UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
AVOCET VENTURES, INC.
---------------------
(Exact name of registrant as specified in its charter)
Nevada Pending 95-4763523
------ ------- ----------
(State or Other Jurisdiction of SEC File No. (IRS Employer
Incorporation or Organization) Identification No.)
1621 Altivo Way
Los Angeles, California 90026
(Address of principal executive offices)
Registrant's telephone number, including area code:
(818) 980-0929
Securities to be registered pursuant to
Section 12(b) of the Act:
COMMON STOCK PAR VALUE $.001
(Title of class)
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CROSS-REFERENCE SHEET
BETWEEN FORM 10 SB FILING
AND ITEMS OF FORM 10 SB
Item Item Caption Location in Filing
No.
1. Description of Business The Company; Business
2. Management's Discussion and Analysis Financial Information
or Plan of Operation
3. Description of Property Property
4. Security Ownership of Certain Principal Stockholders
Beneficial Owners and Management
5. Directors, Executive Officers, Management
Promoters and Control Persons
6. Executive Compensation Executive Compensation
7. Certain Relationships and Related Certain Relationships with
Transactions Management
8. Legal Proceedings Legal Proceedings
9. Market for Common Equity and Related Market for Common Stock
Stockholder Matters
10. Recent Sales of Unregistered Securities Recent Sales of
Unregistered Securities
11. Description of Securities Description of Capital Stock
12. Indemnification of Directors and Indemnification of
Officers Directors and Officers
13. Financial Statements Financial Statements
14. Changes in and Disagreements with Financial Information
Accountants and Financial Disclosure
15. Financial Statements and Exhibits Financial Statements;
Exhibits
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TABLE OF CONTENTS
Page No.
The Company 1
Business 1
Executive Compensation 6
Property 7
Management 7
Certain Relationships with Management 8
Principal Stockholders 8
Description of Capital Stock 9
Market for Common Stock 9
Recent Sales of Unregistered Securities 9
Legal Proceedings 10
Indemnification of Directors and Officers 10
Financial Information 11
Financial Statements 11
Signatures 12
iii
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THE COMPANY
Avocet Ventures, Inc. (the "Company"), is a Nevada corporation organized on
January 29, 1985. Since organization, the Company's operations have been limited
to capital formation.
The Company's business purpose is to acquire a business opportunity which
Management believes offers potential long-term growth. The Company will seek to
acquire majority interests in an existing business or purchase assets which it
will use to establish a business.
The Company does not intend to become involved in any business which would
require it to register as a securities broker-dealer under the Securities
Exchange Act of 1934, as an investment advisor under the Investment Advisor's
Act of 1940, or as an investment company under the Investment Company Act of
1940. Except as set forth herein under BUSINESS - Forms of Combination,
Management's discretion is otherwise unrestricted and it may participate in any
business which may, in the opinion of Management, meet the business objectives
discussed herein. (See "BUSINESS.")
Management believes that business opportunities will become available to
the Company due primarily to its status as a publicly-held company, and its
flexibility in structuring and participating in business opportunities. The
Company has no agreement or understanding to acquire or participate in any
business opportunity, nor does it currently have any opportunity under
investigation. Decisions as to which business opportunity to pursue will be made
by Management of the Company, which will in all probability act without the
consent, vote, or approval of the Company's stockholders. (See "BUSINESS".)
The Company's offices are located at 1621 Altivo Way, Los Angeles,
California 90026. Its telephone number is (818) 980-0929 and telecopier number
is (818) 980-8746.
BUSINESS
Introduction
The Company is a development stage enterprise which proposes to engage in
the active search for a business combination or merger opportunity which, in the
opinion of Management, will enhance stockholder value.
Management believes that business opportunities will become available to
the Company due primarily to its status as a publicly-held company, and its
flexibility in structuring and participating in business opportunities. The
proposed corporate structure of the Company has not been the subject of a
feasibility study or market research nor is Management aware of statistical data
which would support the perceived benefits of a merger or acquisition
transaction for target company stockholders. Therefore, there can be no
assurance that a market exists for such a corporate vehicle. At present, there
are no plans, agreements, understandings, or commitments to acquire or
participate in any business opportunity nor has the Company solicited, received
or considered any proposals regarding a possible combination or merger. Further,
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there can be no assurance that the Company will be successful in locating a
suitable entity for a merger or that the Company will be able to consummate a
combination.
Forms of Combination
The manner in which the Company participates in a business opportunity is
predicated on the nature of the opportunity, the respective needs and desires of
the Company and the promoters of the combination, and the relative negotiating
strength of the Company and such promoters. It is likely that a combination will
take the form of a merger, consolidation, asset acquisition or some other form
of combination. The "target" entities may include private companies,
partnerships, or sole proprietorships.
In transacting a combination, a significant amount of additional shares of
the Company's Common Stock may be issued. The Company is authorized to issue
50,000,000 shares of Common Stock of which 2,500,000 shares are issued and
outstanding. In the event that a substantial number of shares are issued
pursuant to a transaction, present Management and current stockholders may not
have control of a majority of the voting shares of the Company. Further, as part
of such a transaction, the Company's Management may be requested to relinquish
its positions and new directors and officers may be appointed without a vote by
stockholders. Moreover, no assurance can be given as to the experience or
qualifications of such persons either in the operation of the activities of the
Company or in the operation of the business, asset or property being combined.
The Company does not propose to restrict its search for combination
opportunities to any particular industry, and may, therefore, engage in
essentially any business. Management contemplates that the Company will seek to
merge with or acquire a target company with either assets or earnings, or both.
The Company has not established a specific level of earnings or assets below
which it would not consider a merger or acquisition with a target company.
The Company intends to obtain, if possible, audited financial statements
for the entity which it acquires. It is expected that audited financials will
help Management to understand the financial position of the company it acquires
and will also help the Company in complying with the financial reporting
requirements of the Securities Exchange Act of 1934, if the acquisition would
fall within the ambit of such law.
It is anticipated that business opportunities will become available to the
Company from various sources, including its Directors and Officers, professional
advisors such as attorneys and accountants, securities broker-dealers, venture
capitalists, members of the financial community, and others who may present
unsolicited proposals. The Company has no plans, understandings, agreements, or
commitments with any individuals other than its Directors and Officers to act as
finders of opportunities for the Company.
Plan of Acquisition
The Directors and Officers of the Company will undertake the analysis of
business opportunities. Management will have unrestricted flexibility in
seeking, analyzing and participating in business opportunities. In its efforts,
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Management intends to follow a systematic approach to identify its most suitable
acquisition candidates.
Management intends to concentrate on identifying any number of preliminary
prospects which may be brought to its attention through present associations or
unsolicited. Management will then apply certain broad criteria to the
preliminary prospects. Essentially, this will entail a determination by
Management whether or not the prospects are in an industry which appears
promising and whether or not the prospects themselves have potential within
their own industries.
During this initial screening process, Management will ask and receive
answers to questions framed to provide appropriate threshold information,
depending upon the nature of the prospect's business. Such evaluation is not
expected to be an in-depth analysis of the target company's operations, although
it will encompass a look at most, if not all, of the same areas to be examined
once, if and when, a target company is selected for an in-depth review. For
example, at this stage, Management may look at a prospect's unaudited balance
sheet. However, when a prospect is selected for an in-depth review, Management
will review the prospect's audited financial statements. Nevertheless,
Management anticipates this evaluation will entail a broad overview of the
business of the target company and should allow a significant percentage of
preliminary prospects to be eliminated from further consideration.
Management will conduct an in depth analysis of five major areas of concern
with respect to the target company as follows:
1. Managerial and Financial Stability. Management will review audited
financial statements of the target company and will also research the background
of each director and member of management of the target company in order to
discern whether the stability of the target company is such that further
negotiations are warranted.
2. Industry Status. Management will research the potential of the target
company's industry. The concern here is whether the industry is in a growth,
stagnant or declining stage.
3. Production of Product. If the target company is a manufacturer,
Management will review whether it has the necessary resources or access to the
necessary resources and supplies to produce a quality product in a timely
manner.
4. Acceptance and Potential of Product. Management will review the
acceptance of the target company's product in the market place. Management will
also determine whether or not there is potential for the product to be workable
and to fulfill its intended purpose.
5. Development of Target Company. Management will review the target
company's state of development (examples: start-up stage, established company,
etc.).
The foregoing is an outline of the areas of concern which most often arise
and merit careful scrutiny by Management. Because of the possible varieties of
target companies which may come to the attention of Management, additional
factors will most likely be considered in any given analysis. Also, the
procedures used in such a review are expected to vary depending on the target
company being analyzed. Management may select a target company for further
negotiations even though the target may not receive a favorable evaluation in
one or more of the five primary areas of concern.
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Management expects to enter into further negotiations with various target
company managements following successful conclusion of the initial financial and
evaluation studies. Negotiations with target company management will be expected
to focus on the percentage of the Company which target company stockholders
would acquire in exchange for their shareholdings in the target company.
Depending on, amongst other things, the target company's assets and liabilities.
The Company's stockholders will, in all likelihood, hold a lesser
percentage ownership interest in the Company following any merger or
acquisition. The percentage ownership may be subject to significant reduction in
the event the Company acquires a target company with substantial assets. Any
merger or acquisition effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held by the Company's
stockholders.
Management does not intend to force an active participation in the affairs
of the acquired company. However, Management will evaluate any opportunity
offered for such participation if such participation was a necessary ingredient
of a merger. It is not the intention of Management to seek such participation.
Management will in all likelihood be requested to relinquish any voting control
it may exercise prior to a merger to the present management of the business
which is acquired.
Current Management would clearly not control the surviving company
following such a dilution and will not be in a position to demand an active
participation and therefore would not participate unless invited to do so.
The final stage of any merger or acquisition to be effected by the Company
will require the Company to retain the services of counsel and a qualified
accounting firm in order to properly effect the merger or acquisition. The
Company may be expected to incur significant legal fees and accounting costs
during the final stages of a merger or acquisition. Management intends to retain
legal and accounting services only on an as-needed basis in the latter stages of
a proposed merger or acquisition.
The interest of Management is to increase stockholder value. If successful
all the stockholders, including Management, will benefit. Management's objective
is to issue restricted shares of the Company to acquire a private company which
is a going concern. If Management is requested to sell a portion of its shares,
give away a portion of its shares or cancel a portion of its shares to obtain
such a merger, then Management will face a conflict of interest. Presently,
Management has no plan on how to deal with this conflict and believes no general
plan can be formulated at this time; this may adversely affect the Company's
ability to successfully conclude a subsequent merger or acquisition. Conflict
resolutions will otherwise be handled on a case-by-case basis. If the conflict
cannot be resolved, litigation could therefore occur, which would likely damage
the Company's prospects.
There are no corporate policies, board resolutions or bylaws which deal
with conflicts of interest with respect to the sale of shares of the company's
shares by Management and none are anticipated to be placed into effect. (See
"Conflicts of Interest.")
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Management cannot commit at this time as to whether a stockholder will have
the right to vote to complete a merger/acquisition as the nature of the
transaction, and the needs of the candidate will dictate the legal requirements
of the transaction.
In connection with the acquisition of a private business, the Company may
not obtain an independent appraisal of the value of the acquired business. Such
omission by the Company could result in an overvaluation or other related errors
which then could adversely effect the price paid by the Company for the private
business. It is probable that an existing stockholder's future share values
would be adversely effected by factors including but not limited to excess
dilution, reduced dividends, if any, and the lack of a market for his or her
shares.
Should a stockholder wish to challenge the Company in Court to reverse a
merger or otherwise assert damages against the Company's Management for neglect
of fiduciary duties in the construction of a merger or acquisition, the legal
remedy available to that stockholder under state corporate law will most likely
be prohibitively expensive and time consuming to the Company.
The Company has in effect no bylaws understandings, agreements or
resolutions which prevent related party transactions. Such bylaws or resolutions
could be changed by Management initiative. No such changes are presently being
considered.
There are no present plans, proposals, or arrangements to sell or issue
additional shares of the Company prior to an acquisition or a merger.
Competition
- - -----------
The Company is and will remain an insignificant participant amongst the
firms which engage in mergers with and acquisitions of privately-held entities.
There are many established venture capital and financial concerns which have
significantly greater financial and personnel resources and technical expertise
than the Company. In view of the Company's lack of working capital resources and
limited management availability, the Company will continue to be at a
significant competitive disadvantage compared to its competitors.
Regulation and Taxation
- - -----------------------
The Company could be subject to regulation under the Investment Company Act
of 1940 in the event the Company obtains and continues to hold a minority
interest in a number of entities. However, Management intends to seek at most
one or two mergers or acquisitions and Management's plan of operation is based
on the Company obtaining a controlling interest in any merger or acquisition
target company and, accordingly, the Company may be required to discontinue any
prospective merger or acquisition of any company in which a controlling interest
will not be obtained.
The Company could also be required to register under the Investment Company
Act of 1940 in the event the Company comes within the definition of an
Investment Company contained in that Act due to its assets consisting
principally of shareholdings held in a number of subsidiaries. Management
intends to seek at most one or two mergers or acquisitions, which transactions
will result in the Company holding only majority interest in subsidiaries.
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Any securities which the Company acquires in exchange for its Common Stock
will be "restricted securities" within the meaning of the Securities Act of 1933
(the "1933 Act"). If the Company elected to resell such securities, such sale
could not proceed unless the Securities and Exchange Commission had declared a
Registration Statement effective or an exemption from registration was
available. Section 4(2) of the 1933 Act, which exempts sales of securities not
involving a public offering, would in all likelihood be available since it is
likely that any such sale would be a block sale to a private investor to raise
additional capital. Although Management's plan of operation does not contemplate
resale of securities acquired, in the event such a sale were necessary, the
Company would be required to comply with the provisions of the 1933 Act.
As a condition of a merger or acquisition, it is possible that the target
company's management may request registration of the Company's Common Stock to
be received by target company stockholders. In such event, the Company could
incur significant registration costs. Management intends to require the target
company to bear most, if not all, of the cost of any such registration.
Alternatively, the Company may issue "restricted securities" to a prospective
target company, which securities may be subsequently registered for sale or sold
in accordance with Rule 144 of the Securities Act of 1933.
The Company intends to structure a merger or acquisition in such a manner
as to minimize federal and state tax consequences to the Company and any target
company.
In the course of a merger or acquisition the Company may undertake, a
substantial amount of attention will be focused upon federal and state tax
consequences to both the Company and the target company. Presently, under the
provisions of federal and various state tax laws, a qualified reorganization
between business entities will generally result in tax-free treatment to the
parties of the reorganization. This generally requires the company to acquire at
least 80% of the combined voting power of the acquired company plus at least 80%
of the total number of shares of all other classes of stock in exchange for the
voting stock of the acquiring company.
While the Company expects to structure any merger or acquisition in a
manner which will minimize federal and state tax consequences to both the
Company and the target company, there is no assurance that such a business
combination will meet the statutory requirements of a re-organization or that
the parties will obtain the intended tax-free treatment upon a transfer of stock
or assets. A non-qualifying reorganization could result in the imposition of
both federal and state taxes which may have a substantial adverse effect on the
Company. Further, there is no assurance that federal and state tax laws may not
be amended in the foreseeable future to preclude the Company, as well as others,
from availing itself of the tax-free treatment presently afforded business
entities engaged in mergers and acquisitions.
As of the date hereof no arrangements for merger or acquisition have been
made.
Executive Compensation
Pursuant to an oral agreement, the Company's sole Director and Officer does
not receive any remuneration for his services but will be compensated for
expenses, if any, incurred on behalf of the Company. Future compensation to the
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Directors and or Officers will be decided by the Board of Directors. Such
transactions will not be conducted at arm's length. (See "Property" and "Certain
Transactions with Management.")
Employees
The Company is a development stage operation and currently has no employees
other than its sole Director and Officer. The need for employees and their
availability will be addressed as circumstances warrant.
Property
The Company utilizes the offices of its sole Director and Officer, Patrick
C. Brooks, on a month-to-month basis. With effect from October 1, 1999, the
Company pays Mr. Brooks $500 per month for this usage, which includes the use of
telephone, telecopier, computers, office fixtures and fittings, and secretarial
services. Management does not foresee the need for separate offices until
business circumstances dictate otherwise.
MANAGEMENT
The following sets forth information concerning the Directors and Officers
of the Company:
Name Age Positions
---- --- ---------
Patrick C. Brooks 52 Director, President, Chief Financial Officer
and Secretary
The following sets forth certain biographical information pertaining to the
Directors and Officers of the Company:
Patrick C. Brooks
Mr. Brooks has served as the Company's sole member of the Board of
Directors and as its President, Chief Financial Officer and Secretary since
1991.
Formerly, Mr. Brooks served as Chairman and President of Bio-Dental
Technologies Corporation, a publicly-held company traded on the NASDAQ Stock
Exchange. Additionally, he served as joint principal and owner of Thunderbird
Securities Corporation and Meridian Securities, Inc., both companies being
securities-broker dealers licensed by the Securities and Exchange Commission and
the N.A.S.D.
From 1987 to 1990, Mr. Brooks was the promoter and sponsor of three
publicly-held Business Investment Companies. In the fifteen years prior to 1987
he served in the casualty insurance industry in successively advancing
underwriting positions with major European and American insurance companies.
From August 1997 to June 1999, Mr. Brooks has served of President and
Director of Reliance Resources, Inc., a publicly-held corporation. Since 1989 he
has served as President and Director of Goldcrest Corporation, a publicly-held
corporation. Since August 1997 he has served as President and Director of
Fountain Colony Ventures Inc., a publicly-held corporation. Since November 1997,
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Mr. Brooks has served as a Director and President of Laurel Dental Plan, Inc., a
dental managed care organization based in southern California. Additionally, he
serves as a Director and Officer of several privately-held corporations.
Conflicts of Interest
The Directors and Officers of the Company are not required to devote their
full-time efforts to the business of the Company. They are engaged in and may
continue to be engaged in other business pursuits outside the Company, and
potential conflicts may arise regarding, amongst other things, time, effort and
corporate opportunities. The Company's sole Director and Officer, Mr. Brooks
serves as a Director and full-time President of a privately-held dental managed
care organization. Therefore, the time he can devote to the Company is
necessarily limited. He expects to devote not more than 24 hours per month to
the Company's business. Mr. Brooks also serves as sole Director and Officer of
Goldcrest Corporation, a publicly held company as well as sole Director and
Officer of Fountain Colony Ventures Inc., a publicly-held company. Both of these
companies are currently seeking business opportunities. Accordingly, if Mr.
Brooks became aware of a business opportunity, he may be faced with a question
as to which company he should refer such an opportunity. The Company's Directors
and Officers are not obligated to present any particular business opportunity to
the Company. However, Mr. Brooks has undertaken to submit to the Company any
business opportunity submitted to him in his capacity as a Director or Officer
of the Company. Whilst the Directors and Officers intend to observe their duties
as Directors and Officers and controlling stockholders of the Company, there can
be no assurance that in the event of a conflict of interests, the conflict will
be resolved wholly in favor of the Company to the satisfaction of its
stockholders. The Company has not established policies or procedures for the
resolution of current or potential conflicts of interest between the Company,
and its Directors and Officers. All conflicts will be resolved by Mr. Brooks.
Stockholders who believe that the Company has been harmed by the failure of a
Director or Officer to appropriately resolve any conflict may, subject to
applicable rules of civil procedure, be able to bring a class action or
derivative suit to enforce their rights and the Company's rights.
CERTAIN RELATIONSHIPS WITH MANAGEMENT
The Company utilizes the offices of its sole Director and Officer, Patrick
C. Brooks, on a month-to-month basis. With effect from October 1, 1999, the
Company pays Mr. Brooks $500 per month for this usage, which includes the use of
telephone, telecopier, computers, office fixtures and fittings, and secretarial
services. This transaction was not conducted at arm's length.
As of the date hereof, the Company accrued liabilities of $704 to its sole
Director and Officerin consideration for satisfying Company liabilities to third
parties and accrued rental charges. No interest is being charged at this time
for the provision of this capital. (See "Financial Information.")
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding ownership of the
Company's Common Stock by each person known by the Company to be the beneficial
owner of more than 5% of the outstanding Common Stock, by each director and by
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each executive officer of the Company. All shares are held beneficially and of
record, and each recorded stockholder has sole voting, investment and
dispositive power.
Shares Beneficially Percentage of
Name Owned Shares Owned
- - ---- ----- ------------
Patrick C. Brooks (1) 2,000,000 80
1621 Altivo Way
Los Angeles, CA 90026
Directors and Officers as a Group 2,000,000 80
(1) Director and/or Officer of the Company
DESCRIPTION OF CAPITAL STOCK
Common Stock
The Company is authorized to issue 50,000,000 shares of Common Stock with a
par value of $.001 per share. There are 2,500,000 shares of Common Stock issued
and outstanding held by 27 stockholders of record.
Holders of Common Stock are entitled to one vote per share in each matter
to be decided by stockholders. The Common Stock has no redemption provisions and
no preemptive rights. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as the Board of Directors may declare from time to time
out of funds legally available thereof. Upon liquidation of the Company, after
provisions for payment of all of the Company's debts and obligations, if any,
the holders of Common Stock may share ratably in the Company's assets. The
outstanding shares of Common Stock are fully paid and nonassessable.
Transfer Agent and Registrar
The Transfer Agent sand Registrar for the Common Stock of the Company is
First American Stock Transfer, Inc. of Phoenix, Arizona.
MARKET FOR COMMON STOCK
There has not been a public market for the Company's securities during the
past five years.
RECENT SALES OF UNREGISTERED SECURITIES
The Company has not made any sales of securities during the past five
years.
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DIVIDENDS
Holders of the shares of Common Stock are entitled to dividends when, as
and if declared by the Board of Directors out of funds legally available
therefor. The Company has not paid any dividends on its Common Stock and intends
to retain earnings, if any, to finance the development and expansion of its
business. Future dividend policy is subject to the discretion of the Board of
Directors and will depend upon a number of factors, including future earnings,
capital requirements and the financial condition of the Company.
REPORTS
The Company will furnish annual audited financial information to its
stockholders and such other interim reports as Management deems appropriate.
LEGAL PROCEEDINGS
The Company knows of no litigation pending, threatened or contemplated, or
unsatisfied judgment against it, or any proceedings in which the Company is a
party. The Company knows of no legal actions pending or threatened or judgment
entered against any Director or Officer of the Company in his/her capacity as
such.
INDEMNIFICATION
The Directors and Officers of the Company are accountable to the Company as
fiduciaries, which means that such Directors and Officers are required to
exercise good faith and integrity in handling the Company's affairs. A
stockholder may be able to institute legal proceedings on behalf of himself and
all other similarly situated stockholders to recover damages where the Company
has failed or refused to obey the law. Stockholders may, subject to applicable
rules of civil procedure, be able to bring a class action or derivative suit to
enforce their rights, including rights under certain federal and state
securities laws and regulations.
The Company's By-laws provide for the indemnification of Directors and
Officers relating to their activities on behalf of the Company to the fullest
extent permitted by the laws of the state of Nevada.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to officers, directors or persons
controlling the Company, the Company acknowledges that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by an officer, director or controlling person of
the Company in the successful defense of any action, suit or proceeding) is
asserted by such officer, director or controlling person, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
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precedent, submit to a court of competent jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
FINANCIAL INFORMATION
Management's Discussion and Analysis of Plan of Operation
Avocet Ventures, Inc. is a Nevada corporation organized on January 29,
1985. The Company has not conducted any operations since incorporation other
than capital formation.
The Company's business purpose is to acquire a business opportunity which
Management believes offers potential long-term growth. The Company will seek to
acquire majority interests in an existing business or purchase assets which it
will use to establish a business.
Between the period mid-1991 and the second quarter of 1999, the Company
was, essentially, inactive. Operations resumed during the third quarter of 1999.
As of the date hereof, the Company has no assets and liabilities of $704 owed to
its sole Director and Officer in consideration for satisfying Company
liabilities to third parties and accrued rental charges. No interest is being
charged at this time for the provision of this capital. The Company continues to
experience a lack of working capital and a source for such capital. In these
circumstances, there can be no assurance that the Company will be able to meet
its current and ongoing financial obligations or continue in business. In the
absence of working capital or a source of such funds, Management may recommend
the liquidation of the Company in which event stockholders will loose any value
their investment may have had. Until such an eventuality arises, Management will
continue to use all available resources in its endeavor to successfully complete
a business combination.
The Company does not presently have the funds or a source for funds to
repay its indebtedness. No assurance can be given as to the ultimate source of
the funds which may be used to repay the indebtedness. In the absence of the
ability to repay the indebtedness and in the absence of a satisfactory
restructuring of the indebtedness, the Company would be faced with a potential
default of its indebtedness, which may adversely affect its ability to continue
in business. The continued viability of the Company is therefore predicated on
the continued financial support of Mr. Brooks, of which there is no assurance.
Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure
There has been no change in auditors nor is Management of the Company in
disagreement with its independent auditors regarding any matter of accounting
principles or practices or financial statements disclosures.
FINANCIAL STATEMENTS
See Audited Financial Statements as attached hereto.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
AVOCET VENTURES, INC.
Dated: October 25, 1999 /s/ Patrick C. Brooks
---------------------
Patrick C. Brooks
Director, President and Secretary
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AVOCET VENTURES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
For the Years Ended September 30, 1999, 1998 and 1997
with Independent Auditor's Report
Independent Auditor's Report..............................................F-1
Financial Statements:
Balance Sheets............................................................F-2
Statements of Operations..................................................F-3
Statement of Stockholders' Equity.........................................F-4
Statements of Cash Flows..................................................F-5
Notes to Financial Statements...........................................F-6-F-7
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Gerald R. Perlstein
Certified Public Accountant
1260 S. Beverly Glen Boulevard, Suite 106
Los Angeles, California 90024
Telephone (301) 275-4650 Fax. (301) 275-4611
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors
AVOCET VENTURES, INC.
Los Angeles, California
I have audited the accompanying statements of financial position of AVOCET
VENTURES, INC. (a development stage company) as of September 30, 1999, 1998, and
1997 and the related statements of operations, stockholders' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of AVOCET VENTURES, INC. (a
development stage company) as of September 30, 1999, 1998 and 1997 and the
results of its operations, stockholders' equity and cash flows for the years
then ended in conformity with generally accepted accounting principles.
/s/ Gerald R. Perlstein
- - -----------------------
Gerald R. Perlstein
Los Angeles, California
October 12, 1999
F-1
<PAGE>
<TABLE>
<CAPTION>
AVOCET VENTURES, INC.
(A Development Stage Company)
BALANCE SHEETS
For the Years Ended September 30, 1999, 1998 and 1997
ASSETS
------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Current Assets: None None None
- - ---------------
Other Assets:
- - -------------
Organizational costs $ 2,500 $ 2,500 $ 2,500
------- ------- -------
Total Assets $ 2,500 $ 2,500 $ 2,500
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
- - --------------------
Due to Stockholder 204 0 0
------- ------- -------
Total Liabilities 204 0 0
------- ------- -------
Stockholders' Equity
- - --------------------
Common Stock - 50,000,000 shares authorized at
September 30, 1999 and 2,500 shares authorized at
September 30, 1998 and 1997; issued and
outstanding 2,500,000 shares at September 30, 1999,
@ $.001 par value, and 2,500 shares at September
30, 1998 and 1997, @ no par value 2,500 2,500 2,500
Paid-in-capital 2,500 0 0
Deficit accumulated during the development stage (2,704) 0 0
------- ------- -------
Total Stockholders' Equity (2,296) 2,500 2,500
------- ------- -------
Total Liabilities and Stockholders' Equity $ 2,500 $ 2,500 $ 2,500
======= ======= =======
The accompanying notes are an integral part of these financial statements.
F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVOCET VENTURES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For The Years Ended September 30, 1999, 1998 and 1997
and for the Period January 29, 1985 (Date of Inception)
to September 30, 1999
Since
1999 1998 1997 Inception
---- ---- ---- ---------
Operating Expenses:
<S> <C> <C> <C> <C>
General and administrative $ 2,704 $ 0 $ 0 $ 2,704
----------- ----------- ----------- -----------
Total operating Expenses 2,704 0 0 2,704
----------- ----------- ----------- -----------
Net loss $ (2,704) $ (0) $ (0) $ (2,704)
=========== =========== =========== ===========
Weighted number of shares
outstanding: 2,500,000 2,500 2,500 2,500,000
=========== =========== =========== ===========
Net loss per share nil nil nil nil
=========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVOCET VENTURES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For The Years Ended September 30, 1999, 1998 and 1997
and for the Period January 29, 1985 (Date of Inception)
to September 30, 1999
Accumulated
Deficit
Common Stock During Total
------ ------ Paid-In- Development Stockholders'
Number Amount Capital Stage Equity
------ ------ ------- ----- ------
<S> <C> <C> <C> <C> <C>
NO ACTIVITY
January 29, 1985
September 30, 1990
Shares issued for cash 2,500 $ 2,500 $ 2,500
----------- ----------- -----------
Balance September 30, 1991 2,500 2,500 2,500
NO ACTIVITY
October 1, 1991
September 30, 1998
----------- ----------- -----------
Balance September 30, 1997
and 1998 2,500 2,500 2,500
Contributed capital $ 2,500 2,500
Stock split
1000 for 1 2,497,500
Net loss for period $ (2,704) (2,704)
----------- ----------- ----------- ----------- -----------
Balance September 30, 1999 2,500,000 $ 2,500 $ 2,500 $ (2,704) $ (2,296)
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVOCET VENTURES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For The Years Ended September 30, 1999, 1998 and 1997
and for the Period January 29, 1985 (Date of Inception)
to September 30, 1999
Since
1999 1998 1997 Inception
---- ---- ---- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net loss for the period $(2,704) $ 0 $ 0 $(2,704)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Increase in organizational costs 0 0 0 (2,500)
Increase in due to stockholder 204 0 0 204
------- ------- ------- -------
NET CASH USED BY OPERATING ACTIVITIES (2,500) 0 0 (5,000)
------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
None 0 0 0 0
------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 0 0 0 2,500
Proceeds from contributed capital 2,500 0 0 2,500
------- ------- ------- -------
Net cash provided by financing activities 2,500 0 0 5,000
------- ------- ------- -------
NET INCREASE (DECREASED) IN CASH 0 0 0 0
CASH BALANCE, BEGINNING OF PERIOD 0 0 0 0
------- ------- ------- -------
CASH BALANCE, END OF PERIOD 0 0 0 0
======= ======= ======= =======
The accompanying notes are an integral part of the financial statements.
F-5
</TABLE>
<PAGE>
AVOCET VENTURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended September 30, 1999, 1998 and 1997
and for the Period January 29, 1985 (Date of Inception)
to September 30, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
A. Organization and Business:
--------------------------
The Company was incorporated in the State of Nevada on January 29,
1985, under the name R.O.S.I. The Company changed its name to Avocet
Ventures, Inc. on September 28, 1999. The Company is an enterprise in
the development stage as defined by Statement No. 7 of the Financial
Accounting Standard Board, and has not engaged in any significant
business other than organizational efforts. The Company intends to
engage in the active search for a business combination or merger
opportunity which management believes offers long term growth
potential, and does not propose to engage in any business activity
prior to this combination.
B. Use of Estimates:
-----------------
The preparation of financial statements in conformity with generally
accepted accounting principals requires management to make estimates
and assumptions that effect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
C. Loss Per Share:
---------------
Loss per share of common stock is computed using the weighted average
number of common shares outstanding during the periods shown.
D. Income Taxes:
-------------
The Company owes no Federal income taxes. The Company has a loss carry
forward at September 30, 1999, of $2704. Any loss carry forward
incurred prior to a change in control of the Company may be
disallowed.
E. Organizational Costs:
---------------------
Organizational costs include costs incurred for professional services
at the inception of the Company and in March 1991, and will be
amortized over a five year period, using a straight line method, upon
commencement of business activities.
F-6
<PAGE>
AVOCET VENTURES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS continued
For The Years Ended September 30, 1999, 1998 and 1997
and for the Period January 29, 1985 (Date of Inception)
to September 30, 1999
F. Statement of Cash Flows:
------------------------
Supplemental disclosure of cash flow information is as follows:
There has been no cash paid for interest or taxes for the period
January 29, 1985 (date of inception) to September 30, 1999, except for
delinquent State of Nevada Franchise Taxes of $1,400, paid in
September, 1999.
2. STOCKHOLDERS' EQUITY
--------------------
On March 15, 1991, the Company sold 2,500 shares of its no par value common
stock to its President for $2,500. No stock transaction had occurred prior
to that date.
On September 27, 1999, the Board of Directors authorized an amendment of
the Company's articles of incorporation as follows:
1. Increase the authorized shares of common stock to 50,000,000 shares.
2. Create a par value of $.001 for its common stock.
3. Split the previously outstanding shares of common stock of 2,500
shares in the ratio of one thousand shares for each outstanding share,
thereby establishing 2,500,000 shares as outstanding.
4. Change the name of the Company to Avocet Ventures, Inc.
3. COMMITMENTS
-----------
The Company has no outstanding commitments or obligations, nor is it a
party to any litigation. The Company presently utilizes office space
provided by its President at no cost. Effective October 1, 1999, the
Company will pay rent of $500 per month to its President for the use of
office space and secretarial services.
4. RELATED PARTY TRANSACTIONS
--------------------------
In September, 1999, in order to revive the Company in the State of Nevada,
the President contributed $2,500 to the Company for the payment of
delinquent franchise taxes and miscellaneous administrative fees and
expenses. The Company owes an additional cost of $204 to its President.
F-7
<PAGE>
INDEX OF EXHIBITS
Exhibit No. Description
- - ----------- -----------
3.1 Articles of Incorporation
3.2 By-laws
4.1 Specimen of Stock Certificate
23.1 Consent of Experts
EXHIBIT 3.1 - ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION
OF
R. O. S. I.
The name of this Corporation is R. O. S. I.
II
The principal office or place of business of this Corporation shall be located
at 1700 East Desert Inn Road, Suite 410, Las Vegas, Nevada, 89109, c/o Fritz K.
Johnson.
III
The nature of business or objects or purposes to be transacted, promoted or
carried out by the Corporation shall be to transact business, and to purchase,
hold, own, lease, mortgage, sell and convey any and all property, real and
personal, necessary, convenient, or useful for the purposes of the Corporation
in any part of the United States of America. To carry on any other operation or
business in connection with the foregoing and to have and exercise all the
powers conferred by the laws of Nevada upon corporations formed under the Act,
and to do any and all of the things hereinbefore set forth to the same extent as
natural persons might or could do.
IV
This Corporation shall be authorized to issue only one class of shares of stock:
and the total number of shares which this Corporation shall be authorized to
issue shall be TWENTY FIVE HUNDRED (2,500), all of which shall be without Par
Value.
V
The name and residence address within the State of Nevada of this Corporation's
Resident Agent shall be: Fritz K. Johnson, 3200 S. Arville, #196, Las Vegas,
Nevada 89102.
VI
The names and addresses of the Initial Directors of this Corporation shall be as
follows:
1 E. John Wentland, 1700 E. Desert Inn Road, Las Vegas, NV 89109
2 Fritz K. .Johnson, 1700 E. Desert Inn Road ,Las Vegas, NV 8910
3 Betty L. Johnson, 3200 S. Arville, #196, Las Vegas, NV 89102
<PAGE>
VII
The debts of this Corporation shall not be subject to the payment of corporate
debts to any extent whatever.
VIII
The name and post office address of the Incorporator signing these Articles of
Incorporation is Fritz K. Johnson, 1700 E. Desert Inn Road, Suite #410, Las
Vegas, Nevada 89109.
IX
This Corporation shall have perpetual existence.
IN WITNESS WHEREOF, I have set my hand and seal this 24th day of January, 1985.
/s/ Fritz K. Johnson
--------------------
FRITZ K. JOHNSON
STATE OF NEVADA )
)
COUNTY OF CLARK )
On this 24th day of January, before me Mischelle M. Geloff, a Notary Public in
and for Clark County, State of Nevada, residing therein, duly commissioned and
sworn, personally appeared FRITZ K. JOHNSON, personally known to me to be the
said person whose name is subscribed to the foregoing Articles of Incorporation
as Incorporator and who is also named therein as a Director and who acknowledged
to me that he executed the same instrument.
IN WITNESS WHEREOF, I have hereunto affixed my hand and Official Seal this 24th
day of January, 1985.
/s/ Mischelle M. Geloff
-----------------------
Notary Public
My Commission Expires:
May 25, 1987
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
AND
CERTIFICATE DIVIDING SHARES INTO SMALLER DENOMINATIONS
WITHOUT CHANGING AMOUNT OF CAPITAL STOCK
OF
R. O. S. I.
The undersigned, Patrick C. Brooks, hereby certifies as follows:
1. Patrick C. Brooks is the sole duly elected director of R .O. S. I., a
Nevada corporation (the "corporation").
2. Patrick C. Brooks is the President and Secretary of the corporation.
3. On September 22, 1999, the Board of Directors of the corporation duly
adopted the undersigned recitals and resolutions by unanimous written consent,
which recitals and resolutions as of the date hereof have not been revoked,
rescinded, modified or amended, and are in full force and effect:
WHEREAS, the Articles of Incorporation of the corporation provide that the
corporation is authorized to issue one class of stock, and the total number
of shares which the corporation is authorized to issue are Twenty-Five
Hundred (2,500), all of which are without par value; and
WHEREAS, all of the authorized shares are issued and outstanding as of the
date hereof; and
WHEREAS, it is in the best interest of the corporation and its shareholders
that the authorized and outstanding shares of the corporation be
reconstituted and reclassified as having a par value of $.001, and that the
authorized number of shares be increased to Fifty Million (50,000,000); and
WHEREAS, it is in the best interest of the corporation and its shareholders
that the existing outstanding shares of the corporation be split in the ratio of
One Thousand (1,000) shares for each outstanding share; and
WHEREAS, it is in the best interest of the corporation that its Articles of
Incorporation be amended to deny preemptive rights to its shareholders;
NOW, THEREFORE, BE IT RESOLVED THAT the Board of Directors declares a stock
split in the amount of One thousand (1,000) shares of stock for every issued and
outstanding share.
RESOLVED FURTHER, that Article IV of the Articles of Incorporation of the
corporation be amended to read in full as follows:
<PAGE>
"IV
The corporation shall be authorized to issue only one class of shares, and
the total number of shares which the corporation shall be authorized to
issue shall be Fifty Million (50,000,000) shares, each of which shall have
a par value of $.001. No shareholder of the corporation shall have any
preemptive right to acquire any shares or other securities of the
corporation."
RESOLVED FURTHER, that the foregoing amendment be presented to the
shareholders of the corporation for their approval.
RESOLVED FURTHER, that assuming due approval by the shareholders, said
amendment shall become effective upon filing of an appropriate Certificate
of Amendment with the Secretary of State of Nevada.
RESOLVED FURTHER, that the directors and officers of the corporation be,
and they hereby are, authorized and directed to perform such acts and
execute such documents as may be necessary or desirable to effect the
foregoing recitals and resolutions.
4. The foregoing amendment was duly approved and adopted by written consent
of shareholders owning not less than the minimum number of outstanding shares of
the corporation required for such approval, the minimum number required being a
majority of the outstanding shares of the corporation.
IN WITNESS WHEREOF, the undersigned do hereby verify under penalty of
perjury that the foregoing is true and correct, and have duly executed this
Certificate as of this 27th day of September 1999.
/s/ Patrick C. Brooks
- - ---------------------
Patrick C. Brooks
Director and President
STATE OF CALIFORNIA )
)
COUNTY OF LOS ANGELES )
On this 27th day of September, 1999, before me, a Notary Public of the
State of California, personally appeared Patrick C. Brooks, proved to me to be
the person whose name appears on the foregoing instrument, and acknowledged to
me that he executed the said instrument as set forth therein.
IN WITNESS WHEREOF, I have hereunto affixed my hand and official seal on
the date written above.
/s/ Yadira H. Garcia Yadira H. Garcia
- - -------------------- Commission # 1141078
Notary Public - California
My Commission Expires June 2, 2001
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
R. O. S. I.
The undersigned, Patrick C. Brooks, hereby certifies as follows:
1. Patrick C. Brooks is the sole duly elected director of R. O. S. I., a
Nevada corporation (the "corporation").
2. Patrick C. Brooks is the President and Secretary of the corporation.
3. The Board of Directors of the corporation at a meeting duly convened,
held on the 22nd day of September, 1999, adopted a resolution to amend
the Articles of Incorporation of the corporation as follows:
"I
The name of this Corporation is Avocet Ventures, Inc."
4. The number of shares of the corporation outstanding and entitled to
vote on the amendment to the Articles of Incorporation is 2,500; that
the said change and amendment has been consented to and approved by a
majority vote of stockholders holding at least a majority of the stock
outstanding and entitled to vote thereon.
/s/ Patrick C. Brooks
- - ---------------------
Patrick C. Brooks
President and Secretary
STATE OF CALIFORNIA )
)
COUNTY OF LOS ANGESLES )
On this 27th day of September, 1999, before me, a Notary Public of the
State of California, personally appeared Patrick C. Brooks, who acknowledged to
me that he executed the above instrument.
/s/ Yadira H. Garcia Yadira H. Garcia
- - -------------------- Commission # 1141078
Notary Public - California
My Commission Expires June 2, 2001
EXHIBIT 3.2 - BY-LAWS
BYLAWS OF
AVOCET VENTURES, INC.
ARTICLE I
Offices
-------
Section I. Principal Executive Office. The principal office of the
corporation in the State of Nevada shall be located in the City of Reno. The
corporation may have such other offices either within or without the State of
Nevada as the Board of Directors may designate or the business of the
corporation may require from time to time.
ARTICLE II
Meetings of Shareholders
------------------------
Section 1. Place of Meetings. All annual or special meetings of
shareholders shall be held at the principal executive office of the corporation,
or at any other place within or without the State of Nevada which may be
designated by the Board of Directors or by the vote of members present at an
annual or special meeting, or by the written consent of all persons entitled to
vote thereat and not present at the meeting, given either before or after the
meeting and filed with the secretary of the corporation.
Section 2. Annual Meeting. The annual meeting of shareholders shall be held
within 90 days after the close of the fiscal year of the corporation. At such
meetings, directors shall be elected, reports of the affairs of the corporation
shall be considered, and any other business may be transacted which is within
the powers of the shareholders.
Section 3. Special Meetings. Special meetings of the shareholders, for the
purpose of taking any action permitted by the shareholders under the General
Corporation Law and the Articles of Incorporation of this corporation, may be
called at any time by the Chairman of the Board or the President, or by the
Board of Directors, or by one or more shareholders holding not less than ten
percent (10%) of the votes at the meeting. Upon request in writing that a
special meeting of shareholders be called for any proper purpose, directed to
the chairman of the Board, president or secretary, by any person (other than the
Board) entitled to call a special meeting of shareholders, the officer forthwith
shall cause notice to be given to shareholders entitled to vote that a meeting
will be held at a time requested by the person or persons calling the meeting,
not less than thirty-five (35) nor more than sixty (60) days after receipt of
the request. Except in special cases where other express provision is made by
statute, notice of such special meetings shall be given in the same manner as
for the annual meetings of shareholders. In addition to the matters required by
items (a) and, if applicable, (c) of Section 4, notice of any special meeting
shall specify other business may be transacted at such meeting.
<PAGE>
Section 4. Notice of Meeting. Written notice of each annual or special
meeting shall be given to each shareholder entitled to vote, either personally
or by mail or other means of written communication, charges prepaid, addressed
to such shareholder at his address appearing on the books of the corporation or
given by him to the corporation for the purpose of notice. If any notice or
report addressed to the shareholder at the address of such shareholder appearing
on the books of the corporation is returned to the corporation by the United
States Postal Service marked to indicate that the United States Postal Service
is unable to deliver the notice or report to the shareholder at such address,
all future notices or reports shall be deemed to have been duly given without
further mailing if the same shall be available for the shareholder upon written
demand of the shareholder at the principal executive office of the corporation
for a period of one year from the date of the giving of the notice or report to
all other shareholders. If a shareholder gives no address, notice shall be
deemed to have been given him if sent by mail or other means of written
communication addressed to the place where the principal executive office of the
corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said principal executive office is
located.
All notices of each annual or special meeting shall be given to each
shareholder entitled thereto not less than ten (10) days nor more than sixty
(60) days before each annual meeting. Any such notice shall be deemed to have
been given at the time when delivered personally or deposited in the mail or
sent by other means of written communication. An affidavit of mailing of any
such notice in accordance with the foregoing provisions, executed by the
secretary, assistant secretary or any transfer agent of the corporation, shall
be prima facie evidence of the giving of the notice.
Such notices shall specify:
(a) The place, the date, and the hour of such meeting;
(b) Those matters which the Board, at the time of the mailing of the
notice, intends to present for action by the shareholders;
(c) If directors are to be elected, the names of nominees intended at
the time of the notice to be presented by management for
election;
(d) The general nature of a proposal, if any, to take action with
respect to approval of (i) a contract or other transaction with
an interested director, (ii) amendment of the Articles of
Incorporation, (iii) a merger or consolidation of the corporation
as defined in Section 78.450 of the Nevada Revised Statutes, (iv)
voluntary dissolution of the corporation, or (v) a distribution
in dissolution other than in accordance with the right of
outstanding preferred shares, if any; and
(e) Such other matters, if any, as may be expressly required by
statute.
2
<PAGE>
Section 5. Quorum. The presence in person or by proxy of the persons
entitled to vote a majority of the voting shares at any meeting shall constitute
a quorum for the transaction of business. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of shareholders during the
meeting and adjourned meeting resulting in less than a quorum, except any action
taken (other than adjournment) must be approved by a vote of shareholders
entitled to vote over 50% of the voting shares.
Section 6. Adjourned Meeting and Notice Thereof. Any shareholders meeting,
annual or special, whether or not a quorum is present, may be adjourned from
time to time by the vote of a majority of the shares, the holders of which are
either present in person or represented by proxy thereat, but in the absence of
a quorum no other business may be transacted at such meeting, except as provided
in Section 5 above.
When any shareholders' meeting, either annual or special, is adjourned for
forty-five days or more, or if after adjournment a new record date is fixed for
the adjourned meeting, notice of the adjourned meeting shall be given as in the
case of an original meeting. Except as provided above, it shall not be necessary
to give any notice of the time and place of the adjourned meeting or of the
business to be transacted thereat, other than by announcement of the time and
place of the adjourned meeting or of the business to be transacted thereat,
other than by announcement of the time and place thereof at the meeting at which
such adjournment is taken.
Section 7. Chairman. Normally annual or special meetings shall be chaired
by the Chairman of the Board, or in his absence by the President. If neither the
Chairman or the president are present, or if the meeting has been called by the
shareholders, the Chairman for the meeting shall be elected by vote of the
shareholders present as the first order of business.
Section 8. Voting. Unless a record date for voting purposes is fixed as
provided in Section 1 of Article V of these bylaws, then, only persons in whose
names shares entitled to vote stand on the stock records of the corporation at
the close of business on the business day next preceding the day on which notice
of the meeting is given or if such notice is waived, at the close of business on
the business day next preceding the day on which the meeting of shareholders is
held, shall be entitled to vote at such meeting, and such day shall be the
record date for such meeting. Such vote may be by voice or by ballot; provided,
however, that all elections for directors must be by ballot upon demand made by
a shareholder at any election and before the voting begins. If a quorum is
present, except with respect to election of directors, the affirmative vote of
the majority of the shares represented at the meeting and entitled to vote on
any matter shall be the act of the shareholders, unless the vote of a greater
number or voting by classes is required by the Nevada Revised Statutes or the
Articles of Incorporation. Provided the requirements of this paragraph are met,
every shareholder who is entitled to vote at any election for directors shall
have the right to cumulate his votes and give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of votes
to which his shares are entitled, or to distribute his votes on the same
principle among as many candidates as he shall think fit. No shareholder shall
be entitled to cumulative votes unless the name of the candidate or candidates
3
<PAGE>
for whom such votes would be cast has been placed in nomination prior to the
voting, and provided that any shareholder has given notice at the meeting prior
to the voting of such shareholder's intention to cumulate his votes. The
candidates receiving the highest number of votes of shares entitled to be voted
for them, up to the number of directors to be elected, shall be elected.
Section 9. Validation of Defectively Called or Noticed Meetings. The
transactions of any meeting of shareholders, either annual or special, however
called and noticed, shall be as valid as though it had been a meeting duly held
after regular call and notice, if a quorum be present either in person or by
proxy, and if, either before or within 30 days after the meeting, each of the
persons entitled to vote, but not present in person or by proxy, or who, if
present, has, at the beginning of the meeting, properly objected to the
transaction of any business because the meeting was not lawfully called or
convened, or to particular matters of business legally required to be included
in the notice, but not so included. If a person who has objected withdraws his
objection he shall do so by signing a written waiver of notice, or a consent to
the holding of such meeting, or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Section 10. Action Without Meeting. Directors may be elected without a
meeting by a consent in writing, setting forth the action so taken, signed by
all of the persons who would be entitled to vote for the election of directors,
provided that, without notice except as hereinafter set forth, a director may be
elected at any time to fill a vacancy not filled by the directors by the written
consent of persons holding a majority of the outstanding shares entitled to vote
for the election of directors.
Any other action which, under any provision of the Nevada Revised Statutes,
may be taken at a meeting of the shareholders, may be taken without a meeting,
and without notice except as hereinafter set forth, if a consent in writing,
setting forth the action so taken, is signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Unless the consent of all shareholders
entitled to vote have been solicited in writing.
(a) Notice of any proposed shareholder approval of (i) a contract or
other transaction with an interested director, (ii) indemnification of an agent
of the corporation as authorized by Section 15, Article III, of these bylaws,
(iii) a merger or consolidation of the corporation as defined in Section 78.450
of the Nevada Revised Statutes, or (iv) a distribution in dissolution other than
in accordance with the rights of outstanding preferred shares, if any, without a
meeting by less than unanimous written consent, shall be given at least ten (10)
days before the consummation of the action authorized by such approval; and
(b) Prompt notice shall be given of the taking of any other corporate
action approved by shareholders without a meeting by less than unanimous written
consent to those shareholders entitled to vote who have not consented in
writing. Such notices shall be given in the manner and shall be deemed to have
been given as provided in Section 2 of Article II of these bylaws.
4
<PAGE>
Unless, as provided in Section 1 of Article V of these bylaws, the Board of
Directors has fixed a record date for the determination of shareholders entitled
to notice of and to give such written consent, the record date for such
determination shall be the day on which the first written consent is given. All
such written consents shall be filed with the secretary of the corporation.
Section 11. Proxies. Every person entitled to vote or execute consents
shall have the right to do so either in person or by one or more agents
authorized by a written proxy executed by such person or his duly authorized
agent and filed with the secretary of the corporation. Any proxy duly executed
is not revoked and continues in full force and effect until (i) an instrument
revoking it or a duly executed proxy bearing a later date is filed with the
secretary of the corporation prior to the vote pursuant thereto, (ii) the person
executing the proxy attends the meeting and votes in person, or (iii) written
notice of the death or incapacity of the maker of such proxy is received by the
corporation before the vote pursuant thereto is counted; provided that no such
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution, unless the person executing it specifies therein the length of
time for which such proxy is to continue in force.
Section 12. Inspectors of Election. In advance of any meeting of
shareholders, the Board of Directors may appoint any person other than nominees
for office as inspector of the election to act at such meeting or any
adjournment thereof. If inspectors of election be not so appointed, the chairman
of any such meeting may and on the request of any shareholder or his proxy shall
make such appointment at the meeting. The number of inspectors shall be either
one or three. If appointed at a meeting on the request of one or more
shareholders or proxies, the majority of shares represented in person or by
proxy shall determine whether one or three inspectors are to be appointed. In
case any person appointed as inspector fails to appear or fails or refuses to
act, the vacancy may, and on the request of any shareholder or a shareholder's
proxy shall, be filled by appointment by the Board of Directors in advance of
the meeting, or at the meeting by the chairman of the meeting.
The duties of such inspectors shall include determining the number of
shares outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, the authenticity, validity and effect of
proxies; receiving votes, ballots or consents; hearing and determining all
challenges and questions in any way arising in connection with the right to
vote; counting and tabulating all votes or consents; determining when the polls
shall close; determining the result; and such acts as may be proper to conduct
the election or vote with fairness to all shareholders. In the determination of
the validity and effect of proxies, the dates contained on the forms of proxy
shall presumptively determine the order of execution of the proxies, regardless
of the postmark dates on the envelopes in which they are mailed.
The inspectors of election shall perform their duties impartially, in good
faith, to the best of their ability and as expeditiously as is practical. If
there are three inspectors of election, the decision, act or certificate of a
majority is effective in all respects as the decision, act or certificates of
all. Any report or certificate made by the inspectors of election is prima facie
evidence by the facts stated therein.
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ARTICLE III
Directors
---------
Section 1. Powers. Subject to limitations of the Articles of Incorporation
and of the Nevada Revised Statutes as to action to be authorized or approved by
the shareholders, and subject to the duties of directors as prescribed by the
bylaws, all corporate powers shall be exercised by or under the authority of,
and the business and affairs of the corporation shall be controlled by, the
Board of Directors. Without prejudice to such general powers, but subject to the
same limitations, it is hereby expressly declared that the directors shall have
the following powers, to wit:
First - To select a Chairman of the Board, to select and remove all the
officers, agents and employees of the corporation, prescribe such powers and
duties for them as may not be inconsistent with law, with the Articles of
Incorporation or the bylaws, fix their compensation and require from them
security for faithful service.
Second - To conduct, manage and control the affairs and business of the
corporation, and to make such rules and regulations therefor not inconsistent
with law, or with the Articles of Incorporation or the bylaws, as they may deem
best.
Third - To change the principal executive office and principal office for
the transaction of the business of the corporation from one location to another
as provided in Article I, Section 1, hereof; to fix and locate from time to time
one or more subsidiary offices of the corporation within or without the State of
Nevada, as provided in Article I, Section 2, hereof; to designate any place
within or without the State of Nevada for the holding of any shareholders'
meeting or meetings; and to adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to alter the form of such seal
and of such certificates from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall at all times comply with
the provisions of law.
Fourth - To authorize the issue of shares of stock of the corporation from
time to time, upon such terms as may be lawful.
Fifth - To borrow money and incur indebtedness for the purposes of the
corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecation or other evidences of debt and securities therefor.
Sixth - By resolution adopted by a majority of the authorized number of
directors, to designate an executive and other committees, each consisting of
two or more directors, to serve at the pleasure of the Board, and to prescribe
the manner in which proceedings of such committee shall be conducted. Unless the
Board of Directors shall otherwise prescribe the manner of proceedings of any
such committee, meetings of such committee may be regularly scheduled in advance
and may be called at any time by any two members thereof; otherwise, the
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provisions of these bylaws with respect to notice and conduct of meetings of the
Board shall govern. Any such committee, to the extent provided in a resolution
of the Board, shall have all of the authority of the Board, except with respect
to:
(i) the approval of any action for which the Nevada Revised Statutes
or the Articles of Incorporation also require shareholder
approval;
(ii) the filling of vacancies on the Board or in any committee;
(iii)the fixing of compensation of the directors for serving on the
Board or on any committee;
(iv) the adoption, amendment or repeal of bylaws;
(v) the amendment or repeal of any resolution of the Board;
(vi) any distribution to the shareholders, except at a rate or in a
periodic amount or within a price range determined by the Board;
and
(vii)the appointment of other committees of the Board or the members
thereof.
Section 2. Number and Qualification of Directors. The authorized number of
directors shall be a maximum of twelve persons. Directors need not be residents
of the State of Nevada or shareholders of the corporation.
Section 3. Election and Term of Office. The directors shall be elected at
each annual meeting of shareholders but, if any such annual meeting is not held
or the directors are not elected thereat, the directors may be elected at any
special meeting of shareholders held for that purpose. All directors shall hold
office until their respective successors are elected, subject to the Nevada
Revised Statutes and the provisions of these bylaws with respect to vacancies on
the Board.
Section 4. Vacancies. A vacancy in the Board of Directors shall be deemed
to exist in case of the death, resignation or removal of any director, if a
director has been declared of unsound mind by order of court or convicted of a
felony, if the authorized number of directors be increased, or if the
shareholders fail, at any annual or special meeting of shareholders at which any
director or directors are elected, to elect the full authorized number of
directors to be voted for at that meeting.
Vacancies in the Board of Directors, except for a vacancy created by the
removal of a director, may be filled by a majority vote of the remaining
directors, and each director so elected shall hold office until his successor is
elected at an annual or a special meeting of the shareholders. A vacancy in the
Board of Directors created by the removal of a director only may be filled by
the vote of a majority of the shares entitled to vote represented at a duly held
meeting at which a quorum is present, or by the written consent of the holders
of a majority of the outstanding shares.
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The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors. Any such election by written
consent shall require the consent of holders of a majority of the outstanding
shares entitled to vote.
Any director may resign effective upon giving written notice to the
chairman of the Board, the president, the secretary or the Board of Directors of
the corporation, unless the notice specifies a later time for the effectiveness
of such resignation. If the Board of Directors accepts the resignation of a
director tendered to take effect at a future time, the Board or the shareholders
shall have power to elect a successor to take office when the resignation is to
become effective.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his term of office.
Section 5. Place of Meeting. Regular meetings of the Board of Directors
shall be held at any place within or without the State which has been designated
from time to time by resolution of the Board or by written consent of all
members of the Board. In the absence of such designation, regular meetings shall
be held at the principal executive office of the corporation. Special meetings
of the Board may be held either at a place so designated or at the principal
executive office.
Section 6. Organization Meeting. Immediately following each annual meeting
of shareholders, the Board of Directors shall hold a regular meeting at the
place of said annual meeting or at such other place as shall be fixed by the
Board of Directors, for the purpose of organization, election of officers, and
the transaction of other business. Call and notice of such meetings are hereby
dispensed with.
Section 7. Other Regular Meetings. Other regular meetings of the Board of
Directors shall be held without call as provided in a resolution adopted by the
Board of Directors from time to time; provided, however, should said day fall
upon a legal holiday, then said meeting shall be held at the same time on the
next day thereafter ensuing which is a full business day. Notice of all such
regular meetings of the Board of Directors is hereby dispensed with.
Section 8. Special Meetings. Special meetings of the Board of Directors for
any purpose or purposes shall be called at any time by the chairman of the Board
or by any two directors.
Written notice of the time and place of special meetings shall be delivered
personally to each director or communicated to each director by telephone or by
telegraph or mail, charges prepaid, addressed to him at his address as it is
shown upon the records of the corporation or, if it is not so shown on such
records or is not readily ascertainable, at the place at which the meetings of
the directors are regularly held. In case such notice is mailed or telegraphed,
it shall be deposited in the United States mail or delivered to the telegraph
company in the place in which the principal executive office of the corporation
is located at least forty-eight hours prior to the time of the holding of the
meeting. In case such notice is delivered, personally or by telephone, as above
provided, it shall be so delivered at least twenty-four hours prior to the time
of the holding of the meeting. Such mailing, telegraphing or delivery,
personally or by telephone, as above provided, shall be due, legal and personal
notice to such director.
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Section 9. Action Without Meeting. Any action by the Board of Directors may
be taken without a meeting if all members of the Board shall individually or
collectively consent in writing to such action. Such written consent or consents
shall be filed with the minutes of the proceedings of the Board and shall have
the same force and effect as a unanimous vote of such directors.
Section 10. Action at a Meeting: Quorum and Required Vote. Presence of a
majority of the authorized number of directors at a meeting of the Board of
Directors constitutes a quorum for the transaction of business, except as
hereinafter provided. Members of the Board may participate in a meeting through
use of conference telephone or similar communications equipment, so long as all
members participating in such meeting can hear one another. Participation in a
meeting as permitted in the preceding sentence constitutes presence in person at
such meeting. Every act or decision done or made by a majority of the directors
present at a meeting duly held at which a quorum is present shall be regarded as
the act of the Board of Directors, unless a greater number, or the same number
after disqualifying one or more directors from voting, is required by law, by
the Articles of Incorporation, or by these bylaws. A meeting at which a quorum
is initially present may continue to transact business notwithstanding the
withdrawal of directors, provided that any action taken is approved by at least
a majority of the required quorum for such meeting.
Section 11. Telephone Conferences. Members of the Board of Directors, or
any committee designated by the Board, may participate in a meeting of such
Board or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting can hear each other, and
participation in a meeting pursuant to this subsection shall constitute presence
in person at such meeting.
Section 12. Validation of Defectively Called or Noticed Meetings. The
transactions of any meeting of the Board of Directors, however called and
noticed or wherever held, shall be as valid as though had at a meeting duly held
after regular call and notice, if a quorum is present and if, either before or
after the meeting, each of the directors not present or who, though present, has
prior to the meeting or at its commencement, protested the lack of proper notice
to him, signs a written waiver of notice or a consent to holding such meeting or
an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.
Section 13. Adjournment. A quorum of the directors may adjourn any
directors' meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum a majority of the directors present at any
directors' meeting, either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the Board.
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Section 14. Notice of Adjournment. If the meeting is adjourned for more
than twenty-four hours, notice of any adjournment to another time or place shall
be given prior to the time of the adjourned meeting to the directors who were
not present at the time of adjournment. Otherwise notice of the time and place
of holding an adjourned meeting need not be given to absent directors if the
time and place be fixed at the meeting adjourned.
Section 15. Fees and Compensation. Directors and members of committees may
receive such compensation, if any, for their services, and such reimbursement
for expenses, as may be fixed or determined by resolution of the Board.
Section 16. Indemnification of Agents of the Corporation; Purchase of
Liability Insurance.
(a) For the purposes of this section, "agent" means any person who is
or was a director, officer, employee or other agent of this corporation, or is
or was serving at the request of this corporation as a director, officer,
employee or agent of another foreign or domestic corporation, partnership, joint
venture, trust or other enterprise, or was a director, officer, employee or
agent of a foreign or domestic corporation which was a predecessor corporation
of this corporation or of another enterprise at the request of such predecessor
corporation; "proceeding" means any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative; and
"expenses" includes, without limitation, attorneys' fees and any expenses of
establishing a right to indemnification under subdivision (d) or subdivision (e)
(3) of this Section.
(b) This corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, to any proceeding (other than an action by
or in the right of this corporation) by reason of the fact that such person is
or was an agent of this corporation, against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with such proceeding if such person acted in good faith and in a manner such
person reasonably believed to be in the best interests of this corporation and,
in the case of a criminal proceeding, had no reasonable cause to believe the
conduct of such person was unlawful. The termination of any proceeding by
judgment, order, settlement, conviction upon a plea of nolo contendere or its
equivalent shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which the person reasonably believed to be in
the best interests of this corporation or that the person had reasonable cause
to believe that the person's conduct was unlawful.
(c) This corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or completed
action by or in the right of this corporation to procure a judgment in its favor
by reason of the fact that such person is or was an agent of this corporation,
against expenses actually and reasonably incurred by such person in connection
with the defense or settlement of such action if such person acted in good
faith, in a manner such person believed to be in the best interests of this
corporation and with such care, including reasonable inquiry, as an ordinarily
prudent person in a like position would use under similar circumstances. No
indemnification shall be made under this subdivision (c):
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(1) In respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to this corporation in the performance of
such person's duty to this corporation, unless and only to the extent that the
court in which such action was brought shall determine upon application that, in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for the expenses which such court shall determine;
(2) Of amounts paid in settling or otherwise disposing of a threatened
or pending action, with or without court approval; or
(3) Of expenses incurred in defending a threatened or pending action
which is settled or otherwise disposed of without court approval.
(d) To the extent that an agent of this corporation has been
successful on the merits in defense of any proceeding referred to in subdivision
(b) or (c) or in defense of any claim, issue or matter therein, the agent shall
be indemnified against expenses actually and reasonably incurred by the agent in
connection therewith.
(e) Except as provided in subdivision (d), any indemnification under
this section shall be made by this corporation only if authorized in the
specific case, upon a determination that indemnification of the agent is proper
in the circumstances because the agent has met the applicable standard of
conduct set forth in subdivision (b) or (c), by:
(1) A majority vote of a quorum consisting of directors who are not
parties to such proceeding;
(2) Approval or ratification by the affirmative vote of a majority of
the shares of this corporation entitled to vote represented at a duly held
meeting at which a quorum is present or by the written consent of holders of a
majority of the outstanding shares entitled to vote. For such purpose, the
shares owned by the person to be indemnified shall not be considered outstanding
or entitled to vote thereon; or
(3) The court in which such proceeding is or was pending, upon
application made by this corporation or the agent or the attorney or other
person rendering services in connection with the defense, whether or not such
application by the agent, attorney or other person is opposed by this
corporation.
(f) Expenses incurred in defending any proceeding may be advanced by
this corporation prior to the final disposition of such proceeding upon receipt
of an undertaking by or on behalf of the agent to repay such amount, unless it
shall be determined ultimately that the agent is entitled to be indemnified as
authorized in this section.
(g) Nothing contained in this section shall affect any right to
indemnification to which persons other than directors and officers of this
corporation or any subsidiary hereof may be entitled by contract or otherwise.
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(h) No indemnification or advance shall be made under this section,
except as provided in subdivision (d) or subdivision (e) (3), in any
circumstance where it appears:
(1) That it could be inconsistent with a provision of the Articles, a
resolution of the shareholders or an agreement in effect at the time of the
accrual of the alleged cause of action asserted in the proceeding in which the
expenses were incurred or other amounts were paid, which prohibits or otherwise
limits indemnification; or
(2) That it would be inconsistent with any condition expressly imposed
by a court in approving a settlement.
(i) Upon and in the event of a determination by the Board of Directors
of this corporation to purchase such insurance, this corporation shall purchase
and maintain insurance on behalf of any agent of the corporation against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such whether or not this corporation would have the
power to indemnify the agent against such liability under the provisions of this
section.
(ij) This Section 15 does not apply to any proceeding against any
trustee, investment manager or other fiduciary of an employee benefit plan in
such person's capacity as such, even though such person may also be an agent of
the corporation as defined in Section 1. Nothing contained in this Section 15
shall limit any right to indemnification to which such a trustee, investment
manager or other fiduciary may be entitled by contract or otherwise which shall
be enforceable to the extent permitted by applicable law.
ARTICLE IV
Officers
--------
Section 1. Officers. The officers of the corporation shall be a President,
a Secretary and a Treasurer. The corporation may also have, at the discretion of
the Board of Directors, one or more vice presidents, one or more assistant
secretaries, one or more assistant treasurers, and such other officers as may be
appointed in accordance with the provisions of Section 3 of this Article. One
person may hold two or more offices, except that the offices of president and
secretary shall not be held by the same person.
Section 2. Election. The officers of the corporation, except such officers
as may be appointed in accordance with the provisions of Section 3 or Section 5
of this Article, shall be chosen annually by the Board of Directors, and each
shall hold his office until he shall resign or shall be removed or otherwise
disqualified to serve, or his successor shall be elected and qualified.
Section 3. Subordinate Officers, Etc. The Board of Directors may appoint,
and may empower the president to appoint, such other officers as the business of
the corporation may require, each of whom shall hold office, for such period,
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have such authority and perform such duties as are provided in the bylaws or as
the Board of Directors, at any regular or special meeting thereof, or, except in
case of an officer chosen by the Board of Directors, by any officer upon whom
such power of removal may be conferred by the Board of Directors (subject, in
each case, to the rights, if any, of an officer under any contract of
employment).
Any officer may resign at any time by giving written notice to the Board of
Directors or to the president, or to the secretary of the corporation, without
prejudice, however, to the rights, if any, of the corporation under any contract
to which such officer is a party. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the bylaws for regular appointments to such office.
Section 6. Chairman of the Board. The Chairman of the Board, shall, if
present, preside at all meetings of the Board of Directors and exercise and
perform such other powers and duties as may be from time to time assigned to him
by the Board of Directors or prescribed by the bylaws.
The Chairman of the Board shall also be the Chief Executive Officer (CEO).
He shall be ex officio a member of all standing committees, if any, and shall
have the general powers and duties of management usually vested in the office of
Chief Executive Officer and shall have such other powers and duties as may be
prescribed by the Board of Directors or the bylaws.
Section 7. President. Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the Chairman of the Board, the president
shall, subject to the control of the Board of Directors and the Chief Executive
Officer have general supervision, direction and control of the business and
officers of the corporation. In the absence of the Chairman of the Board, he
shall preside at all meetings of the Board of Directors. He shall be ex officio
a member of all the standing committees including the executive committee, if
any, and shall have the general powers and duties of management usually vested
in the office of president of a corporation, and shall have such other powers
and duties as may be prescribed by the Chief Executive Officer, the Board of
Directors or the bylaws.
Section 8. Vice President. In the absence or disability of the president,
the vice presidents, in order of their rank as fixed by the Board of Directors
or, if not ranked, the vice president designated by the Board of Directors,
shall perform all the duties of the president, and when so acting shall have
such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board of Directors or the bylaws.
Section 9. Secretary. The secretary shall record or cause to be recorded,
and shall keep or cause to be kept, at the principal executive office and such
other place as the Board of Directors may order, a book of minutes of actions
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taken at all meetings of directors and shareholders, with the time and place of
holding, whether regular or special, and, if special, how authorized, the notice
thereof given, the names of those present at directors' meetings, the number of
shares present or represented at shareholders' meetings, and the proceedings
thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office or at the office of the corporation's transfer agent, a share register,
or a duplicate share register, showing the names of the shareholders and their
addresses, date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all the meetings
of the shareholders and of the Board of Directors required by the bylaws or by
law to be given, and he shall keep the seal of the corporation in safe custody,
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or by the bylaws.
Section 10. Treasurer. The treasurer shall be the chief financial officer
of the corporation and shall keep and maintain, or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid in surplus and surplus arising from a
reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of accounts shall at all reasonable times be
open to inspection by any director.
The treasurer shall deposit all monies and other valuables in the name and
to the credit of the corporation with such depositories as may be designated by
the Board of Directors. He shall disburse the funds of the corporation as may be
ordered by the Board of Directors, shall render to the president and directors,
whenever they request it, an account of all of his transactions as treasurer and
of the financial condition of the corporation, and shall have such other powers
and perform such other duties as may be prescribed by the Board of Directors or
the bylaws.
ARTICLE V
Miscellaneous
-------------
Section 1. Record Date. The Board of Directors may fix a time in the future
as a record date for the determination of the shareholders entitled to notice of
and to vote at any meeting of shareholders or entitled to give consent to
corporate action in writing without a meeting, to receive any report, to receive
any dividend or distribution, or any allotment of rights, or to exercise rights
in respect to any change, conversion or exchange of shares. The record date so
fixed shall be not more than sixty (60) days nor less than ten (10) days prior
to the date of any meeting, nor more than sixty (60) days prior to any other
event for the purposes of which it is fixed. When a record date is so fixed,
only shareholders of record on that date are entitled to notice of and to vote
at any such meeting, to give consent without a meeting, to receive any report,
to receive a dividend, distribution or allotment of rights, or to exercise the
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rights, as the case may be, notwithstanding any transfer of any shares on the
books of the corporation after the record date, except as otherwise provided in
the Articles of Incorporation or bylaws.
Section 2. Inspection of Corporate Records. The accounting books and
records, the record of shareholders, and minutes of proceedings of the
shareholders and the Board and committees of the Board of this corporation and
any subsidiary of this corporation shall be open to inspection upon the written
demand on the corporation of any shareholder or holder of a voting trust
certificate at any reasonable time during usual business hours, for a purpose
reasonably related to such voting trust certificate. Such inspection by a
shareholder or holder of a voting trust certificate may be made in person or by
agent or attorney, and the right of inspection includes the right to copy and
make extracts.
A shareholder or shareholders holding at least 5 percent in the aggregate
of the outstanding voting shares of the corporation or who hold at least 1
percent of such voting shares and have filed a Schedule 148 with the United
States Securities and Exchange Commission relating to the election of directors
of the corporation shall have (in person, or by agent or attorney) the right to
inspect and copy the record of shareholders' names and addresses and share
holdings during usual business hours upon five business days' prior written
demand upon the corporation and to obtain from the transfer agent for the
corporation, upon written demand and upon the tender of its usual charges, a
list of the shareholders' names and addresses, who are entitled to vote for the
election of directors, and their share holdings, as of the most recent record
date for which it has been compiled or as of a date specified by the shareholder
subsequent to the date of demand. The list shall be made available on or before
the later of five business days after the demand is received or the date
specified therein as the date as of which the list is to be compiled.
Every director shall have the absolute right at any reasonable time to
inspect and copy all books, records and documents of every kind and to inspect
the physical properties of the corporation. Such inspection by a director may be
made in person or by agent or attorney and the right of inspection includes the
right to copy and make extracts.
Section 3. Checks, Drafts, Etc. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board of Directors.
Section 4. Annual Report to Shareholders. At the discretion of the Board of
Directors, annual or other periodic reports may be issued to shareholders, but
nothing herein shall be interpreted as requiring the Board to issue such
reports.
A shareholder or shareholders holding at least five percent of the
outstanding shares of any class of the corporation may make a written request to
the corporation for an income statement of the corporation for the three-month,
six-month or nine-month period of the current fiscal year ended more than 30
days prior to the date of the request and a balance sheet of the corporation as
of the end of such period and, in addition, if no annual report for the last
fiscal year has been sent to shareholders, the annual report for the last fiscal
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year. The corporation shall use its best efforts to deliver on the statement to
the person making the request within 30 days thereafter. A copy of any such
statements shall be kept on file in the principal executive office of the
corporation for 12 months and they shall be exhibited at all reasonable times to
any shareholder demanding an examination of them or a copy shall be mailed to
such shareholder.
The corporation shall, upon the written request of any shareholder, mail to
the shareholder a copy of the last annual, semiannual or quarterly income
statement which it has prepared and a balance sheet as of the end of the period.
The quarterly income statements and balance sheets referred to in this section
shall be accompanied by the report thereon, if any, of any independent
accountants engaged by the corporation or the certificate of an authorized
officer of the corporation that such financial statements were prepared without
audit from the books and records of the corporation.
Section 5. Contracts, Etc., How Executed. The Board of Directors, except as
in the bylaws otherwise provided, may authorize any officer or officers, agent
or agents, to enter into any contract or execute any instrument in the name of
and on behalf of the corporation, and such authority may be general or confined
to specific instances; and, unless so authorized by the Board of Directors, no
officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or to any amount.
Section 6. Certificate for Shares. Every holder of shares in the
corporation shall be entitled to have a certificate assigned in the name of the
corporation by the Chairman or vice chairman of the Board or the president or
vice president and by the chief financial officer or an assistant treasurer or
the secretary or any assistant secretary, certifying the number of shares and
the class or series of shares owned by the shareholder. Any of the signatures on
the certificate may be facsimile, provided that in such event at least one
signature, including that of either officer or the corporation's registrar or
transfer agent, if any, shall be manually signed. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the corporation
with the same effect as if such person were an officer, transfer agent or
registrar at the date of issue.
Any such certificate shall also contain such legend or other statement as
may be required by the Corporation Laws of the State of Nevada, the Federal
Securities Laws and any agreement between the corporation and the issuee
thereof.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the Board of Directors or the bylaws may
provide; provided, however, that any such certificate so issued prior to full
payment shall state on the face thereof the amount remaining unpaid and the
terms of payment thereof.
No new certificate for shares shall be issued in lieu of an old certificate
unless the latter is surrendered and cancelled at the same time; provided,
however, that a new certificate will be issued without the surrender and
cancellation of the old certificate if (1) the old certificate is lost,
16
<PAGE>
apparently destroyed or wrongfully taken; (2) the request for the issuance of
the new certificate is made within a reasonable time after the owner of the old
certificate has notice of its loss, destruction or theft; (3) the request for
the issuance of a new certificate is made prior to the receipt of notice by the
corporation that the old certificate has been acquired by a bonafide purchaser;
(4) the owner of the old certificate files a sufficient indemnity bond with or
provides other adequate security to the corporation; and (5) the owner satisfies
any other reasonable requirements imposed by the corporation. In the event of
the issuance of a new certificate, the rights and liabilities of the
corporation, and of the holders of the old and new certificates, shall be
governed by the provisions of the Nevada Uniform Commercial Code.
Section 7. Representation of Shares of Other Corporations. The president or
any vice president and the secretary or any assistant secretary of this
corporation are authorized to vote, represent and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority herein
granted to said officers to vote or represent on behalf of this corporation any
and all shares held by this corporation in any other corporation or corporations
may be exercised either by such officers in person or by any other person
authorized so to do by proxy or power of attorney duly executed by said
officers.
Section 8. Inspection of Bylaws. The corporation shall keep in its
principal executive office in Nevada, or, if its principal executive office is
not in Nevada, then at its principal business office in Nevada (or otherwise
provide upon written request of any shareholder) the original or a copy of the
bylaws as amended or otherwise altered to date, certified by the secretary,
which shall be open to inspection by the shareholders at all reasonable times
during office hours.
Section 9. Construction and Definitions. Unless the context otherwise
requires, the general provisions, rules of construction and definitions
contained in the Domestic and Foreign Corporation Laws shall govern the
construction of these bylaws. Without limiting the generality of the foregoing,
the masculine gender includes the feminine and neuter, the singular number
includes the plural and the plural number includes the singular, and the term
"person" includes a corporation as well as a natural person.
17
NUMBER SHARES
-------- --------
SEE REVERSE FOR LEGENDS
AVOCET VENTURES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
COMMON STOCK - $.001 PAR VALUE
This certifies that
is the owner of
fully paid and non-assessable shares of Common Stock of AVOCET VENTURES, INC.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate and the shares represented hereby are issued and
shall be subject to all the provisions of the Certificate of Incorporation, as
amended, to all of which the holder, by acceptance hereby assents.
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed in
facsimile by its duly authorized officers and the facsimile Corporation seal to
be duly affixed hereto.
Dated:
/s/ Patrick C. Brooks [SEAL] /s/ Patrick C. Brooks
- - --------------------- ---------------------
Patrick C. Brooks Patrick C. Brooks
PRESIDENT SECRETARY
<PAGE>
AVOCET VENTURES, INC.
For value received, _____________ hereby sell, assign and transfer unto
_____________________________________________ shares of Common Stock represented
by the within Certificate, and do hereby irrevocable constitute and appoint
__________________________________ Attorney to transfer the said Shares of
Common Stock on the books of the within named Corporation with full power of
substitution in the premises.
Signature: __________________________________
In the presence of __________________________
Note: 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 23.1 - CONSENT OF EXPERTS
GERALD R. PERLSTEIN
Certified Public Accountant
1260 S. Beverly Glen Road, Suite 106
Los Angeles, California 90024
Telephone (310) 275-4650
Fax (310) 275-4611
Board of Directors
Avocet Ventures, Inc.
Los Angeles, California
As an independent certified accountant, I consent to the use of my report, dated
October 12, 1999, to the financial statements of Avocet Ventures, Inc. for the
years ended September 30, 1999, 1998, and 1997, and the reference to my firm
under the caption "Experts" included in or made part of this Form 10-SB
registration statement.
/s/ Gerald R. Pertlstein
- - ------------------------
Los Angeles, California
October 20, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CO.
FINANCIAL STATEMENT 9-30-99 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,500
<CURRENT-LIABILITIES> 204
<BONDS> 0
0
0
<COMMON> 2,500
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,500
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> (2,704)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,704)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,704)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
