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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(g) of
The Securities Exchange Act of 1934
EASTERN MANAGEMENT CORPORATION
(Name of Small Business Issuer in its charter)
Nevada 98-0204682
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 106, 1460 Pandosy St., Kelowna,
British Columbia, Canada V1Y 1P3
(Address of principal executive offices) (Zip code)
(250) 868-8177
(Issuer's telephone number)
Securities to be registered pursuant to Section 12(b) of the Act:
none
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
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TABLE OF CONTENTS
Page
Description of Business ......................................................3
Plan of Operation ............................................................4
Risk Factors ................................................................10
Description of Property .....................................................13
Security Ownership of Certain Beneficial Owners and Management...............14
Directors, Executive Officers, Promoters and Control Persons.................15
Executive Compensation ......................................................16
Certain Relationships and Related Transactions...............................17
Legal Proceedings ...........................................................17
Market for Common Equities and Related Stockholder Matters...................17
Recent Sales of Unregistered Securities......................................18
Description of Securities ...................................................19
Indemnification of Directors and Officers....................................19
Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.................................20
Financial Statements.........................................................21
Exhibit Index ...............................................................22
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DESCRIPTION OF BUSINESS
Eastern Management Corporation (the "Company"), was incorporated on
July 23, 1997 under the laws of the State of Nevada to engage in any lawful
corporate purpose. Other than issuing shares to its shareholders, the Company
never commenced any other operational activities. As such, the Company can be
defined as a "shell" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity. The Board of Directors
of the Company has elected to commence implementation of the Company's principal
business purpose, described below under "Plan of Operation."
The Company is filing this registration statement on a voluntary basis
because the primary attraction of the Company as a merger partner or acquisition
vehicle will be its status as a public company. Any business combination or
transaction will likely result in a significant issuance of shares and
substantial dilution to present stockholders of the Company.
The proposed business activities classify the Company as a "blank
check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities or undertake any offering of the
Company's securities, either debt or equity, until such time as the Company has
successfully implemented its business plan.
Lock-up Agreement
Each shareholder of the Company has executed and delivered a "lock-up"
letter agreement, affirming that they shall not sell their respective shares of
the Company's common stock until such time as the Company has successfully
consummated a merger or acquisition and the Company is no longer classified as a
"blank check" company. In order to provide further assurances that no trading
will occur in the Company's securities until a merger or acquisition has been
consummated, each shareholder has agreed to place their respective stock
certificate with the Company's legal counsel, Evers & Hendrickson, LLP, who will
not release these respective certificates until such time as legal counsel has
confirmed that a merger or acquisition has been successfully consummated.
However, while management believes that the procedures established to preclude
any sale of the Company's securities prior to closing of a merger or acquisition
will be sufficient, there can be no assurances that the procedures established
will unequivocally limit any shareholder's ability to sell their respective
securities before such closing.
Investment Company Act of 1940
Although the Company will be subject to regulation under the Securities
Act of 1933 and the Securities Exchange Act of 1934, management believes we will
not be subject to regulation under the Investment Company Act of 1940 insofar as
the Company will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business combinations which
result in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register as
an investment company and could be expected to incur significant registration
and compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, a violation of such Act could
subject the Company to material adverse consequences.
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Investment Advisors Act of 1940
Under Section 202(a)(11) of the Investment Advisors Act of 1940, as
amended, an "investment adviser" means any person who, for compensation, engages
in the business of advising others, either directly or through publications or
writings, as to the value of securities or as to the advisability of investing
in, purchasing, or selling securities, or who, for compensation and as part of a
regular business, issues or promulgates analyses or reports concerning
securities. The Company shall only seek to locate a suitable merger of
acquisition candidate, and does not intend to engage in the business of advising
others in investment matters for a fee or otherwise.
Dissenter's Rights
In accordance with Nevada Revised Statutes ("NRS") ss. 78.3793, on the
10th day following the acquisition of a controlling interest by an acquiring
person, if the control shares are accorded full voting rights pursuant to NRS
ss.ss. 78.378 to 78.3793, inclusive, and the acquiring person has acquired a
majority interest of the voting shares, any stockholder of record, other than
the acquiring person, who has not voted in favor of authorizing voting rights
for the control shares is entitled to demand payment for the fair value of his
shares by making a written demand.
Market Makers
The Company has not, and does not intend to enter in to discussions
with broker-dealers or market makers regarding developing a trading market in
its stock until a qualified merger or acquisition candidate has been identified.
Forward Looking Statements
Because we desire to take advantage of the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995, the Company cautions
readers regarding forward looking statements found in the following discussion
and elsewhere in this registration statement and in any other statement made by,
or on the behalf of the Company, whether or not in future filings with the
Securities and Exchange Commission. Forward looking statements are statements
not based on historical information and which relate to future operations,
strategies, financial results or other developments. Forward looking statements
are necessarily based upon estimates and assumptions that are inherently subject
to significant business, economic and competitive uncertainties and
contingencies, many of which are beyond the Company's control and many of which,
with respect to future business decisions, are subject to change. These
uncertainties and contingencies can affect actual results and could cause actual
results to differ materially from those expressed in any forward looking
statements made by or on behalf of the Company. The Company disclaims any
obligation to update forward looking statements.
PLAN OF OPERATION
The Company intends to seek to acquire assets or shares of an entity
actively engaged in a business that generates revenues, in exchange for its
securities. We have not identified a particular acquisition target and has not
entered into any negotiations regarding such an acquisition. None of our
officers, directors, promoters or affiliates have engaged in any preliminary
contact or discussions with any representative of any other company regarding
the possibility of an acquisition or merger between the Company and such other
company as of the date of this registration statement.
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Depending upon the nature of the relevant business opportunity and the
applicable state statutes governing the manner in which the transaction is
structured, the Company's Board of Directors expects that it will provide the
Company's shareholders with complete disclosure documentation concerning a
potential business opportunity and the structure of the proposed business
combination prior to consummation. Such disclosure is expected to be in the form
of a proxy or information statement.
While such disclosure may include audited financial statements of such
a target entity, there is no assurance that such audited financial statements
will be available. The Board of Directors does intend to obtain certain
assurances of value of the target entity assets prior to consummating such a
transaction, with further assurances that an audited statement would be provided
within sixty days after closing. Closing documents will include representations
that the value of the assets conveyed to or otherwise so transferred will not
materially differ from the representations included in such closing documents,
or the transaction will be voidable.
Due to the Company's intent to remain a shell corporation until a
merger or acquisition candidate is identified, it is anticipated that its cash
requirements shall be minimal, and that all necessary capital, to the extent
required, will be provided by the directors or officers. The Company does not
anticipate that it will have to raise capital in the next twelve months. The
Company also does not expect to acquire any plant or significant equipment.
The Company has no full time employees. Our President and Secretary
have agreed to allocate a portion of their time to the activities of the
Company, without compensation. These officers anticipate that the business plan
of the Company can be implemented by their devoting approximately 5 hours per
month to the business affairs of the Company and, consequently, conflicts of
interest may arise with respect to the limited time commitment by such officers.
The Company does not expect any significant changes in the number of employees.
See "Directors, Executive Officers, Promoters and Control Persons - Conflicts of
Interest".
Our officers and directors may become involved with other companies who
have a business purpose similar to that of the Company. As a result, potential
conflicts of interest may arise in the future. If such a conflict does arise and
an officer or director of the Company is presented with business opportunities
under circumstances where there may be a doubt as to whether the opportunity
should belong to the Company or another "blank check" company they are
affiliated with, they will disclose the opportunity to all such companies. If a
situation arises in which more than one company desires to merge with or acquire
that target company and the principals of the proposed target company has no
preference as to which company will merge or acquire such target company, the
company which first filed a registration statement with the Securities and
Exchange Commission will be entitled to proceed with the proposed transaction.
General Business Plan
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business opportunities presented
to it by persons or firms who or which desire to seek the perceived advantages
of an Exchange Act registered corporation. The Company will not restrict its
search to any specific business, industry, or geographical location and the
Company may participate in a business venture of virtually any kind or nature.
This discussion of the proposed business is purposefully general and is not
meant to be restrictive of the Company's virtually unlimited discretion to
search for and enter into potential business opportunities. Management
anticipates that it may be able to participate in only one potential business
venture because the Company has nominal assets and limited financial resources.
See "Part F/S, Financial Statements." This lack of diversification should be
considered a substantial risk to shareholders
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of the Company because it will not permit the Company to offset potential losses
from one venture against gains from another.
The Company may seek a business opportunity with entities that have
recently commenced operations, or that wish to utilize the public marketplace in
order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
We may acquire assets and establish wholly owned subsidiaries in various
businesses or acquire existing businesses as subsidiaries.
We anticipate that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes) for all shareholders and other factors.
Potentially, available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex.
We have, and will continue to have, no capital with which to provide
the owners of business opportunities with any significant cash or other assets.
However, management believes we will be able to offer owners of acquisition
candidates the opportunity to acquire a controlling ownership interest in a
publicly registered company without incurring the cost and time required to
conduct an initial public offering. The owners of the business opportunities
will, however, incur significant legal and accounting costs in connection with
acquisition of a business opportunity, including the costs of preparing Form
8-K's, 10-K's or 10-KSB's, agreements and related reports and documents. The
Securities Exchange Act of 1934 (the "34 Act") specifically requires that any
merger or acquisition candidate comply with all applicable reporting
requirements, which include providing audited financial statements to be
included within the numerous filings relevant to complying with the 34 Act.
Nevertheless, the officers and directors of the Company have not conducted
market research and are not aware of statistical data which would support the
perceived benefits of a merger or acquisition transaction for the owners of a
business opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the officers and directors of the Company, none of
whom is a professional business analyst. Management intends to concentrate on
identifying preliminary prospective business opportunities which may be brought
to its attention through present associations of our officers and directors, or
by our shareholders. In analyzing prospective business opportunities, management
will consider such matters as the available technical, financial and managerial
resources; working capital and other financial requirements; history of
operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further research,
development, or exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the perceived
public recognition of acceptance of products, services, or trades; name
identification; and other relevant factors. Officers and directors of the
Company expect to meet personally with management and key personnel of the
business opportunity as part of their "due diligence" investigation. To the
extent possible, the Company intends to utilize written reports and personal
investigations to evaluate the above factors. We will not acquire or merge with
any company that cannot provide audited financial statements within a reasonable
period of time after closing of the proposed transaction.
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Management of the Company, while not especially experienced in matters
relating to the new business of the Company, shall rely upon their own efforts
and, to a much lesser extent, the efforts of our shareholders, in accomplishing
the business purposes of the Company. It is not anticipated that any outside
consultants or advisors, except for our legal counsel and accountants, will be
utilized by the Company to effectuate its business purposes. However, if we do
retain such an outside consultant or advisor, any cash fee earned by such party
will be paid by the prospective merger/acquisition candidate, as the Company has
no cash assets with which to pay such obligation. We have no contracts or
agreements with any outside consultants and none are contemplated.
We will not restrict our search for any specific kind of firms, but may
acquire a venture that is in its preliminary or development stage or is already
operating. It is impossible to predict at this time the status of any business
in which the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company may offer. Furthermore, we do not
intend to seek capital to finance the operation of any acquired business
opportunity until such time as the Company has successfully consummated a merger
or acquisition.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan. Because the Company has no capital with
which to pay these anticipated expenses, present management of the Company will
pay these charges with their personal funds, as interest free loans to the
Company. However, the only opportunity which management has to have these loans
repaid will be from a prospective merger or acquisition candidate. Management's
agreements with the Company contain no negative covenants that would impede or
prevent consummation of a proposed transaction.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, we
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a transaction,
it is probable that the present management and shareholders of the Company will
no longer be in control of the Company. In addition, our directors may, as part
of the terms of the acquisition transaction, resign and be replaced by new
directors without a vote of the Company's shareholders or may sell their stock
in the Company. Any terms of sale of the shares presently held by officers
and/or directors of the Company will be also afforded to all other shareholders
of the Company on similar terms and conditions. Any and all such sales will only
be made in compliance with the securities laws of the United States and any
applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, we may agree to register all or a part of
such securities immediately after the transaction is consummated or at specified
times thereafter. If such registration occurs, of which there can be no
assurance, it will be undertaken by the surviving entity after the Company has
successfully consummated a merger or acquisition and the Company is no longer
considered a "shell" company. Until a merger or acquisition is consummated, the
Company will not attempt to register any additional securities. The issuance of
substantial additional securities and their potential sale into any trading
market which may develop in the Company's securities may have a depressive
effect on the value of the Company's securities in the future, if such a market
develops, of which there is no assurance.
While the actual terms of a transaction to which the Company may be a
party cannot be predicted,
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it may be expected that the parties to the business transaction will find it
desirable to avoid the creation of a taxable event and thereby structure the
acquisition in a so-called "tax-free" reorganization under Sections 368(a)(1) or
351 of the Internal Revenue Code (the "Code"). In order to obtain tax-free
treatment under the Code, it may be necessary for the owners of the acquired
business to own 80% or more of the voting stock of the surviving entity. In such
event, the shareholders of the Company would retain 20% or less of the issued
and outstanding shares of the surviving entity, which would result in
significant dilution in the equity of such shareholders.
As part of the Company's "due diligence" investigation, officers and
directors of the Company will meet personally with management and key personnel,
may visit and inspect material facilities, obtain independent analysis of
verification of certain information provided, check references of management and
key personnel, and take other reasonable investigative measures to the extent of
the Company's limited financial resources and management expertise. The manner
in which the Company participates in an opportunity will depend on the nature of
the opportunity, the respective needs and desires of the Company and other
parties, the management of the opportunity and the relative negotiation strength
of the Company and such other management.
With respect to any merger or acquisition, negotiations with target
company management is expected to focus on the percentage of the Company which
the target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders.
We will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties, will specify
certain events of default, will detail the terms of closing and the conditions
that must be satisfied by each of the parties prior to and after such closing,
will outline the manner of bearing costs, including costs associated with the
Company's attorneys and accountants, will set forth remedies on default and will
include miscellaneous other terms.
As stated previously, we will not acquire or merge with any entity that
cannot provide independent audited financial statements within a reasonable
period of time after closing of the proposed transaction. The Company is subject
to the reporting requirements of the 34 Act. Included in these requirements is
the affirmative duty of the Company to file independent audited financial
statements as part of its Form 8-K to be filed with the Securities and Exchange
Commission upon consummation of a merger or acquisition, as well as the
Company's audited financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial statements are not
available at closing, or within time parameters necessary to insure the
Company's compliance with the requirements of the 34 Act, or if the audited
financial statements provided do not conform to the representations made by the
candidate to be acquired in the closing documents, the closing documents will
provide that the proposed transaction will be voidable at the discretion of the
present management of the Company. If such transaction is voided, the agreement
will also contain a provision providing for the acquisition entity to reimburse
the Company for all costs associated with the proposed transaction.
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Year 2000 Disclosure
Many existing computer programs use only two digits to identify a year
in the date field. These programs were designed and developed without
considering the impact of the upcoming change in the century. If not corrected,
many computer applications could fail or create erroneous results by or at the
year 2000. As a result, many companies will be required to undertake major
projects to address the Year 2000 issue. Because the Company has no assets,
including any personal property such as computers, it is not anticipated that we
will incur any negative impact as a result of this potential problem. However,
it is possible that this issue may have an impact on us after we successfully
consummate a merger or acquisition. Management intends to address this potential
problem with any prospective merger or acquisition candidate. There can be no
assurances that new management of the Company will be able to avoid a problem in
this regard after a merger or acquisition is consummated.
Competition
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's combined extremely limited financial resources
and limited management availability, the Company will continue to be at a
significant competitive disadvantage compared to the Company's competitors.
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RISK FACTORS
Our business is subject to numerous risk factors, including the
following:
No Operating History or Revenue and Minimal Assets. We have had no
recent operating history nor any revenues or earnings from operations since its
inception. The Company has no significant assets or financial resources. We
will, in all likelihood, sustain operating expenses without corresponding
revenues, at least until the consummation of a business combination. This may
result in the Company incurring a net operating loss that will increase
continuously until we can consummate a business combination with a profitable
business opportunity. There is no assurance that the Company can identify such a
business opportunity and consummate such a business combination.
Speculative Nature of Company's Proposed Operations. The success of our
proposed plan of operation will depend to a great extent on the operations,
financial condition and management of the identified business opportunity. While
management intends to seek business combination(s) with entities having
established operating histories, there can be no assurance we will be successful
in locating candidates meeting such criteria. In the event we complete a
business combination, the success of our operations may be dependent upon
management of the successor firm or venture partner firm and numerous other
factors beyond our control.
Scarcity of and Competition for Business Opportunities and
Combinations. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with, joint ventures with and
acquisitions of small private and public entities. A large number of established
and well-financed entities, including venture capital firms, are active in
mergers and acquisitions of companies that may be desirable target candidates
for the Company. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the Company and,
consequently, we will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination.
Moreover, we will also compete in seeking merger or acquisition candidates with
numerous other small public companies.
No Agreement for Business Combination or Other Transaction. We have no
arrangement, agreement or understanding with respect to engaging in a merger
with, joint venture with or acquisition of, a private or public entity. There
can be no assurance we will be successful in identifying and evaluating suitable
business opportunities or in concluding a business combination. Management has
not identified any particular industry or specific business within an industry
for evaluation by the Company. There is no assurance we will be able to
negotiate a business combination on terms favorable to the Company.
No Standards for Business Combination. We have not established a
specific length of operating history or a specified level of earnings, assets,
net worth or other criteria which it will require a target business opportunity
to have achieved. Accordingly, we may enter into a business combination with a
business opportunity having no significant operating history, losses, limited or
no potential for earnings, limited assets, negative net worth or other
characteristics that are indicative of development stage companies.
Continued Management Control, Limited Time Availability. While seeking
a business combination, management anticipates devoting up to twenty hours per
month to the business of the Company. None of our officers have entered into a
written employment agreements with us and none is expected to do so in the
foreseeable future. We have not obtained key man life insurance on any of its
officers or directors. Notwithstanding the combined limited experience and time
commitment of management, loss of the services of any of these individuals would
adversely affect development of our
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business and its likelihood of continuing operations. See "Directors, Executive
Officers, Promoters and Control Persons."
Conflicts of Interest - General. Officers and directors of the Company
may participate in business ventures which could be deemed to compete directly
with the Company. Additional conflicts of interest and non-arms length
transactions may also arise in the event our officers or directors are involved
in the management of any firm with which we transact business. Management has
adopted a policy that the Company will not seek a merger with, or acquisition
of, any entity in which management serves as officers, directors or partners, or
in which they or their family members own or hold any ownership interest.
Reporting Requirements May Delay or Preclude Acquisition. Sections 13
and 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") require
reporting companies to provide certain information about significant
acquisitions, including certified financial statements for the company acquired,
covering one, two, or three years, depending on the relative size of the
acquisition. The time and additional costs that may be incurred by some target
entities to prepare such statements may significantly delay or essentially
preclude consummation of an otherwise desirable acquisition by the Company.
Acquisition prospects that do not have or are unable to obtain the required
audited statements may be inappropriate for acquisition so long as the reporting
requirements of the 1934 Act are applicable.
Lack of Market Research or Marketing Organization. The Company has
neither conducted, nor have others made available to it, results of market
research indicating that market demand exists for the transactions contemplated
by the Company. Moreover, we do not have, and do not plan to establish, a
marketing organization. Even in the event demand is identified for a merger or
acquisition contemplated by the Company, there is no assurance we will be
successful in completing any such business combination.
Lack of Diversification. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a business
combination with a business opportunity. Consequently, our activities may be
limited to those engaged in by business opportunities which the Company merges
with or acquires. The Company's inability to diversify its activities into a
number of areas may subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks associated with
our operations.
Government Regulation. Although we will be subject to the reporting
requirements under the Securities Exchange Act of 1934, as amended, management
believes the Company will not be subject to regulation under the Investment
Company Act of 1940, as amended, insofar as the Company will not be engaged in
the business of investing or trading in securities. In the event we engage in
business combinations which result in the Company holding passive investment
interests in a number of entities, we could be subject to regulation under the
Investment Company Act of 1940. In such event, we would be required to register
as an investment company and could be expected to incur significant registration
and compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, violation of such Act could
subject the Company to material adverse consequences.
Probable Change in Control and Management. A business combination
involving the issuance of the Company's common stock will, in all likelihood,
result in shareholders of a private company obtaining a controlling interest in
the Company. Any such business combination may require management of the Company
to sell or transfer all or a portion of the Company's common stock held by them,
or resign as members of the Board of Directors of the Company. The resulting
change in control of the Company could result in removal of one or more present
officers and directors of the Company and a corresponding
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reduction in or elimination of their participation in the future affairs of the
Company.
Reduction of Percentage Share Ownership Following a Business
Combination. Our primary plan of operation is based upon a business combination
with a private concern which, in all likelihood, would result in the Company
issuing securities to shareholders of any such private company. The issuance of
previously authorized and unissued common stock of the Company would result in
reduction in percentage of shares owned by present and prospective shareholders
of the Company and may result in a change in control or management of the
Company.
Disadvantages of Blank Check Offering. We may enter into a business
combination with an entity that desires to establish a public trading market for
its shares. A business opportunity may attempt to avoid what it deems to be
adverse consequences of undertaking its own public offering by seeking a
business combination with us. Such consequences may include, but are not limited
to, time delays of the registration process, significant expenses to be incurred
in such an offering, loss of voting control to public shareholders and the
inability or unwillingness to comply with various federal and state laws enacted
for the protection of investors.
Absence of Trading Market. There currently is no trading market for the
Company's stock and there is no assurance that a trading market will develop.
"Penny" Stock Regulation of Broker-Dealer Sales of Company Securities.
For transactions covered by Rule 15g-9 under the Securities Exchange Act of
1934, a broker-dealer must furnish to all investors in penny stocks, a risk
disclosure document required by the rule, make a special suitability
determination of the purchaser and have received the purchaser's written
agreement to the transaction prior to the sale. In order to approve a person's
account for transactions in penny stock, the broker or dealer must (i) obtain
information concerning the person's financial situation, investment experience
and investment objectives; (ii) reasonably determine, based on the information
required by paragraph (i) that transactions in penny stock are suitable for the
person and that the person has sufficient knowledge and experience in financial
matters that the person reasonably may be expected to be capable of evaluating
the rights of transactions in penny stock; and (iii) deliver to the person a
written statement setting forth the basis on which the broker or dealer made the
determination required by paragraph (ii) in this section, stating in a
highlighted format that it is unlawful for the broker or dealer to effect a
transaction in a designated security subject to the provisions of paragraph (ii)
of this section unless the broker or dealer has received, prior to the
transaction, a written agreement to the transaction from the person; and stating
in a highlighted format immediately preceding the customer signature line that
the broker or dealer is required to provide the person with the written
statement and the person should not sign and return the written statement to the
broker or dealer if it does not accurately reflect the person's financial
situation, investment experience and investment objectives and obtain from the
person a manually signed and dated copy of the written statement.
A penny stock means any equity security other than a security (i)
registered, or approved for registration upon notice of issuance on a national
securities exchange that makes transaction reports available pursuant to 17 CFR
11Aa3-1 (ii) authorized or approved for authorization upon notice of issuance,
for quotation on the Nasdaq NMS ; (iii) that has a price of five dollars or more
or . . . . (iv) whose issuer has net tangible assets in excess of $2,000,000
demonstrated by financial statements dated less than fifteen months previously
that the broker or dealer has reviewed and has a reasonable basis to believe are
true and complete in relation to the date of the transaction with the person.
Consequently, the rule may affect the ability of broker-dealers to sell the
Company's securities.
12
<PAGE>
Taxation. Federal and state tax consequences will, in all likelihood,
be major considerations in any business combination we may undertake. Currently,
such transactions may be structured so as to result in tax-free treatment to
both companies, pursuant to various federal and state tax provisions. The
Company intends to structure any business combination so as to minimize the
federal and state tax consequences to both the Company and the target entity;
however, there can be no assurance that such business combination will meet the
statutory requirements of a tax- free reorganization or that the parties will
obtain the intended tax-free treatment upon a transfer of stock or assets. A
non-qualifying reorganization could result in the imposition of both federal and
state taxes which may have an adverse effect on both parties to the transaction.
Requirement of Audited Financial Statements May Disqualify Business
Opportunities. Management believes that any potential business opportunity must
provide audited financial statements for review for the protection of all
parties to the business combination. One or more attractive business
opportunities may choose to forego the possibility of a business combination
with us, rather than incur the expenses associated with preparing audited
financial statements.
DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to
acquire any properties. The Company intends to attempt to acquire assets or a
business in exchange for its securities.
The Company operates from its offices at Suite 106, 1460 Pandosy St.,
Kelowna, British Columbia, Canada. Space is provided to the Company on a rent
free basis by Mr. Hemmerling, an officer and director of the Company, and it is
anticipated that this arrangement will remain until such time as the Company
successfully consummates a merger or acquisition. Management believes that this
space will meet the Company's needs for the foreseeable future.
13
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Management
The table below lists the beneficial ownership of the Company's voting
securities by each person known by the Company to be the beneficial owner of
more than 5% of such securities, as well as the securities of the Company
beneficially owned by all directors and officers of the Company. Unless
otherwise indicated, the shareholders listed possess sole voting and investment
power with respect to the shares shown.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent of
Title of Class Owner Owner Class
- -------------- ----- ----- -----
Common Devinder Randhawa 152,000 30.4%
Suite 106
1460 Pandosy St.
Kelowna, B.C., Canada
Common Bob Hemmerling 152,000 30.4%
Suite 106
1460 Pandosy St.
Kelowna, B.C., Canada
Common All Officers and 304,000 60.8%
Directors as a
Group (2 persons)
The balance of the Company's outstanding Common stock are held by 8
persons.
14
<PAGE>
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS
The directors and officers of the Company are as follows:
Name Age Position
- ---- --- --------
Devinder Randhawa 39 President, Chairman
Robert Hemmerling 40 Secretary, Treasurer, Director
The above listed officers and directors will serve until the next
annual meeting of the shareholders or until their death, resignation,
retirement, removal, or disqualification, or until their successors have been
duly elected and qualified. Vacancies in the existing Board of Directors are
filled by majority vote of the remaining Directors. Officers of the Company
serve at the will of the Board of Directors. There are no other family
relationship between any executive officer and director of the Company.
Resumes
Devinder Randhawa, President and chairman of the Company, was appointed
to his positions with the Company on July 23, 1997. Upon completing his MBA
in1985, Mr. Randhawa has been in the venture capital/corporate finance
(sub-investment banking). Mr. Randhawa was either a registered representative or
an analyst for 8 years before founding RD Capital Inc. RD Capital, Inc. is a
privately held consulting firm assisting emerging companies in the resource and
non-resource sectors. Mr. Randhawa was the founder of startup's such as First
Smart Sensor and Strathmore Resources Ltd. Mr. Randhawa received a Bachelors
Degree in Business Administration with Honors from Trinity Western College of
Langley, British Columbia in 1983 and received his MBA from the University of
British Columbia in 1985. He devotes only such time as necessary to the business
of the Company, which time is expected to be nominal.
Robert Hemmerling, Secretary, Treasurer and a director, was appointed
to his positions with the Company on July 23, 1997. In addition to his positions
with the Company, since September 1996, Mr. Hemmerling has been employed with
Strathmore Resources, Ltd., Kelowna, British Columbia in the investor relations
department. Strathmore Resources is engaged in the business of acquiring and
developing uranium properties. Prior, from January 1996 through August 1996, Mr.
Hemmerling was unemployed. From January 1992 through December 1995, Mr.
Hemmerling was an electrician with Concord Electric, Kelowna, British Columbia.
He devotes only such time as necessary to the business of the Company, which
time is expected to be nominal.
Prior "Blank Check" Experience
None of our officers and/or directors have had any direct experience in
identifying emerging companies for investment and/or business combinations.
Conflicts of Interest
Members of the Company's management are associated with other firms
involved in a range of business activities. Consequently, there are potential
inherent conflicts of interest in their acting as officers and directors of the
Company. Insofar as the officers and directors are engaged in other business
activities,
15
<PAGE>
management anticipates it will devote only a minor amount of time to the
Company's affairs.
The officers and directors of the Company are now and may in the future
become shareholders, officers or directors of other companies which may be
formed for the purpose of engaging in business activities similar to those
conducted by the Company. Accordingly, additional direct conflicts of interest
may arise in the future with respect to such individuals acting on behalf of the
Company or other entities. Moreover, additional conflicts of interest may arise
with respect to opportunities which come to the attention of such individuals in
the performance of their duties or otherwise. The Company does not currently
have a right of first refusal pertaining to opportunities that come to
management's attention insofar as such opportunities may relate to the Company's
proposed business operations.
The officers and directors are, so long as they are officers or
directors of the Company, subject to the restriction that all opportunities
contemplated by the Company's plan of operation which come to their attention,
either in the performance of their duties or in any other manner, will be
considered opportunities of, and be made available to the Company and the
companies that they are affiliated with on an equal basis. A breach of this
requirement will be a breach of the fiduciary duties of the officer or director.
If the Company or the companies in which the officers and directors are
affiliated with both desire to take advantage of an opportunity, then said
officers and directors would abstain from negotiating and voting upon the
opportunity. However, all directors may still individually take advantage of
opportunities if the Company should decline to do so. Except as set forth above,
we have not adopted any other conflict of interest policy with respect to such
transactions.
EXECUTIVE COMPENSATION
None of our officers and/or directors receive any compensation for
their respective services rendered unto the Company, nor have they received such
compensation in the past. They all have agreed to act without compensation until
authorized by the Board of Directors, which is not expected to occur until the
we have generated revenues from operations after consummation of a merger or
acquisition. As of the date of this registration statement, the Company has no
funds available to pay directors. Further, none of the directors are accruing
any compensation pursuant to any agreement with the Company.
It is possible that, after the Company successfully consummates a
merger or acquisition with an unaffiliated entity, that entity may desire to
employ or retain one or a number of members of the Company's management for the
purposes of providing services to the surviving entity or otherwise provide
other compensation to such persons. However, the Company has adopted a policy
whereby the offer of any post-transaction remuneration to members of management
will not be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity which proposes to undertake a transaction with the Company
and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors is offered
compensation in any form from any prospective merger or acquisition candidate,
the proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to affirmatively approve
such a transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated that this fee will be
either in the form of restricted common stock issued by the Company as part of
the terms of the proposed transaction, or will be in the form of cash
16
<PAGE>
consideration. However, if such compensation is in the form of cash, such
payment will be tendered by the acquisition or merger candidate, because the
Company has insufficient cash available. The amount of such finder's fee cannot
be determined as of the date of this registration statement, but is expected to
be comparable to consideration normally paid in like transactions. No member of
management of the Company will receive any finders fee, either directly or
indirectly, as a result of their respective efforts to implement the Company's
business plan.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the Company for the
benefit of its employees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no related party transactions, or any other
transactions or relationships required to be disclosed pursuant to Item 404 of
Regulation S-B.
LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against the Company.
MARKET PRICE FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
There is no trading market for the Company's Common stock at present
and there has been no trading market to date. Management has not undertaken any
discussions, preliminary or otherwise, with any prospective market maker
concerning the participation of such market maker in the aftermarket for the
Company's securities and management does not intend to initiate any such
discussions until such time as the Company has consummated a merger or
acquisition. There is no assurance that a trading market will ever develop or,
if such a market does develop, that it will continue.
Market Price
The Company's Common stock is not quoted at the present time. The
Securities and Exchange Commission has adopted a Rule which established the
definition of a "penny stock," for purposes relevant to the Company, as any
equity security that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules require: (i)
that a broker or dealer approve a person's account for transactions in penny
stocks; and (ii) the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account for
transactions in penny stocks, the broker or dealer must (i) obtain financial
information and investment experience and objectives of the person; and (ii)
make a reasonable determination that the transactions in penny stocks are
suitable for that person and that person has sufficient knowledge and experience
in financial matters to be capable of evaluating the risks of transactions in
penny stocks. The broker or dealer must also deliver, prior to any transaction
in a penny stock, a disclosure schedule prepared by the Commission relating to
the penny stock market, which, in highlight form, (i) sets forth the basis on
which the broker or dealer made the suitability determination; and (ii) that the
broker or dealer received a signed, written agreement from the investor prior to
the transaction. Disclosure also has to be made about the risks of investing in
penny stock in both public offering and in secondary trading, and about
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions.
17
<PAGE>
Finally, monthly statements have to be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in
penny stocks.
Management intends to strongly consider undertaking a transaction with
any merger or acquisition candidate which will allow the Company's securities to
be traded without the aforesaid limitations. However, there can be no assurances
that, upon a successful merger or acquisition, the Company will qualify its
securities for listing on Nasdaq or some other national exchange, or be able to
maintain the maintenance criteria necessary to insure continued listing. The
failure of the Company to qualify its securities or to meet the relevant
maintenance criteria after such qualification in the future may result in the
discontinuance of the inclusion of the Company's securities on a national
exchange. In such events, trading, if any, in the Company's securities may then
continue in the non-Nasdaq over-the-counter market. As a result, a shareholder
may find it more difficult to dispose of, or to obtain accurate quotations as to
the market value of, the Company's securities.
Effective January 4, 1999, the National Association of Securities
Dealers, Inc. (the "NASD") requires that companies listed for trading on the
Bulletin Board must file a Form 10-SB that must become effective by operation of
law and have no outstanding comments before trading may commence.
Holders
There are ten (10) holders of the Company's Common stock. In July 1997,
the Company issued 500,000 of its Common stock for services and expenses valued
at $.0001 per share ($100.00). All of the issued and outstanding shares of the
Company's Common stock were issued in accordance with the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933.
As of the date of this report, all of the Company's Common stock are
eligible for sale under Rule 144 promulgated under the Securities Act of 1933,
as amended, subject to certain limitations included in said Rule. In general,
under Rule 144, a person (or persons whose shares are aggregated), who has
satisfied a one year holding period, under certain circumstances, may sell
within any three-month period a number of shares which does not exceed the
greater of one percent of the then outstanding Common stock or the average
weekly trading volume during the four calendar weeks prior to such sale. Rule
144 also permits, under certain circumstances, the sale of shares without any
quantity limitation by a person who has satisfied a two-year holding period and
who is not, and has not been for the preceding three months, an affiliate of the
Company.
Dividends
We have not paid any dividends to date, and have no plans to do so in
the immediate future.
Transfer Agent
The Company does not have a transfer agent at this time.
RECENT SALES OF UNREGISTERED SECURITIES
We have not issued any of our securities during the two year period
preceding the date of this Registration Statement. All of the shares of Common
stock of the Company previously issued have been issued for investment purposes
in a "private transaction" and are "restricted" shares as defined in Rule 144
under the Securities Act of 1933, as amended (the "Act"). These shares may not
be offered for public sale except under Rule 144, or otherwise, pursuant to the
Act.
18
<PAGE>
As of the date of this report, all of the issued and outstanding shares
of the Company's Common stock are eligible for sale under Rule 144 promulgated
under the Securities Act of 1933, as amended, subject to certain limitations
included in said Rule.
However, all of the shareholders of the Company have executed and
delivered a "lock-up" letter agreement which provides that each such shareholder
shall not sell their respective securities until such time as the Company has
successfully consummated a merger or acquisition. Further, each shareholder has
placed their respective stock certificate with the Company's legal counsel,
Evers & Hendrickson, LLP, who has agreed not to release any of the certificates
until the Company has closed a merger or acquisition. Any liquidation by the
current shareholders after the release from the "lock-up" selling limitation
period may have a depressive effect upon the trading prices of the Company's
securities in any future market which may develop.
In general, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period, under certain
circumstances, may sell within any three-month period a number of shares which
does not exceed the greater of one percent of the then outstanding Common stock
or the average weekly trading volume during the four calendar weeks prior to
such sale. Rule 144 also permits, under certain circumstances, the sale of
shares without any quantity limitation by a person who has satisfied a two-year
holding period and who is not, and has not been for the preceding three months,
an affiliate of the Company.
DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 100,000,000 shares,
of Common stock, par value $.0001 per share. There are 500,000 shares of Common
stock issued and outstanding as of the date of this filing.
Common Stock
All shares of Common stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of Common stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as fully
paid and nonassessable shares. Cumulative voting in the election of directors is
not permitted, which means that the holders of a majority of the issued and
outstanding shares of Common stock represented at any meeting at which a quorum
is present will be able to elect the entire Board of Directors if they so choose
and, in such event, the holders of the remaining shares of Common stock will not
be able to elect any directors. In the event of liquidation of the Company, each
shareholder is entitled to receive a proportionate share of the Company's assets
available for distribution to shareholders after the payment of liabilities and
after distribution in full of preferential amounts, if any. All shares of the
Company's Common stock issued and outstanding are fully paid and nonassessable.
Holders of the Common stock are entitled to share pro rata in dividends and
distributions with respect to the Common stock, as may be declared by the Board
of Directors out of funds legally available therefor.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Article VIII of the Articles of Incorporation and Article VI of the
Bylaws of the Company, as amended, set forth certain indemnification rights. The
Bylaws of the Company provide that the Company
19
<PAGE>
shall possess and may exercise all powers of indemnification of officers,
directors, employees, agents and other persons and all incidental powers and
authority. The Company's Board of Directors is authorized and empowered to
exercise all of the Company's powers of indemnification, without shareholder
action. The assets of the Company could be used or attached to satisfy any such
liabilities subject to such indemnification. See Exhibit 3.1 hereto.
Disclosure of Commission Position on Indemnification for
Securities Act Liabilities
The Nevada Revised Statutes, as amended, authorize the Company to
indemnify any director or officer under certain prescribed circumstances and
subject to certain limitations against certain costs and expenses, including
attorneys' fees actually and reasonably incurred in connection with any action,
suit or proceedings, whether civil, criminal, administrative or investigative,
to which such person is a party by reason of being a director or officer of the
Company if it is determined that such person acted in accordance with the
applicable standard of conduct set forth in such statutory provisions. The
Company's Articles of Incorporation provides for the indemnification of
directors and officers to the full extent permitted by Nevada law.
The Company may also purchase and maintain insurance for the benefit of
any director or officer which may cover claims for which the Company could not
indemnify such person.
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to officers, directors or persons controlling the Company
pursuant to the foregoing, the Company has been informed that in the opinion of
the U.S. Securities and Exchange Commission such indemnification is against
public policy as expressed in the 1933 Act, and is therefore unenforceable.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
We have not changed accountants since its formation and there are no
disagreements with the findings of said accountants.
20
<PAGE>
Financial Statements.
The following financial statements are attached to this report and
filed as a part thereof.
Table of Contents - Financial Statements .................................F-2
Independent Auditor's Report .............................................F-3
Balance Sheet .............................................................F-4
Statement of Operations ...................................................F-5
Statement of Cash Flows ...................................................F-6
Statement of Shareholders' Equity .........................................F-7
Notes to Financial Statements .............................................F-8
21
<PAGE>
Item 1. Exhibit Index
No. Sequential
Page No.
3.1 Articles of Incorporation 35
3.2 Amendment to Articles of Incorporation 39
3.3 Bylaws 41
4.1 Form of Lock-up Agreement Executed by the
Company's Shareholders 68
27.1 Financial Data Schedule 69
22
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Eastern Management Corporation
Date: June 23, 1999
By: /s/ Bob Hemmerling
----------------------------------
Bob Hemmerling
By: /s/ Devinder Randhawa
----------------------------------
Devinder Randhawa
23
<PAGE>
EASTERN MANAGEMENT CORPORATION
Audited Financial Statements
For the Years Ended March 31, 1999 and 1998
and the Period July 23, 1997 (Inception)
through March 31, 1999
<PAGE>
Eastern Management Corporation
TABLE OF CONTENTS
Page
----
Independent Auditors' Report F-3
Financial Statements
Balance Sheet F-4
Statement of Operations F-5
Statement of Cash Flow F-6
Statement of Shareholders' Equity F-7
Notes to the Financial Statements F-8 to F-10
F-2
<PAGE>
KISH, LEAKE, & ASSOCIATES P.C.
7901 E BELEEVIEW AVE. - SUITE 220
ENGLEWOOD, COLORADO 80111
303.779.5006
Independent Auditors' Report
We have audited the accompanying balance sheet of Eastern Management Corporation
(a developmental Stage Company), as of March 31, 1999 and the related statements
of income, shareholders' equity, and cash flows for the fiscal years ended March
31, 1999 and 1998 and period July 23, 1997 (Inception) through March 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Eastern Management Corporation
at March 31, 1999 and the results of its operations and its cash flows for the
fiscal years ended March 31, 1999 and 1998 and the period July 23, 1997
(Inception) through March 31, 1999 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 5, the Company is
in the development stage and has no operations as of March 31, 1999. The
deficiency in working capital as of March 31, 1999 raises substantial doubt
about its ability to continue as a going concern. Management's plans concerning
these matters are described in Note 5. The financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
Kish, Leake & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
June 11, 1999
F-3
<PAGE>
Eastern Management Corporation
(A Development Stage Company)
Balance Sheet
March
31, 1999
--------
ASSETS $ 0
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES - Accounts Payable 0
SHAREHOLDERS' EQUITY
Common Stock, $.0001 Par Value
Authorized 100,000,000 Shares; Issued
And Outstanding 500,000 Shares 50
Additional Paid In Capital On Common Stock 0
Deficit Accumulated During The Development Stage -50
TOTAL SHAREHOLDERS' EQUITY 0
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 0
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-4
<PAGE>
Eastern Management Corporation
(A Development Stage Company)
Statement Of Operations
July
23, 1997
(Inception)
Through
March March March
31, 1999 31, 1998 31, 1999
----------- ----------- -----------
Revenue $ 0 $ 0 $ 0
Expenses:
Office 0 50 50
Total 0 50 50
Net (Loss) $ 0 $ (50) $ (50)
Basic (Loss) Per Common Share $ 0.00 $ 0.00
Basic Common Shares Outstanding 1,000,000 1,000,000
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-5
<PAGE>
Eastern Management Corporation
(A Development Stage Company)
Statement Of Cash Flows
July
23, 1997
(Inception)
Through
March March March
31, 1999 31, 1998 31, 1999
-------- -------- --------
Net (Loss) Accumulated During
The Development Stage $ 0 $(50) $(50)
Issuance Of Common Stock For
Cash Advances & Services 0 50 50
0 0 0
Cash Flows From Operations 0 0 0
Cash Flows From Financing
Activities:
Issuance Of Common Stock 0 0 0
Cash Flows From Financing 0 0 0
Net Increase In Cash 0 0 0
Cash At Beginning Of Period 0 0 0
Cash At End Of Period $ 0 $ 0 $ 0
Non - Cash Activities:
Stock Issued For Cash Advances & Services $ 0 $ 50 $ 50
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-6
<PAGE>
Eastern Management Corporation
(A Development Stage Company)
Statement Of Shareholders' Equity
Deficit
Accumulated
Number Of During The
Common Common Development
Shares Stock Stage Total
------- ------- ------- -------
Balance At July 23, 1997 0 $ 0 $ 0 $ 0
Issuance Of Common Stock:
July 23, 1997 for Services Valued
at $.0001 Per Share 500,000 50 0 50
Net (Loss) -50 -50
Balance At March 31, 1998, and 1999 500,000 $ 50 $ (50) $ 0
The Accompanying Notes Are An Integral Part Of These Financial Statements.
F-7
<PAGE>
Eastern Management Corporation
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended March 31, 1999 and 1998
Note 1 - Organization and Summary of Significant Accounting Policies
Organization:
On July 23, 1997, Eastern Management Corporation (the Company) was incorporated
under the laws of Nevada to engage in any lawful business or activity for which
corporations may be organized under the laws of the State of Nevada
Development Stage:
The company entered the Development stage in accordance with SFAS No. 7 on July
23, 1997. Its purpose is to evaluate, structure and complete a merger with, or
acquisition a privately owned corporation.
Statement of Cash Flows:
For the purpose of the statement of cash flows, the company considers demand
deposits and highly liquid-debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Cash paid for interest in fiscal year ended March 31, 1999 and 1998 was $-0-.
Cash paid for income taxes in fiscal year ended March 31, 1999 and 1998 was
$-0-.
Basic (Loss) per Common Share:
Basic (Loss) per common share is computed by dividing the net loss for the
period by the weighted average number of shares outstanding at March 31, 1999
and March 31, 1998.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts. Actual results could differ from those estimates.
F-8
<PAGE>
Eastern Management Corporation
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended March 31, 1999 and 1998
Note 2 - Capital Stock and Capital in Excess of Par Value
The Company initially authorized 25,000 shares of no par value common stock. On
July 23, 1997 the Board of Directors approved an increase in authorized shares
to 100,000,000 and changed the par value to $.0001. On July 23, 1997 the Company
issued 500,000 shares of common stock for services valued at $.0001 per share or
$50.
3 - Related Party Events
The Company maintains a mailing address at an officers place of business. This
address is located at Suite 106, 1460 Pandosy Street, Kelowna, B.C., Canada, V1Y
1P3. At this time the Company has no need for an office. As of March 31, 1999
management has incurred a minimal amount of time and expense on behalf of the
Company.
Note 4 - Income Taxes
At March 31, 1999, the company had net operating loss carryforwards available
for financial statement and Federal income tax purposes of approximately $50
which, if not used, will expire in the year 2019.
The Company follows Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109), which requires, among other things,
an asset and liability approach to calculating deferred income taxes. As of
March 31, 1999, the Company has a deferred tax asset of $-0-. The change in the
valuation allowance for 1999 is $ -0-.
Note 5 - Basis of Presentation
In the course of its development activities the Company has sustained continuing
losses and expects such losses to continue for the foreseeable future. The
Company's management plans on advancing funds on an as needed basis and in the
longer term, revenues from the operations of a merger candidate, if found. The
Company's ability to continue as a going concern is dependent on these
additional management advances, and, ultimately, upon achieving profitable
operations through a merger candidate.
F-9
<PAGE>
Eastern Management Corporation
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended March 31, 1999 and 1998
Note 6 - Subsequent Events
On June 14, 1999 the Company filed amended articles with the state of Nevada to
change the authorized shares to the 100,000,000 original approved by the Board
of Directors on July 23, 1997. Nevada Revised Statues Section 78.385(c) treats
this amendment as if it was filed on July 23, 1997 therefore giving the Company
enough shares for the original issuance of 500,000 shares of common stock.
The Board of Directors approved March 31, 1999 as the Company's fiscal year end.
The Company will be filing a Form 10-SB with the Securities and Exchange
Commission thereby electing to be a reporting company under the Securities Act
of 1934.
F-10
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JUL 23 1997
No. C15770-97
-----------------------
Dean Heller
DEAN HELLER, SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
EASTERN MANAGEMENT CORP
A NEVADA CORPORATION
KNOW ALL MEN BY THESE PRESENTS:
THAT I, THE UNDERSIGNED, FOR THE PURPOSE OF FORMING A CORPORATION UNDER
THE LAWS OF THE STATE OF NEVADA, RELATING TO THE GENERAL CORPORATION LAW,
I DO HEREBY CERTIFY THAT:
FIRST: THE NAME OF THE CORPORATION SHALL BE:
EASTERN MANAGEMENT CORP.
SECOND: THE ADDRESS OF CORPORATE SERVICES OF NEVADA, RESIDENT AGENT OF
THIS CORPORATION, IS TO BE LOCATED AT 502 NORTH DIVISION STREET, CARSON CITY,
NEVADA 89703.
THIRD: THIS CORPORATION IS AUTHORIZED TO CARRY ON ANY LAWFUL BUSINESS
OR ENTERPRISE. THIS CORPORATION MAY CONDUCT ALL OR ANY PART OF ITS BUSINESS AND
MAY HOLD, PURCHASE, MORTGAGE, LEASE AND CONVEY REAL AND/OR PERSONAL PROPERTY,
ANYWHERE IN THE WORLD.
FOURTH: THE TOTAL AMOUNT OF AUTHORIZED CAPITAL STOCK OF THIS
CORPORATION IS TWENTY-FIVE THOUSAND (25,000) SHARES, SAID SHARES BEING WITHOUT
NOMINAL OR PAR VALUE AND NON ASSESSABLE. THE BOARD OF DIRECTORS HAS THE
AUTHORITY TO PRESCRIBE, BY RESOLUTION, THE CLASSES, SERIES, NUMBER OF EACH
CLASS AND SERIES, VOTING POWERS, DESIGNATIONS, PREFERENCES, LIMITATIONS,
RESTRICTIONS AND RELATIVE RIGHTS OF EACH CLASS AND SERIES OF STOCK.
<PAGE>
FIFTH: THE MEMBERS OF THE GOVERNING BOARD OF THIS CORPORATION SHALL
BE STYLED AS DIRECTORS OVER THE AGE OF EIGHTEEN (18) AND THEIR NUMBER SHALL BE
NOT LESS THAN ONE. THE INITIAL DIRECTOR OF THIS CORPORATION SHALL BE ONE, AND
THE NAME AND ADDRESS OF THE INITIAL DIRECTOR IS:
GLORY ANN RIVEL
PO BOX 2335
ANAHEIM, CA. 92804
SIXTH: THE NAME AND ADDRESS OF THE INCORPORATOR IS AS FOLLOWS:
DON HARMER
502 NORTH DIVISION ST.
CARSON CITY, NEVADA 89703
SEVENTH: THE PERIOD OF EXISTENCE OF THIS CORPORATION SHALL BE
PERPETUAL.
EIGHTH: NO DIRECTOR, OFFICER OR SHAREHOLDER OF THIS CORPORATION SHALL
HAVE PERSONAL LIABILITY FOR DAMAGES FOR BREACH OF ANY FIDUCIARY DUTY AS A
DIRECTOR OR OFFICER TO THE CORPORATION, ITS SHAREHOLDERS OR ANY OTHER PERSON
EXCEPT FOR:
(A) ACTS OR OMISSIONS WHICH INVOLVE INTERNATIONAL MISCONDUCT,
FRAUD OR A KNOWING VIOLATION OF LAW;
OR
(B) THE PAYMENT OF DIVIDENDS IN VIOLATION OF NRS 78.300
<PAGE>
I, THE UNDERSIGNED, FOR THE PURPOSE OF FORMING A CORPORATION UNDER THE
LAWS OF THE STATE OF NEVADA, DO MAKE, FILE AND RECORD THIS CERTIFICATE, AND DO
CERTIFY THAT THE FACTS HEREIN STATED ARE TRUE AND I HAVE ACCORDINGLY HEREUNTO
SET MY HAND AND SEAL THIS DAY: FRIDAY, JULY 18, 1997.
/s/ Don Harmer
------------------------------
Don Harmer
STATE OF NEVADA }
: ss.
CARSON CITY }
On this 18 day of July, 1997 personally appeared before me, a notary
public, Don Harmer, who acknowledged that they executed the above instrument.
/s/ Sandra F. Mendez
------------------------------
NOTARY PUBLIC
----------------------------------------
[Nevada State Seal] SANDRA F. MENDEZ
Notary Public - State of Nevada
Appointment Recorded in County of Carson
My Appointment Expires Oct. 19, 1999
----------------------------------------
<PAGE>
- ------------------------------
STATE OF NEVADA
Secretary of State
I hereby certify that this is a
true and complete copy of the
document as filed in this
office.
JUL 23 '97
/s/ Dean Heller
DEAN HELLER
Secretary of State
By /s/ Deborah Jennings
----------------------
- ------------------------------
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JUN 14 1999
No. C15770-97
-----------------------
Dean Heller
DEAN HELLER, SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
EASTERN MANAGEMENT CORPORATION
We the undersigned, Devinder Randhawa, President and Bob Hemmerling,
Secretary, of EASTERN MANAGEMENT CORPORATION, a Nevada corporation do hereby
certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 23rd day of July, 1997, adopted a resolution to amend the
original articles as follows:
Article FOURTH is hereby amended to read as follows:
"That the total amount of common stock authorized that may be issued by
the Corporation is ONE HUNDRED MILLION (100,000,000) shares of stock
with a par value of $0.0001 per share and no other class of stock shall
be authorized. Said shares may be issued by the Corporation from time
to time for such consideration as may be fixed by the Board of
Directors."
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 500,000; that the said
change(s) and amendment have been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/s/ Devinder Randhawa
------------------------------
Devinder Randhawa, President
/s/ Bob Hemmerling
------------------------------
Bob Hemmerling, Secretary
SWORN BEFORE ME in the city of
Kelowna in the Province of
British Columbia on this
31 day of May, 1989.
/s/ Lee C. Turner
- -----------------------
A commission for taking
affidavits for British Columbia
Lee C. Turner
Barrister & Solicitor
200 - 537 LEON AVENUE
KELOWNA, B.C. V1Y 2A9
<PAGE>
- ------------------------------
STATE OF NEVADA
Secretary of State
I hereby certify that this is a
true and complete copy of the
document as filed in this
office.
JUN 15 '99
/s/ Dean Heller
DEAN HELLER
Secretary of State
By /s/ D. Farmers
----------------------
- ------------------------------
BYLAWS
of
EASTERN MANAGEMENT CORPORATION
A Nevada Corporation
ARTICLE I
OFFICES
Section 1. PRINCIPAL EXECUTIVE OR BUSINESS OFFICES. The Board of
Directors shall fix the location of the principal executive office of the
corporation at any place within or outside the State of Nevada. If the principal
executive office is located outside Nevada and the corporation has one or more
business offices in Nevada, the Board of Directors shall fix and designate a
principal business office in Nevada.
Section 2. OTHER OFFICES. Branch or subordinate offices may be
established at any time and at any place by the Board of Directors.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE OF MEETINGS. Meetings of shareholders shall be held at
any place within or outside the State of Nevada designated by the Board of
Directors. In the absence of a designation by the Board, shareholders' meetings
shall be held at the corporation's principal executive office.
Section 2. ANNUAL MEETING. The annual meeting of shareholders shall be
held each year on a date and at a time designated by the Board of Directors.
The date so designated shall be within three months after the end of
the corporation's fiscal year, and within fifteen months after the last annual
meeting.
At each annual meeting, Directors shall be elected and any other proper
business within the power of the shareholders may be transacted.
Section 3. SPECIAL MEETINGS. Special meetings of the shareholders may
be called at any time by the Board of Directors, by the Chair of the Board, by
the President or a Vice President, or by one or more shareholders holding shares
that in the aggregate are entitled to cast ten percent or more of the votes at
that meeting.
<PAGE>
If a special meeting is called by anyone other than the Board of
Directors, the person or persons calling the meeting shall make a request in
writing, delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission, to the Chair of the Board or the President, Vice
President, or Secretary, specifying the time and date of the meeting (which is
not less than 35 nor more than 60 days after receipt of the request) and the
general nature of the business proposed to be transacted. Within 20 days after
receipt, the officer receiving the request shall cause notice to be given to the
shareholders entitled to vote, in accordance with the provisions of Sections 4
and 5 of this Article II, stating that a meeting will be held at the time
requested by the person(s) calling the meeting, and stating the general nature
of the business proposed to be transacted. If notice is not given within 20 days
after receipt of the request, the person or persons requesting the meeting may
give the notice. Nothing contained in this paragraph shall be construed as
limiting, fixing, or affecting the time when a meeting of shareholders called by
action of the Board may be held.
Section 4. NOTICE OF SHAREHOLDERS' MEETINGS. All notices of meetings of
shareholders shall be sent or otherwise given in accordance with the
requirements of Section 5 of this Article II and shall not be fewer than 10 nor
more than 60 days before the date of the meeting. Shareholders entitled to
notice shall be determined in accordance with the provision of Section 11 of
this Article II. The notice shall specify the place, date, and hour of the
meeting, and (i) in the case of a special meeting, the general nature of the
business to be transacted, or (ii) in the case of the annual meeting, those
matters that the Board of Directors, at the time of giving the notice, intends
to present for action by the shareholders. If Directors are to be elected, the
notice shall include the names of all nominees whom the Board intends, at the
time of the notice, to present for election.
The notice shall also state the general nature of any proposed action
to be taken at the meeting to approve any of the following matters:
(i) A transaction in which a Director has a financial
interest;
(ii) An amendment of the Articles of Incorporation;
(iii) A reorganization;
(iv) A voluntary dissolution; or
(v) A distribution in dissolution that requires approval
of the outstanding shares.
Section 5. MANNER OF GIVING NOTICE: AFFIDAVIT OF NOTICE. Notice of any
shareholders' meeting shall be given either personally or by first-class mail or
telegraphic or other written communication, charges prepaid, addressed to the
shareholder at the address appearing on the corporation's books or given by the
shareholder to the corporation for purposes of notice. If no address appears on
the corporation's books or has been given as
2
<PAGE>
specified above, notice shall be either (1) sent by first-class mail addressed
to the shareholder at the corporation's principal executive office, or (2)
published at least once in a newspaper of general circulation in the county
where the corporation's principal executive office is located. Notice is deemed
to have been given at the time when delivered personally or deposited in the
mall or sent by other means of written communication.
If any notice or report mailed to a shareholder at the address
appearing on the corporation's books is returned marked to indicate that the
United States Postal Service is unable to deliver the document to the
shareholder at that address, all future notices or reports shall be deemed to
have been duly given without further mailing if the corporation holds the
document available for the shareholder on written demand at the corporation's
principal executive office for a period of one year from the date the notice or
report was given to all other shareholders.
An affidavit of the mailing, or other authorized means of giving notice
or delivering a document, of any notice of shareholders' meeting, report, or
other document sent to shareholders, may be executed by the corporation's
Secretary, Assistant Secretary, or transfer agent, and, if executed, shall be
filed and maintained in the minute book of the corporation.
Section 6. QUORUM. The presence in person or by proxy of the holders of
a majority of the shares entitled to vote at any meeting of the shareholders
shall constitute a quorum for the transaction of business. The shareholders
present at a duly called or held meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 7. ADJOURNED MEETING; NOTICE. Any shareholders' meeting, annual
or special, whether or not a quorum is present, may be adjourned from time to
time by the vote of the majority of the shares represented at that meeting,
either in person or by proxy, but in the absence of a quorum, no other business
may be transacted at that meeting, except as provided in Section 6 of this
Article II.
When any meeting of shareholders, either annual or special, is
adjourned to another time or place, notice of the adjourned meeting need not be
given if the time and place are announced at the meeting at which the
adjournment is taken, unless a new record date for the adjourned meeting is
fixed, or unless the adjournment is for more than 45 days from the date set for
the original meeting, in which case the Board of Directors shall set a new
record date. Notice of any such adjourned meeting, if required, shall be given
to each shareholder of record entitled to vote at the adjourned meeting, in
accordance with the provisions of Sections 4 and 5 of this
3
<PAGE>
Article II. At any adjourned meeting, the corporation may transact any business
that might have been transacted at the original meeting.
Section 8. VOTING. The shareholders entitled to vote at any meeting of
shareholders shall be determined in accordance with the provisions of Section 11
of this Article II. The shareholders' vote may be by voice vote or by ballot,
provided, however, that any election for Directors must be by ballot if demanded
by any shareholder before the voting has begun. On any matter other than the
election of Directors, any shareholder may vote part of the shares the
shareholder is to vote in favor of the proposal and refrain from voting the
remaining shares or vote them against the proposal, but, if the shareholder
fails to specify the number of shares that the shareholder is voting
affirmatively, it will be conclusively presumed that the shareholder's approving
vote is with respect to all shares that the shareholder is entitled to vote. If
a quorum is present (or if a quorum has been present earlier at the meeting but
some shareholders have withdrawn), the affirmative vote of a majority of the
shares represented and voting, provided such shares voting affirmatively also
constitute a majority of the number of shares required for a quorum, shall be
the act of the shareholders unless the vote of a greater number or voting by
classes is required by law or by the Articles of Incorporation.
At a shareholders' meeting at which Directors are to be elected, no
shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes which that shareholder normally
would be entitled to cast), unless the candidates' names have been placed in
nomination before commencement of the voting and a shareholder has given notice
at the meeting, before the voting has begun, of the shareholder's intention to
cumulate votes. If any shareholder has given such a notice, then all
shareholders entitled to vote may cumulate their votes for candidates in
nomination, and may give one candidate a number of votes equal to the number of
Directors to be elected multiplied by the number of votes to which that
shareholder's shares are normally entitled, or distribute the shareholder's
votes on the same principle among any or all of the candidates, as the
shareholder thinks fit. The candidates receiving the highest number of votes, up
to the number of Directors to be elected, shall be elected.
Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The
transactions of any meeting of shareholders, either annual or special, however
called and noticed and wherever held, shall be as valid as though they were had
at a meeting duly held after regular call and notice, if a quorum is present
either in person or by proxy, and if each person entitled to vote who was not
present in person or by proxy, either before or after the meeting, signs a
written waiver of notice or a consent to holding the meeting or an approval of
the minutes of the meeting.
4
<PAGE>
A shareholder's attendance at a meeting also constitutes a waiver of
notice of that meeting, unless the shareholder at the beginning of the meeting
objects to the transaction of any business on the ground that the meeting was
not lawfully called or convened. In addition, attendance at a meeting does not
constitute a waiver of any right to object to consideration of matters required
by law to be included in the notice of the meeting which were not so included,
if that objection is expressly made at the meeting.
Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Any action that could be taken at an annual or special meeting of shareholders
may be taken without a meeting and without prior notice, if a consent in
writing, setting forth the action so taken, is signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take that action at a meeting at which all shares
entitled to vote on that action were present and voted.
Directors may be elected by written consent of the shareholders without
a meeting only if the written consents of all outstanding shares entitled to
vote are obtained, except that vacancies on the Board (other than vacancies
created by removal) not filled by the Board may be filled by the written consent
of the holders of a majority of the outstanding shares entitled to vote.
All consents shall be filed with the Secretary of the corporation and
shall be maintained in the corporate records. Any shareholder or other
authorized person who has given a written consent may revoke it by a writing
received by the Secretary of the corporation before written consents of the
number of shares required to authorize the proposed action have been filed with
the Secretary.
Unless the consents of all shareholders entitled to vote have been
solicited in writing, prompt notice shall be given of any corporate action
approved by shareholders without a meeting by less than unanimous consent, to
those shareholders entitled to vote who have not consented in writing.
Section 11. RECORD DATE FOR SHAREHOLDER NOTICE OF MEETING, VOTING, AND
GIVING CONSENT.
(a) For purposes of determining the shareholders entitled to receive
notice of and vote at a shareholders' meeting or give written consent to
corporate action without a meeting, the Board may fix in advance a record date
that is not more than 60 nor less than 10 days before the date of a
shareholders' meeting, or not more than 60 days before any other action.
5
<PAGE>
(b) If no record date is fixed:
(i) The record date for determining shareholders entitled
to receive notice of and vote at a shareholders'
meeting shall be the business day next preceding the
day on which notice is given, or if notice is waived
as provided in Section 9 of this Article II, the
business day next preceding the day on which the
meeting is held.
(ii) The record date for determining shareholders entitled
to give consent to corporate action in writing
without a meeting, if no prior action has been taken
by the Board, shall be the day on which the first
written consent is given.
(iii) The record date for determining shareholders for any
other purpose shall be as set forth in Section 1 of
Article VIII of these Bylaws.
(c) A determination of shareholders of record entitled to receive
notice of and vote at a shareholders' meeting shall apply to any adjournment of
the meeting unless the Board fixes a new record date for the adjourned meeting.
However, the Board shall fix a new record date if the adjournment is to a date
more than 45 days after the date set for the original meeting.
(d) Only shareholders of record on the corporation's books at the close
of business on the record date shall be entitled to any of the notice and voting
rights listed in subsection (a) of this section, notwithstanding any transfer of
shares on the corporation's books after the record date, except as otherwise
required by law.
Section 12. PROXIES. Every person entitled to vote for Directors or on
any other matter shall have the right to do so either in person or by one or
more agents authorized by a written proxy signed by the person and filed with
the Secretary of the corporation. A proxy shall be deemed signed if the
shareholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission, or otherwise) by the shareholder or the
shareholder's attorney in fact. A validly executed proxy that does not state
that it is irrevocable shall continue in full force and effect unless (i)
revoked by the person executing it, before the vote pursuant to that proxy, by a
writing delivered to the corporation stating that the proxy is revoked, or by
attendance at the meeting and voting in person by the person executing the proxy
or by a subsequent proxy executed by the same person and presented at the
meeting; or (ii) written notice of the death or incapacity of the maker of that
proxy is received by the corporation before the vote pursuant to that proxy is
counted; provided, however, that no proxy shall be valid after the expiration of
6 months from the date of the proxy, unless coupled
6
<PAGE>
with an interest. The revocability of a proxy that states on its face that it is
irrevocable shall be governed by NRS 78.355.
Section 13. INSPECTORS OF ELECTION. Before any meeting of shareholders,
the Board of Directors may appoint any persons other than nominees for office to
act as inspectors of election at the meeting or its adjournment. If no
inspectors of election are so appointed, the Chair of the meeting may, and on
the request of any shareholder or a shareholder's proxy shall, appoint
Inspectors of Election at the meeting. The number of Inspectors shall be either
one or three. If Inspectors are appointed at a meeting on the request of one or
more shareholders or proxies, the holders of a majority of shares or their
proxies present at the meeting shall determine whether one or three Inspectors
are to be appointed. If any person appointed as Inspector fails to appear or
fails or refuses to act, the Chair of the meeting may, and upon the request of
any shareholder or a shareholder's proxy shall, appoint a person to fill that
vacancy.
These Inspectors shall: (a) determine the number of shares outstanding
and the voting power of each, the shares represented at the meeting, the
existence of a quorum, and the authenticity, validity, and effect of proxies;
(b) receive votes, ballots, or consents; (c) hear and determine all challenges
and questions in any way arising in connection with the right to vote; (d) count
and tabulate all votes or consents; (e) determine when the polls shall close;
(f) determine the result; and (g) do any other acts that may be proper to
conduct the election or vote with fairness to all shareholders.
7
<PAGE>
ARTICLE III
DIRECTORS
Section 1. POWERS. Subject to the provisions of the Nevada General
Corporation Law and any limitations in the Articles of Incorporation and these
Bylaws relating to action required to be approved by the shareholders or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all corporate powers shall be exercised by or under the direction of the
Board of Directors.
Without prejudice to these general powers, and subject to the same
limitations, the Board of Directors shall have the power to:
(a) Select and remove all officers, agents, and employees of the
corporation; prescribe any powers and duties for them that are consistent with
law, with the Articles of Incorporation, and with these Bylaws; fix their
compensation; and require from them security for faithful service.
(b) Change the principal executive office or the principal business
office in the State of Nevada from one location to another; cause the
corporation to be qualified to do business in any other state, territory,
dependency, or country and conduct business within or outside the State of
Nevada; and designate any place within or outside the State of Nevada for
holding any shareholders' meeting or meetings, including Annual Meetings.
(c) Adopt, make, and use a corporate seal; prescribe the forms of
certificates of stock; and alter the form of the seal and certificates.
(d) Authorize the issuance of shares of stock of the corporation on any
lawful terms, in consideration of money paid, labor done, services actually
rendered, debts or securities canceled, or tangible or intangible property
actually received.
(e) Borrow money and incur indebtedness on behalf of the corporation,
and cause to be executed and delivered for the corporation's purposes, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations, and other evidences of debt and securities.
Section 2. NUMBER OF DIRECTORS. The number of Directors shall be no
fewer than one (1) nor more than five (5). The exact number of authorized
Directors shall be one (1) until changed, within the limits specified above, by
a Bylaw amending this section, duly adopted by the Board of Directors, or the
shareholders. The maximum or minimum number
8
<PAGE>
of Directors cannot be changed, nor can a fixed number be substituted for the
maximum and minimum numbers, except by a duly adopted amendment to the Articles
of Incorporation or by an amendment to this Bylaws duly adopted by a majority of
the outstanding shares entitled to vote. However, once shares have been issued
to more than two (2) shareholders, an amendment that would reduce the authorized
number of Directors to a number fewer than five cannot be adopted if the votes
cast against its adoption at a shareholders' meeting or the shares not
consenting to an action by written consent are equal to more than one-sixth (16
2/3%) of the outstanding shares entitled to vote.
Section 3. ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors shall be
elected at each Annual Meeting of the shareholders to hold office until the next
Annual Meeting. Each Director, including a Director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
No reduction of the authorized number of Directors shall have the
effect of removing any Director before that Director's term of office expires.
Section 4. VACANCIES. A vacancy in the Board of Directors shall be
deemed to exist: (a) if a Director dies, resigns, or is removed by the
shareholders or an appropriate court, as provided in NRS 78.335 and 78.345; (b)
if the Board of Directors declares vacant the office of a Director who has been
convicted of a felony or declared of unsound mind by an order of court; (c) if
the authorized number of Directors is increased; or (d) if at any shareholders'
meeting at which one or more Directors are elected the shareholders fail to
elect the full authorized number of Directors to be voted for at that meeting.
Any Director may resign effective on giving written notice to the Chair
of the Board, the President, the Secretary, or the Board of Directors, unless
the notice specifies a later effective date. If the resignation is effective at
a future time, the Board may elect a successor to take office when the
resignation becomes effective.
Except for a vacancy caused by the removal of a Director, vacancies on
the Board may be filled by approval of the Board or, if the number of Directors
then in office is less than a quorum, by (1) the unanimous written consent of
the Directors then in office, (2) the affirmative vote of a majority of the
Directors then in office at a meeting held pursuant to notice or waivers of
notice complying with NRS 78.370 and & 78.375, or (3) a sole remaining Director.
A vacancy on the Board caused by the removal of a Director may be filled only by
the shareholders, except that a vacancy created when the Board declares the
office of a Director vacant as provided in clause (b) of the first paragraph of
this section of the Bylaws may be filled by the Board of Directors.
9
<PAGE>
The shareholders may elect a Director at any time to fill a vacancy not
filled by the Board of Directors.
The term of office of a Director elected to fill a vacancy shall run
until the next annual meeting of the shareholders, and such a Director shall
hold office until a successor is elected and qualified.
Section 5. PLACE OF MEETINGS; TELEPHONE MEETINGS. Regular meetings of
the Board of Directors may be held at any place within or outside the State of
Nevada as designated from time to time by the Board. In the absence of a
designation, regular meetings shall be held at the principal executive office of
the corporation. Special meetings of the Board shall be held at any place within
or outside the State of Nevada designated in the notice of the meeting, or if
the notice does not state a place, or if there is no notice, at the principal
executive office of the corporation. Any meeting, regular or special, may be
held by conference telephone or similar communication equipment, provided that
all Directors participating can hear one another.
Section 6. ANNUAL DIRECTORS' MEETING. Immediately after each annual
shareholders' meeting, the Board of Directors shall hold a regular meeting at
the same place, or at any other place that has been designated by the Board of
Directors, to consider matters of organization, election of officers, and other
business as desired. Notice of this meeting shall not be required unless some
place other than the place of the annual shareholders' meeting has been
designated.
Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the Board
of Directors shall be held without call at times to be fixed by the Board of
Directors from time to time. Such regular meetings may be held without notice.
Section 8. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called for any purpose or purposes at any time by the Chair of the Board,
the President, any Vice President, the Secretary, or any two Directors.
Special meetings shall be held on four days' notice by mail or
forty-eight hours' notice delivered personally or by telephone or telegraph.
Oral notice given personally or by telephone may be transmitted either to the
Director or to a person at the Director's office who can reasonably be expected
to communicate it promptly to the Director. Written notice, if used, shall be
addressed to each Director at the address shown on the corporation's records.
The notice need not specify the purpose of the meeting, nor need it specify the
place if the meeting is to be held at the principal executive office of the
corporation.
10
<PAGE>
Section 9. QUORUM. A majority of the authorized number of Directors
shall constitute a quorum for the transaction of business, except to adjourn as
provided in Section 11 of this Article III. Every act or decision done or made
by a majority of the Directors present at a meeting duly held at which a quorum
is present shall be regarded as the act of the Board of Directors.
Section 10. WAIVER OF NOTICE. Notice of a meeting, although otherwise
required, need not be given to any Director who (i) either before or after the
meeting signs a waiver of notice or a consent to holding the meeting without
being given notice; (ii) signs an approval of the minutes of the meeting; or
(iii) attends the meeting without protesting the lack of notice before or at the
beginning of the meeting. Waivers of notice or consents need not specify the
purpose of the meeting. All waivers, consents, and approvals of the minutes
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Section 11. ADJOURNMENT TO ANOTHER TIME OR PLACE. Whether or not a
quorum is present, a majority of the Directors present may adjourn any meeting
to another time or place.
Section 12. NOTICE OF ADJOURNED MEETING. Notice of the time and place
of resuming a meeting that has been adjourned need not be given unless the
adjournment is for more than 24 hours, in which case notice shall be given,
before the time set for resuming the adjourned meeting, to the Directors who
were not present at the time of the adjournment. Notice need not be given in any
case to Directors who were present at the time of adjournment.
Section 13. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken by the Board of Directors may be taken without a meeting, if all
members of the Board of Directors individually or collectively consent in
writing to that action. Any action by written consent shall have the same force
and effect as a unanimous vote of the Board of Directors. All written consents
shall be filed with the minutes of the proceedings of the Board of Directors.
Section 14. FEES AND COMPENSATION OF DIRECTORS. Directors and members
of committees of the Board may be compensated for their services, and shall be
reimbursed for expenses, as fixed or determined by resolution of the Board of
Directors. This section shall not be construed to preclude any Director from
serving the corporation in any other capacity, as an officer, agent, employee,
or otherwise, and receiving compensation for those services.
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ARTICLE IV
COMMITTEES
Section 1. COMMITTEES OF THE BOARD. The Board of Directors may, by
resolution adopted by a majority of the authorized number of Directors,
designate one or more committees, each consisting of two or more Directors. The
Board may designate one or more Directors as alternate members of any committee,
to replace any absent member at a committee meeting. The appointment of
committee members or alternate members requires the vote of a majority of the
authorized number of Directors. A committee may be granted any or all of the
powers and authority of the Board in the management of the business and affairs
of the corporation.
Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and action of
committees shall be governed by, and held and taken in accordance with, Bylaw
provisions applicable to meetings and actions of the Board of Directors, as
provided in Section 5 and Sections 7 through 13 of Article III of these Bylaws,
as to the following matters: place of meetings; regular meetings; special
meetings and notice; quorum; waiver of notice; adjournment; notice of
adjournment; and action without meeting, with such changes in the context of
these Bylaws as are necessary to substitute the committee and its members for
the Board of Directors and its members, except that (a) the time of regular
meetings of committees may be determined either by resolution of the Board of
Directors or by resolution of the committee; (b) special meetings of committees
may also be called by resolution of the Board of Directors; and (c) notice of
special meetings of committees shall also be given to all alternative members
who shall have the right to attend all meetings of the committee. The Board of
Directors may adopt rules for the governance of any committee not inconsistent
with these Bylaws.
ARTICLE V
OFFICERS
Section 1. OFFICERS. The officers of the corporation shall be a
President, a Secretary, and a Treasurer. The corporation may also have, at the
discretion of the Board of Directors, a Chair of the Board, one or more Vice
Presidents, one or more Assistant Secretaries, a Chief Financial Officer, one or
more Assistant Treasurers, and such other officers as may be appointed in
accordance with Section 3 of this Article. Any number of offices may be held by
the same person.
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Section 2. APPOINTMENT OF OFFICERS. The officers of the corporation,
except for subordinate officers appointed in accordance with Section 3 of this
Article V, shall be appointed by the Board of Directors, and shall serve at the
pleasure of the Board of Directors.
Section 3. SUBORDINATE OFFICERS. The Board of Directors may appoint,
and may empower the Chair to appoint other officers as required by the business
of the corporation, whose duties shall be as provided in the Bylaws, or as
determined from time to time by the Board of Directors or the Chair.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Any officer chosen by
the Board of Directors may be removed at any time, with or without cause or
notice, by the Board of Directors. Subordinate officers appointed by persons
other than the Board under Section 3 of this Article may be removed at any time,
with or without cause or notice, by the Board of Directors or by the officer by
whom appointed. Officers may be employed for a specified term under a contract
of employment if authorized by the Board of Directors; such officers may be
removed from office at any time under this section, and shall have no claim
against the corporation or individual officers or Board members because of the
removal except any right to monetary compensation to which the officer may be
entitled under the contract of employment.
Any officer may resign at any time by giving written notice to the
corporation. Resignations shall take effect on the date of receipt of the
notice, unless a later time is specified in the notice. Unless otherwise
specified in the notice, acceptance of the resignation is not necessary to make
it effective. Any resignation is without prejudice to the rights, if any, of the
corporation to monetary damages under any contract of employment to which the
officer is a party.
Section 5. VACANCIES IN OFFICES. A vacancy in any office resulting from
an officer's death, resignation, removal, disqualification, or from any other
cause shall be filled in the manner prescribed in these Bylaws for regular
election or appointment to that office.
Section 6. CHAIR OF THE BOARD. The Board of Directors may elect a
Chair, who shall preside, if present, at Board meetings and shall exercise and
perform such other powers and duties as may be assigned from time to time by the
Board of Directors.
Section 7. PRESIDENT. Except to the extent that the Bylaws or the Board
of Directors assign specific powers and duties to the Chair of the Board (if
any), the President shall be the corporation's general manager and Chief
Executive Officer and, subject to the control of the Board of Directors, shall
have general supervision, direction, and control over
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the corporation's business and its officers. The managerial powers and duties of
the President shall include, but are not limited to, all the general powers and
duties of management usually vested in the office of President of a corporation,
and the President shall have other powers and duties as prescribed by the Board
of Directors or the Bylaws. The President shall preside at all meetings of the
shareholders and, in the absence of the Chair of the Board or if there is no
Chair of the Board, shall also preside at meetings of the Board of Directors.
Section 8. CHAIR OF THE BOARD. The Chair of the Board, if such an
officer be elected, shall, if present, preside at meetings of the Board of
Directors and exercise and perform such other powers and duties as may be from
time to time assigned by the Board of Directors or prescribed by the By-laws. If
there is no President, the Chair of the Board shall in addition be the Chief
Executive Officer of the corporation and shall have the powers and duties
prescribed in Section 7 of this Article V.
Section 9. VICE PRESIDENTS. If desired, one or more Vice Presidents may
be chosen by the Board of Directors in accordance with the provisions for
appointing officers set forth in Section 2 of this Article V. In the absence or
disability of the President, the President's duties and responsibilities shall
be carried out by the highest ranking available Vice President if Vice
Presidents are ranked or, if not, by a Vice President designated by the Board of
Directors. When so acting, a Vice President shall have all the powers of and be
subject to all the restrictions on the President. Vice Presidents of the
corporation shall have such other powers and perform such other duties as
prescribed from time to time by the Board of Directors, the Bylaws, or the
President (or Chair of the Board if there is no President).
Section 10. SECRETARY
(a) Minutes.
The Secretary shall keep, or cause to be kept, minutes of all
of the shareholders' meetings and of all other Board meetings. If the Secretary
is unable to be present, the Secretary or the presiding officer of the meeting
shall designate another person to take the minutes of the meeting.
The Secretary shall keep, or cause to be kept, at the
principal executive office or such other place as designated by the Board of
Directors, a Book of Minutes of all meetings and actions of the shareholders, of
the Board of Directors, and of committees of the Board. The minutes of each
meeting shall state the time and place the meeting was held; whether it was
regular or special; if special, how it was called or authorized; the names of
Directors present
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at Board or committee meetings; the number of shares present or represented at
shareholders' meetings; an accurate account of the proceedings; and when it was
adjourned.
(b) Record of Shareholders.
The Secretary shall keep, or cause to be kept, at the
principal executive office or at the office of the transfer agent or registrar,
a record or duplicate record of shareholders. This record shall show the names
of all shareholders and their addresses, the number and classes of shares held
by each, the number and date of share certificates issued to each shareholder,
and the number and date of cancellation of any certificates surrendered for
cancellation.
(c) Notice of Meetings.
The Secretary shall give notice, or cause notice to be given,
of all shareholders' meetings, Board meetings, and meetings of committees of the
Board for which notice is required by statute or by the Bylaws. If the Secretary
or other person authorized by the Secretary to give notice fails to act, notice
of any meeting may be given by any other officer of the corporation.
(d) Other Duties.
The Secretary shall keep the seal of the corporation, if any,
in safe custody. The Secretary shall have such other powers and perform other
duties as prescribed by the Board of Directors or by the Bylaws.
Section 11. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
keep, or cause to be kept, adequate and correct books and records of accounts of
the properties and business transactions of the corporation, including accounts
of its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any Director.
The Chief Financial Officer shall (1) deposit corporate funds and other
valuables in the corporation's name and to its credit with depositaries
designated by the Board of Directors; (2) make disbursements of corporate funds
as authorized by the Board; (3) render a statement of the corporation's
financial condition and an account of all transactions conducted as Chief
Financial Officer whenever requested by the Chair, the President or the Board of
Directors; and (4) have other powers and perform other duties as prescribed by
the Board of Directors or the Bylaws.
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Unless the Board of Directors has elected a separate Treasurer, the
Chief Financial Officer shall be deemed to be the treasurer for purposes of
giving any reports or executing any certificates or other documents.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES, AND OTHER AGENTS
Section 1. AGENTS, PROCEEDINGS, AND EXPENSES. For the purposes of this
Article, "agent" means any person who is or was a Director, officer, employee,
or other agent of this corporation, or who is or was serving at the request of
this corporation as a Director, officer, employee, or agent of another foreign
or domestic corporation, partnership, joint venture, trust or other enterprise,
or who was a Director, officer, employee, or agent of a foreign or domestic
corporation that was a predecessor corporation of this corporation or of another
enterprise at the request of such predecessor corporation; "proceeding" means
any threatened, pending, or completed action or proceeding, whether civil,
criminal, administrative, or investigative; and "expenses" includes, without
limitation, attorney fees and any expenses of establishing a right to
indemnification under Section 4 or Section 5(d) of this Article VI.
Section 2. ACTIONS OTHER THAN BY THE CORPORATION. This corporation
shall have the 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 this corporation to procure a judgment in its favor) by reason of
the fact that such person is or was an agent of this corporation, against
expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with such proceeding if that person acted in
good faith and in a manner that the person reasonably believed to be in the best
interests of this corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of that 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 that the
person reasonably believed to be in the best interests of this corporation or
that the person had reasonable cause to believe that the person's conduct was
not unlawful.
Section 3. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. This
corporation shall have the 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 this corporation to procure a judgment in its favor
by reason of the fact that such
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person is or was an agent of this corporation, against expenses actually and
reasonably incurred by such person in connection with the defense or settlement
of that action, if such person acted in good faith, in a manner such person
believed to be in the best interests of this corporation and its shareholders.
No indemnification shall be made under this Section 3 for the following:
(a) With respect to any claim, issue, or matter as to which
such person has been adjudged to be liable to this corporation in the
performance of such person's duty to the corporation and its shareholders,
unless and only to the extent that the court in which such proceeding is or was
pending shall determine on application that, in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for
expenses and then only to the extent that the court shall determine;
(b) Amounts paid in settling or otherwise disposing of a
pending action without court approval; or
(c) Expenses incurred in defending a pending action that is
settled or otherwise disposed of without court approval.
Section 4. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of
this corporation has been successful on the merits in defense of any proceeding
referred to in Section 2 or 3 of this Article VI, 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.
Section 5. REQUIRED APPROVAL. Except as provided in Section 4 of this
Article VI, any indemnification under this Section shall be made by the
corporation only if authorized in the specific case, after 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 Section 2 or 3 by one of
the following:
(a) A majority vote of a quorum consisting of Directors who
are not parties to such proceeding;
(b) Independent legal counsel in a written opinion if a quorum
of Directors who are not parties to such a proceeding is not available;
(c) (i) The affirmative vote of a majority of shares of
this corporation entitled to vote represented at a
duly held meeting at which a quorum is present; or
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(ii) the written consent of holders of a majority of the
outstanding shares entitled to vote (for purposes of
this subsection 5(c), the shares owned by the person
to be indemnified shall not be considered outstanding
or entitled to vote thereon); or
(d) The court in which the proceeding is or was pending, on
application made by this corporation or the agent or the attorney or other
person rendering services in connection with the defense, whether or not such
application by the agent, attorney, or other person is opposed by this
corporation.
Section 6. ADVANCE OF EXPENSES. Expenses incurred in defending any
proceeding may be advanced by the corporation before the final disposition of
such proceeding on receipt of an undertaking by or on behalf of the agent to
repay such amounts if it shall be determined ultimately that the agent is not
entitled to be indemnified as authorized in this Article VI. By unanimous vote
of all Directors, other than a Director who may be a party to such proceeding,
this provision requiring an undertaking may be waived; provided, however, that
such waiver shall not relieve the agent of liability.
Section 7. OTHER CONTRACTUAL RIGHTS. The indemnification provided by
this Article VI 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, both as to action in an
official capacity and as to action in another capacity while holding such
office, to the extent such additional rights to indemnification are authorized
in the articles of the corporation. Nothing in this section shall affect any
right to indemnification to which persons other than such Directors and officers
may be entitled by contract or otherwise.
Section 8. LIMITATIONS. No indemnification or advance shall be made
under this Article VI, except as provided in Section 4 or Section 5(d), in any
circumstance if it appears:
(a) 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 expenses were incurred or other amounts were paid, which
prohibits or otherwise limits indemnification; or
(b) That it would be inconsistent with any condition expressly
imposed by a court in approving settlement.
Section 9. INSURANCE. This corporation may purchase and maintain
insurance on behalf of any agent of the corporation insuring against any
liability asserted against or incurred
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by the agent in that capacity or arising out of the agent's status as such,
whether or not this corporation would have the power to indemnify the agent
against that liability under the provisions of this Article VI.
Section 10. FIDUCIARIES OF CORPORATE EMPLOYEE BENEFIT PLAN. This
Article VI 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 that person may also be an agent of the
corporation. The corporation shall have the power to indemnify, and to purchase
and maintain insurance on behalf of any such trustee, investment manager, or
other fiduciary of any benefit plan for any or all of the Directors, officers,
and employees of the corporation or any of its subsidiary or affiliated
corporations.
Section 11. SURVIVAL OF RIGHTS. The rights provided by this Article VI
shall continue for a person who has ceased to be an agent and shall inure to the
benefit of the heirs, executors, and administrators of such person.
Section 12. EFFECT OF AMENDMENT. Any amendment, repeal, or modification
of this Article VI shall not adversely affect an agent's right or protection
existing at the time of such amendment, repeal, or modification.
Section 13. SETTLEMENT OF CLAIMS. The corporation shall not be liable
to indemnify any agent under this Article VI for (a) any amounts paid in
settlement of any action or claim effected without the corporation's written
consent, which consent shall not be unreasonably withheld or (b) any judicial
award, if the corporation was not given a reasonable and timely opportunity to
participate, at its expense, in the defense of such action.
Section 14. SUBROGATION. In the event of payment under this Article VI,
the corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of the agent, who shall execute all papers required and shall
do everything that may be necessary to secure such rights, including the
execution of such documents as may be necessary to enable the corporation
effectively to bring suit to enforce such rights.
Section 15. NO DUPLICATION OF PAYMENTS. The corporation shall not be
liable under this Article VI to make any payment in connection with any claim
made against the agent to the extent the agent has otherwise actually received
payment, whether under a policy of insurance, agreement, vote, or otherwise, of
the amounts otherwise indemnifiable under this Article.
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ARTICLE VII
RECORDS AND REPORTS
Section 1. MAINTENANCE OF SHAREHOLDER RECORD AND INSPECTION BY
SHAREHOLDERS. The corporation shall keep at its principal executive office or at
the office of its transfer agent or registrar, as determined by resolution of
the Board of Directors, a record of the names and addresses of all shareholders
and the number and class of shares held by each shareholder, a copy certified by
the Secretary of State of the corporation=s articles of incorporation and all
amendments thereto, and a copy certified by an officer of the corporation of its
bylaws and all amendments thereto.
Any person who has been a stockholder of record for at least 6 months
immediatley preceding his or her demand, or any shareholder or shareholders
holding at least 5 percent in the aggregate of the outstanding voting shares of
the corporation shall have the right to inspect and copy the record of
shareholders' names and addresses and shareholdings during usual business hours,
on five days' prior written demand on the corporation.
Section 2. MAINTENANCE AND INSPECTION OF BYLAWS. The corporation shall
keep at its principal executive office, or if its principal executive office is
not in the State of Nevada, at its principal business office in this state, a
copy certified by an officer of the corporation of the Bylaws as amended to
date, which shall be open to inspection by the shareholders at all reasonable
times during office hours. If the principal executive office of the corporation
is outside the State of Nevada and the corporation has no principal business
office in this state, the Secretary shall, on the written request of any
shareholder, furnish to that shareholder a copy of the Bylaws as amended to
date.
Section 3. MAINTENANCE AND INSPECTION OF MINUTES AND ACCOUNTING
RECORDS. The minutes of proceedings of the shareholders, Board of Directors, and
committees of the Board, and the accounting books and records, shall be kept at
the principal executive office of the corporation, or at such other place or
places as designated by the Board of Directors. The minutes shall be kept in
written form, and the accounting books and records shall be kept either in
written form or in a form capable of being converted into written form. The
minutes and accounting books and records shall be open to inspection on the
written demand of any shareholder or holder of a voting trust certificate at any
reasonable time during usual business hours, for a purpose reasonably related to
the holder's interests as a shareholder or holder of a voting trust certificate.
The inspection may be made in person or by an agent or attorney, and shall
include the right to copy and make extracts. These rights of inspection shall
extend to the records of each subsidiary of the corporation.
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Section 4. INSPECTION BY DIRECTORS. Every Director shall have the
absolute right at any reasonable time to inspect all books, records, and
documents of every kind and the physical properties of the corporation and each
of its subsidiary corporations. This inspection by a Director may be made in
person or by an agent or attorney and the right of inspection includes the right
to copy and make extracts of documents.
Section 5. ANNUAL REPORT TO SHAREHOLDERS. The Board of Directors shall
cause an annual report to be sent to the shareholders not later than 120 days
after the close of the fiscal year adopted by the corporation. This report shall
be sent at least 15 days (if third-class mail is used, 35 days) before the
annual meeting of shareholders to be held during the next fiscal year and in the
manner specified for giving notice to shareholders in Section 5 of Article II of
these Bylaws. The annual report shall contain a balance sheet as of the end of
the fiscal year and an income statement and a statement of cash flows for the
fiscal year prepared in accordance with generally accepted accounting principles
applied on a consistent basis and accompanied by any report of independent
accountants, or, if there is no such report, the certificate of an authorized
officer of the corporation that the statements were prepared without audit from
the corporation's books and records.
Section 6. ANNUAL REPORT TO SHAREHOLDERS. Inasmuch as, and for as long
as, there are fewer than 100 shareholders, the requirement of an annual report
to shareholders referred to in Section 5 is expressly waived. However, nothing
in this provision shall be interpreted as prohibiting the Board of Directors
from issuing annual or other periodic reports to the shareholders, as the Board
considers appropriate.
Section 7. FINANCIAL STATEMENTS. The corporation shall keep a copy of
each annual financial statement, quarterly or other periodic income statement,
and accompanying balance sheets prepared by the corporation on file in the
corporation's principal executive office for 12 months; these documents shall be
exhibited at all reasonable times, or copies provided, to any shareholder on
demand.
If no annual report for the last fiscal year has been sent to
shareholders, on written request of any shareholder made more than 120 days
after the close of the fiscal year the corporation shall deliver or mail to the
shareholder, within 30 days after receipt of the request, a balance sheet as of
the end of that fiscal year and an income statement and statement of cash flows
for that fiscal year.
A shareholder or shareholders holding 5 percent or more of the
outstanding shares of any class of stock of the corporation may request in
writing an income statement for the most
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recent three-month, six-month, or nine-month period (ending more than 30 days
before the date of the request) of the current fiscal year, and a balance sheet
of the corporation as of the end of that period. If such documents are not
already prepared, the chief financial officer shall cause them to be prepared
and shall deliver the documents personally or mail them to the requesting
shareholders within 30 days after receipt of the request. A balance sheet,
income statement, and statement of cash flows for the last fiscal year shall
also be included, unless the corporation has sent the shareholders an annual
report for the last fiscal year.
Quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of independent accountants
engaged by the corporation or the certificate of an authorized corporate officer
stating that the financial statements were prepared without audit from the
corporation's books and records.
Section 8. ANNUAL STATEMENT OF GENERAL INFORMATION.
(a) Every year, during the calendar month in which the original
Articles of Incorporation were filed with the Nevada Secretary of State, the
corporation shall file a statement with the Secretary of State on the prescribed
form, setting forth the authorized number of Directors; the names and complete
business or residence addresses of all incumbent Directors; the names and
complete business or residence addresses of the President, the Secretary, and
the Treasurer; the street address of the corporation's principal executive
office or principal business office in this state; a statement of the general
type of business constituting the principal business activity of the
corporation; and a designation of the agent of the corporation for the purpose
of service of process.
(b) Notwithstanding the provisions of paragraph (a) of this section, if
there has been no change in the information in the corporation's last annual
statement on file in the Secretary of State's office, the corporation may, in
lieu of filing the annual statement described in paragraph (a) of this section,
advise the Secretary of State, on the appropriate form, that no changes in the
required information have occurred during the applicable period.
ARTICLE VIII
GENERAL CORPORATE MATTERS
Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. For
purposes of determining the shareholders entitled to receive payment of
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dividends or other distributions or allotment of rights, or entitled to exercise
any rights in respect of any other lawful action (other than voting at and
receiving notice of shareholders' meetings and giving written consent of the
shareholders without a meeting), the Board of Directors may fix in advance a
record date, which shall be not more than 60 nor less than 10 days before the
date of the dividend payment, distribution, allotment, or other action. If a
record date is so fixed, only shareholders of record at the close of business on
that date shall be entitled to receive the dividend, distribution, or allotment
of rights, or to exercise the other rights, as the case may be, notwithstanding
any transfer of shares on the corporation's books after the record date, except
as otherwise provided by statute.
If the Board of Directors does not so fix a record date in advance, the
record date shall be at the close of business on the later of (1) the day on
which the Board of Directors adopts the applicable resolution or (2) the 60th
day before the date of the dividend payment, distribution, allotment of rights,
or other action.
Section 2. AUTHORIZED SIGNATORIES FOR CHECKS. All checks, drafts, other
orders for payment of money, notes, or other evidences of indebtedness issued in
the name of or payable to the corporation shall be signed or endorsed by such
person or persons and in such manner authorized from time to time by resolution
of the Board of Directors.
Section 3. EXECUTING CORPORATE CONTRACTS AND INSTRUMENTS. Except as
otherwise provided in the articles or in these Bylaws, the Board of Directors by
resolution may authorize any officer, officers, agent, or agents to enter into
any contract or to execute any instrument in the name of and on behalf of the
corporation. This authority may be general or it may be confined to one or more
specific matters. No officer, agent, employee, or other person purporting to act
on behalf of the corporation shall have any power or authority to bind the
corporation in any way, to pledge the corporation's credit, or to render the
corporation liable for any purpose or in any amount, unless that person was
acting with authority duly granted by the Board of Directors as provided in
these Bylaws, or unless an unauthorized act was later ratified by the
corporation.
Section 4. CERTIFICATES FOR SHARES. A certificate or certificates for
shares of the capital stock of the corporation shall be issued to each
shareholder when any of the shares are fully paid.
In addition to certificates for fully paid shares, the Board of
Directors may authorize the issuance of certificates for shares that are partly
paid and subject to call for the remainder of the purchase price, provided that
the certificates representing partly paid shares shall state the total amount of
the consideration to be paid for the shares and the amount actually paid.
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All certificates shall certify the number of shares and the class or
series of shares represented by the certificate. All certificates shall be
signed in the name of the corporation by (1) either the Chair of the Board of
Directors, the Vice Chair of the Board of Directors, the President, or any Vice
President, and (2) either the Chief Financial Officer, any Assistant Treasurer,
the Secretary, or any Assistant Secretary.
Any or all of the signatures on the certificate may be facsimile. If
any officer, transfer, agent, or registrar who has signed or whose facsimile
signature has been placed on a certificate shall have ceased to be that officer,
transfer agent, or registrar before that certificate is issued, the certificate
may be issued by the corporation with the same effect as if that person were an
officer, transfer agent, or registrar at the date of issue.
Section 5. LOST CERTIFICATES. Except as provided in this Section 5, no
new certificates for shares shall be issued to replace old certificates unless
the old certificate is surrendered to the corporation for cancellation at the
same time. If share certificates or certificates for any other security have
been lost, stolen, or destroyed, the Board of Directors may authorize the
issuance of replacement certificates on terms and conditions as required by the
Board, which may include a requirement that the owner give the corporation a
bond (or other adequate security) sufficient to indemnify the corporation
against any claim that may be made against it (including any expense or
liability) on account of the alleged loss, theft, or destruction of the old
certificate or the issuance of the replacement certificate.
Section 6. SHARES OF OTHER CORPORATIONS: HOW VOTED. Shares of other
corporations standing in the name of this corporation shall be voted by one of
the following persons, listed in order of preference:
(1) Chair of the Board, or person designated by the Chair of the Board;
(2) President, or person designated by the President; (3) First Vice President,
or person designated by the First Vice President; (4) other person designated by
the Board of Directors.
The authority to vote shares granted by this section includes the
authority to execute a proxy in the name of the corporation for purposes of
voting the shares.
Section 7. REIMBURSEMENT OF CORPORATION IF PAYMENT NOT TAX DEDUCTIBLE.
If all or part of the compensation, including expenses, paid by the corporation
to a Director, officer, employee, or agent is finally determined not to be
allowable to the corporation as a federal or state income tax deduction, the
Director, officer, employee,
24
<PAGE>
or agent to whom the payment was made shall repay to the corporation the amount
disallowed. The Board of Directors shall enforce repayment of each such amount
disallowed by the taxing authorities.
Section 8. CONSTRUCTION AND DEFINITIONS. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions in NRS
78.010 through 78.795 shall govern the construction of these Bylaws. Without
limiting the generality of this provision, the singular number includes the
plural, the plural number includes the singular, and the term "person" includes
both a corporation and a natural person.
25
<PAGE>
ARTICLE IX
AMENDMENTS
Section 1. AMENDMENT BY SHAREHOLDERS. New Bylaws may be adopted or
these Bylaws may be amended or repealed by the vote or written consent of
holders of a majority of the outstanding shares entitled to vote; provided,
however, that if the Articles of Incorporation of the corporation set forth the
number of authorized Directors of the corporation, the authorized number of
Directors may be changed only by an amendment of the Articles of Incorporation.
Section 2. POWERS OF DIRECTORS. Subject to the right of the
Shareholders to adopt, amend or repeal Bylaws, as provided in Section 1 of this
Article IX, the Board of Directors may adopt, amend or repeal any of these
Bylaws other than a Bylaw or amendment thereof changing the authorized number of
Directors.
26
<PAGE>
EASTERN MANAGEMENT CORPORATION
SECRETARY'S CERTIFICATE OF ADOPTION OF BYLAWS
BY
THE SOLE DIRECTOR
ADOPTION BY DIRECTOR.
The undersigned Secretary of EASTERN MANAGEMENT CORPORATION, hereby
certifies that at a duly held meeting held on the 23rd day of July, 1997, the
Board of Directors of this corporation did approve as the Bylaws of this
corporation the Bylaws which precede this certification in the Minute Book of
this corporation.
Executed this 23rd day of July, 1997. /s/ Bob Hemmerling
-------------------------
Secretary
FORM OF LOCK-UP AGREEMENT
__________________, 1997
Board of Directors
Eastern Management Corporation
Gentlemen:
The undersigned, a beneficial owner of the common stock of Eastern
Management Corporation (the "Company"), $0.0001 par value per share (the "Common
Stock"), understands that the Company has filed with the U.S. Securities and
Exchange Commission a registration statement on Form 10-SB (File No. ) (the
"Registration Statement"), for the registration of the Company's Common Stock.
As part of the disclosure included in the Registration Statement, the Company
has affirmatively stated that there will be no trading of the Company's
securities until such time as the Company successfully implements its business
plan as described in the Registration Statement.
In order to insure that the aforesaid disclosure is adhered to, the
undersigned agrees, for the benefit of the Company, that he/she will not offer
to sell, assign, pledge, hypothecate, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of the Common Stock of
the Company owned by him/her, or subsequently acquired through the exercise of
any options, warrants or rights, or conversion of any other security, grant
options, rights or warrants with respect to any such shares of Common Stock,
until the Company successfully closes a merger or acquisition. The undersigned
also agrees to surrender his/her certificate(s) to the Company, which will
forward the certificate(s) to its legal counsel for safekeeping. Furthermore,
the undersigned will permit all certificates evidencing his/her shares to be
endorsed with the appropriate restrictive legends and will consent to the
placement of appropriate stop transfer orders with the transfer agent of the
Company.
Very truly yours,
______________________________
[Signature of Holder]
______________________________
[Please Print Name(s)]
________________
[Number of Shares of Common Stock Owned]
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