
----------------------------
CHARLES E. McEWAN, President
By /s/ Clare C. Schrum
----------------------------
CLARE C. SCHRUM, Secretary
<PAGE>
BYLAWS OF
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
A California Corporation
OFFICES
-------
1. PRINCIPAL OFFICE. The principal office for the transaction of the
business of the corporation is hereby fixed and located at 3197 Boeing Road,
Cameron Park, California. The Board of Directors is hereby granted full power
and authority to change the place of said principal office.
2. OTHER OFFICES. Branch or subordinate offices may at any time be
established by the Board of Directors at any place or places where the
corporation is qualified to do business.
SHAREHOLDERS
------------
3. PLACE OF MEETINGS. Shareholders' meetings shall be held at the
principal office for the transaction of the business of this corporation in the
State of California, or at such other place as the Board of Directors shall, by
resolution, appoint.
4. ANNUAL MEETINGS. The annual meetings of shareholders shall be held
in the month of March in each year. At such meeting 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 shareholders. The
first annual meeting of shareholders after incorporation need not be held if
less than nine months have elapsed since incorporation to such meeting date.
Written notice of each annual meeting shall be mailed to each
shareholder entitled to vote, addressed to such shareholder at his address
appearing on the books of the corporation or given by him to the corporation for
the purpose of notice. If a shareholder gives no address, notice shall be deemed
to have been given 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 office is located. All such notices
shall be mailed, postage prepaid, to each shareholder entitled thereto not less
than ten (10) days nor more than sixty (60) days before each annual meeting.
Such notices shall specify the place, the day, and the hour of such meeting, the
names of the nominees for election as Directors if Directors are to be elected
at the meeting, and those matters which the Board of Directors intends to
present for action by the shareholders, and shall state such other matters, if
any, as may be expressly required by statute.
-1-
<PAGE>
5. SPECIAL MEETINGS. Special meetings of the shareholders, may be
called at any time by the Chairman of the Board of Directors, if any, the
President or any Vice President, or by the Board of Directors, or by one or more
shareholders holding not less than ten (10%) percent of the voting power of the
corporation. Except in special cases where other express provision is made by
statute, notice of such special meeting shall be given in the same manner as for
an annual meeting of shareholders. Said notice shall specify the general nature
of the business to be transacted at the meeting. No business shall be transacted
at a special meeting except as stated in the notice sent to shareholders, unless
by the unanimous consent of all shareholders represented at the meeting, either
in person or by proxy. Upon written request to the Chairman of the Board, the
President, the Secretary or any Vice President of the corporation by any person
(but not the Board of Directors) entitled to call a special meeting of
shareholders, the person receiving such request shall cause a notice to be given
to the shareholders entitled to vote that a meeting will be held at a time
requested by the person calling the meeting not less than thirty-five (35) nor
more than sixty (60) days after the receipt of the request.
6. ADJOURNED MEETINGS AND NOTICE THEREOF. Any shareholders' 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 no other business may be transacted at such meeting.
Notice of an adjourned meeting need not be given if (a) the
meeting is adjourned for forty-five (45) days or less, (b) the time and place of
the adjourned meeting are announced at the meeting at which the adjournment is
taken, and (c) no new record date is fixed for the adjourned meeting. Otherwise,
notice of the adjourned meeting shall be given as in the case of an original
meeting
7. VOTING. Except as provided below or as otherwise provided by the
Articles of Incorporation or by law, a shareholder shall be entitled to one vote
for each share held of record on the record date fixed for the determination of
the shareholders entitled to vote at a meeting or if no such date is fixed, the
date determined in accordance with law. Upon the demand of any shareholder made
at a meeting before the voting begins, the election of Directors shall be by
ballot. At every election of Directors, shareholders may cumulate votes and give
one candidate a number of votes equal to the number of Directors to be elected
multiplied by the number of votes to which the shares are entitled or distribute
votes according to the same principal among as many candidates as desired;
however, no shareholder shall be entitled to cumulate votes for any one or more
candidates unless such candidate or candidates' name has been placed in
nomination prior to the voting and at least one shareholder has given notice at
the meeting prior to the voting of such shareholder's intention to cumulate
votes.
8. QUORUM. A majority of the shares entitled to vote, represented in
person or by proxy, constitutes a quorum for the transaction of business. No
business may be transacted at a meeting in the absence of a quorum other than
the adjournment of such meeting, except that if a quorum is present at the
commencement of a meeting, business may be transacted until the meeting is
adjourned even though the withdrawal of shareholders results in less than a
-2-
<PAGE>
quorum. If a quorum is present at a meeting, the affirmative vote of a majority
of the shares represented at the meeting and entitled to vote on any matter
shall be the act of the shareholders unless the vote of a larger number is
required by law or the Articles of Incorporation. If a quorum is present at the
commencement of a meeting but the withdrawal of shareholders results in less
than a quorum, the affirmative vote of the majority of shares required to
constitute a quorum shall be the act of the shareholders unless the vote of a
larger number is required by law or the Articles of Incorporation. Any meeting
of shareholders, whether or not a quorum is present, may be adjourned by the
vote of a majority of the shares represented at the meeting.
9. CONSENT OF ABSENTEES. The transactions of any meeting of
shareholders, however called and noticed and wherever held, are as valid as
though had at a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy and if, either before or after the meeting,
each of the persons entitled to vote who is not present at the meeting in person
or by proxy signs a written waiver of notice, a consent to the holding of the
meeting or an approval of the minutes of the meeting. For such purposes a
shareholder shall not be considered present at a meeting if, at the beginning of
the meeting, the shareholder objects to the transaction of any business because
the meeting was not properly called or convened or, with respect to the
consideration of a matter required to be included in the notice for the meeting
which was not so included, the shareholder expressly objects to such
consideration at the meeting.
10. ACTION WITHOUT MEETING. Except as provided below or by the Articles
of Incorporation, any action which may be taken at any 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 of outstanding
shares having no less than the minimum number of votes which would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote on such action were present and voted. Unless the consents of all
shareholders entitled to vote have been solicited in writing, the corporation
shall give, to those shareholders entitled to vote who have not consented in
writing, a written notice of (a) any shareholder approval obtained without a
meeting pursuant to those provisions of the California Corporations Code set
forth in Subsection 603(b)(l) of such Code at least ten (10) days before the
consummation of the action authorized by such approval, and (b) the taking of
any other action approved by shareholders without a meeting, which notice shall
be given promptly after such action is taken.
11. PROXIES. A shareholder may be represented at any meeting of
shareholders by a written proxy signed by the person entitled to vote or by such
person's duly authorized attorney-in-fact. A proxy must bear a date within
eleven (11) months prior to the meeting, unless the proxy specifies a different
length of time. A revocable proxy is revoked by a writing delivered to the
Secretary of the corporation stating that the proxy is revoked or by a
subsequent proxy executed by, or by attendance at the meeting and voting in
person by, the person executing the proxy.
-3-
<PAGE>
12. ELECTION INSPECTORS. One or three election inspectors may be
appointed by the Board of Directors in advance of a meeting of shareholders or
at the meeting by the Chairman of the meeting. If not previously chosen, one or
three inspectors shall be appointed by the Chairman of the meeting if a
shareholder or proxyholder so requests. When inspectors are appointed at the
request of a shareholder or proxyholder, the majority of shares represented in
person or by proxy shall determine whether one or three inspectors shall be
chosen. The election inspectors shall determine all questions concerning the
existence of a quorum and the right to vote, shall tabulate and determine the
results of voting and shall do all other acts necessary or helpful to the
expeditious and impartial conduct of the vote. If there are three inspectors,
the decision, act or certificate of a majority of the inspectors is effective as
if made by all.
DIRECTORS
---------
13. POWERS. Subject to limitations of the Articles of Incorporation,
the Bylaws, and the California General Corporation Law as to action to be
authorized or approved by the shareholders, and subject to the duties of
Directors as prescribed by the Bylaws, all corporate powers shall be exercised
by or under the ultimate direction 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 Directors shall have the following powers:
(a) To select and remove all of the other officers, agents and
employees of the corporation, prescribe such powers and duties for them as may
be consistent with law, with the Articles of Incorporation, or the 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 Articles of Incorporation, or the Bylaws, as
they may deem best.
(c) To change the principal office for the transaction of the
business of the corporation from one location to another within the same county
as provided in Section 1 hereof; to fix and locate from time to time one or more
subsidiary offices of the corporation within or without the State of California,
as provided in Section 2 hereof; to designate any place within or without the
State of California for the holding of any shareholders' meeting or meetings;
and to prescribe the forms of certificates of stock, and to alter the form of
such certificates from time to time, as in their judgment they may deem best,
provided such certificates shall at all times comply with the provisions of law.
(d) To authorize the issuance of shares of capital 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 evidence of debt and securities therefor.
-4-
<PAGE>
14. NUMBER OF DIRECTORS. The authorized number of Directors of this
corporation shall be three (3) until changed by amendment of the Articles of
Incorporation or by a By-Law duly adopted by the shareholders amending this
Section 14.
15. ELECTION, TERM OF OFFICE AND VACANCIES. At each annual meeting of
shareholders, Directors shall be elected 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 the Director was elected
and until a successor has been elected. The Board of Directors may declare
vacant the office of a Director who has been declared to be of unsound mind by
court order or convicted of a felony. Vacancies on the Board of Directors not
caused by removal may be filled by a majority of the Directors then in office,
regardless of whether they constitute a quorum, or by the sole remaining
Director. The shareholders may elect a Director at any time to fill any vacancy
not filled, or which cannot be filled, by the Board of Directors.
16. REMOVAL. Except as described below, any or all of the Directors may
be removed without cause if such removal is approved by the affirmative vote of
a majority of the outstanding shares entitled to vote. Unless the entire Board
of Directors is so removed no Director may be removed if (a) the votes cast
against removal, or not consenting in writing to such removal, would be
sufficient to elect such Director if voted cumulatively at an election at which
the same total number of votes were cast or, if such action is taken by written
consent, all shares entitled to vote were voted, and (b) the entire number of
Directors authorized at the time of the Director's most recent election were
then being elected.
17. RESIGNATION. Any Director may resign by giving written notice to
the Chairman of the Board, the President, the Secretary or the Board of
Directors. Such resignation shall be effective when given unless the notice
specifies a later time. The resignation shall be effective regardless of whether
it is accepted by the corporation.
18. COMPENSATION. If the Board of Directors so resolves, the Directors,
including the Chairman of the Board, shall receive compensation and expenses of
attendance for meetings of the Board of Directors and of committees of the
Board. Nothing herein shall preclude any Director from serving the corporation
in another capacity and receiving compensation for such service.
19. COMMITTEES. 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, to serve at the pleasure
of the Board. The Board may designate one or more Directors as alternate members
of a committee who may replace any absent member at any meeting of the
committee. To the extent permitted by resolution of the Board of Directors, a
committee may exercise all of the authority of the Board to the extent permitted
by Section 311 of the California Corporations Code.
-5-
<PAGE>
20. INSPECTION OF RECORDS AND PROPERTIES. Each Director may inspect all
books, records, documents and physical properties of the corporation and its
subsidiaries at any reasonable time. Inspections may be made either by the
Director or the Director's agent or attorney. The right of inspection includes
the right to copy and make extracts.
21. TIME AND PLACE OF MEETINGS AND TELEPHONE MEETINGS. Immediately
following each annual meeting of shareholders, the Board of Directors shall hold
a regular meeting for the purposes of organizing the Board, election of officers
and the transaction of other business. The Board may establish by resolution the
times, if any, when other regular meetings of the Board shall be held. All
meetings of Directors shall be held at the principal executive office of the
corporation or at such other place, within or without California, as shall be
designated in the notice for the meeting or in a resolution of the Board of
Directors. Directors may participate in a meeting through use of conference
telephone or similar communications equipment so long as all Directors
participating in such meeting can hear each other.
22. CALL. Meetings of the Board of Directors, whether regular or
special, may be called by the Chairman of the Board, the President, the
Secretary, or any Director.
23. NOTICE. Regular meetings of the Board of Directors may be held
without notice if the time of such meetings has been fixed by the Board. Special
meetings shall be held upon four days' notice by mail or 48 hours' notice
delivered personally or by telephone or telegraph, and regular meetings shall be
held upon similar notice if notice is required for such meetings. Neither a
notice nor a waiver of notice need specify the purpose of any regular or special
meeting. If a meeting is adjourned for more than 24 hours, notice of the
adjourned meeting shall be given prior to the time of such meeting to the
Directors who were not present at the time of the adjournment.
24. MEETING WITHOUT REGULAR CALL AND NOTICE. The transactions of any
meeting of the Board of Directors, however called and noticed or wherever held,
are 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 signs a written waiver of notice, a consent to holding the
meeting or an approval of the minutes of the meeting. For such purposes, a
Director shall not be considered present at a meeting if, although in attendance
at the meeting, the Director protests the lack of notice prior to the meeting or
at its commencement.
25. ACTION WITHOUT MEETING. Any action required or permitted to be
taken by the Board of Directors may be taken without a meeting, if all the
members of the Board individually or collectively consent in writing to such
action.
26. QUORUM AND REQUIRED VOTE. A majority of the Directors then in
office shall constitute a quorum for the transaction of business, provided that
unless the authorized number of Directors is one, the number constituting a
quorum shall not be less than the greater of one-third of the authorized number
of Directors or two Directors.
-6-
<PAGE>
Except as otherwise provided by Subsection 307(a)(8) of the California
Corporations Code, the Articles of Incorporation or these Bylaws, 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 is the act of the Board. A meeting at which a
quorum is initially present may continue to transact business notwithstanding
the withdrawal of Directors, if any action taken is approved by at least a
majority of the required quorum for such meeting. A majority of the Directors
present at a meeting whether or not a quorum is present, may adjourn the meeting
to another time and place.
27. COMMITTEE MEETINGS. The principles set forth in Sections 21 through
26 of these Bylaws shall apply to committees of the Board of Directors and to
actions by such committees.
28. LOANS. Except as provided by Section 315 of the California
Corporations Code, the vote or written consent of the holders of a majority of
the shares of all classes, regardless of limitations on voting rights, other
than shares held by the benefitted Director, officer or shareholder, shall be
obtained before this corporation makes any loan of money or property to or
guarantees the obligation of:
(a) Any Director or officer of the corporation, any Director
or officer of any of its parents, or any Director or officer of any of its
subsidiary corporations, directly or indirectly.
(b) Any person upon the security of the shares of the
corporation or the shares of its parent, unless the loan or guaranty is
otherwise adequately secured.
OFFICERS
--------
29. TITLES AND RELATION TO BOARD OF DIRECTORS. The officers of the
corporation shall include a President, a Secretary and a Treasurer. The Board of
Directors may also choose a Chairman of the Board and one or more Vice
Presidents, Assistant Secretaries, Assistant Treasurers or other officers. Any
number of offices may be held by the same person and, unless otherwise
determined by the Board, the Chairman of the Board and President shall be the
same person. Ml officers shall perform their duties and exercise their powers
subject to the direction of the Board of Directors.
30. ELECTION, TERM OF OFFICE AND VACANCIES. At its regular meeting
after each annual meeting of shareholders, the Board of Directors shall choose
the officers of the corporation. No officer need be a member of the Board of
Directors except the Chairman of the Board. The officers shall hold office until
their successors are chosen, except that the Board of Directors may remove any
officer at any time. If an office becomes vacant for any reason, the vacancy
shall be filled by the Board.
31. RESIGNATION. Any officer may resign at any time upon written notice
to the corporation without prejudice to the rights, if any, of the corporation
under any contract to which the officer is a party. Such resignation shall be
effective when given unless the notice specifies a later time. The resignation
shall be effective regardless of whether it is accepted by the corporation.
-7-
<PAGE>
32. SALARIES. The Board of Directors shall fix the salaries of the
Chairman of the Board and President and may fix the salaries of other employees
of the corporation including the other officers. If the Board does not fix the
salaries of the other officers, the President shall fix such salaries.
33. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there shall be
such an officer, shall, if present, 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 the
Bylaws.
34. PRESIDENT (CHIEF EXECUTIVE OFFICER). Unless otherwise determined by
the Board of Directors, the President shall be the general manager and chief
executive officer of the corporation, shall preside at all meetings of the Board
of Directors and shareholders, shall be ex-officio a member of any committees of
the Board, shall effectuate orders and resolutions of the Board of Directors and
shall exercise such other powers and perform such other duties as the Board of
Directors shall prescribe.
35. VICE PRESIDENT. In the absence or disability of the President, the
Vice President (or if more than one, the Vice Presidents in order of their rank
as fixed by the Board of Directors, or if not so ranked, the Vice President
designated by the Board of Directors) or, if none, the Secretary or Treasurer,
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 President or, if none, the Secretary or Treasurer, 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 the Bylaws.
36. SECRETARY. The Secretary shall have the following powers and
duties:
(a) Record of Corporate Proceedings. The Secretary shall
attend all meetings of the Board of Directors and its committees and shall
record all votes and the minutes of such meetings in a book to be kept for that
purpose at the principal executive office of the corporation or at such other
place as the Board of Directors may determine. The Secretary shall keep at the
corporation's principal executive office, if in California, or at its principal
business office in California, if the principal executive office is not in
California, the original or a copy of the Bylaws, as amended.
(b) Record of Shares. Unless a transfer agent is appointed by
the Board of Directors to keep a share register, the Secretary shall keep at the
principal executive office of the corporation a share register showing the names
of the shareholders and their addresses, the number and class of shares held by
each, the number and date of certificates issued, and the number and date of
cancellation of each certificate surrendered for cancellation.
-8-
<PAGE>
(c) Notices. The Secretary shall give such notices as may be
required by law or these Bylaws.
(d) Additional Powers and Duties. The Secretary shall exercise
such other powers and perform such other duties as the Board of Directors or
President shall prescribe.
37. TREASURER (CHIEF FINANCIAL OFFICER). The Treasurer of the
corporation shall be its chief financial officer. Unless otherwise determined by
the Board of Directors, the Treasurer shall have custody of the corporate funds
and securities and shall keep adequate and correct accounts of the corporation's
properties and business transactions. The Treasurer shall disburse such funds of
the corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, shall render to the President and Directors, at
regular meetings of the Board of Directors or whenever the Board may require, an
account of all transactions and the financial condition of the corporation and
shall exercise such other powers and perform such other duties as the Board of
Directors or President shall prescribe.
38. OTHER OFFICERS. The other officers (if any) of this corporation
shall perform such duties as may be assigned to them by the Board of Directors.
SHARES
------
39. CERTIFICATES. A certificate or certificates for shares of the
capital stock of the corporation shall be issued to each shareholder when any
such shares are fully paid up. All such certificates shall be signed by the
Chairman of the Board, the President or a Vice President and the Secretary or
Assistant Secretary.
40. TRANSFERS OF SHARES OF CAPITAL STOCK. Transfers of shares shall be
made only upon the transfer books of this corporation, kept at the office of the
corporation or transfer agent designated to transfer such shares, and before a
new certificate is issued, the old certificate shall be surrendered for
cancellation.
41. REGISTERED SHAREHOLDERS. Registered shareholders only shall be
entitled to be treated by the corporation as the holders in fact of the shares
standing in their respective names and the corporation shall not be bound to
recognize any equitable or other claim to or interest in any share on the part
of any other person, whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of California.
42. LOST OR DESTROYED CERTIFICATES. The corporation may cause a new
stock certificate to be issued in place of any certificate previously issued by
the corporation alleged to have been lost, stolen or destroyed. The corporation
may, at its discretion and as a condition precedent to such issuance, require
the owner of such certificate to deliver an affidavit stating that such
certificate was lost, stolen or destroyed, or to give the corporation a bond or
other security sufficient to indemnify it against any claim that may be made
against it, including any expense or liability, on account of the alleged loss,
theft or destruction or the issuance of a new certificate.
-9-
<PAGE>
43. RECORD DATE AND CLOSING OF STOCK BOOKS. The Board of Directors may
fix a time, in the future, not more than sixty (60) nor less than ten (10) days
prior to the date of any meeting of shareholders, or not more than sixty (60)
days prior to the date fixed for the payment of any dividend or distribution, or
for the allotment of rights, or when any change or conversion or exchange of
shares shall go into effect, as a record date for the determination of the
shareholders entitled to notice of and to vote at any such meeting, or entitled
to receive any such dividend or distribution, or any such allotment of rights,
or to exercise the rights in respect to any such change, conversion, or exchange
of shares, and in such case except as provided by law, only shareholders of
record on the date so fixed shall be entitled to notice of and to vote at such
meeting or to receive such dividend, distribution, or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after any record date fixed as aforesaid.
A determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting unless the
Board of Directors fixes a new record date. The Board of Directors shall fix a
new record date if the adjourned meeting takes place more than 45 days from the
date set for the original meeting.
44. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may appoint
one or more transfer agents or transfer clerks, and one or more registrars, who
shall be appointed at such times and places as the requirements of the
corporation may necessitate and the Board of Directors may designate.
AMENDMENTS
----------
45. ADOPTION OF AMENDMENTS. New Bylaws may be adopted or these Bylaws
may be amended or repealed:
(a) At any annual meeting, or other meeting of the
shareholders called for that purpose by the vote of shareholders
holding more than fifty percent (50%) of the issued and outstanding
shares of the corporation; or
(b) Without a meeting, by written consent of shareholders
holding more than fifty percent (50%) of the issued and outstanding
shares of the corporation; or
(c) By a majority of the Directors of the corporation;
provided, however, that a greater vote of shareholders or Directors
shall be necessary if required by law or by the Articles of
Incorporation; and provided, further, that Section 14 (number of
Directors) and this Section 45 shall be amended or repealed only by the
vote or written consent of shareholders holding not less than a
majority of the issued and outstanding voting shares of the
corporation. Section 14 shall not be amended to reduce the number of
Directors below two if the votes cast against its adoption at a meeting
or the shares not consenting in the case of an action by written
consent are equal to more than sixteen and two-thirds percent (16-2/3%)
of the outstanding shares entitled to vote.
-10-
<PAGE>
46. RECORD OF AMENDMENTS. Whenever an amendment or new Bylaw is
adopted, it shall be copied in the Book of Bylaws with the original Bylaws, in
the appropriate place. If any Bylaws or Bylaw is repealed, the fact of repeal
with the date of the meeting at which the repeal was enacted or written assent
was filed shall be stated in said book.
CORPORATE SEAL
--------------
47. FORM OF SEAL. The corporation may adopt and use a corporate seal
but shall not be required to do so. If adopted and used, the corporate seal
shall be circular in form, and shall have inscribed thereon the name of the
corporation, the date of its incorporation and the word "California
MISCELLANEOUS
-------------
48. 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.
49. CONTRACT, ETC., HOW EXECUTED. The Board of Directors, except as
otherwise provided in these Bylaws, may authorize any officer or officers, or
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 by the Board of
Directors, no officer, agent or employee 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 for any amount.
50. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The Chairman of the
Board, the President or any Vice President and the Secretary or Assistant
Secretary of this corporation are authorized to vote, represent, and exercise on
behalf of this corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of this corporation. The
authority herein granted to said officers to vote or represent on behalf of this
corporation any and all shares held by this corporation in any other corporation
or corporations may be exercised either by such officers in person or by any
other person authorized so to do by proxy or power of attorney duly executed by
said officers.
51. INSPECTION OF BYLAWS. The corporation shall keep in its principal
office for the transaction of business the original or a copy of these Bylaws as
amended or otherwise altered to date, certified by the Secretary, which shall be
open to inspection by the shareholders at all reasonable times during office
hours.
-11-
<PAGE>
52. ANNUAL REPORT. The annual report to shareholders specified in Section 1501
of the California Corporations Code is dispensed with except as the Board of
Directors may otherwise determine, so long as there are less than 100 holders of
record of the corporation's shares. Any such annual report sent to shareholders
shall be sent at least 15 days prior to the next annual meeting of shareholders.
53. CONSTRUCTION AND DEFINITIONS. Unless the context otherwise requires, the
general provisions, rules and construction, and definitions contained in the
California 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.
SIGNATURES
----------
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, being the Directors of ADVANCED REFRIGERATION
TECHNOLOGIES, INC., as of the 4th day of March, 1998, hereby assent to the
foregoing Bylaws and adopt the same as the Bylaws of the said corporation
IN WITNESS WHEREOF, we have hereunto subscribed our names the 4th day of March,
1998.
By /s/ Charles E. McEwan
---------------------------
CHARLES McEWAN, Director
By /s/ Allan E. Schrum
---------------------------
ALLAN E. SCHRUM, Director
By /s/ David J. Kimber
---------------------------
DAVID KIMBER, Director
-12-
<PAGE>
SECRETARY'S CERTIFICATE
-----------------------
THIS IS TO CERTIFY:
That I am the duly elected, qualified and acting Secretary of
ADVANCED REFRIGERATION TECHNOLOGIES, INC., and that the above and foregoing
Bylaws were adopted as the Bylaws of said corporation on the 4th day of March,
1998, by the Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this 4th day
of March, 1998
By /s/ Clare C. Schrum
----------------------------
CLARE SCHRUM, Secretary
-13-
<PAGE>
<PAGE>
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
INCORPORATED UNDER THE LAWS OF THE STATE OF CALIFORNIA
20,000,000 Shares Authorized
COMMON STOCK
No Par Value
CUSIP NO> 00757S 10 3
NUMBER SHARES
ADVANCED REFRIGERATION TECHNOLOGIES, INC.
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
Shares of ADVANCED REFRIGERATION TECHNOLOGIES, INC. Common Stock
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid until countersigned by the Transfer Agent and registered by the
Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
/s/ Clare C. Schrum /s/ Charles E. McEwan
Secretary President
Countersigned & Registered:
AMERICAN REGISTRAR & TRANSFER CO.
P.O. Box 1798*Salt Lake City, UT 84110
By_________________________________
Registrar-Authorized Signature
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 360
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<COMMON> 61623
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<TOTAL-LIABILITY-AND-EQUITY> 29486
<SALES> 2737
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<TOTAL-COSTS> 66535
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