UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 31, 2000
ADVANTAGE TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA
(STATE OR OTHER JURISDICTION OF INCORPORATION)
000-29717 93-1244440
(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
1324 S. Mary Avenue, Sunnyvale, CA 94087
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(408) 746-9960
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
Go Fathom Group, Inc.
24351 Pasto Road, Suite B
Dana Point, CA 92629
(949) 489-2400
(FORMER NAME, ADDRESS AND TELEPHONE NUMBER)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to a Stock Exchange Agreement (the "Exchange Agreement") dated
as of March 31, 2000 between MRC Legal Services Corporation, a California
Corporation, which entity is the controlling shareholder of Go Fathom Group,
Inc. ("Go Fathom"), a Delaware corporation, and Advantage Technologies, Inc., a
Nevada corporation ("Advantage" or the "Company"), approximately 80.0% (800,000
shares) of the outstanding shares of common stock of Go Fathom Group, Inc. were
exchanged for 1,155,000 shares of common stock of Advantage in a transaction
which Advantage became the parent corporation of Go Fathom.
The Exchange Agreement was adopted by the unanimous consent of the Board of
Directors of Go Fathom on March 31, 2000. The Exchange Agreement was adopted
by the unanimous consent of the Board of Directors of Advantage on March 31,
2000. No approval of the shareholders of Advantage or Go Fathom is required
under applicable state corporate law.
Prior to the merger, Go Fathom had 1,000,000 shares of common stock
outstanding of which 800,000 shares were exchanged for 1,155,000 shares
of common stock of Advantage. By virtue of the exchange, Advantage acquired
80.0% of the issued and outstanding common stock of Go Fathom. Certain
consultants were issued an additional 1,540,000 shares and $100,000 cash
pursuant to a Consulting Agreement.
Prior to the effectiveness of the Exchange Agreement, effective on
February 17, 2000, Advantage had an aggregate of 24,159,240 shares of common
stock, par value $0.001, issued and outstanding.
Upon effectiveness of the acquisition, Advantage had an aggregate of
26,854,240 shares of common stock outstanding.
The officers of Advantage continue as officers of Advantage subsequent
to the Exchange Agreement. See "Management" below. The officers, directors,
and by-laws of Advantage will continue without change.
A copy of the Exchange Agreement is attached hereto as an exhibit. The
foregoing description is modified by such reference.
(b) The following table sets forth certain information regarding
beneficial ownership of the common stock as of February 17, 2000 (prior to the
issuance of 1,155,000 shares pursuant to the Exchange Agreement and 1,540,000
shares pursuant to the Consulting Agreement) by each individual who is known
to the Company, as of the date of this filing, to be the beneficial owner
of more than five percent of any class of Advantage's voting securities.
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This table describes the current ownership of the Company's outstanding
Common Stock by (i) each of our officers and directors; (ii) each person who is
known by us to own more than 5% of the Company's outstanding Common Stock; and
(iii) all of our officers and directors as a group:
Title of Class Name and Address of Amount and Percent of
- -------------- ------------------- -------------------- ----------
Beneficial Owner Nature of Beneficial Class
---------------- -------------------- -----
Owner
-----
Common Stock George J. Bentley 1,804,086 7.5 %
2600 Lunada Lane
Alamo, CA 94507
Common Stock Keith E. Avinger 1,463,659 6.1 %
1382 Antwerp Lane
San Jose, CA 95118
Common Stock Kenney F. Noel 2,128,020 8.9 %
7145 Dublin Meadows St.
Dublin, CA 94568
Common Stock Vijay V. Marathe 1,463,659 6.1 %
20015 Puente Court
Saratoga, CA 95070
Common Stock Alfonso Reyes 1,317,294 5.5 %
2529 Home Crest Dr.
San Jose, CA 95148
Common Stock Corinna A. Stolp -0- 0 %
1017 El Camino Real
PMB # 475
Redwood City, CA 94063
Common Stock Yoshi Iwagami -0- 0%
1881 Firebrick Terrace
Union City, CA 94587
Common Stock Matthew L. Dodson -0- 0%
645 El Dorado Ave., #107
Oakland, CA 94611
Common Stock Galileo, SA 1,800,000 7.5 %
APDO 342
San Jose, Costa Rica 1000
Common Stock Triparoo, SA 1,800,000 7.5 %
APDO 342
San Jose, Costa Rica 1000
Common Stock EuroCarib Consultants, Inc. 1,800,000 7.5 %
PO Box 10697
Kings Court Bay Street
Nassau, Bahamas
Common Stock Middlegate Investments, Inc. 1,800,000 7.5 %
Bahamas Financial Centre
PO Box N 5484
Nassau, Bahamas
- ----------------------
All officers and directors
as a group ( 5 persons) 5,395,765 22.3 %
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Exchange Agreement
was negotiated between representatives of the shareholders of Go Fathom
and the management of Advantage.
In evaluating Advantage as a candidate for the proposed acquisition,
Go Fathom used criteria such as the value of the assets of Advantage, its
present stock price as set forth on the over-the-counter bulletin board, its
computer business and other anticipated operations, and Advantage's business
name and reputation. The shareholders of Go Fathom determined that the
consideration for the merger was reasonable.
(b) Advantage intends to continue its historical businesses and proposed
businesses as set forth more fully immediately below.
DESCRIPTION OF BUSINESS.
HISTORY
Advantage Technologies, Inc. (the"Company") was originally organized as
a Nevada corporation on September 21, 1993 under the name Logistics Distribution
Systems International Group, Inc. Under the Company's management at that time,
of which our current management was not a part, the Company's original business
was to investigate for possible acquisition various business opportunities. The
current management of the Company is not aware of what business, if any, was
carried at that time. On November 8, 1995, the Company's name was changed to
Vortices, Inc. Under the then current management, the Company's business was the
development and marketing of flight simulators to the arcade game market.
On April 21, 1998, the Company merged with Simulator Systems, Inc., a
Nevada corporation, which was the surviving corporation of a prior merger on
April 15, 1997 between Simulator Systems, Inc. and Marksmanship Training
Centers, Inc., an Oregon corporation.
After the merger with Simulator Systems, Inc., the business of the
Company became the development and marketing of a computerized rifle/pistol
simulator which uses real weapons to provide the user with an accurate and
realistic shooting experience with the use of live ammunition. The user aims a
weapon at a video display screen and fires at a target on the screen. The system
also allows the user to obtain a computer printout of shots fired indicating
accuracy.
On April 5, 1999, the Company changed its name to Casino Pirata.com
Ltd. In February, 1999, the Company entered into agreements with WorldNet
Casinos.com, Inc. pursuant to which the Company owned and operated an Internet
gaming website.
On September 24, 1999, the Company entered into a Share Exchange
Agreement and Plan of Reorganization with Advantage Systems, Inc., a California
corporation, doing business as American Computer. Pursuant to that Agreement,
the Company acquired all of the issued and outstanding common stock of American
Computer, which became a wholly-owned subsidiary of the Company. American
Computer is a second-tier vendor and marketer of personal computers.
American Computer was originally formed in 1985. It was originally
known as American Cash Register, Inc., which was later shortened to ACR, Inc.
and then expanded to American Computer Research, Inc. In 1996, Advantage
Systems, Inc. acquired the name, phone and customer lists, inventory, and other
assets from American Computer Research, Inc. and commenced business as American
Computer.
On November 18, 1999, the Company changed its name to Advantage
Technologies, Inc. On December 1, 1999, the Company conveyed its interest in its
Internet gaming website to a newly- formed wholly owned subsidiary operating
under the name Casino Pirata.com Ltd.
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The Company is organized as a holding company with two wholly-owned
subsidiaries: Advantage Systems, Inc. and Casino Pirata.com Ltd.
BUSINESS AND OPERATING PLAN
ADVANTAGE SYSTEMS, INC.
At the present time. the Company's principal business activity will be
that of its wholly-owned subsidiary, Advantage Systems, Inc. ("ASI"). Under the
trade name of American Computer, ASI is a second-tier vendor and marketer of
personal computers. ASI builds high-quality, well-configured, top-of-the-line
computers that are reliable and competitively priced. ASI has the opportunity to
leverage its current self-sustaining position and realize substantial increases
in revenues and profits by expanding its direct sales programs targeting
high-growth segments - small- to medium-sized business, small office/home office
and mainstream corporate information technology and aggressively scaling-up its
already effective "just-in-time" component sourcing and assembly operations.
The total U.S. market for personal computers is projected to reach
$59.6 billion in 1999 and $65.0 billion in 2000, fueled by the Internet,
interactive applications, and demand for low-cost, network-ready multimedia
machines. The bulk of the personal computer business is conducted in the direct
sales channel and through the World Wide Web to which information technology
purchasing managers and technology-savvy consumers refer when seeking product
information, vendors, and pricing. Second-tier vendors account for about 45
percent of PCs sold, or $31.5 billion in the U.S. The Company believes this
could grow to over $120 billion by the year 2000, and ASI is now moving quickly
to capture market share where each percent of the business is worth more than $1
billion.
In pursuit of these objectives ASI has assembled an experienced
management team with a record of success in various technology enterprises.
Kenney Noel, Vice President of Purchasing, is responsible for ASI's
"just-in-time" purchasing model as well as all vendor relationships. Alfonso
Reyes, has been in Sales and Marketing for more than ten years and the
electronics industry over four years. George Bentley, Vice President Marketing
and E-Commerce, founded a successful information technology company and has
managed product development, manufacturing, sales, and installation for over
thirty seven years.
ASI builds a wide variety of personal computers for resale under the
American Computer name. Six basic systems are currently offered ranging from
low-end AMD K6-2 3D 350 MHz processors at $819 for first-time users to
sophisticated Intel Pentium 550 MHz Quad Xeon network servers priced up to
$14,999. With each basic system, customers can specify processor speed according
to price/performance needs. All systems include the latest microprocessors from
Intel and American Micro Devices, as well as graphics, multimedia, and
networking technologies; video and sound cards, color monitors, CD-ROM drives,
DVD-ROM drives, and onboard fax/modems.
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Products
ASI builds and markets high-quality personal computer systems for
corporate networked environments, as well as standalone systems for a wide
variety of applications. Overall, the existing product line under our own brand
name - American Computer - is in the introductory stage. The technology in our
products consists of the latest multimedia sound and video, and Internet/network
connectivity running primarily Windows 98 and NT platforms. Six basic products
are currently offered:
o An entry level system called the STUDENT is available in AMD
K6-2-3D 350 MHz through AMD K7 Athelon 550 MHz models, ranging in price
from $819 to $1,249. All versions include 64 MB RAM, 6.0 GB hard drive,
15-inch color monitor, 8 MB video card 56kbs voice/fax/modem, 44x
CD-ROM drive, 32-bit sound card, 120-watt speakers, keyboard, mouse,
and Microsoft Windows 98 software.
o The SCHOLAR product line is available in Intel Pentium III 450
through 600 MHz models, as well as AMD K7-500 and K7-550 models. All
versions include 64 MB RAM, 10.0 GB hard drive, 17-inch color monitor,
and upgraded versions of the STUDENT feature set. Prices range from
$1,019 to $1,269.
o The GRADUATE product line features Intel technology throughout,
13.0 GB hard drive, 8 MB 3-D video card, 44x CD-ROM drive, and 128-bit
SoundBlaster sound card, all in a mini-tower case. It is considered a
robust system for mature users and offers Pentium III, and AMD K7
versions running at speeds up to 550 MHz. Prices range from $1,379 to
$2,079.
o The PRO-FORMER system series offers most leading-edge
technologies. A favorite of software developers and state-of-the-art
consumers, it is available in the same versions as the GRADUATE at
prices ranging from $1,719 to $2,499 with 128 MB RAM, 18.0 GB hard
drive, 17-inch color monitor, 44x CD-ROM drive, 16 MB 3-D video card,
and 256-bit SoundBlaster sound card in a mini-tower case.
o The CAD-PRO II system is configured for engineering and CAD
markets, with various Dual Pentium III versions including MMX
technology. Prices range from $2,599 to $3,499 with all versions
including 256 MB RAM, 18.0 GB hard drive, 21-inch color monitor, and
other upgraded features, including bundled MS Windows NT 4.
o The NETWORK SERVE series is intended as an application or data
server expandable to accommodate 100-plus simultaneous users. It offers
very fast processing of extremely large data files and astronomical
calculations. The NETWORK SERVER comes in single, dual, and quadruple
Pentium III and Xeon versions ranging in price from $3,099 to $16,599.
All versions feature minimum 256 MB RAM, five 9.0 GB hard drives,
14-inch color monitor, 8 MB video card, an Intel 10/100 Ethernet card,
5 Kbs fax/modem, 44x CD-ROM drive, all in a full tower case. The
company also offers a version with up to four Pentium Pro 200s for less
than $15,000.
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ASI also sells top-quality name-brand systems for Compaq Computers as a
Value Added Reseller. To date sales have been nominal in this relationship which
is less than three months old. However, management feels this will uniquely
position the company to compete at all levels of Network and Web design,
configuration, sales, and installation.
We plan to follow these products with extensions to our line which
include network servers targeted at Internet Service Providers; thin-client PCs
targeting corporate, education, and government markets; and high-quality laptop
computers with extensive multimedia and Internet connectivity features.
ASI also offers high-quality laptop computers, and has positioned
itself to develop a revenue stream from this highly lucrative $21.5B market.
Research estimates anticipate a growth rate of 17.0% through the year 2000. ASI
will assemble units with ASI-specified components in accordance with market
opportunities.
A critical factor in the production of our products includes our
unique "just-in-time" approach to supply and inventory, which guarantees us the
flexibility we need to face this competitive and rapidly changing market. Our
business model is unique because if provides a method for assembling the best
configuration of final product at a competitive price., provides for a
continuous supply of product without the attendant inventory burden, and takes
advantage of known and proven marketing methodologies as a major component of
its overall business model.
ASI averaged 50 systems sold per month over the last twelve months.
All components are new and fully warranted by the original manufacturer, with
direct component costs running 80 percent for systems, 70 percent for
off-the-shelf sales. Using TechData, Ingram Micro, Ameriquest, Merisel, and
other national distributors for sourcing insures availability of product at the
lowest possible price on terms favorable to our operation.
With sales increasing, ASI will purchase desktops and laptops at
higher volume pricing direct from original (white boxes) manufacturers. Pricing
will then be relatively flexible versus the competition, and ASI will be better
positioned to control volume and maximize profits. The company will also realize
significant technical support, warranty, and return merchandise authorization
(RMA) advantages, will be able to acquire components at times when smaller
integrators - our primary competition - cannot, and will be better insulated
against temporary price swings during periods of product scarcity.
Marketing
ASI relies primarily on telemarketing and customer referral to
advertise its products for sale and secondarily on the world wide web. This form
of advertising results in approximately 20 to 50 systems sales per month
directly and 5 to 15 systems per month as referral business.
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The estimated worldwide installed base of x586 or older systems is
approximately 125,000,000 units, and those units will be replaced starting in
2000 as totally new chip technologies, operating systems, and software are
introduced. Due to its small size, flexibility of operations, and extensive
network of suppliers, Advantage Systems is strategically positioned to quickly
integrate and bring to market products configured with any new technologies, and
therefore capture a major share of the first-adopter market.
Our target market will be the small to medium sized business and Small
Office-Home Office where there is a real need for suppliers who can design and
install a networked environment. Traditionally they will buy both the lower-end
PC, where price is the primary factor, and the high-end PC, where component
technology is the primary factor.
ASI is basing its strategy on prior experience, as well as research
from national trade magazines that provide pricing analysis for specific market
segments and data on average system configurations within specific price ranges.
By following this research, as well as data collected from its own sales
records, ASI is able to optimize configuration and pricing of its systems in
positioning versus competition.
Our target markets do not have substantial seasonal components.
Historically, sales are relatively constant throughout the year, with the
exception of some downturn from December 20 to January 20 according to industry
studies. Our marketing plan will concentrate on generating direct sales through
telemarketing with known response potential. ASI will be using telemarketing as
its primary advertising vehicle and it's website, www.ampcomp.net as a secondary
sales tool. This marketing and sales strategy will drive our primary revenue
engine.
Competition
ASI competes directly with "second-tier" vendors - emerging companies
in the direct marketing channel. These are companies that are now established,
have good management teams, are generally well financed, and are moving up to
compete with the Top 5: Dell, Gateway, Compaq, IBM, and Micron. Their strengths
are size and adaptability. Their weakness is in their inability to manage the
increased pressure of financing and rapid growth, causing strained credit lines
and supplier relationships, and resulting in loss of focus.
Because of increased competition from the internet in the form of
auction houses and direct sellers whose business models and sales strategies
call for selling systems at or below cost, most companies in the "second-tier"
have been required to completely re-evaluate the way they do business. ASI has
not been exempt from this re-evaluation process.
The management of ASI believes that to survive and thrive there has to
be a value-add component to the offerings of a company in addition to price and
quality. Service is clearly the additional component. It comes in the form of
"build to order" systems, short delivery dates, flexibility of configuration,
price, and performance. All these things are offered in some degree by the
competition. We believe that the real value add has to be around the concept of
a one stop solution. A place where a customer's hardware needs can be assessed,
priced competitively, and
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delivered quickly, where operating software and networking can be engineered
into the equation, including cabling and installation. A place where a customer
can not only get computers, but a place that can design your website and have
you doing e-business in a short period of time. It is ASI's intent to be a full
service, one stop shop.
ASI's competitive advantage stems from the broad financial,
manufacturing, and marketing and sales experience of the management team. The
overall quality of our products; our consistently competitive pricing; the
strategic advantage of our "just-in-time" components sourcing; the flexible
setup envisioned for our assembly operations; and our willingness to embrace
change and go where the market is going.
Due to the competitive nature of the computer industry in general,
ASI, like it's competitors, has had to look to other avenues for sales of it's
systems outside the traditional print media/direct sales format. ASI has earned
the designation from Microsoft Corporation to advertise and hold itself out to
be a Microsoft Certified Solutions Provider. This has opened up new revenue
potential to ASI in the areas of customer based solutions for networking
installation and management, internet and intranet communications, website
development and hosting, as well as hardware sales and maintenance.
Because of the open architecture of the IBM PC clone, ASI is able to
compete technically as well as price wise with the biggest to the smallest names
in the industry. The latest components are available to ASI as quickly as they
are to Compaq, Dell, Gateway and others. With only a slight increase in monthly
volume, AST could become eligible to buy direct from many manufacturers, thereby
improving its ability to compete.
Strategy
ASI's market strategy is to become established as a leading one stop
supplier of solutions for information and communications technology which
include IBM PC Clones and related components and peripherals which allow end
users to perform the task they specify efficiently utilizing the latest
technology at very competitive prices. To do this, we will leverage its core
competencies, knowledge and expertise in the industry, to achieve market
penetration and gain a reasonable and growing market share.
ASI will need to identify, develop, and train telesales people which
reach its pre-identified target market with a direct sells campaign that is
effective and conveys the concept of American as a quality alternative to the
established system integrators who do not offer the full suite of services found
at ASI.
In order to be competitive, ASI will need to improve its sourcing so
as to maximize quality and minimize costs. Products will need to continue to be
delivered on time, with costs controlled, marketing budgets managed and assets
safeguarded. In addition, personnel with a variety of skills and experience will
have to be recruited, trained, and retained.
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Technology
At present, ASI neither owns nor licenses any technology with respect
to its products or services.
CASINO PIRATA. COM
Through its wholly-owned subsidiary, the Company operates an Internet gaming
site under the name Casino Pirata.com. The website address is
www.casinopirata.com. The gaming site is operated through a license agreement
with WorldNet Gaming, Inc. WorldNet Casinos.com, Inc. ("WorldNet") maintains its
headquarters in San Jose, Costa Rica and its U.S. marketing office in Fort
Lauderdale, Florida. WorldNet is in the business of developing JAVA(R) based
online casino software and licensing "turn-key" Internet casinos. In addition,
WorldNet operates two of its own Internet casinos.
The Company has a five (5) year license from WorldNet pursuant to a Software
License Agreement dated April 19, 1999. The Company paid WorldNet $150,000.00
for the license rights The license includes the following games: blackjack;
slots; pai-gow; video porker; roulette; instant bingo; and baccarat. Under the
license, WorldNet provides management services; technical support; marketing;
account and billing back office suite to view real-time sales; software
upgrades. For these services, WorldNet receives a management fee of 30% of the
net win.
WorldNet uses Internet proprietary encoding and processing technology, which
allows for security for financial transactions via the Internet. This technology
acts as an international currency converter and a secure Internet transaction
gateway to financial institutions for on-line merchants. SSL Internet Protocol
is used to provide privacy and reliability between he communicating
applications. SSL uses 12b bit encryption which ensures server and client
authentication through encrypted algorithms and cryptographic keys. WorldNet
also provides an additional level of security with an Address Verification
System validation, which validates submitted addresses with the casino player's
registered address to mitigate the use of stolen credit cards. Each casino
player registers on the website and is issued a unique Personal Identification
Number. WorldNet accepts both MasterCard and VISA credit cards.
To date the company has not received any income from this operation.
For all practical purposes, access to this site is open to the public, but
basically, only individuals with credit cards can gamble immediately. An
individual could mail in a check or money order and after some period of time an
account could be opened on their behalf, thus allowing them to wager up to the
amount of the credit in their account.
There does appear to be traffic to the website and some wagering
activity. Accounting information submitted to management by WorldNet Gaming,
Inc, while raw, incomplete, and unsubstantiated indicates some revenues and
traffic into the site on a monthly basis. However, all of the hardware,
software, and other elements of business control are in the hands of the
Franchisor WorldNet Gaming, Inc. To date management of WorldNet Gaming, Inc has
been
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unwilling to allow access to the original source records or to the financial
institution with which WorldNet Gaming, Inc operates through.
Financial control of the entire operation is through a special banking
relationship known as a Master Merchant Account Agreement. The Master Merchant
Account Agreement, which accommodates credit card transactions, appears to be a
wrap-around of an existing Master Merchant Account Agreement between WorldNet
Gaming, Inc and an as yet undisclosed foreign bank. The company has tried
unsuccessfully to obtain original source account documents from WorldNet Gaming,
Inc. Without access to these, determination of financial gain or loss is
impossible. Management has considered other legal remedies, however, WorldNet
Gaming, Inc. and all of their resources are located outside the United States of
America.
Therefore it is the view of management, at this time, that the
franchise agreement with WorldNet Gaming, Inc has no future economic value.
Management is in discussions with WorldNet Gaming, Inc and others for the
possibility of obtaining it's own software and Master Merchant Account Agreement
operated at it's own URL on it's own hardware. There are numerous hurdles to
overcome in this regard but the main ones are locating a financial institution
amenable to entering into a Master Merchant Account Agreement with
CasinoPirata.com for a gaming website, and raising the approximate $1,000,000
necessary to acquire software and hardware with which to setup a site in a host
country.
SIMULATOR SYSTEMS - EXCALIBORE
------------------------------
Through the Company's merger, when it was known as Simulator Systems, Inc, with
Marksmanship Training Centers, Inc. ("Marksmanship"), the Company acquired the
interest of Marksmanship in the development and marketing of an interactive
rifle/pistol simulator designed to improve marksmanship skills. The first
generation product was known as "Excalibore".
The product is a computerized system which uses real weapons to
provide the user with an accurate and realistic shooting experience without the
use of live ammunition. The user aims a weapon at a video display screen and
fires at a target on the screen which is chosen from a menu which includes full
and half-size silhouettes, both stationary or pop-up and a variety of
bull's-eyes.
The user can select firing ranges from 25 yards to 1,000 yards. A
camera device mounted on the barrel of the weapon "sees" the target through the
sights of the weapon in the same manner as the target is seen by the user. When
a shot is fired, the system instantaneously matches the information derived from
the camera alignment (the sight) to the corresponding pixel address on the
screen (the target) Algorithms compensate for distance and environmental
factors. The instant feedback on where the short hit or missed the target shows
the user how to adjust on subsequent shots.
Actual modified pistols and rifles are used so that the weight and
trigger action are real. Simulated recoil and sound lend authenticity to the
firing experience. To provide a close simulation of actual weapons fire, the
Excalibore has recoil action which is adjustable to the
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specific weapon attached. Earphones provide the actual sound of a weapon firing
and a printer records how far the shots hit or missed the target. The Excalibore
is compact in design and can be operated in a six by six foot area using
standard AC current.
Although the management of the Company when it was known as Simulator
Systems, Inc. aggressively attempted to market the Excalibore system to a
variety of users, including the U.S. armed forces, the Company's current
management has decided to cease further marketing efforts at this time.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
REVIEW OF OPERATING RESULTS
---------------------------
The following discussion should be read together with the financial
statements and the accompanying notes to the financial statements.
Operations of the Company for the year ended September 30, 1999
resulted in a net ordinary loss. One segment of the business, Advantage Systems,
dba American Computer, had net income from operations for the period, but this
was more than offset by the losses incurred in other segments of the Company.
Most of those losses are attributable to business segments which have
been abandoned and discontinued by management, specifically the franchise
relationship with WorldNet Gaming and the Excalibore system. While the Company's
present management can not be assured that there will be no future losses of the
type realized in the current period, management believes these losses were do to
a failure by the Company's previous management to investigate business basics
before undertaking the WorldNet Gaming franchise and the Excalibore system.
Management believes that the business plan it has developed for it's
primary business segment, Advantage Systems, Inc., is practical and executable
on a profitable basis in fiscal year 2000. However, management can make no
assurances of profitability. Additionally, management will have to raise
significant working capital to achieve these goals. The only practicable way
management can do this is through the sale of the Company's stock for which
there may be no market.
Our business plan calls for us to :
o Identify and acquire profitable new business segments by trading company stock
o Attempt to raise working capital from sale of company stock
o Execute on the business plans developed for the current owned business
segments
o Vigilantly manage costs and expenses so to as remain competitive
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CAPITAL NEEDS AND FUTURE REQUIREMENTS
-------------------------------------
The formation of Advantage Technologies, Inc was undertaken for a
number of reasons. These will be fully discussed in the course of the text of
this treatment. The primary reason is, as is customary, to segregate diverse
business segments into independently functioning operating units for economic,
managerial, and legal reasons. The initial and immediate focus of Advantage
Technologies, Inc.'s management will be towards its two principal wholly owned
subsidiaries. These are the wellspring from which future successes will depend.
It is also the intent of management to identify and acquire additional
operating entities on an ongoing basis. The candidates for acquisition which
management will attempt to locate will be primarily new, startup type entities
with technology oriented products with uses by large demographic users.
Because of Management's proximity to the San Francisco Bay Area and the
nature of one of it's principal subsidiary's business as a systems integrator,
management believes that many such acquisition opportunities will present
themselves. While it would not be in the best interest of the company to reveal
exactly the type, nature, and qualities of acquisition candidates, generally
management will be looking for acquisition candidates which have unique and
exploitable proprietary technology applicable to large demographics and
potential for vertical integration.
Management believes that what it has to offer to such candidates is
access to capital markets through its status as a publicly traded entity, as
well as its managerial depth which will be made available to exploit any
opportunities present in an acquisition candidate. Management intends all of its
acquisitions to be accomplished with very little, if any cash being exchanged.
It is the intent of company management to exchange common stock of Advantage
Technologies, Inc. for the stock of the target acquisition.
With respect to the Company's wholly owned subsidiary,
CasinoPirata.com, as reported elsewhere in this filing statement, its principal
business activity consists primarily as that of a corporate shell at this time.
There are currently no tangible assets, no income, no physical assets, and no
direct business activities of an ongoing nature in this corporation. Its
intangible assets are determined to be of no value. Management has determined
that the franchise agreement held by it and issued by WorldNet Gaming, Inc. Has
no economic value.
While the franchise itself is of no value, management strongly believes
that the fundamental underlying business concept is one of enormous business and
profit potential. The industry predictions for the gaming business and
especially the online gaming industry show tremendous growth potential on a
global basis. To date, only a few of the large Las Vegas and Atlantic City and
New Jersey gaming establishments have entered into this enormous new area of
e-commerce. Most studies show that there is a global market that is
significantly larger than
13
<PAGE>
the one that is being exploited within the areas of the United States where
casino gambling is legal. Management is currently assessing the business
opportunity represented here to determine how to best proceed in attempting to
gain successful entry into this market.
Since involving itself in the gaming business by acquiring the
franchise with WorldNet Gaming, Inc., the company's management team has changed.
The current management team is responsible for determining that the agreement
between WorldNet Gaming, Inc. is of no value to the company. In the process of
making this determination, a number of important factors were analyzed which
gave rise to the determination of worthlessness of the franchise. These same
factors were determined to be critical for any company to be successful in the
online gaming business.
Therefore, in order for CasinoPirata.com to be successful in the
online gaming business, management has determined that the following conditions,
at a minimum, must be satisfied:
(1) A Master Merchant Account Agreement with an accredited financial
institution must be established;
(2) Proprietary gaming software must be identified and acquired. The
software has to be renderable in multiple languages;
(3) A site must be located and secured in an environment where
operating a business of this type is legal;
(4) Parameters of hardware and software requirements to support peak
demand must be determined;
(5) Technical personnel to operate the hardware and software have to
be recruited and trained and put in place. This is a twenty-four
hours a day/seven days per week/52 weeks per year business. An
attorney with experience in international gaming law must be
identified and retained;
(6) A marketing plan must be developed to drive internet traffic to
this site on a global basis and personnel acquired to accomplish
these goals;
(7) Funds sufficient to accomplish all of the above are required.
While this not an exhaustive treatment of a business model for online
gaming, these are some of the fundamentals which management has determined to be
necessary in order to go forward. Management's best estimate of the cost to
accomplish all of the above is approximately $1,000,000. Management currently
does not have sufficient working capital to undertake online gaming. At this
time, management does not have a financing plan. Management is aware that other
more established and better financed organizations with expertise in the gaming
industry are either already online or are considering entering the online gaming
industry.
14
<PAGE>
With respect to Advantage Technologies, Inc.'s wholly owned subsidiary,
Advantage Systems, Inc, its principal business activity consists primarily as
that of a systems integrator. However, as a response to increased competition,
especially around pricing and dwindling profit margins, Advantage Systems, Inc.
has moved in the direction of a Value Added Reseller and service model. In this
model, the traditional systems integrator adds branded product lines to their
existing proprietary product lines and models, and service, related usually to
application software, operating systems software, or website development.
Advantage Systems, Inc. continues to be a systems integrator and its' sales of
computers consists primarily of its' own brand, "American Computer" systems.
However, Advantage Systems has added Compaq and Hewlett Packard to its offerings
of hardware. The company also sells a wide variety of Branded Network
connectivity products such as Intel, 3COM, CISCO, Bay Networks, SMC, Ascend, and
Asante. Advantage Systems, Inc, also has become a Microsoft Certified Solutions
Provider.
This enables the Company to advertise offerings of hardware,
installation, networking services and installation of operating systems,
including all cabling, switching devices, routers, and hubs, installations with
a solid basis and expertise, which the public wants. The profit margins in these
service and networking areas are substantially higher than from hardware. This
bundle of goods and services can be and is often separated and sold
individually, but usually one provides a doorway through which to sell the
others.
In the business model management has developed, the primary target is
the small and/or startup business. The reasons for this are that there are
numerous such businesses that need the kind of expertise and service which the
Company offers on an incremental or part-time basis. These businesses need
custom designed as well as "off-the-shelf" hardware solutions such as offered by
the Company. These businesses also need internet access and connectivity,
including category 5 cabling. Lastly, these business need website development,
consulting and design. The Company offers all of these goods and services.
In this business model, management has determined that duplication for
purposes of growth is relatively simple and straightforward. Management's'
intent is to develop the techniques we currently use to develop sales leads for
our Silicon Valley area to the point of acceptable efficiency. We anticipate
less than a year to perfect these techniques. Once we are efficient in the sales
lead generation segment, management intends to expand the outside sales force to
new communities and open outside sales offices in these newly identified areas.
15
<PAGE>
At this time, management has determined, that all that will be needed is:
(1) The acquisition of the data relating to the demographics which we have
established;
(2) Adequate 1-800 number service;
(3) Apply the same telesales techniques for sales lead generation locale
sales office for outside sales personnel;
(4) Outside sales personnel;
(5) software and hardware installation technicians for installations.
All management, purchasing, accounting, support and customer service
will be directed from the corporate office in San Jose, California.
The Company's marketing strategy is relatively simple. We obtain
database information relative to the marketing demographic parameters, which we
have predetermined. We use professional telesales individuals coupled with a
direct mailing of collateral materials to our predetermined demographics. Once a
level of interest is established, a professional sales representative is
scheduled for an onsite interview with the prospective client where an
assessment is made of the client's requirements. Often, in this environment, our
sales people are able to offer alternatives which are more effective and at
times less expensive. Typically, we do not charge for this consulting service.
There are incremental costs associated with hiring telesales
professionals. Usually, within a short period of time after adding a telesales
professional, one or more outside sales professionals have to be added. This
results in a slight increase in overhead initially, and it is hoped a
significant increase in sales shortly thereafter. We monitor telesales and
outside sales to be sure we meet the goals we set from monthly self-assessment
sales meetings.
We are able to keep our investment in inventory low as we utilize
just-in-time purchasing and inventory techniques. The largest costs to be
financed in this model are the Accounts Receivable/ Work-in-Progress costs. We
keep this as low as possible by billing all hardware on delivery. Service work
is billed incrementally, beginning with a retainer if the job appears to be
longer than thirty days. We also, as a policy, add technical personnel on a full
time basis only when the revenue related to that aspect of business justifies
the slot. Some of the financing of operations comes from trade creditors.
Advantage Systems has been in this business for over 16 years now and we do have
favorable terms with most of our suppliers. Another source of financing
historically has been from retained profits being put back into the business. It
is estimated for every incremental $1,000,000 in gross business, an additional
$100,000 in working capital is required. Advantage Systems is projecting a
growth of $1,500,000
16
<PAGE>
in sales for the fiscal year-end September 30, 2000. According to this model an
additional $150,000 in working capital will be required. Management expects to
meet the need in part by retaining earnings from operations. Additionally,
management expects to sell common stock to meet these and other cash flow
requirements. Management understands that there may not be a market for the
stock it expects to offer for sale.
In April 2000, the Company issued a convertible debenture in the face
amount of $750,000. The debenture was issued pursuant to the exemption from
registration provided by Rule 504 promulgated under Regulation D.
YEARS 2000 COMPLIANCE
- ---------------------
Advantage Technologies, Inc. and Advantage Systems, Inc. rely on
computers for all of the customary uses that any technology related company
would rely upon them. In addition to these concerns, the very nature of our
business put us at the front of the problem and the solution. The century date
change occurred without incident.
The Company has sold thousands of systems to the general public over
the course of the last sixteen years. While only a fraction of those could
result in any exposure to the Company in terms of warranty related problems,
none have resulted in a reported claim to the Company.
This comes as no surprise to management inasmuch as the problem was
primarily related to the BIOS (Basic Input/Output System) Programs found onboard
all motherboards of IBM PC Clones. Most highend motherboard manufacturers, as
well as most BIOS chip manufacturers, made the required corrections early in
1998. All of the legacy systems still in use older than two years could solve
the problem by going online and downloading an update patch for their BIOS from
the manufacturer well prior to December 31, 1999. To date we have had only one
system returned with a potential Y2K problem and it was resolved and returned to
the customer within 72 hours with only a small charge to the customer. We
anticipate no further material consequences as a result of the century date
change.
ACQUISITION OF GO FATHOM CONSULTING AGREEMENT
On March 31, 2000 the Company entered into a consulting agreement between the
Company and the following individual professional persons who acted as
consultants to the Company: M. Richard Cutler, Brian A. Lebrecht, Vi Bui, and
Asher Starik for services involving consultation, advice and counsel with
respect to the negotiation and completion of the stock exchange between
Advantage and Go Fathom. In addition to cash compensation, the agreement
calls for issuance of a total of 1,540,000 shares of Advantage to be
issued to the consultants together with an obligation for the Company to
register such shares on Form S-8.
PROPERTY
The Company maintains its principal administrative and executive
offices at 1324 S. Mary Ave., Sunnyvale, CA 94087 consisting of approximately
800 square feet of office space and 600 square feet of assembly and shipping
space. The Company expects this facility to be adequate for its needs for the
next six months. The Company is now looking for a facility more suited to
light-industrial assembly that will accommodate anticipated expansion in the
near future.
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER SHAREHOLDER MATTERS.
17
<PAGE>
Our Common Stock has been thinly traded in the over-the-counter market
and prices for the Common Stock are published on the OTC Bulletin Board under
the Company's original symbols of SIMM and CSIN, and VRCS at the time of its
merger with Votices, Inc. The Company's current stock symbol is ADVV. The
over-the-counter market is extremely limited and the prices for our Common Stock
quoted by brokers are not a reliable indication of the value of the Common
Stock. The following is the range of high and low bid prices for our Common
Stock since February 1997, reflected in cents per share:
Quarter Ending High Low
-------------- ---- ---
March 1997 0 13/16 0 1/16
June 1997 0 1/16 0.02
September 1997 0.02 0.01
December 1997 0 1/16 0
March 1998 0.03 0.03
June 1998 2.61 2.25
September 1998 2 3/8 1 1/2
March 1999 1 9/16 1 1/4
June 1999 1 3/8 0 9/16
September 1999 0 7/8 0 1/2
These prices reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual purchases and sales by
investors. The Company has never paid cash dividends on our Common Stock;
however, the Company may pay dividends in the future if earnings justify it. As
of December 1, 1999, the Company has approximately 130 shareholders of the
Company's common stock.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following sets forth the names and ages of the current directors
and executive officers of Advantage who will remain so with the combined entity,
their principal offices and positions and the date each such person became a
director or executive officer.
All directors are elected annually by the shareholders and hold office
until the next annual general meeting of shareholders or until their successors
are duly elected and qualified, unless they sooner resign or cease to be
directors in accordance with the Articles of Incorporation of the Registrant.
Executive officers are appointed and serve at the pleasure of the Board
of Directors.
The following persons are the current directors and executive officers
of the Company:
Name Age Title
---- --- -----
George J. Bentley 61 President, CEO, Director
Kenney F. Noel 51 Secretary, Director
Yoshi Iwagami 36 Director
Corinna A. Stolp 29 Director
Matthew L. Dodson 27 Director
George J. Bentley has been President, Chief Executive Officer and a
director since September 1999, after the acquisition of American Computer by the
Company. He is also a director of Casino Pirata.com Ltd., the Company's
wholly-owned subsidiary. Since 1991, Mr. Bentley has been the owner of SP Group
which is involved in information technology and the development of website for
clients. Mr. Bentley received his Bachelors of Science degree from Pepperdine
College in 1964.
Kenney F. Noel has been corporate secretary and a director since
October 1999. Mr. Noel also serves as Vice President of Operations for American
Computer. He has been associated with American Computer since February 1996. Mr.
Noel is also the President of Casino Pirata.com Lt., the Company's wholly-owned
subsidiary.
Yoshi Iwagami has been a director since October 1999. Since 1994, Mr.
Iwagami has the President and majority shareholder of I. J. Corporation, a
privately-held company involved in the wholesale building materials business.
Mr. Iwagami holds a Master of Engineering Degree from the Nagoya Institute of
Technology in Japan and Masters of Business Administration from Pepperdine
University.
Corinna A. Stolp has been a director since October 1999. Since July
1997, Ms. Stolp has been involved in CAD design and a CAD analyst at Sun
Microsystems. From 1993 to 1997, she was an assistant to the President,
Lightrix, a company involved in the design and development of holographics. Ms.
Stolp received her Bachelor of Arts from Pepperdine University in 1991.
Matthew L. Dodson has been a director since October 1999. Mr. Dodson is
currently Business Metrisc Coordinator for Abar Staffing in San Francisco,
California. From 1998 to the time of his current employment, he was a Products
and Design Manager for Tenny Consulting, an internet consulting firm. From 1996
to 1998, Mr. Dodson was a store manager for the Arts Store, Inc., which is
involved in the retail creative supplies business. From 1992 to 1996, he
18
<PAGE>
was a store manager for Mittel's Art and Frame Center. Mr. Dodson obtained his
Bachelor of Science degree in Business Administration from Pepperdine University
in 1997.
Our directors serve in their positions until the next annual meeting of
stockholders or until the directors' successors have been elected and qualified.
Our executive officers are appointed by our Board of Directors and serve at the
discretion of the Board.
EXECUTIVE COMPENSATION
At the current time, the Company has entered into an Employment
Agreement with the Company's President, and Chief Executive Officer, George J.
Bentley. The Agreement is for a term of twenty-four (24) months beginning
October 7, 1999. Mr. Bentley's base compensation is $100,000.00 per year payable
monthly. The Company may not be in a position to pay Mr. Bentley's base
compensation until such time that the Company determines that its financial
condition is such that it can pay such compensation. At the time of the
Company's acquisition of Advantage Systems, Inc. pursuant to the Share Exchange
Agreement and Plan of Reorganization dated September 24, 1999, Mr. Bentley
received an initial payment from the Company of $20,000.00.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's wholly-owned subsidiary Advantage Systems, Inc., issued a
Convertible Nonnegotiable Promissory Note dated September 24, 1999 to Kenney F.
Noel, the Company's corporate secretary, in the amount of $92,728.02. The Note
represented amounts previously loaned by Mr. Noel to Advantage Systems, Inc. The
Note is convertible into common stock of the Company at Mr. Noel's option at a
conversion price equal to the lesser of (a) 100% of the lowest of the closing
bid prices for the common stock for the five trading days immediately prior to
the date of the Note; or (b) 77.5% of the lowest of the closing bid prices for
the common stock for the five trading days immediately prior to the date of
conversion. The maturity date of the note is September 24, 2000. As of January
2, 2000, Mr. Noel has exercised his conversion rights to the extent of $
42,728.02 for an aggregate of 551,329 shares of common stock.
In February 2000, the Company issued to Mr. Noel 113,032 shares of
Common Stock in satisfaction of $8,760.00 of unpaid salary for the period
October 1, 1999 to December 31, 1999. The Common Stock was issued at a price of
$0.0775 per share in the same manner as the conversion of the Company's
Convertible Nonnegotiable Promissory Note dated September 24, 1999.
In February 2000, the Company issued to George Bentley 344,086 shares
of Common Stock in satisfaction of $ 26,666.66 of unpaid salary for the period
October 1, 1999 to December 31, 1999. The Common Stock was issued at a price of
$0.0775 per share in the same
19
<PAGE>
manner as the shares of Common Stock were issued to Kenney Noel for Mr. Noel's
unpaid salary.
DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue 95,000,000 shares of Common Stock. At this
time, we have 24,159,240 shares of Common Stock issued and outstanding. Each
share of Common Stock entitles the shareholder (i) to one non-cumulative vote
for each share held of record on all matters submitted to a vote of the
stockholders; (ii) to participate equally and to receive dividends as may be
declared by the Board of Directors; and, (iii) to participate pro rata in any
distribution of assets available for distribution upon liquidation of the
Company. Our stockholders have no preemptive rights to acquire additional shares
of Common Stock or any other securities. Our Common Stock is not subject to
redemption and carries no rights to purchase other securities of the Company.
Our Common Stock is non-assessable.
Potential de-listing of common stock
We may be de-listed from the OTC bulletin board. NASD Eligibility Rule 6530
issued on January 4, 1999, states that issuers who do not make current
filings pursuant to Sections 13 and 15(d) of the Securities Act of 1934 are
ineligible for listing on the OTC bulletin board. Issuers who are not current
with such filings are subject to de-listing according to a phase-in
schedule depending on each issuer's trading symbol as reported on January 4,
1999. Our trading symbol on January 4, 1999 was SIMM. Therefore, under
the phase-in schedule, our common stock is subject to de-listing on April 5,
2000. One month prior to our potential de-listing date, our common stock
had its trading symbol changed to ADVVE.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Successor Issuer Election.
Upon execution of the Exchange Agreement and delivery of the Advantage
shares to
20
<PAGE>
the shareholders of Go Fathom, pursuant to Rule 12g-3(a) of the General Rules
and Regulations of the Securities and Exchange Commission, Advantage became the
successor issuer to Go Fathom for reporting purposes under the Securities
Exchange Act of 1934 and elected to report under the Act effective April 3,2000.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
Not applicable.
ITEM 7. FINANCIAL STATEMENTS
REPORT OF INDEPENDENT AUDITORS
To the Stockholders
Advantage Technologies, Inc.
We have audited the accompanying consolidated balance sheets of Advantage
Technologies, Inc. (formerly Simulator Systems, Inc.) as of September 30, 1999
and 1998, and the related consolidated statements of operation, cash flows and
changes in stockholders' equity for each of the three years in the period ended
September 30, 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Advantage
Technologies, Inc. (formerly Simulator Systems, Inc.) as of September 30, 1999
and 1998, and the results of its operations and its cash flows for each of the
three years in the period ended September 30, 1999, in accordance with generally
accepted accounting principles.
/s/ Timothy L. Stters
TIMOTHY L. STEERS
CERTIFIED PUBLIC ACCOUNTANT, LLC
Portland, Oregon
February 1, 2000
21
<PAGE>
2
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
<TABLE>
<CAPTION>
Consolidated Balance Sheets
September 30
--------------------------
1999 1998
---------- ----------
ASSETS
<S> <C> <C>
Current assets:
Cash $ 164,427 $ 2,684
Accounts receivable - trade 220,923 -
Receivable from stockholders - 57,519
Inventories 31,206 -
Prepaid expenses - 415
---------- ----------
Total current assets 416,556 60,618
Equipment, less accumulated depreciation of
$4,210 in 1998 2,635 6,777
Other assets:
Organizational costs, less accumulated
amortization of $464 in 1999 ($310 in 1998) 8,865 9,019
Deposits - 250
Goodwill, less accumulated amortization of
$6,115 in 1998 4,663,997 67,261
---------- ----------
Total other assets 4,672,862 76,530
---------- ----------
$ 5,092,053 $ 143,925
========== ==========
Continued on page 3.
22
<PAGE>
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
Consolidated Balance Sheets (continued)
September 30
--------------------------
1999 1998
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Checks outstanding in excess of cash $ 9,399 $ -
Accounts payable 189,522 40,572
Income taxes currently payable 10 30
Other liabilities 32,600 -
Notes payable to stockholders 122,480 -
Long term debt due within one year 12,000 -
---------- ----------
Total current liabilities 366,011 40,602
Long term debt 327,660 40,000
Convertible notes payable to stockholders 42,728 -
Stockholders' equity:
Preferred stock, $.001 stated value; authorized
5,000,000 shares - -
Common stock, $.001 par value; authorized
95,000,000 shares; issued 17,046,295 shares
in 1999 (246,295 shares in 1998); outstanding
14,546,295 shares in 1999 (246,295 shares in
1998) 14,546 246
Additional paid-in capital 5,373,175 654,975
Retained deficit (1,032,067) (591,898)
---------- -----------
Total stockholders' equity 4,355,654 63,323
---------- ----------
$ 5,092,053 $ 143,925
========== ==========
</TABLE>
See accompanying notes.
23
<PAGE>
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
<TABLE>
<CAPTION>
Consolidated Statements of Operations
Years ended September 30
----------------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Revenues $ - $ - $ -
Costs and expenses:
Marketing 6,756 3,432 7,667
General and administrative 195,724 135,415 206,885
Research and development 26,533 120,609 60,783
Non-recurring losses 211,146 - -
Interest - 1,500 2,250
----------- --------- ----------
Total costs and expenses 440,159 260,956 277,585
----------- --------- ----------
Loss before provision for income taxes (440,159) (260,956) (277,585)
Provision for income taxes 10 10 10
----------- --------- ----------
Net loss $ (440,169) $ (260,966) $ (277,595)
=========== ========= ==========
Net loss per common share $ (.101) $ (1.189) $ (1.501)
=========== ========= ==========
</TABLE>
See accompanying notes.
24
<PAGE>
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Stockholders' Equity
For the period from October 1, 1996 through September 30, 1999
Preferred stock Common stock Additional Total
----------------- --------------------- paid-in Retained shareholders'
Shares Amount Shares Amount capital deficit equity(deficit)
-------- ------ ---------- --------- ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at October 1, 1996 - $ - 8,989,525 $ 8,990 $ 300,605 $ (53,337) $ 256,258
Effect of 50 shares for 1 share
reverse stock split - - (8,804,646) (8,805) 8,805 - -
Net loss - - - - - (277,595) (277,595)
-------- ----- ---------- ------ ---------- ----------- -------------
Balance at September 30, 1997 - - 184,879 185 309,410 (330,932) (21,337)
Shares issued for cash, net of
offering costs - - 41,127 41 177,209 - 177,250
Shares issued to stockholders for
cash and compensation - - 19,535 20 94,980 - 95,000
Shares issued in exchange for
shares of Simulator Systems, Inc. - - 754 - 73,376 - 73,376
Net loss - - - - - (260,966) (260,966)
-------- ----- ---------- ------ ---------- ----------- -------------
Balance at September 30, 1998 - - 246,295 246 654,975 (591,898) 63,323
Shares issued for cash - - 6,000,000 6,000 54,000 - 60,000
Shares issued to stockholders for
cash - - 1,000,000 1,000 9,000 - 10,000
Shares issued in exchange for
shares of Advantage Systems, Inc. - - 7,300,000 7,300 4,555,200 - 4,562,500
Capital contributed - - - - 100,000 - 100,000
Net loss - - - - - (440,169) (440,169)
-------- ----- ---------- ------ ---------- ----------- -------------
Balance at September 30, 1999 - - 14,546,295 $14,546 $ 5,373,175 $ (1,032,067) $ 4,355,654
======== ===== ========== ====== ========== =========== ============
</TABLE>
See accompanying notes.
25
<PAGE>
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
Years ended September 30
--------------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (440,169) $ (260,966) $ (277,595)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,318 8,393 10,575
Deferred income taxes (186,800) (111,600) (118,800)
Allowance for deferred tax assets 186,800 111,600 118,800
Common stock issued in exchanged for
compensation - 85,500 -
Advances to stockholders' exchanged for
compensation 103,569 - -
Non-recurring losses 61,146 - -
Changes in assets and liabilities, net of
effects of purchase of Advantage
Systems, Inc. in 1999 (Simulator
Systems, Inc. in 1998):
Prepaid expenses 415 - -
Marketable equity securities - - 299,028
Accounts payable 60,284 (12,478) 3,300
Income taxes currently payable (20) 10 10
----------- ----------- -----------
(212,457) (179,541) 35,318
Cash flows from investing activities:
Decrease (Increase) in deposits 250 - (250)
Advances to stockholders (46,050) (7,820) (31,495)
Capital expenditures - (180) (357)
----------- ----------- -----------
(45,800) (8,000) (32,102)
Cash flows from financing activities:
Proceeds from long term debt 250,000 - -
Capital contributed 100,000 - -
Proceeds from common stock 70,000 209,500 -
Offering costs - (22,570) -
----------- ------------ -----------
420,000 186,750 -
----------- ----------- -----------
Net increase (decrease) in cash 161,743 (791) 3,216
Cash at beginning of year 2,684 3,475 259
----------- ----------- -----------
Cash at end of year $ 164,427 $ 2,684 $ 3,475
=========== =========== ===========
</TABLE>
See accompanying notes.
26
<PAGE>
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
Notes to Consolidated Financial Statements
September 30, 1999
1. Nature of business and summary of significant accounting policies
-----------------------------------------------------------------
Nature of business: Advantage Technologies, Inc. (the "Company") was
originally organized as a Nevada corporation in September 1993 under
the name Logistics Distribution Systems International Group, Inc. In
November 1995, the Company's name was changed to Vortices, Inc. and
began developing and marketing flight simulators to the arcade game
industry.
In April 1998, the Company acquired Simulator Systems, Inc. and began
developing and marketing computerized rifle/pistol simulators to the
arcade game industry. With that acquisition, the Company ceased
developing and marketing flight simulators and changed its name to
Simulator Systems, Inc.
In April 1999, the Company ceased developing and marketing computerized
rifle/pistol simulators, purchased a franchise to operate an Internet
gaming website, and changed its name to Casino Pirata.com, Ltd.
In September 1999, the Company acquired Advantage Systems, Inc., dba
American Computer. American Computer is a second-tier vendor and
marketer of personal computer products.
In December 1999, new management of the Company conveyed its Internet
gaming website franchise rights to a newly-formed, wholly owned
subsidiary and changed the name of the Company to Advantage
Technologies, Inc.
Basis of reporting: Prior to its acquisition of Advantage Systems, Inc.
the Company was engaged in the development of its products and markets
and recognized no revenues from operations. All research and
development costs were expensed as incurred in accordance with
Statement of Financial Accounting Standards No. 7.
The 1998 financial statements include the accounts of the Company and
since its acquisition on April 21, 1998 its wholly owned subsidiary
Simulator Systems, Inc. The 1999 financial statements include the
accounts of the Company and its wholly owned subsidiaries Simulator
Systems, Inc. and, since its acquisition on September 24, 1999,
Advantage Systems, Inc. All inter-company balances and transactions
have been eliminated upon consolidation.
Cash: The Company deposits their cash in financial institutions and, at
various times throughout the year, cash held in these accounts has
exceeded Federal Deposit Insurance Corporation limits. The Company has
not experienced any losses as a result of these cash concentrations.
For purposes of the statement of cash flows, the Company considers cash
equivalents to be highly liquid instruments with original due dates
within three months of the date purchased.
27
<PAGE>
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
Notes to Consolidated Financial Statements
September 30, 1999
1. Nature of business and summary of significant accounting policies
-----------------------------------------------------------------
(continued)
-----------
Cash (continued): Supplemental disclosure of noncash investing and
financing activities is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ---------- ---------
<S> <C> <C> <C>
Common stock issued in exchange for the purchase of
Advantage Systems, Inc. $ 4,562,500 $ - $ -
============ ========= =========
Common stock issued in exchange for the purchase of
Simulator Systems, Inc. $ - $ 73,376 $ -
============ ========= =========
Common stock issued in exchange for compensation $ - $ 85,500 $ -
============ ========= =========
Stockholders' advances exchanged for compensation $ 103,569 $ - $ -
============ ========= =========
</TABLE>
Inventories: Inventories consist of finished goods and are valued at
the lower of average cost (specific identification) or market.
Equipment: Equipment is carried at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the
depreciable assets, which range from three to seven years.
Amortization of organizational costs: Organizational costs are being
amortized using the straight-line basis over five years.
Goodwill: Goodwill in 1999 represents the excess purchase price over
the estimated fair value of Advantage Systems, Inc. Goodwill will be
amortized using the straight-line method over seven years. Goodwill in
1998 represented the excess purchase price over estimated fair value of
Simulator Systems, Inc. and was being amortized using the straight-line
method over five years.
Impairment of long-lived assets: The Company assesses the
recoverability of long-lived assets by determining whether the
depreciation and amortization of the asset's balances over its
remaining life can be recovered through projected undiscounted, future
cash flows. The amount of impairment, if any, is measured based on fair
value and charged to operations in the period in which the impairment
is determined by management.
In April 1999 management of the Company determined they were unable to
recover their goodwill relating to the acquisition of Simulator
Systems, Inc. and charged the remaining balance of $61,146 to
operations as non-recurring losses.
28
<PAGE>
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
Notes to Consolidated Financial Statements
September 30, 1999
1. Nature of business and summary of significant accounting policies
-----------------------------------------------------------------
(continued)
-----------
Impairment of long-lived assets (continued): In September 1999,
management of the Company determined they were unable to recover the
purchase of their Internet gaming website franchise and charged its
cost of $150,000 to operations as non-recurring losses.
Revenue recognition: Revenues are recognized when products are shipped
to customers.
Reporting comprehensive income: The Company reports and displays
comprehensive income and its components as separate amounts in the
financial statements. Comprehensive income includes all changes in
equity during a period that results from recognized transactions and
other economic events other than transactions with owners. The Company
did not carry any items required to be disclosed as other comprehensive
income in 1999, 1998 or 1997.
Stock based compensation: The Company accounts for stock based
compensation under Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"). SFAS 123
defines a fair value based method of accounting for stock based
compensation. However, SFAS 123 allows an entity to continue to measure
compensation cost related to stock and stock options issued to
employees using the intrinsic method of accounting prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB 25"). Entities electing to remain with the
accounting method of APB 25 must make pro forma disclosures of net
income and earnings per share, as if the fair value method of
accounting defined in SFAS 123 had been applied. The Company has
elected to account for its stock based compensation to employees under
APB 25 and has adopted the disclosure-only provisions of SFAS 123.
Accordingly, no compensation cost is recognized for the stock options.
Income taxes: Income taxes are accounted for and reported using an
asset and liability approach. Deferred income tax assets and
liabilities are provided annually for differences between the financial
statement and tax bases of assets and liabilities that will result in
taxable or deductible amounts in the future. Deferred income taxes are
computed based on enacted tax laws and rates applicable to the periods
in which the differences are expected to effect taxable income.
Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized. Income tax expense is
the tax payable or refundable for the period plus or minus the change
during the year in deferred tax assets and liabilities.
29
<PAGE>
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
Notes to Consolidated Financial Statements
September 30, 1999
1. Nature of business and summary of significant accounting policies
-----------------------------------------------------------------
(continued)
-----------
Net loss per common share: Net loss per share is computed by dividing
net loss by the weighted average number of common shares outstanding
during the period. The weighted average number of common stock shares
outstanding was 4,356,158 for 1999 (219,720 for 1998; 184,879 for
1997). Shares issued to an escrow agent, but not outstanding, and stock
options are not considered common stock equivalents, as the affect on
net loss per share would be anti-dilutive.
Concentration risk: The Company grants credit to customers. The
Company's ability to collect receivables is affected by economic
fluctuations in the geographic areas in which it serves.
Risks and uncertainties: The process of preparing financial statements
in conformity with generally accepted accounting principles requires
the use of estimates and assumptions regarding certain types of assets,
liabilities, revenues and expenses. Management of the Company has made
certain estimates and assumptions regarding the collectability of
accounts receivable, carrying values of inventories, and recoverability
of goodwill. Such estimates and assumptions primarily relate to
unsettled transactions and events as of the date of the financial
statements. Accordingly, upon settlement, actual results may differ
from estimated amounts.
2. Business combinations
On September 24, 1999, the Company entered into a "Share Exchange
Agreement and Plan of Reorganization" (the "Share Exchange Agreement")
with Advantage Technologies, Inc., dba American Computer ("American
Computer"). Pursuant to the Share Exchange Agreement the Company issued
7,300,000 shares of its common stock in exchange for 100% of the issued
and outstanding common stock of American Computer. The business
combination was accounted for in accordance with Accounting Principles
Board Opinion No. 16 as a purchase.
The value of the shares issued for American Computer was $4,562,500
($.625 per share) which represented the closing bid price of the
Company's common stock on the date of the Share Exchange Agreement. The
purchase price exceeded the fair market value of American Computer by
$4,663,997. Components of the purchase of American Computer are as
follows:
Fair value of the Company's common stock issued $ 4,562,500
30
<PAGE>
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
Notes to Consolidated Financial Statements
September 30, 1999
2. Business combinations (continued)
--------------------------------
Fair value of American Computer:
Accounts receivable, at net realizable value $ 220,923
Inventories, at net realizable value 31,206
Equipment, at estimated value determined by
management 2,635
Checks outstanding in excess of cash (9,399)
Accounts payable (99,394)
Other liabilities (32,600)
Notes payable to stockholders (165,208)
Long term debt (49,660)
------------
Net liabilities acquired (101,497)
------------
Goodwill $ 4,663,997
============
The results of operations of American Computer are included in the
accompanying consolidated financial statements since the date of
acquisition. The following pro forma summary presents the consolidated
financial position and results of operations of the Company as if the
business combination occurred on October 1, 1997:
As of September 30
-----------------------------------
1999 1998
-------------- --------------
Current assets $ 416,557 $ 92,916
Tangible assets 428,056 109,965
Total assets 3,788,481 4,239,197
Current liabilities 366,011 190,549
Total liabilities 736,399 265,160
Total stockholders' equity 3,052,082 3,974,037
Year ended September 30
-----------------------------------
1999 1998
-------------- --------------
Net revenues $ 1,412,363 $ 1,018,192
Gross profit 320,481 155,737
Costs and expenses 1,364,886 1,185,105
Net loss (1,044,405) (1,029,368)
Loss per common share (.091) (.137)
The above amounts are based upon certain assumptions and estimates that
the Company believes are reasonable. The pro forma consolidated
financial position and results of operations do not purport to be
indicative of the results which would have been obtained had the
business combination occurred as of October 1, 1997 or which may be
obtained in the future.
31
<PAGE>
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
Notes to Consolidated Financial Statements
September 30, 1999
2. Business combinations (continued)
--------------------------------
On April 21, 1998, the Company entered into an "Articles of Merger and
Plan of Merger" (the "Plan of Merger") with Simulator Systems, Inc.
Under the Plan of Merger the Company issued 754 shares of its common
stock in exchange for 100% of the issued and outstanding common stock
of Simulator Systems, Inc. The business combination was accounted for
in accordance with Accounting Principles Board Opinion No. 16 as a
purchase.
The value of the shares issued for Simulator Systems, Inc. was $73,376
($97.316 per share) which represented the closing bid price of the
Company's common stock on the date of the Plan of Merger. The purchase
price exceeded the fair market value of Simulator Systems, Inc. by
$73,376.
3. Notes payable to stockholders
Two stockholders, one also being an officer of the Company, advanced
working capital to the Company in exchange for notes payable. The notes
are non-interest bearing, unsecured and due September 2000.
The note payable to the officer of the Company, which aggregated
$92,728, is convertible at the option of the officer at any time in
whole or in part into shares of common stock of the Company. Shares
issued will be valued at 100% of the lowest closing bid price for the
five trading days immediately prior to September 24, 1999, the date of
the note, or 77.5% of the lowest closing bid price for the five trading
days immediately prior to the date of conversion, whichever is lessor.
Subsequent to September 30, 1999 and through February 1, 2000, this
officer has converted $42,728 of the note into 551,329 shares of common
stock of the Company. Accordingly, this amount has been classified as
long term in the accompanying consolidated balance sheet at September
30, 1999.
4. Long term debt
Long term debt consisted of the following at September 30:
1999 1998
--------- ---------
Note payable due September 2001 with
interest at 7% per annum. Any outstanding
principal and unpaid accrued interest may
be converted at any time in whole or in
part at the option of the holder into
shares of common stock of the Company.
Shares issued will be valued at 100% of the
lowest closing bid price for the five
trading days immediately prior to September
27, 1999, the date
32
<PAGE>
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
Notes to Consolidated Financial Statements
September 30, 1999
4. Long term debt (continued)
-------------------------
1999 1998
--------- ---------
of the note, or 77.5% of the lowest closing
bid price for the five trading days
immediately prior to the date of
conversion, whichever is lessor. $ 250,000 $ -
Non-interest bearing, convertible notes
payable to individuals were due June 1996. 40,000 40,000
Note payable to a bank, due in monthly
repayments of $1,000 per month plus
interest at the bank's prime rate plus 3%
per annum. Guaranteed by two stockholders'
of the Company. 49,660 -
--------- ---------
Total long term debt 339,660 40,000
Less amount due within one year 12,000 -
--------- ---------
Long term debt $ 327,660 $ 40,000
======== =========
The holder of the $250,000 note payable has converted $194,161 of
principal and $2,236 of interest of the note into an aggregate of
1,650,614 shares of common stock of the Company through February 1,
2000.
On October 8, 1999, the holders of the $40,000 non-interest bearing
notes payable converted their entire balances into 40,000 shares of
common stock of the Company. Accordingly, these notes have been
classified as long term in the accompanying consolidated balance sheet.
Aggregate repayments of long term debt after giving affect to
conversions into common stock are as follows: $12,000 in 2001; $67,839
in 2002; $12,000 in 2003; and $1,660 in 2004.
5. Income taxes
The components of net deferred income taxes are as follows as of
September 30:
1999 1998
----------- ----------
Deferred tax assets:
Net operating losses $ 413,000 $ 251,500
Amortization of goodwill 26,900 1,600
Less allowance for deferred tax assets (439,900) (253,100)
---------- ----------
Net deferred income taxes $ - $ -
========== ==========
33
<PAGE>
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
Notes to Consolidated Financial Statements
September 30, 1999
5. Income taxes (continued)
-----------------------
The components of the provision (benefit) for income taxes are as
follows for the years ended September 30:
<TABLE>
<CAPTION>
1999 1998 1997
-------------- ------------- -------------
<S> <C> <C> <C>
Currently payable -state $ 10 $ 10 $ 10
Deferred:
Federal (157,800) $ (94,400) $ (100,500)
State of Oregon (29,000) (17,200) (18,300)
------------ ----------- -----------
(186,800) (111,600) (118,800)
------------ ----------- -----------
Net benefit for income taxes (186,790) (111,590) (118,790)
Change in allowance for deferred tax assets 186,800 111,600 118,800
----------- ----------- -----------
Provision for income taxes $ 10 $ 10 $ 10
=========== =========== ===========
Reconciliation of income taxes computed at the federal statutory rate
to the provision (benefit) for income taxes is as follows for the years
ended September 30:
1999 1998 1997
-------------- ------------- ------------
Federal tax benefit at statutory rates $ (149,654) $ (88,728) $ (94,379)
State tax benefit, net of federal benefit (37,450) (22,967) (24,522)
Differences resulting from:
Non-deductible and other items 314 105 111
Change in allowance for deferred tax assets 186,800 111,600 118,800
------- ----------- -------
Provision for income taxes $ 10 $ 10 $ 10
=========== =========== ===========
</TABLE>
The Company had net operating loss carryovers of approximately
$1,027,300 as of September 30, 1999 available to offset future taxable
income, if any. Utilization of the loss carryovers is further limited
in any year because the Company's ownership changed more than 50%
during 1999. If not utilized against future taxable income, the tax
loss carryovers will expire as follows: $56,400 in 2111; $295,500 in
2117; $273,600 in 2118; and $401,800 in 2119.
6. Common stock
Effective March 15, 1999, the stockholders of the Company approved a 50
shares for 1 share reverse stock split. All share amounts in the
accompanying consolidated financial statements have been restated to
reflect this reverse stock split.
34
<PAGE>
Advantage Technologies, Inc.
(formerly Simulator Systems, Inc.)
Notes to Consolidated Financial Statements
September 30, 1999
6. Common stock (continued)
-----------------------
On October 8, 1999, the Company issued 10,000 shares of its common
stock and a vehicle in exchange for accounts payable of $5,222.
On September 27, 1999, the Company has issued to an escrow agent
2,500,000 shares of its common stock for conversion of the $250,000
note payable under the term of the agreement.
On September 27, 1999, in connection with obtaining the $250,000
convertible note payable, the Company granted options to purchase
25,000 shares of its common stock to the holders of the note. The
options may be exercised in whole or in part on or before September 27,
2002 at a purchase price per share equal to 110% of the closing bid
price of the Company's common stock on the date the share options were
issued, which was $.625 per share. The Company has reserved 25,000
shares of its common stock for issuance under this option agreement.
In March 1999, two then existing officers were granted 500,000 shares
each of common stock of the Company at a price of $.01 per share. The
price per share represented recent sales of the Company's common stock
to outsiders on the date of grant; accordingly no compensation expense
was charged to operations as a result of these share grants.
In March 1998, the same two then existing officers exercised grants
aggregating 19,535 shares of the Company's common stock. The shares
were valued at $95,000 ($4.863 per share) which represented the closing
bid price of the Company's common stock on the date of grant.
Compensation expense of $90,000 was charged to operations in 1998 as a
result of these share grants.
In February 2000, the Board of Directors of the Company approved the
issuance of 344,086 shares of its common stock to its President in
exchange for compensation expense from October 1, 1999 through January
31, 2000 aggregating approximately $26,700.
35
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders
Advantage Technologies, Inc.
We have audited the accompanying consolidated balance sheet of Advantage
Technologies, Inc. as of September 30, 1999. This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated balance sheet referred to above present fairly,
in all material respects, the financial position of Advantage Technologies, Inc.
as of September 30, 1999 in accordance with generally accepted accounting
principles.
/s/ Timothy L. Steers
Portland, Oregon
February 1, 2000
36
<PAGE>
ADVANTAGE TECHNOLOGIES, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
<S> <C> <C>
(Unaudited)
December 31, September 30,
1999 1999
-------------- --------------
ASSETS
Current assets:
Cash $ 27,772 $ 164,427
Accounts receivable 68,046 220,923
Inventories 30,699 31,206
-------------- --------------
Total current assets 126,517 416,556
Net equipment 2,089 2,635
Other assets:
Net organizational costs 8,421 8,865
Goodwill, less accumulated amortization of $166,571 at December 31, 1999 4,497,426 4,663,997
-------------- --------------
Total other assets 4,505,847 4,672,862
-------------- --------------
$ 4,634,453 $ 5,092,053
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 25,599 $ 189,522
Other current liabilities 18,396 42,009
Notes payable to stockholders 122,480 122,480
Long term debt due within one year 18,507 12,000
-------------- --------------
Total current liabilities 184,982 366,011
Long term debt 177,142 327,660
Convertible notes payable to stockholders 42,728 42,728
Stockholders' equity:
Preferred stock, $.001 stated value; authorized 5,000,000 shares - -
Common stock, $.001 par value; authorized 95,000,000 shares;
issued 17,096,295 shares at December 31, 1999 (17,046295 shares
at September 30, 1999); outstanding 15,443,490 shares at
December 31, 1999 (14,546,295 shares at September 30, 1999) 15,443 14,546
Additional paid-in capital 5,552,764 5,373,175
Retained deficit (1,338,606) (1,032,067)
Total stockholders' equity 4,229,601 4,355,654
--------------- ------------
$ 4,634,453 $ 5,092,053
=============== ============
</TABLE>
37
<PAGE>
ADVANTAGE TECHNOLOGIES, INC.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
<S> <C> <C>
(Unaudited)
Three months ended
December 31,
--------------------
1999 1998
-------------------- ---------
Net sales $ 215,026 $ -
Cost of goods sold 189,073 -
-------------------- ---------
Gross profit 25,953 -
Selling expenses 6,808 -
General and administrative expenses 318,990 12,915
-------------------- ---------
Net loss from operations (299,845) (12,915)
Interest expense 6,694 -
-------------------- ---------
Net loss before provision for income taxes (306,539) (12,915)
Provision for income taxes - -
-------------------- ---------
Net loss $ (306,539) $(12,915)
==================== =========
Net loss per common share $ (0.08) $ (0.21)
==================== =========
</TABLE>
38
<PAGE>
ADVANTAGE TECHNOLOGIES, INC.
Consolidated Statements of Changes in Stockholders' Equity
For the period from October 1, 1997 through December 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Additional Total
Preferred stock Common stock paid-in Retained shareholders'
Shares Amount Shares Amount capital deficit equity
------ ------- ---------- ------- ---------- ------------ -----------
Balance at October 1, 1998 - $ - 246,295 $ 246 $ 654,975 $ (591,898) $ 63,323
Shares issued for cash - - 6,000,000 6,000 54,000 - 60,000
Shares issued to stockholders for cash - - 1,000,000 1,000 9,000 - 10,000
Shares issued in exchange for
shares of Advantage Systems, Inc. - - 7,300,000 7,300 4,555,200 - 4,562,500
Capital contributed - - - - 100,000 - 100,000
Net loss - - - - - (440,169) (440,169)
------ ------- ---------- ------- ---------- ------------ -----------
Balance at September 30, 1999 - - 14,546,295 14,546 5,373,175 (1,032,067) 4,355,654
Shares issued in exchange for
accounts payable (unaudited) - - 50,000 50 40,078 - 40,128
Shares issued to exchange for debt
and accrued interest (unaudited) - - 847,195 847 139,511 - 140,358
Net loss (unaudited) - - - - - (306,539) (306,539)
------ ------- ---------- ------- ---------- ------------ -----------
Balance at September 30, 1999
(unaudited) - - 15,443,490 $15,443 $5,552,764 $(1,338,606) $4,229,601
====== ======= ========== ======= ========== ============ ===========
</TABLE>
39
<PAGE>
ADVANTAGE TECHNOLOGIES, INC.
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
<S> <C> <C>
(Unaudited)
Three months ended
December 31,
-------------------------------
1999 1998
-------------------- ---------
Cash flows from operating activities:
Net loss $ (306,539) $(12,915)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 990 580
Amortization of goodwill 166,571 3,668
Changes in assets and liabilities:
Accounts receivable 152,877 -
Inventories 507 -
Accounts payable (123,795) 11,000
Other current liabilities (23,613) -
-------------------- ---------
(133,002) 2,333
Cash flows from investing activities -
Advances to stockholders - (4,450)
Cash flows from financing activities-
Principal payments on long-term debt (3,653) -
-------------------- ---------
Net decrease in cash (136,655) (2,117)
Cash at beginning of period 164,427 2,684
-------------------- ---------
Cash at end of period $ 27,772 $ 567
==================== =========
Supplemental disclosure of cash flow information -
Cash paid for interest $ 2,319 $ -
==================== =========
Supplemental disclosure of noncash investing and financing activities -
Common stock issued in exchange for debt and accrued interest $ 180,486 $ -
==================== =========
</TABLE>
40
<PAGE>
ADVANTAGE TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements
1. Nature of business and summary of significant accounting policies
Nature of business: Advantage Technologies, Inc. (the "Company") was originally
organized as a Nevada corporation in September 1993 under the name Logistics
Distribution Systems International Group, Inc. In November 1995, the Company's
name was changed to Vortices, Inc. and began developing and marketing flight
simulators to the arcade game industry.
In April 1998, the Company acquired Simulator Systems, Inc. and began developing
and marketing computerized rifle/pistol simulators to the arcade game industry.
With that acquisition, the Company ceased developing and marketing flight
simulators and changed its name to Simulator Systems, Inc.
In April 1999, the Company ceased developing and marketing computerized
rifle/pistol simulators, purchased a franchise to operate an Internet gaming
website, and changed its name to Casino Pirata.com, Ltd.
In September 1999, the Company acquired Advantage Systems, Inc., dba American
Computer. American Computer is a second-tier vendor and marketer of personal
computer products.
In December 1999, new management of the Company conveyed its Internet gaming
website franchise rights to a newly-formed, wholly owned subsidiary and changed
the name of the Company to Advantage Technologies, Inc.
Interim reporting: In the opinion of management of the Company, the accompanying
consolidated financial statements contain all adjustments, consisting of only
normal recurring adjustments, except as noted elsewhere in the notes to the
consolidated financial statements, necessary to present fairly its financial
position as of December 31, 1999 and the results of its operations and cash
flows for the three months ended December 31, 1999 and 1998. These statements
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The
statements should be read in conjunction with the consolidated financial
statements and footnotes of the Company for the year ended September 31, 1999.
The results of operations for the three months ended December 31, 1999 are not
necessarily indicative of the results to be expected for the full year.
Basis of consolidation: The 1998 financial statements include the accounts of
the Company. The 1999 financial statements include the accounts of the Company
and its wholly owned subsidiaries Simulator Systems, Inc. All inter-company
balances and transactions have been eliminated upon consolidation.
41
<PAGE>
1. Nature of business and summary of significant accounting policies
(continued)
Cash: The Company deposits their cash in financial institutions and, at various
times throughout the year, cash held in these accounts has exceeded Federal
Deposit Insurance Corporation limits. The Company has not experienced any
losses as a result of these cash concentrations.
For purposes of the statement of cash flows, the Company considers cash
equivalents to be highly liquid instruments with original due dates within three
months of the date purchased.
Inventories: Inventories consist of finished goods and are valued at the lower
of average cost (specific identification) or market.
Equipment: Equipment is carried at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the depreciable assets,
which range from three to seven years.
Amortization of organizational costs: Organizational costs are being amortized
using the straight-line basis over five years.
Goodwill: Goodwill represents the excess purchase price over the estimated fair
value of Advantage Systems, Inc. Goodwill is being amortized using the
straight-line method over seven years.
Impairment of long-lived assets: The Company assesses the recoverability of
long-lived assets by determining whether the depreciation and amortization of
the asset's balances over its remaining life can be recovered through projected
undiscounted, future cash flows. The amount of impairment, if any, is measured
based on fair value and charged to operations in the period in which the
impairment is determined by management.
Revenue recognition: Revenues are recognized when products are shipped to
customers.
Reporting comprehensive income: The Company reports and displays comprehensive
income and its components as separate amounts in the financial statements.
Comprehensive income includes all changes in equity during a period that results
from recognized transactions and other economic events other than transactions
with owners. The Company did not carry any items required to be disclosed as
other comprehensive income for the three months ended December 31, 1999 or 1998.
42
<PAGE>
1. Nature of business and summary of significant accounting policies
-------------------------------------------------------------------------
(continued)
Stock based compensation: The Company accounts for stock based compensation
under Statement of Financial Accounting Standards No. 123 ("SFAS 123"). SFAS
123 defines a fair value based method of accounting for stock based
compensation. However, SFAS 123 allows an entity to continue to measure
compensation cost related to stock and stock options issued to employees using
the intrinsic method of accounting prescribed by Accounting Principles Board
Opinion No. 25 ("APB 25"), "Accounting for Stock issued to Employees". Entities
electing to remain with the accounting method of APB 25 must make pro forma
disclosures of net income and earnings per share, as if the fair value method of
accounting defined in SFAS 123 had been applied. The Company has elected to
account for its stock based compensation to employees under APB 25.
Advertising: The Company expenses the cost of advertising as incurred as
selling expenses. Advertising expenses was $6,808 (unaudited) for the three
months ended December 31, 1999.
Income Taxes: Income taxes are provided on the liability method whereby deferred
tax assets and liabilities are recognized for the expected tax consequences of
temporary differences between the tax bases and reported amounts of assets and
liabilities. Deferred tax assets and liabilities are computed using enacted tax
rates expected to apply to taxable income in the years in which temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities from a change in tax rates is recognized in income in the
period that includes the enactment date. The Company provides a valuation
allowance for certain deferred tax assets, if it is more likely than not that
the Company will not realize tax assets through future operations.
Net loss per common share: Net loss per share is computed by dividing net loss
by the weighted average number of common shares outstanding during the period.
The weighted average number of common stock shares outstanding was 3,694,070 for
the three months ended December 311999 (61,574 for 1998). Shares issued to an
escrow agent, but not outstanding, and stock options are not considered common
stock equivalents, as the affect on net loss per share would be anti-dilutive.
Concentration risk: The Company grants credit to customers. The Company's
ability to collect receivables is affected by economic fluctuations in the
geographic areas in which it serves.
Risks and uncertainties: The process of preparing financial statements in
conformity with generally accepted accounting principles requires the use of
estimates and assumptions regarding certain types of assets, liabilities,
revenues and expenses. Management of the Company has made certain estimates and
assumptions regarding the collectability of accounts receivable, carrying values
of inventories, and
43
<PAGE>
1. Nature of business and summary of significant accounting policies
-------------------------------------------------------------------------
(continued)
recoverability of goodwill. Such estimates and assumptions primarily relate to
unsettled transactions and events as of the date of the financial statements.
Accordingly, upon settlement, actual results may differ from estimated amounts.
2. Business combinations
The following pro forma summary presents the consolidated financial position and
results of operations of the Company as if American Computer had been acquired
at the beginning of the Company's 1998 fiscal year:
<TABLE>
<CAPTION>
<S> <C>
(Unaudited)
Three months ended
December 31, 1998
--------------------
Net revenues $ 239,457
Gross profit 57,212
Costs and expenses 254,100
Net loss (196,888)
Net loss per common share $ (0.104)
</TABLE>
The above amounts are based upon certain assumptions and estimates that the
Company believes are reasonable. The pro forma consolidated results of
operations do not purport to be indicative of the results which would have been
obtained had the business combination occurred as of October 1, 1998 or which
may be obtained in the future.
3. Notes payable to stockholders
Two stockholders, one also being an officer of the Company, advanced working
capital to the Company in exchange for notes payable. The notes are
non-interest bearing, unsecured and due September 2000.
The note payable to the officer of the Company, which aggregated $92,728, is
convertible at the option of the officer at any time in whole or in part into
shares of common stock of the Company. Shares issued will be valued at 100% of
the lowest closing bid price for the five trading days immediately prior to
September 24, 1999, the date of the note, or 77.5% of the lowest closing bid
price for the five trading days immediately prior to the date of conversion,
whichever is lessor.
In January 2000, this officer converted $42,728 of the note into 551,329 shares
of common stock of the Company. Accordingly, this amount has been classified as
long term in the accompanying consolidated balance sheet at December 31, 1999.
44
<PAGE>
4. Long term debt
Long term debt consisted of the following:
<TABLE>
<CAPTION>
<S> <C> <C>
(Unaudited)
December 31, September 30,
1999 1999
-------------- --------------
Note payable due September 2001 with
interest at 7% per annum. Any
outstanding principal and unpaid accrued
interest may be converted at any time in
whole or in part at the option of the holder
into shares of common stock of the
Company. Shares issued will be valued
at 100% of the lowest closing bid price for
the five trading days immediately prior to
September 27, 1999, the date of the
note, or 77.5% of the lowest closing bid
price for the five trading days immediately
prior to the date of conversion, whichever
is lessor. $ 110,839 $ 250,000
Non-interest bearing, convertible notes
payable to individuals were due June
1996. 40,000 40,000
Note payable to a bank, due in monthly
repayments of $1,901 per month including
interest at 11.5% per annum. Guaranteed
by two stockholders' of the Company. 44,810 49,660
-------------- --------------
Total long term debt 195,649 339,660
Less amount due within one year 18,507 12,000
-------------- --------------
Long term debt $ 177,142 $ 327,660
============== ==============
</TABLE>
45
<PAGE>
5. Common stock
On October 8, 1999, the Company issued 50,000 shares of its common stock and a
vehicle in exchange for debt of $40,128.
The Company issuance of 847,195 shares of common stock during the three months
ended December 21, 1999 in exchange for debt and accrued interest. Management
of the Company valued the shares at a weighted average price of $.166 per share,
which represented a 26.2% discount from the closing bid price of the Company's
common stock at the date of issuance. Management of the Company estimated the
value of the Company's shares granted after considering the historical trend of
the trading prices for its common stock and the limited volume of shares being
traded.
6. Subsequent events
In February 2000, the Board of Directors of the Company approved the issuance of
344,086 shares of its common stock to its President in exchange for accrued
compensation expense from October 1, 1999 through January 31, 2000.
46
<PAGE>
ITEM 8. CHANGE IN FISCAL YEAR
Advantage as the successor issuer has a fiscal year end of September 31,
which fiscal year end will continue for the successor issuer.
EXHIBITS
Exhibit
Number Description
- ------ -----------
1.1 Stock Exchange Agreement between MRC Legal Services
Corporation and Advantage Technologies, Inc., dated as of
March 31, 2000.
1.2 Consulting Agreement dated March 31, 2000.
2.1 Articles of Merger and Plan of Merger dated April 21, 1998
between Vortices, Inc. and Simulator Systems.
2.2 Share Exchange Agreement and Plan of Reorganization dated
September 24, 1999 , and amendment thereto, between Casino
Pirata.com Ltd, Advantage Systems, Inc. and the shareholders
of Advantage Systems, Inc.
3.1 Articles of Incorporation of Advantage Technologies, Inc. and
Amendments thereto.
3.2 Articles of Incorporation of Advantage Systems, Inc.
3.3 Articles of Incorporation of CasinoPirata.com Ltd.
3.4 Bylaws of Advantage Technologies, Inc.
3.5 Bylaws of Advantage Systems, Inc.
3.6 Bylaws of Casino Pirata.com Ltd.
4 Specimen Stock Certificate
10.1 Employment Agreement between George J. Bentley and Advantage
Technologies, Inc. dated November 18, 1999, effective as of
October 7, 1999.
10.2 Software License Agreement with WorldNet Casinos.com Ltd.
dated April 19, 1999.
21 Subsidiaries
23 Auditor's Consent
36
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Advantage Technologies, Inc.
Date: April 3, 2000 By /s/ George J. Bentley
----------------------
George J. Bentley, President
37
<PAGE>
STOCK EXCHANGE AGREEMENT
Agreement dated as of March 31, 2000 between Advantage Technologies, Inc.,
a Nevada corporation ("ADVV"), on the one hand, and MRC Legal Services
Corporation ("MRC" or the "Shareholder"), on the other hand.
1. THE ACQUISITION.
1.1 Purchase and Sale Subject to the Terms and Conditions of this
Agreement. At the Closing to be held as provided in Section 2, ADVV shall sell
the ADVV Shares (defined below) to the Shareholder and the Shareholder shall
purchase the ADVV Shares from ADVV, free and clear of all Encumbrances other
than restrictions imposed by Federal and State securities laws.
1.2 Purchase Price. ADVV will exchange 1,155,000 shares of its
restricted common stock (the "ADVV Shares") for 800,000 shares of Go Fathom
Group, Inc., a Delaware corporation ("Go Fathom"), representing approximately
80.0% of the issued and outstanding common shares of Go Fathom (the "Go Fathom
Shares"). Immediately after the Closing, the Shareholder will cause Go Fathom
to complete a reverse stock split (the "Reverse Stock Split") previously
approved by the directors of Go Fathom which will result in the remaining
200,000 shares of Go Fathom being cashed out by the Shareholder at no additional
cost to ADVV. Immediately subsequent to the Reverse Stock Split, ADVV shall be
the sole shareholder of Go Fathom with 8 shares issued and outstanding. The
ADVV Shares shall be issued and delivered to the Shareholder or assigns as set
forth in Exhibit "A" hereto.
2. THE CLOSING.
2.1 Place and Time. The closing of the sale and exchange of the ADVV
Shares for the Go Fathom Shares (the "Closing") shall take place at Cutler Law
Group, 610 Newport Center Drive, Suite 800, Newport Beach, CA 92660 no later
than the close of business (Orange County California time) on or before March 4,
2000 or at such other place, date and time as the parties may agree in writing.
2.2 Deliveries by the Shareholders. At the Closing, the Shareholder
shall deliver the following to ADVV:
1. Certificates representing the Go Fathom Shares, duly endorsed for
transfer to ADVV and accompanied by appropriate medallion guaranteed stock
powers; the Shareholder shall immediately change those certificates for, and to
deliver to ADVV at the Closing, a certificate representing the Go Fathom Shares
registered in the name of ADVV (without any legend or other reference to any
Encumbrance other than appropriate federal securities law limitations).
2. The documents contemplated by Section 3.
<PAGE>
3. All other documents, instruments and writings required by this Agreement
to be delivered by the Shareholder at the Closing and any other documents or
records relating to Go Fathom's business reasonably requested by ADVV in
connection with this Agreement.
2.3 Deliveries by ADVV. At the Closing, ADVV shall deliver the
following to the Shareholder:
a. The ADVV Shares for further delivery to the Shareholder or assigns as
contemplated by section 1.
2. The documents contemplated by Section 4.
3. All other documents, instruments and writings required by this Agreement
to be delivered by ADVV at the Closing.
3. CONDITIONS TO ADVV'S OBLIGATIONS.
The obligations of ADVV to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by ADVV:
3.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits ADVV's
acquisition of the Go Fathom Shares or the ADVV Shares or that will require any
divestiture as a result of ADVV's acquisition of the Go Fathom Shares or that
will require all or any part of the business of ADVV to be held separate and no
litigation or proceedings seeking the issuance of such an injunction, order or
decree or seeking to impose substantial penalties on ADVV or Go Fathom if this
Agreement is consummated shall be pending.
3.2 Representations, Warranties and Agreements. (a) The
representations and warranties of the Shareholder set forth in this Agreement
shall be true and complete in all material respects as of the Closing Date as
though made at such time, and (b) the Shareholder shall have performed and
complied in all material respects with the agreements contained in this
Agreement required to be performed and complied with by it at or prior to the
Closing.
3.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of ADVV's acquisition of the Go Fathom Shares shall have been
obtained and shall be in full force and effect.
3.4 Resignations of Director. Effective on the Closing Date, all of
officers and directors shall have resigned as an officer, director and employee
of Go Fathom.
<PAGE>
4. CONDITIONS TO THE SHAREHOLDER'S OBLIGATIONS.
The obligations of the Shareholder to effect the Closing shall be subject
to the satisfaction at or prior to the Closing of the following conditions, any
one or more of which may be waived by the Shareholder:
4.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits ADVV's
acquisition of the Go Fathom Shares or the Shareholder's acquisition of the ADVV
Shares or that will require any divestiture as a result of ADVV's acquisition of
the Shares or the Shareholder's acquisition of the ADVV Shares or that will
require all or any part of the business of ADVV or Go Fathom to be held separate
and no litigation or proceedings seeking the issuance of such an injunction,
order or decree or seeking to impose substantial penalties on ADVV or Go Fathom
if this Agreement is consummated shall be pending.
4.2 Representations, Warranties and Agreements. (a) The
representations and warranties of ADVV set forth in this Agreement shall be true
and complete in all material respects as of the Closing Date as though made at
such time, and (b) ADVV shall have performed and complied in all material
respects with the agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Closing.
4.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of ADVV's acquisition of the Go Fathom Shares and the Shareholder's
acquisition of the ADVV Shares shall have been obtained and shall be in full
force and effect.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER.
The Shareholder represents and warrants to ADVV that, to the Knowledge of
the Shareholder, and except as set forth in an Go Fathom Disclosure Letter:
5.1 Authorization. The Shareholder is a corporation duly organized,
validly existing and in good standing under the laws of the state of California.
This Agreement constitutes a valid and binding obligation of the Shareholder,
enforceable against it in accordance with its terms.
5.2 Capitalization. The authorized capital stock of Go Fathom consists
of 20,000,000 authorized shares of stock, par value $.001, and 1,000,000
preferred shares, par value $.001, of which 1,000,000 common shares and no
preferred shares are presently issued and outstanding. No shares have been
registered under state or federal securities laws. As of the Closing Date there
will not be outstanding any warrants, options or other agreements on the part of
Go Fathom obligating Go Fathom to issue any additional shares of common or
preferred stock or any of its securities of any kind.
<PAGE>
5.3 Ownership of Go Fathom Shares. The delivery of certificates to ADVV
provided in Section 2.2 will result in ADVV's immediate acquisition of record
and beneficial ownership of the Go Fathom Shares, free and clear of all
Encumbrances subject to applicable State and Federal securities laws.
5.4 Consents and Approvals of Governmental Authorities. Except with
respect to applicable State and Federal securities laws, no consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Body is required to be made or obtained by Go Fathom or ADVV or any of its
Subsidiaries in connection with the execution, delivery and performance of this
Agreement by Go Fathom or the consummation of the sale of the Go Fathom Shares
to ADVV.
5.5 Financial Statements. Go Fathom has delivered to ADVV the
consolidated balance sheet of Go Fathom as at June 30, 1998 and June 30, 1999,
and statements of income and changes in financial position for the fiscal years
then ended and the period from inception to the period then ended, together with
the report thereon of Go Fathom's independent accountant (the "Go Fathom
Financial Statements"). The Go Fathom Financial Statements are accurate and
complete in accordance with generally accepted accounting principles. The
independent accountants for Go Fathom will furnish any and all work papers
required by ADVV and will sign any and all consents required to be signed to
include the financial statements of ADVV in any subsequent filing by ADVV.
5.6 Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or threatened
in writing against or involving Go Fathom which is likely to have a material
adverse effect on the business or financial condition of Go Fathom, ADVV and
any of their Subsidiaries, taken as whole, or which would require a payment by
Go Fathom in excess of $2,000 in the aggregate or which questions or challenges
the validity of this Agreement. Go Fathom is not subject to any judgment, order
or decree that is likely to have a material adverse effect on the business or
financial condition of Go Fathom, ADVV or any of their Subsidiaries, taken as a
whole, or which would require a payment by Go Fathom in excess of $2,000 in the
aggregate.
5.7 Absence of Certain Changes. Since the date of the Go Fathom
Financial Statements, Go Fathom has not:
1. suffered the damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to the
business or financial condition of Go Fathom or made any disposition of any of
its material properties or assets other than in the ordinary course of business;
2. made any change or amendment in its certificate of incorporation or
by-laws, or other governing instruments;
<PAGE>
3. issued or sold any Equity Securities or other securities, acquired,
directly or indirectly, by redemption or otherwise, any such Equity Securities,
reclassified, split-up or otherwise changed any such Equity Security, or granted
or entered into any options, warrants, calls or commitments of any kind with
respect thereto;
4. organized any new Subsidiary or acquired any Equity Securities of any
Person or any equity or ownership interest in any business;
5. borrowed any funds or incurred, or assumed or become subject to, whether
directly or by way of guarantee or otherwise, any obligation or liability with
respect to any such indebtedness for borrowed money;
6. paid, discharged or satisfied any material claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than in the ordinary course
of business;
7. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
8. canceled any material debts or waived any material claims or rights,
except in the ordinary course of business;
9. disposed of or permitted to lapse any rights to the use of any material
patent or registered trademark or copyright or other intellectual property owned
or used by it;
10. granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any employee benefit plan);
11. purchased or entered into any contract or commitment to purchase any
material quantity of raw materials or supplies, or sold or entered into any
contract or commitment to sell any material quantity of property or assets,
except (i) normal contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary course business,
(ii) normal contracts or commitments for the sale of, and normal sales of,
inventory in the ordinary course of business, and (iii) other contracts,
commitments, purchases or sales in the ordinary course of business;
12. made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets (other than raw materials and
supplies) at a cost in excess of $100,000 in the aggregate;
13. written off or been required to write off any notes or accounts
receivable in an aggregate amount in excess of $2,000;
14. written down or been required to write down any inventory in an
aggregate amount in excess of $ 2,000;
<PAGE>
15. entered into any collective bargaining or union contract or agreement;
or
16. other than the ordinary course of business, incurred any liability
required by generally accepted accounting principles to be reflected on a
balance sheet and material to the business or financial condition of Go Fathom.
5.8 No Material Adverse Change. Since the date of the Go Fathom
Financial Statements, there has not been any material adverse change in the
business or financial condition of Go Fathom.
5.9 Brokers or Finders. The Shareholder has not employed any broker or
finder or incurred any liability for any brokerage or finder's fees or
commissions or similar payments in connection with the sale of the Go Fathom
Shares to ADVV.
6. REPRESENTATIONS AND WARRANTIES OF ADVV.
ADVV represents and warrants to the Shareholder that, to the Knowledge of
ADVV (which limitation shall not apply to Section 6.3). Such representations
and warranties shall survive the Closing for a period of two years.
6.1 Organization of ADVV; Authorization. ADVV is a corporation duly
organized, validly existing and in good standing under the laws of Nevada with
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action of
ADVV and this Agreement constitutes a valid and binding obligation of ADVV;
enforceable against it in accordance with its terms.
6.2 Capitalization. The authorized capital stock of ADVV consists of
95,000,000 shares of common stock, par value $0.001 per share, and 5,000,000
shares of preferred stock, par value $0.001 per share. As of the date of this
Agreement, ADVV had 24,159,240 shares of common stock issued and outstanding,
and no shares of Preferred Stock issued and outstanding. As of the Closing
Date, all of the issued and outstanding shares of common stock of ADVV are
validly issued, fully paid and non-assessable. The Common Stock of ADVV is
presently listed and trading on the Nasdaq Over-the-Counter Bulletin Board under
the symbol "ADVVE."
6.3 Ownership of ADVV Shares. The delivery of certificates to Go Fathom
provided in Section 2.3 will result in the Shareholder or assigns immediate
acquisition of record and beneficial ownership of the ADVV Shares, free and
clear of all Encumbrances other than as required by Federal and State securities
laws.
<PAGE>
6.4 No Conflict as to ADVV and Subsidiaries. Neither the execution and
delivery of this Agreement nor the consummation of the sale of the ADVV Shares
to the Shareholders will (a) violate any provision of the certificate of
incorporation or by-laws (or other governing instrument) of ADVV or any of its
Subsidiaries or (b) violate, or be in conflict with, or constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or excuse performance by any Person of any of its obligations
under, or cause the acceleration of the maturity of any debt or obligation
pursuant to, or result in the creation or imposition of any Encumbrance upon any
property or assets of ADVV or any of its Subsidiaries under, any material
agreement or commitment to which ADVV or any of its Subsidiaries is a party or
by which any of their respective property or assets is bound, or to which any of
the property or assets of ADVV or any of its Subsidiaries is subject, or (c)
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to ADVV or any of its
Subsidiaries except, in the case of violations, conflicts, defaults,
terminations, accelerations or Encumbrances described in clause (b) of this
Section 6.4, for such matters which are not likely to have a material adverse
effect on the business or financial condition of ADVV and its Subsidiaries,
taken as a whole.
6.5 Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration with, any
Governmental Body is required to be made or obtained by ADVV or any of either of
their Subsidiaries in connection with the execution, delivery and performance of
this Agreement by ADVV or the consummation of the sale of the ADVV Shares to the
Shareholders.
6.6 Other Consents. No consent of any Person is required to be obtained
by Go Fathom or ADVV to the execution, delivery and performance of this
Agreement or the consummation of the sale of the ADVV Shares to the
Shareholders, including, but not limited to, consents from parties to leases or
other agreements or commitments, except for any consent which the failure to
obtain would not be likely to have a material adverse effect on the business and
financial condition of Go Fathom or ADVV.
6.7 Financial Statements. Prior to closing, ADVV shall have delivered
to the Shareholder consolidated balance sheets of ADVV and its Subsidiaries as
at September 30, 1999 and 1998, and statements of income and changes in
financial position for each of the periods then ended, together with the report
thereon of ADVV's independent accountant (the "ADVV Financial Statements").
Such ADVV Financial Statements and notes fairly present the consolidated
financial condition and results of operations of ADVV and its Subsidiaries as
at the respective dates thereof and for the periods therein referred to, all in
accordance with generally accepted United States accounting principles
consistently applied throughout the periods involved, except as set forth in the
notes thereto, and shall be utilizable in any SEC filing in compliance with Rule
310 of Regulation S-B promulgated under the Securities Act.
6.8 Brokers or Finders. Other than M. Richard Cutler, Brian Lebrecht,
Vi Bui, and Asher Starik, ADVV has not employed any broker or finder or
incurred any liability for any brokerage or finder's fees or commissions or
similar payments in connection with the sale of the ADVV Shares to the
Shareholders.
<PAGE>
6.9 Purchase for Investment. ADVV is purchasing the Go Fathom Shares
solely for its own account for the purpose of investment and not with a view to,
or for sale in connection with, any distribution of any portion thereof in
violation of any applicable securities law.
7. Access and Reporting; Filings With Governmental Authorities; Other
Covenants.
7.1 Access Between the date of this Agreement and the Closing Date.
Each of the Shareholder and ADVV shall (a) give to the other and its authorized
representatives reasonable access to all plants, offices, warehouse and other
facilities and properties of Go Fathom or ADVV, as the case may be, and to its
books and records, (b) permit the other to make inspections thereof, and (c)
cause its officers and its advisors to furnish the other with such financial and
operating data and other information with respect to the business and properties
of such party and its Subsidiaries and to discuss with such and its authorized
representatives its affairs and those of its Subsidiaries, all as the other may
from time to time reasonably request.
7.2 Regulatory Matters. The Shareholder and ADVV shall (a) file with
applicable regulatory authorities any applications and related documents
required to be filed by them in order to consummate the contemplated transaction
and (b) cooperate with each other as they may reasonably request in connection
with the foregoing.
8. CONDUCT OF GO FATHOM'S BUSINESS PRIOR TO THE CLOSING. The Shareholder
shall use its best efforts to ensure the following:
8.1 Operation in Ordinary Course. Between the date of this Agreement
and the Closing Date, Go Fathom shall cause conduct its businesses in all
material respects in the ordinary course.
8.2 Business Organization. Between the date of this Agreement and the
Closing Date, Go Fathom shall (a) preserve substantially intact the business
organization of Go Fathom; and (b) preserve in all material respects the present
business relationships and good will of Go Fathom.
8.3 Corporate Organization. Between the date of this Agreement and the
Closing Date, Go Fathom shall not cause or permit any amendment of its
certificate of incorporation or by-laws (or other governing instrument) and
shall not:
1. issue, sell or otherwise dispose of any of its Equity Securities, or
create, sell or otherwise dispose of any options, rights, conversion rights or
other agreements or commitments of any kind relating to the issuance, sale or
disposition of any of its Equity Securities;
2. create or suffer to be created any Encumbrance thereon, or create, sell
or otherwise dispose of any options, rights, conversion rights or other
agreements or commitments of any kind relating to the sale or disposition of any
Equity Securities;
3. reclassify, split up or otherwise change any of its Equity Securities;
<PAGE>
be party to any merger, consolidation or other business combination;
4. sell, lease, license or otherwise dispose of any of its properties or
assets (including, but not limited to rights with respect to patents and
registered trademarks and copyrights or other proprietary rights), in an amount
which is material to the business or financial condition of Go Fathom except in
the ordinary course of business; or
5. organize any new Subsidiary or acquire any Equity Securities of any
Person or any equity or ownership interest in any business.
8.4 Other Restrictions. Between the date of this Agreement and the
Closing Date, Go Fathom shall not:
1. borrow any funds or otherwise become subject to, whether directly or by
way of guarantee or otherwise, any indebtedness for borrowed money;
2. create any material Encumbrance on any of its material properties or
assets;
3. increase in any manner the compensation of any director or officer or
increase in any manner the compensation of any class of employees;
4. create or materially modify any material bonus, deferred compensation,
pension, profit sharing, retirement, insurance, stock purchase, stock option, or
other fringe benefit plan, arrangement or practice or any other employee benefit
plan (as defined in section 3(3) of ERISA);
5. make any capital expenditure or acquire any property or assets;
6. enter into any agreement that materially restricts ADVV, Go Fathom or any
of their Subsidiaries from carrying on business;
7. pay, discharge or satisfy any material claim, liability or obligation,
absolute, accrued, contingent or otherwise, other than the payment, discharge or
satisfaction in the ordinary course of business of liabilities or obligations
reflected in the Go Fathom Financial Statements or incurred in the ordinary
course of business and consistent with past practice since the date of the Go
Fathom Financial Statements; or
8. cancel any material debts or waive any material claims or rights.
9. DEFINITIONS.
As used in this Agreement, the following terms have the meanings specified
or referred to in this Section 9.
9.1 "Business Day" C Any day that is not a Saturday or Sunday or a day
on which banks located in the City of New York are authorized or required to be
closed.
9.2 "Code" C The Internal Revenue Code of 1986, as amended.
9.3 "Encumbrances" C Any security interest, mortgage, lien, charge,
adverse claim or restriction of any kind, including, but not limited to, any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership, other than a restriction on transfer arising under
Federal or state securities laws.
9.4 "Equity Securities" C See Rule 3aB11B1 under the Securities
Exchange Act of 1934.
9.5 "ERISA" C The Employee Retirement Income Security Act of 1974, as
amended.
<PAGE>
9.6 "Governmental Body" C Any domestic or foreign national, state or
municipal or other local government or multi-national body (including, but not
limited to, the European Economic Community), any subdivision, agency,
commission or authority thereof.
9.7 "Knowledge" C Actual knowledge, after reasonable investigation.
9.8 "Person" C Any individual, corporation, partnership, joint venture,
trust, association, unincorporated organization, other entity, or Governmental
Body.
9.9 "Subsidiary" C With respect to any Person, any corporation of which
securities having the power to elect a majority of that corporation's Board of
Directors (other than securities having that power only upon the happening of a
contingency that has not occurred) are held by such Person or one or more of its
Subsidiaries.
10. TERMINATION.
10.1 Termination. This Agreement may be terminated before the Closing
occurs only as follows:
1. By written agreement of the Shareholder and ADVV at any time.
2. By ADVV, by notice to the Shareholders at any time, if one or more of the
conditions specified in Section 3 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1) would otherwise occur or
if satisfaction of such a condition is or becomes impossible.
3. By the Shareholder, by notice to ADVV at any time, if one or more of the
conditions specified in Section 4 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1), would otherwise occur
of if satisfaction of such a condition is or becomes impossible.
4. By either the Shareholders or ADVV, by notice to the other at any time
after March 4, 2000, if the transaction has not been completed.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, this Agreement shall terminate without any liability or further
obligation of any party to another.
13. NOTICES. All notices, consents, assignments and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given when (a) delivered by hand, (b) sent by telex or facsimile (with receipt
confirmed), provided that a copy is mailed by registered mail, return receipt
requested, or (c) received by the delivery service (receipt requested), in each
case to the appropriate addresses, telex numbers and facsimile numbers set forth
below (or to such other addresses, telex numbers and facsimile numbers as a
party may designate as to itself by notice to the other parties).
<PAGE>
(a) If to ADVV:
Advantage Technologies, Inc.
1324 S. Mary Avenue
Sunnyvale, CA 94087
Facsimile (408) 746-9963
Attn: President
(b) If to the Shareholder:
c/o Cutler Law Group
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Facsimile No.: (949) 719-1988
Attention: M. Richard Cutler, Esq.
14. MISCELLANEOUS.
14.2 Expenses. Each party shall bear its own expenses incident to the
preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder.
14.3 Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
agreement.
14.4 No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
14.5 Exclusive Agreement; Amendment. This Agreement supersedes all prior
agreements among the parties with respect to its subject matter with respect
thereto and cannot be changed or terminated orally.
14.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
14.7 Governing Law, Venue. This Agreement and (unless otherwise provided)
all amendments hereof and waivers and consents hereunder shall be governed by
the internal law of the State of California, without regard to the conflicts of
law principles thereof. Venue for any cause of action brought to enforce any
part of this Agreement shall be in Orange County, California.
<PAGE>
14.8 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns,
provided that neither party may assign its rights hereunder without the consent
of the other, provided that, after the Closing, no consent of Go Fathom or the
Shareholder shall be needed in connection with any merger or consolidation of
ADVV with or into another entity.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective offi-cers, hereunto duly authorized, and
entered into as of the date first above written.
ADVANTAGE TECHNOLOGIES, INC.
a Nevada corporation
/s/ George J. Bentley
____________________________________________________
By: George J. Bentley, President
MRC LEGAL SERVICES CORPORATION
/s/ M. Richard Cutler
____________________________________________________
By: M. Richard Cutler, President
<PAGE>
EXHIBIT A
GO FATHOM SHAREHOLDER AND ASSIGNS
Shareholder ADVV Shares to be Issued
- ----------- ----------------------------
MRC Legal Services LLC 625,625
Brian A. Lebrecht 192,500
Vi Bui 144,375
Asher Starik 192,500
TOTAL 1,155,000
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of March 31, 2000 between ADVANTAGE
TECHNOLOGIES, INC., a Nevada corporation, ("ADVV"), on the one hand, and M.
RICHARD CUTLER ("Cutler"), BRIAN A. LEBRECHT ("Lebrecht"), VI BUI ("Bui"), and
ASHER STARIK ("Starik", and, together with Cutler, Lebrecht, and Bui, the
"Consultants"), on the other hand.
WHEREAS:
A. Consultants have agreed to render consulting services with regard to
the negotiation and completion of a stock exchange between ADVV and the majority
shareholder of Go Fathom Group, Inc., a Delaware corporation (the "Go Fathom
Shareholder").
B. In the event ADVV is able to complete the Stock Exchange with the Go
Fathom Shareholder, ADVV wishes to compensate Consultants for their consulting
services.
NOW THEREFORE, it is agreed:
1. Stock Compensation. ADVV shall pay and cause to be issued to the
-------------------
Consultants a consulting fee of $100,000 cash, plus 1,540,000 shares of common
stock of ADVV (the "Shares") immediately upon the execution of a stock exchange
agreement with the Go Fathom Shareholder. Such shares shall be subject to
registration by ADVV on Form S-8 within 5 days of ADVV closing on the stock
exchange agreement with the Go Fathom Shareholder. The Consultants agree to
prepare and file the S-8 Registration Statement at their sole expense, except
for the filing fee associated therewith, which shall be reimbursed by ADVV. The
parties agree that the value of the Shares is equal to 50% of the closing bid
price on the date of this Agreement. The Shares shall be issued as follows:
500,500 to Cutler, 154,000 to Lebrecht, 115,500 to Bui, and 770,000 to Starik.
2. Miscellaneous. This Agreement (i) shall be governed by the laws of
-------------
the State of California; (ii) may be executed in counterparts each of which
shall constitute an original; (iii) shall be binding upon the successors,
representatives, agents, officers and directors of the parties; and (iv) may not
be modified or changed except in a writing signed by all parties.
<PAGE>
This Consulting Agreement has been executed as of the date first above
written.
ADVANTAGE TECHNOLOGIES, INC.
/s/ George J. Bentley
____________________________________________________
By: George J. Bentley, President
CONSULTANTS
/s/ M. Richard Cutler
____________________________________________________
M. Richard Cutler
/s/ Brian A. Lebrecht
____________________________________________________
Brian A. Lebrecht
/s/ Vi Bui
____________________________________________________
Vi Bui
/s/ Asher Starik
____________________________________________________
Asher Starik
Exhibit 2.1
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
11563-93
APR 21 1998
Dean Heller
ARTICLES OF MERGER AND PLAN OF MERGER
VORTICES, INC., a Nevada corporation ("VORTICES") and SIMULATOR SYSTEMS, INC. a
Nevada corporation ("SIMULATOR") enter into this agreement to merge the
corporations this 16 day of April, 1998.
The parties recite that:
(a) Steve Amdahl is the sole director of VORTICES.
(b) Paul Stringer and Steve Amdahl are the directors of SIMULATOR.
(c) VORTICES will be the sole surviving corporation, and the shareholders
of SIMULATOR will be the shareholders VORTICES immediately following
the merger.
(d) The name of the surviving corporation will be Simulator Systems, Inc.
(e) The parties intend that this merger constitute a merger under Nevada
law and that the merger will be tax-free under Internal Revenue Code
ss.3 368(a)(1)(A).
In consideration of the mutual promises and covenants contained herein, the
parties agree as follows:
Merger of Corporations. SIMULATOR will merge into VORTICES pursuant to
the provisions of Nevada Revised Statutes ("NRS") 78.451 et. seq. The parties
intend that this merger be a tax free merger under the provisions of Internal
Revenue Code ss.368(a)(1)(A). VORTICES will be the sole surviving corporation
and will continue to be a Nevada corporation a governed under Nevada law. All
assets and liabilities of SIMULATOR will become the assets and liabilities of
VORTICES.
Issuance of Stock. As a part of this merger, the shareholders of
SIMULATOR shall receive one share of VORTICES for every one share of SIMULATOR
they own. No other consideration will be given for the merger.
Surviving Name. The name of the surviving Nevada corporation will be Simulator
Systems, Inc.
Capitalization. The capitalization of the surviving corporation shall
be 95,000,000 shares of common stock with a par value of $.001 and 5,000,000
shares of preferred stock with a par value of $.001.
Effective Date. The effective date for the merger shall be the date of
filing of this agreement and articles and plan of merger with the Nevada
Secretary of State.
<PAGE>
Officers and Directors. PAUL STRINGER will fill the position of
president and STEVE AMDAHL will fill the position of secretary. Both Paul and
Steve will serve on the Board of Directors of the surviving corporation.
Resident Agent. The 'resident agent of the surviving corporation shall
be Roxanne L. Paine, 230 Bullion Rd., Dayton, Nevada 89403.
Warranties and Representation. Each corporation represents and warrants
the following pertaining to itself:
(a) Organization, Existence, Qualification. Each corporation
warrants that it has been duly organized, is validly existing and is in good
standing under the laws of the state of Nevada, with all requisite power and
authority to own, operate and lease its properties and to carry on its business
as it is now being conducted.
(b) Necessary Approval. Each corporation has obtained all
necessary approvals from its officers, directors, and shareholders authorizing
this merger, including complying with the requirements of NRS ss.78.453 and all
other applicable laws. There is nothing in the articles or bylaws of either
corporation, nor is there any other restriction which would prevent this merger.
(c) Financial Statements. Each corporation has made its
financial statements available to the other. Said financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except to the extent
otherwise specifically stated in such financial statements or the certificates
accompanying them and are complete and correct in all material respects and do
and will fairly reflect its financial position, the results of its operations
and all of its liabilities, contingent or otherwise, except liabilities which
are not required to be so reflected in accordance with generally accepted
accounting principles and which are not, in the aggregate, material.
(d) Tax Returns and Payments. All tax returns and reports
required by law to be filed have been duly filed or extensions of filing dates
have been obtained, and all taxes, assessments, fees and other governmental
charges upon it or upon any of its properties, assets, income or franchises,
which are due and payable, have been paid, other than those presently payable
without penalty or interest, those being contested in good faith, and those
which have heretofore been disclosed. Charges, accruals and reserves therefor on
the financial statements delivered and to be delivered under this agreement are
and will be adequate.
(e) Title to Properties: Absence of Liens, Encumbrances and
Leases. Except as heretofore disclosed:
(1) each corporation has good and marketable title to
all its properties and assets, real and personal, free and clear of all liens
and encumbrances, except liens for current taxes not yet due and payable and
liens, encumbrances and mortgages which are normal to its business and are not,
in the aggregate, material to it, and such imperfections of title and easements,
if any, as are insubstantial in character, amount or extent, and do not
materially detract
<PAGE>
from the value or interfere with the present use of the property subject thereto
or affected thereby or otherwise materially impair business operation;
(2) all the properties and assets material to the
operation of each corporation are in good, serviceable and functional condition,
reasonable wear and tear excepted;
(3) each corporation's properties and assets include
all properties and assets reflected in the financial statements given to the
other parties;
(4) all material leases pursuant to which it, as
lessee, leases real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, under any
such lease, any material existing default by the lessee or any event which, with
the giving of notice or lapse of time or otherwise, would constitute a default,
and in respect of which the lessee has not taken adequate steps to prevent the
default from occurring or, to the best knowledge of such lessee, any material
existing default by the lessor or any event which, with the giving of notice or
lapse of time or otherwise, would constitute such a default.
(f) Litigation. There is no claim, action, suit or proceeding
pending (of which it has been served with process or otherwise been given
notice) or, to its knowledge, threatened against or affecting it or its property
or assets, or any basis therefor of which it has been given notice, which, if
adversely determined, would have a material adverse effect on its business,
operations, assets or financial condition or which otherwise could prevent,
hinder or delay consummation of the transactions contemplated by this agreement.
(g) Contracts. Neither corporation is bound by any contract,
commitment or arrangement: (1) for employment of any officer or employee which
is not terminable on thirty (30) days' notice or less; (2) with any labor union;
(3) with any provider of materials, supplies, equipment or inventory
substantially in excess of its requirements for its current business operations;
(4) under which it is a lessor; (5) in the nature of a pension, profit-sharing,
insurance, vacation, severance or similar plan or informal practice; (6) in the
nature of a management agreement; (7) in the nature of a confidentiality or
non-competition agreement; (8) in the nature of any discount on sales not in the
ordinary course of business; or (9) not in the ordinary course of business.
(h) Compliance with Other Instruments. Neither party is in
violation of any material term of any charter, bylaw, security agreement,
mortgage, indenture, or, to the best of its knowledge, any material term of any
contract, agreement, instruments, lease, certificate, judgment, decree, order,
statute, rule or regulation.
Filing with Secretary of State. This agreement, together with any
appropriate accompanying documents, shall be filed with the Nevada Secretary of
State, pursuant to the provisions of NRS 78.458.
Entire Agreement. This agreement contains all of the terms of the
agreement between the parties. The parties acknowledge that no other oral or
written representations have been made or relied upon by them in entering into
this agreement.
<PAGE>
Benefit. This agreement shall be binding upon and inure to the benefit
of the parties hereto and their administrators, executors, successor and
assigns.
Notices. Whenever notice of any kind is required by the terms of this
agreement, the same may be mailed by registered mail to the indicated parties at
their last known address as shown by the records of the corporation, or in lieu
thereof, by delivery in person. If mailed, the date of mailing shall be the date
of giving notice.
Severability. All terms and conditions contained herein are severable,
and in the event that any of them shall be held or considered to be
unenforceable by any Court of competent jurisdiction, this agreement shall be
interpreted as if such unenforceable term or condition were not contained
herein.
Modification of Agreement. No waiver or modification of this agreement
or of any term or condition herein contained shall be valid unless in writing
and duly executed, nor shall any waiver or modification of this agreement not
duly executed as provided herein be deemed to be part of this agreement under
any circumstances.
Applicable Law. This agreement shall be governed by and interpreted
according to the laws of the State of Nevada. Each party submits to the personal
jurisdiction of all courts, whether federal or state, within Nevada.
Enforcement Costs. The defaulting party shall pay all costs incurred by
the nondefaulting party to enforce the terms of this agreement, regardless of
whether an action is commenced at law or in equity, which costs include, but are
not limited to, court costs and reasonable attorneys' fees.
Necessary Documents, Each party shall, upon the request of the other,
execute, acknowledge and deliver any instruments appropriate or necessary to
carry into effect the intentions and provisions of this agreement.
Waiver of Breach. The waiver of breach of any term or condition of this
agreement shall not be deemed to constitute the waiver of any other or
subsequent breach of the same or any other term or condition.
Number, Gender, etc. Where applicable, the singular includes the
plural, the masculine includes the feminine, and vice versa.
Time of the Essence. The parties agree that time is of the essence in
the performance of all obligations contained in this agreement.
Execution in Counterparts. This agreement may be executed in multiple
copies and by counterparts.
Section Headings. The section headings contained in this agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this agreement.
<PAGE>
Cumulative Remedies. No remedy or I election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
Neither Party a Draftsman. This agreement is the product of
negotiations by the parties and neither party shall be deemed to be the
draftsman of this agreement.
Approval by Board of Directors and Shareholders. This agreement has
been adopted by resolution or consent of the board of directors of each
corporation which is a party to the merger. The shareholders of each corporation
approved the merger by resolution or consent.
VORTICES, INC.,
a Nevada corporation
/s/ Steve Amdahl
------------------------------------
STEVE AMDAHL, President
SIMULATOR SYSTEMS, INC.
A Nevada corporation
/s/ Paul Stringer
------------------------------------
PAUL STRINGER, President
/s/ Steve Amdahl
------------------------------------
STEVE AMDAHL, Secretary
COUNTY OF Washington )
)SS:
STATE OF Oregon )
On April 16, 1998, before me, the undersigned, a Notary Public in and for the
aforementioned county and state, personally appeared Paul Stringer, President
and Steve Amdahl, Secretary and President known to me, or proven to be to my
satisfaction the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same.
/s/ Elizabeth C Miles
------------------------------------
Notary Public
OFFICIAL SEAL
ELIZABETH C MILES
NOTARY PUBLIC-OREGON
COMMISSION NO. 060261
My COMMISSION EXPIRES JAN. 11. 2000
Exhibit 2.2
SHARE EXCHANGE AGREEMENT
AND
PLAN OF REORGANIZATION
DATED: September 24, 1999
BETWEEN: Casino Pirata.com Ltd., a Nevada corporation
9498 SW Barbur Blvd., Suite 305.
Portland, OR 97219 "Casino"
AND: Advantage Systems, Inc. a California corporation,
doing business as American Computer
1324 S. Mary Ave.
Sunnyvale, CA 94087 "American"
AND: Those persons whose names appear on the
attached Exhibit A as American Shareholders "American Shareholders" or
"American Shareholder"
RECITALS
A. Casino desires to acquire One Hundred Percent (100%) of the issued
and outstanding common stock of American.
B. The American Shareholders are willing to exchange their shares of
common stock in American ( "American Securities") for shares common stock of
Casino ("Casino Securities") pursuant to the terms and conditions of this
Agreement and with the understanding and intention that the exchange of shares
will qualify as a tax-free reorganization under Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
1. The Exchange.
(a) Common Share Exchange. Each American Shareholder will
exchange one (1) share of the issued and outstanding common stock of American
for 3.208 shares of common stock of Casino. A total of 3,200,000 shares of
Casino shares of common stock will be issued to the American Shareholders based
on a price of $.625 per share of Casino common stock. A schedule of all American
Shareholders executing this Agreement and their respective
Page 1 - SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
holdings of American Securities and the number of shares of Casino Securities
each will receive under this Agreement is attached hereto as Exhibit A and
incorporated herein by this reference.
(b) Procedure. The American Shareholders, by executing this
Agreement, agree to surrender all their respective American Securities for
exchange pursuant to this Agreement.
2. Intention of the Parties. It is the intention of Casino and American
that upon the Closing of this Agreement, as defined in Section 6 herein, Casino
shall acquire control not only of the physical assets of American, but also
American's relationships with its vendors and customers and American's
management expertise in computer systems integration and networking. In
addition, it is the further intention and understanding of Casino and American
that Casino shall exercise its good faith efforts to provide financing to
American in the amount of $500,000 for the purpose of implementing American's
business plans. Casino and American acknowledge that the ability of Casino to
provide the financing to American referred to above may be dependent on a number
of factors which may be beyond the control of Casino, such as general market
conditions, investors' decisions with regard to the investment of their funds,
securities law compliance requirements, and the like.
3. Representations and Warranties of American Shareholders.
(a) By executing this Agreement, the American Shareholders
represent and warrant that they own all of the American Securities listed
opposite their names on Schedule A free and clear of any lien, encumbrance or
claim of others and may freely transfer, assign and exchange the same.
(b) The American Shareholders represent and warrant that they
are exchanging their American Securities for the Casino Securities for
investment purposes only, and not with a view to distribute and acknowledge that
the Casino Securities will not be registered and only may be sold or transferred
pursuant to a registration statement or an exemption from registration under the
Securities Act of 1933. The American Shareholders acknowledge that the Casino
Securities may be issued to them with a legend setting forth this restriction on
transfer.
4. Representations and Warranties of Casino.
(a) Casino is a corporation duly organized under the laws of
the State of Nevada, validly existing, and authorized to exercise all its
corporate powers, rights and privileges;
Page 2 - SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
(b) Casino has the corporate power and authority to own and
operate its properties and to carry on its businesses now conducted;
(c) Casino has all requisite legal and corporate power to
execute and deliver this Agreement;
(d) Casino will have at Closing all required legal and
corporate power to issue the Casino Securities called for by this Agreement.
(e) All corporate actions on the part of Casino necessary for
the authorization, execution, delivery and performance of all obligations under
this Agreement and for the issuance and delivery of the Casino Securities has
been taken, and this Agreement constitutes a valid obligation of Casino.
(f) The Casino Securities, when sold and delivered in
accordance with the terms of this Agreement and for the consideration expressed
herein, shall be duly and validly issued, fully paid and non-assessable;
(g) Casino is a non-reporting public corporation within the
meaning of the Securities Exchange Act of 1934;
(h) There is no action, proceeding, or investigation pending
or threatening, or any basis therefor known to Casino to question the validity
of this Agreement or the accuracy of the representations and warranties
contained herein
(i) The authorized capital stock of Casino consists of
95,000,000 shares of common stock, of which 7,250,179 shares are issued and
outstanding as of the date of this Agreement and 5,000,000 shares of preferred
stock, none of which shares are issued and outstanding as of the date of this
Agreement. Except as described in the attached Exhibit "B", there are no other
securities, options, warrants, or other rights to purchase any securities of
Casino outstanding. All outstanding securities of Casino are duly and validly
issued, fully paid and non-assessable;
5. Representations and Warranties of American.
(a) American is a corporation duly organized under the laws
the State of California, validly existing and authorized to exercise all its
corporate powers, rights and privileges;
Page 3 - SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
(b) American has the corporate power and authority to own and
operate its properties and to carry on its business as now conducted;
(c) American has all requisite legal and corporate power to
execute and deliver this Agreement;
(d) All corporate actions on the part of American necessary
for the authorization, execution, delivery and performance of all obligations
under this Agreement have been taken and this Agreement constitutes a valid
obligation of American.
(e) American is a non-reporting corporation within the meaning
of the Securities Exchange Act of 1934.
(f) There is no action, proceeding or investigation pending or
threatening or any basis thereof known to American to question the validity of
this Agreement or the accuracy of the representations and warranties contained
herein.
(g) The authorized capital stock of American consists of
10,000,000 shares of common stock, of which 997,500 shares are issued and
outstanding as of the date of this Agreement. Except as contemplated in this
Agreement, there are no other securities, options, warrants, or other rights to
purchase any securities of American outstanding. All outstanding securities of
American are duly and validly issued, fully paid and non-assessable.
6. Closing.
Closing shall take place on or about September 24, 1999 at the offices
of Casino or at another place, or by any other means, agreed to by the parties
("Closing"). Upon receipt of the Agreement executed by all parties or in
counterparts and when in possession of not less than one hundred percent (100%)
of American Securities, Casino may complete the transaction by transferring the
Casino Securities to the American Shareholders.
7. Opinion of Counsel for American.
At Closing, American shall deliver to Casino the opinion of legal
counsel, dated as of Closing, in form and substance reasonably satisfactory to
Casino, as to Sections 4.a.,4.b., 4.c.,4.d., 4.e.,4.f., and 4.g.
8. Appointment of Officers / Agreements with Key Employees
(a) As soon practicable after Closing, the Board of Directors
of Casino shall appoint George Bentley ("Bentley") as President of Casino and
Paul J. Stringer shall be appointed
Page 4 - SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
Chief Executive Officer. Each shall serve at the pleasure of the Board of
Directors until their respective successors have been duly qualified and
appointed. Bentley and Casino shall enter into an Employment Agreement which,
among other things, shall provide for a term of twenty-four (24) months; an
annual salary to Bentley of $100,000; and a payment of $20,000 to be paid to
Bentley upon the signing of this Agreement. The Employment Agreement shall
provide further that all management decisions involving the business of Casino,
including but not limited to, merger and acquisitions and the hiring or
termination of management personnel, shall require the prior approval of
Bentley.
(b) Except as Section 7 (a) above shall apply to Bentley, the
current executive officers and key employees of American shall continue in their
respective capacities with American for a minimum of twenty-four (24) months
after Closing. At Closing, American shall deliver to Casino employment
agreements with each of American's executive officers and key employees.
9. Consent of Casino's Shareholders.
Casino shall submit this Agreement to its shareholders for their
consent and approval in accordance with the requirements of the Nevada Business
Corporation Act. Casino shall notify American in writing that the consent of the
shareholders has been obtained.
10. Publicity.
The initial press release relating to this Agreement shall be a joint
press release, subject to the prior written approval of Bentley. Thereafter
Casino and American shall, subject to their respective legal obligations,
including requirements of the OTC Bulletin Board, NASDAQ National Market, stock
exchanges and similar regulatory bodies, consult with each other, and use
reasonable efforts to agree upon the text of any press release, before issuing
any such press release or otherwise making public statements with respect to the
transactions contemplated by this Agreement and in making any filings with any
federal or state governmental or regulatory agency or any securities exchange
with respect thereto. Any such press release shall be subject also to the prior
written approval of Bentley.
11. Miscellaneous.
(a) This Agreement may be signed in any number of
counterparts, each of which will be considered an original. Execution and
delivery of this Agreement by exchange of
Page 5 - SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
facsimile copies bearing the facsimile signature of each party shall constitute
a valid and binding execution and delivery of this Agreement by each party. Such
facsimile copies shall constitute enforceable original documents.
(b) The representations and warranties herein contained will
survive Closing.
(c) This Agreement constitutes the entire agreement between
the parties and supersedes any previous agreement between the parties concerning
its subject matter.
(d) This Agreement will be governed by the laws of the state
of Nevada.
(e) Any controversy or claim arising out of, or related to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the rules of the America Arbitration Association and judgement
upon the award rendered by the arbitrator(s) may be entered in any court have
jurisdiction thereof. American hereby submits to the jurisdiction of any local,
state or federal court in the United States for purposes of enforcing any
judgement described in this section.
(f) In any arbitration proceeding initiated under this
Agreement, the prevailing party shall be entitled to an award of its reasonable
attorneys fees and costs.
THIS AGREEMENT IS EFFECTIVE AS OF THE DATE FIRST ABOVE WRITTEN.
CASINO PIRATA.COM LTD. ADVANTAGE SYSTEMS, INC.
By: /s/Paul Stringer By:
--------------------------------- ---------------------------------
Name: Paul Stringer Name:
------------------------------- -------------------------------
Title: President Title:
------------------------------ ------------------------------
AMERICAN SHAREHOLDERS:
- -------------------------- ----------------------------
Kenney Noel Vijay Marathe
- -------------------------------- ----------------------------------
Keith Avinger George Bentley
- -------------------------------- -----------------------------------
Al Reyes Loc Doung
Page 6 - SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
facsimile copies bearing the facsimile signature of each party shall constitute
a valid and binding execution and delivery of this Agreement by each party. Such
facsimile copies shall constitute enforceable original documents.
(b) The representations and warranties herein contained will
survive Closing.
(c) This Agreement constitutes the entire agreement between
the parties and supersedes any previous agreement between the parties concerning
its subject matter.
(d) This Agreement will be governed by the laws of the state
of Nevada.
(e) Any controversy or claim arising out of, or related to
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the rules of the America Arbitration Association and judgement
upon the award rendered by the arbitrator(s) may be entered in any court have
jurisdiction thereof. American hereby submits to the jurisdiction of any local,
state or federal court in the United States for purposes of enforcing any
judgement described in this section.
(f) In any arbitration proceeding initiated under this
Agreement, the prevailing party shall be entitled to an award of its reasonable
attorneys fees and costs.
THIS AGREEMENT IS EFFECTIVE AS OF THE DATE FIRST ABOVE WRITTEN.
CASINO PIRATA.COM LTD. ADVANTAGE SYSTEMS, INC.
By: By: /s/Keith Avinger
--------------------------------- ---------------------------------
Name: Name: Keith Avinger
------------------------------- -------------------------------
Title: Title: President
------------------------------ ------------------------------
AMERICAN SHAREHOLDERS:
/s/Kenney Noel /s/Vijay Marathe
- -------------------------- ----------------------------
Kenney Noel Vijay Marathe
/s/Keith Avinger /s/George Bentley
- -------------------------------- ----------------------------------
Keith Avinger George Bentley
/s/Al Reyes /s/Loc Doung
- -------------------------------- -----------------------------------
Al Reyes Loc Doung
Page 6 - SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
AMERICAN SHAREHOLDERS
Name American Securities Owned Casino Securities Received
Kenney Noel 200,000 641,604
Vijay Marathe 200,000 641,604
Keith Avinger 200,000 641,604
George Bentley 199,500 640,000
Al Reyes 180,000 577,444
Loc Doung 18,000 57,744
TOTAL 997,500 3,200,000
------- ---------
Exhibit A
Page 7 - SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
Outstanding Options, Warrants or Other Rights to Purchase Securities
of
Casino Pirata. com Ltd.
Name Securities
Exhibit B
Page 8 - SHARE EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
<PAGE>
Amendment to
Share Exchange Agreement and Plan of Reorganization
dated September 24, 1999
between Casino Pirata.com Ltd. and Advantage Systems, Inc.
and the shareholders of Advantage Systems, Inc.
The Share Exchange Agreement and Plan of Reorganization dated September
24, 1999 is hereby amended to provide that the number of shares of common stock
of Casino Pirata. com Ltd to be issued to the shareholders of Advantage Systems,
Inc is increased by 4,100,000, so that the aggregate number of shares of common
stock issued to the shareholders of Advantage Systems, Inc shall be 7,300,000.
Dated November 5, 1999
CASINO PIRATA.COM LTD. ADVANTAGE SYSTEMS, INC.
By:/s/George J. Bentley By: /s/Keith E. Avinger
-------------------------- --------------------------
Name: George J. Bentley Name: Keith E. Avinger
Title: President Title: President
AMERICAN SHAREHOLDERS:
/s/Kenny Noel /s/Vijay Marathe
-------------------------- --------------------------
Kenny Noel Vijay Marathe
/s/Keith E. Avinger /s/George J. Bentley
-------------------------- --------------------------
Keith E. Avinger George J. Bentley
/s/Al Reyes /s/Loc D. Doung
-------------------------- --------------------------
Al Reyes Loc D. Doung
Exhibit 3.1
FILED Articles of Incorporation Filing fee: $225.00
IN THE OFFICE OF THE (PURSUANT TO NRS 78) Receipt #: C91237
SECRETARY OF STATE OF THE LOGISTIC DISTRIBUTION
STATE OF NEVADA STATE OF NEVADA SYSTEMS
1845 SOUTH 9TH STREET
SEP 2 1993 SALT LAKE CITY, UT
11563.93 84104
CHERYL A LAU SECRETARY OF STATE
STATE OF NEVADA
IMPORTANT: Read instructions on reverse side before completing this form
TYPE OR PRINT (BLACK INK ONLY)
1. NAME OF CORPORATION LOGISTIC DISTRIBUTION SYSTEMS INTERNATIONAL GROUP, INC.
2. RESIDENT AGENT: (designated resident agent and his STREET ADDRESS in Nevada
where process may be served)
Name of Resident Agent: CT Corporation System
Street Address. One East First Street Reno Nevada 89501
Street No. Street Name City Zip
3. SHARES: (number of shares the corporation is authorized to issue)
Number of shares with par value: 100,000,000 Par value: $0.001
Number of shares without par value: 0
4. GOVERNING BOARD: shall be styled as (check one): XX Directors __ Trustees
The FIRST BOARD OF DIRECTORS shall consist of
Name Wayne Notwell Address 1845 So. 9th West, Salt Lake City, Utah 84104
Name Koni Smart Address 1845 So. 9th West, Salt Lake City, Utah 84104
Name Toni Fightmaster Address 1845 So. 9th West, Salt Lake City, Utah 84104
5.PURPOSE (optional- see reverse side): The purpose of the corporation shall be:
6. NRS 78.037: States that the articles of incorporation may also contain a
provision eliminating or limiting the personal liability of a director or
officer of the corporation or its stockholders for damages for breach of
fiduciary duty as a director or officer except acts or emissions which include
misconduct or fraud. Do you want this provision to be part of your articles?
Please check one of the following: YES XX NO __.
7. OTHER MATTERS: This form includes the minimal statutory requirements to
incorporate under NRS 78. You may attach additional information noted on
separate pages. But, if any of the additional information is contradictory to
this form it cannot be filed and will be returned to you for correction. Number
of pages attached 5 .
8. SIGNATURES OF INCORPORATORS: The names and addresses of each of the
incorporators signing the articles: (signatures most be notarized)
Name (print) Wayne Notwell Name (print) Koni Smart
Address 1845 So. 9th W SLC, UT 84104 Address 1845 So. 9th W SLC, UT 84104
Signature /s/ Wayne C Notwell Signature /s/ Koni H. Smart
Name (print) Toni Fightmaster Subscribed and sworn to before me this
Address 1845 So. 9th W SLC, UT 84104 31 day of August, 93
Signature /s/ Toni Fightmaster /s/ Francine E. Jordan
Notary Public OFFICIAL NOTARY SEAL
FRANCINE E JORDAN STATE OF UTAH
My Comm Exp May 05, 1995
9. CERTIFICATF OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
(see attached CONSENT)
hereby accept appointment as Resident Agent
- ---------------------------
Signature of Resident Agent
<PAGE>
7. OTHER MATTERS
ARTICLE I
NAME OF CORPORATION
The name of the Corporation is Logistic Distribution Systems
International Group, Inc.
ARTICLE II
DURATION
Corporation shall exist perpetually or until dissolved according to
law.
ARTICLE III
PURPOSES
The nature of the business or purposes to be conducted or promoted is
to obtain funds which, though limited, may be used to businesses and/or and take
advantage of innovative businesses and/or practices as may, in the management's
perception, from time to time appear desirable; provided that none of such
opportunities would entail any violation of federal, state or local law or
regulation; and to conduct such other business as may be authorized by the laws
of the State of Nevada.
ARTICLE IV
SHARES
The aggregate number of shares which the Corporation shall have
authority to issue is one hundred million(100,000,000) shares of common stock
having a par value of one tenth of one cent ($.001) per share. All voting rights
of the Corporation shall be exercised by the holders of the common stock, with
each share of common stock being entitled to one vote. All shares of common
stock shall have equal rights in the event of dissolution or final liquidation.
There shall be no other "classes" than common stock.
ARTICLE V
COMMENCEMENT OF BUSINESS
The Corporation will not commence business until consideration of the
value of at least One Thousand Dollars ($1,000) has been received for the
issuance of shares.
ARTICLE VI
REGULATION INTERNAL AFFAIRS
Section 1. Shareholders' Meetings. Meetings of the shareholders may be
called by the President or by any one director or by any number of shareholders
owning not less than ten percent of the
<PAGE>
outstanding shares entitled to vote at such meeting. Notice of shareholder's
meetings shall be given in writing by mailing such notice to the address of
every shareholder, at the last known address of such shareholder, at least ten
days prior to the date and hour of said meeting. Publication of notice of a
shareholders' meeting is not required for any purpose. Any notice required to be
given any shareholders of this Corporation may be waived by written instrument
signed by such shareholders. A majority but less than all of the shareholders
entitled to vote may amend the Articles of Incorporation or take such other
action that requires shareholders approval.
Section 2. By-laws. The majority of the directors may adopt by-laws for
the Corporation which are consistent with these Articles and the laws of the
State of Nevada and may amend and repeal from time to time any by-law.
Section 3. Contracts with interested directors or officers. No
contract, lease, or other transaction between the Corporation and any other
corporation and no other act of the Corporation with relation to any other
corporation shall, in the absence of fraud, in any way be invalidated or
otherwise affected, by the fact that any one or more of the directors of the
Corporation are pecuniarily or otherwise interested in, or are directors or
officers of such other corporation. Any director of the Corporation may vote
upon any contract or other transaction between the Corporation and any
subsidiary or affiliated corporation without regard to the fact that he is also
a director of such subsidiary or individually, or any firm or association of
which any director may be a member, may be a party to, or may be pecuniarily or
otherwise interested in, any contract, lease, or other transaction with the
Corporation, provided that the fact that he individually or as a member of such
firm or association is such or part to, or is so interested in, any contract,
lease, or other transaction with the Corporation, shall be disclosed, or shall
have been known, to the Board of Directors or by a majority of such members
thereof as shall be present at any meeting of the Board of Directors at which
action upon such contract or transaction shall be taken; and in any case
described in this paragraph, any such director may be counted in determining the
existence of a quorum at any meeting of the Board of Directors which shall
authorize any such contract, lease, or other transaction and may vote thereat to
authorize any such contract or transaction.
ARTICLE VII
NO PREEMPTIVE RIGHTS
No holder of shares of the capital stock of any class of the
corporation shall have any preemptive or preferential rights of subscription to
any shares of any class of stock of the corporation whether now or hereafter
hereafter authorized, or to
-2-
<PAGE>
any obligations convertible into stock of the corporation, issued or sold. The
term "Convertible obligations" as used herein shall include any notes, bonds or
other evidences of indebtedness to which are attached or with which are issued
warrants or other rights to purchase stock of the corporation.
ARTICLE VIII
REGISTERED OFFICE AND AGENT
The address of the initial registered office of the Corporation is One
East First Street, Reno, Nevada 89501, and the name of its registered agent at
such address is CT Corporation System.
ARTICLE IX
DIRECTORS
The number of directors which shall constitute the initial Board of
Directors of the Corporation is three. They shall serve as directors until the
first regular annual meeting of the shareholders or until their successors are
elected and shall qualify. They are:
NAME ADDRESS
Wayne Notwell 1845 South 9th West
Salt Lake City, Utah 84104
Toni Fightmaster 1845 South 9th West
Salt Lake City, Utah 84104
Koni Smart 1845 South 9th West
Salt Lake City, Utah 84104
ARTICLE X
INCORPORATORS
The name and address of each incorporator are:
NAME ADDRESS
Wayne Notwell 1845 South 9th West
Salt Lake City, Utah 84104
Toni Fightmaster 1845 South 9th West
Salt Lake city, Utah 84104
Koni Smart 1845 South 9th West
Salt Lake City, Utah 84104
-3-
<PAGE>
ARTICLE XI
INDEMNIFICATION - EXCULPATION
The Corporation shall provide indemnification and/or exculpation to its
directors, officers, employees, agents, and other entities which deal with it to
the maximum extent provided, and under the terms provided, by the laws and
decisions of the Courts of the State of Nevada, and by any additional applicable
federal or state laws or court decisions.
-4-
<PAGE>
CONSENT T0 BE REGISTERED AGENT
The Corporation Trust Company of Nevada, One East, First Street, Reno,
Nevada 89501, does hereby consent to be the Nevada registered agent for Curtis
Valley Incorporated, a Nevada corporation.
The Corporation Trust Company of Nevada
By /s/ Marcia J. Sunahara
---------------------------------------
Marcia J. Sunahara, Special Assistant Secretary
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
NOV 08 1995
NO. 11563-93
DEAN HELLER SECRETARY OF STATE
CERTIFICATE Of AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
LOGISTIC DISTRIBUTION SYSTEMS
INTERNATIONAL GROUP, INC.
Steve Jorgensen and Barbara Jorgensen certify that:
1. They are the President and the Secretary, respectively, of Logistic
Distribution Systems International Group, Inc. (the "Corporation,") a Nevada
corporation.
2. The Board of Directors of the Corporation has duly approved the
following amendment to the Articles of Incorporation of said Corporation.
Article FIRST is amended to read in full as follows:
"FIRST: The name of the corporation (hereinafter called
the Corporation) shall be VORTICES, INC. "
3. The foregoing amendment of the Articles of Incorporation of the
Corporation has been duly approved by the required written consent of the
shareholders in accordance with Sections 78.320 and 78.390 of the Domestic and
Foreign Corporation Laws of the State of Nevada. The Corporation has one class
of shares outstanding which are entitled to vote with respect to the amendment,
and the number of votes representing such outstanding voting shares is 6,825,000
votes. The number of votes authorizing the amendments by written consent of a
majority, that is, more than 50% of the outstanding votes shares was required
for approval of the amendment and the amendment was approved by written consent
of 5,460,000 votes, or 80% of the outstanding votes.
DATED: November , 1995 /s/ Steve Jorgensen President
---------------------------------
Steve Jorgensen, President
DATED: November , 1995 /s/ Barbara J. Jorgensen
---------------------------------
Barbara Jorgensen
<PAGE>
State of California )
) ss.
County of Los Angeles )
Steve Jorgensen, being duly sworn, deposes and says:
That he has read the foregoing certificate and knows the contents
thereof.
That the matters set forth therein are true of his own knowledge.
/s/ Steve Jorgensen Pres.
----------------------------
Steve Jorgensen, President
Subscribed and sworn to before me this day of November,
1995.
[notarial seal] /s/ Stanton Weinstein
---------------------------
Notary Public
<PAGE>
State of California )
) ss.
County of Los Angeles )
Barbara Jorgensen, being duly sworn, deposes and says:
That she has read the foregoing certificate and knows the contents
thereof.
That the matters set forth therein are true of her own knowledge.
/s/ Barbara Jorgensen
----------------------------
Barabara Jorgensen Secretary
Subscribed and sworn to before me this day of November, 1995.
[notarial seal] /s/ Stanton Weinstein
---------------------------
Notary Public
<PAGE>
Registry Number: C 1563-93
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
APR 05 1999
No. c11563-93
DEAN HELLER, SECRETARY OF STATE
Certificate of Amendment
of Articles of Incorporation
(After Issuance of Stock)
SIMULATOR SYSTEMS, INC.
We the undersigned, Paul Stringer, President, and Steve Amdahl,
Secretary, of Simulator Systems, Inc, do hereby certify:
That the Board of Directors of said corporation by unanimous consent
action without a meeting pursuant to NRS 78.315 on March 31, 1999, adopted a
resolution to amend the articles as follows:
Article 1 is hereby amended to read as follows:
The name of the corporation is Casino Pirata.com Ltd.
The number of shares of common stock of the corporation outstanding and
entitled to vote on the amendments to the Articles of Incorporation is
6,246,295; that the said change and amendment have been consented to and
approved by the majority of the stockholders holding a least a majority of each
class of stock outstanding and entitled to vote thereon.
/s/Paul Stringer
---------------------------------
Paul Stringer, President
/s/Steve Amdahl
---------------------------------
Steve Amdahl, Secretary
State of Oregon
County of Multnomah
Steve Ain Amdahl
Secretary
On March 31 1999, personally appeared before me, a Notary Public, Paul
Stringer and Steve Amdahl, who acknowledged that they executed the foregoing
instrument.
/s/ Robert C. Laskowski
---------------------------------
Notary Public for Oregon
Official Seal
ROBERT C LASKOWSKI
NOTARY PUBLIC - OREGON
COMMISSION NO. 060599
MY COMMISSION EXPIRES MAR. 5 2000
<PAGE>
Registry Number: C 11563-93
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
NOV 18 1999
No. c11563-93
DEAN HELLER, SECRETARY OF STATE
Certificate of Amendment
of Articles of Incorporation
(After Issuance of Stock)
CASINO PIRATA.COM LTD.
We the undersigned, George J. Bentley, President, and Kenny Noel,
Secretary, of Casino Pirata.com Ltd. do hereby certify:
That the Board of Directors of said corporation by unanimous consent
action without a meeting pursuant to NRS 78.315 on November 5, 1999, adopted a
resolution to amend the articles as follows:
Article I is hereby amended to read as follows:
The name of the corporation is Advantage Technologies, Inc.
The number of shares of common stock of the corporation outstanding and
entitled to vote on the amendments to the Articles of Incorporation is
11,274,857; that the said change and amendment have been consented to and
approved by the majority of the stockholders holding a least a majority of each
class of stock outstanding and entitled to vote thereon.
/s/George J Bently
---------------------------------
George J Bently, President
/s/Kenny Noel
---------------------------------
Kenny Noel, Secretary
State of California
County of Contra Costa
On November 11, 1999, personally appeared before me, a Notary Public,
George J. Bentley and Kenny Noel, who acknowledged that they executed the
foregoing instrument.
/s/Frederick F. Tabsharani
---------------------------------
Notary Public for California
Frederick F. Tabsharani
COMM. # 1171316
NOTARY PUBLIC-CALIFORNIA
CONTRA COSTA COUNTY
COMM. EXP. FEB. 25, 2002
Exhibit 3.2
1903757
ENDORSED - FILED
In the Office of the Secretary
of State
of the State of California
SEP 0 3 1996
BILL JONES, Secretary of State
ARTICLES OF INCORPORATION
OF
ADVANTAGE SYSTEMS, INC.
FIRST: The name of this corporation is
ADVANTAGE SYSTEMS, INC.
SECOND: The purpose of the corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business the trust company
business, or the practice of a profession permitted to be incorporated by the
California Corporations Code.
THIRD: The name and address in the State of California of this
corporation's initial agent for service of process is Keith Avinger, 1001 S.
Saratoga-Sunnyvale Rd., San Jose, CA 95129
FOURTH: This corporation is authorized to issue only one class of
shares of stock; and the total number of such shares which the corporation is
authorized to issue is 100,000 shares.
FIFTH: The liability of the directors of the corporation for monetary
damages
1
<PAGE>
shall be eliminated to the fullest extent permissible under California law.
SIXTH: The corporation is authorized to provide indemnification of
agents (as defined in Section 317 of the Corporations Code.) for breach of duty
to the corporation and its stockholders through bylaw provisions or through
agreements with agents, or otherwise, in excess of the indemnification otherwise
permitted by Section 317 of the Corporations Code, subject to the limits of such
excess indemnification set forth in Section 204 of the Corporations Code.
I declare that I am the person who executed the above Articles of
Incorporation, and that this instrument is any act and deed.
/s/ Steven Mehlman
-----------------------------
Incorporator, Steven Mehlman
2
<PAGE>
A498575
E N D 0 R S E D
F I L E D
In the office Of the Secretary of State
of the State of California
OCT 10 1997
BILL JONES, Secretary of State
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
ADVANTAGE SYSTEMS, INC.
The undersigned certify that:
1. They are the president and the secretary respectively, of ADVANTAGE SYSTEMS,
INC., a California Corporation.
2. Article FOURTH of the Articles of Incorporation of this corporation is
amended to read as follows:
"FOURTH This corporation is authorized to issue only one class of
shares of stock; and the total number of shares which the corporation
is authorized to issue is 10,000,000 shares."
3. The foregoing amendment of the Articles of Incorporation has been duly
approved by the board of directors.
4. The foregoing amendment of the Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section 902,
California Corporations Code. The total number of outstanding shares of the
corporation is 90,000. The number of shares voting in favor of the amendment
equaled or exceeded the vote required. The percentage vote required was more
than 50%.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Date: September 30, 1997
/s/ Keith Avinger
--------------------------
Keith Avinger, President
/s/ Kenney Noel
--------------------------
Kenney Noel, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT OF
ARTICLES OF INCORPORATION OF
ADVANTAGE SYSTEMS, INC.
The undersigned certify that:
1. They are the president and the secretary, respectively, of ADVANTAGE SYSTEMS,
INC., California Corporation.
2. Article FOURTH of the Articles of Incorporation of this corporation is
amended to read as follows:
"FOURTH This corporation is authorized to issue only one class of
shares of stock; and the total number of shares which the corporation
is authorized to issue is 10,000,000 shares."
3. The foregoing amendment of the Articles of Incorporation has been duly
approved by the board of directors.
4. The foregoing amendment of the Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section 902,
California Corporations Code. The total number of outstanding shares of the
corporation is 90,000. The number of shares voting in favor of the amendment
equaled or exceeded the vote required. The percentage vote required was more
than 50%.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Date: September 19 , 1997
/s/ Keith Avinger
--------------------------
Keith Avinger, President
--------------------------
Kenney Noel, Secretary
Exhibit 3.3
FILED C29172
NOV 19 1999
The OFFICE OF
DEAN HELLER SECRETARY OF STATE
Articles of Incorporation
of
Casino Pirata.com Ltd.
I
The name of the corporation is CASINO PIRATA.COM LTD,
II
The name of the registered agent and registered office is:
Roxanne Paine
230 Bullion Road
Dayton, Nevada 89403
III
The purpose of the corporation shall be to engage in any lawful
activity and any activities necessary, convenient or desirable to accomplish
such purposes, not forbidden by law or these articles of incorporation.
IV
The total authorized capital of the corporation shall be 50,000,000
shares of common stock, par value $0.001 per share and 10,000,000 shares of
preferred stock, par value $0.001 per share. The board of directors shall have
the authority, without any further approval of the shareholders, to establish
the relative rights, preferences and limitations of any class of common or
preferred stock. The consideration for the issuance of any shares of capital
stock may be paid, in whole or in part, in money, services or other thing of
value. The judgment of the directors as to the value of the consideration for
the shares shall be conclusive. When the payment of the consideration for the
shares has been received by the corporation, such shares shall be deemed fully
paid and nonassessable.
V
The initial board of directors shall consist of two (2) members whose
names and addresses are as follows:
George J. Bentley Keith E. Avinger
1324 S. Mary Av. 1324 S. Mary Ave.
Sunnyvale, CA 94087 Sunnyvale, CA 94087
<PAGE>
VI
The incorporator of the corporation is:
Robert C. Laskowski
l001 SW Fifth Ave., Suite 1300
Portland, OR 97204
VII
The corporation shall indemnify to the fullest extent not prohibited by
law any person who was or is a party or is threatened to be made a party to any
legal proceeding against all expenses (including attorney's fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred by the
person in connection with such proceeding.
IN WITNESS WHEREOF, I have executed these Articles of Incorporation
this 15, of November, 1999.
/s/Robert C. Laskowski
---------------------------------
Robert C. Laskowski, Incorporator
STATE OF OREGON }
}ss.
COUNTY OF MULTNOMAH }
On the day of November, 1999, personally appeared before me, a notary public of
the State of Oregon, Robert C. Laskowski, known to me to be the person who
executed the foregoing Articles of Incorporation acknowledged that /s/ the same
freely and voluntarily.
OFFICIAL SEAL
MERLE ANN SALA /s/ Merle Ann Sala
NOTARY PUBLIC-OREGON ---------------------------------
COMMISSION NO. 325456 Notary Public for Oregon
MY COMMISSION EXPIRES AUG. 28, 2003
ACCEPTANCE OF APPOINTMENT OF REGISTERED AGENT
I, Roxanne Paine, hereby accept appointment as Resident Agent for the above
named corporation.
Dated: November 18, 1999 /s/ Roxanne Paine
---------------------------------
Exhibit 3.4
BYLAWS
OF
ADVANTAGE TECHNOLOGIES, INC.
ARTICLE I
SHAREHOLDERS: MEETING AND VOTING
1.1 Place of Meetings.
Meetings of the shareholders shall be held at the corporation's
principal office, or at such other location as shall be designated in the notice
of meeting.
1.2 Annual Meetings.
The annual meeting of the shareholders shall be held on the first
Monday of November of each year, if not a legal holiday, and if a legal holiday,
then on the next succeeding business day, at the hour of 9:30 o'clock, a.m. The
time and date of such meeting may be varied by the Board of Directors provided
that notice of the varied date and time of the annual meeting is given in
accordance with these By-laws. At the annual meeting, the shareholders shall
elect by vote a Board of Directors, consider reports of the affairs of the
corporation, and transact such other business as may properly be brought before
the meeting.
1.3 Special Meetings.
Special meetings of the shareholders may be called at any time by the
President, the Board of Directors, by the holders of not less than one-tenth
(1/10th) of all the shares entitled to vote at such meeting, and as otherwise
provided in the Nevada Business Corporation Act, as amended (the "Act").
1.4 Notice of Meetings
1.4.1 Written or printed notice, in a comprehensible form, stating the
date, time and place of the meeting, and in case of a special meeting, a
description of the purpose or purposes for which the meeting is called, shall be
delivered not earlier than sixty (60) nor less than ten (10) days before the
meeting date, in person, telegraph, teletype, or other form of wire or wireless
communication, by mail or private carrier, by or at the direction of the
President, Secretary, other officer or persons calling the meeting. If mailed,
the notice is effective when deposited postpaid in the United States mail,
correctly addressed to the shareholder's address shown on the Corporation's
current record of shareholders. In all other cases, the notice shall be
effective when received by the shareholders.
1.4.2 If a shareholders' meeting is adjourned to a different date, time
or place, notice need not be given of the new date, time or place, if the new
date, time or place is announced at the meeting before adjournment, unless a new
record date for the adjourned meeting is or must be fixed under the Act, in
which event notice of the adjourned meeting must be given to the persons who are
shareholders as of the new record date.
1. By-Laws
<PAGE>
1.5 Voting Entitlement of Shares.
Unless the Articles of Incorporation provide otherwise, or except as
provided by the Act, each outstanding share, regardless of class, is entitled to
one vote on each matter voted on at a shareholders' meeting. Only shares are
entitled to vote.
1.6 Quorum and Voting.
1.6.1. Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares exists with
respect to that matter. Unless the Articles of Incorporation or the Act provides
otherwise, a majority of the votes entitled to be cast on the matter by the
voting group constitutes a quorum of that voting group for action on that
matter.
1.6.2 Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting, unless a new record date is or must be set for that
adjourned meeting.
1.6.3 If a quorum exists, action on a matter, other than the election
of directors, by a voting group, is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
Articles of Incorporation or the Act requires a greater number of affirmative
votes.
1.6.4 Unless otherwise provided in the Articles of Incorporation,
Directors are elected by a plurality of the votes cast by the shares entitled to
vote in the election at a meeting at which a quorum is present.
1.6.5 If the Articles of Incorporation or the Act provides for voting
by a single group on a matter, action on that matter is taken when voted upon by
that voting group in accordance with these By-Laws.
1.6.6 If the Articles of Incorporation or the Act provides for voting
for two or more voting groups on a matter, action on that matter is taken only
when voted upon by each of those voting groups counted separately as provided by
these By-Laws.
1.7 Proxies.
A shareholder may vote shares in person or by written proxy signed by
the shareholder or the shareholder's attorney in fact and delivered to the
secretary or other officer or agent of the Corporation authorized to tabulate
votes.
1.8 Record Date.
The record date for determining the shareholders entitled to notice of
a shareholders' meeting, to demand a special meeting, to vote or to take other
action, shall, unless otherwise determined by the Board of Directors in advance
of such action, be the date of such notice, demand, vote, or other action.
2. ByLaws
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1.9 Shareholders' List for Meeting.
After fixing a record date for a meeting, the corporation shall prepare
an alphabetical list of the names of all of its shareholders who are entitled to
notice of a shareholders' meeting. The list must be arranged by voting group,
and within each voting group by class or series of shares, and show the address
of and number of shares held by each shareholder. The shareholders' list must be
available for inspection by any shareholder, beginning two business days after
notice of the meeting is given for which the list was prepared and continuing
through the meeting, at the corporation's principal office or at a place
identified in the meeting notice in the city where the meeting is to take place.
The corporation shall make the shareholders' list available at the meeting, and
any shareholder, the shareholder's agent, or attorney is entitled to inspect the
list at any time during the meeting or any adjournment thereof.
ARTICLE II
DIRECTORS
2.1 Powers.
The business and affairs of the corporation shall be managed by a Board
of Directors which shall exercise or direct the exercise of all corporate powers
except to the extent shareholder authorization is required by the Act, the
Articles of Incorporation, or these By-Laws.
2.2 Number.
The number of the members of the Board of Directors shall be not less
than one, nor more than seven.
2.3 Election and Term of Office.
Except as provided in the Articles of Incorporation, the directors
shall be elected at the annual meeting of the shareholders. The terms of office
of the directors shall begin immediately after election and shall expire at the
next annual shareholders' meeting following their election and when their
successors are duly elected and qualified. The directors need not be residents
of this state, or shareholders of the corporation.
2.4 Vacancies.
2.4.1 A vacancy on the Board of Directors shall exist upon the death,
resignation, or removal of any director, in the event an amendment of the
By-Laws is adopted increasing the number of directors, or in the event that the
directors determine that it is desirable to elect one or more additional
directors within the variable-range of the number of directors established by
these By-Laws.
2.4.2 Unless the Articles of Incorporation provide otherwise, a vacancy
may be filled by the shareholders, the Board of Directors, or if the Directors
remaining in office constitute fewer than a quorum of the Board, they may fill
the vacancy by an affirmative vote of a majority of all of the Directors
remaining in office.
2.4.3 The term of a director elected to fill a vacancy expires at the
next shareholders' meeting at which directors are elected, and when his/her
successor has been duly elected and qualified.
3. BY-Laws
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2.4.4 A vacancy that will occur at a specific later date, by reason of
a resignation submitted in accordance with the Act, may be filled before the
vacancy occurs, but the new director may not take office until the vacancy
occurs.
2.4.5 Except as provided by the Articles of Incorporation or the Act,
during the existence of any vacancy, the remaining directors shall possess and
may exercise all powers vested in the Board of Directors, notwithstanding lack
of a quorum of the board.
2.4.6 The shareholders may remove one or more directors with or without
cause at a special meeting of shareholders called for that purpose pursuant to a
meeting notice indicating removal as one of the purposes. If a director is
elected by a voting group of shareholders, only the shareholders of that voting
group may participate in the vote to remove the director. A director may be
removed only if the number of votes cast to remove the director exceeds the
number of votes cast not to remove the director.
2.5 Meetings.
2.5.1 The annual meeting of the Board of Directors of this corporation
shall be held immediately following the annual meeting of the shareholders,
which meeting shall be considered a regular meeting as to which no notice is
required.
2.5.2 Regular meetings of the Board of Directors may be held without
notice of the date, time, place or purpose of the meeting.
2.5.3 Special meetings of the Board of Directors for any purpose or purposes may
be called by an officer or director of the corporation in accordance with the
notice provisions of Section 2.6.1 of these By-Laws.
2.6 Notice of Special Meetings.
Special meetings of the Board of Directors must be preceded by at least
two (2) days' notice of the date, time and place of the meeting. The notice need
not describe the purpose of such meetings. Notice of special meetings of the
Board of Directors may be in writing or oral, and may be communicated in person,
by telephone, telegraph, teletype, or other form of wire or wireless
communication, by mail or by private carrier. Written notice, if in
comprehensible form, is effective at the earliest of the following: (a) when
received; (b) five (5) days after its deposit in the U.S. Mail, as evidenced by
the postmark, if mailed postpaid and correctly addressed; or (c) on the date
shown on the return receipt, if sent by registered or certified mail, return
receipt requested, and the receipt is signed by or on behalf of the addressee.
Oral notice is effective when communicated, if communicated in a comprehensible
manner.
2.7 Manner of Conducting Meetings.
The Board of Directors may permit any or all directors to participate
in a regular or special meeting by, or conduct the meeting through, use of any
means of communication by which all directors participating may simultaneously
hear each other during the meeting. A director participating in a meeting by
this means is deemed to be present in person at the meeting.
4. By-Laws
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2.8 Quorum.
Unless the Articles of Incorporation or these By-Laws provide
otherwise, a quorum of the Board of Directors consists of a majority of the
number in office immediately before the meeting begins.
2.9 Compensation.
Unless the Articles of Incorporation provide otherwise, the Board of
Directors may fix the compensation of directors, and authorize the corporation
to reimburse the directors for their reasonable expenses incurred while
attending meetings of the Board and while engaged in other activities on behalf
of the corporation.
ARTICLE III
OFFICERS
3.1 Designation, Election and Qualifications.
The officers shall include a President, and a Secretary. The officers
may include a Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer, Vice-President(s), Treasurer, Assistant Secretary, or Assistant
Treasurer, as the Board of Directors shall, from time to time, appoint. Officers
need not be members of the Board of Directors. The officers shall be elected by,
and hold office at the pleasure of the Board of Directors. Any two offices may
be held by the same person.
Compensation and Term of Office.
3.2.1 The compensation and term of office of the officers of the
corporation shall be fixed by the Board of Directors. Any officer may be removed
either with or without cause, by action of the Board of Directors.
3.2.2 An officer may resign at any time by delivering notice to the
corporation. A resignation is effective when the notice is effective under the
Act, unless the notice specifies a later effective date. If a resignation is
made effective at a later date and the corporation accepts the future effective
date, Board of Directors may fill the pending vacancy before the effective date
provided that the successor does not take office until the effective date.
3.3 President.
The President shall be the chief executive officer of the corporation
and shall, subject to the control of the Board of Directors, have general
supervision, direction and control of the business affairs of the corporation.
He shall, when present, preside at all meetings of the shareholders and of the
Board of Directors. He shall be an ex-officio member of all committees, if any,
shall have the general powers and duties of management usually vested in the
office of President of a corporation, and shall have such other powers and
duties as may be prescribed by the Board of Directors or the By-Laws. He may
sign with the Secretary or any other proper officer of the corporation
authorized by the Board of Directors certificates for shares of the corporation,
deeds, mortgages, bonds, contracts, or other instruments which the Board of
Directors authorizes to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the directors or by these
By-Laws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed.
5. By-Laws
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3.4 Vice-President.
The Vice-President(s), if any, shall perform such duties as may be
assigned to him/her by the President or the Board of Directors. In the event of
the death, disability, inability or refusal to act of the President, the
Vice-President shall perform the duties and exercise the powers of the President
unless otherwise designated by the Board of Directors. In the event the
corporation has more than one Vice-President, the Executive Vice-President or,
if none, the Vice-President in charge of administration, shall be the officer
acting in the stead of the President as provided in this section.
3.5 Secretary.
3.5.1 The Secretary shall keep or cause to be kept at the principal
office of the corporation or such other place as the Board of Directors may
order, a book of minutes of all meetings of directors and shareholders showing
the time and place of the meeting, whether it was required by the By-Laws of the
corporation, how authorized, the notice given, the names of those present at
directors' meetings, the number of shares present or represented at
shareholders' meetings and the proceedings of each meeting.
3.5.2 The Secretary shall keep or cause to be kept at the principal
office or at the office of the corporation's transfer agent, a share register or
duplicate share register, showing the names of the shareholders and their
addresses, the number of shares of each class held by each, and the number and
date of cancellation of each certificate surrendered for cancellation.
3.5.3 The Secretary shall give or cause to be given such notice of the
meetings of the shareholders and of the Board of Directors as is required by the
By-Laws. He/she shall keep the seal of the corporation, if any, and affix it to
all documents requiring a seal, and shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or By-Laws.
3.6 Treasurer.
The Treasurer, if any, shall be responsible for the funds of the
corporation, receive and give receipts for monies due and payable to the
corporation from any source whatsoever, deposit all such monies in the name of
the corporation in such banks, trust companies or other depositories as shall be
selected in accordance with these By-Laws, shall pay the funds of the
corporation out only on the checks of the corporation signed in the manner
authorized by the Board of Directors, and, in general, perform all of the duties
incident to the office of Treasurer and such other duties as, from time to time,
may be assigned to him/her by the President or the Board of Directors.
3.7 Assistants.
The Board of Directors may appoint or authorize the appointment of
assistants to any officer. Such assistants may exercise the power of such
officer and shall perform such duties as arc prescribed by the Board of
Directors.
6. By-Laws
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ARTICLE IV
COMMITTEES
The Board of Directors may appoint from among its members one or more committees
of two (2) or more members, in accordance with and subject to the restrictions
of the Act.
ARTICLE V
CONTRACTS, CHECKS AND DEPOSITS
5.1 Checks, Drafts, Etc.
All checks, drafts, or other orders for the payment of money, notes or
other evidence of indebtedness, issued in the name of or payable to the
corporation, shall be signed by such person or persons and in the manner as
shall be determined from time to time by resolution of the Board of Directors.
5.2 Deposits.
All funds of the corporation not otherwise employed shall be deposited,
from time to time, to the credit of the corporation in such banks, trust
companies, or other depositories as the Board of Directors may select.
5.3 Contracts, Instruments.
The Board of Directors may, except as otherwise provided in the
By-Laws, authorize any officer or agent to enter into any contract or execute
any instrument in the name of and on behalf of the corporation. Such authority
may be general or confined to specific instances. Unless so authorized by the
Board of Directors, no officer, agent, or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credits, or to render it liable for any purpose or for any amount.
ARTICLE VI
CERTIFICATES AND TRANSFER OF SHARES
6.1 Certificates for Shares.
6.1.1 Certificates for shares shall be in such form as the Board of
Directors may designate and shall indicate the state law under which the
corporation is organized. The certificates shall state the name of the record
holder of the shares represented thereby, the number of the certificate, the
date of issuance and the number of shares for which it is issued, the par value
of such shares, if any, or that such shares are without par value, and the
series and class of such shares. If the corporation is authorized to issue
different classes of shares or different series of shares within a class, the
designations, relative rights, preferences and limitations of each class, the
variations in rights, preferences and limitations determined for each series,
and the authority of the Board of Directors to determine variations for future
series shall be summarized on the front or back of each certificate, or, each
certificate may state conspicuously on its front or back that the corporation
will furnish the shareholder with this information on request in writing, and
without charge. Each certificate shall state or make reference on its front or
back to any liens, purchase options or restrictions on transfer.
7. By-Laws
<PAGE>
6.1.2 Each share certificate must be signed, either manually or in
facsimile, by the President or a Vice-President and the Secretary or an
Assistant Secretary.
6.2 Transfer on the Books.
Upon surrender to the corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment, or
authority to transfer, the corporation shall issue a new certificate to the
person entitled thereto, cancel the old certificate, and record the transaction
upon it books.
6.3 Lost, Stolen, or Destroyed Certificates.
If a certificate is represented as being lost, stolen, or destroyed, a
new certificate shall be issued in its place upon such proof of the loss, theft,
or destruction and upon the giving of such bond or other security as may be
required by the Board of Directors.
6.4 Transfer Agents and Registrars.
The Board of Directors may from time to time appoint one or more
specific transfer agents and one or more registrars for the shares of the
corporation who shall have such powers and duties as the Board of Directors may
specify.
ARTICLE VII
INDEMNIFICATION AND LIABILITY
7.1 Indemnification.
The corporation shall indemnify to the fullest extent not prohibited by
law any person who was or is a party or is threatened to be made a party to any
proceeding (as hereinafter defined) against all expenses (including attorney's
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by the person in connection with such proceeding.
7.2 Advancement of Expenses.
Expenses incurred by a director or officer in defending a proceeding
shall, in all cases, be paid by the corporation in advance of the final
disposition of such proceeding at the written request of such person, if the
person:
7.2.1 Furnishes the corporation a written affirmation of the person's
good faith belief that such person is entitled to be indemnified by the
corporation under this article or under any other indemnification rights granted
by the corporation to such person; and
7.2.2 Furnishes the corporation a written undertaking to repay such
advance to the extent it is ultimately determined by a court that such person is
not entitled to be indemnified by the corporation under this article or under
any other indemnification rights granted by the corporation to such person. Such
advances shall be made without regard to the person's ultimate entitlement to
indemnification under this article or otherwise.
8. By-Laws
<PAGE>
7.3 Definition of Proceedings.
The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding, whether brought in the right of the
corporation or otherwise and whether of a civil, criminal, administrative or
investigative nature, *in which a person may be or may have been involved as a
party or otherwise by reason of the fact that the person is or was a director or
officer of the corporation or a fiduciary within the meaning of the Employee
Retirement Income Security Act of 1974 with respect to any employee benefit plan
of the corporation, or is or was serving at the request of the corporation as a
director, officer or fiduciary of an employee benefit plan of another
corporation, partnership, joint venture, trust or other enterprise, whether or
not serving in such capacity at the time any liability or expense is incurred
for which indemnification or advancement of expenses can be provided under this
article.
7.4 Non-Exclusivity and Continuity of Rights.
The indemnification and entitlement to advancement of expenses provided
by this article shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under the articles of incorporation or any statute,
agreement, general or specific action of the board of directors vote of stock
holders or otherwise, shall continue as to a person who has ceased to be a
director or officer, shall inure to the benefit of the heirs, executors, and
administrators of such a person and shall extend to all claims for
indemnification of advancement of expenses after the adoption of this article.
7.5 Amendments.
Any repeal of this article shall only be prospective and no repeal or
modification hereof shall adversely affect the rights under this article in
effect at the time of the alleged occurrence of any action or omission to act
that is the cause of any proceeding.
7.6 Director Liability.
No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for conduct as a director;
provided that this section 7.6 shall not eliminate the liability of a director
for any act or omission for which sum elimination of liability is not permitted
under the Oregon Business Corporation Act. No amendment to the Oregon Business
Corporation Act that further limits the acts or omissions for which elimination
of liability is permitted shall affect the liability of a director for any act
or omission which occurs prior to the effective date of such amendment.
ARTICLE VII
GENERAL PROVISIONS
8.1 Amendment of By-Laws.
Except as otherwise provided by the Act or the Articles of
Incorporation, the By-Laws may be amended by the Board of Directors or the
shareholders. Whenever amendments or new By-Laws are adopted, they shall be
placed in the minute book with the original By-Laws in the appropriate place. If
any By-Law is repealed, the fact of repeal and the date on which the repeal
occurred shall be stated in such book and place.
9. By-Laws
<PAGE>
8.2 Dividends.
Except as provided by the Act or the Articles of Incorporation, the
directors may, from time to time, declare and the corporation may pay, dividends
on its outstanding shares in the manner and upon the terms and conditions
provided by law.
8.3 Seal.
The directors may provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words "corporate seal".
8.4 Action Without Meeting.
Any action which the Act, the Articles of Incorporation or by the
By-Laws require or permit the shareholders or directors to take at a meeting may
be taken without a meeting if the action is taker by all of the shareholders or
directors entitled to vote on the matter, evidenced by one or more written
consents describing the action taken, signed by each shareholder or director, as
the case may be, and included in the minutes or filed with the corporate records
reflecting the action taken.
8.5 Waiver of Notice.
A shareholder or director may, at any time, waive any notice required
by the Act, the Articles of Incorporation or the By-Laws. Any such waiver shall
be in writing, signed by the shareholder or director entitled to the notice and
shall be delivered to the corporation for inclusion in the minutes or corporate
records.
I hereby certify that the foregoing By-Laws were adopted by the Board
of Directors on October 13,1999.
By:/s/ Steve Amdahl
-------------------------------
Corporate Secretary
10. By-laws
Exhibit 3.5
BY-LAWS
OF
ADVANTAGE SYSTEMS, INC.
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TABLE OF CONTENTS
PAGE
----
ARTICLE I - OFFICES ..................................... 1
1. PRINCIPAL EXECUTIVE OFFICE ............ 1
2. OTHER OFFICES ......................... 1
ARTICLE II - ANNUAL MEETINGS OF SHAREHOLDERS ............ 1
1. PLACE.................................. 2
2. TIME .................................. 2
3. NOTICE................................. 3
ARTICLE III - SPECIAL MEETINGS OF SHAREHOLDERS .......... 3
1. PURPOSE, TIME AND PLACE ............... 3
2. CALL .................................. 3
3. NOTICE ................................ 3
4. BUSINESS TRANSACTED ................... 4
ARTICLE IV - QUORUM AND VOTING OF STOCK ................. 4
1 . QUORUM ................................ 4
2. MAJORITY VOTE ......................... 5
3. VOTING ................................ 5
4. PROXY REPRESENTATIVES ................. 6
5. WRITTEN CONSENT ....................... 6
6. ANNUAL REPORT ......................... 7
ARTICLE V - DIRECTORS ................................... 7
1. NUMBER, QUALIFICATION AND TERM......... 7
2. VACANCIES ............................. 8
3. FUNCTION .............................. 8
4. BOOKS ................................. 9
5. COMPENSATION .......................... 9
ARTICLE VI - MEETINGS OF THE BOARD OF DIRECTORS ......... 9
1. PLACE ................................. 9
2. FIRST MEETING ......................... 9
3. TIME AND PLACE ........................ 9
4. CALL OF SPECIAL MEETINGS............... 9
5. WAIVER OF NOTICE ...................... 10
6. QUORUM AND ACTION ..................... 10
7. CONSENT ............................... 10
ARTICLE VII - COMMITTEES ................................ 11
1. EXECUTIVE COMMITTEE ................... 11
2. OTHER COMMITTEES ...................... 11
ARTICLE VIII - NOTICES .................................. 12
1. MANNER OF GIVING NOTICE ............... 12
2. WAIVER OF NOTICE OR CONSENT ........... 13
ARTICLE IX - OFFICERS ................................... 14
1. TITLES ................................ 14
2. ELECTION .............................. 14
<PAGE>
PAGE
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3. OTHER OFFICERS ................................. 14
4. BOARD OF DIRECTORS DIRECTION ................... 14
5. SALARIES ....................................... 14
6. TERM ....................................... 14
7. THE PRESIDENT .................................. 15
8. THE VICE-PRESIDENTS ............................ 15
9. THE SECRETARY .................................. 15
10. ASSISTANT SECRETARIES ................. 16
11. THE CHIEF FINANCIAL OFFICER ........... 16
12. THE ASSISTANT TREASURERS .............. 17
ARTICLE X - SHARES ...................................... 17
1. CERTIFICATES FOR SHARES ............... 17
2. LOST CERTIFICATES ..................... 18
3. EXCHANGE OF CERTIFICATES .............. 18
4. TRANSFERS OF SHARES ................... 19
5. CLOSING OF TRANSFER OF BOOKS .......... 19
6. REGISTERED SHAREHOLDERS ............... 20
ARTICLE XI - INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND OTHER AGENTS ..................... 21
1. AGENTS, PROCEEDINGS, AND EXPENSES .............. 21
2. ACTIONS OTHERS THAN BY THE CORPORATION ......... 21
3. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION .. 22
4. SUCCESSFUL DEFENSE BY AGENT .................... 23
5. REQUIRED APPROVAL .............................. 23
6. ADVANCE OF EXPENSES ............................ 24
7. OTHER CONTRACTUAL RIGHT ........................ 24
8. LIMITATIONS..................................... 24
9. INSURANCE ...................................... 25
10. FIDUCIARIES OF CORPORATE EMPLOYEE BENEFIT PLAN . 25
11. SURVIVAL OF RIGHTS ............................. 25
12. EFFECT OF AMENDMENT ............................ 25
13. SETTLEMENT OF CLAIMS ........................... 25
14. SUBROGATION .................................... 26
15. NO DUPLICATION OF PAYMENTS...................... 26
ARTICLE XII - GENERAL PROVISIONS......................... 26
1. DIVIDENDS ............................. 26
2. RESERVE FUND .......................... 27
3. CHECKS ................................ 27
4. FISCAL YEAR ........................... 27
5. SEAL .................................. 27
6. BOOKS AND RECORDS ..................... 27
7. AMENDMENTS ............................ 28
8. CORPORATE SECRETARY CERTIFICATION ..... 29
2
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ADVANTAGE SYSTEMS, INC.
*****
BYLAWS
*****
ARTICLE I
OFFICES
Section 1. Principal Executive Office. The principal executive office
shall be located in San Jose, California.
Section 2. Other Offices. The location may be changed by approval of a
majority of the authorized directors and the corporation may also establish
offices at such other places both within and without the State of California as
the board of directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. Place. All meetings of shareholders for the election of
directors shall be held in the City of San Jose, State of California, at such
place as may be fixed from time to time by the board of directors, or at such
other place either within or without the State of California as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting. Meetings of shareholders for any other purpose may be held at
such time and place, within or without the State of California, as shall be
stated in the notice of the meeting or in a duly executed
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<PAGE>
waiver of notice thereof If no other place is stated or fixed, shareholders'
meetings shall be held at the principal executive office of the corporation.
Section 2. Time. Annual meetings of shareholders, commencing with the
year 1997, shall be held on the second Tuesday of January if not a legal
holiday, and if a legal holiday, then on the next secular day following at 9:00
a.m., or at such other date and time as shall be designated from time to time by
the board of directors and stated in the notice of the meeting, at which they
shall elect by a plurality vote a board of directors and transact such other
business as may properly be brought before the meeting,
Section 3. Notice. Written or printed notice of the annual meeting
stating the place, day and hour of the meeting and those matters which the board
of directors, at the time of mailing the notice, intends to present for action
by the shareholders, shall be given to each shareholder entitled to vote thereat
not less than 10 (or, if sent by third-class mail, 30) nor more than 60 days
before the date of the meeting. Notice may be sent by third-class mail only if
the outstanding shares of the corporation are held of record by 500 or more
persons (determined as provided in Section 605 of the California General
Corporation Law) on the record date for the shareholders' meeting. The notice of
any meeting at which directors are to be elected shall include the names of
nominees intended at the time of notice to be presented by the Board of
Directors for election. At an annual meeting of shareholders, any matter
relating to the affairs of the corporation, whether or not stated in the notice
of the meeting, may be brought up for action except matters which the General
Corporation Law requires to be stated in the notice of the meeting. The notice
of any annual or special meeting shall also include, or be accompanied by, any
additional statements, information, or documents prescribed by the General
Corporation Law. When a meeting is
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<PAGE>
adjourned to another time or place, notice of die adjourned meeting need not be
given if die time and place thereof are announced at the meeting at which the
adjournment is taken; provided that, if the adjournment is for more than
forty-five (45) days, or if after adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder. At the adjourned meeting, the corporation may transact any business
which might have been transacted at the original meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Purpose. Time and Place. Special meetings of shareholders
for any purpose other than the election of directors may be held at such time
and place within or without the State of California as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2. Call. Special meetings of the shareholders, for any purpose
or purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of directors, or the
holders of not less than 10 percent of all the shares entitled to vote at the
meeting and if the corporation has a chairman of the board of directors, special
meetings of the shareholders may be called by the chairman.
Section 3. Notice, Written or printed notice of a special meeting of
shareholders, stating the time, place and purpose or purposes thereof, shall be
given to each shareholder entitled to vote thereat not less than 10 (or, if sent
by third-class mail, 30) nor more than 60 days before the date fixed for the
meeting. Notice may be sent by third-class mail only if the outstanding shares
of
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the corporation are held of record by 500 or more persons (determined as
provided in Section 605 of the California General Corporation Law) on the record
date for the shareholders' meeting. The notice of any special meeting shall also
include, or be accompanied by any additional statements, information or
documents prescribed by the General Corporation Law. When a meeting is adjourned
to another time or place notice of the adjourned meeting need not be if the time
and place thereof are announced at the meeting at which the adjournment is
taken; provided that, if the adjournment is for more than forty-five (45) days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each shareholder.
At the adjourned meeting, the corporation may transact any business which might
have been transacted the original meeting.
Section 4. Business Transacted. The business transacted at any special
meeting of shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. Quorum. The holders of a majority of the shares of stock
issued and outstanding and entitled to vote, represented in person or by proxy,
shall constitute a quorum at all meetings of the shareholders for the
transaction of business except as otherwise provided by statute or by the
articles of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the shareholders, the shareholders present in
person or represented by proxy shall have power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a
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quorum shall be present or represented, any business may be transacted which
might have been transacted at the original meeting.
Section 2. Majority Vote. If a quorum is present, the affirmative vote
of a majority of the shares of stock represented and voting at the meeting
(which shares voting affirmatively also constitute at least a majority of the
required quorum), shall be the act of the shareholders unless the vote of a
greater number or voting by classes is required by law or the articles of
incorporation.
Section 3. Voting. Each outstanding share of stock having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact. On any
matter other than the election of directors, any shareholder may vote part of
the shares 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.
In all elections for directors, every shareholder entitled to vote
shall have the right to vote, in person or by proxy, the number of shares of
stock owned by him for as many persons as there are directors to be elected, or,
upon satisfaction of the requirements set forth in Section 708(b) of the
California General Corporation Law, to cumulate the vote of said shares, and
give one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of votes to which the shareholder's shares are
normally entitled, or to distribute the votes on the same principle among as
many candidates as he may see fit. Section 708(b) of the California General
Corporation Law provides that no shareholder shall be entitled to cumulate votes
for any candidate for the office
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of director unless such candidates' names have been placed in nomination prior
to the voting and at least one shareholder has given notice at the meeting prior
to the voting of his intention to cumulate his votes.
Section 4. Proxy Representatives. Every shareholder may authorize
another person or persons to act as his proxy at a meeting or by written action.
No proxy shall be valid after the expiration of eleven months from the date of
its execution unless otherwise provided in the proxy Every proxy shall be
revocable at the pleasure of the person executing it prior to the vote or
written action pursuant thereto, except as otherwise provided by the General
Corporation Law. As used herein, a "proxy" shall be deemed to mean a written
authorization signed by a shareholder or a shareholder's attorney in fact giving
another person or persons power to vote or consent in writing with respect to
the shares of such shareholder, and "signed" as used herein shall be deemed to
mean the placing of such shareholder's name on the proxy, whether by manual
signature, typewriting, telegraphic transmission or otherwise by such
shareholder or such shareholder's attorney in fact. Where applicable, the form
of any proxy shall comply with the provisions of Section 604 of the General
Corporation Law,
Section 5. Written Consent. Unless otherwise provided in the articles,
any action, except election of directors, which may be taken at any 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, shall be
signed by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Except to fill a vacancy in the board of directors not filled by the directors,
directors may not be elected by written consent except
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by unanimous written consent of all shares entitled to vote for the election of
directors. Any election of a director to fill a vacancy (other than a vacancy
created by removal) not filled by the directors requires the written consent of
a majority of the shares entitled to vote. Notice of any shareholder approval
pursuant to Section 310, 317, 1201 or 2007 without a meeting by less than
unanimous written consent shall be given at least ten days before the
consummation of the action authorized by such approval, and prompt notice shall
be given of the taking of any other corporate action approved by shareholders
without a meeting by less than unanimous written consent to those shareholders
entitled to vote who have not consented in writing.
Elections of directors at a meeting need not be by ballot unless a
shareholder demands election by ballot at the election and before the voting
begins. In all other matters voting need not be by ballot.
Section 6. Annual Report. Whenever the corporation shall have fewer
than one hundred shareholders as said number is determined as provided in
Section 605 of the General Corporation Law, the Board of Directors shall not be
required to cause to be sent to the shareholders of the corporation the annual
report prescribed by Section 1501 of the General Corporation Law unless it shall
determine that a useful purpose would be served by causing the same to be sent
or unless the Department of Corporations, pursuant to the provisions of the
Corporate Securities Law of 1968, shall direct the sending of the same.
ARTICLE V
DIRECTORS
Section 1. Number, Qualification and Term. The number of directors
shall be three (3).
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Directors need not be residents of the State of California nor shareholders of
the corporation. Subject to the foregoing provisions and the provisions of
Section 212 of the General Corporation Law, the number of directors may be
changed from time to time by an amendment of these Bylaws. No decrease in the
authorized number of directors shall have the effect of shortening the term of
any incumbent director. The directors, other than the first board of directors,
shall be elected at the annual meeting of the shareholders, and each director
elected shall serve until the next succeeding annual meeting and until his
successor shall have been elected and qualified. The first board of directors
shall hold office until the first annual meeting of shareholders.
Section 2. Vacancies. Unless otherwise provided in the articles of
incorporation, vacancies, except for a vacancy created by the removal of a
director, and newly created directorships resulting from any increase in the
number of directors may be filled by a majority of the directors then in office,
though less than a quorum, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and shall
qualify. Unless otherwise provided in the articles of incorporation any vacancy
created by the removal of a director shall be filled by the shareholders by the
vote of a majority of the shares entitled to vote at a meeting at which a quorum
is present. Any vacancies, which may be filled by directors and are not filled
by the directors, may be filled by the shareholders by a majority of the shares
entitled to vote at a meeting at which a quorum is present.
Section 3. Function. The business affairs of the corporation shall be
managed by its board of directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the articles of incorporation or by these Bylaws directed or required to be
exercised or done by the shareholders.
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Section 4. Books. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of California, at such place or places as they may from time to time
determine,
Section 5 Compensation. The board of directors, by the affirmative vote
of a majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise,
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Place. Meetings of the board of directors, regular or
special, may be held either within or without the State of California,
Section 2. First Meeting. The first meeting of each newly elected board
of directors shall be held at such time and place as shall be fixed by the vote
of the shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present, or it may convene at such place and
time as shall be fixed by the consent in writing of all the directors.
Section 3. Time and Place. Regular meetings of the board of directors
may be held upon such notice, or without notice, and at such time and at such
place as shall from time to time be determined by the board.
Section 4. Call of Special Meetings. Special meetings of the board of
directors may be called by the president on four (4) days' notice by mail or
forty-eight (48) hours notice delivered
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personally or by telephone or telegraph to each director, either personally or
by mail or by telephone or by telegram; special meetings shall be called by the
president or secretary in like manner and on like notice on the written request
of two directors unless the board consists of only one director; in which case,
special meetings shall be called by the president or secretary in like manner
and on like notice on the written request of the sole director.
Section 5. Waiver of Notice. Attendance of a director at any meeting
shall constitute a waiver of notice of such meeting, except where a director
attends for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
board of directors need be specified in the notice or waiver of notice of such
meeting,
Section 6. Quorum and Action. A majority of the directors shall
constitute a quorum for the transaction of business unless a greater number is
required by law or by the articles of incorporation. The act of a majority of
the directors present at any meeting at which a quorum is present shall be the
act of the board of directors, unless the act of a greater number is required by
statute or by the articles of incorporation. If a quorum shall not be present at
any meeting of directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present,
Section 7. Consent. Any action required or permitted to be taken at a
meeting of the directors may be taken without a meeting if a consent in writing,
setting forth the action so taken shall be signed by all of the directors
entitled to vote with respect to the subject matter thereof.
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ARTICLE VII
COMMITTEES
Section 1. Executive Committees. The board of directors, by resolution
adopted by a majority of the number of directors fixed by the Bylaws or
otherwise, may designate two or more directors to constitute an executive
committee, which committee, to the extent provided in such resolution, shall
have and exercise all of the authority of the board of directors in the
management of the corporation, except as otherwise required by law. Vacancies in
the membership of the committee shall be filled by the board of directors at a
regular or special meeting of the board of directors. The executive committee
shall keep regular minutes of its proceedings and report the same to the board
when required. The board of directors may designate one or more directors as
alternate members of the executive committee. The executive committee shall not
have authority: (1) To approve any action which will also require the
shareholders' approval; (2) To fill vacancies on the board or in any committee;
(3) To fix the compensation of directors for serving on the board or on any
committee; (4) To amend or repeal the Bylaws or adopt new Bylaws; (5) To amend
or repeal any resolution of the board which by its express terms is not so
amendable or repealable; (6) To make a distribution to the shareholders except
at a rate or in a periodic amount or within a price range determined by the
board; or (7) To appoint other committees of the board or the members thereof.
Section 2. Other Committees, The board of directors, by resolution
adopted by a majority of the authorized number of directors, may designate one
or more committees, each consisting of two or more directors to serve at the
pleasure of the board of directors. The board of directors may designate one or
more directors as alternate members of any such committee, who may
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replace any absent member at any meeting of such committee. Any such committee,
to the extent provided in the resolution of the board of directors, shall have
all the authority of the board of directors except such authority as may not be
delegated by the provisions of the General Corporation Law.
Meetings and action of committees shall be governed by, and held and
taken in accordance with, Bylaw provisions applicable to meetings and actions of
the Board of Directors, with such changes in the context of those Bylaws as are
necessary to substitute the committee and its members for the board of directors
and its members, except that (a) the time of regular meetings of committees may
be determined either by resolution of the Board of Directors 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 the provisions
of these Bylaws.
ARTICLE VIII
NOTICES
Section 1. Manner of Giving Notice. Whenever, under the provisions of
the statutes or of the articles of incorporation or of these Bylaws, notice is
required to be given to any director or shareholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, by mail,
addressed to such director or shareholder, at his address as it appears on the
records of the corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors
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may also be given by telegram. Notice to any shareholder shall be given at the
address furnished by such shareholder for the purpose of receiving notice. If
such address is not given and if no address appears on the records of tile
corporation for such shareholder, notice may be given to such shareholder at the
place where tile principal executive office of the corporation is located or by
publication at least once in a newspaper of general circulation in the county in
which said principal executive office is located. If a notice of a shareholders'
meeting is sent by mail it shall be sent by first-class mail, or, in case the
corporation has outstanding shares held of record by 500 or more persons
(determined as provided in Section 605 of the California General Corporation
Law) on the record date for the shareholders' meeting, notice may be by
third-class mail.
Section 2, Waiver of Notice or Consent.
Whenever any notice whatever is required to be given under the
provisions of the statutes or under the provisions of the articles of
incorporation or these Bylaws, a waiver thereof in writing or a consent to the
holding of the meeting or an approval of the minutes thereof, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice. All
such waivers, consents and approvals shall be filed with the corporate records
or made a part of the minutes of the meeting. Attendance of a person at a
meeting constitutes a waiver of notice of and presence at such meeting, except
when the person objects, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or convened and except
that attendance at a meeting shall not constitute a waiver of any right to
object to the consideration of matters required by the General Corporation Law
to be included in the notice but not so included, if such objection is expressly
made at the meeting
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ARTICLE IX
OFFICERS
Section 1. Titles. The officers of the corporation, except those
elected in accordance with Section 210 of the California General Corporation
Law, shall be chosen by the board of directors and shall be president, a
vice-president, a secretary and a chief financial officer. The board of
directors may also choose additional vice-presidents, and one or more assistant
secretaries and assistant treasurers.
Section 2. Election, The board of directors, at its first meeting after
each annual meeting of shareholders, shall choose a president, one or more
vice-presidents, a secretary and a chief financial officer, none of whom need be
a member of the board.
Section 3. Other Officers. The board of directors may appoint such
other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board of directors.
Section 4. Board of Directors Direction. All officers shall perform
their duties and exercise their powers subject to the direction of the board of
directors.
Section 5. Salaries. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 6. I=. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
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Section 7. The President. The president shall be the chief executive
officer of the corporation, shall preside at all meetings of the shareholders
and the board of directors, shall have general and active management of the
business of the corporation and shall see that all orders and resolutions of the
board of directors are carried into effect.
The President shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
Section 8. The Vice-Presidents. The vice-president, of if there shall
be more than one, the vice-presidents in the order determined by the board of
directors, shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
Section 9. The Secretary. The secretary shall attend all meetings of
the board of directors and all meetings of the shareholders and record all
proceedings of the meetings of the corporation and of the board of directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees when required. The secretary shall give, or cause to be
given, notice of all meetings of the shareholders and special meetings of the
board of directors, and shall perform such other duties as may be prescribed by
the board of directors or president, under whose supervision the secretary shall
be. The secretary shall have custody of the corporate seal of the corporation
and the secretary shall have authority to affix the same to any instrument
requiring it, and when so affixed, it may be attested by his or her signature.
Unless a transfer agent is appointed
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by the board of directors to keep a share resister, the secretary shall keep at
the principal executive office of the corporation a share register showing the
names of the shareholders and their addresses, the number and class of shares
held by each, the number and date of certificates issued and the number and date
of cancellation of each certificate surrendered for cancellation. The board of
directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his or her signature.
Section 10. Assistant Secretaries. The assistant secretary, or if there
be more than one, the assistant secretaries in the order determined by the board
of directors, shall, in the absence or disability of the secretary perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
Section 11. The Chief Financial Officer. The chief financial officer
shall have the custody of the corporate funds and securities and shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the board of directors.
The chief financial officer shall disburse the funds of the corporation
as may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his or her transactions as chief financial officer and of the financial
condition of the corporation.
If required by the board of directors, the chief financial officer
shall give the corporation a
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bond in such sum and with such surety or sureties as shall be satisfactory to
the board of directors for the faithful performance of the duties of his or her
office and for the restoration to the corporation, in case of his or her death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his or her possession or under his
or her control belonging to the corporation.
The chief financial officer is, for the purpose of executing any
documents requiring the signature of the "Treasurer," deemed to be the treasurer
of the corporation.
Section 12. The Assistant Treasurers. The assistant treasurer, or, if
there shall be more than one, the assistant treasurers in the order determined
by the board of directors, shall, in the absence or disability of the chief
financial officer, perform the duties and exercise the powers of the chief
financial officer and shall perform such other duties and have such other powers
as the board of directors may from time to time prescribe.
ARTICLE X
SHARES
Section 1. Certificates for Shares. Every holder of shares in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the chairman or vice-chairman of the board of directors,
or the president or vice-president and the chief financial officer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation, certifying the number of shares and the class or series of shares
owned by the shareholders in the corporation. If the shares of the corporation
are classified or if any class of shares has two or more series, there shall
appear on the certificate either (1) a statement of the rights, preferences,
privileges and
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restrictions granted to or imposed upon each class or series of shares to be
issued and upon the holders thereof, or (2) a summary of such rights,
preferences, privileges and restrictions with reference to the provisions of the
articles and any certificates of determination establishing the same; or (3) a
statement setting forth the office or agency of the corporation from which
shareholders may obtain, upon request and without charge, a copy of the
statement referred to in item (1) heretofore, Every certificate shall have noted
thereon any information required to be set forth by the California General
Corporation Law and such information shall be set forth in the manner provided
by such law.
Any or all of the signatures on the certificate may be facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if such person were an
officer, transfer agent or registrar at the date of issue.
Section 2. Lost Certificates. The board of directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
corporation alleged to have been lost or destroyed. When authorizing such issue
of a new certificate, the board of directors, in its discretion and as a
condition precedent to the issuance thereof, may prescribe such terms and
conditions as it deems expedient, and may require such indemnities as it deems
adequate, to protect the corporation from any claim that may be made against it
with respect to any such certificate alleged to have been lost or destroyed.
Section 3. Exchange of Certificates. If the Articles of Incorporation
are amended in any way affecting the statements contained in the certificates
for outstanding shares, or it becomes
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desirable for any reason, in the discretion of the board of directors, to cancel
any outstanding certificates for shares and issue a new certificate therefor
conforming to the rights of the holder, the board may order any holders of
outstanding certificates to surrender and exchange them for new certificates
within a reasonable time to be fixed by the board.
Section 4. Transfers of Shares. Upon surrender to the corporation or
the transfer agent of the corporation of a certificate representing shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, a new certificate shall be issued to the person entitled
thereto, and the old certificate cancelled and the transaction recorded upon the
books of the corporation.
Upon compliance with any provisions of the General Corporation Law
and/or the Corporate Securities Law of 1968 which may restrict the
transferability of shares, transfers of shares of the corporation shall be made
only on the record of shareholders of the corporation by the registered holder
thereof, or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the corporation or with a transfer
agent or a registrar, if any, and on surrender of the certificate or
certificates for such shares properly endorsed and the payment of all taxes, if
any, due thereon.
Section 5. Closing of Transfer of Books. In order that the corporation
may determine the shareholders entitled to notice of any meeting or to vote or
entitled to receive payment of any dividend or other distribution or allotment
of any rights or entitled to exercise any rights in respect of any other lawful
action, the board may fix, in advance, a record date, which shall not be more
than 60 nor less than 10 days prior to the date of such meeting nor more than 60
days prior to any other action. If the board of directors shall not have fixed a
record date as aforesaid, the record
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date for determining shareholders entitled to notice of or to vote at a meeting
of shareholders shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is waived, at the close
of business on the business day next preceding the day on which the meeting is
held; the record date for determining shareholders entitled to give consent to
corporate action in writing without a meeting, when no prior action by the board
of directors has been taken, shall be the day on which the first written consent
is given; and the record date for determining shareholders for any other purpose
shall be at the close of business on the day on which the board of directors
adopts the resolution relating thereto, or the sixtieth day prior to the date of
such other action, whichever is later.
A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the meeting
unless the board fixes a new record date for the adjourned meeting, but the
board shall fix a new record date if the meeting is adjourned for more than 45
days from the date set for the original meeting.
Except as may be otherwise provided by the General Corporation Law,
shareholders at the close of business on the record date shall be entitled to
notice and to vote or to receive any dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date.
Section 6. Registered Shareholders. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receivedividends, and to vote as such owner, and to hold
liable for calls and assessments to a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it
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shall have express or other notice thereof, except as otherwise provided by the
laws of California.
ARTICLE XI
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 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
was a director, officer, employee, or agent of a foreign or domestic corporation
which 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,
attorneys' fees and any expenses of establishing a right to indemnification
under Section 4 or Section 5(c) of this Article XI.
Section 2. Actions Other than by the Corporation. This corporation
shall indemnify any person who was or is a party, or is threatened to be made a
party, to any proceeding (other than an action by or in the right of 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
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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 unlawful,
Section 3. Actions by or in the Right of the Corporation. This
corporation shall indemnify any person who was or is a party, or is threatened
to be made a party, to any threatened, pending, or completed action by or in the
right of 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
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
upon 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) Of amounts paid in settling or otherwise disposing of a pending
action without court approval;
(c) Of expenses incurred in defending a pending action that is settled
or otherwise
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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 XI, 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 XI, any indemnification under this section shall be made by the
corporation only if authorized in the specific case, upon a determination that
indemnification of the agent is proper in the circumstances because the agent
has met the applicable standard of conduct set forth in 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
(ii) The written consent of holders of a majority of the
outstanding shares entitled to vote (for purposes of the subsections 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 tile 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
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corporation.
Section 6. Advance of Expenses. Expenses incurred in defending any
proceeding may be advanced by die corporation before the final disposition of
such proceeding upon 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 XI.
Section 7. Other Contractual Right. The indemnification provided by
this Article XI 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. The rights of indemnity hereunder shall
continue as to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of the person. Nothing contained in this section shall affect any right to
indemnification to which persons other than such directors and officers may be
entitled by contract or otherwise.
Section 8. Limitations, No indemnification or advance shall be made
under this Article XI except as provided in Section 4 or Section 5(c), 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 die 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
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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 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 XI Notwithstanding the foregoing, if this corporation owns all or a
portion of the shares of the company issuing the policy of insurance, the
insuring company and/or the policy shall meet the conditions set forth in
Section 317(i) of the Corporations Code.
Section 10. Fiduciaries of Corporate Employee Benefit Plan. This
Article XI 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 indemnity, 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 XI
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 XI 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
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agent under this Article XI 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 XI,
the corporation shall be subrogated to the extend 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 to corporation
effectively to bring suit to enforce such rights,
Section 15. No Duplication of Payments. The corporation shall not be
liable under this Article XI 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
ARTICLE XII
GENERAL PROVISIONS
Section 1. Dividends. Subject to the provisions of the articles of
incorporation relating thereto, if any, dividends may be declared by the board
of directors at any regular or special meeting, pursuant to law. Dividends may
be paid in cash, in property or in shares of the capital stock, subject to any
provisions of the articles of incorporation and the California General
Corporation Law,
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<PAGE>
Section 2. Reserve Fund. Before payment of any dividend, there may be
set aside out of any funds of the corporation available for dividends such sum
or sums as the directors from time to time, in their absolute discretion, think
proper as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 3. Checks. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers of such other person or
persons as the board of directors may from time to time designate.
Section 4. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 5. Seal. The corporate seal shall have inscribed thereon the
name of the corporation, the date of its incorporation and the words "Corporate
Sale, California". The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or in any mariner reproduced.
Section 6. Books and Records. The corporation shall keep at its
principal executive office in the State of California or, if its principal
executive office is not in the State of California, at its principal business
office in the State of California, the original or a copy of the Bylaws as
amended to date, which shall be open to inspection by the shareholders at all
reasonable times during office hours. If the principal executive office of the
corporation is outside the State of California, and, if the corporation has no
principal business office in the State of California, it shall upon request of
any shareholder furnish a copy of the Bylaws as amended to date.
The corporation shall keep adequate and correct books and records of
account and shall keep
27
<PAGE>
minutes of the proceedings of its shareholders, Board of Directors and
committees, if any, of the Board of Directors, The corporation shall keep at its
principal executive office, or at the office of its transfer agent or registrar,
a record of its shareholders, giving the names and addresses of all shareholders
and the number and class of shares held by each. Such minutes shall be in
written form. Such other books and records shall be kept either in written form
or in any other form capable of being converted into written form.
Section 7. Amendments. These bylaws may be altered, amended or repealed
or new bylaws may be adopted:
(a) at any regular or special meeting of shareholders at which a quorum
is present or represented, by the affirmative vote of a majority of the stock
entitled to vote, provided notice of the proposed alteration, amendment or
repeal be contained in the notice of such meeting, or
(b) by the affirmative vote of a majority of the board of directors at
any regular or special meeting of the board.
The board of directors shall not make or alter any bylaw specifying a
fixed number of directors or the maximum or minimum number of directors and the
directors shall not change a fixed board to a variable board or vice versa in
the bylaws. The board of directors shall not change a
28
<PAGE>
bylaw, if any, which requires a larger proportion of the vote of directors for
approval then is required by the California General Corporation Law.
I HEREBY CERTIFY that the foregoing is a full, true and correct copy of
the Bylaws of ADVANTAGE SYSTEMS, INC., a California corporation, as in effect on
the date hereof.
WITNESS my hand and the seal of the corporation.
Dated: September 9, 1996
/s/ Keith E. Avinger
---------------------------------
Secretary
ADVANTAGE SYSTEMS INC.
29
Exhibit 3.6
BYLAWS
OF
CASINO PIRATA.COM LTD.
ARTICLE I
SHAREHOLDERS MEETING AND VOTING
1.1 Place of Meetings.
Meetings of the shareholders shall be held at the corporation's
principal office, or at such other location as shall be designated in the notice
of meeting
1.2 Annual Meetings.
The annual meeting of the shareholders shall be held on the first
Monday of November of each year, if not a legal holiday, and if a legal holiday,
then on the next succeeding business day, at the hour of 9:30 o'clock, a.m. The
time and date of such meeting may be varied by the Board of Directors provided
that notice of the varied date and time of the annual meeting is given in
accordance with these By-Laws. At the annual meeting, the shareholders shall
elect by vote a Board of Directors, consider reports of the affairs of the
corporation, and transact such other business as may properly be brought before
the meeting.
1.3 Special Meetings.
Special meetings of the shareholders may be called at any time by the
President, the Board of Directors, by the holders of not less than one-tenth
(1/10th) of all the shares entitled to vote at such meeting, and as otherwise
provided in the Nevada Business Corporation Act, as amended (the "Act").
1.4 Notice of Meetings.
1.4.1 Written or printed notice, in a comprehensible form, stating the
date, time and place of the meeting, and in case of a special meeting, a
description of the purpose or purposes for which the meeting is called, shall be
delivered not earlier than sixty (60) nor less than ten (10) days before the
meeting date, in person, telegraph, teletype, or other form of wire or wireless
communication, by mail or private carrier, by or at the direction of the
President, Secretary, other officer or persons calling, the meeting. If mailed,
the notice is effective when deposited postpaid in the United States mail,
correctly addressed to the shareholder's address shown on the Corporation's
current record of shareholders. In all other cases, the notice shall be
effective when received by the shareholders.
1.4.2 If a shareholders' meeting is adjourned to a different date, time
or place, notice need not be given of the new date, time or place, if the new
date, time or place is announced at the meeting before adjournment, unless a new
record date for the adjourned meeting is or must be fixed under the Act, in
which event notice of the adjourned meeting must be given to the persons who are
shareholders as of tile new record date.
1. By-Laws
<PAGE>
1.5 Voting Entitlement of Shares.
Unless the Articles of Incorporation provide otherwise, or except as provided by
the Act, each outstanding share, regardless of class, is entitled to one vote on
each matter voted on at a shareholders' meeting. Only shares are entitled to
vote.
1.6 Quorum and Voting.
1.6.1 Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares exists with
respect to that matter. Unless the Articles of Incorporation or the Act provides
otherwise, a majority of the votes entitled to be cast on the matter by the
voting group constitutes a quorum of that voting group for action on that
matter.
1.6.2 Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting, unless a new record date is or must be set for that
adjourned meeting.
1.6.3 If a quorum exists, action on a matter, other than the election
of directors, by a voting group, is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
Articles of Incorporation or the Act requires a greater number of affirmative
votes.
1.6.4 Unless otherwise provided in the Articles of Incorporation,
Directors are elected by a plurality of the votes cast by the shares entitled to
vote in the election at a meeting at which a quorum is present.
1.6.5 If the Articles of Incorporation or the Act provides for voting
by a single group on a matter, action on that matter is taken when voted upon by
that voting group in accordance with these By-Laws.
1.6.6 If the Articles of Incorporation or the Act provides for voting
for two or more voting groups on a matter, action on that matter is taken only
when voted upon by each of those voting groups counted separately as provided by
these By-Laws.
1.7 Proxies.
A shareholder may vote shares in person or by written proxy signed by
the shareholder or the shareholders attorney in fact and delivered to the
secretary or other officer or agent of the Corporation authorized to tabulate
votes.
1.8 Record Date.
The record date for determining the shareholders entitled to notice of
a shareholders' meeting, to demand a special meeting, to vote or to take other
action, shall, unless otherwise determined by the Board of Directors in advance
of such action, be the date of such notice, demand, vote, or other action.
2. By-Laws
<PAGE>
1.9 Shareholders' List for Meeting.
After fixing a record date for a meeting, the corporation shall prepare
an alphabetical list of the names of all of its shareholders who are entitled to
notice of a shareholders' meeting. The list must be arranged by voting group,
and within each voting group by class or series of shares, and show the address
of and number of shares held by each shareholder. The shareholders' list must be
available for inspection by any shareholder, beginning two business days after
notice of the meeting is given for which the list was prepared and continuing
through the meeting, at the corporation's principal office or at a place
identified in the meeting notice in the city where the meeting is to take place.
The corporation shall make the shareholders' list available at the meeting, and
any shareholder, the shareholder's agent, or attorney is entitled to inspect the
list at any time during the meeting or any adjournment thereof.
ARTICLE II
DIRECTORS
2.1 Powers.
The business and affairs of the corporation shall be managed by a Board
of Directors which shall exercise or direct the exercise of all corporate powers
except to the extent shareholder authorization is required by the Act, the
Articles of Incorporation, or these By-Laws.
2.2 Number.
The number of the members of the Board of Directors shall be not less
than one, nor more than seven.
2.3 Election and Term of Office.
Except as provided in the Articles of Incorporation, the directors
shall be elected at the annual meeting of the shareholders. The terms of office
of the directors shall begin immediately after election and shall expire at the
next annual shareholders' meeting following their election and when their
successors are duly elected and qualified. The directors need not be residents
of this state, or shareholders of the corporation.
2.4 Vacancies.
2.4.1 A vacancy on the Board of Directors shall exist upon the death,
resignation, or removal of any director, in the event an amendment of the
By-Laws is adopted increasing the number of directors, or in the event that the
directors determine that it is desirable to elect one or more additional
directors within the variable-range of the number of directors established by
these By-Laws.
2.4.2 Unless the Articles of Incorporation provide otherwise, a vacancy
may be filled by the shareholders, the Board of Directors, or if the Directors
remaining in office constitute fewer than a quorum of the Board, they may fill
the vacancy by an affirmative vote of a majority of all of the Directors
remaining in office.
2.4.3 The term of a director elected to fill a vacancy expires at the
next shareholders' meeting at which directors are elected, and when his/her
successor has been duly elected and qualified.
3. By-Laws
<PAGE>
2.4.4 A vacancy that will occur at a specific later date, by reason of
a resignation submitted in accordance with the Act, may be filled before the
vacancy occurs, but the new director may not take office until the vacancy
occurs.
2.4.5 Except as provided by the Articles of Incorporation or the Act,
during the existence of any vacancy, the remaining directors shall possess and
may exercise all powers vested in the Board of Directors, notwithstanding lack
of a quorum of the board.
2.4.6 The shareholders may remove one or more directors with or without
cause at a special meeting of shareholders called for that purpose pursuant to a
meeting notice indicating removal as one of the purposes. If a director is
elected by a voting group of shareholders, only the shareholders of that voting
group may participate in the vote to remove the director. A director may be
removed only if the number of votes cast to remove the director exceeds the
number of votes cast not to remove the director.
2.5 Meetings.
The annual meeting of the Board of Directors of this corporation shall
be held immediately following the annual meeting of the shareholders, which
meeting shall be considered a regular meeting as to which no notice is required.
2.5.2 Regular meetings of the Board of Directors may be held without
notice of the date, time, place or purpose of the meeting.
2.5.3 Special meetings of the Board of Directors for any purpose or
purposes may be called by an officer or director of the corporation in
accordance with the notice provisions of Section 2.6.1 of these By-Laws.
2.6 Notice of Special Meetings.
Special meetings of the Board of Directors must be preceded by at least
two (2) days' notice of the date, time and place of the meeting. The notice need
not describe the purpose of such meetings. Notice of special meetings of the
Board of Directors may be in writing or oral, and may be communicated in person,
by telephone, telegraph, teletype, or other form of wire or wireless
communication, by mail or by private carrier. Written notice, if in
comprehensible form, is effective at the earliest of the following: (a) when
received; (b) five (5) days after its deposit in the U.S. Mail, as evidenced by
the postmark, if mailed postpaid and correctly addressed; or (c) on the date
shown on the return receipt, if sent by registered or certified mail, return
receipt requested, and the receipt is signed by or on behalf of the addressee.
Oral notice is effective when communicated, if communicated in a comprehensible
manner.
2.7 Manner of Conducting Meetings.
The Board of Directors may permit any or all directors to participate
in a regular or special meeting by, or conduct the meeting through, use of any
means of communication by which all directors participating may simultaneously
hear each other during the meeting. A director participating in a meeting by
this means is deemed to be present in person at the meeting.
4. By-Laws
<PAGE>
2.8 Quorum.
Unless the Articles of Incorporation or these By-Laws provide
otherwise, a quorum of the Board of Directors consists of a majority of the
number in office immediately before the meeting begins.
2.9 Compensation
Unless the Articles of Incorporation provide otherwise, the Board of
Directors may fix the compensation of directors, and authorize the corporation
to reimburse the directors for their reasonable expenses incurred while
attending meetings of the Board and while engaged in other activities on behalf
of the corporation.
ARTICLE III
OFFICERS
3.1 Designation, Election and Qualifications.
The officers shall include a President, and a Secretary. The officers
may include a Chief Executive Officer, thief Operating Officer, Chief Financial
Officer, Vice-President(s), Treasurer, Assistant Secretary, or Assistant
Treasurer, as the Board of Directors shall, from time to time, appoint. Officers
need not be members of the Board of Directors. The officers shall be elected by,
and hold office at the pleasure of the Board of Directors. Any two offices may
be held by the same person.
3.2 Compensation and Term of Office.
3.2.1 The compensation and term of office of the officers of the
corporation shall be fixed by the Board of Directors. Any officer may be removed
either with or without cause, by action of the Board of Directors.
3.2.2 An officer may resign at any time by delivering notice to the
corporation. A resignation is effective when the notice is effective under the
Act, unless the notice specifies a later effective date. If a resignation is
made effective at a later date and the corporation accepts the future effective
date, Board of Directors may fill the pending vacancy before the effective date
provided that the successor does not take office until the effective date.
3.3 President.
The President shall be the chief executive officer of the corporation
and shall, subject to the control of the Board of Directors, have general
supervision, direction and control of the business affairs of the corporation.
He shall, when present, preside at all meetings of the shareholders and of the
Board of Directors. He shall be an ex-officio member of all committees, if any,
shall have the general powers and duties of management usually vested in the
office of President of a corporation, and shall have such other powers and
duties as may be prescribed by the Board of Directors or the By-Laws. He may
sign, with the Secretary or any other proper officer of the corporation
authorized by the Board of Directors, certificates for shares of the
corporation, deeds, mortgages, bonds, contracts, or other instruments which the
Board of Directors authorizes to be executed, except in cases where the signing
and execution thereof shall be expressly delegated by the directors or by these
By-Laws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed.
5. By-Laws
<PAGE>
3.4 Vice-President.
The Vice-President(s), if any, shall perform such duties as may be
assigned to him/her by the President or the Board of Directors. In the event of
the death, disability, inability or refusal to act of the President, the
Vice-President shall perform the duties and exercise the powers of the President
unless otherwise designated by the Board of Directors. In the event the
corporation has more than one Vice-President, the Executive Vice-President or,
if none, the Vice-President in charge of administration, shall be the officer
acting in the stead of the President as provided in this section.
3.5 Secretary.
3.5.1 The Secretary shall keep or cause to be kept at the principal
office of the corporation or such other place as the Board of Directors may
order, a book of minutes of all meetings of directors and shareholders showing
the time and place of the meeting, whether it was required by the By-Laws of the
corporation, how authorized, the notice given, the names of those present at
directors' meetings, the number of shares present or represented at
shareholders' meetings and the proceedings of each meeting.
3.5.2 The Secretary shall keep or cause to be kept at the principal
office or at the office of the corporation's transfer agent, a share register or
duplicate share register, showing the names of the shareholders and their
addresses, the number of shares of each class held by each, and the number and
date of cancellation of each certificate surrendered for cancellation.
3.5.3 The Secretary shall give or cause to be given such notice of the
meetings of the shareholders and of the Board of Directors as is required by the
By-Laws. He/she shall keep the seal of the corporation, if any, and affix it to
all documents requiring a seal, and shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or By-Laws.
3.6 Treasurer.
The Treasurer, if any, shall be responsible for the funds of the
corporation, receive and give receipts for monies due and payable to the
corporation from any source whatsoever, deposit all such monies in the name of
the corporation in such banks, trust companies or other depositories as shall be
selected in accordance with these By-Laws, shall pay the funds of the
corporation out only on the checks of the corporation signed in the manner
authorized by the Board of Directors, and, in general, perform all of the duties
incident to the office of Treasurer and such other duties as, from time to time,
may be assigned to him/her by the President or the Board of Directors.
3.7 Assistants.
The Board of Directors may appoint or authorize the appointment of
assistants to any officer. Such assistants may exercise the power of such
officer and shall perform such duties as are prescribed by the Board of
Directors.
6. By-Laws
<PAGE>
ARTICLE IV
COMMITTEES
The Board of Directors may appoint from among its members one or more committees
of two (2) or more members, in accordance with and subject to the restrictions
of the Act.
ARTICLE V
CONTRACTS, CHECKS AND DEPOSITS
5.1 Checks, Drafts, Etc.
All checks, drafts, or other orders for the payment of money, notes or
other evidence of indebtedness, issued in the name of or payable to the
corporation, shall be signed by such person or persons and in the manner as
shall be determined from time to time by resolution of the Board of Directors.
5.2 Deposits.
All funds of the corporation not otherwise employed shall be deposited,
from time to time, to the credit of the corporation in such banks, trust
companies, or other depositories as the Board of Directors may select.
Contracts, Instruments.
The Board of Directors may, except as otherwise provided in the
By-Laws, authorize any officer or agent to enter into any contract or execute
any instrument in the name of and on behalf of the corporation. Such authority
may be general or confined to specific instances. Unless so authorized by the
Board of Directors, no officer, agent, or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credits, or to render it liable for any purpose or for any amount.
ARTICLE VI
CERTIFICATES AND TRANSFER OF SHARES
6.1 Certificates for Shares.
6.1.1 Certificates for shares shall be in such form as the Board of
Directors may designate and shall indicate the state law under which the
corporation is organized. The certificates shall state the name of the record
holder of the shares represented thereby, the number of the certificate, the
date of issuance and the number of shares for which it is issued, the par value
of such shares, if any, or that such shares are without par value, and the
series and class of such shares. If the corporation is authorized to issue
different classes of shares or different series of shares within a class, the
designations, relative rights, preferences and limitations of each class, the
variations in rights, preferences and limitations determined for each series,
and the authority of the Board of Directors to determine variations for future
series shall be summarized on the front or back of each certificate, or, each
certificate may state conspicuously on its front or back that the corporation
will furnish the shareholder with this information on request in writing, and
without charge. Each certificate shall state or make reference on its front or
back to any liens, purchase options or restrictions on transfer.
7. By-Laws
<PAGE>
6.1.2 Each share certificate must be signed, either manually or in
facsimile, by the President or a Vice-President and the Secretary or an
Assistant Secretary.
6.2 Transfer on the Books.
Upon surrender to the corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment, or
authority to transfer, the corporation shall issue a new certificate to the
person entitled thereto, cancel the old certificate, and record the transaction
upon its books.
6.3 Lost, Stolen, or Destroyed Certificates.
If a certificate is represented as being lost, stolen, or destroyed, a
new certificate shall be issued in its place upon such proof of the loss, theft,
or destruction and upon the giving of such bond or to the security as may be
required by the Board of Directors.
6.4 Transfer Agents and Registrars.
The Board of Directors may from time to time appoint one or more
specific transfer agents and one or more registrars for the shares of the
corporation who shall have such powers and duties as the Board of Directors may
specify.
ARTICLE VII
INDEMNIFICATION AND LIABILITY
7.1 Indemnification.
The corporation shall indemnify to the fullest extent not prohibited by
law any person who was or is a party or is threatened to be made a party to any
proceeding (as hereinafter defined) against all expenses (including attorney's
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by the person in connection with such proceeding.
7.2 Advancement of Expenses.
Expenses incurred by a director or officer in defending a proceeding
shall, in all cases, be paid by the corporation in advance of the final
disposition of such proceeding at the written request of such person, if the
person:
7.2.1 Furnishes the corporation a written affirmation of the person's
good faith belief that such person is entitled to be indemnified by the
corporation under this article or under any other indemnification rights granted
by the corporation to such person; and
7.2.2 Furnishes the corporation a written undertaking to repay such
advance to the extent it is ultimately determined by a court that such person is
not entitled to be indemnified by the corporation under this article or under
any other indemnification rights granted by the corporation to such person. Such
advances shall be made without regard to the person's ultimate entitlement to
indemnification under this article or otherwise.
8. By-Laws
<PAGE>
7.3 Definition of Proceedings.
The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding, whether brought in the right of the
corporation or otherwise and whether of a civil, criminal, administrative or
investigative nature, in which a person may be or may have been involved as a
party or otherwise by reason of the fact that the person is or was a director or
officer of the corporation or a fiduciary within the meaning of the Employee
Retirement Income Security Act of 1974 with respect to any employee benefit plan
of the corporation, or is or was serving at the request of the corporation as a
director, officer or fiduciary of an employee benefit plan of another
corporation, partnership, joint venture, trust or other enterprise, whether or
not serving in such capacity at the time any liability or expense is incurred
for which indemnification or advancement of expenses can be provided under this
article.
7.4 Non-Exclusivity and Continuity of Rights.
The indemnification and entitlement to advancement of expenses provided
by this article shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under the articles of incorporation or any statute,
agreement, general or specific action of the board of directors, vote of stock
holders or otherwise, shall continue as to a person who has ceased to be a
director or officer, shall inure to the benefit of the heirs, executors, and
administrators of such a person and shall extend to all claims for
indemnification of advancement of expenses after the adoption of this article.
7.5 Amendments.
Any repeal of this article shall only be prospective and no repeal or
modification hereof shall adversely affect the rights under this article in
effect at the time of the alleged occurrence of any action or omission to act
that is the cause of any proceeding.
7.6 Director Liability.
No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for conduct as a director;
provided that this section 7.6 shall not eliminate the liability of a director
for any act or omission for which sum elimination of liability is not permitted
under the Oregon Business Corporation Act. No amendment to the Oregon Business
Corporation Act that further limits the acts or omissions for which elimination
of liability is permitted shall affect the liability of a director for any act
or omission which occurs prior to the effective date of such amendment.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Amendment of By-Laws.
Except as otherwise provided by the Act or the Articles of
Incorporation, the By-Laws may be amended by the Board of Directors or the
shareholders. Whenever amendments or new By-Laws are adopted, they shall be
placed in the minute book with the original By-Laws in the appropriate place. If
any By-Law is repealed, the fact of repeal and the date on which the repeal
occurred shall be stated in such book and place.
9. By-Laws
<PAGE>
8.2 Dividends.
Except as provided by the Act or the Articles or Incorporation, the
directors may, from time to time, declare and the corporation may pay, dividends
on its outstanding shares in the manner and upon the terms and conditions
provided by law.
8.3 Seal.
The directors may provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words "corporate seal".
8.4 Action Without Meeting
Any action which the Act, the Articles of Incorporation or by the
By-Laws require or permit the shareholders or directors to take at a meeting may
be taken without a meeting if the action is taken by all of the shareholders or
directors entitled to vote on the matter, evidenced by one or more written
consents describing the action taken, signed by each shareholder or director, as
the case may be, and included in the minutes or filed with the corporate records
reflecting the action taken.
8.5 Waiver of Notice.
A shareholder or director may, at any time, waive any notice required
by the Act, the Articles of Incorporation or the By-Laws. Any such waiver shall
be in writing, signed by the shareholder or director entitled to the notice and
shall be delivered to the corporation for inclusion in the minutes or corporate
records.
I hereby certify that the foregoing Amended By-Laws were adopted by the
Board of Directors on December 1, 1999.
By: /s/ Keith E. Avinger
------------------------------
Corporate Secretary
10. By-Laws
Exhibit 4
(STOCK CERTIFICATE SPECIMEN COPY)
NUMBER
ADAVANTAGE TECHNOLOGIES, Inc. SHARES
Incorporated under the letters of the State of Nevada
This Certifies That CUSIP 00759 U 10 6
is the Owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF $.001 PAR VALUE SHARES
OF
ADVANTAGE TECHNOLOGIES, Inc.
transferable upon the books of the corporation upon surrender of this
certificate properly endorsed. This Certificate is not valid until countersigned
by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of
duly authorized officers.
Date:
COUNTERSIGNED by ADVANTAGE TECHNOLOGIES, Inc.
OTR, Inc. (Corporate Seal)
317 SW Alder, #1120
Portand, OR 97204
- ---------------------------- -------------------- ---------------------------
Authorized Officer President
---------------------------
Secretary
Exhibit 10.1
EMPLOYMENT AGREEMENT
DATE: November 18, 1999, to be effective as of October 7, 1999
PARTIES: Advantage Technologies, Inc., a Nevada corporation
1324 S. Mary Avenue
Sunnyvale, CA 94087 ( "Company")
George J. Bentley
2600 Lunada Lane
Alamo, CA 94507-1023 ("Employee")
RECITAL
The Company desires to employ and retain the unique experience,
abilities, and services of Employee to perform certain duties pursuant to the
terms and conditions described herein.
AGREEMENT
The parties agree as follows:
1. EMPLOYMENT
1.1 Term. The Company agrees to employ Employee as President
and Chief Executive Officer for a term commencing on October 7, 1999 and
continuing for a period of twenty-four (24) months thereafter or until
terminated in accordance with Section 6 herein.
1.2 Duties. Employee accepts employment with the Company on
the terms and conditions set forth in this Agreement. Employee shall perform his
duties and shall exercise such specific authority as may be assigned to Employee
from time to time. In performing such duties, Employee shall be subject to the
direction and control of the Board of Directors of the Company. Employee further
agrees that in all aspects of such employment, Employee shall comply with the
policies, standards, and regulations of the Company established from time to
time, and shall perform his duties faithfully, intelligently, to the best of his
ability, and in the best interest of the Company. The devotion of reasonable
periods of time by Employee for personal purposes, outside business activities,
or charitable activities shall not be deemed a breach of this Agreement,
provided that such purposes or activities do not materially interfere with the
services required to be rendered to or on behalf of the Company. All management
decisions involving the business of the Company, including but no limited to
mergers and acquisitions and the hiring and termination of management personnel
shall require the prior approval of Employee.
Page 1- EMPLOYMENT AGREEMENT
<PAGE>
2. COMPENSATION
2.1 Base Compensation. The base compensation ("Base
Compensation")to be paid Employee for services rendered under this Agreement
shall be $100,000.00 per annum, payable monthly.
2.2 Annual Bonus. In addition to the Base Compensation, the
Company may pay Employee an annual bonus ("Annual Bonus") in the sole discretion
of the Board of Directors.
2.3 Benefits. The Company shall provide to Employee the same
health insurance benefits that the Company may provide to other similarly
employed personnel, subject to Employee's satisfaction of the respective
eligibility conditions for such benefits.
2.4 Reimbursement. Employee shall be entitled to reimbursement
from the Company for reasonable expenses necessarily incurred by Employee in the
performance of Employee's duties under this Agreement, upon presentation of
vouchers indicating in detail the amount and business purpose of each such
expense and upon compliance with the Company's reimbursement policies
established from time to time.
3. CONFIDENTIALITY
3.1 Confidentiality. Employee acknowledges and agrees that all
software and proprietary information regarding software, including any
refinements, modifications and changes to such software, planning information,
lists of the Company's clients, financial information, and other Company data
related to its business ("Confidential Information") are valuable assets of the
Company. Except for information that is a matter of public record, Employee
shall not, during the term of this Agreement or after the termination of
employment with the Company, disclose any Confidential Information to any person
or use any Confidential Information for the benefit of Employee or any other
person, except with the prior written consent of the Company.
3.2 Return of Documents. Employee acknowledges and agrees that
all originals and copies of records, software, computer programs, reports,
documents, lists, plans, drawings, memoranda, notes, and other documentation
related to the business of the Company or containing any Confidential
Information shall be the sole and exclusive property of the Company, and shall
be returned to the Company upon the termination of employment with the Company
or upon the written request of the Company. This provision shall not apply to
any personal property of Employee which has been used by Employee during the
course of, and in connection with, his employment hereunder.
3.3 Injunction. Employee agrees that it would be difficult to
measure damage to the Company from any breach by Employee of Section 3.1 or 3.2
and that monetary damages would be an inadequate remedy for any such breach.
Accordingly, Employee agrees that if Employee shall breach or take steps
preliminary to breaching Section 3.1 or 3.2, the Company shall be entitled, in
addition to all other remedies it may have at law or in equity, to an injunction
Page 2- EMPLOYMENT AGREEMENT
<PAGE>
or other appropriate orders to restrain any such breach, without showing or
proving any actual damage sustained by the Company.
3.4 No Release. Employee agrees that the termination of
employment with the Company shall not release Employee from any obligations
under Section 3.1, 3.2 or 3.3.
4. ILLNESS OR DISABILITY
In the event Employee is unable to perform his duties under this
Agreement due to illness or disability for a continuous period of two (2) weeks,
the Base Compensation which shall be otherwise payable during said illness or
disability shall be reduced by fifty percent (50%) percent. The Base
Compensation shall be reinstated upon Employee's resumption of his duties
hereunder. In the event, however, that Employee is unable to perform his duties
under this Agreement, for any reason, for a continuous period of 90 days, the
Company shall have the option to terminate this Agreement immediately pursuant
to Section 6.2.5 of this Agreement.
5. DEATH BENEFIT
In the event of Employee's death during his employment under this
Agreement, the Company shall pay to the Employee's estate the Base Compensation
and the Annual Bonus, if any, due and owing through the end of the month in
which death occurred.
6. TERMINATION
6.1 Termination by Prior Notice.
6.1.1 The employment of Employee by the Company may be
terminated by the Company upon the giving of fourteen (14) days' prior written
notice to Employee, which termination shall be effective on the 14th day
following such notice.
6.1.2 Employee may terminate his employment hereunder
only upon the giving of six (6) months' prior written notice to the Company,
which termination shall be effective on the last day of such six (6) month
period. During said six (6) month notice period, Employee shall cooperate with
the Company in training Employee's replacement.
6.1.3 Employee's employment hereunder may be terminated
at any time by mutual agreement of the parties.
6.2 Immediate Termination. The employment of Employee by the
Company may be terminated immediately in the sole discretion of the Company upon
the occurrence of any one of the following events:
6.2.1 Employee willfully and continuously fails or
refuses to comply with the policies, standards, and regulations of the Company
established from time to time;
Page 3- EMPLOYMENT AGREEMENT
<PAGE>
6.2.2 Employee engages in fraud, dishonesty, or any other
act of misconduct in the performance of Employee's duties on behalf of the
Company;
6.2.3 Employee fails to perform any provision of this
Agreement to be performed by Employee;
6.2.4 All or substantially all the assets of the Company
are sold, transferred, or otherwise disposed of, the Company's assets are
distributed to its shareholders in liquidation, or the Company's business is
discontinued; or
6.2.5 Employee suffers a permanent disability. For
purposes of this Agreement, "permanent disability" shall be defined as
Employee's inability, due to illness, accident, or other cause, to perform
substantially all of his duties hereunder for a period of ninety (90) days or
more despite reasonable accommodation by the Company, upon certification of such
disability by, in the discretion of the Company, Employee's regularly attending
physician or a physician selected by the Company. Employee shall be deemed to
have become subject to a "permanent disability" on the date the Company has
determined that Employee is permanently disabled and so notifies Employee.
6.3 Payment of Compensation Upon Termination. Upon the
termination of employment of Employee hereunder, the Company shall be obligated
to pay to Employee the Base Compensation for the remaining term of this
Agreement, plus any earned but unpaid Annual Bonus to the date of termination.
7. COVENANT NOT TO COMPETE
During the term of his employment under this Agreement, and for a
period of one(1) year thereafter, Employee shall not, directly or indirectly, as
proprietor, partner, limited partner, member of a limited liability company,
shareholder, officer, director, employee, agent or representative, engage in a
Competitive Business Activity within the United States. "Competitive Business
Activity" shall mean the usual and customary products and services provided by
the Company. In addition, during the term of his employment under this
Agreement, and for a period of one (1) year thereafter, Employee shall not,
directly or indirectly, hire the employees of the Company to engage in a
Competitive Business Activity within the United States nor shall Employee
solicit any employees or customers to leave the Company.
8. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE
Employee represents and warrants to the Company that there is no
employment contract or any other contractual obligation to which Employee is
subject which prevents Employee from entering into this Agreement or from
performing fully Employee's duties under this Agreement.
Page 4- EMPLOYMENT AGREEMENT
<PAGE>
9. LEGAL COUNSEL
This Agreement was prepared for the Company by the Law Office of Robert
C. Laskowski. Employee has been advised to obtain his own legal counsel in
connection with this Agreement and Employee has elected not to do so.
10. MISCELLANEOUS PROVISIONS
10.1 The wavier by either the Company or Employee of a breach
of any provision of this Agreement will not operate by either the Company as a
waiver of any subsequent breach by either the Company or Employee.
10.2 This Agreement shall be binding upon and shall inure to
the benefit of both the Company and Employee and then respective successors,
heirs, and legal representatives; however, neither this Agreement nor any rights
hereunder may be assigned by either the Company or Employee without the written
consent of the other party.
10.3 No amendment or variation of the terms and conditions of
this Agreement shall be valid unless it is in writing and signed by the Company
and Employee.
10.4 All notices required or permitted to be given under this
Agreement shall be in writing. Notices may be served by certified or registered
mail, postage prepaid with return receipt requested; by private courier,
prepaid; by telex, facsimile or other telecommunications device capable of
transmitting or creating a written record; or personally. Mailed notices shall
be deemed delivered ten (10) days after mailing, properly addressed. Notices
sent by courier shall be deemed delivered on that date the courier warrants the
delivery will occur. Telex or telecommunicated notices shall be deemed delivered
when receipt is either confirmed by confirming transmission equipment or
acknowledged by the addressee or its office. Personal delivery shall be
effective when accomplished. Unless a party changes its address by giving notice
to the other party as provided herein, notices shall be delivered to the parties
at the addresses first set forth above
10.5 In the event suit or action is instituted to enforce any
of the terms of this Agreement, the prevailing party shall be entitled to
recover from the other party such sum as the Court may adjudge reasonable as
attorney's fees at trial or on appeal, in addition to all other sums provided by
law.
10.6 This Agreement shall be interpreted and enforced in
accordance with the laws of the State of California
10.7 This Agreement constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supercedes all prior oral or written agreements and understandings with respect
thereto.
Page 5- EMPLOYMENT AGREEMENT
<PAGE>
10.8 This Agreement may be executed in several counterpart copies, each
of which shall be deemed an original and shall constitute one agreement.
IN WITNESS WHEREOF, this Agreement is executed on the day and year
first above written.
Company: Advantage Technologies, Inc.
By:/s/George J. Bentley
-----------------------
George J. Bentley
Employee: /s/George J. Bentley
-----------------------
George J. Bentley
Page 6- EMPLOYMENT AGREEMENT
Exhibit 10.2
(WorldNet Casinos.Com, Inc. Letterhead)
1299 E. Commercial Blvd.
Ft. Lauderdale, Florida 33334
954-453-6000
S0FTWARE LICENSE AGREEMENT
WorldNetCasinos.Com, Inc.
THIS AGREEMENT, (hereinafter, "the Agreement") into the 19th day of April, 1999,
by and between:
WorldnetCasinos.com, Inc. (hereinafter referred to as 'Licensor"), a corporation
having principal offices at 1299 East Commercial Blvd., Fort Lauderdale,
Florida, 33334, USA,
and:
Simulator Systems Inc., a corporation having principal offices at P.O. Box
80241, Portland, Oregon, USA, 97280.
(hereinafter referred to "Licensee")
WHEREAS, the Licensor has developed certain software for Internet gaming and has
full right and title to all games it licenses.
WHEREAS, the Licensee desires to license from the Licensor and operate the
Licensor's software for the Internet gaming/sportsbook site as described herein.
Now, therefore, in consideration of the mutual covenants and promises set forth
herein, the parties ~~~~~~ agree as follows:
1. Entire Agreement
This Agreement, including all appendixes and referenced attachments, constitutes
the entire agreement between Licensor and Licensee and supersedes all proposals,
agreements, oral and written, between the parties on this subject matter,
whether carried out previously or after this agreement.
2. Software License
The Licensor herewith agrees to provide the following services (including the
software license as forth below) on a non-exclusive basis and subject to those
terms conditions:
1. License
The Licensor shall provide a software license, subject to all
provisions within this agreement, as per Schedule A.
1
<PAGE>
2. Usage
The Licensor grants usage rights to the Licensee on an non-exclusive
basis as follows:
1. The right: to use one copy of the Software utilizing multiple
URLs in a legal jurisdiction for the Licensee.
Except as specifically sat forth, the Licensee shall not copy or
distribute or cause to be distributed or copied, the software for any
other purpose except as provided herein.
3. Documentation
The Licensor agrees to provide current documentation free of charge and
additional documentation, if required, at the Lincensor's normal hourly
rates. The Licensee "I have the right to reproduce any documentation
the Licensor makes available provided that the reproduction is soley
for its internal use.
4. Maintenance
During to period of the lease, the Licensor shall provide to Licensee
any new, corrected or enhanced version of the Software as create by the
Licensor. Such enhancement shall include all modifications to the
software which Increase the speed, efficiency or ease of use of the
software or add additional capabilities or functionality to the
software, but shall not include any substantially now or rewritten
version of the software.
5. Performance
Subject to availability, Licensee shall be entitled to the casino game
listed on Schedule A. In the event that certain software is not
available or functioning as represented, a different game will be
substituted.
3. Performance of Services
The Licensee shall be solely responsible for the selection, installation and use
of the licensed product. The Licensor shall provide Licensee with technical
support and services as set out in Schedule A. These services do not include
hosting, merchant processing and other related Internet e-commerce services, nor
do they form any part of this license agreement.
Page 2
<PAGE>
4. Delivery and installation
The parties hereto acknowledge and understand that time is of the essence and
shall make their best efforts to expedite the delivery of the Software as
follows:
1. Delivery Schedule
The Licensor shall deliver or cause to be delivered to the Licensee at
the specified hosting site, the agreed upon Software program with a
time period specified In Schedule A.
2. Site Preparation and Installation
The Licensor shall be responsible for preparation and installation of
the Software at the designated hosting location, specified in Schedule
A.
5. Acceptance
Acceptance of the Software shall occur upon delivery by the Licensor to the Site
of Licensee at the Software, as set forth In Schedule A.
6. Title
Title to the original and any copies of the Licensed program materials, in whole
or in part, which are made by Licensee, including translations, complications,
partial copies, and updated works shall be and remain the sole property of the
Licensor.
7. Warranty and Legality
Upon delivery, the Licensor acknowledges to the but of its ability that the
Software is free of defects or imperfections for a period of sixty (60) days
from delivery date. Any errors that auto error messages and which can be
reproduced by the Licensee on the Licensor's or mutually agreeable test computer
system that are found In the delivered software during the warranty period shall
be corrected in a reasonable time from at the Licensor's expense.
The Licensor shall only be responsible for errors that we reproducible in the
Software as delivered by the Licensor, and not for any errors created because of
programs or Additions made by the Licensee or any other party.
The Licensor hereby disclaims all other warranties of any kind as the Software,
Client Games, whether stated or implied, including any warranty of
merchantability or fitness for a particular purpose, even if the Licensor has
been advised of that purpose.
Page 3
<PAGE>
The Licensee represents that it has conducted an independent investigation into
the legality of it's Intended use of the Software and hereby releases the
Licensor from any responsibility with respect to any present or intervening
illegality of such use.
The Licensee shall indemnity and hold the Licensor harmless from any and all
claims, liability or damage arising from or related to any alleged or actual
illegal use of the Software, In the event of any such illegality the Licensee
shall not be excused from it's obligations to the Licensor hereunder.
8. Payment to the Licensor
All payments shall be made by the Licensee to the Licensor as provided heroin on
Schedule A.
Upon termination of this Agreement for any reason, the Licensor shall be
entitled to payments and partial payments that occurred prior to the date of
termination and for which the Licensor how not yet been paid.
Furthermore, all Services and Schedules provided herein by the Licensor shall be
suspended if any payments, fees or invoices are in arrears and shall remain
suspended until such time the arrears have been paid or until the Licensor
elects to continue working with the Licensee.
9. Term/Termination
1. Term
The term hereunder shall begin upon the Effective date, and shall
continue for a period of five (5) years, and may be renewed for the
some period, unless terminated In writing by either party, within sixty
(60) days of the anniversary date and as long as either party is not in
default of this Agreement. Both parties agree that the License and
Confidentiality provisions of to Agreement shall remain in full force
and effect after the termination of this Agreement.
Page 4
<PAGE>
2. Default
Either party has the right to terminate this Agreement if the other
party breaches or is in default of It's obligations hereunder, and such
default is incapable of cure or which, being capable of cure, has not
been cured within thirty (30) days after receipt of notices of such
default (or such additional cure period as the non-defaulting party may
authorize).
3. Act of Insolvency
Either party may terminate this Agreement by written ratio to the
affected party if the affected party becomes insolvent suffers or
permits the appointment of a receiver for its business or assets,
becomes subject to any proceeding under any bankruptcy or insolvency
law whether domestic or foreign, or has wound up or liquidated
voluntarily or otherwise
4. Force Majeure Event
In the event that either party is unable to perform any of it's
obligations under this Agreement, or to enjoy any of it's benefits
because of natural disasters, or communications line failure not the
fault of the affected party (hereinafter referred to (Force Majeure
Event), the party who has been so affected shall immediately give
notice to other party and shall do everything possible to resume
performance. Upon receipt of such notice, all obligations under this
Agreement shall be immediately suspended. If the period of
nonperformance exceeds fifteen (15) days from this receipt of notice of
the Force Majeure Event, the party whose ability to perform has not
been affected may, by giving written notice, terminate this Agreement.
However, delays in delivery due to Force Majeure Events shall
automatically extend the delivery date for a period equal to the
duration of such Events; any warranty period affected by a Form Majeure
Event shall likewise be extended for a period equal to the duration of
such Event
5. Return of Software
Should this Agreement be terminated by the Licensor for any reason
pursuant to this Agreement, the Licensor shall be entitled to repossess
any and all the Services by directing the Licensee in writing to
deliver all records, notes, date, memoranda of any nature that are in
their possession or under their control within fifteen (15) days to the
Licensor and at the Licensee's expense to the nearest convenient
location of the Licensor.
Page 5
<PAGE>
10. Relationship of Parties
It is understood by the parties that to Licensor is an independent contractor
with respect to the Licensee, and not an employee of the Licensee. The Licensee
shall not provide fringe benefits, including health insurance benefits, paid
vacation, or any other employee benefit, for the benefit of the Licensor or it's
employees and/or agents. Furthermore, it is understood and agreed by the parties
that for a period of two (2) years, the Licensee shall not hire, or contract
with or in any manner have any of the Licensor's employees work for the
Licensee.
11. Consequential Damages
Licensee damages shall be limited to replacement of the software.
12. Intellectual Property
Except as otherwise provided for herein, the following provision shall apply
with respect to copyrightable works, ideas, discoveries, inventions, application
for patents, and patents (collectively, "Intellectual Property"):
1. The Licensed shall not hold any ownership Interest in any Intellectual
property
2. Any items of intellectual property discovered or developed by to
Licensor (or the Licensor's employees) for the benefit of the Licensee
during the term of this Agreement shall automatically become the
property of the Licensor.
13. Confidential and Proprietary Information
Both parties recognize that they have and/or shall have copyrights, products,
costs, business affairs, trade secrets, technical information, product design
information and other proprietary information (collectively, "Information")
which are valuable, special and unique assets.
1. Licensee's Business information
The Licensor agrees that the Licensor shall not knowingly distribute
any information of the Licensee to a third party without prior approval
of the Licensee. The only exception to this being statistics, winnings,
number of players, and any other information with regard to the games,
required by the Licensor to use in the marketing of the Software,
should this be a part of the herein agreement.
2. The Licensee agrees that the Software provided by the Licensor to the
Licensee is the sole property of the Licensor regardless of any
payments, fees or other considerations made to the Licensor by the
Licensee.
Page 6
<PAGE>
3. Unauthorized Disclosure of Information
In the event the Licensee has disclosed (or has threatened to disclose)
Information in violation of this Agreement, the other party shall be entitled to
an injunction to restrain the other party from disclosing, in whole or in part,
such information, or from providing any Services to any party to whom such
information has been disclosed or may be disclosed pending resolution for any
arbitration filed to resolve a dispute as it relates to this Agreement. Licensee
shall be prohibited by this provision from pursuing other remedies, including a
claim for losses and damages.
4. Confidentiality After Termination of Agreement
The confidentiality provisions of this Agreement shall remain in full force and
effect after the termination of this Agreement.
14. Return of Records
Upon termination of this Agreement, both Parties shall deliver of records,
notes, date, memoranda, of any nature that are in their possession or under
their control and that are the other Party's property or relate to the other
Party's business operations.
Page 7
<PAGE>
15. Notices
All notices required or permitted under this Agreement shall be in writing and
shall be deemed delivered when delivered in person or deposited into the USA
mail, postage prepaid, addressed as follows:
Licensor: WorldNet Casinos.Com Inc
1299 East Commercial Blvd.
Fort Lauderdale, Florida 33334
USA
Lincensee:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
Such addresses may be changed from time to time by either party providing
written notice in manner set forth above.
16. Amendment
This amendment may be modified of amended, if the amendment is made in writing
and is signed and dated by both parties.
Page 8
<PAGE>
17. Severability
If any provision of this Agreement shall be hold to be invalid or unenforceable
for any reason, the remaining provisions shall continue to be valid and
enforceable. If arbitration finds that any provision of the Agreement is invalid
or unenforceable, then such provision shall be deemed to be written, construed,
end enforced as so limited.
16. Waiver
The failure of either party to enforce any provision of this Agreement shall not
be construed as a waiver or limitation of that party's right to subsequently
enforce and compel strict compliance with every provision of this Agreement.
No term or Provision hereof shall be deemed waived and no breach excused unless
such waiver or consent shall be in writing and signed by to party claimed to
have waived or consented.
19. No Contingencies or Changes
It is agreed by the Licensor that the Software has been created and is not
contingent upon uncertain events or engineering which shall not have occurred
until after the contract is awarded. This does not include changes requested by
the Licensee or other factors that are not under the Licensor's direct control.
20. Taxes
Licensee shall pay all taxes arising from the license of this Software except
for any tax based on Licensor's income.
21. Applicable Law and Venue
This Agreement shall be governed by the laws of the State of Florida. Any suits
by law or in equity or arbitration shall be hold in Broward County, Florida. The
Licensee consents to the personal jurisdiction of the courts of Florida.
22. Enforcement
In the event of the breach of any covenants or provisions set forth herein, and
in to event of litigation in connection with this Agreement, the prevailing
party shall be entitled to recover it's costs, including attorney's fees at
trial and all appellate levels.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and do each
hereby warrant and represent that their respective signatory whose signature
appears below has been and is on the date of the Agreement duty authorized by
all necessary and appropriate corporate action to execute this Agreement and
have cause this Agreement to become effective as of the date first above
written:
Page 9
<PAGE>
"LICENSOR"
WORLDNETCASINOS.COM INC.
Per:
---------------------------------- (SEAL)
Name:
----------------------------------
Title:
----------------------------------
"LICENSEE"
SIMULATOR SYSTEMS, INC. (SEAL)
Per:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Page 10
<PAGE>
SCHEDULE A
Forming part of the Agreement, dated this 19th day of April, 1999, by and
between:
WORLDNETCASINOS.COM, INC. (Licensor)
- - and -
SIMULATOR SYSTEMS, INC. (Licensee)
Both parties agree to the following term:
Both Parties agree to the following terms:
Purchase Price is ONE HUNDRED AND FIFTY DOLLARS ($150,000.00) US
Payment Schedule:
$50,000.00 upon Execution of this contract.
The balance of $125,000.00 upon completion of this project.
Term of License is 5 years. This license is renewable after five years, for a
further five years at $100,000.00 US dollars.
This Licensee will include the following:
Casino: To include eight (8) games, which may include the following, or some
derivative of the following games:
Blackjack
Slots
Pai-gow
Video Poker (Dueces Wild and Jacks or Better)
Roulette
Instant Bingo
Baccarat
The game SuperSix will be Included In this Casino, for which the Licensee
receives 25% of the net win.
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Sportsbook: Fully functioning on-line Sportsbook shall also be included, from
which the Licensee will receive 15% of the net win of the traffic from his site.
This Licensee will be provided with the following management services, including
but not Limited to:
1. Hosting: The Software will be hosted and managed from our server's
location in Costa Rica.
2. Graphics and Changes: Custom graphics including logo and web site
design.
3. Technical Support: Licensee is entitled to technical support for the
duration of the License.
4. 1-800 Customer Support Number: This telephone number is provided to the
Licensee for use by players of the Casino/sportsbook to report any
problem questions and/or questions they may have. This number is
answered by our operators located in Costa Rica.
5. Offshore Circuits: Licensee shall be provided with bandwidth of at
least 2 meg over internet circuits.
6. Backup: All servers are guaranteed battery backup as well as a 100 KVA
generator in the event of a power outage.
7. Site Promotion: The Licensee is guaranteed participation in our search
engine site promotion.
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A Management fee for the above services is to be paid, based on thirty percent
(30%) of the net win of the Casino/Sportsbook.
WORLDNETCASINOS.COM, INC.
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SIMULATOR SYSTEMS, INC.
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DATED THIS day of ,1999.
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February 24, 1996
Re: Letter of Intent for the License of Software
Dear ***** Kelly:
This letter of intent is for the purpose of confirming the conversation
to date and mutual intention of WorldNet Casinos.Com, Inc. ("Licensor") and
Simulator Systems, Inc. ("Licensee"). If the basic terms and conditions as set
forth in this Letter of Intent are acceptable, then it is the intent of the
parties that a definitive License Agreement will be entered into, embodying the
concepts and proposed terms outline below, including customary representations,
warranties and indemnification, by both parties.
1. Confirmation of Licensing Agreement. Within 5 days from the date of
this Letter of Intent, Licensee shall confirm to Licensor, in writing, of its
desire to enter into, embodying the concepts and proposed terms outline below,
including customary representations, warranties and indemnification's by both
parties.
2. Gaming Software Packages. Licenses has selected the following gaming
software packages.
The Casino License for "Casino Pirata" will exist for a period of five
a (5) years. This License is Renewable after five (5) years for a further five
(5) years at One Hundred and Fifty Thousand US Dollars ($150,000.00). License
will include nine games: blackjack, slots, pai-gow, video poker (double down,
deuces wild and jacks or better), roulette, instant bingo, and baccarat.
Included with the option plan, the License will be provided with the following
management services, including but not limited to:
- - Domain Name, including ".com" and ".co.or"
- - All graphic changes
- - Offshore circuits, via internet circuits - 2 meg
- - Two (2) servers: a) 1 sequal database server
b) 1 Dec Alpha, 600 megahertz
- - Thirty (30) day installation
- - Tech support for the duration of the contract
- - Use of UPS battery backup and 100 kva generator
- - 1-800 telephone number for customer support
- - Participation in our search engine site promotion
- - Software upgrades as available
Signature /s/PHS
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A management fee of thirty percent (30%) of the net win for these services will
apply.
In conjunction with the Casino software, a sportsbook link is set up on your
casino site to drive traffic to the sportsbook site, of Global Collection Corp,
of which you receive fifteen percent (15%) of the net win.
3. Additional Services. The proposed License Agreement will
specifically exclude Licensor from any obligation related to marketing or
promotional services concerning the gaming programs licensed to Licensee.
Furthermore, Licensor will not be providing credit card processing services for
the business of Licensee pursuant to the proposed License Agreement, however,
Licensor will provide introduction and contact to the agent of such services.
This service refers to the Translock System, realtime sales reporting system,
and MasterMerchant Services, the credit card processing system.
4. Performance. Within thirty (30) days from the date of the License
Agreement, Licensor shall provide and/or install (depending on software package)
the gaming program selected by Licensee requires a modification to Licensor's
software resulting in a delay to Licensor's 30 day performance period, Licensee
agrees that Licensor shall not be responsible for such a delay.
5. Payments. Licensee shall pay Licensor a total license fee of One
Hundred and Fifty Thousand US dollars, ($150,000.00).
Payable is accepted as follows:
(1) Deposit of $50,000 upon execution of this Letter of Intent.
(2) Remaining balance of $100,000 due upon signing of contract.
6. Definitive Licensing Agreement. The definitive License Agreement
shall be prepared by Licensor and submitted to Licensee no later than 30 days
after confirmation date.
Signature /s/PHS
<PAGE>
7. Non-Binding. This letter expresses discussions to date and is not
intended to be a binding agreement. It is understood that the definitive License
Agreement will contain other terms and conditions which will have to be
negotiated and agreed to before finalizing said License Agreement.
If this Letter of Intent is in accordance with your understanding of
the proposed transaction, please indicate your acceptance of this letter by your
signature below.
Very truly yours,
WorldNet
Casino.Com, Inc.
Agreed this
Day of March, 1999
<PAGE>
February 24, 1998
Re: Letter of Intent for the License of Software
Dear :
This Letter of Intent is fag the purpose of confirming the
conversations to date and mutual intention of WorldNet Gaming, Inc. ("Licensor")
and ("Licensee"). If the basic terms and conditions as set forth in this Letter
of Intent are acceptable, then it is the intent of the parties that a definitive
License Agreement will be entered into, embodying the concepts and proposed
terms outlined below, including customary representations, warranties and
indemnification by both parties
1. Confirmation of Licensing Agreement. Within 5 days from the
date of this Letter of Intent, Licensee shall confirm to Licensor, in writing of
its desire to enter a definitive and binding License Agreement with Licensor
("Confirmation Date").
2. Gaming Software Packages. Licensee to has selected the
following gaming
The Casino License for "Casino Pirata", will exist for a period of five
years. The Won will include nine games: blackjack, slots, pai-gow, video poker
(double down, deuces wild and jacks or better), roulette instant bingo, and
baccarat. Included with the option plan, the Licensee will be provided with
management services, including but not limited to: server-hosting, hardware,
bandwidth, maintenance, technical support, assist with marketing contacts for
site promotion, account and billing back office suite to view real-time sales,
software upgrades and an offshore IBC. A management fee of thirty percent (30%)
for these services will apply. In conjunction with the Casino software, a
sportsbook link is set up on your Casino site to drive traffic to the sportsbook
site, of Global Collection Corp. of which you received 15% of the net win.
<PAGE>
3. Additional Services. The proposed License Agreement will
specifically exclude Licensor from any obligation related to marketing or
promotional services concerning the gaming programs licensed to Licensee.
Furthermore, Licensor will not be providing credit card processing services for
the business of Licensee pursuant to the proposed License Agreement.
4. Performance. Within ninety (90) days from the date of the License
Agreement, Licensor shall provide and/or install (depending on the software
package) the gaming program selected by Licensee, the name and design of which
will be selected by Licensee. In the event Licensee requests a modification to
Licensor's software resulting in a delay to Licensor's 90 day performance
period, Licensee agrees that Licensor shall not be responsible for such a delay.
4. Licensee shall pay Licensor a total license fee of $150,000.00 US
dollars payable as follows:
(1) Deposit upon execution of this Letter of Intent.
(2) Remaining balance due upon .
5. Definitive licensing Agreement. The definitive License Agreement
shall be prepared by Licensor and submitted to Licensee no later than. days
after the Confirmation Date.
6. Non-Binding. This letter expresses discussions to date and is not
intended to be a binding agreement. It is understood that the definitive License
Agreement will contain other terms and conditions which will have to be
negotiated and agreed to before finalizing said License Agreement.
If this Letter of Intent is in accordance with your understanding of
the proposed transaction, please indicate your acceptance of this letter by your
signature below.
Very truly yours,
WorldNet
Casino.Com, Inc.
---------------------------------
By:
------------------------------
(Print name and title)
Agreed this
Day of March, 1999
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LICENSEE
By:
------------------------------
(Print name and title)
Exhibit 21
Subsidiaries of Small Business Issuer
Name Jurisdiction of Incorporation
Advantage Systmes, Inc. California
Casino Pirata.com Ltd Nevada
INDEPENDENT AUDITOR'S CONSENT
To The Board of Directors of Advantage Technologies, Inc.
We hereby consent to the use in this Form 8-K of our report dated
February 1, 2000 relating to the financial statements of
Advantage Technologies, Inc. (formerly Simulator Systems, Inc.) as of
September 30, 1999 and 1998 and for each of the three years in the period
ended September 30, 1999.
/s/ Timothy L. Steers, CPA, LLC
Timothy L. Steers, CPA, LLC
Portland, Oregon
April 3, 2000
