U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM 10-SB
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GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
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SOLO & HURST, INC.
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(Name of Small Business Issuer in its charter)
Nevada 86-0930437
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11260 North 92nd, Suite 1118
Scottsdale, Arizona 85260
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(Address of principal executive offices) (Zip code)
Issuer's telephone number: (480) 870-0000
Securities to be registered pursuant to Section 12(b) of the Act:
none
Securities to be registered pursuant to Section 12(g) of the Act:
$.001 Common Stock
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(Title of Class)
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TABLE OF CONTENTS
Page
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PART I
Item 1. Description of Business 3
Item 2. Plan of Operation 9
Item 3. Description of Property 15
Item 4. Security Ownership of Certain
Beneficial Owners and Management 15
Item 5. Directors, Executive Officers, Promoters
and Control Persons 16
Item 6. Executive Compensation 19
Item 7. Certain Relationships and
Related Transactions 20
Item 8. Description of Securities 20
PART II
Item 1. Market for Common Equities and Related Stockholder
Matters 21
Item 2. Legal Proceedings 23
Item 3. Changes in and Disagreements with Accountants 23
Item 4. Recent Sales of Unregistered Securities 23
Item 5. Indemnification of Directors and Officers 27
PART F/S
Financial Statements 28
PART III
Item 1. Index to Exhibits 35
Signatures 36
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Solo & Hurst, Inc. (the "Company") was incorporated on February 25, 1998
under the laws of the State of Nevada to engage in any lawful corporate
activity, including, but not limited to, selected mergers and acquisitions. The
Company has been in the developmental stage since inception and has no
operations to date. Other than issuing shares to its original shareholders, the
Company never commenced any operational activities. As such, the Company can be
defined as a "shell" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity. The Board of Directors
of the Company has elected to commence implementation of the Company's principal
business purpose described below under "Item 2 - Plan of Operation." The
proposed business activities described herein may classify the Company as a
"blank check" company.
The Company is filing this registration statement on a voluntary basis
because the primary attraction of the Company as a merger partner or acquisition
vehicle will be its status as a public company. Any business combination or
transaction will likely result in a significant issuance of shares and
substantial dilution to present stockholders of the Company.
In addition, the Company is filing this registration statement to enhance
investor protection and to provide information if a trading market commences. On
December 11, 1997, the National Association of Securities Dealers, Inc. (NASD)
announced that its Board of Governors had approved a series of proposed changes
for the Over The Counter ("OTC") Bulletin Board and the OTC market. The
principal changes, which was approved by the Securities and Exchange Commission
on January 5, 1999 allows only those companies that report their current
financial information to the Securities and Exchange Commission, banking, or
insurance regulators to be quoted on the OTC Bulletin Board. The rule provides
for a phase-in period for those securities already quoted on the OTC Bulletin
Board.
RISK FACTORS
The Company's business is subject to numerous risk factors, including the
following:
1. Lack of History. The Company has had no operating history nor any
revenues or earnings from operations. The Company has no significant assets or
financial resources. The Company will, in all likelihood, sustain operating
expenses without corresponding revenues, at least until the consummation of a
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business combination. This may result in the Company incurring a net operating
loss which will increase continuously until the Company can consummate a
business combination with a profitable business opportunity. There is no
assurance that the Company can identify such a business opportunity and
consummate such a business combination.
2. The Company's Proposed Operations is Speculative. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified business
opportunity. While management intends to seek business combination(s) with
entities having established operating histories, there can be no assurance that
the Company will be successful in locating candidates meeting such criteria. In
the event the Company completes a business combination, of which there can be no
assurance, the success of the Company's operations may be dependent upon
management of the successor firm or venture partner firm and numerous other
factors beyond the Company's control.
3. Scarcity of and Competition for Business Opportunities and Combinations.
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with, joint ventures with and acquisitions of small
private and public entities. A large number of established and well-financed
entities, including venture capital firms, are active in mergers and
acquisitions of companies which may be desirable target candidates for the
Company. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the Company and,
consequently, the Company will be at a competitive disadvantage in identifying
possible business opportunities and successfully completing a business
combination. Moreover, the Company will also compete in seeking merger or
acquisition candidates with numerous other small public companies.
4. The Company has No Agreement for a Business Combination or Other
Transaction - No Standards for Business Combination. The Company has no
arrangement, agreement or understanding with respect to engaging in a merger
with, joint venture with or acquisition of, a private or public entity. There
can be no assurance the Company will be successful in identifying and evaluating
suitable business opportunities or in concluding a business combination.
Management has not identified any particular industry or specific business
within an industry for evaluation by the Company. There is no assurance the
Company will be able to negotiate a business combination on terms favorable to
the Company. The Company has not established a specific length of operating
history or a specified level of earnings, assets, net worth or other criteria
which it will require a target business opportunity to have achieved, and
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without which the Company would not consider a business combination in any form
with such business opportunity. Accordingly, the Company may enter into a
business combination with a business opportunity having no significant operating
history, losses, limited or no potential for earnings, limited assets, negative
net worth or other negative characteristics.
5. Continued Management Control, Limited Time Availability. While seeking a
business combination, management anticipates devoting up to ten hours per month
to the business of the Company. None of the Company's officers has entered into
a written employment agreement with the Company and none is expected to do so in
the foreseeable future. The Company has not obtained key man life insurance on
any of its officers or directors. Notwithstanding the combined limited
experience and time commitment of management, loss of the services of any of
these individuals would adversely affect development of the Company's business
and its likelihood of continuing operations. See "Item 5 - Directors, Executive
Officers, Promoters and Control Persons."
6. There May be Conflicts of Interest. Officers and directors of the
Company may in the future participate in business ventures which could be deemed
to compete directly with the Company. Additional conflicts of interest and
non-arms length transactions may also arise in the future in the event the
Company's officers or directors are involved in the management of any firm with
which the Company transacts business. Management has adopted a policy that the
Company will not seek a merger with, or acquisition of, any entity in which
management serve as officers, directors or partners, or in which they or their
family members own or hold any ownership interest.
7. Reporting Requirements May Delay or Preclude Acquisitions. Sections 13
and 5(d) of the Securities Exchange Act of 1934 (the "1934 Act"), require
companies subject thereto to provide certain information about significant
acquisitions, including certified financial statements for the company acquired,
covering one, two, or three years, depending on the relative size of the
acquisition. The time and additional costs that may be incurred by some target
entities to prepare such statements may significantly delay or essentially
preclude consummation of an otherwise desirable acquisition by the Company.
Acquisition prospects that do not have or are unable to obtain the required
audited statements may not be appropriate for acquisition so long as the
reporting requirements of the 1934 Act are applicable.
8. Lack of Market Research or Marketing Organization. The Company has
neither conducted, nor have others made available to it, results of market
research indicating that market demand exists for the transactions contemplated
by the Company. Moreover, the Company does not have, and does not plan to
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establish, a marketing organization. Even in the event demand is identified for
a merger or acquisition contemplated by the Company, there is no assurance the
Company will be successful in completing any such business combination.
9. Lack of Diversification. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a business
combination with a business opportunity. Consequently, the Company's activities
may be limited to those engaged in by business opportunities which the Company
merges with or acquires. The Company's inability to diversify its activities
into a number of areas may subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks associated with
the Company's operations.
10. Regulation. Although the Company will be subject to regulation under
the 1934 Act, management believes the Company will not be subject to regulation
under the Investment Company Act of 1940, insofar as the Company will not be
engaged in the business of investing or trading in securities. In the event the
Company engages in business combinations which result in the Company holding
passive investment interests in a number of entities, the Company could be
subject to regulation under the Investment Company Act of 1940. In such event,
the Company would be required to register as an investment company and could be
expected to incur significant registration and compliance costs. The Company has
obtained no formal determination from the Securities and Exchange Commission as
to the status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject the Company to material
adverse consequences.
11. Probable Change in Control and Management. A business combination
involving the issuance of the Company's Common Shares will, in all likelihood,
result in shareholders of a private company obtaining a controlling interest in
the Company. Any such business combination may require management of the Company
to sell or transfer all or a portion of the Company's Common Shares held by
them, or resign as members of the Board of Directors of the Company. The
resulting change in control of the Company could result in removal of one or
more present officers and directors of the Company and a corresponding reduction
in or elimination of their participation in the future affairs of the Company.
12. Reduction of Percentage Share Ownership Following Business Combination.
The Company's primary plan of operation is based upon a business combination
with a private concern which, in all likelihood, would result in the Company
issuing securities to shareholders of any such private company. The issuance of
previously authorized and unissued Common Shares of the Company would result in
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reduction in percentage of shares owned by present and prospective shareholders
of the Company and may result in a change in control or management of the
Company.
13. Disadvantages of Blank Check Offering. The Company may enter into a
business combination with an entity that desires to establish a public trading
market for its shares. A business opportunity may attempt to avoid what it deems
to be adverse consequences of undertaking its own public offering by seeking a
business combination with the Company. Such consequences may include, but are
not limited to, time delays of the registration process, significant expenses to
be incurred in such an offering, loss of voting control to public shareholders
and the inability or unwillingness to comply with various federal and state laws
enacted for the protection of investors.
14. Taxation. Federal and state tax consequences will, in all likelihood,
be major considerations in any business combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as to
minimize the federal and state tax consequences to both the Company and the
target entity; however, there can be no assurance that such business combination
will meet the statutory requirements of a tax-free reorganization or that the
parties will obtain the intended tax-free treatment upon a transfer of stock or
assets. A non-qualifying reorganization could result in the imposition of both
federal and state taxes which may have an adverse effect on both parties to the
transaction.
15. Requirement of Audited Financial Statements May Disqualify Business
Opportunities. Management of the Company believes that any potential business
opportunity must provide audited financial statements for review, for the
protection of all parties to the business combination. One or more attractive
business opportunities may choose to forego the possibility of a business
combination with the Company, rather than incur the expenses associated with
preparing audited financial statements.
16. Dilution. Any merger or acquisition effected by the Company can be
expected to have a significant dilutive effect on the percentage of shares held
by the Company's then shareholders.
17. No Trading Market. There is no trading market for the Company's common
stock at present, and there has been no trading market to date. There is no
assurance that a trading market will ever develop or, if such market does
develop, that it will continue. The Company intends to request a broker-dealer
to make application to the NASD Regulation, Inc. to have the Company's
securities traded on the OTC Bulletin Board or published in print and electronic
media, or either, in the National Quotation Bureau LLC "Pink Sheet."
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18. Required Year 2000 Compliance After January 1, 2000. The Year 2000
issue affected virtually all companies and organizations. A business combination
may result in the Company disclosing certain Year 2000 matters. Many existing
computer programs used only two digits to identify a year in the date field.
These programs were designed and developed without considering the impact of the
change in the century.
19. Disclosure by Public Companies Regarding the Year 2000 Issue After
January 1, 2000. Any business combination may require special Year 2000
disclosures. Management of the Company believes that any potential business
opportunity may require a disclosure that the target company must undertake
remedial action to address the Year 2000 issue. The disclosure of the potential
costs and uncertainties will depend on a number of factors, including its
software and hardware and the nature of its industry. The Company may be
required to review whether it needs to disclose future anticipated costs,
problems and uncertainties associates with any remedial Year 2000 consequences,
particularly in its filings with the Securities and Exchange Commission. The
Company may have to disclose this information in the Securities and Exchange
Commission filings because (i) the form or report may require the disclosure, or
(ii) in addition to the information that the Company is specifically required to
disclose, the disclosure rules require disclosure of any additional material
information necessary to make the required disclosure not misleading.
If the Company determines that it is required to make a Year 2000
disclosure, applicable rules or regulations must be followed. As part of
this disclosure, the following topics will be addressed:
* the target company's general plans to address any Year 2000 remedial
action issues relating to its business, its operations (including
operating systems) and, if material, its relationships with customers,
suppliers, and other constituents; and its timetable for carrying out
those plans; and
* the total dollar amount that the target company estimates will be
spent to remediate its Year 2000 problems, if such amount is expected
to be material to the target company's business, operations or
financial condition, and any material impact these expenditures are
expected to have on the target company's results of operations,
liquidity and capital resources.
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ITEM 2. PLAN OF OPERATION
The Company intends to seek to acquire assets or shares of an entity
actively engaged in business which generates revenues in exchange for its
securities. The Company has no particular acquisitions in mind and has not
entered into any negotiations regarding such an acquisition. None of the
Company's officers, directors, promoters or affiliates have engaged in any
preliminary contact or discussions with any representative of any other company
regarding the possibility of an acquisition or merger between the Company and
such other company as of the date of this registration statement.
The Company has no full time or part-time employees. None of the officers
and directors anticipates devoting more than ten (10%) percent of his or her
time to Company activities. The Company's President and Secretary have agreed to
allocate a portion of said time to the activities of the Company, without
compensation. These officers anticipate that the business plan of the Company
can be implemented by their devoting minimal time per month to the business
affairs of the Company and, consequently, conflicts of interest may arise with
respect to the limited time commitment by such officers. See "Item 5 -
Directors, Executive Officers, Promoters and Control Persons - Resumes."
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the advantages of an Issuer who has
complied with the 1934 Act. The Company will not restrict its search to any
specific business, industry, or geographical location and the Company may
participate in a business venture of virtually any kind or nature. This
discussion of the proposed business is purposefully general and is not meant to
be restrictive of the Company's virtually unlimited discretion to search for and
enter into potential business opportunities. Management anticipates that it may
be able to participate in only one potential business venture because the
Company has nominal assets and limited financial resources. See Item F/S,
"Financial Statements." This lack of diversification should be considered a
substantial risk to shareholders of the Company because it will not permit the
Company to offset potential losses from one venture against gains from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
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The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological advances being made in some industries
and shortages of available capital, management believes that there are numerous
firms seeking the benefits of an Issuer who has complied with the 1934 Act. Such
benefits may include facilitating or improving the terms on which additional
equity financing may be sought, providing liquidity for incentive stock options
or similar benefits to key employees, providing liquidity (subject to
restrictions of applicable statutes), for all shareholders and other factors.
Potentially, available business opportunities may occur in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant cash or other
assets. However, management believes the Company will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in an Issuer who has complied with the 1934 Act without incurring the
cost and time required to conduct an initial public offering. The owners of the
business opportunities will, however, incur significant legal and accounting
costs in connection with acquisition of a business opportunity, including the
costs of preparing Form 8-K's, 10-K's or 10-KSB's, agreements and related
reports and documents. The 1934 Act, specifically requires that any merger or
acquisition candidate comply with all applicable reporting requirements, which
include providing audited financial statements to be included within the
numerous filings relevant to complying with the 1934 Act. Nevertheless, the
officers and directors of the Company have not conducted market research and are
not aware of statistical data which would support the benefits of a merger or
acquisition transaction for the owners of a business opportunity.
The Company has made no determination as to whether or not it will file
periodic reports in the event its obligation to file such reports is suspended
under the 1934 Act. Valerie J. Sams, an officer and director of the Company, has
agreed to provide the necessary funds, without interest, for the Company to
comply with the 1934 Act reporting requirements, provided that she is an officer
and director of the Company when the obligation is incurred.
The analysis of new business opportunities will be undertaken by, or under
the supervision of, the officers and directors of the Company, none of whom is a
professional business analyst. Management intends to concentrate on identifying
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preliminary prospective business opportunities which may be brought to its
attention through present associations of the Company's officers and directors,
or by the Company's shareholders. In analyzing prospective business
opportunities, management will consider such matters as the available technical,
financial and managerial resources; working capital and other financial
requirements; history of operations, if any; prospects for the future; nature of
present and expected competition; the quality and experience of management
services which may be available and the depth of that management; the potential
for further research, development, or exploration; specific risk factors not now
foreseeable but which then may be anticipated to impact the proposed activities
of the Company; the potential for growth or expansion; the potential for profit;
the public recognition of acceptance of products, services, or trades; name
identification; and other relevant factors. Officers and directors of the
Company expect to meet personally with management and key personnel of the
business opportunity as part of their investigation. To the extent possible, the
Company intends to utilize written reports and personal investigation to
evaluate the above factors. The Company will not acquire or merge with any
company for which audited financial statements cannot be obtained within a
reasonable period of time after closing of the proposed transaction.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company, will rely upon their own efforts in
accomplishing the business purposes of the Company. It is not anticipated that
any outside consultants or advisors will be utilized by the Company to
effectuate its business purposes described herein. However, if the Company does
retain such an outside consultant or advisor, any cash fee by such party will
need to be paid by the prospective merger acquisition candidate, as the Company
has no cash assets with which to pay such obligation. There have been no
contracts or agreements with any outside consultants and none are anticipated in
the future.
The Company will not restrict its search for any specific kind of firms,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status of any business in
which the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other advantages which the Company may offer. However, the Company does not
intend to obtain funds in one or more private placements to finance the
operation of any acquired business opportunity until such time as the Company
has successfully consummated such a merger or acquisition.
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It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan described herein. Because the Company has no
capital with which to pay these anticipated expenses, present management of the
Company will pay these charges with their personal funds, as interest free loans
to the Company or as capital contributions. However, if loans, the only
opportunity which management has to have these loans repaid will be from a
prospective merger or acquisition candidate. Management has agreed among
themselves that the repayment of any loans made on behalf of the Company will
not impede, or be made conditional in any manner, to consummation of a proposed
transaction.
The Company has no plans, proposals, arrangements or understandings with
respect to the sale or issuance of additional securities prior to the location
of an acquisition or merger candidate.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and shareholders of the
Company will no longer be in control of the Company. In addition, the Company's
directors may, as part of the terms of the acquisition transaction, resign and
be replaced by new directors without a vote of the Company's shareholders or may
sell their stock in the Company. Any terms of sale of the shares presently held
by officers and/or directors of the Company will be also afforded to all other
shareholders of the Company on similar terms and conditions. Any and all such
sales will only be made in compliance with the securities laws of the United
States and any applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, of which there can be
no assurance, it will be undertaken by the surviving entity after the Company
has successfully consummated a merger or acquisition and the Company is no
longer considered a "shell" company. The issuance of substantial additional
securities and their potential sale into any trading market which may develop in
the Company's securities may have a depressive effect on the value of the
Company's securities in the future, if such a market develops, of which there is
no assurance.
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While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In order to
obtain tax-free treatment under the Code, it may be necessary for the owners of
the acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company, would retain less than
20% of the issued and outstanding shares of the surviving entity, which would
result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis of verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise. The manner in which the
Company participates in an opportunity will depend on the nature of the
opportunity, the respective needs and desires of the Company and other parties,
the management of the opportunity and the relative negotiation strength of the
Company and such other management.
With respect to any merger or acquisition, negotiations with target company
management is expected to focus on the percentage of the Company which the
target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants, will set forth remedies
on default and will include miscellaneous other terms.
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The Company will not acquire or merge with any entity which cannot provide
independent audited financial statements within a reasonable period of time
after closing of the proposed transaction. The Company is subject to all of the
reporting requirements included in the 1934 Act. Included in these requirements
is the affirmative duty of the Company to file independent audited financial
statements as part of its Form 8-K to be filed with the Securities and Exchange
Commission upon consummation of a merger or acquisition, as well as the
Company's audited financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial statements are not
available at closing, or within time parameters necessary to insure the
Company's compliance with the requirements of the 1934 Act, or if the audited
financial statements provided do not conform to the representations made by the
candidate to be acquired in the closing documents, the closing documents will
provide that the proposed transaction will be voidable, at the discretion of the
present management of the Company. If such transaction is voided, the agreement
will also contain a provision providing for the acquisition entity to reimburse
the Company for all costs associated with the proposed transaction.
COMPETITION
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than the Company. In
view of the Company's combined extremely limited financial resources and limited
management availability, the Company will continue to be at a significant
competitive disadvantage compared to the Company's competitors.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Securities Act
of 1933, as amended, and the 1934 Act, management believes the Company will not
be subject to regulation under the Investment Company Act of 1940 insofar as the
Company will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business combinations which
result in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register as
an investment company and could be expected to incur significant registration
and compliance costs. The Company has obtained no formal determination from the
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Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, any violation of such Act
would subject the Company to material adverse consequences. The Company's Board
of Directors unanimously approved a resolution stating that it is the Company's
desire to be exempt from the Investment Company Act of 1940 under Regulation
3a-2 thereto.
LOCK-UP AGREEMENT
Each of the officers and directors of the Company have executed and
delivered a "lock-up" letter agreement affirming that they shall not sell their
respective shares of the Company's common stock until such time as the Company
has entered into a merger or acquisition agreement, or the Company is no longer
classified as a "blank check" company, whichever first occurs.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to acquire
any properties.
The Company presently occupies office space at 11260 North 92nd, Suite
1118, Scottsdale, Arizona 85260. This space is provided to the Company on a rent
free basis, and it is anticipated that this arrangement will remain until such
time as the Company successfully consummates a merger or acquisition. Management
believes that this arrangement will meet the Company's needs for the foreseeable
future.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth the security and beneficial ownership for
each class of equity securities of the Company for any person who is known to be
the beneficial owner of more than five percent of the Company.
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Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
- -------------- ----- ----- --------
Common Valerie J. Sams 1,100,000 36.66%
11260 North 92nd,
Suite 1118
Scottsdale, AZ 85260
Common Scott McGovern 1,100,000 36.66%
550 East Wethersfield Rd.
Scottsdale, AZ 85260
Common All Officers and 2,200,000 73.32%
Directors as a Group
(two [2] individuals)
The total of the Company's outstanding Common Shares are held by 24
persons.
(b) Security Ownership of Management.
The following table sets forth the ownership for each class of equity
securities of the Company owned beneficially and of record by all directors and
officers of the Company.
Common Valerie J. Sams 1,100,000 36.66%
11260 North 92nd,
Suite 1118
Scottsdale, AZ 85260
Common Scott McGovern 1,100,000 36.66%
550 East Wethersfield Rd.
Scottsdale, AZ 85260
Common All Officers and 2,200,000 73.32%
Directors as a Group
(two [2] individuals)
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The directors and officers of the Company are as follows:
Name Age Position
---- --- --------
Valerie J. Sams 46 President/Director
Scott McGovern 32 Secretary/Treasurer/Director
16
<PAGE>
The above listed officers and directors will serve until the next annual
meeting of the shareholders or until their death, resignation, retirement,
removal, or disqualification, or until their successors have been duly elected
and qualified. Vacancies in the existing Board of Directors are filled by
majority vote of the remaining Directors. Officers of the Company serve at the
will of the Board of Directors. There are no agreements or understandings for
any officer or director to resign at the request of another person and no
officer or director is acting on behalf of or will act at the direction of any
other person. There is no family relationship between any executive officer and
director of the Company.
RESUMES
VALERIE J. SAMS
From 1998 to the present Ms. Sams has been employed by National Mortgage
Executives, Inc. where she was responsible for personnel management,
accounting and payroll and correspondence and data entry. From 1997 through
1998 Ms. Sams was employed by American Fine Art where she performed
secretarial and accounting duties and assisted with publications,
advertising and promotions. From 1995 through 1997 Ms. Sams was employed by
Programmed Land Management where she performed executive secretarial
duties. From 1993 through 1994 Ms. Sams was employed by Stivers Temporary
Services where she performed secretarial duties for the Mayo Clinic, Public
Sector and Security America Mortgage. From 1990 through 1993 Ms. Sams was
employed by Gallagher Bassett Services, Inc. where she processed commercial
and workers compensation insurance claims and performed general secretarial
duties. From 1988 through 1989 Ms. Sams was employed by Sierra-Sonora
Enterprises where she performed personnel and customer service duties.
SCOTT McGOVERN
From 1992 to the present Mr. McGovern has been employed by America West
Airlines. From 1997 to the present he has been a maintenance control shift
manager responsible for daily maintenance operation and from 1992 to 1997
he was a maintenance controller support responsible for support and guide
line maintenance technicians with the repair and deferment of aircraft
mechanical malfunctions. From 1987 to 1992 he was employed by Dynair
Maintenance Facility. From 1985 through 1986 he was employed by Evergreen
Air Center. He has been trained on A320 and V2500 systems and 757 and 737
Boeing systems and CFM and JT8 trained. He received his Airframe and
Powerplant Rating on September 7, 1984 and his Private Pilot Rating on
December 17, 1984.
17
<PAGE>
PREVIOUS BLANK CHECK COMPANIES - CURRENT
BLANK CHECK COMPANIES
The officers and directors of the Company have not been officers and
directors in any other blank check offerings. The officers and directors,
however, do anticipate becoming involved with additional blank check companies
who may file under the Securities Act of 1933, as amended, or the 1934 Act, or
either. In addition, the officers and directors of the Company may become
involved in additional blank check companies which may request a broker-dealer
to request clearance from the NASD Regulation, Inc. for trading clearance in the
applicable quotation medium.
CONFLICTS OF INTEREST
Members of the Company's management are associated with other firms
involved in a range of business activities. Consequently, there are potential
inherent conflicts of interest in their acting as officers and directors of the
Company. Insofar as the officers and directors are engaged in other business
activities, management anticipates it will devote only a minor amount of time to
the Company's affairs.
The officers and directors of the Company are now and may in the future
become shareholders, officers or directors of other companies which may be
engaged in business activities similar to those conducted by the Company.
Accordingly, additional direct conflicts of interest may arise in the future
with respect to such individuals acting on behalf of the Company or other
entities. Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individuals in the performance
of their duties or otherwise. The Company does not currently have a right of
first refusal pertaining to opportunities that come to management's attention
insofar as such opportunities may relate to the Company's proposed business
operations.
The officers and directors are, so long as they are officers or directors
of the Company, subject to the restriction that all opportunities contemplated
by the Company's plan of operation which come to their attention, either in the
performance of their duties or in any other manner, will be considered
opportunities of, and be made available to the Company and the companies that
they are affiliated with on an equal basis. A breach of this requirement will be
a breach of the fiduciary duties of the officer or director. If the Company or
the companies in which the officers and directors are affiliated with both
desire to take advantage of an opportunity, then said officers and directors
would abstain from negotiating and voting upon the opportunity. However, all
directors may still individually take advantage of opportunities if the Company
should decline to do so. Except as set forth above, the Company has not adopted
any other conflict of interest policy with respect to such transactions.
18
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION.
None of the Company's officers and/or directors receive any compensation
for their respective services rendered unto the Company, nor have they received
such compensation in the past. They all have agreed to act without compensation
until authorized by the Board of Directors, which is not expected to occur until
the Company has generated revenues from operations after consummation of a
merger or acquisition. As of the date of this registration statement, the
Company has no funds available to pay directors. Further, none of the directors
are accruing any compensation pursuant to any agreement with the Company.
It is possible that, after the Company successfully consummates a merger or
acquisition with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of the Company's management for the purposes
of providing services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a policy whereby
the offer of any post-transaction remuneration to members of management will not
be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity which proposes to undertake a transaction with the Company
and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors is offered
compensation in any form from any prospective merger or acquisition candidate,
the proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to affirmatively approve
such a transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated that this fee will be
either in the form of restricted common stock issued by the Company as part of
the terms of the proposed transaction, or will be in the form of cash
consideration. However, if such compensation is in the form of cash, such
payment will be tendered by the acquisition or merger candidate, because the
Company has insufficient cash available. The amount of such finder's fee cannot
be determined as of the date of this registration statement, but is expected to
be comparable to consideration normally paid in like transactions. No member of
management of the Company will receive any finders fee, either directly or
indirectly, as a result of their respective efforts to implement the Company's
business plan outlined herein.
19
<PAGE>
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There have been no related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation S-B.
Valerie J. Sams agreed to advanced to the Company the funds to pay for the
current accounting costs applicable to this Form 10SB12G and all amendments
applicable to this filing, and has agreed to provide the necessary funds,
without interest, for the Company to comply with the 1934 Act provided that she
is an officer and director of the Company when the obligation is incurred. All
advances are interest-free.
ITEM 8. DESCRIPTION OF SECURITIES.
The Company's authorized capital stock consists of 20,000,000 shares, par
value $.001 per share. There are 3,000,000 Common Shares issued and outstanding
as of the date of this filing.
All shares of Common Stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of Common Stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as
fully-paid and nonassessable shares. Cumulative voting in the election of
directors is not permitted, which means that the holders of a majority of the
issued and outstanding shares of Common Stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose and, in such event, the holders of the remaining shares of Common
Stock will not be able to elect any directors. In the event of liquidation of
the Company, each shareholder is entitled to receive a proportionate share of
the Company's assets available for distribution to shareholders after the
payment of liabilities and after distribution in full of preferential amounts,
if any. All shares of the Company's Common Stock issued and outstanding are
fully-paid and nonassessable. Holders of the Common Stock are entitled to share
pro rata in dividends and distributions with respect to the Common Stock, as may
be declared by the Board of Directors out of funds legally available therefor.
20
<PAGE>
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There is no trading market for the Company's Common Stock at present and
there has been no trading market to date. There is no assurance that a trading
market will ever develop or, if such a market does develop, that it will
continue. The Company intends to request a broker-dealer to make application to
the NASD Regulation, Inc. to have the Company's securities traded on the OTC
Bulletin Board System or published, in print and electronic media, or either, in
the National Quotation Bureau LLC "Pink Sheets."
(a) Market Price.
The Company's Common Stock is not quoted at the present time.
The Securities and Exchange Commission adopted Rule 15g-9, which
established the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stock in both public offering and in
secondary trading, and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
21
<PAGE>
For the initial listing in the NASDAQ SmallCap market, a company must have
net tangible assets of $4 million or market capitalization of $50 million or a
net income (in the latest fiscal year or two of the last fiscal years) of
$750,000, a public float of 1,000,000 shares with a market value of $5 million.
The minimum bid price must be $4.00 and there must be 3 market makers. In
addition, there must be 300 shareholders holding 100 shares or more, and the
company must have an operating history of at least one year or a market
capitalization of $50 million.
For continued listing in the NASDAQ SmallCap market, a company must have
net tangible assets of $2 million or market capitalization of $35 million or a
net income (in the latest fiscal year or two of the last fiscal years) of
$500,000, a public float of 500,000 shares with a market value of $1 million.
The minimum bid price must be $1.00 and there must be 2 market makers. In
addition, there must be 300 shareholders holding 100 shares or more.
Management intends to strongly consider undertaking a transaction with any
merger or acquisition candidate which will allow the Company's securities to be
traded without the aforesaid limitations. However, there can be no assurances
that, upon a successful merger or acquisition, the Company will qualify its
securities for listing on NASDAQ or some other national exchange, or be able to
maintain the maintenance criteria necessary to insure continued listing. The
failure of the Company to qualify its securities or to meet the relevant
maintenance criteria after such qualification in the future may result in the
discontinuance of the inclusion of the Company's securities on a national
exchange. In such events, trading, if any, in the Company's securities may then
continue in the non-NASDAQ over-the-counter market. As a result, a shareholder
may find it more difficult to dispose of, or to obtain accurate quotations as to
the market value of, the Company's securities.
The Company intends to request a broker-dealer to make application to the
NASD Regulation, Inc. to have the Company's securities traded on the OTC
Bulletin Board Systems or published, in print and electronic media, or either,
in the National Quotation Bureau LLC "Pink Sheets," or either.
(b) Holders.
There are twenty-four (24) holders of the Company's Common Stock. In 1998,
the Company issued 3,000,000 of its Common Shares for cash. All of the issued
and outstanding shares of the Company's Common Stock were issued in accordance
with the exemption from registration afforded by Section 4(2) of the Securities
Act of 1933, as amended.
22
<PAGE>
As of the date of this registration statement, 20,000,000 shares of the
Company's Common Stock are eligible for sale under Rule 144 promulgated under
the Securities Act of 1933, as amended, subject to certain limitations included
in said Rule. In general, under Rule 144, a person (or persons whose shares are
aggregated), who has satisfied a one year holding period, under certain
circumstances, may sell within any three-month period a number of shares which
does not exceed the greater of one percent of the then outstanding Common Stock
or the average weekly trading volume during the four calendar weeks prior to
such sale. Rule 144 also permits, under certain circumstances, the sale of
shares without any quantity limitation by a person who has satisfied a two-year
holding period and who is not, and has not been for the preceding three months,
an affiliate of the Company.
(c) Dividends.
The Company has not paid any dividends to date, and has no plans to do so
in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there are
no disagreements with the findings of said accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
(a) Securities sold.
The Company has sold and issued its securities during the three year period
preceding the date of this registration statement. On or about February 28,
1998, the Company authorized the sale and issuance for cash of all of the shares
that are outstanding. The Treasurer of the Company acknowledged receipt of the
full consideration for the shares on or about February 28, 1998 and the
certificates evidencing said shares were executed and delivered on or about said
dated. Each of said shareholders have owned the shares of common stock since
February 28, 1998. No additional shares have been sold or issued. All of the
shares of Common Stock of the Company have been issued for investment purposes
in a "private transaction" and are "restricted" shares as defined in Rule 144
under the Securities Act of 1933, as amended. These shares may not be offered
for public sale except under Rule 144, or otherwise, pursuant to said Action.
23
<PAGE>
In summary, Rule 144 applies to affiliates (that is, control persons) and
nonaffiliates when they resell restricted securities (those purchased from the
issuer or an affiliate of the issuer in nonpublic transactions). Nonaffiliates
reselling restricted securities, as well as affiliates selling restricted or
nonrestricted securities, are not considered to be engaged in a distribution
and, therefore, are not deemed to be underwriters as defined in Section 2(11) of
the Securities Act of 1933, as amended, if six conditions are met:
(1) Current public information must be available about the issuer unless
sales are limited to those made by nonaffiliates after two years.
(2) When restricted securities are sold, generally there must be a
one-year holding period.
(3) When either restricted or nonrestricted securities are sold by an
affiliate after one year, there are limitations on the amount of
securities that may be sold; when restricted securities are sold by
non-affiliates between the first and second years, there are identical
limitations; after two years, there are no volume limitations for
resales by non-affiliates.
(4) Except for sales of restricted securities made by nonaffiliates after
two years, all sales must be made in brokers' transactions as defined
in Section 4(4) of the Securities Act of 1933, as amended, or a
transaction directly with a "market maker" as that term is defined in
Section 3(a)(38) of the 1934 Act.
(5) Except for sales of restricted securities made by nonaffiliates after
two years, a notice of proposed sale must be filed for all sales in
excess of 500 shares or with an aggregate sales price in excess of
$10,000.
(6) There must be a bona fide intention to sell within a reasonable time
after the filing of the notice referred to in (5) above.
(b) Underwriters and other purchasers.
There was no underwriters in connection with the sale and issuance of any
securities.
24
<PAGE>
All of the shareholders have had a pre-existing personal or business
relationship with the Company or its officers and directors, by reason of a time
commitment in business projects with the officers of the Company. Further, each
of the shareholders have established a pre-existing personal relationship with
the officers and directors of the Company. The following are the names of 23
original issuees and the number of shares purchased by each of them.
Name Number of Shares
---- ----------------
Scott Butler 20,000
Sandra Downing 20,000
Bruce E. Eaton 10,000
Earl Gilbrech 1,225,000
Josephine Gilbrech 40,000
Geraldine Graham 20,000
Mack Graham 20,000
Donna Harper 40,000
Jeff Jorgensen 20,000
William Kostrivas 10,000
Elisa Lane 40,000
Melissa Morris 40,000
Mike Morris 50,000
John C. Mueller 20,000
Robert Nicholson 1,225,000
Mark Nielsen 20,000
Dennis Pannullo 20,000
Don Reel 10,000
Dennis Reissig 40,000
Sherri Reissig 40,000
Vito Tassone 10,000
Eva Velez 10,000
Juan Velez 50,000
As of the date hereof, there are 24 shareholders. Valerie Sams and Scott
McGovern each acquired 1,110,000 shares of stock and John E. Bauer acquired
250,000 shares of stock from the original shareholders. Robert Nicholson now
owns 1,100,000 shares of stock and Earl Gilbrech is no longer a shareholder.
Each of the transfers of the shares of stock was an exempt transaction under the
Securities Act of 1933, as amended, by virtue of section 4(1).
Juan and Eva Velez, Dennis and Sherri Reissig, Mike and Melissa Morris and
Mack and Geraldine Graham are husbands and wives. Josephine Gilbrech is the
mother of Earl Gilbrech, Elisa Lane is the daughter of Juan and Eva Velez,
Melissa Morris is the daughter of Donna Harper, Valarie Sams and Donna Harper
are sisters and Vita Tassone is the father of Valarie Sams and Donna Harper.
(c) Consideration.
Each of the shares of stock were originally sold for cash. Each shareholder
paid $.01 per share for the shares, the Company sold and issued 3,000,000
shares, and the aggregate consideration received by the Company was $3,000.00.
(d) Exemption from Registration Relied Upon.
The sale and issuance of the shares of stock was exempt from registration
under the Securities Act of 1933, as amended, by virtue of section 4(2) as a
transaction not involving a public offering. Each of the shareholders had
acquired the shares for investment and not with a view to distribution to the
public. From the date of the issuance to the date of this report, there were no
transfers of the stock sold and issued.
25
<PAGE>
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
- -------------- ----- ----- --------
Common Valerie J. Sams 1,100,000 36.66%
11260 North 92nd,
Suite 1118
Scottsdale, AZ 85260
Common Scott McGovern 1,100,000 36.66%
550 East Wethersfield Rd.
Scottsdale, AZ 85260
Common All Officers and 2,200,000 73.32%
Directors as a Group
(two [2] individuals)
The total of the Company's outstanding Common Shares are held by 24
persons.
(b) Security Ownership of Management.
The following table sets forth the ownership for each class of equity
securities of the Company owned beneficially and of record by all directors and
officers of the Company.
Common Valerie J. Sams 1,100,000 36.66%
11260 North 92nd,
Suite 1118
Scottsdale, AZ 85260
Common Scott McGovern 1,100,000 36.66%
550 East Wethersfield Rd.
Scottsdale, AZ 85260
Common All Officers and 2,200,000 73.32%
Directors as a Group
(two [2] individuals)
26
<PAGE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Except for acts or omissions which involve intentional misconduct, fraud or
known violation of law or for the payment of dividends in violation of Nevada
Revised Statutes, there shall be no personal liability of a director or officer
to the Company, or its stockholders for damages for breach of fiduciary duty as
a director or officer. The Company may indemnify any person for expenses
incurred, including attorneys fees, in connection with their good faith acts if
they reasonably believe such acts are in and not opposed to the best interests
of the Company and for acts for which the person had no reason to believe his or
her conduct was unlawful. The Company may indemnify the officers and directors
for expenses incurred in defending a civil or criminal action, suit or
proceeding as they are incurred in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount of such expenses if it is ultimately
determined by a court of competent jurisdiction in which the action or suit is
brought determined that such person is fairly and reasonably entitled to
indemnification for such expenses which the court deems proper.
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 pursuant to the foregoing, the Company has been informed
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is therefore unenforceable.
27
<PAGE>
PART F/S
FINANCIAL STATEMENTS.
The following financial statements are attached to this report and filed as
a part thereof.
1) Table of Contents
2) Independent Auditors' Report
3) Assets
4) Liabilities and Stockholders' Equity
5) Statement of Operations
6) Statement of Shareholders' Equity
7) Statement of Cash Flows
8) Notes to Financial Statements
28
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Solo & Hurst, Inc.
Scottsdale, Arizona
We have audited the accompanying balance sheets of Solo & Hurst, Inc., a
corporation, as of December 31, 1999 and December 31, 1998 and the related
statements of income, stockholders' equity, and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with Generally Accepted Auditing Standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Solo & Hurst, Inc. as of
December 31, 1999 and December 31, 1998 and its results of operations, and cash
flows for the years then ended, in conformity with Generally Accepted Accounting
Principles.
As discussed in Note 1, the Company has been in the development stage since its
inception on February 6, 1998. Realization of the major portion of its assets is
dependent upon the Company's ability to meet its future financing requirements,
and the success of future operations. The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern.
Michael L. Stuck
Certified Public Accountant
January 3, 2000
Scottsdale, Arizona
29
<PAGE>
SOLO & HURST, INC.
(a development stage enterprise)
Statements of Income
For the Years Ended December 31, 1999
and December 31, 1998
and the Period February 6, 1998 (inception) to December 31, 1999
Year Year February 6, 1998
Ended Ended (inception) to
12/31/99 12/31/98 December 31, 1999
----------- ---------- -----------------
REVENUE $ -0- $ -0- $ -0-
COST OF SALES -0- -0- -0-
----------- ---------- ----------
GROSS PROFIT -0- -0- -0-
OPERATING EXPENSES
Filing Fees -0- 300 300
Professional Fees -0- 2,700 2,700
----------- ---------- ----------
-0- 3,000 3,000
----------- ---------- ----------
NET INCOME (LOSS) BEFORE
INCOME TAXES (-0-) (3,000) (3,000)
INCOME TAXES -0- -0- -0-
----------- ---------- ----------
NET INCOME (LOSS)
$ (-0-) $ (3,000) $ (3,000)
=========== ========= =========
EARNINGS PER SHARE OF COMMON STOCK $ -0- $ -0-
WEIGHTED AVERAGE NUMBERS OF SHARES
OUTSTANDING 3,000,000 3,000,000
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
SOLO & HURST, INC.
(a development stage enterprise)
Balance Sheets
December 31, 1999 and December 31, 1998
ASSETS
December 31, 1999 December 31, 1998
----------------- -----------------
CURRENT ASSETS
Cash $ -0- $ -0-
PROPERTY AND EQUIPMENT -0- -0-
-------- --------
$ -0- $ -0-
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Loan payable $ -0- $ -0-
-------- --------
TOTAL CURRENT LIABILITIES -0- -0-
-------- --------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value,
20,000,000, shares authorized,
3,000,000 shares issued and
outstanding 3,000 3,000
Preferred stock, $.001 par value,
5,000,000 shares authorized, no
shares issued and outstanding -0- -0-
Deficit accumulated during
development stage (3,000) (3,000)
-------- --------
Total stockholders' equity -0- -0-
-------- --------
$ -0- $ -0-
======== ========
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
SOLO & HURST, INC.
(a development stage enterprise)
Statements of Cash Flows
For the Years Ended December 31, 1999
and December 31, 1998
and the Period February 6, 1998 (inception) to December 31, 1999
February 6, 1998
Year Ended Year Ended (inception) to
12/31/99 12/31/98 December 31, 1999
-------- -------- -----------------
Net Income/(Loss) $ -0- $(3,000) $ (3,000)
Adjustments to reconcile not
income to net cash provided by
operating activities: -0- -0- -0-
------ ------- --------
Cash From Operations -0- (3,000) (3,000)
------ ------- --------
Cash From Investing Activities -0- -0- -0-
------ ------- --------
Cash From Financing Activities
Stock issued -0- 3,000 3,000
------ ------- --------
Net Increase in Cash -0- -0- -0-
Beginning Cash Balance -0- -0- -0-
------ ------- --------
Ending Cash Balance $ -0- $ -0- $ -0-
====== ======= ========
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
SOLO & HURST, INC.
(a development stage enterprise)
Statement of Stockholders' Equity
December 31, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Paid in During
Preferred Stock Common Stock Capital Development
Stock Amount Stock Amount Amount Stage Total
----- ------ ----- ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance February 6, 1998 -0- $ -0- -0- $ -0- $ -0- $ -0- $ -0-
Stock issued -0- -0- 3,000,000 3,000 -0- -0- 3,000
Retained Earnings (Loss) -0- -0- -0- -0- -0- (3,000) (3,000)
Balance December 31, 1998 -0- -0- 3,000,000 3,000 -0- (3,000) -0-
Retained Earnings (Loss) -0- -0- -0- -0- -0- -0- -0-
Balance December 31, 1999 -0- $ -0- 3,000,000 $3,000 $ -0- $(3,000) $ -0-
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
SOLO & HURST, INC.
(a development stage enterprise)
Notes to Financial Statements
December 31, 1999 and December 31, 1998
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF OPERATIONS
The Company was organized under the laws of the state of Nevada in 1998 and
is authorized to do business in the United States. The Company has no
revenue from operations during the period covered by this financial
statement.
METHOD OF ACCOUNTING
These financial statements are prepared on the accrual basis of accounting
in accordance with generally accepted accounting principles. Consequently,
revenues are recognized when earned and expenses are recognized when the
obligation is actually incurred.
INCOME TAXES AND CASH FLOWS
The Company accounts for income taxes and the statement of cash flows in
accordance with Financial Accounting Standards Board Statement No. 109 and
No. 95.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all highly liquid investments with a
maturity of three months or less when purchased.
NOTE 2: CASH
The Company has no bank accounts at this time.
NOTE 3: EARNINGS PER SHARE
Earnings per share has been computed by dividing net income/(loss) by the
weighted average number of common shares outstanding for the period. There
are no items which are deemed to be common stock equivalents during the
audit period.
NOTE 4: COMMON STOCK
As of December 31, 1999 and December 31, 1998, the Company had 3,000,000
shares of common stock, par value $0.001, issued and outstanding.
NOTE 5: LEASE COMMITMENTS
The Company currently has no commitments for leases or contingencies.
NOTE 6: USE OF ESTIMATES
The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from these estimates.
34
<PAGE>
PART III
ITEM 1. EXHIBIT INDEX
No.
- ---
(3) Articles of Incorporation and Bylaws
3.1 Articles of Incorporation
3.2 Bylaws
(12) Lock-Up Agreements
12.1 Valerie J. Sams
12.2 Scott McGovern
(23) Consents - Experts
23.1 Consent of Michael L. Stuck
(27) Financial Data Schedule
27.1 Financial Data Schedule
35
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date: January 24, 2000 SOLO & HURST, INC.
By: /s/ Valerie J. Sams
------------------------------
Valerie J. Sams
President
36
ARTICLES OF INCORPORATION
OF
SOLO & HURST. INC.
The undersigned, a natural person, over the age of twenty-one (21) years, in
order to form a corporation for the purposes hereinafter stated, under and
pursuant to the provisions of the laws of the State of Nevada, does hereby
certify as follows:
ARTICLE I
NAME
The name of the Corporation, hereinafter called the Corporation is:
SOLO & HURST, INC.
ARTICLE II
EXISTENCE
The Corporation shall have perpetual existence.
ARTICLE III
OBJECTS AND PURPOSES
The purpose for which this Corporation is created is to conduct any lawful
business or businesses for which corporations may be incorporated pursuant to
the Nevada Corporation Code.
1
<PAGE>
ARTICLE IV
CAPITAL STOCK
1. NUMBER OF SHARES. The aggregate number of capital stock shares which the
Corporation shall have authority to issue is Twenty-Five Million (25,000,000)
shares, of which Twenty Million (20,000,000) shares shall be common stock, $.001
par value, and Five Million (5,000.000) shares shall be preferred stock, 5.001
par value.
2. VOTING RIGHTS OF SHAREHOLDERS. Each voting shareholder of record shall have
one vote for each share of stock standing in his name on the books of the
Corporation and entitled to vote. Cumulative voting shall not be allowed in the
election of directors or for any other purpose.
3. QUORUM. At all meetings of shareholders, one-half of the shares entitled to
vote at such meeting, represented in person or by proxy, shall constitute a
quorum. Except as otherwise provided by these Articles of Incorporation or the
Nevada Corporation Code, if a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders. When, with respect to any
action to be taken by shareholders of this Corporation, the laws of Nevada
require the vats or concurrence of the holders of two-thirds of the outstanding
shares, of the shares entitled to vote thereon, or of any class or series, such
action may be taken by the vote or concurrence of a majority of such shares or
class or series thereof.
4. NO PREEMPTIVE RIGHTS. No shareholder of the Corporation shall have any
preemptive or other rights to subscribe for any additional shares of stock, or
for other securities of any class, or for rights, warrants or options to
purchase stock or for scrip, or for securities of any kind convertible into
stock or carrying stock purchase warrants or privileges.
5. SHAREHOLDER DISTRIBUTIONS. The Board of Directors may from time to time
distribute to the shareholders in partial liquidation, out of stated capital or
capital surplus of the Corporation, a portion of its assets, in cash or
property, subject to the limitations contained in the statutes of the State of
Nevada.
6. PREFERRED STOCK RIGHTS. The Board of Directors shall have the authority to
divide the preferred shares into series and to fix by resolution the voting
powers, designation, preference, and relative participating, option or other
special rights, and the qualifications, limitations or restrictions of the
shares at any series so established.
2
<PAGE>
ARTICLE V
DIRECTORS AND OFFICERS
1. NUMBER OF DIRECTORS. The Board of Directors shall consist of between one (1)
and thirteen (13) members as the By-Laws shall prescribe, but in no event shall
the number of directors be more than thirteen (13) and not less than one (1).
2. INITIAL BOARD OF DIRECTORS. The Names of those persons who shall constitute
the Board of Directors of the Corporation for the first year of its existence or
until their successors are duly elected and qualified are:
Name Address
---- -------
Kelly J. Mueller 2102 E. Solano Dr.
Phoenix, AZ 88016
ARTICLE VI
RESIDENT AGENT AND PRINCIPAL OFFICE
The address of the initial principal office of the Corporation is 3885 S.
Decatur, Ste. 8010, Las Vegas NV 89103. The name of its initial resident agent
at such address is Nevada Corporate Planners, Inc.
The Corporation may conduct all or part of its business in any other part of the
State of Nevada, or any other State in the United States.
3
<PAGE>
ARTICLE VII
INDEMNIFICATION OF DIRECTORS
1. ACTION, SUITES, PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION.
The Corporation shall indemnify any person who was or is party or is threatened
to be made a party to any threatened, pending or completed action, suit, or
proceeding, whether civil, criminal. administrative, or investigative (other
than an action by or in the right of the Corporation) by reason of the fact that
he is or was a Director, Officer, employee or agent of the Corporation or is or
was serving at the request of the Corporation as a director, office, employee or
agent of another corporation. partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and, in the case
of conduct in his official capacity with the Corporation, in a manner he
reasonably believed to be in the best interest of the Corporation, or, in all
other cases, that his conduct was at least not opposed to the Corporation's best
interests. In the case of any criminal proceeding, he must have had no
reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order settlement,
conviction, or upon a plea of NOLO CONTENDERE or its equivalent shall not, or
itself determine that the individual did not meet the standard of conduct set
forth in this paragraph.
2. ACTIONS OR SUITS BY OR IN THE RIGHT OF THE CORPORATION. The 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 or suit by or in the right of the
Corporation to procure a judgement in its favor by reason of the fact that he is
or was a Director, Officer, employee or agent of the Corporation or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership joint venture, trust or other enterprise
against expenses(including attorney's fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and, in the case of conduct in his official capacity with
the Corporation, in a manner he reasonably believed to be in the best interests
of the Corporation and, in all other cases, that his conduct was at least not
opposed to the Corporation's best interests; but no indemnification shall be
made in respect of any claim, issue or matter as to which such person has been
4
<PAGE>
adjudged to be liable for negligence or misconduct in the performance of this
duty to the Corporation or where such person was adjudged liable on the basis
that personal benefit was improperly received by him, unless and only to the
extent that the court in which such action or suit was brought determines upon
application that, despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which such court deems proper.
3. INDEMNIFICATION OF SUCCESSFUL PARTY. To the extent that a Director, Officer,
employee or agent of the Corporation has been successful on the merits or
otherwise (including, without limitation, dismissal without prejudice) in
defense of any action, suit, or proceeding referred to in this Article VII or in
defense of any claim, issue, or matter therein, he shall be indemnified against
all expenses (including attorneys' fees) actually and reasonably incurred by him
in connection therewith.
4. DETERMINATION OF RIGHT TO INDEMNIFICATION. Any indemnification under (1) or
(2) of the Article VII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the Director, Officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
paragraphs (1) or (2) of this Article VII. Such determination shall be made by
the Board of Directors by a majority vote of a quorum consisting of Directors
who were not parties to such action, suit or proceeding, or, if such a quorum is
not obtainable and a quorum of disinterested Directors so directs, by
independent legal counsel in a written opinion, or by the shareholders.
5. ADVANCE OF COSTS, CHARGES AND EXPENSES. Cost, charges and expenses (including
attorney's fees) incurred in defending a civil or criminal action, suit, or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors as
provided in paragraph (4) of this Article VII upon receipt of a written
affirmation by the Director. Officer, employee or agent of his good faith belief
that he has met the standard of conduct described in paragraphs (1) or (2) of
this Article VII, and an undertaking by or on behalf of the Director, Officer,
employee or agent to repay such amount unless it is ultimately determined that
he is entitled to be indemnified by the Corporation as authorized in this
Article VII. The Majority of the Directors may, in the manner set forth above,
and upon approval of such Director, Officer, employee or agent of the
Corporation. authorized the Corporation's counsel to represent such person in
any action, suit or proceeding, whether or not the Corporation is a party to
such action, suit or proceeding.
5
<PAGE>
6. SETTLEMENT. If in any action, suit or proceeding, including any appeal,
within the scope of (1) or (2) of this Article VII, the person to be indemnified
shall have unreasonably failed to enter into a settlement thereof, then,
notwithstanding any other provision hereof the indemnification obligation of the
Corporation to such person in connection with such action, suit or proceeding
shall not exceed the total of the amount at which settlement could have been
made and the expenses by such person prior to the time such settlement could
reasonably have been effected.
7. OTHER RIGHTS: CONTINUATION OF RIGHT TO INDEMNIFICATION. The indemnification
provided by this Article VII shall not be deemed exclusive of any other rights
to which those indemnified may be entitled under these Articles of
Incorporation, any bylaw, agreement, vote of shareholders or disinterested
Directors, or otherwise, and any procedure provided for by any of the foregoing,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to person who has ceased to be
a Director, Officer, employee or agent and shall inure to the benefit of heirs,
executors, and administrators of such a person. All rights to indemnification
under this Article VII shall be deemed to be a contract between the Corporation
and each director or officer of the Corporation who serves or served in such
capacity at any time while this Article VII is in effect. Any repeal or
modification of this Article VII or any repeal or modification of relevant
provisions of the Nevada Corporation Code or any other applicable laws shall not
in any way diminish any rights to indemnification of such Director. Office,
employee or agent or the obligations of the Corporation arising hereunder. This
Article VII shall be binding upon any successor corporation to this Corporation,
whether by way of acquisition, merger, consolidation or otherwise.
8. INSURANCE. The Corporation may purchase and maintain insurance on behalf of
any person who is or was a Director, Officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provision of this Article VII: provided, however, that
such insurance is available on acceptable terms, which determination shall be
made by a vote of the majority of the Directors.
6
<PAGE>
9. SAVING CLAUSE. If this Article VI or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each Director, Officer, employee and agent of the
Corporation as to any cost, charge and expense (including attorney's fee),
judgment fine and amount paid in settlement with respect to any action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
en action by or in the right of the Corporation, to the full extent permitted by
an applicable portion of this Article VII that shall not have been invalidated,
and to the full extent permitted by applicable law.
10. AMENDMENT. The affirmative vote of at least two-thirds of the total votes
eligible to be cast shall be required to amend, repeal, or adopt any provision
inconsistent with, this Article VII. No amendment, termination or repeal of this
Article VII shall affect or impair in any way the rights of any Director,
officer, employee or agent of the Corporation to indemnification under the
provisions hereof with respect to any action, suit or proceeding arising out of
or relating to, any actions, transactions or facts occurring prior to the final
adoption of such amendment, termination or appeal.
11. SUBSEQUENT LEGISLATION. If the Nevada Corporation Code is amended after
adoption of these Articles to further expand the indemnification permitted to
Directors, Officers, employees or agents of the Corporation, then the
Corporation shall indemnify such persons to the fullest extent permitted by the
Nevada Corporation Code, as so amended.
ARTICLE VIII
INCORPORATOR
The name and address of the Incorporator is:
Name Address
---- -------
Robert E. Nicholson 10044 N. 58th P1.
Scottsdale, AZ 88253
7
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of February, 1998.
/s/ Robert E. Nicholson
----------------------------------------
Robert E. Nicholson
VERIFICATION
STATE OF ARIZONA
COUNTY OF MARICOPA
I, Barbara T. Hawkins, a Notary Public, hereby certify that on the 6th day of
February, 1998, personally appeared before me William E. Lane who, being by me
first duly sworn, declared that he was the person who signed the foregoing
document as incorporator and that the statements therein contained are true.
My commission expires:________________________________
Witness my hand and official seal.
(SEAL)
/s/ BARBARA T. HAWKINS
----------------------------------------
Notary Public
BARBARA T. HAWKINS
NOTARY PUBLIC-ARIZONA
MARICOPA COUNTY
MY COMM. EXPIRES SEPT. 8, 2000
BY-LAWS
OF
SOLO & HURST, INC.
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office for the transaction of
business of the corporation shall be fixed or may be changed by approval of a
majority of the authorized Directors, and additional offices may be established
and maintained at such other place or places as the Board of Directors may from
time to time designate.
Section 2. OTHER OFFICES. Branch or subordinate offices may at any time be
established by the Board of Directors at any place or places where the
corporation is qualified to do business.
ARTICLE II
DIRECTORS - MANAGEMENT
Section 1. RESPONSIBILITY OF BOARD OF DIRECTORS. Subject to the provisions
of applicable law and to any limitations in the Articles of Incorporation of the
corporation relating to action required to be approved by the Shareholders, or
by the outstanding shares, the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised by or under the direction of
the Board of Directors. The Board may delegate the management of the day-to-day
operation of the business of the corporation to an executive committee or
others, provided that the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised under the ultimate direction
of the Board.
Section 2. STANDARD OF CARE. Each Director shall perform the duties of a
Director, including the duties as a member of any committee of the Board upon
which the Director may serve, in good faith, in a manner such Director believes
to be in the best interests of the corporation, and with such care, including
reasonable inquiry, as an ordinary prudent person in a like posi tion would use
under similar circumstances.
Section 3. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number of
Directors shall be three (3) until changed by a duly adopted amendment to the
1
<PAGE>
Articles of Incorporation or by an amendment to this by-law adopted by the vote
or written consent of holders of a majority of the outstanding shares entitled
to vote.
Section 4. ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors shall be
elected at each annual meeting of the Share holders to hold office until the
next annual meeting. Each Director, including a Director elected to fill a
vacancy, shall hold office until the expiration of the term for which elected
and until a successor has been elected and qualified.
Section 5. VACANCIES. Vacancies in the Board of Directors may be filled by
a majority of the remaining Directors, though less than a quorum, or by a sole
remaining Director, except that a vacancy created by the removal of a Director
by the vote or written consent of the Shareholders or by court order may be
filled only 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 holders of a majority of the outstanding shares entitled to vote. Each
Director so elected shall hold office until the next annual meeting of the
Shareholders and until a successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in the event of the death, resignation, or removal of any Director, or if the
Board of Directors by resolution declares vacant the office of a Director who
has been declared of unsound mind by an order of court or convicted of a felony,
or if the authorized number of Directors is increased, or if the Shareholders
fail, at any meeting of Shareholders at which any Director or Directors are
elected, to elect the number of Directors to be voted for at that meeting.
The Shareholders may elect a Director or Directors at any time to fill any
vacancy or vacancies not filled by the Directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
Any Director may resign effective on giving written notice to the Chairman
of the Board, the President, the Secretary, or the Board of Directors, unless
the notice specifies a later time for that resignation to become effective. If
the resignation of a Director is effective at a future time, the Board of
Directors may elect a successor to take office when the resignation becomes
effective.
No reduction of the authorized number of Directors shall have the effect of
removing any Director before that Directors' term of office expires.
Section 6. REMOVAL OF DIRECTORS. Subject to applicable law, the entire
Board of Directors or any individual Director may be removed from office. In
such case, the remaining Board members may elect a successor Director to fill
such vacancy for the remaining unexpired term of the Director so removed.
2
<PAGE>
Section 7. NOTICE, PLACE AND MANNER OF MEETINGS. Meetings of the Board of
Directors may be called by the Chairman of the Board, or the President, or any
Vice President, or the Secretary, or any two (2) Directors and shall be held at
the principal executive office of the corporation, unless some other place is
designated in the notice of the meeting. Members of the Board may participate in
a meeting through use of a conference telephone or similar communications
equipment so long as all members partici pating in such a meeting can hear one
another. Accurate minutes of any meeting of the Board or any committee thereof,
shall be maintained by the Secretary or other Officer designated for that
purpose.
Section 8. ORGANIZATIONAL MEETINGS. The organizational meetings of the
Board of Directors shall be held immediately following the adjournment of the
Annual Meetings of the Share holders.
Section 9. OTHER REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at the corporate offices, or such other place as may be
designated by the Board of Directors, as follows:
Time of Regular Meeting: 9:00 A.M.
Date of Regular Meeting: Last Friday of every month
If said day shall fall upon a holiday, such meetings shall be held on the
next succeeding business day thereafter. No notice need be given of such regular
meetings.
Section 10. SPECIAL MEETINGS - NOTICES - WAIVERS. Special meetings of the
Board may be called at any time by the President or, if he or she is absent or
unable or refuses to act, by any Vice President or the Secretary or by any two
(2) Directors, or by one (1) Director if only one is provided.
At least forty-eight (48) hours notice of the time and place of special
meetings shall be delivered personally to the Directors or personally
communicated to them by a corporate Officer by telephone or telegraph. If the
notice is sent to a Director by letter, it shall be addressed to him or her at
his or her address as it is shown upon the records of the corporation, or if it
is not so shown on such records or if not readily ascertainable, at the place in
which the meetings of the Directors are regularly held. In case such notice is
mailed, it shall be deposited in the United States mail, postage prepaid, in the
place in which the principal executive officer of the corporation is located at
least four (4) days prior to the time of the holding of the meeting. Such
mailing, telegraphing, telephoning or delivery as above provided shall be due,
legal and personal notice to such Director.
3
<PAGE>
When all of the Directors are present at any Directors' meeting, however,
called or noticed, and either (i) sign a written consent thereto on the records
of such meeting, or, (ii) if a majority of the Directors is present and if those
not present sign a waiver of notice of such meeting or a consent to holding the
meeting or an approval of the minute thereof, whether prior to or after the
holding of such meeting, which said waiver, consent or approval shall be filed
with the Secretary of the corporation, or, (iii) if a Director attends a meeting
without notice but without protesting, prior thereto or at its commencement, the
lack of notice, then the transactions thereof are as valid as if had at a
meeting regularly called and noticed.
Section 11. DIRECTORS' ACTION BY UNANIMOUS WRITTEN CONSENT. Any action
required or permitted to be taken by the Board of Directors may be taken without
a meeting and with the same force and effect as if taken by a unanimous vote of
Directors, if authorized by a writing signed individually or collectively by all
members of the Board. Such consent shall be filed with the regular minutes of
the Board.
Section 12. QUORUM. A majority of the number of Directors as fixed by the
Articles of Incorporation or By-Laws shall be necessary to constitute a quorum
for the transaction of business, and the action of a majority of the Directors
present at any meeting at which there is a quorum, when duly assembled, is valid
as a corporate act; provided that a minority of the Directors, in the absence of
a quorum, may adjourn from time to time, but may not transact any business. A
meeting at which a quorum is initially present may continue to transact
business, notwithstanding the withdrawal of Directors, if any action taken is
approved by a majority of the required quorum for such meeting.
Section 13. NOTICE OF ADJOURNMENT. 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 and held within twenty-four (24) hours, but if
adjourned more than twenty-four (24) hours, notice shall be given to all
Directors not present at the time of the adjournment.
Section 14. COMPENSATION OF DIRECTORS. Directors, as such, shall not
receive any stated salary for their services, but by resolution of the Board a
fixed sum and expense of attendance, if any, may be allowed for attendance at
each regular and special meeting of the Board; provided that nothing herein
contained shall be construed to preclude any Director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 15. COMMITTEES. Committees of the Board may be appointed by
resolution passed by a majority of the whole Board. Committees shall be composed
4
<PAGE>
of two (2) or more members of the Board and shall have such powers of the Board
as may be expressly delegated to it by resolution of the Board of Directors,
except those powers expressly made non-delegable by applicable law.
Section 16. ADVISORY DIRECTORS. The Board of Directors from time to time
may elect one or more persons to be Advisory Directors who shall not by such
appointment be members of the Board of Directors. Advisory Directors shall be
available from time to time to perform special assignments specified by the
President, to attend meetings of the Board of Directors upon invitation and to
furnish consultation to the Board. The period during which the title shall be
held may be prescribed by the Board of Directors. If no period is prescribed,
the title shall be held at the pleasure of the Board.
Section 17. RESIGNATIONS. Any Director may resign effec tive upon giving
written notice to the Chairman of the Board, the President, the Secretary or the
Board of Directors of the Corpo ration, unless the notice specifies a later time
for the effec tiveness of such resignation. If the resignation is effective at a
future time, a successor may be elected to take office when the resignation
becomes effective.
ARTICLE III
OFFICERS
Section 1. OFFICERS. The Officers of the corporation shall be a President,
a Secretary, and a Chief Financial Officer. The corporation may also have, at
the discretion of the Board of Directors, a Chairman of the Board, one or more
Vice Presidents, one or more Assistant Secretaries, or one or more Assistant
Trea surers, and such other Officers as may be appointed in accordance with the
provisions of Section 3 of this Article. Any number of offices may 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 office until he or she shall resign or shall be removed or otherwise
disqualified to serve or a successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may appoint
such other Officers as the business of the corporation may require, each of whom
shall hold office for such period, have such authority and perform such duties
as are provided by the By-Laws or as the Board of Directors may from time to
time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if
any, of any Officer under any contract of employment, any Officer may be
removed, either with or without cause, by the Board of Directors, at any regular
or special meeting of the Board, 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.
5
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Any Officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the Officer is a
party.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filed in the
manner prescribed in the By-Laws for regular appointment to that office.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an
officer be elected, shall, if present, preside at meetings of the Board of
Directors and exercise and perform such other powers and duties as may be from
time to time assigned by the Board of Directors or prescribed by the By-Laws. If
there is no President, the Chairman of the Board shall in addition be the Chief
Executive Officer of the corporation and shall have the powers and duties
prescribed in Section 7 of this Article.
Section 7. PRESIDENT/CHIEF EXECUTIVE OFFICER. Subject to such supervisory
powers, if any, as may be given by the Board of Directors to the Chairman of the
Board, if there be such an Officer, the President shall be the Chief Executive
Officer of the corporation and shall, subject to the control of the Board of
Directors, have general supervision, direction and control of the business and
Officers of the corporation. He or she shall preside at all meetings of the
Shareholders and in the absence of the Chairman of the Board, or if there be
none, at all meetings of the Board of Directors. The President 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 Board of Directors or the
By-Laws.
Section 8. VICE PRESIDENT. In the absence or disability of the President,
the Vice Presidents, if any, 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 all the powers of, and be subject to, all the restrictions upon, the
President. The Vice Presidents 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 By-Laws.
6
<PAGE>
Section 9. SECRETARY. The Secretary shall keep, or cause to be kept, a book
of minutes at the principal office or such other place as the Board of Directors
may order, of 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 prin cipal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register showing the names of the Shareholders and their
addresses, the number and classes of shares held by each, the number and 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 By-Laws or by
law to be given. He or she 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 By-Laws.
Section 10. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall keep
and maintain, or cause to be kept and maintained in accordance with generally
accepted accounting principles, adequate and correct accounts of the properties
and business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, earnings (or
surplus) and shares. The books of accounts shall at all reasonable times be open
to inspection by any Director.
This Officer shall deposit all moneys and other valuables in the name and
to the credit of the corporation with such deposi taries as may be designated by
the Board of Directors. He or she 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 or her
transactions 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 By-Laws.
ARTICLE IV
SHAREHOLDERS' MEETINGS
Section 1. PLACE OF MEETINGS. All meetings of the Share holders shall
be held at the principal executive office of the corporation unless some other
appropriate and convenient location be designated for that purpose from time to
time by the Board of Directors.
7
<PAGE>
Section 2. ANNUAL MEETINGS. The annual meetings of the Shareholders shall
be held, each year, at the time and on the day following:
Time of Meeting: 10:00 A.M.
Date of Meeting: April 20th
If this day shall be a legal holiday, then the meeting shall be held on the
next succeeding business day, at the same hour. At the annual meeting, the
Shareholders shall elect a Board of Directors, consider reports of the affairs
of the corporation and transact such other business as may be properly brought
before the meeting.
Section 3. SPECIAL MEETINGS. Special meetings of the Shareholders may be
called at any time by the Board of Directors, the Chairman of the Board, the
President, a Vice President, the Secretary, or by one or more Shareholders
holding not less than one-tenth (1/10) of the voting power of the corporation.
Except as next provided, notice shall be given as for the annual meeting.
Upon receipt of a written request addressed to the Chairman, President,
Vice President, or Secretary, mailed or delivered personally to such Officer by
any person (other than the Board) entitled to call a special meeting of
Shareholders, such Officer shall cause notice to be given, to the 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 the receipt of such request. If such notice is not given
within twenty (20) days after receipt of such request, the persons calling the
meeting may give notice thereof in the same manner provided by these By-Laws.
Section 4. NOTICE OF MEETINGS - REPORTS. Notice of meetings, annual or
special, shall be given in writing not less than ten (10) nor more than sixty
(60) days before the date of the meeting to Shareholders entitled to vote
thereat. Such notice shall be given by the Secretary or the Assistant Secretary,
or if there be no such Officer, or in the case of his or her neglect or refusal,
by any Director or Shareholder.
Such notices or any reports shall be given personally or by mail and shall
be sent to the Shareholder's address appearing on the books of the corporation,
or supplied by him or her to the corporation for the purpose of the notice.
8
<PAGE>
Notice of any meeting of Shareholders shall specify the place, the day and
the hour of meeting, and (1) in case of a special meeting, the general nature of
the business to be transacted and no other business may be transacted, or (2) in
the case of an annual meeting, those matters which Board at date of mailing,
intends to present for action by the Shareholders. At any meetings where
Directors are to be elected notice shall include the names of the nominees, if
any, intended at date of notice to be presented by management for election.
If a Shareholder supplies no address, notice shall be deemed to have been
given if mailed to the place where the principal executive office of the
corporation is situated, or published at least once in some newspaper of general
circulation in the County of said principal office.
Notice shall be deemed given at the time it is delivered personally or
deposited in the mail or sent by other means of written communication. The
Officer giving such notice or report shall prepare and file an affidavit or
declaration thereof.
When a meeting is adjourned for forty-five (45) days or more, notice of the
adjourned meeting shall be given as in case of an original meeting. Save, as
aforesaid, it shall not be necessary to give any notice of adjournment or of the
business to be transacted at an adjourned meeting other than by announcement at
the meeting at which said adjournment is taken.
Section 5. WAIVER OF NOTICE OR CONSENT BY ABSENT SHARE HOLDERS. The
transactions of any meeting of Shareholders, however called and notice, shall be
valid as through had at 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 after
the meeting, each of the Shareholders entitled to vote, not present in person or
by proxy, sign a written waiver of notice, or a consent to the holding of such
meeting or an approval shall be filed with the corporate records or made a part
of the minutes of the meeting. Attendance shall constitute a waiver of notice,
unless objection shall be made as provided in applicable law.
Section 6. SHAREHOLDERS ACTING WITHOUT A MEETING - DIRECTORS. Any action
which may be taken at a meeting of the Shareholders, may be taken without a
meeting or notice of meeting if authorized by a writing signed by all of the
Shareholders entitled to vote at a meeting for such purpose, and filed with the
Secretary of the corporation, provided, further, that while ordinarily Directors
can be elected by unanimous written consent, if the Directors fail to fill a
vacancy, then a Director to fill that vacancy may be elected by the written
consent of persons holding a majority of shares entitled to vote for the
election of Directors.
9
<PAGE>
Section 7. OTHER ACTIONS WITHOUT A MEETING. Unless otherwise provided for
under applicable law or the Articles of Incorporation, any action which may be
taken at any annual or special meeting of Shareholders may be taken without a
meeting and without prior notice, if a consent in writing, setting forth the
action so taken, signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to authorize to take
such action at a meeting at which all shares entitled to vote thereon were
present and voted.
Unless the consents of all Shareholders entitled to vote have been
solicited in writing,
(1) Notice of any Shareholder approval 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
(2) Prompt notice shall be given of the taking of any other
corporate action approved by Shareholders without a meeting be less
than unani mous written consent, to each of those Shareholders
entitled to vote who have not consented in writing.
Any Shareholder giving a written consent, or the Share- holder's
proxyholders, or a transferee of the shares of a personal representative of the
Shareholder or their respective proxyholders, may revoke the consent by a
writing received by the corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the corporation, but may not do so thereafter. Such
revocation is effective upon its receipt by the Secretary of the corporation.
Section 8. QUORUM. The holder of a majority of the shares entitled to vote
thereat, present in person, or represented by proxy, shall constitute a quorum
at all meetings of the Shareholders for the transaction of business except as
otherwise provided by law, by the Articles of Incorporation, or by these
By-Laws. If, however, such majority shall not be present or represented at any
meeting of the Shareholders, the shareholders entitled to vote thereat, present
in person, or by proxy, shall have the power to adjourn the meeting from time to
time, until the requisite amount of voting shares shall be present. At such
adjourned meeting at which the requisite amount of voting shares shall be
represented, any business may be transacted which might have been transacted at
a meeting as originally notified.
10
<PAGE>
If a quorum be initially present, the Shareholders may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum, if any action taken is approved by a
majority of the Shareholders required to initially constitute a quorum.
Section 9. VOTING. Only persons in whose names shares entitled to vote
stand on the stock records of the corporation on the day of any meeting of
Shareholders, unless some other day be fixed by the Board of Directors for the
determination of Share holders of record, and then on such other day, shall be
entitled to vote at such meeting.
Provided the candidate's name has been placed in nomination prior to the
voting and one or more Shareholders has given notice at the meeting prior to the
voting of the Shareholder's intent to cumulate the Shareholder's votes, every
Shareholder entitled to vote at any election for Directors of any corporation
for profit may cumulate their 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 or her shares are entitled to, or distribute his or her votes on
the same principle among as many candidates as he or she thinks fit.
The candidates receiving the highest number of votes up to the number of
Directors to be elected are elected.
The Board of Directors may fix a time in the future not exceeding thirty
(30) days preceding the date of any meeting of Shareholders or the date fixed
for the payment of any dividend or distribution, or for the allotment of rights,
or when any change or conversion or exchange of shares shall go into effect, as
a record date for the determination of the Shareholders entitled to notice of
and to vote at any such meeting, or entitled to receive any such dividend or
distribution, or any allotment of rights or to exercise the rights in respect to
any such change, conversion or exchange of shares. In such case only
Shareholders of record on the date so fixed shall be entitled to notice of and
to vote at such meeting, to receive such dividends, distribution or allotment of
rights, or to exercise such rights, as the case may be notwithstanding any
transfer of any share on the books of the corporation after any record date
fixed as aforesaid. The Board of Directors may close the books of the
corporation against transfers of shares during the whole or any part of such
period.
Section 10. PROXIES. Every Shareholder entitled to vote, or to execute
consents, may do so, either in person or by written proxy, executed in
accordance with the provisions of applicable law filed with the Secretary of the
corporation.
Section 11. ORGANIZATION. The President, or in the absence of the
President, any Vice President, shall call the meeting of the Shareholders to
11
<PAGE>
order, and shall act as Chairman of the meeting. In the absence of the President
and all of the Vice Presidents, Shareholders shall appoint a Chairman for such
meeting. The Secretary of the corporation shall act as Secretary of all meetings
of the Shareholders, but in the absence of the Secretary at any meeting of the
Shareholders, the presiding Officer may appoint any person to act as Secretary
of the meeting.
Section 12. INSPECTORS OF ELECTION. In advance of any meeting of
Shareholders, the Board of Directors may, if they so elect, appoint inspectors
of election to act at such meeting or any adjournment thereof. If inspectors of
election be not so appointed, or if any persons so appointed fail to appear or
refuse to act, the chairman of any such meeting may, and on the request of any
Shareholder or his or her proxy shall, make such appointment at the meeting in
which case the number of inspectors shall be either one (1) or three (3) as
determined by a majority of the Shareholders represented at the meeting.
ARTICLE V
CERTIFICATES AND TRANSFER OF SHARES
Section 1. CERTIFICATES FOR SHARES. Certificates for shares shall be of
such form and device as the Board of Directors may designate and shall state the
name of the record holder of the shares represented thereby; its number; date of
issuance; the number of shares for which it is issued; a statement of the
rights, privileges preferences and restriction, if any; a statement as to the
redemption or conversion, if any; a statement of liens or restrictions upon
transfer or voting, if any; if the shares be assessable or, if assessments are
collectible by personal action, a plain statement of such facts.
All certificates shall be signed in the name of the corporation by the
Chairman of the Board 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 or all of the signatures on the certificate may be facsimile. In case
any Officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed on a certificate shall have ceased to be that Officer,
transfer agent, or registrar before that certificate is issued, it may be issued
by the corporation with the same effect as if that person were an Officer,
transfer agent, or registrar at the date of issuance.
12
<PAGE>
Section 2. TRANSFER ON THE BOOKS. Upon surrender to the Secretary or
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succes sion, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 3. LOST OR DESTROYED CERTIFICATES. Any person claiming a
certificate of stock to be lost or destroyed shall make an affidavit or
affirmation of that fact and shall, if the Directors so require, give the
corporation a bond of indemnity, in form and with one or more sureties
satisfactory to the Board, in at least double the value of the stock represented
by said certificate, whereupon a new certificate may be issued in the same
tender and for the same number of shares as the one alleged to be lost or
destroyed.
Section 4. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may
appoint one or more transfer agents or transfer clerks, and one or more
registrars which shall be an incorporated bank or trust company, either domestic
or foreign, who shall be appointed at such times and places as the requirements
of the corporation may necessitate and the Board of Directors may designate.
Section 5. CLOSING STOCK TRANSFER BOOKS - RECORD DATE. In order that the
corporation may determine the Shareholders entitled to notice of any meeting or
to vote or entitled to receive payment of any dividend or other distribution or
allotment of any rights or entitled to exercise any rights in respect to any
other lawful action, the Board may fix, in advance, a record date, which shall
not be more than sixty (60) days nor less than ten (10) days prior to the date
of such meeting nor more than sixty (60) days prior to any other action.
If no record date is fixed; the record date for determining Shareholders
entitled to notice of or to vote at a meeting of Shareholders shall be at the
close of business on the business day next preceding the day on which notice is
given or if notice is waived, at the close of business on the business day next
preceding the day on which the meeting is held. The record date for determining
Shareholders entitled to give consent to corporate action in writing without a
meeting, when no prior action by the Board is necessary, shall be the day on
which the first written consent is given.
The record date for determining Shareholders for any other purpose shall be
at the close of business on the day on which the Board adopts the resolution
relating thereto, or the sixtieth (60th) day prior to the date of such other
action, whichever is later.
13
<PAGE>
ARTICLE VI
RECORDS - REPORTS - INSPECTION
Section 1. RECORDS. The corporation shall maintain, in accordance with
generally accepted accounting principles, adequate and correct accounts, books
and records of its business and properties. All of such books, records and
accounts shall be kept at its principal executive office as fixed by the Board
of Directors from time to time.
Section 2. INSPECTION OF BOOKS AND RECORDS. All books and records shall be
open to inspection of the Directors and Shareholders from time to time and in
the manner provided under applicable law.
Section 3. CERTIFICATION AND INSPECTION OF BY-LAWS. The original or a copy
of these By-Laws, as amended or otherwise altered to date, certified by the
Secretary, shall be kept at the corporation's principal executive office and
shall be open to inspection by the Shareholders at all reasonable times during
office hours.
Section 4. CHECK, 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 shall be determined from time to time by the Board
of Directors.
Section 5. CONTRACT, ETC. -- HOW EXECUTED. The Board of Directors,
except as in the By-Laws 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. Such authority may be general
or confined to specific instances. Unless so authorized by the Board of
Directors, no Officer, agent or employee shall have any power or authority to
bind the corporation by any contract or agreement, or to pledge its credit, or
to render it liable for any purpose or to any amount except as may be provided
under applicable law.
14
<PAGE>
ARTICLE VII
ANNUAL REPORTS
Section 1. REPORT TO SHAREHOLDERS, DUE DATE. The Board of Directors shall
cause an annual report to be sent to the Share holders not later than one
hundred twenty (120) days after the close of the fiscal or calendar year adopted
by the corporation. This report shall be sent at least fifteen (15) days before
the annual meeting of Shareholders to be held during the next fiscal year and in
the manner specified in Section 4 of the Article IV of these By-Laws for giving
notice to Shareholders of the corporation. The annual report shall contain a
balance sheet as of the end of the fiscal year and an income statement and
statement of changes in financial position for the fiscal year, accompanied by
any report of independent accountants or, if there is no such report, the
certificate of an authorized officer of the corporation that the statements were
prepared without audit from the books and records of the corporation.
ARTICLE VIII
AMENDMENTS TO BY-LAWS
Section 1. AMENDMENT BY SHAREHOLDERS. New By-Laws may be adopted or these
By-Laws may be amended or repealed by the vote or written consent of holders of
a majority of the outstanding shares entitled to vote; provided, however, that
if the Articles of Incorporation of the corporation set forth the number of
authorized Directors of the corporation, the authorized number of Directors may
be changed only by an amendment of the Article of Incor poration.
Section 2. POWERS OF DIRECTORS. Subject to the right of the Shareholders to
adopt, amend or repeal By-Laws, as provided in Section 1 of this Article VIII,
and the limitations, if any, under law, the Board of Directors may adopt, amend
or repeal any of these By-Laws other than a By-Law or amendment thereof changing
the authorized number of Directors.
Section 3. RECORD OF AMENDMENTS. Whenever an amendment or new By-Law is
adopted, it shall be copied in the book of By-Laws with the original By-Laws, in
the appropriate place. If any By-Law is repealed, the fact of repeal with the
date of the meeting at which the repeal was enacted or written assent was filed
shall be stated in said book.
ARTICLE IX
CORPORATE SEAL
Section 1. SEAL. The corporate seal shall be circular in form, and shall
have inscribed thereon the name of the corporation, the date and State of
incorporation.
15
<PAGE>
ARTICLE X
MISCELLANEOUS
Section 1. REPRESENTATION OF SHARES IN OTHER CORPORATIONS. Shares of other
corporations standing in the name of this corporation may be voted or
represented and all incidents thereto may be exercised on behalf of the
corporation by the Chairman of the Board, the President or any Vice President
and the Secretary or an Assistant Secretary.
Section 2. SUBSIDIARY CORPORATIONS. Shares of this corporation owned by a
subsidiary shall not be entitled to vote on any matter. A subsidiary for these
purposes is defined as a corporation, the shares of which possessing more than
25% of the total combined voting power of all classes of shares entitled to
vote, are owned directly or indirectly through one (1) or more subsidiaries.
Section 3. INDEMNITY. Subject to applicable law, the corporation may
indemnify any Director, Officer, agent or employee as to those liabilities and
on those terms and conditions as appropriate. In any event, the corporation
shall have the right to purchase and maintain insurance on behalf of any such
persons whether or not the corporation would have the power to indemnify such
person against the liability insured against.
Section 4. ACCOUNTING YEAR. The accounting year of the corporation shall be
fixed by resolution of the Board of Directors.
16
December 30, 1999
Solo & Hurst, Inc.
11260 North 92nd, Suite 1118
Scottsdale, Arizona 85260
Re: SOLO & HURST, INC.
Gentlemen:
The undersigned is the record owner of 1,100,000 shares of the common stock of
Solo & Hurst, Inc., par value $.001 per share (the "Shares), such Shares are
eligible for sale under Rule 144 promulgated under the Securities Act of 1933,
as amended, subject to certain limitations included in said Rule.
The Company intends to file a Form 10SB12G with the Securities and Exchange
Commission. Thereafter, during the pendency of said filing, the undersigned,
together with the other majority shareholders, and each of them, agreed as
follows:
1. The undersigned will not sell, contract to sell, or make any other
disposition of, or grant any purchase option for the sale of, any of the
shares of the common stock owned by the undersigned, directly or
indirectly, until such time as the Company has entered into a merger or
acquisition or the Company is no longer classified as a "blank check"
company, as that term is defined in the Form 10SB12G on file with the
Securities and Exchange Commission, whichever first occurs.
2. The undersigned acknowledges that Executive Registrar & Transfer Agency,
Inc., 3145 West Lewis, Suite 2, Phoenix, Arizona 85009, the transfer agent
for the Company, has been advised of the restrictions described herein and
that any attempts by the undersigned to violate said restriction may result
in legal action(s) by the Company. The undersigned further agrees, upon the
request of the Company, that in addition to any other restrictions
reflecting that the Shares have not been registered under the Securities
Act of 1933, as amended, may be placed on individual certificates issued.
Very truly yours,
/s/ Valerie J. Sams
- ---------------------------
VALERIE J. SAMS
cc: Executive Registrar & Transfer Company
December 30, 1999
Solo & Hurst, Inc.
11260 North 92nd, Suite 1118
Scottsdale, Arizona 85260
Re: SOLO & HURST, INC.
Gentlemen:
The undersigned is the record owner of 1,100,000 shares of the common stock of
Solo & Hurts, Inc., par value $.001 per share (the "Shares), such Shares are
eligible for sale under Rule 144 promulgated under the Securities Act of 1933,
as amended, subject to certain limitations included in said Rule.
The Company intends to file a Form 10SB12G with the Securities and Exchange
Commission. Thereafter, during the pendency of said filing, the undersigned,
together with the other majority shareholders, and each of them, agreed as
follows:
1. The undersigned will not sell, contract to sell, or make any other
disposition of, or grant any purchase option for the sale of, any of the
shares of the common stock owned by the undersigned, directly or
indirectly, until such time as the Company has entered into a merger or
acquisition or the Company is no longer classified as a "blank check"
company, as that term is defined in the Form 10SB12G on file with the
Securities and Exchange Commission, whichever first occurs.
2. The undersigned acknowledges that Executive Registrar & Transfer Agency,
Inc., 3145 West Lewis, Suite 2, Phoenix, Arizona 85009, the transfer agent
for the Company, has been advised of the restrictions described herein and
that any attempts by the undersigned to violate said restriction may result
in legal action(s) by the Company. The undersigned further agrees, upon the
request of the Company, that in addition to any other restrictions
reflecting that the Shares have not been registered under the Securities
Act of 1933, as amended, may be placed on individual certificates issued.
Very truly yours,
/s/ Scott McGovern
- ------------------------------
SCOTT McGOVERN
cc: Executive Registrar & Transfer Company
Michael L. Stuck, C.P.A., P.C.
7641 E. Gray Road, Suite G
Scottsdale, AZ 85260
January 19, 2000
To Whom It May Concern:
The firm of Michael L. Stuck, P.C., Certified Public Accountant consents to the
inclusion of their report of December 31, 1999, on the Financial Statements of
Solo & Hurst, Inc., as of December 31, 1999, in any filings that are necessary
now or in the near future with the U.S. Securities and Exchange Commission.
Very truly yours,
/s/ MICHAEL L. STUCK
---------------------------
Michael L. Stuck
Certified Public Accountant
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 20,000,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> (3,000)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (3,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<EPS-BASIC> (.001)
<EPS-DILUTED> (.001)
</TABLE>
