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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10SB-12G
General Form For Registration of Securities
of Small Business Issuers
Pursuant to Sections 12(b) and (g) of
the Securities Exchange Act of 1934
MNS EAGLE EQUITY GROUP IV, INC.
(Exact name of Small Business Issuer as specified in its charter)
Nevada 84-1517720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
12373 E. Cornell Avenue, Aurora, Colorado 80014
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(Address of Principal Executive Offices and Zip Code)
303-337-3384
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(Small Business Issuer's telephone number, including area code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each Class Name of each exchange on which
to be so registered each class is to be registered
NONE NONE
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.001 Par Value
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(Title of Class)
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TABLE OF CONTENTS
PART I
Item 1. DESCRIPTION of BUSINESS ...................................... 4
Background ................................................. 4
Forward-Looking Statements ................................. 4
Exchange Act Registration .................................. 5
Proposed Business .......................................... 5
Pre-Combination Activities .............................. 5
Combination Suitability Standards ....................... 6
Form of Acquisition ..................................... 8
Post-Combination Activities ............................. 9
Potential Benefits to Insiders ............................. 10
Use of Consultants and Finders ............................. 10
State Securities Law Considerations ........................ 10
No Investment Company Regulation ........................... 11
Competition ................................................ 11
Employees .................................................. 11
Item 2. MANAGEMENT'S DISCUSSION and ANALYSIS or PLAN of OPERATION .... 11
Results of Operations ...................................... 11
Liquidity and Capital Resources ............................ 12
Item 3. DESCRIPTION of PROPERTY ...................................... 13
Item 4. SECURITY OWNERSHIP of CERTAIN
BENEFICIAL OWNERS and MANAGEMENT ............................ 13
Beneficial Ownership ....................................... 13
Changes in Control ......................................... 14
Item 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS and CONTROL PERSONS ............................... 14
Biographical Information ................................... 14
Prior Experience with Blank Check Companies................. 15
Potential Conflicts of Interest ............................ 15
Indemnification of Directors and Officers .................. 16
Exclusion of Director Liability ............................ 16
Item 6. EXECUTIVE COMPENSATION ....................................... 16
Cash and Other Compensation ................................ 16
Compensation Pursuant to Plans ............................. 17
Employee Stock Compensation Plan ........................... 17
Compensatory Stock Option Plan ............................. 17
Employment Contracts ....................................... 17
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Item 7. CERTAIN RELATIONSHIPS and RELATED TRANSACTIONS ............... 17
Item 8. DESCRIPTION of SECURITIES .................................... 18
Common Stock ............................................... 18
Preferred Stock ............................................ 18
Annual Reports ............................................. 19
Transfer Agent ............................................. 19
PART II
Item 1. MARKET PRICE of and DIVIDENDS on the REGISTRANT'S COMMON
EQUITY and OTHER SHAREHOLDER MATTERS ........................ 19
Price Range of the Common Stock ............................ 19
Dividends .................................................. 19
Public Market for the Common Shares ........................ 19
Rule 144 Resales ........................................... 20
Item 2. LEGAL PROCEEDINGS ............................................ 20
Item 3. CHANGES in and DISAGREEMENTS with ACCOUNTANTS
on ACCOUNTING and FINANCIAL DISCLOSURE ...................... 20
Item 4. RECENT SALES of UNREGISTERED SECURITIES ...................... 20
Item 5. INDEMNIFICATION of DIRECTORS and OFFICERS .................... 21
PART F/S
FINANCIAL STATEMENTS ......................................... 21
PART III
Item 1. LIST of EXHIBITS ............................................. 22
SIGNATURES ................................................... 22
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PART I
ITEM 1. DESCRIPTION of BUSINESS.
BACKGROUND
MNS Eagle Equity Group IV, Inc., a Nevada corporation ("MNS" or "Company"),
was incorporated on February 28, 1997. MNS issued 725,000 shares of common stock
to MNS Eagle Equity Group, Inc. (its former parent) for cash, organization costs
and deferred offering costs. MNS is in the development stage with no significant
assets or liabilities and has been essentially inactive, except for
organizational activities and the private placement offering described below.
The Company's parent offered for sale, at the price of US$1.00 per unit, a
total of 100,000 Units. Each Unit consisted of a share of common stock in six
different corporations for a total of six (6) shares of stock, including one
share of common stock, $.001 par value per share, of MNS Eagle Equity Group,
Inc., the former parent, and one share of common stock, $.001 par value per
share, of each of the following corporations organized in the State of Nevada
and which were at that time wholly owned subsidiaries of the Parent, namely: MNS
Eagle Equity Group I, Inc., MNS Eagle Equity Group II, Inc., MNS Eagle Equity
Group III, Inc., MNS Eagle Equity Group IV, Inc. and MNS Eagle Equity Group V,
Inc. No minimum number of Units had to be sold.
On October 31, 1997, the Company's former parent closed the private
placement offering. A total of 7,500 units were sold for $7,500. The proceeds
were allocated by the Company's parent as follows: $5,000 to the parent and $500
to each of the wholly owned subsidiaries.
MNS owns no real estate and has no full time employees, and it will have no
operations of its own unless and until it engages in one or more of the
activities described below under this ITEM 1. MNS is a "blank check" company
which intends to enter into a business combination with one or more as yet
unidentified privately held businesses.
FORWARD-LOOKING STATEMENTS
This Registration Statement contains certain forward-looking statements and
information relating to MNS that are based on the beliefs of its management as
well as assumptions made by and information currently available to its
management. When used in this report, the words "anticipate", "believe",
"estimate", "expect", "intend", "plan" and similar expressions, as they relate
to MNS or its management, are intended to identify forward-looking statements.
These statements reflect management's current view of MNS concerning future
events and are subject to certain risks, uncertainties and assumptions,
including among many others: a general economic downturn; a downturn in the
securities markets; a general lack of interest for any reason in going public by
means of transactions involving public blank check companies; federal or state
laws or regulations having an adverse effect on blank check companies,
Securities and Exchange Commission regulations which affect trading in the
securities of "penny stocks," and other risks and uncertainties.
Should any of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in this report as anticipated, estimated or expected. Readers
should realize that MNS is in the development stage, with only very limited
assets, and that for MNS to succeed requires that it either originate a
successful business (for which it lacks the funds) or acquire a successful
business. MNS's realization of its business aims as stated herein will depend in
the near future principally on the successful completion of its acquisition of a
business, as discussed below.
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EXCHANGE ACT REGISTRATION
MNS has voluntarily filed this registration statement on Form 10-SB with
the Securities and Exchange Commission ("SEC" or "Commission") in order to
register MNS's common stock under Section 12(g) of the Securities Exchange Act
of 1934, as amended ("Exchange Act"). Upon effectiveness of this registration
statement, MNS will be required to file quarterly, annual and other reports and
other information with the SEC as required by the Exchange Act. Management
believes it is in the shareholders' best interests for MNS to register under the
Exchange Act, in order that MNS's common stock can be quoted on the OTC Bulletin
Board. Additionally, management believes that potential combination candidates
will find MNS more attractive as a public blank check company if it is subject
to Exchange Act reporting requirements and files annual and quarterly financial
statements with the SEC. If MNS's duty to file reports under the Exchange Act is
suspended, MNS intends to nonetheless continue filing reports on a voluntary
basis.
PROPOSED BUSINESS
MNS intends to enter into a business combination with one or more as yet
unidentified privately held businesses. Management believes that MNS will be
attractive to privately held companies interested in becoming publicly traded by
means of a business combination with MNS, without offering their own securities
to the public. MNS intends to pursue negotiations with qualified candidates
after effectiveness of this Registration Statement. MNS will not be restricted
in its search for business combination candidates to any particular geographical
area, industry or industry segment, and may enter into a combination with a
private business engaged in any line of business. Management's discretion is, as
a practical matter, unlimited in the selection of a combination candidate. MNS
has not entered into any agreement, arrangement or understanding of any kind
with any person regarding a business combination. MNS does not intend to enter
into any business combination involving any business or venture with which its
sole officer or director is affiliated.
Depending upon the nature of the transaction, the current officers and
directors of MNS probably will resign their directorship and officer positions
with MNS in connection with MNS's consummation of a business combination. See
"Form of Acquisition" below. MNS's current management will not have any control
over the conduct of MNS's business following MNS's completion of a business
combination.
It is anticipated that business opportunities will come to MNS's attention
from various sources, including its management, its other stockholders,
professional advisors such as attorneys and accountants, securities
broker-dealers, venture capitalists, members of the financial community, and
others who may present unsolicited proposals. MNS has no plans, understandings,
agreements, or commitments with any individual or entity to act as a finder of
or as a business consultant in regard to any business opportunities for MNS.
There are no plans to use advertisements, notices or any general solicitation in
the search for combination candidates.
PRE-COMBINATION ACTIVITIES. MNS is a "blank check" company, defined as an
inactive company with nominal assets and liabilities. With these
characteristics, management believes that MNS will be attractive to privately
held companies interested in becoming publicly traded by means of a business
combination with MNS, without offering their own securities to the public. MNS
intends to pursue negotiations with qualified candidates after effectiveness of
this Registration Statement and become publicly quoted.
The term "business combination" (or "combination") means the result of (i)
a statutory merger of a combination candidate into or its consolidation with MNS
or a wholly owned subsidiary of MNS formed for the purpose of the merger or
consolidation, (ii) the exchange of securities of MNS for the assets or
outstanding equity securities of a privately held business, or (iii) the sale of
securities by MNS for cash or other value to a business entity or individual,
and similar transactions. A combination may be structured in one of the
foregoing ways or in any other form which will result in the combined entity
being a publicly held corporation. It is unlikely that any proposed combination
will be submitted for the approval of MNS's shareholders prior to consummation.
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Pending negotiation and consummation of a combination, MNS anticipates that it
will have no business activities or sources of revenues and will incur no
significant expenses or liabilities other than expenses related to this
Registration Statement, related to ongoing filings required by the Exchange Act,
or related to the negotiation and consummation of a combination.
The Company anticipates that the business opportunities presented to it
will (1) be recently organized with no operating history, or a history of losses
attributable to under-capitalization or other factors; (2) be experiencing
financial or operating difficulties; (3) be in need of funds to develop a new
product or service or to expand into a new market; (4) be relying upon an
untested product or marketing concept; or (5) have a combination of the
foregoing characteristics. Given the above factors, it should be expected that
any acquisition candidate may have a history of losses or low profitability.
MNS will not be restricted in its search for business combination
candidates to any particular geographical area, industry or industry segment,
and may enter into a combination with a private business engaged in any line of
business, including service, finance, mining, manufacturing, real estate, oil
and gas, distribution, transportation, medical, communications, high technology,
biotechnology or any other. Management's discretion is, as a practical matter,
unlimited in the selection of a combination candidate. Management of MNS will
seek combination candidates in the United States and other countries, as
available time permits, through existing associations and by word of mouth.
MNS has not entered into any agreement or understanding of any kind with
any person regarding a business combination. There is no assurance that MNS will
be successful in locating a suitable combination candidate or in concluding a
business combination on terms acceptable to MNS. MNS's Board of Directors has
not established a time limitation by which it must consummate a suitable
combination; however, if MNS is unable to consummate a suitable combination
within a reasonable period, such period to be determined at the discretion of
MNS's Board of Directors, the Board of Directors will probably recommend its
liquidation and dissolution. It is anticipated that MNS will not be able to
diversify, but will essentially be limited to one such venture because of MNS's
lack of capital. This lack of diversification will not permit MNS to offset
potential losses from one acquisition against profits from another, and should
be considered an adverse factor affecting any decision to purchase MNS's
securities.
MNS's management has the authority and discretion to effect transactions
having a potentially adverse impact upon MNS's shareholders and to complete a
combination without submitting any proposal to the stockholders for their prior
approval. MNS's shareholders should not anticipate that they will have any
meaningful opportunity to consider or vote upon any candidate selected by MNS
management for acquisition. However, it is anticipated that MNS's shareholders
will, prior to completion of any combination, be given information about the
candidate company's business, financial condition, management and other
information required by ITEMs 6(a), (d), (e), 7 and 8 of Schedule 14A of
Regulation 14A under the Exchange Act.
COMBINATION SUITABILITY STANDARDS. The analysis of candidate companies will
be undertaken by or under the supervision of MNS's President, who is not a
professional business analyst. See "MANAGEMENT" below.
To a large extent, a decision to participate in a specific combination may
be made upon management's analysis of the quality of the candidate company's
management and personnel, the anticipated acceptability of new products or
marketing concepts, the merit of technological changes, the perceived benefit
the candidate will derive from becoming a publicly held entity, and numerous
other factors which are difficult, if not impossible, to objectively quantify or
analyze. In many instances, it is anticipated that the historical operations of
a specific candidate may not necessarily be indicative of the potential for the
future because of the possible need to shift marketing approaches substantially,
expand significantly, change product emphasis, change or substantially augment
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management, or make other changes. MNS will be dependent upon the owners and
management of a candidate to identify any such problems which may exist and to
implement, or be primarily responsible for the implementation of, required
changes. Because MNS may participate in a business combination with a newly
organized candidate or with a candidate which is entering a new phase of growth,
it should be emphasized that MNS will incur further risks, because management in
many instances will not have proved its abilities or effectiveness, the eventual
market for the candidate's products or services will likely not be established,
and the candidate may not be profitable when acquired.
Otherwise, MNS anticipates that it may consider, among other things, the
following factors:
1. Potential for growth and profitability, indicated by new technology,
anticipated market expansion, or new products;
2. MNS's perception of how any particular candidate will be received by
the investment community and by MNS's stockholders;
3. Whether, following the business combination, the financial condition
of the candidate would be, or would have a significant prospect in the
foreseeable future of becoming sufficient to enable the securities of
MNS to qualify for listing on an exchange or on NASDAQ, so as to
permit the trading of such securities to be exempt from the
requirements of the federal "penny stock" rules adopted by the SEC.
4. Capital requirements and anticipated availability of required funds,
to be provided by MNS or from operations, through the sale of
additional securities, through joint ventures or similar arrangements,
or from other sources;
5. The extent to which the candidate can be advanced;
6. Competitive position as compared to other companies of similar size
and experience within the industry segment as well as within the
industry as a whole;
7. Strength and diversity of existing management, or management prospects
that are scheduled for recruitment;
8. The cost of participation by MNS as compared to the perceived tangible
and intangible values and potential; and
9. The accessibility of required management expertise, personnel, raw
materials, services, professional assistance, and other required
items.
No one of the factors described above will be controlling in the selection
of a candidate. Potentially available candidates may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex. It should be recognized that, because of MNS's
limited capital available for investigation and management's limited experience
in business analysis, MNS may not discover or adequately evaluate adverse facts
about the opportunity to be acquired. MNS cannot predict when it may participate
in a business combination. It expects, however, that the analysis of specific
proposals and the selection of a candidate may take several months or more.
Management believes that various types of potential merger or acquisition
candidates might find a business combination with MNS to be attractive. These
include acquisition candidates desiring to create a public market for their
shares in order to enhance liquidity for current shareholders, acquisition
candidates which have long-term plans for raising capital through the public
sale of securities and believe that the possible prior existence of a public
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market for their securities would be beneficial, and acquisition candidates
which plan to acquire additional assets through issuance of securities rather
than for cash, and believe that the possibility of development of a public
market for their securities will be of assistance in that process. Acquisition
candidates which have a need for an immediate cash infusion are not likely to
find a potential business combination with MNS to be an attractive alternative.
Prior to consummation of any combination (other than a mere sale by MNS
insiders of a controlling interest in MNS's common stock) MNS intends to require
that the combination candidate provide MNS the financial statements required by
ITEM 310 of Regulation S-B, including at the least an audited balance sheet as
of the most recent fiscal year end and statements of operations, changes in
stockholders' equity and cash flows for the two most recent fiscal years,
audited by certified public accountants acceptable to MNS's management, and the
necessary unaudited interim financial statements. Such financial statements must
be adequate to satisfy MNS's reporting obligations under Section 15(d) or 13 of
the Exchange Act. If the required audited financial statements are not available
at the time of closing, MNS management must reasonably believe that the audit
can be obtained in less than 60 days. This requirement to provide audited
financial statements may significantly narrow the pool of potential combination
candidates available, since most private companies are not already audited. Some
private companies will either not be able to obtain an audit or will find the
audit process too expensive. In addition, some private companies on closer
examination may find the entire process of being a reporting company after a
combination with MNS too burdensome and expensive in light of the perceived
potential benefits from a combination.
FORM OF ACQUISITION. It is impossible to predict the manner in which MNS
may participate in a business opportunity. Specific business opportunities will
be reviewed as well as the respective needs and desires of MNS and the promoters
of the opportunity and, upon the basis of that review and the relative
negotiating strength of MNS and such promoters, the legal structure or method
deemed by management to be suitable will be selected. Such structure may
include, but is not limited to leases, purchase and sale agreements, licenses,
joint ventures and other contractual arrangements. MNS may act directly or
indirectly through an interest in a partnership, corporation or other form of
organization. Implementing such structure may require the merger, consolidation
or reorganization of MNS with other corporations or forms of business
organization, and although it is likely, there is no assurance that MNS would be
the surviving entity. In addition, the present management and stockholders of
MNS most likely will not have control of a majority of the voting shares of MNS
following a reorganization transaction. As part of such a transaction, MNS's
existing directors may resign and new directors may be appointed without any
vote or opportunity for approval by MNS's shareholders.
It is likely that MNS will acquire its participation in a business
opportunity through the issuance of Common Stock or other securities of MNS.
Although the terms of any such transaction cannot be predicted, it should be
noted that in certain circumstances the criteria for determining whether or not
an acquisition is a so-called "tax free" reorganization under the Internal
Revenue Code of 1986, depends upon the issuance to the stockholders of the
acquired company of a controlling interest (i.e. 80% or more) of the common
stock of the combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions rather than
other "tax free" provisions provided under the Internal Revenue Code, MNS's
current stockholders would retain in the aggregate 20% or less of the total
issued and outstanding shares. This could result in substantial additional
dilution in the equity of those who were stockholders of MNS prior to such
reorganization. Any such issuance of additional shares might also be done
simultaneously with a sale or transfer of shares representing a controlling
interest in MNS by the current officers, directors and principal shareholders.
It is anticipated that any new securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available, from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of the transaction, MNS may
agree to register such securities either at the time the transaction is
consummated, or under certain conditions or at specified times thereafter. The
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issuance of substantial additional securities and their potential sale into any
trading market that might develop in MNS's securities may have a depressive
effect upon such market.
MNS will participate in a business opportunity only after the negotiation
and execution of a written agreement. Although the terms of such agreement
cannot be predicted, generally such an agreement would require specific
representations and warranties by all of the parties thereto, specify certain
events of default, detail the terms of closing and the conditions which must be
satisfied by each of the parties thereto prior to such closing, outline the
manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.
As a general matter, MNS anticipates that it, and/or its officers and
principal shareholders will enter into a letter of intent with the management,
principals or owners of a prospective business opportunity prior to signing a
binding agreement. Such a letter of intent will set forth the terms of the
proposed acquisition but will not bind any of the parties to consummate the
transaction. Execution of a letter of intent will by no means indicate that
consummation of an acquisition is probable. Neither MNS nor any of the other
parties to the letter of intent will be bound to consummate the acquisition
unless and until a definitive agreement concerning the acquisition as described
in the preceding paragraph is executed. Even after a definitive agreement is
executed, it is possible that the acquisition would not be consummated should
any party elect to exercise any right provided in the agreement to terminate it
on specified grounds.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others. If a
decision is made not to participate in a specific business opportunity, the
costs theretofore incurred in the related investigation would not be
recoverable. Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are provided, the
inability of MNS to pay until an indeterminate future time may make it
impossible to procure goods and services.
POST-COMBINATION ACTIVITIES. Management anticipates that, following
consummation of a combination, control of MNS will change as a result of the
issuance of additional Common Stock to the shareholders of the business acquired
in the combination. Once ownership control has changed, it is likely that the
new controlling shareholders will call a meeting for the purpose of replacing
the incumbent directors of MNS with candidates of their own, and that the new
directors will then replace the incumbent officers with their own nominees. Rule
14f-1 under the Exchange Act requires that, if in connection with a business
combination or sale of control of MNS there should arise any arrangement or
understanding for a change in a majority of MNS's directors and the change in
the board of directors is not approved in advance by MNS's shareholders at a
shareholder meeting, then none of the new directors may take office until at
least ten (10) days after an information statement has been filed with the
Securities and Exchange Commission and sent to MNS's shareholders. The
information statement furnished must as a practical matter include the
information required by ITEMs 6(a), (d) and (e), 7 and 8 of Schedule 14A of
Regulation 14A in a proxy statement.
Following consummation of a combination, management anticipates that MNS
will file a current report on Form 8-K with the Commission which discloses among
other things the date and manner of the combination, material terms of the
definitive agreement, the assets and consideration involved, the identity of the
person or persons from whom the assets or other property was acquired, changes
in management and biographies of the new directors and executive officers,
identity of principal shareholders following the combination, and contains the
required financial statements. The Form 8-K report also will be required to
include all information as to the business acquired called for by ITEM 101 of
Regulation S-B.
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POTENTIAL BENEFITS to INSIDERS
In connection with a business combination, it is possible that shares of
common stock constituting control of MNS may be purchased from the current
principal shareholders ("insiders") of MNS by the acquiring entity or its
affiliates. If stock is purchased from the insiders, the transaction is very
likely to result in substantial gains to them relative to the price they
originally paid for the stock. In MNS's judgment, none of its officers and
directors would as a result of such a sale become an " underwriter" within the
meaning of the Section 2(11) of the Securities Act of 1933, as amended. No bylaw
or charter provision MNS prevents insiders from negotiating or consummating such
a sale of their shares. The sale of a controlling interest by MNS insiders could
occur at a time when the other shareholders of the Company remain subject to
restrictions on the transfer of their shares, and it is unlikely that MNS
shareholders generally will be given the opportunity to participate in any such
sale of shares. Moreover, MNS shareholders probably will not be afforded any
opportunity to review or approve any such buyout of shares held by an officer,
director or other affiliate, should such a buyout occur.
MNS may require that a company being acquired repay all advances made to
MNS by MNS shareholders and management, at or prior to closing of a combination.
Otherwise, there are no conditions that any combination or combination candidate
must meet, such as buying stock from MNS insiders or paying compensation to any
MNS officer, director or shareholder or their respective affiliates.
USE OF CONSULTANTS and FINDERS
Although there are no current plans to do so, MNS management might hire and
pay an outside consultant to assist in the investigation and selection of
candidates, and might pay a finder's fee to a person who introduces a candidate
with which MNS completes a combination. Since MNS management has no current
plans to use any outside consultants or finders to assist in the investigation
and selection of candidates, no policies have been adopted regarding use of
consultants or finders, the criteria to be used in selecting such consultants or
finders, the services to be provided, the term of service, or the structure or
amount of fees that may be paid to them. However, because of the limited
resources of MNS, it is likely that any such fee MNS agrees to pay would be paid
in stock and not in cash. MNS has had no discussions, and has entered into no
arrangements or understandings, with any consultant or finder. MNS's officers
and directors have not in the past used any particular consultant or finder on a
regular basis and have no plan to either use any consultant or recommend that
any particular consultant be engaged by MNS on any basis.
It is possible that compensation in the form of common stock, options,
warrants or other securities of MNS, cash or any combination thereof, may be
paid to outside consultants or finders. No securities of MNS will be paid to
officers, directors or promoters of MNS nor any of their respective affiliates.
Any payments of cash to a consultant or finder would be made by the business
acquired or persons affiliated or associated with it, and not by MNS. It is
possible that the payment of such compensation may become a factor in any
negotiations for MNS's acquisition of a business opportunity. Any such
negotiations and compensation may present conflicts of interest between the
interests of persons seeking compensation and those of MNS's shareholders, and
there is no assurance that any such conflicts will be resolved in favor of MNS's
shareholders.
STATE SECURITIES LAWS CONSIDERATIONS
Section 18 of the Securities Act of 1933, as amended in 1996, provides that
no law, rule, regulation, order or administrative action of any state may
require registration or qualification of securities or securities transactions
that involve the sale of a "covered security." The term "covered security" is
defined in Section 18 to include among other things transactions by "any person
not an issuer, underwriter or dealer," (in other words, secondary transactions
in securities already outstanding) that are exempted from registration by
Section 4(1) of the Securities Act of 1933, provided the issuer of the security
is a "reporting company," meaning that it files reports with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act.
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Section 18 as amended preserves the authority of the states to require
certain limited notice filings by issuers and to collect fees as to certain
categories of covered securities, specifically including Section 4(1) secondary
transactions in the securities of reporting companies. Section 18 expressly
provides, however, that a state may not "directly or indirectly prohibit, limit,
or impose conditions based on the merits of such offering or issuer, upon the
offer or sale of any (covered) security. This provision prohibits states from
requiring registration or qualification of securities of an Exchange Act
reporting company which is current in its filings with the SEC.
The states generally are free to enact legislation or adopt rules that
prohibit secondary trading in the securities of "blank check" companies like
MNS. Section 18, however, of the Act preempts state law as to covered securities
of reporting companies. Thus, while the states may require certain limited
notice filings and payment of filing fees by MNS as a precondition to secondary
trading of its shares in those states, they cannot, so long as MNS is a
reporting issuer, prohibit, limit or condition trading in MNS's securities based
on the fact that MNS is or ever was a blank check company. MNS will comply with
such state limited notice filings as may be necessary in regard to secondary
trading. At this time, MNS's stock is not actively traded in any market, and an
active market in its common stock is not expected to arise, if ever, until after
completion of a business combination.
NO INVESTMENT COMPANY ACT REGULATION
Prior to completing a combination, MNS will not engage in the business of
investing or reinvesting in, or owning, holding or trading in securities, or
otherwise engaging in activities which would cause it to be classified as an
"investment company" under the 1940 Act. To avoid becoming an investment
company, not more than 40% of the value of MNS's assets (excluding government
securities and cash and cash equivalents) may consist of "investment
securities," which is defined to include all securities other than U.S.
government securities and securities of majority-owned subsidiaries. Because MNS
will not own less than a majority of any assets or business acquired, it will
not be regulated as an investment company. MNS will not pursue any combination
unless it will result in MNS owning at least a majority interest in the business
acquired.
COMPETITION
MNS will be in direct competition with many entities in its efforts to
locate suitable business opportunities. Included in the competition will be
business development companies, venture capital partnerships and corporations,
small business investment companies, venture capital affiliates of industrial
and financial companies, broker-dealers and investment bankers, management and
management consultant firms and private individual investors. Most of these
entities will possess greater financial resources and will be able to assume
greater risks than those which MNS, with its limited capital, could consider.
Many of these competing entities will also possess significantly greater
experience and contacts than MNS's Management. Moreover, MNS also will be
competing with numerous other blank check companies for such opportunities.
EMPLOYEES
The only employees of MNS currently are its officers. It is not expected
that MNS will have additional employees except as a result of completing a
combination.
ITEM 2. MANAGEMENT'S DISCUSSION and ANALYSIS or PLAN of OPERATION.
MNS's plan of operation over the next twelve months is set forth above
under ITEM 1 (Description of Business). This plan of operation has been adopted
in order to attempt to create value for MNS's shareholders.
RESULTS of OPERATIONS
MNS has never had operations or revenues and is still in the development
stage. MNS anticipates no operations unless and until it completes a business
combination as described above.
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LIQUIDITY and CAPITAL RESOURCES
As of the date of this Registration Statement, MNS has no cash and minimal
debts. MNS has no commitments for any capital expenditure and foresees none.
However, MNS will incur routine fees and expenses incident to its reporting
duties as a public company, and it will incur fees and expenses in the event it
makes or attempts to make an acquisition. As a practical matter, MNS expects no
significant operating costs other than professional fees payable to attorneys
and accountants. To the extent accounting services are performed by President
Stephen M. Siedow, an accountant, he has agreed not to charge MNS for those
services, although any other accountants utilized are expected to charge MNS
their customary rates.
MNS does not anticipate that funding will be necessary in order to complete
a proposed combination, except possibly for fees and costs of MNS's professional
advisers. Accordingly, there are no plans to raise capital to finance any
business combination, nor does management believe that any combination candidate
will expect cash from MNS. MNS hopes to require the candidate companies to
deposit with MNS an advance which MNS can use to defray professional fees and
costs and travel, lodging and other due diligence costs of MNS's management.
Otherwise, management would have to advance such costs out of their own pockets,
and there is no assurance they will advance such costs.
Other routine expenses, such as making required filings with the Securities
and Exchange Commission, inevitably will be incurred. In order to pay these, MNS
will be forced to borrow money or prevail upon existing shareholders to
contribute additional funds, whether as a loan or investment, to MNS. It is by
no means certain that existing shareholders will want or be financially able to
do so. There are no plans to sell additional securities of MNS to raise capital.
MNS's failure to timely file reports required under the Securities Exchange Act
of 1934, as amended, could subject it to fines and penalties and make it less
desirable to a potential combination candidate. None of these sources of funds
is assured and, if no funds can be raised, MNS may be effectively unable to
pursue its business plan.
MNS shareholders and management members who advance money to MNS to cover
operating expenses will expect to reimbursed by the company acquired, prior to
or at the time of completing the combination. MNS has no intention of borrowing
money to pay any officer, director or shareholder of MNS or their affiliates.
YEAR 2000 ISSUES
Many computers and computer programs in use around the world for purposes
of economy contain only two fields for expression of dates and were programmed
to assume that all dates entered are for years in the twentieth century
beginning with "19" (e.g., 99 means 1999). It is believed that many computers
and software programs will crash on commencement of the year 2000, because they
will not recognize dates beginning with "20" instead of "19" and that widespread
computer crashes will have significant economic effects on governments,
companies and individuals. This is known as the "Y2K" problem or the "milennium
bug." The extent, severity and duration of the Y2K problem are unknown and
impossible to forecast. Moreover, experts disagree on the extent, severity and
duration of the Y2K problem, and on the economic losses and other damage that
may occur as a result of it.
MNS has no operations or revenues, does no business with customers, vendors
or suppliers, and has no material relationships with other companies. MNS
therefore does not anticipate that it will suffer any losses as a result of Y2K
issues. However, if general economic problems resulting from Y2K issues are
severe and prolonged, demand for blank check companies could be reduced or
eliminated for an unknown (and unknowable) period of time. Because MNS regularly
backs up its records and documents maintained on computer, any computer failure
should not directly cause MNS more than a modest inconvenience at worst.
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ITEM 3. DESCRIPTION of PROPERTY.
MNS neither owns nor leases any real estate or other properties. MNS's
offices are located at 12373 E. Cornell Avenue, Aurora, Colorado 80014, and are
provided at no charge by its President. This arrangement is entirely adequate
for MNS's current needs. MNS does not have any plans to acquire any properties
or lease offices, and management does not anticipate that MNS will take office
space unless and until it has completed a business combination, in which case
MNS's offices almost certainly will be the same as those of the business
opportunity acquired.
ITEM 4. SECURITY OWNERSHIP of CERTAIN BENEFICIAL OWNERS and MANAGEMENT.
BENEFICIAL OWNERSHIP
The following table sets forth, as of the date of this Registration
Statement, the stock ownership of each executive officer and director of MNS, of
all executive officers and directors of MNS as a group, and of each person known
by MNS to be a beneficial owner of 5% or more of its Common Stock. Except as
otherwise noted, each person listed below is the sole beneficial owner of the
shares and has sole investment and voting power as such shares. No person listed
below has any option, warrant or other right to acquire additional securities of
MNS, except as may be otherwise noted.
Name and Address Amount & Nature
of Beneficial of Beneficial Percent
Owner Ownership of Class
- ----------------------------- ---------------- --------
*Stephen M. Siedow 269,689 (1,3) 44.6%
12373 E. Cornell Avenue
Aurora, Colorado 80014
John D. Brasher Jr. 246,689 (2,3) 44.2%
90 Madison Street, Suite 707
Denver, Colorado 80206
MNS Eagle Equity Group, Inc. 34,916 (3) 5.1%
12373 E. Cornell Avenue
Aurora, Colorado 80014
*All directors & officers 269,689 44.6%
as a group (1 person)
(1) Mr. Siedow disclaims beneficial ownership of 12,500 shares of common
stock owned by his wife, Linda M. Siedow, of 10,000 shares of common
stock held by his wife as custodian for his minor children, and of
5,000 shares of common stock held by his daughter.
(2) Mr. Brasher disclaims beneficial ownership of 10,000 shares of common
stock owned by his wife, Lisa K. Brasher, and of 5,000 shares of
common stock held by his wife as trustee for a trust established for
his minor children. Includes 20,000 shares of common stock held by
Yakima Corp., a corporation controlled by Mr. Brasher and his wife.
(3) Includes 34,916 shares of common stock held by MNS Eagle Equity Group,
Inc. (former parent), a corporation controlled by Mr. Brasher and Mr.
Siedow.
Despite not having received any compensation and not having otherwise
engaged in any transactions involving the acquisition or disposition of assets
with MNS, the current officers and directors of MNS may be deemed to be
"promoters" and "founders" of MNS.
CHANGES in CONTROL
A change of control of MNS probably will occur upon consummation of a
business combination, which is anticipated to involve significant change in
ownership of MNS and in the membership of the board of directors. The extent of
any such change of control in ownership or board composition cannot be predicted
at this time.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS and CONTROL PERSONS.
Directors are elected for one-year terms or until the next annual meeting
of shareholders and until their successors are duly elected and qualified.
Executive officers (none of whom have an employment or similar contract)
continue in office at the pleasure of the Board of Directors. The following
table sets forth the name, age, position held and tenure of each director and
executive officer:
Name Age Position Held and Tenure
---- --- ------------------------
Stephen M. Siedow 49 President, CEO, Director, Chairman of the Board,
since inception
There are no family relationships among the officers and directors. There
is no arrangement or understanding between MNS (or any of its directors or
officers) and any other person pursuant to which such person was or is to be
selected as a director or officer, or under which any officer or director will
resign at the request of another person, and no officer or director is acting or
will act on behalf of or at the direction of any other person. The directors and
officers are expected to devote their time to MNS's affairs on an "as needed"
basis, but are not required to make any specific portion of their time available
to MNS. It is anticipated that officers and directors will, on the average,
devote no more than 15 hours per week to MNS's affairs.
BIOGRAPHICAL INFORMATION
STEPHEN M. SIEDOW. Mr. Siedow is president and sole shareholder of Stephen
M. Siedow, P.C., a professional accounting firm providing auditing, management
consulting, tax services and write-up services to corporations, partnerships and
individuals since 1982. Mr. Siedow specializes in public and SEC accounting and
has experience in industries including mining (gold and coal), oil and gas,
construction, and mergers/acquisitions/liquidations. Prior to that, he was with
the audit department of Ernst & Young, Certified Public Accountants in Denver,
Colorado, for eight years. Mr. Siedow is a member of the American Institute of
Certified Public Accountants and the Colorado Society of Certified Public
Accountants.
Mr. Siedow also is a director, executive officer, promoter or control
person of the following companies with business plans substantially identical to
those of MNS:
o Chairman, CEO, President and significant shareholder of EQUICAP, INC.,
a formerly active California corporation no longer in the development
stage but which has scant assets.
o Chairman, CEO, President and significant shareholder of GALLAGHER
RESEARCH (NEV.) CORPORATION, a formerly active Colorado corporation no
longer in the development stage but which has scant assets.
o Chairman, CEO, President and significant shareholder of MNS EAGLE
EQUITY GROUP, INC., MNS EAGLE EQUITY GROUP I, INC., MNS EAGLE EQUITY
GROUP II, INC., and MNS EAGLE EQUITY GROUP III, INC., all Nevada
corporations in the development stage.
PRIOR EXPERIENCE with BLANK CHECK COMPANIES
Mr. Siedow has never been an executive officer or director of a blank check
or "blind pool" company which conducted a public offering. Mr. Siedow has,
however, been an executive officer and director of several reporting blank check
companies (those required to file reports with the SEC), and his experience is
detailed below.
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1. WHITNEY AMERICAN CORPORATION ("WHAM") - Organized 1987 in Delaware.
Effective on March 10, 1998, WHAM acquired Kemron Environmental Services, Inc. a
New York company, in a stock-for-stock exchange. In the exchange, WHAM issued to
the shareholders of Kemron Environmental Services, Inc. a total of 3,500,000
common shares. WHAM's common stock is quoted on the OTC Bulletin Board under the
symbol WHAM and trades sporadically. Mr. Siedow was not an officer or director
of WHAM following consummation of the merger. Neither Mr. Siedow nor any other
officer, director or shareholder of WHAM, nor their respective affiliates, sold
any stock in connection with the acquisition of Kemron Environmental Services,
Inc.
2. CASHBUILDER, INC. ("CBI") - Organized 1982 in Colorado. Mr. Siedow sold
shares of CBI amounting to control of CBI in a private transaction for an
aggregate of $50,000 in 1994. Otherwise, no officer, director or shareholder of
CBI, nor their respective affiliates, sold any stock in connection with any
acquisition made.
POTENTIAL CONFLICTS of INTEREST
The Company's Officers and Directors are affiliated with other companies
having a similar business plan to that of MNS ("Affiliated Companies") which may
compete directly or indirectly with MNS. MNS has not identified a specific
business area, industry or industry segment in which it will seek combination
candidates. MNS has made a determination that it will not concentrate its search
for combination candidates in any particular business, industry or industry
segment, since any such determination is potentially limiting and confers no
advantage to MNS or its shareholders. Certain specific conflicts of interest may
include those discussed below.
1. The interests of any Affiliated Companies from time to time may be
inconsistent in some respects with the interests of MNS. The nature of these
conflicts of interest may vary. There may be circumstances in which an
Affiliated Company may take advantage of an opportunity that might be suitable
for MNS. Although there can be no assurance that conflicts of interest will not
arise or that resolutions of any such conflicts will be made in a manner most
favorable to MNS and its shareholders, the officers and directors of MNS have a
fiduciary responsibility to MNS and its shareholders and, therefore, must adhere
to a standard of good faith and integrity in their dealings with and for MNS and
its shareholders.
2. The officers and directors of MNS serve as officers or directors of one
or more Affiliated Companies and may serve as officers and directors of other
Affiliated Companies in the future. MNS's officers and directors are required to
devote only so much of their time to MNS's affairs as they deem appropriate, in
their sole discretion. As a result, MNS's officers and directors may have
conflicts of interest in allocating their management time, services, and
functions among MNS and any current and future Affiliated Companies which they
may serve, as well as any other business ventures in which they are now or may
later become involved.
3. The Affiliated Companies may compete directly or indirectly with that of
MNS for the acquisition of available, desirable combination candidates. There
may be factors unique to MNS or an Affiliated Company which respectively makes
it more or less desirable to a potential combination candidate, such as age of
the company, name, capitalization, state of incorporation, contents of the
articles of incorporation, etc. However, any such direct conflicts are not
expected to be resolved through arm's- length negotiation, but rather in the
discretion of management. While any such resolution will be made with due regard
to the fiduciary duty owed to MNS and its shareholders, there can be no
assurance that all potential conflicts can be resolved in a manner most
favorable to MNS as if no conflicts existed. Members of MNS's management who
also are members of management of another Affiliated Company will also owe the
same fiduciary duty to the shareholders of the other Affiliated Company.
4. Certain conflicts of interest exist and will continue to exist between
MNS and its officers and directors due to the fact that each has other
employment or business interests to which he devotes his primary attention. Each
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officer and director is expected to continue to do so in order to make a living,
notwithstanding the fact that management time should be devoted to MNS's
affairs. MNS has not established policies or procedures for the resolution of
current or potential conflicts of interest between MNS and its management.
As a practical matter, such potential conflicts could be alleviated only if
the Affiliated Companies either are not seeking a combination candidate at the
same time as the Company, have already identified a combination candidate, are
seeking a combination candidate in a specifically identified business area, or
are seeking a combination candidate that would not otherwise meet MNS's
selection criteria. It is likely, however, that the combination criteria of MNS
and any Affiliated Companies will be substantially identical. Ultimately, MNS's
shareholders ultimately must rely on the fiduciary responsibility owed to them
by MNS's officers and directors.
There can be no assurance that members of management will resolve all
conflicts of interest in MNS's favor. The officers and directors are accountable
to MNS and its shareholders as fiduciaries, which means that they are legally
obligated to exercise good faith and integrity in handling MNS's affairs and in
their dealings with MNS. Failure by them to conduct MNS's business in its best
interests may result in liability to them. The area of fiduciary responsibility
is a rapidly developing area of law, and persons who have questions concerning
the duties of the officers and directors to MNS should consult their counsel.
INDEMNIFICATION of DIRECTORS and OFFICERS
See discussion under Part II, ITEM 5 below.
EXCLUSION of DIRECTOR LIABILITY
Pursuant to the General Corporation Law of Nevada, MNS's Certificate of
Incorporation excludes personal liability on the part of its directors to MNS
for monetary damages based upon any violation of their fiduciary duties as
directors, except as to liability for any acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law or for improper
payment of dividends. This exclusion of liability does not limit any right which
a director may have to be indemnified and does not affect any director's
liability under federal or applicable state securities laws.
ITEM 6. EXECUTIVE COMPENSATION.
CASH and OTHER COMPENSATION
Since inception of MNS and through the date of this Registration Statement,
no director or executive officer has received cash or cash equivalent
compensation from MNS. MNS has no other agreement or understanding, express or
implied, with any director or executive officer concerning employment or cash or
other compensation for services. MNS will undoubtedly pay compensation to
officers and other employees should it succeed in acquiring a business and funds
exist for compensation.
COMPENSATION PURSUANT to PLANS
Since inception of MNS and through the date of this Registration Statement,
no director or executive officer has received compensation from MNS pursuant to
any compensatory or benefit plan. There is no plan or understanding, express or
implied, to pay any compensation to any director or executive officer pursuant
to any compensatory or benefit plan of MNS, although MNS anticipates that it
will compensate its officers and directors for services to MNS with stock or
options to purchase stock, in lieu of cash.
MNS currently has in place an employee stock compensation plan and
compensatory stock option plan. MNS has no long-term incentive plans, as that
term is defined in the rules and regulations of the Securities and Exchange
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Commission. There are no other compensatory or benefit plans, such as retirement
or pension plans, in effect or anticipated to be adopted, although other plans
may be adopted by new management following completion of a business combination.
EMPLOYEE STOCK COMPENSATION PLAN
MNS has adopted the 1997 Employee Stock Compensation Plan for employees,
officers, directors of MNS and advisors to MNS (the "ESC Plan"). MNS has
reserved a maximum of 1,000,000 Common Shares to be issued upon the grant of
awards under the ESC Plan. Employees will recognize taxable income upon the
grant of Common Stock equal to the fair market value of the Common Stock on the
date of the grant and MNS will recognize a compensating deduction for
compensation expense at such time. The ESC Plan will be administered by the
Board of Directors or a committee of directors. No shares have been awarded or
currently are anticipated to be awarded under the ESC Plan.
COMPENSATORY STOCK OPTION PLAN
MNS has adopted the 1997 Compensatory Stock Option Plan for officers,
employees, directors and advisors (the "CSO Plan"). MNS has reserved a maximum
of 1,500,000 Common Shares to be issued upon the exercise of options granted
under the CSO Plan. The CSO Plan will not qualify as an "incentive stock option"
plan under Section 422 of the Internal Revenue Code of 1986, as amended. Options
will be granted under the CSO Plan at exercise prices to be determined by the
Board of Directors or other CSO Plan administrator. With respect to options
granted pursuant to the CSO Plan, optionees will not recognize taxable income
upon the grant of options granted at or in excess of fair market value. However,
optionees will realize income at the time of exercising an option to the extent
the market price of the common stock at that time exceeds the option exercise
price, and MNS must recognize a compensation expense in an amount equal to any
taxable income realized by an optionee as a result of exercising the option. The
CSO Plan will be administered by the Board of Directors or a committee of
directors. No options have been granted or currently are anticipated to granted
under the CSO Plan.
EMPLOYMENT CONTRACTS
No person has entered into any employment or similar contract with MNS. It
is not anticipated that MNS will enter into any employment or similar contract
unless in conjunction with or following completion of a business combination.
ITEM 7. CERTAIN RELATIONSHIPS and RELATED TRANSACTIONS.
On November 18, 1997, a stockholder of the Company surrendered 50,000
shares of the Company's $.001 par value common stock back to the Company for no
consideration. These shares were cancelled by the Company.
At September 30, 1999 MNS was indebted to MNS Eagle Equity Group, Inc.
(former parent) in the amount of $359 for costs and expenses advanced on its
behalf. MNS is not indebted to any other officer, director, promoter or control
person. MNS has no understanding with its officers, directors or shareholders,
pursuant to which such persons are required to contribute capital to MNS, loan
money or otherwise provide funds to MNS, although management expects that one or
more of such persons may make funds available to MNS in the event of need to
cover operating expenses.
There were no transactions, or series of transactions, for the year ended
December 31, 1998 nor are there any currently proposed transactions, or series
of transactions, to which MNS is a party, in which the amount exceeds $60,000,
and in which to the knowledge of MNS any director, executive officer, nominee,
five percent or greater shareholder, or any member of the immediate family of
any of the foregoing persons, have or will have any direct or indirect material
interest.
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ITEM 8. DESCRIPTION of SECURITIES.
The authorized capital stock of MNS consists of 50,000,000 shares of Common
Stock, $.001 par value, and 10,000,000 shares of Preferred Stock, $.001 par
value.
COMMON STOCK
At September 30, 1999, there were 682,5000 shares of Common Stock
outstanding. The holders of Common Stock are entitled to one vote for each share
held. MNS's Certificate of Incorporation provides that the affirmative vote of a
majority of the votes cast at a shareholder's meeting is sufficient to effect
any corporate action upon which shareholders may or must vote. Common Shares do
not carry cumulative voting rights, thus holders of more than 50% of the Common
Stock have the power to elect all directors if they wish and, as a practical
matter, to control MNS. Holders of Common Stock are not entitled to preemptive
rights, and the Common Stock is not subject to redemption.
MNS's bylaws provide for a board of one director, all of whom are elected
for one-year terms at the annual meeting of shareholders. The affirmative vote
of a simple majority of the outstanding Common Stock is necessary to remove a
director. A special meeting of shareholders may be called by the Chairman of the
Board, the President, a majority of the Board of Directors, or shareholders
owning in the aggregate 10% or more of the Common Stock. Holders of Common Stock
are entitled to receive, pro rata dividends if, when and as declared by the
Board of Directors out of funds legally available therefor.
Upon liquidation, dissolution or winding up of MNS, holders of Common Stock
are entitled to share ratably in MNS's assets legally available for distribution
to its shareholders after payment of liquidation preference and outstanding
redemption rights (if any) on any Preferred Stock outstanding and are not
subject to further calls or assessments.
PREFERRED STOCK
Although no shares of Preferred Stock are being registered in this
Registration Statement or have previously been registered under the Exchange
Act, this discussion is included to enhance the reader's understanding of MNS.
No Preferred Shares are issued or outstanding, and MNS has no plans to issue any
Preferred Shares. The Board of Directors has the authority to issue Preferred
Stock in one or more series and to fix the voting powers, conversion rights,
other special rights and qualifications, limitations and restrictions of each
series, without any further vote or action by the shareholders. It is not
possible to state the actual effect of the authorization of any Preferred Stock
upon the rights of holders of the Common Stock, until the Board of Directors
determines the specific rights of the holders of the Preferred Stock. However,
the Preferred Stock may have adverse effects upon the holders of the Common
Stock, including (i) restrictions on dividends on the Common Stock if dividends
on the Preferred Stock have not been paid, (ii) dilution of the voting power of
the Common Stock to the extent that the Preferred Stock has voting rights, (iii)
dilution of the equity interest of the Common Stock to the extent that the
Preferred Stock is converted into Common Stock, or (iv) the Common Stock not
being entitled to share in MNS's assets upon liquidation until satisfaction of
any liquidation preference granted the holders of the Preferred Stock. MNS does
not currently anticipate that it will issue Preferred Stock in connection with
any business combination, but issuance for this purpose is a possibility. MNS
has not authorized such number of Preferred Shares for anti-takeover or similar
purposes.
ANNUAL REPORTS
MNS will furnish its shareholders with annual reports containing financial
statements of MNS as examined and reported upon by independent certified public
accountants. MNS will distribute other reports as determined by the Board of
Directors.
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TRANSFER AGENT
MNS has not appointed a transfer agent or registrar for its Common Shares
and, in order to minimize expenses, does not expect to do so unless and until it
appears that its Common Shares will commence to trade.
PART II
ITEM 1. MARKET PRICE of and DIVIDENDS on the REGISTRANT'S COMMON EQUITY and
OTHER SHAREHOLDER MATTERS.
PRICE RANGE of the COMMON STOCK
Not applicable.
DIVIDENDS
MNS has not declared or paid any dividends on its Common Stock to date.
Management anticipates that any future earnings will be retained as working
capital and used for business purposes. Accordingly, it is unlikely that MNS
will declare or pay any such dividends in the foreseeable future.
PUBLIC MARKET for the COMMON SHARES
There currently is no public market for MNS's common stock, and no
assurance can be given that a market will develop or that a shareholder ever
will be able to liquidate his investment without considerable delay, if at all.
If a market should develop, the price may be highly volatile. Unless and until
MNS's common shares are quoted on the NASDAQ system or listed on a national
securities exchange, it is likely that the common shares will be defined as
"penny stocks" under the Exchange Act and SEC rules thereunder. The Exchange Act
and penny stock rules generally impose additional sales practice and disclosure
requirements upon broker-dealers who sell penny stocks to persons other than
certain "accredited investors" (generally, institutions with assets in excess of
$5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 jointly with spouse) or in transactions
not recommended by the broker-dealer.
For transactions covered by the penny stock rules, the broker-dealer must
make a suitability determination for each purchaser and receive the purchaser's
written agreement prior to the sale. In addition, the broker-dealer must make
certain mandated disclosures in penny stock transactions, including the actual
sale or purchase price and actual bid and offer quotations, the compensation to
be received by the broker-dealer and certain associated persons, and deliver
certain disclosures required by the SEC. So long as MNS's common shares are
considered "penny stocks", many brokers will be reluctant or will refuse to
effect transactions in MNS's shares, and many lending institutions will not
permit the use of penny stocks as collateral for any loans.
RULE 144 RESALES
MNS has 682,500 common shares issued and outstanding, of which
approximately 68,700 shares are unrestricted and may be freely traded in the
securities markets. There are in addition approximately 613,800 common shares
which have been issued and outstanding, and fully paid, for more than two years
which could be resold pursuant to Rule 144 under the Securities Act of 1933, as
amended. Rule 144 provides that a person who acquired securities in a private
placement transaction and has beneficially owned those securities, fully paid,
for a period of at least one year may, under certain conditions, sell every
three months, in brokerage transactions, a number of shares that does not exceed
one percent (1%) of the issuer's outstanding common stock. For issuers whose
shares are listed on a stock exchange or NASDAQ, a shareholder may alternatively
sell a number of shares that does not exceed the average weekly trading volume
during the four calendar weeks prior to his or her sale.
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However, if a person has beneficially owned securities for a period of two
years and has not been an affiliate (control person) of the issuer for the
preceding three-month period, the person may request that all restrictive
legends affecting the securities be removed, and there is no limit on the number
of shares that the non-affiliate may then sell. The sale of a substantial number
of shares of MNS under Rule 144 or under any other exemption from the Act could
have a depressive effect upon the price of MNS's common shares in any market
that may develop. Under current SEC rules, no MNS common shares may be resold
under Rule 144 during the ninety (90)-day period following effectiveness of this
Registration Statement.
ITEM 2. LEGAL PROCEEDINGS.
There are no legal proceedings which are pending or have been threatened
against MNS or any officer, director or control person of which management is
aware.
ITEM 3. CHANGES in and DISAGREEMENTS with ACCOUNTANTS on ACCOUNTING and
FINANCIAL DISCLOSURE.
Not applicable.
ITEM 4. RECENT SALES of UNREGISTERED SECURITIES.
The following sets forth certain information with respect to all common
stock of MNS sold during the three-year period or since inception prior to the
filing of this Registration Statement.
(1) On February 28, 1997, the Company issued 725,000 shares of common stock
to MNS Eagle Equity Group, Inc. (its former parent) for cash, organization costs
and deferred offering costs. These common shares were valued at $.01 per share.
These securities were issued without registration under the Securities Act of
1933, as amended, and exemption for such sale(s) from registration under such
Act is claimed under Section 4(2) thereof on the basis that such sale was a
transaction not involving any public offering. MNS Eagle Equity Group, Inc.
executed a customary form of investment letter concerning such purchase.
Appropriate precautions against transfer were taken, including the placement of
an investment legend on the certificate(s) evidencing such shares and placement
of a stop transfer notation in the stock records concerning such shares.
(2) Private Placement. The Company's parent offered for sale, at the price
of US$1.00 per unit, a total of 100,000 Units. Each Unit consisted of a share of
common stock in six different corporations for a total of six (6) shares of
stock, including one share of common stock, $.001 par value per share, of MNS
Eagle Equity Group, Inc., the former parent, and one share of common stock,
$.001 par value per share, of each of the following corporations organized in
the State of Nevada and which were at that time wholly owned subsidiaries of the
Parent, namely: MNS Eagle Equity Group I, Inc., MNS Eagle Equity Group II, Inc.,
MNS Eagle Equity Group III, Inc., MNS Eagle Equity Group IV, Inc. and MNS Eagle
Equity Group V, Inc. No minimum number of Units had to be sold. On October 31,
1997, the Company's former parent closed the private placement offering. A total
of 7,500 units were sold for $7,500. The proceeds were allocated by the
Company's parent as follows: $5,000 to the parent and $500 to each of the wholly
owned subsidiaries. The offering was not registered under the Securities Act of
1933, as amended ("Act"), and was offered to qualified investors in reliance
upon the exemption from such registration requirements provided by Section 4(2)
of the Act and/or Rule 505 of Regulation D under the Act and applicable state
laws. Accordingly, the Units and component shares were deemed "restricted
securities" and are subject to significant restrictions on transfer. Appropriate
precautions against transfer were taken, including the placement of an
investment legend on the certificate(s) evidencing such shares and placement of
a stop transfer notation in the stock records concerning such shares.
20
<PAGE>
ITEM 5. INDEMNIFICATION of DIRECTORS and OFFICERS.
As permitted by Nevada law, MNS's Certificate of Incorporation provides
that MNS will indemnify its officers and directors against attorneys' fees and
other expenses and liabilities they incur to defend, settle or satisfy any civil
or criminal action brought against them arising out of their association with or
activities on behalf of MNS unless, in any such action, they are adjudged to
have acted with gross negligence or to have engaged in willful misconduct. MNS
may also bear the expenses of such litigation for any such persons upon their
promise to repay such sums if it is ultimately determined that they are not
entitled to indemnification. Such expenditures could be substantial and may not
be recouped, even if MNS is so entitled. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling MNS pursuant to the foregoing
provisions, MNS has been informed that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in that Act and is, therefore, unenforceable. Furthermore, it should be noted
that a successful indemnification of any officer or director could deplete the
assets of MNS.
PART F/S
(1) AUDITED FINANCIAL STATEMENTS.
Independent Auditor's Report .................................. F-1
Balance Sheets as of December 31, 1998 and 1997................ F-2
Statements of Operations for the year ended
December 31, 1998, period from February 28, 1997
(inception) to December 31, 1997 and for the
period February 28, 1997 (inception) to
December 31, 1998............................................. F-3
Statement of Stockholders' Equity for the period
February 28, 1997(inception) to December 31, 1998............. F-4
Statements of Cash Flows for the year ended
December 31, 1998, period from February 28, 1997
(inception) to December 31, 1997 and for the
period February 28, 1997 (inception) to
December 31, 1998............................................. F-5
Notes to Financial Statements ................................. F-6
(2) MANAGEMENT PREPARED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Balance Sheets as of September 30, 1999 and
December 31, 1998 (audited)................................... F-1
Statements of Operations for the nine month
ended September 30, 1999 and 1998 and for the period
February 28, 1997 (inception) to September 30, 1999........... F-2
Statement of Stockholders' Equity (Deficit) for
the period February 28, 1997
(inception) to September 30, 1999............................. F-3
Statements of Cash Flows for the nine months
ended September 30, 1999 and 1998 and for the
period February 28, 1997 (inception) to September 30, 1999.... F-4
Notes to Financial Statement .................................. F-5
21
<PAGE>
PART III
ITEM 1. LIST OF EXHIBITS.
The following exhibits are either filed with this registration statement or
have previously been filed with the Securities and Exchange Commission and are
incorporated by reference to another report, registration statement or form. As
to any shareholder of record requesting a paper copy of this registration
statement, MNS will furnish any exhibit indicated in the list below as filed
with this report upon payment to MNS of its expenses in furnishing the
information.
3.1 Certificate of Incorporation of MNS as filed with the
Nevada Secretary of State on February 28, 1997............. 1
3.4 Bylaws of MNS .............................................. 1
4.1 Specimen common stock certificate .......................... 1
10.1 1997 Compensatory Stock Option Plan of MNS ................. 1
10.2 1997 Employee Stock Compensation Plan of MNS ............... 1
1 - Filed herewith as an exhibit.
2 - Incorporated by reference to another registration statement,
report or document.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Company has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
DATED: October 8, 1999
MNS Eagle Equity Group IV, INC.
By /s/ Stephen M. Siedow
--------------------------------------------
Stephen M. Siedow, President and CEO
22
<PAGE>
Larry O'Donnell, CPA, P.C.
Telephone (303)745-4545 2280 South Xanadu Way
Suite 370
Aurora, Colorado 80014
Independent Auditor's Report
Board of Directors and Stockholders
MNS Eagle Equity Group IV, Inc.
I have audited the accompanying balance sheets of MNS Eagle Equity Group IV,
Inc. as of December 31, 1998 and 1997 and the related statements of operations,
changes in stockholders' equity and cash flows for the year ended December 31,
1998, period from inception February 28, 1997 to December 31, 1997 and for the
period from inception February 28, 1997 to December 31, 1998. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of MNS Eagle Equity Group IV, Inc. as
of December 31, 1998 and 1997 and the results of its operations and their cash
flows for the year ended December 31, 1998, period from inception February 28,
1997 to December 31, 1997 and for the period from inception February 28, 1997 to
December 31, 1998 in conformity with generally accepted accounting principles.
Larry O'Donnell, CPA, P.C.
August 4, 1999
F-1
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Balance Sheets)
ASSETS
December 31,
1998 1997
----- -----
Current assets:
Cash $ 176 $ 510
----- -----
Other assets:
Organization costs, net 282 371
----- -----
$ 458 $ 881
===== =====
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: $ -- $ --
----- -----
Stockholders' equity:
Preferred stock; $.001 par value; authorized -
5,000,000 shares; issued - none -- --
Common stock; $.001 par value; authorized -
50,000,000 shares; issued and outstanding -
682,500 shares 682 682
Additional paid-in capital 368 368
Deficit accumulated during the development stage (592) (169)
----- -----
Total stockholders' equity 458 881
----- -----
$ 458 $ 881
===== =====
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Statement of Operations
Year Feb. 28, 1997 Feb. 28, 1997
Ended (inception) to (inception) to
December 31, December 31, December 31,
1998 1997 1998
----------- -------------- --------------
<S> <C> <C> <C>
Costs and expenses:
Amortization $ 89 $ 74 $ 163
General and administrative, related party 334 95 429
--------- --------- ---------
Net loss $ (423) $ (169) $ (592)
========= ========= =========
Loss per common share $ (.0006) $ (.0002)
========= =========
Weighted average common shares outstanding 682,500 682,500
========= =========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period February 28, 1997 (Inception) to December 31, 1998
Deficit
Common Stock Additional Accumulated
------------------------ Paid-in from
Shares Amount Capital Inception
------- -------- ---------- -----------
Balances, February 28, 1997 (inception) -- $ -- $ -- $ --
Common stock issued for cash,
organization costs, and deferred offering
costs, valued at $.001 per share 725,000 725 -- --
Common stock issued for cash, net
of offering costs of $175 7,500 7 318 --
Cancellation of common stock (50,000) (50) 50 --
Net loss for the period (169)
-------- -------- -------- --------
Balances, December 31, 1997 682,500 682 368 (169)
Net loss (423)
-------- -------- -------- --------
Balances, December 31, 1998 682,500 $ 682 $ 368 $ (592)
======== ======== ======== ========
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Statement of Cash Flows
Year Feb. 28, 1997 Feb. 28, 1997
Ended (inception) to (inception) to
December 31, December 31, December 31,
1998 1997 1998
------------ -------------- --------------
Cash flows from operating activities:
Net loss $(423) $(169) $(592)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization 89 74 163
Common stock issued for services -- -- --
Changes in assets and liabilities:
Increase (decrease) in accounts payable -- -- --
Increase (decrease) in amounts
due to an officer/stockholder -- -- --
----- ----- -----
Net cash used in operating activities (334) (95) (429)
----- ----- -----
Cash flows from investing activities:
Organization costs -- (100) (100)
----- ----- -----
Net cash used in investing activities -- (100) (100)
----- ----- -----
Cash flows from financing activities:
Proceeds from sale of common stock -- 803 803
Deferred offering costs -- (98) (98)
----- ----- -----
Net cash provided by financing activities -- 705 705
----- ----- -----
Net increase (decrease) in cash (334) 510 176
Cash at beginning of year 510 -- --
----- ----- -----
Cash at end of year $ 176 $ 510 $ 176
===== ===== =====
Supplemental disclosure of noncash investing and financing activities:
Common stock issued for organizational costs $ -- $ 345 $ 345
===== ===== =====
Common stock issued for deferred offering costs $ -- $ 77 $ 77
===== ===== =====
Common stock issued for services $ -- $ -- $ --
===== ===== =====
The accompanying notes are an integral part of the financial statements.
F-5
</TABLE>
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Description of Business
- -----------------------
The financial statements presented are those of MNS Eagle Equity Group IV, Inc.,
a development stage company (the "Company"). The Company was organized under the
laws of the State of Nevada on February 28, 1997. The Company's activities, to
date, have been organizational in nature, and have been directed towards the
raising of capital and to discussions of potential business combinations. Should
the Company eventually engage in a business combination, future consolidated
operations of the Company would depend on the operations of the company with
which it combines.
Use of Estimates in the Preparation of Financial Statements
- -----------------------------------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
Deferred Offering Costs
- -----------------------
Costs incurred directly related to the private placement offering are
capitalized. Such costs will be offset against the proceeds received from the
private placement.
Organization Costs
- ------------------
Organization costs are amortized over five years.
Fair Value of Financial Instruments
- -----------------------------------
The fair value of the Company's payable due to officers/stockholders is not
practicable to estimate due to the related party nature of the underlying
transactions and the indefinite payment terms.
Income Taxes
- ------------
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
F-6
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date.
Loss Per Common Share
- ---------------------
Loss per common share is computed by dividing the net loss by the weighted
average shares outstanding during the period.
Note 2 - Stockholders' Equity
Common Stock Transactions
- -------------------------
On February 28, 1997, the Company issued 725,000 shares of common stock to MNS
Eagle Equity Group, Inc. (its former parent) for cash, organization costs and
deferred offering costs. These common shares were valued at $.001 per share.
On April 25, 1997, the Company's parent granted two year options on a pro-rata
basis to its officers, directors and stockholders to purchase 687,500 shares of
the 725,000 shares that it owned in the Company.
The Company's parent offered for sale, at the price of US$1.00 per unit, a total
of 100,000 Units. Each Unit consisted of a share of common stock in six
different corporations for a total of six (6) shares of stock, including one
share of common stock, $.001 par value per share, of MNS Eagle Equity Group,
Inc., the former parent, and one share of common stock, $.001 par value per
share, of each of the following corporations organized in the State of Nevada
and which were at that time wholly owned subsidiaries of the Parent, namely: MNS
Eagle Equity Group I, Inc., MNS Eagle Equity Group II, Inc., MNS Eagle Equity
Group III, Inc., MNS Eagle Equity Group IV, Inc. and MNS Eagle Equity Group V,
Inc. No minimum number of Units had to be sold. The offering was not registered
F-7
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements
under the Securities Act of 1933, as amended ("Act"), and was offered to
qualified investors in reliance upon the exemption from such registration
requirements provided by Section 4(2) of the Act and/or Rule 505 of Regulation D
under the Act and applicable state laws. Accordingly, the Units and component
shares were deemed "restricted securities" and are subject to significant
restrictions on transfer.
On June 18, 1997, the officers and directors of the parent exercised the stock
options held by them. Options on 616,378 of the 687,500 optioned shares of the
Company's common stock were exercised.
On October 31, 1997, the Company's former parent closed the private placement
offering. A total of 7,500 units were sold for $7,500. The proceeds were
allocated by the Company's parent as follows: $5,000 to the parent and $500 to
each of the wholly owned subsidiaries. Offering costs of $175 were incurred by
each subsidiary.
On November 18, 1997, a stockholder of the Company surrendered 50,000 shares of
the Company's $.001 par value common stock back to the Company for no
consideration. These shares were cancelled by the Company. Options on 47,416 of
the 687,500 optioned shares of the Company's common stock were also cancelled.
On November 25, 1997, a stockholder of the former parent exercised the stock
options held by them. Options on 23,706 of the 687,500 optioned shares of the
Company's common stock were exercised.
Dividends may be paid on outstanding shares as declared by the Board of
Directors. Each share of common stock is entitled to one vote.
Preferred Stock
- ---------------
No shares of preferred stock have been issued or are outstanding. Dividends,
voting rights and other terms, rights and preferences of the preferred shares
have not been designated but may be designated by the Board of Directors from
time to time.
1997 Stock Option Plan
- ----------------------
The Company has adopted a stock option plan (the "CSO Plan") which allows for
the issuance of options to purchase up to 1,000,000 shares of stock to
employees, officers, directors and consultants of the Company. The CSO Plan is
not intended to qualify as an "incentive stock option plan" under Section 422 of
the Internal Revenue Code. Options will be granted under the CSO Plan at
exercise prices to be determined by the Board of Directors or other CSO Plan
F-8
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements
administrator. The Company will incur compensation expense to the extent that
the market value of the stock at date of grant exceeds the amount the grantee is
required to pay for the options. No options have been granted under the CSO Plan
to date.
1997 Employee Stock Compensation Plan
- -------------------------------------
The Company has adopted an employee stock compensation plan (the "ESC Plan")
which allows for the issuance of up to 1,500,000 shares of stock to employees,
officers, directors and consultants of the Company. The Company will incur
compensation expense to the extent the market value of the stock at date of
grant exceeds the amount the employee is required to pay for the stock (if any).
The ESC Plan will be administered by the Board of Directors or a committee of
directors. No stock has been awarded under the ESC Plan to date.
Note 3 - Income Taxes
There is no provision for income taxes since the Company has incurred net
operating losses.
Income taxes at the federal statutory rate is reconciled to the Company's actual
income taxes as follows:
<TABLE>
<CAPTION>
December 31,
---------------------------
1998 1997
---------- ----------
<S> <C> <C>
Federal income tax benefit at statutory rate (15%) $ (63) $ (25)
State income tax benefit net of federal tax effect -- --
Deferred income tax valuation allowance 63 25
---------- ----------
$ -- $ --
========== ==========
The Company's deferred tax assets are as follows:
Accrued expenses $ -- $ --
Net operating loss carryforward 88 25
Valuation allowance (88) (25)
---------- ----------
$ -- $ --
========== ==========
</TABLE>
At December 31, 1998, the Company has net operating loss carryforwards of $592
which may be available to offset future taxable income through 2018.
Note 4 - Related Party Transaction
The Company utilizes office space provided by the President of the Company at no
charge.
F-9
<PAGE>
<TABLE>
<CAPTION>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Balance Sheets (Unaudited)
ASSETS
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
Current assets:
Cash $ -- $ 176
------- -------
Other assets:
Organization costs, net 215 282
------- -------
$ 215 $ 458
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ -- $ --
Due to an officer/stockholder 359 --
------- -------
359 --
------- -------
Stockholders' equity (deficit):
Preferred stock; $.001 par value; authorized -
5,000,000 shares; issued - none -- --
Common stock; $.001 par value; authorized -
50,000,000 shares; issued and outstanding -
682,500 shares 682 682
Additional paid-in capital 368 368
Deficit accumulated during the development stage (1,194) (592)
------- -------
Total stockholders' equity (deficit) (144) 458
------- -------
$ 215 $ 458
======= =======
The accompanying notes are an integral part of the financial statements.
F-1
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Statements of Operations (Unaudited)
Nine Nine Feb 28, 1997
Months Ended Months Ended (inception) to
September 30, September 30, September 30,
1999 1998 1999
------------- ------------- -------------
Costs and expenses:
Amortization $ 67 $ 67 $ 230
General and administrative, related party 535 334 964
--------- --------- ---------
Net loss $ (602) $ (401) $ (1,194)
========= ========= =========
Loss per common share $ (.001) $ (.001)
========= =========
Weighted average shares outstanding 682,500 682,500
========= =========
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Statements of Changes in Stockholders' Equity (Deficit) (Unaudited)
For the Period February 28, 1997 (Inception) to September 30, 1999
Deficit
Common Stock Additional Accumulated
---------------------- Paid-in from
Shares Amount Capital Inception
------ ------ ---------- ------------
Balances, February 28, 1997 (inception) -- $ -- $ -- $ --
Common stock issued for cash,
organization costs, and deferred offering
costs, valued at $.001 per share 725,000 725 -- --
Common stock issued for cash, net
of offering costs of $175 7,500 7 318 --
Cancellation of common stock (50,000) (50) 50 --
Net loss for the period (169)
-------- -------- -------- --------
Balances, December 31, 1997 682,500 682 368 (169)
Net loss (423)
-------- -------- -------- --------
Balances, December 31, 1998 682,500 682 368 (592)
Net loss for the period (602)
-------- -------- -------- --------
Balances, September 30, 1999 682,500 $ 682 $ 368 $ (1,194)
======== ======== ======== ========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Statements of Cash Flows (Unaudited)
Nine Nine Feb 28, 1997,
Months Ended Months Ended (inception) to
September 30, September 30, September 30,
1999 1998 1999
------------- ------------- -------------
Cash flows from operating activities:
Net loss $ (602) $ (401) $(1,194)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization 67 67 230
Common stock issued for services -- -- --
Changes in assets and liabilities:
Increase (decrease) in accounts payable -- -- --
Increase (decrease) in amounts due
to an officer/stockholder 359 -- 359
------- ------- -------
Net cash used in operating activities (176) (334) (605)
------- ------- -------
Cash flows from investing activities:
Organization costs -- -- (100)
------- ------- -------
Net cash used in investing activities -- -- (100)
------- ------- -------
Cash flows from financing activities:
Proceeds from sale of common stock -- -- 803
Deferred offering costs -- -- (98)
------- ------- -------
Net cash provided by financing activities -- -- 705
------- ------- -------
Net increase (decrease) in cash (176) (334) --
Cash at beginning of year 176 510 --
------- ------- -------
Cash at end of period $ -- $ 176 $ --
======= ======= =======
Supplemental disclosure of noncash investing and financing activities:
Common stock issued for organizational costs $ -- $ -- $ 345
======= ======= =======
Common stock issued for deferred offering costs $ -- $ -- $ 77
======= ======= =======
Common stock issued for services $ -- $ -- $ --
======= ======= =======
The accompanying notes are an integral part of the financial statements.
F-4
</TABLE>
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
Note 1 - Summary of Significant Accounting Policies
Description of Business
- -----------------------
The financial statements presented are those of MNS Eagle Equity Group IV, Inc.,
a development stage company (the "Company"). The Company was organized under the
laws of the State of Nevada on February 28, 1997. The Company's activities, to
date, have been organizational in nature, and have been directed towards the
raising of capital and to discussions of potential business combinations. Should
the Company eventually engage in a business combination, future consolidated
operations of the Company would depend on the operations of the company with
which it combines.
Use of Estimates in the Preparation of Financial Statements
- -----------------------------------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
Deferred Offering Costs
- -----------------------
Costs incurred directly related to the private placement offering are
capitalized. Such costs will be offset against the proceeds received from the
private placement.
Organization Costs
- ------------------
Organization costs are amortized over five years.
Fair Value of Financial Instruments
- -----------------------------------
The fair value of the Company's payables due to officers/stockholders is not
practicable to estimate due to the related party nature of the underlying
transactions and the indefinite payment terms.
F-5
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
Income Taxes
- ------------
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date.
Loss Per Common Share
- ---------------------
Loss per common share is computed by dividing the net loss by the weighted
average shares outstanding during the period.
Unaudited Financial Statements
- ------------------------------
The unaudited financial statements of the Company have been prepared on the
accrual basis and includes all of the information and footnotes required by
generally accepted accounting principles. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included.
Note 2 - Stockholders' Equity (Deficit)
Common Stock Transactions
- -------------------------
On February 28, 1997, the Company issued 725,000 shares of common stock to MNS
Eagle Equity Group, Inc. (its former parent) for cash, organization costs and
deferred offering costs. These common shares were valued at $.001 per share.
On April 25, 1997, the Company's parent granted two year options on a pro-rata
basis to its officers, directors and stockholders to purchase 687,500 shares of
the 725,000 shares that it owned in the Company.
The Company's parent offered for sale, at the price of US$1.00 per unit, a total
of 100,000 Units. Each Unit consisted of a share of common stock in six
different corporations for a total of six (6) shares of stock, including one
share of common stock, $.001 par value per share, of MNS Eagle Equity Group,
Inc., the former parent, and one share of common stock, $.001 par value per
share, of each of the following corporations organized in the State of Nevada
and which were at that time wholly owned subsidiaries of the Parent, namely: MNS
Eagle Equity Group I, Inc., MNS Eagle Equity Group II, Inc., MNS Eagle Equity
Group III, Inc., MNS Eagle Equity Group IV, Inc. and MNS Eagle Equity Group V,
Inc. No minimum number of Units had to be sold. The offering was not registered
F-6
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
under the Securities Act of 1933, as amended ("Act"), and was offered to
qualified investors in reliance upon the exemption from such registration
requirements provided by Section 4(2) of the Act and/or Rule 505 of Regulation D
under the Act and applicable state laws. Accordingly, the Units and component
shares were deemed "restricted securities" and are subject to significant
restrictions on transfer.
On June 18, 1997, the officers and directors of the parent exercised the stock
options held by them. Options on 616,378 of the 687,500 optioned shares of the
Company's common stock were exercised.
On October 31, 1997, the Company's former parent closed the private placement
offering. A total of 7,500 units were sold for $7,500. The proceeds were
allocated by the Company's parent as follows: $5,000 to the parent and $500 to
each of the wholly owned subsidiaries. Offering costs of $175 were incurred by
each subsidiary.
On November 18, 1997, a stockholder of the Company surrendered 50,000 shares of
the Company's $.001 par value common stock back to the Company for no
consideration. These shares were cancelled by the Company. Options on 47,416 of
the 687,500 optioned shares of the Company's common stock were also cancelled.
On November 25, 1997, a stockholder of the former parent exercised the stock
options held by them. Options on 23,706 of the 687,500 optioned shares of the
Company's common stock were exercised.
Dividends may be paid on outstanding shares as declared by the Board of
Directors. Each share of common stock is entitled to one vote.
Preferred Stock
- ---------------
No shares of preferred stock have been issued or are outstanding. Dividends,
voting rights and other terms, rights and preferences of the preferred shares
have not been designated but may be designated by the Board of Directors from
time to time.
F-7
<PAGE>
MNS EAGLE EQUITY GROUP IV, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
1997 Stock Option Plan
- ----------------------
The Company has adopted a stock option plan (the "CSO Plan") which allows for
the issuance of options to purchase up to 1,000,000 shares of stock to
employees, officers, directors and consultants of the Company. The CSO Plan is
not intended to qualify as an "incentive stock option plan" under Section 422 of
the Internal Revenue Code. Options will be granted under the CSO Plan at
exercise prices to be determined by the Board of Directors or other CSO Plan
administrator. The Company will incur compensation expense to the extent that
the market value of the stock at date of grant exceeds the amount the grantee is
required to pay for the options. No options have been granted under the CSO Plan
to date.
1997 Employee Stock Compensation Plan
- -------------------------------------
The Company has adopted an employee stock compensation plan (the "ESC Plan")
which allows for the issuance of up to 1,500,000 shares of stock to employees,
officers, directors and consultants of the Company. The Company will incur
compensation expense to the extent the market value of the stock at date of
grant exceeds the amount the employee is required to pay for the stock (if any).
The ESC Plan will be administered by the Board of Directors or a committee of
directors. No stock has been awarded under the ESC Plan to date.
Note 3 - Income Taxes
There is no provision for income taxes since the Company has incurred net
operating losses.
Income taxes at the federal statutory rate is reconciled to the Company's actual
income taxes as follows:
<TABLE>
<CAPTION>
September 30,
---------------------------
1999 1998
---------- ----------
<S> <C> <C>
Federal income tax benefit at statutory rate (15%) $ (90) $ (60)
State income tax benefit net of federal tax effect -- --
Deferred income tax valuation allowance 90 60
---------- ----------
$ -- $ --
========== ==========
The Company's deferred tax assets are as follows:
Accrued expenses $ -- $ --
Net operating loss carryforward 178 85
Valuation allowance (178) (85)
---------- ----------
$ -- $ --
========== ==========
</TABLE>
At September 30, 1999, the Company has net operating loss carryforwards of
$1,194 which may be available to offset future taxable income through 2019.
Note 4 - Related Party Transaction
The Company utilizes office space provided by the President of the Company at no
charge.
F-8
Exhibit 3.1
CERTIFICATE OF INCORPORATION
of
MNS EAGLE EQUITY GROUP IV, INC.
(A Nevada Corporation)
FIRST. The name of this corporation is MNS EAGLE EQUITY GROUP IV, INC.
SECOND. The Corporation's Registered Office in the State of Nevada is
located at 2533 N. Carson Street, Carson City, Nevada 89706. The Corporation's
Resident Agent at this address is Laughlin Associates, Inc.
THIRD. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Nevada. The Corporation may conduct all or any part of its business, and
may hold, purchase, mortgage, lease and convey real and personal property,
anywhere in the world. The Corporation shall have perpetual duration.
FOURTH. The name and mailing address of the Incorporator is:
Name Mailing Address
---- ---------------
John D. Brasher Jr. 90 Madison Street, Suite 707
Denver, Colorado 80206
Upon the filing of this Certificate of Incorporation the powers of the
Incorporator shall terminate. The names and addresses of the person or persons
who are to serve as directors until the first annual meeting of shareholders or
until their successors are duly elected and have qualified are:
Name Mailing Address
---- ---------------
John D. Brasher Jr. 90 Madison Street, Suite 707
Denver, Colorado 80206
Stephen M. Siedow 12373 E. Cornell Avenue
Aurora, Colorado 80014
{CAPITAL STOCK}
FIFTH. The aggregate number of shares of capital stock of all classes which
the Corporation shall have authority to issue is FIFTY-FIVE MILLION
(55,000,000), of which FIFTY MILLION (50,000,000) shares having a par value of
$.001 per share shall be of a class designated "Common Stock" (or "Common
Shares") and FIVE MILLION (5,000,000) shares having a par value of $.001 per
share shall be of a class designated "Preferred Stock" (or "Preferred Shares").
All shares of the Corporation shall be issued for such consideration or
considerations as the Board of Directors may from time to time determine. The
designations, voting powers, preferences, optional or other special rights and
qualifications, limitations, or restrictions of the above classes of stock shall
be as follows:
I. PREFERRED STOCK
(a) Issuance in Class and Series. Shares of Preferred Stock may be issued
in one or more classes or series at such time or times as the Board of Directors
may determine. All shares of any one series shall be of equal rank and identical
in all respects.
(b) Authority of Board for Issuance. Authority is hereby expressly granted
to the Board of Directors to fix from time
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to time, by resolution or resolutions providing for the issuance of any class or
series of Preferred Stock, the designation of such classes and series and the
powers, preferences and rights of the shares of such classes and series, and the
qualifications, limitations or restrictions thereof, including the following:
1. The distinctive designation and number of shares comprising such
class or series, which number may (except where otherwise provided by the
Board of Directors in creating such class or series) be increased or
decreased (but not below the number of shares then outstanding) from time
to time by action of the Board of Directors;
2. The rate of dividend, if any, on the shares of that class or
series, whether dividends shall be cumulative and, if so, from which date
or dates, the relative rights of priority, if any, of payment of dividends
on shares of that class or series over shares of any other class or series;
3. Whether the shares of that class or series shall be redeemable at
the option of the Corporation or of the holder of the shares or of another
person or upon the occurrence of a designated event and, if so, the terms
and conditions of such redemption, including the date or dates upon or
after which they shall be redeemable, and the amount per share payable in
case of redemption, which amount may vary under different conditions and
different redemption dates;
4. Whether that class or series shall have a sinking fund for the
redemption or purchase of shares of that class or series and, if so, the
terms and amounts payable into such sinking fund;
5. The rights to which the holders of the shares of that series shall
be entitled in the event of voluntary or involuntary liquidation,
dissolution, distribution of assets or winding-up of the Corporation,
relative rights of priority; if any, of payment of shares of that class or
series;
6. Whether the shares of that class or series shall be convertible
into or exchangeable for shares of stock of any class or any other series
of Preferred Stock and, if so, the terms and conditions of such conversion
or exchange, including the method of adjusting the rates of conversion or
exchange in the event of a stock split, stock dividend, combination of
shares or similar event;
7. Whether the issuance of any additional shares of such class or
series, or of any shares of any other class or series, shall be subject to
restrictions as to issuance, or as to the powers, preferences or rights of
any such other class or series;
8. Any other preferences, privileges and powers, and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions of such class or series, as the Board of
Directors may deem advisable and as shall not be inconsistent with the
provisions of the Corporation's Charter, as from time to time amended, and
to the full extent now or hereinafter permitted by the laws of Nevada.
(c) Dividends. Payment of dividends shall be as follows:
1. The holders of Preferred Stock of each class or series, in
preference to the holders of Common Stock, shall be entitled to receive, as
and when declared by the Board of Directors out of funds legally available
therefor, all dividends, at the rate for such class or series fixed in
accordance with the provisions of this Article FIFTH and no more;
2. Dividends may be paid upon, or declared or set aside for, any class
or series of Preferred Stock in preference to the holders of any other
class or series of Preferred Stock in the manner determined by the
resolutions of the Board of Directors authorizing and creating such class
or series;
3. So long as any shares of Preferred Stock shall be outstanding, in
no event shall any dividend, whether in cash or in property, be paid or
declared nor shall any distribution be made, on the Common Stock, nor shall
any shares of Common Stock be purchased, redeemed or otherwise acquired for
value by the Corporation, unless all dividends on all cumulative classes
and series Preferred Stock with respect to all past dividend periods, and
unless all dividends on all classes and series of Preferred Stock for the
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<PAGE>
then current dividend period shall have been paid or declared, and provided
for, and unless the Corporation shall not be in default with respect to any
of its obligations with respect to any sinking fund for any class or series
of Preferred Stock. The foregoing provisions of this subparagraph (3) shall
not, however, apply to any dividend payable in Common Stock;
4. No dividend shall be deemed to have accrued on any share of
Preferred Stock of any class or series with respect to any period prior to
the date of the original issue of such share or the dividend payment date
immediately preceding or following such date of original issue, as may be
provided in the resolutions of the Board of Directors creating such class
or series. Preferred Stock shall not be entitled to participate in any
dividends declared and paid on Common Stock, whether payable in cash, stock
or otherwise. Accruals of dividends shall not pay interest.
(d) Dissolution or Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution of assets or winding-up of the Corporation,
the holders of the shares of each class or series of Preferred Stock then
outstanding shall be entitled to receive out of the net assets of the
Corporation, but only in accordance with the preferences, if any, provided for
such series, before any distribution or payment shall be made to the holders of
Common Stock, the amount per share fixed by the resolution or resolutions of the
Board of Directors to be received by the holder of each such share on such
voluntary or involuntary liquidation, dissolution, distribution of assets or
winding-up, as the case may be. If such payment shall have been made in full to
the holders of all outstanding Preferred Stock of all classes and series, or
duly provided for, the remaining assets of the Corporation shall be available
for distribution among the holders of Common Stock as provided in this Article
FIFTH. If upon any such liquidation, dissolution, distribution of assets or
winding-up, the net assets of the Corporation available for distribution among
the holders of any one or more classes or series of Preferred Stock which (i)
are entitled to a preference over the holders of Common Stock upon such
liquidation, dissolution, distribution of assets or winding-up, and (ii) rank
equally in connection therewith, shall be insufficient to make payment for the
preferential amount to which the holders of such shares shall be entitled, then
such assets shall be distributed among the holders of each such series of
Preferred Stock ratably according to the respective amounts to which they would
be entitled in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full. Neither the
consolidation nor merger of the Corporation, nor the exchange, sale, lease or
conveyance (whether for cash, securities or other property) of all,
substantially all or any part of its assets, shall be deemed a liquidation,
dissolution, distribution of assets or winding-up of the Corporation within the
meaning of this provision.
(e) Voting Rights. Except to the extent otherwise required by law or
provided in the resolution of the Board of Directors adopted pursuant to
authority granted in this Article FIFTH, the shares of Preferred Stock shall
have no voting power with respect to any matter whatsoever. The Board of
Directors may determine whether the shares of any class or series shall have
limited, contingent, full or no voting rights, in addition to the voting rights
provided by law and, if so, the terms of such voting rights. Whenever holders of
Preferred Stock are entitled to vote on a matter, each holder of record of
Preferred Stock shall be entitled to one vote for each share standing in his
name on the books of the Corporation and entitled to vote.
II. COMMON STOCK
(a) Issuance. The Common Stock may be issued from time to time in one or
more classes or series in any manner permitted by law, as determined by the
Board of Directors and stated in the resolution or resolutions providing for
issuance thereof. Each class or series shall be appropriately designated, prior
to issuance of any shares thereof, by some distinguishing letter, number or
title. All shares of each class or series of Common Stock shall be alike in
every particular and shall be of equal rank and have the same power, preferences
and rights, and shall be subject to the same qualifications, limitations and
restrictions, if any.
(b) Voting Powers. The Common Stock may have such voting powers (full,
limited, contingent or no voting powers), such designations, preferences and
relative, participating, optional or other special rights, and be subject to
such qualifications, limitations and restrictions, as the Board of Directors
shall determine by resolution or resolutions. Unless otherwise resolved by the
Board of Directors at the time of issuing Common Shares, (i) each Common Stock
share shall be of the same class, without any designation, preference or
relative, participating, optional or other special rights, and subject to no
qualification, limitation or restriction, and (ii) Common Shares shall have
unlimited voting rights, including but not limited to the right to vote in
elections for directors, and each holder of record of Common Shares entitled to
vote shall have one vote for each share of stock standing in his name on the
books of the Corporation and entitled to vote, except that in the election of
directors each holder shall have as many votes for each share held by him as
there are directors.
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<PAGE>
(c) Dividends. After the requirements with respect to preferential
dividends, if any, on Preferred Stock, and after the Corporation shall have
complied with all requirements, if any, with respect to the setting aside of
sums in a sinking fund for the purchase or redemption of shares of any class or
series of Preferred Stock, then and not otherwise, the holders of Common Stock
shall receive, to the extent permitted by law, such dividends as may be declared
from time to time by the Board of Directors.
(d) Dissolution or Liquidation. After distribution in full of the
preferential amount, if any, to be distributed to the holders of Preferred
Stock, in the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding-up of the Corporation, the holders of Common
Stock shall be entitled to receive all the remaining assets of the Corporation
of whatever kind available for distribution to shareholders ratably in
proportion to the number of shares of Common Stock respectively held by them.
III. GENERAL MATTERS
(a) Capital. The portion of the consideration received by the Corporation
upon issuance of any of its shares that shall constitute "capital" within the
meaning of the General Corporation Law of Nevada shall be (1) in the case of
par-value shares, the par value thereof, and (2) in the case of shares without
par value, the stated value of such shares as determined by the Board of
Directors at the time of issuance; provided, that if no stated value is
determined at the time that shares without par value are issued, the entire
consideration to be received for the shares shall constitute capital.
(b) Fully Paid and Nonassessable. Any and all shares of Common or Preferred
Stock issued by the Corporation for which not less than the portion of the
consideration to be received determined to be "capital" has been paid to the
Corporation, provided the Corporation has received a promissory note or other
binding legal obligation of the purchaser to pay the balance thereof, shall be
deemed fully paid and nonassessable shares.
(c) Amendment of Shareholder Rights. So long as no shares of any class or
series established by resolution of the Board of Directors have been issued, the
voting rights, designations, preferences and relative, optional, participating
or other rights of these shares may be amended by resolution of the Board of
Directors.
(d) Status of Certain Shares. Shares of Preferred or Common Stock which
have redeemed, converted, exchanged, purchased, retired or surrendered to the
Corporation, or which have been reacquired in any other manner, shall have the
status of authorized and unissued shares and may be reissued by the Board of
Directors as shares of the same or any other series, unless otherwise provided
herein or in the resolution authorizing and establishing the shares.
(e) Denial of Preemptive Rights. No holder of any shares of the Corporation
shall be entitled as a matter of right to subscribe for or purchase any part of
any new or additional issue of stock of any class or of securities convertible
into or exchangeable for stock of any class, whether now or hereafter authorized
or whether issued for money, for a consideration other than money, or by way of
dividend.
(f) Convertibility. Common Shares or other shares of any class or series,
and notes, debentures, bonds and other debt instruments issued by the Company or
any affiliated company, may be made convertible into or exchangeable for, at the
option of the Corporation or the holder or upon the occurrence of a specified
event, shares of any other class or classes or any other series of the same or
any other class or classes of shares of the Corporation, at such price or prices
or at such rate or rates of exchange and with such adjustments as shall be set
forth in the resolution or resolutions providing for the issuance of such
convertible or exchangeable shares adopted by the Board of Directors.
(g) Redeemability. Common Shares may be made redeemable at the option of
the Corporation or upon the occurrence of a designated event, if and to the
extent now or subsequently allowed by the General Corporation Law of Nevada, as
such law may subsequently be amended, and the terms and conditions of
redemption, including the date or dates upon or after which they shall be
redeemable, the amount per share payable in case of redemption and any variance
in the amount or amounts payable, among other terms, conditions and limitations
which may be imposed, may be fixed and established by the Board of Directors in
the resolution or resolutions authorizing the issuance of redeemable Common
Shares.
4
<PAGE>
{VOTING OF SHAREHOLDERS}
SIXTH. The following provisions are hereby adopted for the purpose of
regulating certain matters relating to the voting of shareholders of the
Corporation:
(a) Definitions. Whenever the term "total voting power" appears in this
Charter, it shall mean all shares of the Corporation entitled to vote at a
meeting or on a question presented for shareholder approval, and of every class
or series of shares entitled to vote by class or series. Whenever the term
"votes cast" appears in this Charter, it shall mean the total number of voting
shares out of the total voting power which were unequivocally voted in favor of
or against a director standing for election or a matter presented for
shareholder approval at a legal meeting which commenced with a quorum.
(b) Quorum. A majority of the total voting power, or where a separate vote
by class or series is required, a majority of the voting shares of each such
class or series, represented in person or by proxy, shall constitute a quorum at
any meeting of the Corporation's shareholders.
(c) Vote Required. Any action to be taken by the Corporation's shareholders
at any valid meeting which commenced with a quorum shall require the affirmative
vote only of a majority of the votes cast, except where this Charter or the
Corporation's Bylaws then in effect requires the affirmative vote of a higher
proportion of the votes cast or requires the affirmative vote of a proportion of
the total voting power, and except where the Nevada General Corporation Law
specifically requires the affirmative vote of a majority of all the votes
entitled to be cast. Directors shall be elected by plurality vote. Abstentions
from voting shall not be considered in the tallying of votes. Nothing contained
in this Article SIXTH shall affect the voting rights of holders of any class or
series of shares entitled to vote as a class or by series. The Bylaws may
provide for the vote necessary at any adjournment of a duly called meeting for
which a quorum was not obtained. Cumulative voting shall not be allowed in
voting for directors.
(d) Manner of Voting; Etc. The vote of shareholders may be taken at a
meeting by a show of hands or other method authorized by the Board of Directors.
Written ballots shall be used only upon authorization of the Board of Directors
or as provided in the Corporation's Bylaws. Cumulative voting shall not be
allowed in the election of directors.
(e) Action Without Meeting. Any action by the shareholders may be taken by
written consent, in lieu of a meeting and without prior notice or vote, by the
holders of a majority of the total voting power, except where a higher
proportion of the total voting power is expressly required herein to authorize
such action. The manner of obtaining any such written consent shall be governed
by the Corporation's Bylaws.
(f) Shareholder Ratification. Any contract, transaction, or act of the
Corporation or of the directors which shall be ratified by vote of the
shareholders at any annual meeting, or at any special meeting called for such
purpose, or by means of a written consent of shareholders in lieu of a meeting,
shall so far as permitted by law be as valid and as binding as though ratified
by every shareholder of the Corporation.
{CONCERNING SHAREHOLDERS, DIRECTORS AND OFFICERS}
SEVENTH. The following provisions are hereby adopted for the purpose of
defining, limiting, and regulating the powers of the Corporation and of the
directors, officers and shareholders:
(a) Number of Directors. The number of Directors shall be as fixed in the
Bylaws. In the absence of such provision in the Bylaws, the Corporation shall
have two (2) Directors. Directors shall be elected by plurality vote and need
not be elected by written ballot, except as provided in the Bylaws.
5
<PAGE>
(b) Removal of Directors. A director of the Corporation, or the entire
Board of Directors of the Corporation, may be removed by the shareholders, with
or without cause, only upon the affirmative vote of the holders of not less than
two-thirds (2/3) of the total voting power, without considering the vote of the
director or directors sought to be removed.
As used herein, "cause" for the removal of a director shall be deemed to
exist if (A) there has been a finding by not less than 2/3 of the entire Board
of Directors that cause exists and the directors have recommended removal to the
shareholders, or (B) any other cause defined by law.
(c) Removal of Officers and Employees. Unless the Bylaws otherwise provide,
any officer or employee of the Corporation may be removed at any time with or
without cause by the Board of Directors or by any committee or superior officer
upon whom such power of removal may be conferred by the Bylaws or by authority
of the Board of Directors, without prejudice, however, to existing contractual
rights.
(d) Corporate Opportunities. The officers, directors and other members of
management of the Corporation shall be subject to the doctrine of "corporate
opportunities" only insofar as it applies to any business opportunity (i) of a
type falling within the regular business or operations of the Corporation, or
(ii) in which the Corporation has expressed an interest as determined from time
to time by the Corporation's Board of Directors as evidenced by resolutions
appearing in the Corporation's minutes. All such business opportunities which
come to the attention of the officers, directors, and other members of
management of the Corporation shall be disclosed promptly to the Corporation and
made available to it. The Board of Directors may reject any business opportunity
presented to it, and only thereafter may any officer, director or other member
of management avail himself of such opportunity. The provisions of this
paragraph (d) shall not be construed to release any employee of the Corporation
from any fiduciary duties which he may have to the Corporation.
{BYLAWS}
EIGHTH. The initial Bylaws of the Corporation shall be adopted by its Board
of Directors. The power to alter, amend or repeal the Bylaws or adopt new Bylaws
shall be vested in the Board of Directors, subject to the right of the
shareholders to alter, amend or repeal such Bylaws or adopt new Bylaws by the
affirmative vote of at least a majority of the total voting power. The Bylaws
may contain any provisions for the regulation and management of the affairs of
the Corporation not inconsistent with law or this Charter.
{INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS}
NINTH. The following provisions are hereby adopted for the purpose of
defining and regulating certain rights of directors, officers and others in
respect of indemnification and related matters.
(a) Actions, Suits or Proceedings Other than by or in the Right of the
Corporation. The Corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation), by reason of the
fact that he is or was or has agreed to become a director, officer, employee or
agent of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action alleged to have been taken or omitted in such capacity, against
costs, charges, expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation or that, with respect to
any criminal proceeding, he had reasonable cause to believe that his conduct was
unlawful.
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<PAGE>
(b) Actions or Suits by or in the Right of the Corporation. The Corporation
may indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding by or
in the right of the Corporation to procure a judgment in its favor by reason of
the fact that he is or was or has agreed to become a director, officer, employee
or agent of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action alleged to have been taken or omitted in such capacity, against
costs, charges and expenses (including amounts paid in settlement and attorney's
fees) actually and reasonably incurred by him or on his behalf in connection
with the defense or settlement of such action or suit and any appeal therefrom,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation. No indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged by a court of competent jurisdiction after exhaustion of all
appeals therefrom to be liable to the Corporation or for amounts paid in
settlement to the Corporation unless and only to the extent that the court in
which such action or suit was brought or other court of competent jurisdiction
shall determine upon application that, despite the adjudication of such
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such costs, charges and expenses
which the court shall deem proper.
(c) Indemnification for Costs, Charges and Expenses of Successful Party.
Notwithstanding the other provisions of this Article NINTH, to the extent that a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise, including, without limitation, the dismissal of an
action without prejudice, in defense of any action, suit or proceeding referred
to in Sections (a) and (b) of this Article NINTH, or in defense of any claim,
issue or matter therein, he shall be indemnified against all costs, charges and
expenses (including attorney's fees) actually and reasonably incurred by him or
on his behalf in connection therewith.
(d) Determination of Right to Indemnification. Any indemnification under
Sections (a) and (b) of this Article NINTH (unless ordered by a court) shall be
paid by the Corporation unless a determination is made (i) by a disinterested
majority of the Board of Directors who were not parties to such action, suit or
proceeding, or (ii) if such disinterested majority of the Board of Directors so
directs or cannot be obtained, by independent legal counsel in a written
opinion, or (iii) by the shareholders, that indemnification of the director or
officer is not proper in the circumstances because he has not met the applicable
standard of conduct set forth in Sections (a) and (b) of this Article NINTH.
(e) Advances of Costs, Charges and Expenses. Costs, charges and expenses
(including attorney's fees) incurred by a person referred to in Sections (a) or
(b) of this Article NINTH in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding; provided, however, that the payment of such
costs, charges and expenses incurred by a director or officer in his capacity as
a director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer) in advance of the final
disposition of such action, suit or proceeding shall be made only upon receipt
of an undertaking by or on behalf of the director or officer to repay all
amounts so advanced in the event that it shall ultimately be determined that
such director or officer is not entitled to be indemnified by the Corporation as
authorized in this Article, accompanied by evidence satisfactory to the Board of
Directors of ability to make such repayment. Such costs, charges and expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the majority of the Directors deems appropriate. The
majority of the Directors may, in the manner set forth above, and upon approval
of such director, officer, employee or agent of the Corporation, authorize the
Corporation's counsel to represent such person, in any action, suit or
proceeding, whether or not the Corporation is a party to such action, suit or
proceeding.
(f) Procedure for Indemnification. Any indemnification under Sections (a),
(b) and (c), or advance of costs, charges and expenses under Section (e) of this
Article NINTH, shall be made promptly, and in any event within 60 days, upon the
written request of the director or officer. The right to indemnification or
advances as granted by this Article shall be enforceable by the director or
officer in any court of competent jurisdiction if the Corporation denies such
request, in whole or in part, or if no disposition thereof is made within 60
days. Such person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for the advance
of costs, charges and expenses under Section (e) of this Article NINTH where the
required undertaking, if any, has been received by the Corporation) that the
claimant has not met the standard of conduct set forth in Sections (a) or (b) of
this Article NINTH, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
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Directors, its independent legal counsel and its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in Sections (a) or (b) of this Article NINTH, nor
the fact that there has been an actual determination by the Corporation
(including its Board of Directors, its independent legal counsel and its
shareholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(g) Settlement. If in any action, suit or proceeding, including any appeal,
within the scope of Sections (a) or (b) of this Article NINTH, the person to be
indemnified shall have unreasonably failed to enter into a settlement thereof,
then, notwithstanding any other provision hereof, the indemnification obligation
of the Corporation to such person in connection with such action, suit or
proceeding shall not exceed the total of the amount at which settlement could
have been made and the expenses by such person prior to the time such settlement
could reasonably have been effected.
(h) Other Rights; Continuation of Right to Indemnification. The
indemnification provided by this Article shall not be deemed exclusive of any
other rights to which any director, officer, employee or agent seeking
indemnification may be entitled under any law (common or statutory), agreement,
vote of shareholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
office or while employed by or acting as agent for the Corporation, and 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 estate, heirs, executors and
administrators of such person. All rights to indemnification under this Article
shall be deemed to be a contract between the Corporation and each director or
officer of the Corporation who serves or served in such capacity at any time
while this Article NINTH is in effect. Any repeal or modification of this
Article NINTH or any repeal or modification of relevant provisions of the
General Corporation Law of Nevada or any other applicable laws shall not in any
way diminish any rights to indemnification of such director, officer, employee
or agent or the obligations of the Corporation arising hereunder. This Article
NINTH shall be binding upon any successor corporation to this Corporation,
whether by way of acquisition, merger, consolidation or otherwise.
(i) Exceptions to Indemnification Right. Notwithstanding any other language
in this Charter, the Company shall not be obligated pursuant to the terms of
this Charter:
(1) Claims Initiated by Indemnitee. To indemnify or advance expenses
to any person with respect to proceedings or claims initiated or brought
voluntarily by him or her and not by way of defense, expect with respect to
proceedings brought to establish or enforce a right to indemnification
under this Charter or any other statue or law or otherwise as required
under the General Corporation Law of Nevada, but such indemnification or
advancement of expenses may be provided by the Corporation in specific
cases if the Board of Directors finds it to be appropriate; or
(2) Lack of Good Faith. To indemnify any person for any expenses
incurred by him or her with respect to any proceeding instituted by him or
her to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by him or
her in such proceeding was not made in good faith or was frivolous;
(3) Insured Claims. To indemnify any person for expenses or
liabilities of any type whatsoever (including, but not limited to,
judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement) which have been paid directly to him or her by an insurance
carrier under a policy of officers' and directors' liability insurance
maintained by the Corporation.
(4) Claims Under Section 16(b). To indemnify any person for expenses
or the payment of profits arising from the purchase and sale by him or her
of securities in violation of Section 16(b) of the Securities Exchange Act
of 1934, as amended, or any similar or successor statute.
(j) Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was or has agreed to become a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him or on his behalf in any such capacity,
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or arising out of his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the provisions of this
Article NINTH; provided, however, that such insurance is available on acceptable
terms, which determination shall be made by a vote of a majority of the
Directors.
(k) Savings Clause. If this Article NINTH or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation (i) shall nevertheless indemnify each director and officer of the
Corporation and (ii) may nevertheless indemnify each employee and agent of the
Corporation, as to any cost, charge and expense (including attorney's fees),
judgment, fine and amount paid in settlement with respect to any action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
an action by or in the right of the Corporation, to the full extent permitted by
any applicable portion of this Article NINTH that shall not have been
invalidated and to the full extent permitted by applicable law.
(l) Amendment. The affirmative vote of at least a majority of the total
voting power shall be required to amend, repeal, or adopt any provision
inconsistent with, this Article NINTH. No amendment, termination or repeal of
this Article NINTH shall affect or impair in any way the rights of any director
or officer of the Corporation to indemnification under the provisions hereof
with respect to any action, suit or proceeding arising out of, or relating to,
any actions, transactions or facts occurring prior to the final adoption of such
amendment, termination or appeal.
(m) Subsequent Legislation. If the General Corporation Law of Nevada is
amended after adoption of this Charter to further expand the indemnification
permitted to directors, officers, employees or agents of the Corporation, then
the Corporation shall indemnify such persons to the fullest extent permitted by
the General Corporation Law of Nevada, as so amended.
(n) Restriction. Notwithstanding any other provision hereof whatsoever, no
person shall be indemnified under this Article NINTH who is adjudged liable for
(i) a breach of duty to the Company or its shareholders that resulted in
personal enrichment to which he was not legally entitled, (ii) intentional fraud
or dishonesty or illegal conduct, or (iii) for any other cause prohibited by
applicable state or federal law, unless a court determines otherwise.
{EXCLUSION OF DIRECTOR LIABILITY}
TENTH. As authorized by Section 78.037(1) of the General Corporation Law of
Nevada, no director or officer of the Company shall be personally liable to the
Company or any shareholder thereof for monetary damages for breach of his
fiduciary duty as a director or officer, except for liability for (a) any acts
or omissions which involve intentional misconduct, fraud or a knowing violation
of law, or (b) any payment of dividends in violation of Section 78.300 of the
General Corporation Law of Nevada, as it now exists or may hereafter be amended.
This Article TENTH shall apply to a person who has ceased to be a director or
officer of the Company with respect to any breach of fiduciary duty which
occurred when such person was serving as a director or officer. This Article
TENTH shall not be construed to limit or modify in any way any director's or
officer's right to indemnification or other right whatsoever under this Charter,
the Company's ByLaws or the General Corporation Law of Nevada.
If the General Corporation Law of Nevada hereafter is amended to authorize
the further elimination or limitation of the liability of directors or officers
generally, then the liability of the Company's directors and officers, in
addition to the limitation on personal liability provided herein, shall be
limited to the fullest extent permitted by the General Corporation Law of Nevada
as so amended. Any repeal or modification of this Article TENTH by the
shareholders shall be prospective only and shall not adversely affect any
limitation on the personal liability of any director or officer existing at the
time of such repeal or modification. The affirmative vote of at least a majority
of the total voting power shall be required to amend or repeal, or adopt any
provision inconsistent with, this Article TENTH.
{AMENDMENT}
ELEVENTH. The Corporation reserves the right to amend, restate or repeal
any provision contained in this Charter, in the manner now or hereafter
prescribed by statute, and all rights conferred on shareholders are granted
subject to this reservation. The affirmative vote of a majority of the votes
cast is necessary to amend or restate provisions of this Charter, except such
provisions which expressly require a higher proportion of the votes cast or
require a proportion of the total voting power. The affirmative vote of a
majority of the total voting power is necessary to repeal this Charter in its
entirety and adopt a new charter in its stead.
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{CERTAIN POWERS RESERVED TO DIRECTORS}
TWELFTH. The Corporation hereby reserves solely to the Board of Directors
the power and authority to borrow from time to time on behalf and in the name of
the Corporation and to determine the amount, terms, provisions and conditions of
any such borrowing; and in connection therewith to create, issue and deliver
instruments of indebtedness, including but not limited to promissory notes,
bonds, debentures and similar instruments containing such terms, provisions and
conditions as the Board of Directors deems necessary or advisable in its sole
discretion.
In connection with the creation, issuance or delivery of any such form or
evidence of indebtedness, there is also reserved solely to the Board of
Directors the power and authority to create, enter into and execute indentures
of trust, conveyances, mortgages and similar instruments containing such terms,
provisions and conditions as the Board of Directors deems necessary or advisable
in its sole discretion; and, without need of prior or subsequent shareholder
approval, to pledge, mortgage or convey any or all property, assets, rights,
privileges or franchises now or hereafter belonging to the Corporation in order
to secure the payment when due of the principal, interest and other charges due
upon any such promissory notes, bonds or debentures or other obligations or
evidences of indetedness of the Corporation; and to create, issue and deliver
additional amounts or series of obligations under the terms of any such
indenture, conveyance or mortgage after creation and issuance of the original
obligations thereunder. Any form of indebtedness authorized by the Board of
Directors may be made convertible into Common Stock or other securities of the
Corporation and may be made redeemable at such time and on such terms (including
the use of a sinking fund or similar arrangement) as the Board of Directors
deems necessary or advisable in its sole discretion.
The affirmative vote of a majority of the total voting power shall be
required to amend, repeal or adopt any provision inconsistent with this Article
TWELFTH.
{INAPPLICABILITY OF CONTROL SHARE ACQUISITION STATUTE}
THIRTEENTH. The Corporation expressly elects not to be governed by Sections
78.378 through 78.3793 of the General Corporation Law of Nevada (concerning
acquisitions of controlling interest in corporations), as it now exists or may
hereafter be amended, or any successor statute. The affirmative vote of at least
a majority of the total voting power shall be required to amend, repeal or adopt
any provision inconsistent with this Article THIRTEENTH.
IN WITNESS WHEREOF, the undersigned, being the Incorporator named above,
for the purpose of forming a corporation pursuant to the General Corporation Law
of Nevada, does hereby make and file this Certificate of Incorporation for MNS
EAGLE EQUITY GROUP IV, INC.
DATED: February 5, 1997
INCORPORATOR:
By /S/ John D. Brasher Jr.
-------------------------------
John D. Brasher Jr.
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State of Colorado )
)ss
County of Denver )
On this day the 5th day of February, 1997, before me, Elisabeth M. Crosse.,
the above signed incorporator, personally appeared John D. Brasher Jr., known to
me (or satisfactorily proven) to be the person whose name is subscribed to the
within instrument and acknowledged that he executed the same for the purposes
therein contained. In witness whereof, I hereunto set my hand and official seal.
By /s/ Elisabeth M. Crosse
(SEAL) ----------------------------------
Notary Public
11
Exhibit 3.4
BYLAWS
of
MNS EAGLE EQUITY GROUP IV, INC.
(A Nevada Corporation)
ARTICLE I
General
1.01 Applicability. These Bylaws provide rules for conducting the business
of this corporation (the "Company"). Every shareholder and person who
subsequently becomes a shareholder, the Board of Directors, Committees and
Officers of the Company shall comply with these Bylaws, as amended from time to
time. All bylaws and resolutions heretofore adopted by the Board of Directors
are hereby repealed, to the extent in conflict with the provisions of these
Bylaws.
1.02 Offices. The principal office of the Company shall be selected by the
Board of Directors from time to time and may be within or without the State of
Nevada. The Company may have such other offices, within or without the State of
Nevada, as the Board of Directors may, from time to time, determine. The
registered office of the Company required by the General Corporation Law of
Nevada to be maintained in Nevada may be, but need not be, identical with the
principal office if in Nevada, and the address of the registered office may be
changed from time to time by the Board of Directors.
1.03 Definition of Terms. Terms defined in the Company's Certificate of
Incorporation, as amended and restated from time to time (the "Charter"), shall
have the same meanings when used in these Bylaws.
ARTICLE II
Stock Certificates
2.01 Stock Certificates. The shares of the Company's capital stock shall be
represented by consecutively numbered certificates signed by the President or a
Vice President and the Secretary or Assistant Secretary of the Company, and
sealed with the seal of the Company, or a facsimile thereof. If certificates are
signed by a transfer agent and registrar other than the Company or an employee
thereof, the signatures of the officers of the Company may be facsimile. In case
any officer who has signed (by real or facsimile signature) a certificate shall
have ceased to hold such office before the certificate is issued, it may be
issued by the Company with the same effect as if he continued to hold such
office on the date of issue. Each certificate representing shares shall state
upon the face thereof: (i) that the Company is organized under the laws of the
State of Nevada; (ii) the name of the person to whom issued; (iii) the number,
class and series (if any) of shares which such certificate represents; and (iv)
the par value, if any, of the shares represented by such certificate, or a
statement that the shares have no par value.
If any class or series of shares is subject to special powers,
designations, preferences or relative, participating or other special rights,
then such (together with all qualifications, limitations or restrictions of such
preferences or rights) shall be set forth in full or summarized on the
certificate representing such class or series. Moreover, each certificate shall
state that the Company will furnish, without charge, to the registered holder of
the shares represented by such certificate who so requests a statement setting
forth such information in full.
Each certificate also shall set forth restrictions upon transfer, if any,
or a reference thereto, as shall be adopted by the Board of Directors or by the
shareholders, or as may be contained in this Article II. Any shares issued
without registration under the Securities Act of 1933, as amended ("Act"), shall
bear a legend restricting transfer unless such shares are registered under such
act or an exemption from registration is available for a proposed transfer.
2.02 Consideration for Shares. Shares of the Company shall be issued, and
treasury shares may be disposed of, for such consideration or considerations as
shall be fixed from time to time by the Board of Directors. No shares shall be
issued for less than the par value thereof. The consideration for the issuance
of shares may be paid, in whole or in part, in money, in other property,
tangible or intangible, or in labor or services actually performed for the
Company, or as permitted in the Charter.
2.03 Lost Certificates. The Board of Directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the Company alleged to have been lost or destroyed, upon
the making of an affidavit of that fact by the person claiming the certificate
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of stock to be lost, and the Board of Directors when authorizing such issue of a
new certificate or certificates may in its discretion, and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates or his legal representative to advertise the same in
such manner as it shall require, and/or furnish to the Company a bond in such
sum as it may direct, as indemnity against any claim that may be made against
the Company. Except as herein above in this section provided, no new certificate
or certificates evidencing shares of stock shall be issued unless and until the
old certificate or certificates, in lieu of which the new certificate or
certificates are issued, shall be surrendered for cancellation.
2.04 Registered Holder as Owner. The Company shall be entitled to treat the
registered holder of any shares of the Company as the owner of such shares, and
shall not be bound to recognize any equitable or other claim to, or interest in,
such shares or rights deriving from such shares, unless and until such
purchaser, assignee, transferee or other person becomes the registered holder of
such shares, whether or not the Company shall have either actual or constructive
notice of the interests of such purchaser, assignee, or transferee or other
person. The purchaser, assignee, or transferee of any of the shares of the
Company shall not be entitled: to receive notice of the meetings of the
shareholders; to vote at such meetings; to examine a list of the shareholders;
to be paid dividends or other sums payable to shareholders; or to own, enjoy and
exercise any other property or rights deriving from such shares against the
Company, until such purchaser, assignee, or transferee has become the registered
holder of such shares.
2.05 Reversions. Cash, property or share dividends, shares issuable to
shareholders in connection with a reclassification of stock, and the redemption
price of redeemed shares, which are not claimed by the shareholders entitled
thereto within TWO years after the dividend or redemption price became payable
or the shares became issuable, despite reasonable efforts by the Company to pay
the dividend or redemption price or deliver the certificate(s) for the shares to
such shareholders within such time shall, at the expiration of such time, revert
in full ownership to the Company, and the Company's obligation to pay any such
dividend or redemption price or issue such shares, as the case may be, shall
thereupon cease; provided, that the Board of Directors may at any time and for
any reason satisfactory to it, but need not, authorize (i) payment of the amount
of cash or property dividend or (ii) issuance of any shares, ownership of which
has reverted to the Company pursuant to this Section of Article II, to the
person or entity who or which would be entitled thereto had such reversion not
occurred.
2.06 Returned Certificates. All certificates for shares changed or returned
to the Company for transfer shall be marked by the Secretary "CANCELLED," with
the date of cancellation, and the transaction shall be immediately recorded in
the certificate book opposite the memorandum of their issue. The returned
certificate may be inserted in the certificate book.
2.07 Transfer of Shares. Upon surrender to the Company or to a transfer
agent of the Company of a certificate of stock endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, and such
documentary stamps as may be required by law, it shall be the duty of the
Company to issue a new certificate, upon payment by the transferee of such
nominal charge therefor as the Company or its transfer agent may impose. Each
such transfer of stock shall be entered on the stock book of the Company.
Respecting any securities issued in reliance upon Rule 903 of Regulation S under
the Act at any time when the Company is not a "reporting issuer" as defined in
Rule 902 of Regulation S, no transfer of such securities shall be registered
unless made in accordance with the provisions of Regulation S.
2.08 Transfer Agent. The Board of Directors shall have power to appoint one
or more transfer agents and registrars for the transfer and registration of
certificates of stock of any class, and may require that stock certificates
shall be countersigned and registered by one or more of such transfer agents and
registrars. Any powers or duties with respect to the transfer and registration
of certificates may be delegated to the transfer agent and registrar.
ARTICLE III
Meetings of the Shareholders
3.01 Annual Meeting. The annual meeting of the shareholders shall be held
between the 90th and 180th day after the tax year end, at such date and time and
at such place, within or without the State of Nevada, as is designated from time
to time by the Board of Directors and stated in the notice of the meeting. At
each annual meeting the shareholders shall elect a Board of Directors in
accordance with the Charter and shall transact such other business as may
properly be brought before the meeting.
3.02 Special Meetings. Unless otherwise proscribed by law, the Charter or
these Bylaws, special meetings of the shareholders may be called by the Chairman
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of the Board, the President, or a majority of the Board of Directors. The
President shall call a special meeting upon the Secretary's receipt of written
demand therefor by the holders of not less than ten percent (10%) of the total
voting power. Requests for special meetings shall state the purpose or purposes
of the proposed meeting.
3.03 Notice of Meetings. Except as otherwise provided by law, the Charter
or these Bylaws, written notice of any annual or special meeting of the
shareholders shall state the place, date, and time thereof and, in the case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be given to each shareholder of record entitled to vote at such meeting not
fewer than 10 nor more than 60 days prior to the meeting by any means permitted
in Section 8.01 hereof. No business other than that specified in the notice of a
special meeting shall be transacted at any such special meeting.
3.04 Record Date. In order that the Company may determine shareholders of
record who are entitled (i) to notice of or to vote at any shareholders meeting
or adjournment thereof, (ii) to express written consent to corporate action in
lieu of a meeting, (iii) to receive payment of any dividend or other
distribution, or (iv) to allotment of any rights or to exercise any rights in
respect of any change, conversion or exchange of stock, or in order that the
Company may make a determination of shareholders of record for any other lawful
purpose, the Board of Directors may fix in advance a date as the record date for
any such determination. Such date shall not be more than 60 days, and in case of
a meeting of shareholders, not less than 10 days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken,
and in no event may the record date precede the date upon which the Directors
adopt a resolution fixing the record date.
If no record date is fixed for the determination of shareholders entitled
to notice of or to vote at a meeting of shareholders, or shareholders entitled
to receive payment of a dividend, the date on which notice of the meeting is
given (as defined in Section 8.01 hereof) or the date on which the resolution of
the Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of the shareholders. When a
determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in this Section such determination shall apply to any
adjournment thereof, unless the Board of Directors fixes a new record date for
the adjournment. The record date for determining shareholders entitled to
consent to corporate actions without a meeting shall be fixed as provided in
Section 3.12 hereof.
3.05 Voting List. At least 10 days but nor more than 60 days before any
meeting of shareholders, the officer or transfer agent in charge of the
Company's stock transfer books shall prepare a complete alphabetical list of the
shareholders entitled to vote at such meeting, which list shows the address of
each shareholder and the number of shares registered in his or her name. The
list so prepared shall be maintained at the corporate offices of the Company and
shall be open to inspection by any shareholder, for any purpose germane to the
meeting, at any time during usual business hours during a period of no fewer
than 10 days prior to the meeting. The list shall also be produced and kept open
at any shareholders meeting and, except as otherwise provided by law, may be
inspected by any shareholder or proxy of a shareholder who is present in person
at the meeting. The original stock transfer books shall be prima facie evidence
as to who are the shareholders entitled to examine the list of shareholders and
to vote at any meeting of shareholders.
3.06 Quorum; Adjournments. (a) The holders of a majority of the total
voting power at any shareholders meeting present in person or by proxy shall be
necessary to and shall constitute a quorum for the transaction of business at
all shareholders meetings, except as otherwise provided by law or by the
Articles.
(b) If a quorum is not present in person or by proxy at any shareholders
meeting, a majority of the voting shares present or represented shall have the
power to adjourn the meeting from time to time to the same or another place
within 30 days thereof and no further notice of such adjourned meeting need be
given if the time and place thereof are announced at the meeting at which the
adjournment is taken.
(c) Even if a quorum is present in person or by proxy at any shareholders
meeting, a majority of the voting shares present or represented shall have the
power to adjourn the meeting from time to time, for good cause, without notice
of the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjourment is taken, until a new date which is not more
than 30 days after the date of the original meeting.
(d) Any business which might have been transacted at a shareholders meeting
as originally called may be transacted at any meeting held after adjournment as
provided in this Section 3.06 at which reconvened meeting a quorum is present in
person or by proxy. Anything in paragraph (b) of this Section to the contrary
notwithstanding, if an adjournment is for more than 30 days, or if after an
adjournment a new record date is fixed for the adjourned meeting, notice of the
adjourned meeting shall be given to each shareholder of record entitled to vote
thereat.
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(e) The shareholders present at a duly called meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
3.07 Proxies. At all meetings of shareholders, a shareholder may vote by
proxy, executed in writing by the shareholder or by his duly authorized attorney
in fact. Any proxyholder shall be authorized to sign, on the shareholder's
behalf, any written consent for shareholder action taken in lieu of a meeting.
Such proxy shall be filed with the Secretary of the Company before or at the
time of the meeting. No proxy shall be valid after the expiration of six (6)
months from the date of its execution, unless coupled with an interest, or
unless the person executing it specifies therein the length of time for which it
is to continue in force, which in no case shall exceed three (3) years from the
date of its execution.
3.08 Voting of Shares. At any shareholders meeting every shareholder having
the right to vote shall be entitled to vote in person or by proxy. Except as
otherwise provided by law, by the Articles or in the Board resolution
authorizing the issuance of shares, each shareholder of record shall be entitled
to one vote (on each matter submitted to a vote) for each share of capital stock
registered in his, her or its name on the Company's books. Except as otherwise
provided by law or by the Articles, all matters submitted to the shareholders
for approval shall be determined by a majority of the votes cast (not counting
abstentions) at a legal meeting commenced with a quorum.
3.09 Voting of Shares by Certain Holders. Neither treasury shares, nor
shares of its own stock held by the Company in a fiduciary capacity, nor shares
held by another corporation if the majority of the shares entitled to vote for
the election of directors of such other corporation is held by the Company,
shall be voted at any meeting or counted in determining the total number of
outstanding shares at any given time.
Shares standing in the name of another corporation, domestic or foreign,
may be voted by such officer, agent, or proxy as the bylaws of such corporation
may prescribe, or, in the absence of such provision, as the board of directors
of such corporation may determine.
Shares held by an administrator, executor, personal representative,
guardian, or conservator may be voted by him, either in person or by proxy,
without a transfer of such shares into his name. Shares standing in the name of
a trustee may be voted by him, either in person or by proxy, but no trustee
shall be entitled to vote shares held by him without a transfer of such shares
into his name.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority to do so be
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
3.10 Chairman. The Chairman of the Board of Directors of the Company, if
there is one, or in his absence, the President, shall act as chairman at all
meetings of shareholders.
3.11 Manner of Shareholder Voting. Voting at any shareholders' meeting
shall be oral or by show of hands; provided, however, that voting shall be by
written ballot if such demand is made by any shareholder present in person or by
proxy and entitled to vote.
3.12 Informal Action by Shareholders; Record Date. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by a majority of the total
voting power; provided, that where an action requires a greater proportion of
the total voting power, then the consent shall be signed by such greater
proportion. No written consent will be effective unless written consents, signed
by a sufficient proportion of shareholders to take action, are delivered to the
Company within sixty (60) days of the date of the earliest such consent. Such
consent shall have the same force and effect as a vote of the shareholders, and
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may be stated as such in any document filed with the Secretary of State of
Nevada under the General Corporation Law of Nevada. Prompt notice of such action
by written consent of less than all shareholders entitled to vote shall be given
to all shareholders who have not consented in writing to the action taken.
The record date for determining shareholders entitled to consent to
corporate actions in writing without a meeting (the "consent record date") shall
not precede, and shall not be more than ten (10) days after, the date upon which
the resolution fixing the record date was adopted. However, if no consent record
date is fixed, the consent record date shall be, respectively, (i) if prior
action by the Board of Directors is required under the General Corporation Law
of Nevada for the consent to be validly taken, the close of business on the day
on which the Board of Directors adopts the resolution taking such prior action;
and (ii) if prior action by the Board of Directors is not required, the first
date on which a properly signed and dated consent setting forth the action taken
or proposed to be taken is delivered as required above.
3.13 Presiding Officers; Order of Business. (a) Shareholders meetings shall
be presided over by the Chairman of the Board; or if the Chairman (and Vice
Chairman) is not present, by the President; or if the President is not present,
by a Vice President; or if a Vice President is not present, by such person
chosen by the Board of Directors; or if none, by a chairperson to be chosen at
the meeting by shareholders present in person or by proxy who own a majority of
the voting power present. The Secretary of a shareholders meeting shall be the
Secretary of the Company; or if the Secretary is not present, an Assistant
Secretary; or if an Assistant Secretary is not present, such person as may be
chosen by the Board of Directors; or if none, by such person who is chosen by
the chairperson at the meeting.
(b) The following order of business, unless otherwise ordered at the
shareholders meeting by the chairperson thereof, shall be observed as far as
practicable and consistent with the purposes of the meeting:
1. Calling of the shareholders' meeting to order.
2. Presentation of proof of mailing of the notice of the meeting and, if
a special meeting, the call thereof.
3. Presentation of proxies.
4. Determination and announcement that a quorum is present.
5. Reading and approval (or waiver thereof) of the minutes of the
previous meeting of shareholders.
6. Reports, if any, of officers.
7. Election of directors, if the meeting is an annual meeting or a
meeting called for such purpose.
8. Consideration of the specific purpose or purposes for which the
meeting has been called, other than election of directors.
9. Transaction of such other business as may properly come before the
meeting.
10. Adjournment.
3.14 Annual Report. The President of the Company shall prepare an annual
report which will set forth a statement of affairs of the Company as of the end
of its last fiscal year, including a balance sheet, an income statement and a
statement of changes in financial position, which need not be audited, and
present them at the annual meeting of shareholders. Failure to prepare or
present an annual report shall not affect the validity of any shareholder
meeting. No such report need be prepared or presented for any fiscal year in
which the Company was inactive. This Section shall not apply as to any fiscal
year if the Company (i) was at the year end subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, and
subsequently furnishes to the shareholders an annual report or report on Form
10-K under such Act covering such fiscal year, or (ii) furnishes to shareholders
an Information Statement which conforms to the requirements of Rule 15c2-11 of
the Securities and Exchange Commission.
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ARTICLE IV
Directors, Powers and Meetings
4.01 General Powers. All corporate powers shall be exercised, and the
Company's business and affairs shall be managed, by or under the authority of
its Board of Directors, except as otherwise provided in the General Corporation
Law of Nevada or the Charter.
4.02 Number, Tenure and Qualifications. The Company's Board of Directors
shall consist of not less than one (1) and not more than seven (7) Directors, as
resolved from time to time by the Board of Directors. If such number is not so
fixed, the Company shall have one Director. Directors shall be elected at each
annual meeting of shareholders, except as otherwise provided below. Each
Director shall hold office until the next annual meeting of shareholders and
thereafter until his successor shall have been elected and duly qualified.
Directors need not be residents of Nevada or shareholders of the Company.
Directors shall be elected by plurality vote. At least one-fourth in number of
the Directors must be elected annually. No decrease in the number of Directors
shall shorten the term of any incumbent Director.
4.03 Vacancies; Resignation. (a) Any vacancy occurring in the Board of
Directors, except resulting from an increase in the number of directors, may be
filled by the affirmative vote of a majority of the remaining Directors, though
less than a quorum, or by a sole remaining Director. A Director elected to fill
a vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
Directors shall be filled by the affirmative vote of a majority of the entire
board or by a majority of the total voting power at any annual meeting or at a
special meeting of shareholders called for that purpose, or by means of written
shareholder consents taken in lieu of a meeting. Every director chosen to fill a
vacancy as provided in this Section shall hold office until the next annual
meeting of shareholders or until his successor has been elected and qualified.
(b) Any Director may resign at any time by giving written notice to the
Board, the Chairman of the Board, the President or the Secretary of the Company.
Unless otherwise specified in such written notice, a resignation shall take
effect upon delivery to the Board or the designated officer. A resignation need
not be accepted in order for it to be effective.
4.04 Removal of Directors. Any Director may be removed only by the
shareholders in the manner provided in the Company's Charter and, if no such
provision appears therein, then as provided by law. Such action may be taken at
any special meeting called for that purpose or by means of written shareholder
consents. In case any vacancy so created shall not be filled by the shareholders
at such meeting or in the written consent effecting removal, such vacancy may be
filled by a majority of the Board of Directors.
4.05 Place of Meetings. The Board of Directors may hold both regular and
special meetings either within or without the State of Nevada, at such place as
the Board of Directors from time to time deems advisable.
4.06 Regular Meetings. A regular meeting of the Board of Directors shall be
held without other notice than these Bylaws immediately after and at the same
place as the annual meeting of shareholders. The Board of Directors may provide
by resolution the time and place for the holding of additional regular meetings
without other notice than such resolution; provided, that any Director not
present when any such resolution is passed is given notice of the resolution.
4.07 Special Meetings. A special meeting of the Board of Directors shall be
held without other notice than these Bylaws immediately after and at the same
place as every special meeting of shareholders. Special meetings of the Board of
Directors also may be called by or at the request of the Chairman of the Board,
the President, or any two Directors upon two days' notice to each director if
such notice is delivered personally or sent by telegram, or upon five days'
notice if sent by mail.
4.08 Telephonic Meetings. One or more members of the Board of Directors or
any committee designated by the Board may participate in a meeting of the Board
of Directors or committee by means of conference telephone or similar
communications equipment by which all persons participating in the meeting can
hear one another at the same time. Such participation shall constitute presence
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in person at the meeting. All participants in any meeting of Directors, by
virtue of their participation and without further action on their part, shall be
deemed to have consented to the recording of such meeting by electronic device
or otherwise, and to the making of a written transcript thereof, in order that
minutes thereof shall be available for the Company's records.
4.09 Notice. Except as otherwise provided above, notice of the time, date
and place, of every special meeting of Directors or any committee thereof shall
be given. Any Director may waive notice of any meeting. The attendance of a
Director at a meeting shall constitute a waiver of notice of such meeting,
except where a Director attends a meeting for the express purpose of objecting
to the transaction of any business 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.
4.10 Quorum; Adjournments. A majority of the number of directors then in
office, present in person or by means of conference telephone or similar
equipment, shall constitute a quorum for the transaction of business at every
Board meeting, and the act of the majority of the Directors present at a meeting
at which a quorum is present shall be the act of the Board of Directors, except
as may otherwise specifically be provided by law, the Charter or these Bylaws.
If a quorum is not present at any Board meeting, the directors present may
adjourn the meeting, from time to time, without notice other than announcement
of the meeting, until a quorum is present.
4.11 Compensation. Directors shall be entitled to such compensation for
their services as directors as from time to time may be fixed by the Board and
shall be entitled to reimbursement of all reasonable expenses incurred by them
in attending Board meetings. A director may waive compensation for any Board
meeting. No director who receives compensation as a director shall be barred
from serving the Company in any other capacity or from receiving compensation
and reimbursement of reasonable expenses for any or all such other services.
4.12 Presumption of Assent. A Director of the Company who is present at a
meeting of the Board of Directors at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof, or shall forward such dissent by
registered or certified mail, first class, postage prepaid, to the Secretary of
the Company, provided such mailing is postmarked within ten calendar days after
the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
4.13 Action by Directors Without Meeting. Any action required to be taken
at a meeting of the Directors of the Company or of a committee of Directors or
any action which may be taken at such a meeting, 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. A consent shall be sufficient for this Section if it is executed in
counterparts, in which event all of such counterparts, when taken together,
shall constitute one and the same consent.
4.14 Bank Accounts, etc. Anything herein to the contrary notwithstanding,
the Board of Directors may, except as may otherwise be required by law,
authorize any officer or officers, agent or agents, in the name of and on behalf
of the Company, to sign checks, drafts, or other orders for the payment of money
or notes or other evidences of indebtedness, to endorse for deposit, deposit to
the credit of the Company at any bank or trust company or banking institution in
which the Company may maintain an account or to cash checks, notes, drafts, or
other bankable securities or instruments, and such authority may be general or
confined to specific instances, as the Board of Directors may elect.
4.15 Inspection of Records. Every Director shall have the absolute right at
any reasonable time to inspect all books, records, documents of every kind, and
the physical properties, of the Company and of its subsidiaries. Such inspection
may be made personally or by an agent and includes the right to make copies and
extracts.
4.16 Executive Committee. (a) The Board of Directors may, by resolution
adopted by a majority of the whole Board, appoint two or more of its members to
constitute an Executive Committee. One of such directors shall be designated as
Chairman of the Executive Committee. Each member of the Executive Committee
shall continue as a member thereof until the expiration of his term as a
director, or until his earlier resignation from the Executive Committee, in
either case unless sooner removed as a director or member of the Executive
Committee by any means authorized by the Charter or herein.
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(b) The Executive Committee shall have and may exercise, to the extent
provided in such resolution and except as prohibited by law, all of the rights,
power and authority of the Board of Directors.
(c) The Executive Committee shall fix its own rules of procedure and shall
meet at such times and at such place or places as may be provided by its rules.
The Chairman of the Executive Committee, or in the absence of the Chairman, a
member of the Executive Committee chosen by a majority of the members present,
shall preside at all meetings of the Executive Committee, and another member
thereof chosen by the Executive Committee shall act as Secretary. A majority of
the Executive Committee shall constitute a quorum for the transaction of
business, and the affirmative vote of a majority of the members thereof shall be
required for any action of the Executive Committee. The Executive Committee
shall keep minutes of its meetings and deliver such minutes to the Board of
Directors.
4.17 Other Committees. The Board of Directors may, by resolution duly
adopted by a majority of directors at a meeting at which a quorum is present,
appoint an audit committee, compensation committee, and such other committee or
committees as it shall deem advisable and with such limited authority as the
Board of Directors shall from time to time determine.
4.18 Other Provisions Regarding Committees. (a) The Board of Directors
shall have the power at any time to fill vacancies in, change the membership of,
or discharge any committee. The members of any committee present at any meeting
of a committee, whether or not they constitute a quorum, may appoint a director
to act in the place of an absent member.
(b) Members of any committee shall be entitled to such compensation for
their services as such as from time to time may be fixed by the Board of
Directors and in any event shall be entitled to reimbursement of all reasonable
expenses incurred in attending committee meetings. Any member of a committee may
waive compensation for any meeting. No member of a committee who receives
compensation as a member of one or more committees shall be barred from serving
the Company in any other capacity or from receiving compensation and
reimbursement of reasonable expenses for any or all such other services.
(c) Unless otherwise prohibited by law, the provisions above concerning
action by written consent of directors and meetings of directors by telephonic
or similar means shall apply to all committees from time to time created by the
Board of Directors.
ARTICLE V
Officers and Agents
5.01 Positions. The Company's officers generally shall be chosen by the
Board of Directors and shall consist of a Chairman of the Board, a President,
one or more Vice Presidents if desired, a Secretary and a Treasurer. The Board
of Directors may appoint one or more other officers, assistant officers and
agents as it from time to time deems necessary or appropriate, who shall be
chosen in such manner and hold their offices for such terms and have such
authority and duties as from time to time may be determined by the Board of
Directors. The Board may delegate to the Chairman of the Board the authority to
appoint any officer or agent of the Company and to fill a vacancy other than the
Chairman of the Board or President. Any two or more offices may be held by the
same person, except that no person may simultaneously hold the offices of
President and Secretary and of President and Vice President. In all cases where
the duties of any officer, agent or employee are not prescribed by these bylaws
or by the Board of Directors, such officer, agent or employee shall follow the
orders and instructions of the President.
5.02 Term of Office; Removal. Each officer of the Company shall hold office
at the pleasure of the Board and any officer may be removed, with or without
cause, at any time by the affirmative vote of a majority of the directors then
in office; provided, that any officer appointed by the Chairman of the Board
pursuant to authority delegated by the Board may be removed, with or without
cause, at any time by the Chairman whenever the Chairman in his or her absolute
discretion shall consider that the Company's best interests shall be served by
such removal. Removal of an officer by the Board (or the Chairman, as the case
may be) shall not prejudice the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall not in itself
create contract rights.
5.03 Vacancies. A vacancy in any office, however occurring, may be filled
by the Board or the Executive Committee, for the unexpired portion of the term
by majority vote of its members, or by the Chairman of the Board in the case of
a vacancy occurring in an office to which the Chairman has been delegated
authority to make appointments.
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5.04 Compensation. The salaries of all officers of the Company shall be
fixed from time to time by the Board, and no officer shall be prevented from
receiving a salary by reason of the fact that he also receives compensation from
the Company in any other capacity.
5.05 Chairman of the Board. The Chairman of the Board ("Chairman"), if such
officer shall be chosen by the Board of Directors, shall preside at all meetings
of the Board of Directors and meetings of shareholders at which he is present
and shall exercise general supervision and direction over the implementation of
Board policy affecting the affairs of the Company. Any act which may be
performed by the Chief Executive Officer or President may be performed by the
Chairman.
5.06 Chief Executive Officer; Chief Operating Officer. The Chairman of the
Board shall, unless the Board determines otherwise, serve as the Chief Executive
Officer ("CEO") of the Company. If the Chairman is not designated the CEO, then
the President shall serve as CEO. The Board may, from time to time, designate
from among the executive officers of the Company an officer to serve as Chief
Operating Officer ("COO") of the Company. If the Chairman serves as the CEO,
then the President shall serve as COO. If the President is designated CEO, then
the Executive Vice President (or if there is none, then the next most senior
Vice President) shall serve as COO. A person designated to serve in the capacity
of CEO or COO shall serve at the pleasure of the Board.
A person designated Chief Executive Officer (CEO) shall have primary
responsibility for and active charge of the management and supervision of the
Company's business and affairs. The CEO may execute in the name of the Company
authorized corporate obligations and other instruments, shall perform such other
duties as may be prescribed by the Board (or Chairman, as the case may be) from
time to time and, in the absence or disability of the President, shall exercise
all of the duties and powers of the President. In the event that the President
is not the CEO, then the CEO shall supervise the performance of the President
and shall be responsible for the execution of the policies and directives of the
Board. The CEO shall report directly to the Board. The CEO shall perform such
other duties as may be assigned by the Board (or Chairman, as the case may be).
The CEO may perform any act which might be performed by the President.
A person designated Chief Operating Officer (COO) shall be responsible for
the day-to-day management of the Company's operations, subject to the authority
of the CEO. The COO shall report directly to the CEO of the Company and shall
consult with the CEO on all matters of corporate policy and material business
activities of the Company. The COO shall perform such other duties as may be
assigned by the Board or the CEO.
5.07 President. The President shall have general active management of the
business of the Company, subject to the authority of the Chief Executive Officer
if the President is not designated as such, and general supervision of its
officers, agents and employees. In the absence of the Chairman and Chief
Executive Officer, he shall preside at all meetings of the shareholders and of
the Board. In the absence of a designated Chief Executive Officer he shall see
that all policies and directives of the Board are carried into effect.
He shall, unless otherwise directed by the Board of Directors, attend in
person or by substitute appointed by him, or shall execute in behalf of the
Company written instruments appointing a proxy or proxies to represent the
Company, at all meetings of the stockholders of any other company in which the
Company shall hold any stock. He may, on behalf of the Company, in person or by
substitute or by proxy, execute written waivers of notice and consents with
respect to any such meetings. At all such meetings and otherwise, the President,
in person or by substitute or proxy as aforesaid, may vote the stock so held by
the Company and may execute written consent and other instruments and power
incident to the ownership of said stock, subject however to the instructions, if
any, of the Chairman or the Board of Directors. The President shall have custody
of the Treasurer's bond, if any.
5.08 Executive Vice President. The Executive Vice President, if any, shall
assist the President in the discharge of supervisory, managerial and executive
duties and functions. In the absence of the President or in the event of his
death, or inability or refusal to act, the Executive Vice President shall
perform the duties of the President and when so acting shall have the duties and
powers of the President. He shall perform such other duties as from time to time
may be assigned to him by the President, Chairman or Board of directors.
5.09 Vice Presidents. The Vice Presidents, if any, shall assist the
President and Executive Vice President and shall perform such duties as may be
prescribed by the Board, the Chairman or the President. Vice Presidents in the
order of their seniority shall, in the absence or disability of the Chairman and
President, exercise all of the duties and powers of such officers. The Executive
Vice President, if any, shall be the most senior of Vice Presidents, and the
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Senior Vice President, if any, shall be the next most senior of Vice Presidents.
In regard to other Vice Presidents, they shall have the respective ranks
designated by the Board of Directors, or if none has been so designated, as
designated by the Chairman, or if none has been so designated by the Chairman,
they shall rank in the order of their respective elections to such office. The
execution of any instrument on the Company's behalf by a Vice President shall be
conclusive evidence, as to third parties, of his authority to act in the stead
of the President and Executive Vice President.
5.10 Secretary. The Secretary shall: (i) keep the minutes of the
proceedings of the shareholders and the Board of Directors and record all votes
and proceedings thereof in a book kept for that purpose; (ii) see that all
notices are duly given in accordance with the provisions of these Bylaws or as
required by law; (iii) be custodian of the corporate records and of the seal of
the Company and affix the seal to all documents when authorized by the Board of
Directors; (iv) keep at its registered office or principal place of business
within or outside Delaware a record containing the names and addresses of all
shareholders and the number and class of shares held by each, unless such a
record shall be kept at the office of the Company's transfer agent or registrar;
(v) sign with the President, or a Vice President, certificates for shares of the
Company, the issuance of which shall have been authorized by resolution of the
Board of Directors; (vi) have general charge of the stock transfer books of the
Company, unless the Company has a transfer agent; and (vii) in general, perform
all duties incident to the office of Secretary and such other duties as from
time to time may be assigned to him by the President or the Board of Directors.
The Board of Directors may give general authority to officers other than the
Secretary or any Assistant Secretary to affix the Company's seal and to attest
the fixing thereof by his or her signature.
5.11 Assistant Secretary. The Assistant Secretary, if any (or if there is
more than one, the Assistant Secretaries in the order designated, or in the
absence of any designation, in the order of their appointment), in the absence
or disability of the Secretary, shall perform the duties and exercise the powers
of the Secretary. The Assistant Secretary(ies) shall perform such other duties
and have such other powers as from time to time may be prescribed by the Board,
the Chairman or the Chief Executive Officer. The Chairman may appoint one or
more Assistant Secretary(ies) to office.
5.12 Treasurer. The Treasurer shall, unless the Board otherwise resolves,
be the principal financial officer and principal accounting officer of the
Company and shall have the care and custody of all funds, securities, evidence
of indebtedness and other valuable effects of the Company, shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Company and shall deposit all money and other valuable effects of the Company in
the name and to the credit of the Company in such depositories as from time to
time may be designated by the Board. The Treasurer shall disburse the funds of
the Company in such manner as may be ordered by the Board from time to time and
shall render to the Chairman of the Board, the President and the Board, at
regular Board meetings or whenever any of them may so require, an account of all
transactions and of the Company's financial condition.
5.13 Assistant Treasurer. The Assistant Treasurer, if any (or if there is
more than one, the Assistant Treasurers in the order designated, or in the
absence of any designation, in the order of their appointment), in the absence
or disability of the Treasurer, shall perform the duties and exercise the powers
of the Treasurer. The Assistant Treasurer(s) shall perform such other duties and
have such other powers as from time to time may be prescribed by the Board, the
Chairman or the Chief Executive Officer. The Chairman may appoint one or more
Assistant Treasurer(s) to office.
5.14 Resignations. Any officer may resign at any time by giving written
notice to the Board or to the Chairman. Such resignation shall take effect at
the time specified therein and, unless specified therein, no acceptance of the
resignation shall be required for the resignation to be effective.
5.15 Delegation of Duties. In the event of the absence or disability of any
officer of the Company, or for any other reason the Board shall deem sufficient,
the Board may temporarily designate the powers and duties, or particular powers
and duties, of such officer to any other officer, or to any director.
5.16 Fidelity Bonds. The Board of Directors shall have the power, to the
extent permitted by law, to require any officer, agent or employee of the
Company to give bond for the faithful discharge of his duties in such form and
with such surety or sureties as the Board deems advisable.
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ARTICLE VI
Indemnification
Every Director, officer, employee and agent of the Company, and every
person serving at the Company's request as a director, officer (or in a position
functionally equivalent to that of officer or director), employee or agent of
another corporation, partnership, joint venture, trust or other entity, shall be
indemnified to the extent and in the manner provided by the Company's Charter,
as it may be amended, and in the absence of any such provision therein, in
accordance with Nevada law.
ARTICLE VII
Execution of Instruments and Deposit of Corporate Funds
7.01 Execution of Instruments Generally. The Chairman of the Board, the
President, any Vice President, the Secretary or the Treasurer, subject to the
approval of the Board of Directors, may enter into any contract or execute and
deliver any instrument in the name and on behalf of the Company. The Board of
Directors may authorize any officer or officers, or agent or agents, to enter
into any contract or execute and deliver any instrument in the name and on
behalf of the Company, and such authorization may be general or confined to
specific instances.
7.02 Borrowing. Unless and except as authorized by the Board of Directors,
no loans or advances shall be obtained or contracted for, by or on behalf of the
Company, and no negotiable paper shall be issued in its name. Such authorization
may be general or confined to specific instances. Any officer or agent of the
Company thereunto so authorized may attain loans and advances for the Company
and for such loans and advances may make, execute and deliver any promissory
notes, bonds, or other evidences of indebtedness of the Company. Any officer or
agent of the Company so authorized may pledge, hypothecate or transfer as
security for the payment of any and all loans, advances, indebtedness and
liabilities of the Company, any and all stocks, bonds other securites and other
personal property at any time held by the Company, and to that end may endorse,
assign and deliver the same and do every act and thing necessary or proper in
connection therewith.
7.03 Deposits. All funds of the Company not otherwise employed shall be
deposited from time to time to its credit in such banks or trust companies or
with such bankers or other depositaries as the Board of Directors may select, or
as may be selected by any officer or officers or agent or agents authorized to
do so by the Board of Directors. Endorsements for deposit to the credit of the
Company in any of its duly authorized depositaries shall be made in such manner
as the Board of Directors from time to time may determine.
7.04 Checks, Drafts, etc. All checks, drafts or other orders for the
payment of money, and all notes or other evidence of indebtedness issued in the
name of the Company, shall be signed by such officer or officers or agent or
agents of the Company and in such manner as the Board of Directors from time to
time may determine.
7.05 Proxies. Proxies to vote with respect to shares of stock of other
corporations owned by, or standing in the name of, the Company may be executed
and delivered from time to time on behalf of the Company by the Chairman of the
Board, the President or any Vice President or by any other person or persons
thereunto authorized by the Board of Directors.
ARTICLE VIII
Miscellaneous
8.01 Declaration of Dividends. The Board of Directors at any regular or
special meeting may declare dividends payable, whenever in the exercise of its
discretion it may deem such declaration advisable and such is permitted by law.
Such dividends may be paid in cash, property, or shares of the Company.
8.02 Benefit Plans. Directors shall have the power to install and authorize
any pension, profit sharing, stock option, stock award or stock bonus,
insurance, welfare, educational, bonus, health and accident or other benefit
program which the Board deems to be in the interest of the Company, at the
expense of the Company, and to amend or revoke any plan so adopted. Any such
plan may adopted and have full force and effect by resolution of the Board of
Directors, except where applicable laws, rules or regulations require prior
approval of the Company's shareholders of such plan in order for the plan to be
valid.
8.03 Seal. The corporate seal of the Company shall be circular in form and
shall contain the name of the Company, the year incorporated and the words
"Seal" and "Nevada".
8.04 Fiscal Year. The Board of Directors shall have the power to fix, and
from time to time change, the fiscal year of the Company. Any such adoption of
or change in a fiscal year shall not constitute or require an amendment to these
Bylaws.
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8.05 Amendment of Bylaws. These Bylaws may be amended or repealed in the
manner provided for in the Charter, or if none is there provided: by majority
vote of the Board of Directors, taken at any meeting or by written consent,
subject to the shareholders' right to change or repeal any Bylaws so made or
adopt new Bylaws by vote of at least a majority of the total voting power.
Bylaws amendments may be proposed by any Director or shareholder. Any action
duly taken by the Board or the shareholders which conflicts or is inconsistent
with these Bylaws (as they may be amended) shall constitute an amendment of the
Bylaws, if the action was taken by such number of directors or shares voting as
would be sufficient for amendment of the Bylaws.
8.06 Gender. The masculine gender is used in these Bylaws as a matter of
convenience only and shall be interpreted to include the feminine and neuter
genders as the circumstances indicate.
8.07 Conflicts. In the event of any irreconcilable conflict between these
Bylaws and either the Company's Charter or applicable law, the latter shall
control.
8.08 Definitions. Except as these Bylaws otherwise specifically provide,
all terms used in these Bylaws shall have the definitions given them in the
Company's Charter or the Nevada General Corporation Law.
ARTICLE IX
Notices
9.01 Receipt of Notices by the Company. Notices, shareholder writings
consenting to action, and other documents or writings shall be deemed to have
been received by the Company when they are actually received: (i) at the
registered office of the Company in Nevada; (ii) at the principal office of the
Company (as designated in the most recent document filed by the Company with the
Nevada Secretary of State designating a principal office) addressed to the
attention of the Secretary of the Company; (iii) by the Secretary of the Company
wherever the Secretary may be found; or (iv) by any other person authorized from
time to time by the Board of Directors or the President to receive such
writings, wherever such person is found.
9.02 Giving of Notice. Except as otherwise provided by the General
Corporation Law of Nevada, these Bylaws, the Charter or resolution of the Board
of Directors, every meeting notice or other notice, demand, bill, statement or
other communication (collectively, "Notice") from the Company to a Director,
Officer or shareholder shall be duly given if it is written or printed and is
(i) sent by first class or express mail, postage prepaid, (ii) sent by any
commercial overnight air courier service, such as DHL, Federal Express, Emery,
Airborne, UPS or similar service, (iii) sent by telegraph, cablegram, telex,
telecopier, facsimile or similar transmission, (iv) delivered by any commercial
messenger service which regularly retains its receipts, or (v) personally
delivered, provided a receipt is obtained reflecting the date of delivery.
Notice shall not be duly given unless all delivery or postage charges are
prepaid. Notice shall be given to an addressee's most recent address as it
appears on the Company's records or to such other address as has been provided
in writing to the Secretary. A Notice shall be deemed "given" when dispatched
for delivery, when personally delivered, when transmitted electronically, or if
mailed, on the date postmarked. This Section shall not have the effect of
shortening any notice period provided for in these Bylaws.
9.03 Waiver of Notice. Any Notice required or permitted by the General
Corporation Law of Nevada, the Charter or these Bylaws may be waived in writing
at any time by the person entitled to the Notice, and such waiver shall be
equivalent to the giving of notice. Notice of any shareholders' meeting shall be
waived by attendance, in person or by proxy, at the meeting, unless any question
of lack of or defect in a Notice is raised prior to conclusion of the meeting. A
waiver of Notice of a special meeting of shareholders shall state the purpose
for which the meeting was called or the business to be transacted thereat.
APPROVED AND ADOPTED by the Board of Directors as of February 28, 1997.
12
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SECRETARY'S CERTIFICATION
I, the undersigned Secretary of this corporation, hereby certify that the
foregoing Bylaws were duly adopted by its Board of Directors on the date above
indicated and that the foregoing text of the Bylaws are currently in full force
and effect and have not been revoked, suspended or amended since adoption
thereof.
Dated: February 28, 1997
MNS EAGLE EQUITY GROUP, INC.
By /s/ John D. Brasher Jr.
(SEAL) -------------------------------------
John D. Brasher Jr.
13
Exhibit 4.1
NUMBER SHARES
-------- --------
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
MNS EAGLE EQUITY GROUP IV, INC.
The Corporation is authorized to issue 50,000,000 Common Shares -
Par Value $.001 each
This Certifies that____________________________________________________ is the
registered holder of ___________________________________________________Shares
Fully paid and non-assessable
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this _________ day of ______________ A.D.____________
- ----------------------------------- --------------------------------------
SECRETARY PRESIDENT
(CORPORATE SEAL
OMITTED)
<PAGE>
For Value Received, ______________ hereby sell, assign and transfer unto
___________________________________________, ________________________Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint _____________________ Attorney to transfer the said Shares on the books
of the within named Corporation with full power of substitution in the premises.
Dated___________________ ________
In presence of _________________________________________
___________________________________
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE, IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
Exhibit 10.1
MNS EAGLE EQUITY GROUP IV, INC.
1997 COMPENSATORY STOCK OPTION PLAN
1. Purpose of this Plan.
This 1997 Compensatory Stock Option Plan ("Plan") is intended as an
employment incentive, to aid in attracting and retaining in the employ or
service of MNS EAGLE EQUITY GROUP IV, INC. ("Company"), a Nevada corporation,
and any Affiliated Corporation, persons of experience and ability and whose
services are considered valuable, to encourage the sense of proprietorship in
such persons, and to stimulate the active interest of such persons in the
development and success of the Company. This Plan provides for the issuance of
non-statutory stock options ("CSOs" or "options") which are not intended to
qualify as "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended ("Code"). Certain other terms also are
defined in Paragraph 17 and elsewhere of this Plan.
2. Administration of this Plan.
The Company's Board of Directors ("Board") may appoint and maintain as
administrator of this Plan the Compensation Committee ("Committee") of the Board
which shall consist of at least two members of the Board. At any time that the
Committee is not duly constituted, the Board itself shall have and fulfill the
duties herein allocated to the Committee. The Committee shall have full power
and authority to designate Plan participants, to determine the provisions and
terms of respective CSOs (which need not be identical as to number of shares
covered by any CSO, the method of exercise as related to exercise in whole or in
installments, or otherwise), including the CSO price, and to interpret the
provisions and supervise the administration of this Plan. The Committee may in
its discretion provide that certain CSOs not vest (that is, become exercisable)
until expiration of a certain period after issuance or until other conditions
are satisfied, so long as not contrary to this Plan.
A majority of the members of the Committee shall consititue a quorum. All
decisions and selections made by the Committee pursuant to this Plan's
provisions shall be made by a majority of its members. Any decision reduced to
writing and signed by all of the members shall be fully effective as if it had
been made by a majority at a meeting duly held. The Committee shall select one
of its members as its chairman and shall hold its meetings at such times and
places as it deems advisable. If at any time the Board shall consist of seven or
more members, then the Board may amend this Plan to provide that the Committee
shall consist only of Board members who shall not have been eligible to
participate in this Plan (or similar stock or stock option plan) of the Company
or its affiliates at any time within one year prior to appointment to the
Committee. Shareholder approval of this Plan shall be required, and all CSOs
granted under this Plan will be subject to, and may not be exercised before, the
approval of this Plan by the shareholders. Each CSO shall be evidenced by a
written agreement containing terms and conditions established by the Committee
consistent with the provisions of this Plan.
3. Designation of Participants.
Only Employees shall be eligible for participation in this Plan. The
Committee shall have full power to designate, from among eligible individuals,
the persons to whom CSOs may be granted. A person who has been granted a CSO
hereunder may be granted an additional CSO or CSOs, if the Committee shall so
determine. The granting of a CSO shall not be construed as a contract of
employment or as entitling the recipient thereof to any rights of continued
employment or engagement by the Company or an Affiliated Corporation. Persons
eligible under this Plan additionally may be granted one or more options under
any other compensation or stock option plan or awarded shares under any other
benefit plan of the Company.
4. Stock Reserved for this Plan.
Subject to adjustment as provided in Paragraph 9 below, a total of
1,500,000 shares of Common Stock of the Company ("Plan Stock" or "Plan Shares")
shall be subject to this Plan. The Plan Stock subject to this Plan shall consist
of unissued shares of Common Stock or previously issued shares of Common Stock
reacquired and held by the Company or any Affiliated Corporation, and such
number of Plan Shares shall be and is hereby reserved for sale for such purpose.
Any Plan Shares which may remain unsold and which are not subject to outstanding
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<PAGE>
CSOs at the termination of this Plan shall cease to be reserved for the purpose
of this Plan, but until termination of this Plan the Company shall at all times
reserve a sufficient number of shares to meet the requirements of this Plan.
Should any CSO expire or be cancelled prior to its exercise in full, the
unexercised Plan Shares theretofore subject to such CSO may again be subjected
to a CSO under this Plan.
5. Option Exercise Price.
The purchase price of each share of Plan Stock made subject to a CSO shall
not be less than one hundred percent (100%) of the fair market value of a share
of Common Stock on the date the CSO is granted. The fair market value of a share
of Plan Stock on a particular date shall be deemed to be the average of either
(i) the highest and lowest prices at which shares of Common Stock were sold on
the date of grant, if traded on a national securities exchange, (ii) the high
and low sale prices reported on the date of grant, if traded on the Nasdaq Small
Cap Market or National Market System, or (iii) the high bid and low asked price,
or if unavailable, the closing high bid and low asked price, on the date of
grant, if quoted on the OTC Electronic Bulletin Board. If no transactions in the
Common Stock occur on the date of grant, the fair market value shall be
determined as of the next earliest day for which reports or quotations are
available. If the Common Stock not then quoted on any exchange or in any
quotation medium at the time the option is granted, then the Board of Directors
or Committee will use its discretion in selecting a good faith value believed to
represent fair market value based on factors then known to them. The cash
proceeds from the sale of Plan Stock are to be added to the general funds of the
Company.
6. Exercise Period; Vesting.
(a) The CSO exercise period shall be a term of not more than five (5) years
from the date of granting of each CSO and shall automatically terminate:
(i) Upon termination of the optionee's employment with the Company for
cause (defined as termination for reasons other than layoff due to lack of work,
injury, illness, disability, or due to economic reasons unrelated to the
optionee's job performance, or for a reason stated in subparagraph 6(b) of this
Plan);
(ii) At the expiration of six (6) months from the date of termination
without cause of the optionee's employment with the Company for any reason other
than death; provided, that if the optionee dies within such six-month period,
sub-clause (iii) below shall apply; or
(iii) At the expiration of fifteen (15) months after the date of death of
the optionee.
(b) "Employment with the Company" as used in this Plan shall include
employment with (or in the case of a consultant, adviser or agent, engagement
by) any Affiliated Corporation in any capacity, even if employment or engagement
in another capacity ceases, and CSOs granted under this Plan shall not be
affected by an employee's transfer of employment among the Company and any
Parent or Subsidiary thereof. An optionee's employment with the Company shall
not be deemed interrupted or terminated by a bona fide leave of absence (such as
sabbatical leave or employment by the Government) duly approved, military leave
or sick leave.
(c) The Board or Committee may determine at the time of grant that a CSO
granted hereunder shall not vest immediately but over a specified time, in
specified amounts per time period, or subject to other restrictions or
limitations. Unless otherwise set forth in the granting resolution, a CSO shall
vest immediately upon grant. If employment with the Company ceases before a CSO
vests, then vesting shall never take place, and unvested CSOs shall then be lost
forever.
7. Exercise of Options.
(a) The Committee, in granting CSOs, shall have discretion to determine the
terms upon which CSOs shall be exercisable, subject to applicable provisions of
this Plan. Once available for purchase, unpurchased Plan Shares shall remain
subject to purchase until the CSO expires or terminates in accordance with
Paragraph 6 above. Unless otherwise provided in the CSO, a CSO may be exercised
in whole or in part, one or more times, but no CSO may be exercised for a
fractional share. Resulting fractions shall be rounded up or down, as
appropriate.
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<PAGE>
(b) CSOs may be exercised solely by the optionee or a permitted transferee
during his lifetime or by a spouse or former spouse pursuant to a qualified
domestic relations order, or after his death (with respect to the number of
shares which the optionee could have purchased at the time of death) by the
person or persons entitled thereto under the decedent's will or the laws of
descent and distribution.
(c) The purchase price of the Plan Shares as to which a CSO is exercised
shall be paid in full at the time of exercise and no Plan Shares shall be issued
until full payment is made therefor. Payment shall be made either (i) in cash,
represented by bank or cashier's check, certified check or money order, or made
by bank wire transfer; (ii) by delivering shares of the Company's Common Stock
which have been beneficially owned by the optionee, the optionee's spouse, or
both of them for a period of at least six (6) months prior to the time of
exercise (the "Delivered Stock"), in a number equal to the number of Plan Shares
being purchased upon exercise of the CSO; (iii) a combination of cash and
Delivered Stock; (iv) by delivery of shares of corporate stock which are freely
tradeable without restriction and which are part of a class of securities which
has been listed for trading on the NASDAQ system or a national securities
exchange, with an aggregate fair market value equal to or greater than the
exercise price of the Plan Shares being purchased under the CSO ("Other
Shares"), or (v) a combination of cash, Delivered Stock and Other Shares. A CSO
shall be deemed exercised when written notice thereof, accompanied by the
appropriate payment in full, is received by the Company. No holder of a CSO
shall be, or have any of the rights and privileges of, a shareholder of the
Company in respect of any Plan Shares purchasable upon exercise of a CSO unless
and until certificates representing such shares shall have been issued by the
Company to him or her. The Committee shall have absolute discretion whether to
accept Other Shares offered and in valuing such shares.
8. Assignability.
No CSO shall be assignable or otherwise transferable except by will or by
operation of law, pursuant to a qualified domestic relations order (as defined
in Rule 16b-3 of the Securities and Exchange Commission, or any successor rule),
or pursuant to Title I of the Employee Retirement Income Security Act of 1974,
as amended (ERISA), or rules thereunder. No CSO shall be pledged or hypothecated
in any manner, whether by operation of law or otherwise, nor be subject to
execution, attachment or similar process.
9. Reorganizations and Recapitalizations of the Company.
(a) The existence of this Plan and CSOs granted hereunder shall not affect
in any way the right or power of the Company or its shareholders to make or
authorize any and all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures or other
indebtedness, or any preferred or prior preference stocks senior to or affecting
the Company's Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale, exchange or transfer of all or any part
of its assets or business, or any other corporate act or proceeding, whether of
a similar character or otherwise.
(b) The Plan Shares with respect to which CSOs may be granted hereunder are
shares of the Common Stock of the Company as currently constituted. If, and
whenever, prior to delivery by the Company of all of the Plan Shares which are
subject to CSOs granted hereunder, the Company shall effect a split or
combination of the Common Stock or other capital readjustment, the payment of a
Common Stock dividend, or recapitalization or other increase or reduction of the
number of shares of the Common Stock outstanding without receiving compensation
therefor in money, services or property, then the number of Plan Shares
available under this Plan and the number of Plan Shares with respect to which
CSOs granted hereunder may thereafter be exercised shall (i) in the event of an
increase in the number of outstanding shares of Common Stock, be proportionately
increased, and the cash consideration payable per share shall be proportionately
reduced; and (ii) in the event of a reduction in the number of outstanding
shares of Common Stock, be proportionately reduced, and the cash consideration
payable per share shall be proportionately increased.
(c) If the Company is reorganized, merged, consolidated or party to a plan
of exchange with another corporation pursuant to which shareholders of the
Company receive any shares of stock or other securities in exchange for the
Common Stock, there shall be substituted for the Plan Shares subject to the
unexercised portions of outstanding CSOs an appropriate number of shares of each
class of stock or other securities which were distributed to the shareholders of
the Company in respect of the Common Stock in the case of a reorganization,
merger, consolidation or plan of exchange; provided, however, that all
3
<PAGE>
outstanding CSOs may be cancelled by the Company as of the effective date of a
reorganization, merger, consolidation, plan of exchange, or any dissolution or
liquidation of the Company, by giving notice to each optionee or his personal
representative of its intention to do so and by permitting the purchase of all
the Plan Shares subject to such outstanding CSOs for a period of not less than
thirty (30) days during the sixty (60) days immediately preceding such effective
date.
(d) Except as expressly provided above, the Company's issuance of shares of
its capital stock of any class, or securities convertible into shares of its
capital stock of any class, for cash or property, or for labor or services,
either upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into or exchangeable for shares of capital stock or other securities of the
Company, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number of Plan Shares subject to CSOs granted hereunder or
the purchase price of such shares.
10. Purchase for Investment.
Unless the Plan Shares covered by this Plan have been registered under the
Act prior to issuance, each person exercising a CSO under this Plan may be
required by the Company to give a representation in writing that he is acquiring
such shares for his or her own account for investment and not with a view to, or
for sale in connection with, the distribution of any part thereof.
11. Effective Date and Expiration of this Plan.
This Plan shall be effective as of February 28, 1997, the date of its
adoption by the Board, and no CSO shall be granted pursuant to this Plan after
its expiration. This Plan shall expire on February 28, 2007 except as to CSOs
then outstanding, which shall remain in effect until they have expired or been
exercised.
12. Amendments or Termination.
The Committee or Board may amend, alter or discontinue this Plan at any
time in such respects as it shall deem advisable in order to conform to any
change in any other applicable law, or in order to comply with the provisions of
any rule or regulation of the Securities and Exchange Commission required to
exempt this Plan or any CSOs granted thereunder from the operation of Section
16(b) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), or in
any other respect not inconsistent with Section 16(b) of the Exchange Act;
provided, that no amendment or alteration shall be made which would impair the
rights of any participant under any CSO theretofore granted, without his consent
(unless made solely to conform such CSO to, and necessary because of, changes in
the foregoing laws, rules or regulations), and except that no amendment or
alteration shall be made without the approval of shareholders which would
increase the total number of shares reserved for the purposes of this Plan
(except as provided in Paragraph 9) or extend the expiration date of this Plan
as set forth in Paragraph 11.
13. Government Regulations.
This Plan, and the granting and exercise of CSOs hereunder, and the
obligation of the Company to sell and deliver Plan Shares under such CSOs, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
14. Liability.
No member of the Board of Directors or the Committee, nor any officers,
employees or agents of the Company or any Affiliated Corporation shall be
personally liable for any action, omission or determination made in good faith
in connection with this Plan.
15. Options in Substitution for Other Options.
The Committee may, in its sole discretion, at any time during the term of
this Plan, grant new options to an employee under this Plan or any other stock
option plan of the Company on the condition that such employee shall surrender
for cancellation one or more outstanding options which represent the right to
purchase (after giving effect to any previous partial exercise thereof) a number
of shares, in relation to the number of shares to be covered by the new
conditional grant hereunder, determined by the Committee. If the Committee shall
have so determined to grant such new options on such a conditional basis ("New
Conditional Options"), no such New Conditional Option shall become exercisable
4
<PAGE>
in the absence of such employee's consent to the condition and surrender and
cancellation as appropriate. New Conditional Options shall be treated in all
respects under this Plan as newly granted options. Options may be granted under
this Plan from time to time in substitution for similar rights held by employees
of other corporations who are about to become employees of the Company or an
Affiliated Corporation as a result of a merger or consolidation of the employing
corporation with the Company or an Affiliated Corporation, or the acquisition by
the Company or an Affiliated Corporation of the assets of the employing
corporation, or the acquisition by the Company or an Affiliated Corporation of
stock of the employing corporation as the result of which such other corporation
becomes an Affiliated Corporation.
16. Withholding Taxes.
Pursuant to applicable federal and state laws, the Company may be required
to collect withholding taxes upon the exercise of a CSO. The Company may
require, as a condition to the exercise of a CSO, that the optionee concurrently
pay to the Company the entire amount or a portion of any taxes which the Company
is required to withhold by reason of such exercise, in such amount as the
Committee or the Company in its discretion may determine. In lieu of part or all
of any such payment, the optionee may elect to have the Company withhold from
the shares to be issued upon exercise of the option that number of shares having
a Fair Market Value equal to the amount which the Company is required to
withhold.
17. Definitions.
Whenever used in this Plan, except where the context might clearly indicate
otherwise, the following terms shall have the meanings set forth below:
(a) "Act" means the U.S. Securities Act of 1933, as amended.
(b) "Affiliated Corporation" means any Parent or Subsidiary of the Company.
(c) "Award" or "grant" means any grant of a CSO (option) made under this
Plan.
(d) "Board of Directors" means the Board of Directors of the Company. The
term "Committee" is defined in Section 2 of this Plan.
(e) "Common Stock" or "Common Shares" means the common stock, $.001 par
value per share, of the Company, or in the event that the outstanding Common
Shares are hereafter changed into or exchanged for different shares or
securities of the Company or any other issuer, such other shares or securities.
(f) "Date of Grant" means the day the Committee authorizes the grant of a
CSO or such later date as may be specified by the committee as the date a
particular grant will become effective.
(g) "Employee" means and includes the following persons: (i) executive
officers, officers and directors (including advisory and other special
directors) of the Company or an Affiliated Corporation; (ii) full-time and
part-time employees of the Company or an Affiliated Corporation; (iii) natural
persons engaged by the Company or an Affiliated Corporation as consultant,
advisor or agent; and (iv) a lawyer, law firm, accountant or accounting firm, or
other professional or professional firm engaged by the Company or an Affiliated
Corporation.
(h) "Optionee" means an Employee to whom a CSO is granted.
(i) "Parent" means any corporation owning 50% or more of the total combined
voting stock of all classes of the Company or of another corporation qualifying
as a parent within this definition.
(j) "Subsidiary" means a corporation more than 50% of whose total combined
capital stock of all classes held by the Company or by another corporation
qualifying as a Subsidiary within this definition.
5
<PAGE>
==========
SIGNATURE PAGE
==========
By signature below, the undersigned officers of the Company hereby certify
that the foregoing is a true and correct copy of the 1997 Compensatory Stock
Option Plan of the Company.
DATED: February 28, 1997
MNS EAGLE EQUITY GROUP IV, INC.
X /s/ Stephen M. Siedow
(SEAL) ------------------------------------
Stephen M. Siedow, President,
Chief Executive Officer and Treasurer
X /s/ John D. Brasher Jr.
-----------------------------------
John D. Brasher Jr., Secretary
==========
CERTIFICATION OF PLAN ADOPTION
==========
I, the undersigned Secretary of this corporation, hereby certify that the
foregoing 1997 Compensatory Stock Option Plan of this corporation was duly
approved by the requisite number of holders of the issued and outstanding common
stock of this corporation as of the below date.
Date of Approval: February 28, 1997
X /s/ John D. Brasher Jr.
(SEAL) -----------------------------------------
John D. Brasher Jr., Secretary
6
Exhibit 10.2
MNS EAGLE EQUITY GROUP IV, INC.
1997 EMPLOYEE STOCK COMPENSATION PLAN
1. Purpose of the Plan.
This 1997 Employee Stock Compensation Plan ("Plan") is intended to further
the growth and advance the best interests of MNS EAGLE EQUITY GROUP IV, INC., a
Nevada corporation ("Company"), and any Affiliated Corporation, by supporting
and increasing the Company's ability to attract, retain and compensate persons
of experience and ability and whose services are considered valuable, to
encourage the sense of proprietorship in such persons, and to stimulate the
active interest of such persons in the development and success of the Company
and any Affiliate Corporation. This Plan provides for stock compensation through
the award of the Company's Common Stock.
2. Definitions.
Whenever used in this Plan, except where the context might clearly indicate
otherwise, the following terms shall have the meanings set forth in this
section:
(a) "Act" means the U.S. Securities Act of 1933, as amended.
(b) "Affiliated Corporation" means any Parent or Subsidiary of the Company.
(c) "Award" or "grant" means any grant or sale of Common Stock made under
this Plan.
(d) "Board of Directors" means the Board of Directors of the Company. The
term "Committee" is defined in Section 4 of this Plan.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Common Stock" or "Common Shares" means the common stock, $.001 par
value per share, of the Company, or in the event that the outstanding Common
Shares are hereafter changed into or exchanged for different shares or
securities of the Company, such other shares or securities.
(g) "Date of Grant" means the day the Committee authorizes the grant of
Common Stock or such later date as may be specified by the Committee as the date
a particular award will become effective.
(h) "Employee" means and includes the following persons: (i) executive
officers, officers and directors (including advisory and other special
directors) of the Company or an Affiliated Corporation; (ii) full-time and
part-time employees of the Company or an Affiliated Corporation; (iii) natural
persons engaged by the Company or an Affiliated Corporation as a consultant,
advisor or agent; and (iv) a lawyer, law firm, accountant or accounting firm or
other professional or professional firm engaged by the Company or an Affiliated
Corporation.
(i) "Parent" means any corporation owning 50% or more of the total combined
voting stock of all classes of the Company or of another corporation qualifying
as a Parent within this definition.
(j) "Participant" means an Employee to whom an Award of Plan Shares has
been made.
(k) "Plan Shares" means shares of Common Stock from time to time subject to
this Plan.
(l) "Subsidiary" means a corporation more than 50% of whose total combined
capital stock of all classes is held by the Company or by another corporation
qualifying as a Subsidiary within this definition. 3. Effective Date of the
Plan.
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3. Effective Date of the Plan.
This Plan shall be effective as of February 28, 1997, the date of its
adoption by the Board, and no ESO shall be granted pursuant to this Plan after
its expiration. This Plan shall expire on February 28, 2007 except as to ESOs
then outstanding, which shall remain in effect until they have expired or been
exercised.
4. Administration of the Plan.
The ESC Compensation Committee of the Board of Directors ("Committee"), and
in default of the appointment or continued existence of such Committee the Board
of Directors, will be responsible for the administration of this Plan, and will
have sole power to award Common Shares under this Plan. Subject to the express
provisions of this Plan, the Committee shall have full authority and sole and
absolute discretion to interpret this Plan, to prescribe, amend and rescind
rules and regulations relating to it, and to make all other determinations which
it believes to be necessary or advisable in administering this Plan. The
determination of those eligible to receive an award of Plan Shares shall rest in
the sole discretion of the Committee, subject to the provisions of this Plan.
Awards of Plan Shares may be made as compensation for services rendered,
directly or in lieu of other compensation payable, as a bonus in recognition of
past service or performance or may be sold to an Employee as herein provided.
The Committee may correct any defect, supply any omission or reconcile any
inconsistency in this Plan in such manner and to such extent it shall deem
necessary to carry it into effect. Any decision made, or action taken, by the
Committee arising out of or in connection with the interpretation and
administration of this Plan shall be final and conclusive.
5. Stock Subject to the Plan.
The maximum number of Plan Shares which may be awarded under this Plan is
1,000,000 shares.
6. Persons Eligible to Receive Awards.
Awards may be granted only to Employees (as herein defined).
7. Grants or Awards of Plan Shares.
Except as otherwise provided herein, the Committee shall have complete
discretion to determine when and to which Employees Plan Shares are to be
granted, and the number of Plan Shares to be awarded to each Employee. A grant
to an Employee may be made for cash, property, services rendered or other form
of payment constituting lawful consideration under applicable law; Plan Shares
awarded other than for services rendered shall be sold at not less than the fair
value thereof on the date of grant. No grant will be made if, in the judgment of
the Committee, such a grant would constitute a public distribution with the
meaning of the Act or the rules and regulations promulgated thereunder.
8. Delivery of Stock Certificates.
As promptly as practicable after authorizing an award of Plan Shares, the
Company shall deliver to the person who is the recipient of the award, a
certificate or certificates registered in that person's name, representing the
number of Plan Shares that were granted. Unless the Plan Shares have been
registered under the Act, each certificate evidencing Plan Shares shall bear a
legend to indicate that such shares represented by the certificate were issued
in a transaction which was not registered under the Act, and may only be sold or
transferred in a transaction that is registered under the Act or is exempt from
the registration requirements of the Act. In the absence of registration under
the Act, any person awarded Plan Shares may be required to execute and deliver
to the Company an investment letter, satisfactory in form and substance to the
Company, prior to issuance and delivery of the shares. An award may be made
under this Plan wherein the Plan Shares may be issued only after registration
under the Act.
9. Assignability.
An award of Plan Shares may not be assigned. Plan Shares themselves may be
assigned only after such shares have been awarded, issued and delivered, and
only in accordance with law and any transfer restrictions imposed at the time of
award.
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<PAGE>
10. Employment not Conferred.
Nothing in this Plan or in the award of Plan Shares shall confer upon any
Employee the right to continue in the employ of the Company or Affiliated
Corporation nor shall it interfere with or restrict in any way the lawful rights
of the Company or any Affiliated Corporation to discharge any Employee at any
time for any reason whatsoever, with or without cause.
11. Laws and Regulations.
The obligation of the Company to issue and deliver Plan Shares following an
award under this Plan shall be subject to the condition that the Company be
satisfied that the sale and delivery thereof will not violate the Act or any
other applicable laws, rules or regulations.
12. Withholding of Taxes.
If subject to withholding tax, the Company or any Affiliated Corporation
may require that the Employee concurrently pay to the Company the entire amount
or a portion of any taxes which the Company or Affiliated Corporation is
required to withhold by reason of granting Plan Shares, in such amount as the
Company or Affiliated Corporation in its discretion may determine. In lieu of
part or all of any such payment, the Employee may elect to have the Company or
Affiliated Corporation withhold from the Plan Shares issued hereunder a
sufficient number of shares to satisfy withholding obligations. If the Company
or Affiliated Corporation becomes required to pay withholding taxes to any
federal, state or other taxing authority as a result of the granting of Plan
Shares, and the Employee fails to provide the Company or Affiliated Corporation
with the funds with which to pay that withholding tax, the Company or Affiliated
Corporation may withhold up to 50% of each payment of salary or bonus to the
Employee (which will be in addition to any required or permitted withholding),
until the Company or Affiliated Corporation has been reimbursed for the entire
withholding tax it was required to pay in respect of the award of Plan Shares.
13. Reservation of Shares.
The stock subject to this Plan shall, at all times, consist of authorized
but unissued Common Shares, or previously issued shares of Common Stock
reacquired or held by the Company or an Affiliated Corporation equal to the
maximum number of shares the Company may be required to issue as stated in
Section 5 of this Plan, and such number of Common Shares hereby is reserved for
such purpose. The Committee may decrease the number of shares subject to this
Plan, but only the Board of Directors my increase such number, except as a
consequence of a stock split or other reorganization or recapitalization
affecting all Common Shares.
14. Amendment and Termination of the Plan.
The Committee may suspend or terminate this Plan at any time or from time
to time, but no such action shall adversely affect the rights of a person
granted an Award under this Plan prior to that date. Otherwise, this Plan shall
terminate on the earlier of the terminal date stated in Section 3 of this Plan
or the date when all Plan Shares have been issued. The Committee shall have
absolute discretion to amend this Plan, subject only to those limitations
expressly set forth herein; however, the Committee shall have no authority to
extend the term of this Plan, to increase the number of Plan Shares subject to
award under this Plan or to amend the definition of "Employee" to include
executive officers or directors of the Company or any Affiliated Corporation.
15. Delivery of Plan.
A copy or synopsis (for which copy the prospectus will serve) or
description of this Plan shall be delivered to every person to whom an award of
Plan Shares is made. The Secretary of the Company may, but is not required to,
also deliver a copy of the resolution or resolutions of the Committee
authorizing the award.
16. Liability.
No member of the Board of Directors, the Committee or any other committee
of directors, or officers, employees or agents of the Company or any Affiliated
Corporation shall be personally liable for any action, omission or determination
made in good faith in connection with this Plan.
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17. Miscellaneous Provisions.
The place of administration of this Plan shall be in the State of Nevada
(or subsequently, wherever the Company's principal executive offices are
located), and the validity, construction, interpretation and effect of this Plan
and of its rules, regulations and rights relating to it, shall be determined
solely in accordance with the laws of the State of Nevada. Without amending this
Plan, the Committee may issue Plan Shares to employees of the Company who are
foreign nationals or employed outside the United States, or both, on such terms
and conditions different from those specified in this Plan but consistent with
the purpose of this Plan, as it deems necessary and desirable to create
equitable opportunities given differences in tax laws in other countries. All
expenses of administering this Plan and issuing Plan Shares shall be borne by
the Company.
18. Reorganizations and Recapitalizations of the Company.
(a) The shares of Common Stock subject to this Plan are shares of the
Common Stock of the Company as currently constituted. If, and whenever, the
Company shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a Common Stock dividend, a stock split, combination
of shares (reverse stock split) or recapitalization or other increase or
reduction of the number of shares of the Common Stock outstanding without
receiving compensation therefor in money, services or property, then the number
of shares of Common Stock subject to this Plan shall (i) in the event of an
increase in the number of outstanding shares, be proportionately increased; and
(ii) in the event of a reduction in the number of outstanding shares, be
proportionately reduced.
(b) Except as expressly provided above, the Company's issuance of shares of
Common Stock of any class, or securities convertible into shares of Common Stock
of any class, for cash or property, or for labor or services, either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into or
exchangeable for shares of Common Stock or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number of
shares of Common Stock subject to this Plan.
==========
SIGNATURE PAGE
==========
By signature below, the undersigned officers of the Company hereby certify
that the foregoing is a true and correct copy of the 1997 Employee Stock
Compensation Plan of the Company.
DATED: February 28, 1997
MNS EAGLE EQUITY GROUP IV, INC.
X /s/ Stephen M. Siedow
(SEAL) ----------------------------------
Stephen M. Siedow, President
X /s/ John D. Brasher Jr.
-----------------------------------
John D. Brasher Jr., Secretary
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==========
CERTIFICATION OF PLAN ADOPTION
==========
I, the undersigned Secretary of this corporation, hereby certify that the
foregoing 1997 Employee Stock Compensation Plan of this corporation was duly
approved by the requisite number of holders of the issued and outstanding,
common stock of this corporation as of the below date.
Date of Approval: February 28, 1997
X /s/ John D. Brasher Jr.
(SEAL) ---------------------------------------
John D. Brasher Jr., Secretary
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