U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
PROVIDENCE CAPITAL I, INC.
(Name of Small Business Issuer in its charter)
Colorado 05-0508617
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
735 Broad Street, Suite 800
Chattanooga, Tennessee 37402
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (423) 265-5062
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Not Applicable Not Applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
FORWARD LOOKING STATEMENTS
THIS FORM 10-SB12G AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY
PROVIDENCE CAPITAL I, INC. (HEREINAFTER REFERRED TO AS "PROVIDENCE CAPITAL"
AND/OR "COMPANY") OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY
CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES
ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. FIFTEEN U.S.C.A. SECTIONS 77Z-2 AND
78U-5 (SUPP. 1996). THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT,
BELIEF OR CURRENT EXPECTATIONS OF PROVIDENCE CAPITAL AND MEMBERS OF ITS
MANAGEMENT TEAM AS WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE BASED.
PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS
ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES,
AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH
FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN
FORWARD-LOOKING STATEMENTS ARE SET FORTH IN THE SAFE HARBOR COMPLIANCE
STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS EXHIBIT 99.1 TO THIS FORM
10-SB12G, AND ARE HEREBY INCORPORATED HEREIN BY REFERENCE. THE COMPANY
UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS TO
REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES
TO FUTURE OPERATING RESULTS OVER TIME.
<PAGE> 1
RISK FACTORS
1. YEAR 2000.
It is possible that the Company's currently installed computer system,
software products or other business systems, or those of the Company's
customers, vendors or resellers, working either alone or in conjunction with
other software or systems, will not accept input of, store, manipulate and
output dates for the years 1999, 2000 or thereafter without error or
interruption (commonly known as the "Year 2000" problem). The Company has
conducted a review of its business systems, including its computer systems,
and is querying its customers, vendors and resellers as to their progress in
identifying and addressing problems that their computer systems may face in
correctly interrelating and processing date information as the year 2000
approaches and is reached.
The detail planning and inventory for the majority of the Company's legacy
systems that are being modified for Year 2000 compatibility has been completed
and such systems are in remediation.
The estimated cost of the Company's Year 2000 efforts is $1,000 to $1,500 over
1998 and 1999, the majority of which represents redirection of internal
resources. However, there can be no assurance that the Company will identify
all such Year 2000 problems in its computer systems or those
of its customers, vendors or resellers in advance of their occurrence or that
the Company will be able to successfully remedy any problems that are
discovered. The expenses of the Company's efforts to identify and address such
problems, or the expenses or liabilities to which the Company may become
subject as a result of such problems, could have a material adverse effect on
the Company's business, financial condition and results of operations.
In addition, failure of the Company to identify and remedy Year 2000 problems
could put the Company at a competitive disadvantage relative to companies that
have corrected such problems.
2. Control by Principal Shareholders, Officers and Directors.
The Company's principal shareholders, officers and directors will beneficially
own approximately ninety percent (90%) of the Company's Common Stock. As a
result, such persons may have the ability to control the Company and direct
its affairs and business. Such concentration of ownership may also have the
effect of delaying, deferring or preventing change in control of the Company.
See "Principal Stockholders."
3. Conflicts of Interest.
Certain conflicts of interest exist between the Company and its officers and
directors. They have other business interests to which they devote their
attention, and they may be expected to continue to do so although management
time should be devoted to the business of the Company. As a result, conflicts
of interest may arise that can be resolved only through their exercise of such
<PAGE> 2
judgment as is consistent with his fiduciary duties to the Company. See
"Management," and "Conflicts of Interest."
The Company's President, Vice President and all current shareholders own all
of the issued and outstanding stock of eight (8) additional corporations
(Providence Capital II, III, IV, V, VI, VII, IX, and X) which are shell
companies formed November 24. The Form 10-SB registration statement of
Providence Capital I through X may become effective by lapse of time on or
about May 17, 2000. (See "Item 5. Directors, Executive Officers, Promoters,
and Control Persons---Other Blind Pool Activities.") Thus, the Company may be
in competition with Providence Capital II, III, IV, V, VI, VII, VIII, IX, and
X in seeking merger candidates.
The Company's Directors may also elect, in the future, to form one or more
additional public shell companies with a business plan similar or identical to
that of the Company. Any such additional shell companies would also be in
direct competition with the Company for available business opportunities.
(See Item 5 - "Directors, Executive Officers, Promoters and Control Persons-
Conflicts of Interest.")
It is anticipated that Company's President and Vice President may actively
negotiate or otherwise consent to the purchase of a portion of their common
stock as a condition to, or in connection with, a proposed merger or
acquisition transaction. In this process, the Company's President and/or Vice
President may consider their own personal pecuniary benefit rather than the
best interests of other Company shareholders, and the other Company
shareholders are not expected to be afforded the opportunity to approve or
consent to any particular stock buy-out transaction. See "Conflicts of
Interest."
4. Possible Need for Additional Financing.
The Company has very limited funds, and such funds may not be adequate to take
advantage of any available business opportunities. Even if the Company's
funds prove to be sufficient to acquire an interest in, or complete a
transaction with, a business opportunity, the Company may not have enough
capital to exploit the opportunity. The ultimate success of the Company may
depend upon its ability to raise additional capital. The Company has not
investigated the availability, source, or terms that might govern the
acquisition of additional capital and will not do so until it determines a
need for additional financing. If additional capital is needed, there is no
assurance that funds will be available from any source or, if available, that
they can be obtained on terms acceptable to the Company. If not available,
the Company's operations will be limited to those that can be financed with
its modest capital.
5. Regulation of Penny Stocks.
The Company's securities, when available for trading, will be subject to a
Securities and Exchange Commission rule that imposes special sales practice
requirements upon broker-dealers who sell such securities to persons other
<PAGE> 3
than established customers or accredited investors. For purposes of the rule,
the phrase "accredited investors" means, in general terms, institutions with
assets in excess of $5,000,000, or individuals having a net worth in excess of
$1,000,000 or having an annual income that exceeds $200,000 (or that, when
combined with a spouse's income, exceeds $300,000). For transactions covered
by the rule, the broker-dealer must make a special suitability determination
for the purchaser and receive the purchaser's written agreement to the
transaction prior to the sale. Consequently, the rule may affect the ability
of broker-dealers to sell the Company's securities and also may affect the
ability of purchasers in this offering to sell their securities in any market
that might develop therefor.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1,
15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and 15g-7 under the Securities Exchange Act
of 1934, as amended. Because the securities of the Company may constitute
"penny stocks" within the meaning of the rules, the rules would apply to the
Company and to its securities. The rules may further affect the ability of
owners of Shares to sell the securities of the Company in any market that
might develop for them.
Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse.
Such patterns include (i) control of the market for the security by one or a
few broker-dealers that are often related to the promoter or issuer; (ii)
manipulation of prices through prearranged matching of purchases and sales and
false and misleading press releases; (iii) "boiler room" practices involving
high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (iv) excessive and undisclosed bid-ask differentials and
markups by selling broker-dealers; and (v) the wholesale dumping of the same
securities by promoters and broker-dealers after prices have been manipulated
to a desired level, along with the resulting inevitable collapse of those
prices and with consequent investor losses. The Company's management is aware
of the abuses that have occurred historically in the penny stock market.
Although the Company does not expect to be in a position to dictate the behavior
of the market or of broker-dealers who participate in the market, management
will strive within the confines of practical limitations to prevent the
described patterns from being established with respect to the Company's
securities.
6. No Operating History.
The Company was formed in November of 1999 for the purpose of registering its
common stock under the 1934 Act and acquiring a business opportunity. The
Company has no operating history, revenues from operations, or assets other
than cash from private sales of stock. The Company faces all of the risks of
a new business and the special risks inherent in the investigation,
acquisition, or involvement in a new business opportunity. The Company must
be regarded as a new or "start-up" venture with all of the unforeseen costs,
expenses, problems, and difficulties to which such ventures are subject.
<PAGE> 4
7. No Assurance of Success or Profitability.
There is no assurance that the Company will acquire a favorable business
opportunity. Even if the Company should become involved in a business
opportunity, there is no assurance that it will generate revenues or profits,
or that the market price of the Company's Common Stock will
be increased thereby.
8. Reporting Requirements May Delay Or Preclude Acquisition.
Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act"),
requires companies subject thereto to provide certain information about
significant acquisitions, including certified financial statements for the
company acquired, covering one or two 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.
9. 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 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.
10. Possible Business - Not Identified and Highly Risky.
The Company has not identified and has no commitments to enter into or acquire
a specific business opportunity and therefore can disclose the risks and
hazards of a business or opportunity that it may enter into in only a general
manner, and cannot disclose the risks and hazards of any specific business or
opportunity that it may enter into. An investor can expect a potential
business opportunity to be quite risky. The Company's acquisition of or
participation in a business opportunity will likely be highly illiquid and
could result in a total loss to the Company and its stockholders if the business
or opportunity proves to be unsuccessful. See Item 1 "Description of
Business."
11. Type of Business Acquired.
The type of business to be acquired may be one that desires to avoid effecting
its own public offering and the accompanying expense, delays, uncertainties,
and federal and state requirements which purport to protect investors. Because
of the Company's limited capital, it is more likely than
<PAGE> 5
not that any acquisition by the Company will involve other parties whose
primary interest is the acquisition of control of a publicly traded company.
Moreover, any business opportunity acquired may be currently unprofitable or
present other negative factors.
12. Impracticability of Exhaustive Investigation.
The Company's limited funds and the lack of full-time management will likely
make it impracticable to conduct a complete and exhaustive investigation and
analysis of a business opportunity before the Company commits its capital or
other resources thereto. Management decisions, therefore, will likely be made
without detailed feasibility studies, independent analysis, market surveys and
the like which, if the Company had more funds available to it, would be
desirable. The Company will be particularly dependent in making decisions
upon information provided by the promoter, owner, sponsor, or others
associated with the business opportunity seeking the Company's participation.
A significant portion of the Company's available funds may be expended for
investigative expenses and other expenses related to preliminary aspects of
completing an acquisition transaction, whether or not any business opportunity
investigated is eventually acquired.
13. Lack of Diversification.
Because of the limited financial resources that the Company has, it is
unlikely that the Company will be able to diversify its acquisitions or
operations. The Company's probable inability to diversify its activities into
more than one area will subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks associated
with the Company's operations.
14. Possible Reliance upon Unaudited Financial Statements.
The Company generally will require audited financial statements from companies
that it proposes to acquire. No assurance can be given, however, that audited
financials will be available to the Company. In cases where audited
financials are unavailable, the Company will have to rely upon unaudited
information received from target companies' management that has not been
verified by outside auditors. The lack of the type of independent verification
which audited financial statements would provide, increases the risk that the
Company, in evaluating an acquisition with such a target company, will not have
the benefit of full and accurate information about the financial
condition and operating history of the target company. This risk increases
the prospect that the acquisition of such a company might prove to be an
unfavorable one for the Company or the holders of the Company's securities.
Moreover, the Company will be subject to the reporting provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and thus
will be required to furnish certain information about significant
acquisitions, including audited financial statements for any business that it
acquires. Consequently, acquisition prospects that do not have, or are unable
to provide reasonable assurances that they will be able to obtain, the
required audited statements would not be considered by the Company to be
appropriate for acquisition so long as the reporting requirements of the
Exchange Act are applicable. Should the Company, during the time it remains
<PAGE> 6
subject to the reporting provisions of the Exchange Act, complete an
acquisition of an entity for which audited financial statements prove to be
unobtainable, the Company would be exposed to enforcement actions by the
Securities and Exchange Commission (the "Commission") and to corresponding
administrative sanctions, including permanent injunctions against the Company
and its management. The legal and other costs of defending a Commission
enforcement action are likely to have material, adverse consequences for the
Company and its business. The imposition of administrative sanctions would
subject the Company to further adverse consequences.
In addition, the lack of audited financial statements would prevent the
securities of the Company from becoming eligible for listing on NASDAQ, the
automated quotation system sponsored by the National Association of Securities
Dealers, Inc., or on any existing stock exchange. Moreover, the lack of such
financial statements is likely to discourage broker-dealers from becoming or
continuing to serve as market makers in the securities of the Company. Without
audited financial statements, the Company would almost certainly be unable to
offer securities under a registration statement pursuant to the Securities Act
of 1933, and the ability of the Company to raise capital would be significantly
limited until such financial statements were to become available.
15. Other Regulation.
An acquisition made by the Company may be of a business that is subject to
regulation or licensing by federal, state, or local authorities. Compliance
with such regulations and licensing can be expected to be a time-consuming,
expensive process and may limit other investment opportunities of the
Company.
16. Dependence upon Management; Limited Participation of Management.
The Company currently has three individuals who are serving as its sole
officers and directors. The Company will be heavily dependent upon their
skills, talents, and abilities to implement its business plan, and may, from
time to time, find that the inability of the officers and directors to devote
their full time attention to the business of the Company results in a delay in
progress toward implementing its business plan. Furthermore, since only three
individuals are serving as the officers and directors of the Company, it will
be entirely dependent upon their experience in seeking, investigating, and
acquiring a business and in making decisions regarding the Company's operations.
See "Management." Because investors will not be able to evaluate the merits of
possible business acquisitions by the Company, they should critically assess
the information concerning the Company's three officers and directors.
<PAGE> 7
17. Lack of Continuity in Management.
The Company does not have an employment agreement with its officers and
directors, and as a result, there is no assurance that they will continue to
manage the Company in the future. In connection with acquisition of a
business opportunity, it is likely the current officers and directors of the
Company may resign. A decision to resign will be based upon the identity of
the business opportunity and the nature of the transaction, and is likely to
occur without the vote or consent of the stockholders of the Company.
18. Indemnification of Officers and Directors.
The Company's Articles of Incorporation provide for the indemnification of its
directors, officers, employees, and agents, under certain circumstances,
against attorney's fees and other expenses incurred by them in any litigation
to which they become a party arising from their association
with or activities on behalf of the Company. The Company will also bear the
expenses of such litigation for any of its directors, officers, employees, or
agents, upon such person's promise to repay the Company therefor if it is
ultimately determined that any such person shall not have been entitled to
indemnification. This indemnification policy could result in substantial
expenditures by the Company which it will be unable to recoup.
19. Director's Liability Limited.
The Company's Articles of Incorporation exclude personal liability of its
directors to the Company and its stockholders for monetary damages for breach
of fiduciary duty except in certain specified circumstances. Accordingly, the
Company will have a much more limited right of action against its directors
than otherwise would be the case. This provision does not affect the
liability of any director under federal or applicable state securities laws.
20. Dependence upon Outside Advisors.
To supplement the business experience of its officers and directors, the
Company may be required to employ accountants, technical experts, appraisers,
attorneys, or other consultants or advisors. The selection of any such
advisors will be made by the Company's President without any input from
stockholders. Furthermore, it is anticipated that such persons may be engaged
on an "as needed" basis without a continuing fiduciary or other obligation to
the Company. In the event the President of the Company considers it necessary
to hire outside advisors, he may elect to hire persons who are affiliates, if
they are able to provide the required services.
21. Leveraged Transactions.
There is a possibility that any acquisition of a business opportunity by the
Company may be leveraged, i.e., the Company may finance the acquisition of the
business opportunity by borrowing against the assets of the business
opportunity to be acquired, or against the projected future revenues or
<PAGE> 8
profits of the business opportunity. This could increase the Company's
exposure to larger losses. A business opportunity acquired through a
leveraged transaction is profitable only if it generates enough revenues to
cover the related debt and expenses. Failure to make payments on the debt
incurred to purchase the business opportunity could result in the loss of a
portion or all of the assets acquired. There is no assurance that any business
opportunity acquired through a leveraged transaction will generate sufficient
revenues to cover the related debt and expenses.
22. Competition.
The search for potentially profitable business opportunities is intensely
competitive. The Company expects to be at a disadvantage when competing with
many firms that have substantially greater financial and management resources
and capabilities than the Company. These competitive conditions will exist in
any industry in which the Company may become interested.
23. No Foreseeable Dividends.
The Company has not paid dividends on its Common Stock and does not anticipate
paying such dividends in the foreseeable future.
24. Loss of Control by Present Management and Stockholders.
The Company may consider an acquisition in which the Company would issue as
consideration for the business opportunity to be acquired an amount of the
Company's authorized but unissued Common Stock that would, upon issuance,
represent the great majority of the voting power and equity of the Company.
The result of such an acquisition would be that the acquired company's
stockholders and management would control the Company, and the Company's
management could be replaced by persons unknown at this time. Such a merger
would result in a greatly reduced percentage of ownership of the Company by
its current shareholders. In addition, the Company's President and/or Vice
President could sell their control block of stock at a premium price to the
acquired company's stockholders.
25. No Public Market Exists.
There is no public market for the Company's common stock, and no assurance can
be given that a market will develop or that a shareholder ever will be able to
liquidate his investment without considerable delay, if at all. If a market
should develop, the price may be highly volatile. Factors such as those
discussed in this "Risk Factors" section may have a significant impact upon
the market price of the securities offered hereby. Owing to the low price of
the securities, many brokerage firms may not be willing to effect transactions
in the securities. Even if a purchaser finds a broker willing to effect a
transaction in these securities, the combination of brokerage commissions,
state transfer taxes, if any, and any other selling costs may exceed the
selling price. Further, many lending institutions will not permit the use of
such securities as collateral for any loans.
<PAGE> 9
26. Rule 144 Sales.
All of the outstanding shares of Common Stock held by present stockholders are
"restricted securities" within the meaning of Rule 144 under the Securities
Act of 1933, as amended.
As restricted shares, these shares may be resold only pursuant to an effective
registration statement or under the requirements of Rule 144 or other
applicable exemptions from registration under the Act and as required under
applicable state securities laws. Rule 144 provides in essence that a person
who has held restricted securities for a prescribed period may, under certain
conditions, sell every three months, in brokerage transactions, a number of
shares that does not exceed the greater of 1.0% of a company's outstanding
common stock or the average weekly trading volume during the four calendar
weeks prior to the sale. As a result of revisions to Rule 144 which became
effective on or about April 29, 1997, there will be no limit on the amount of
restricted securities that may be sold by a nonaffiliate after the restricted
securities have been held by the owner for a period of two years. A sale
under Rule 144 or under any other exemption from the Act, if available, or
pursuant to subsequent registrations of shares of Common Stock of present
stockholders, may have a depressive effect upon the price of the Common Stock
in any market that may develop. Of the total 734,000 shares of common stock
held by present stockholders of the Company, 734,000 shares which were issued
pursuant to Rule 701, may become available for resale under Rule 144, on or
about July 1, 2000.
27. Blue Sky Considerations.
Because the securities registered hereunder have not been registered for
resale under the blue sky laws of any state, the holders of such shares and
persons who desire to purchase them in any trading market that might develop
in the future, should be aware that there may be significant state
blue-sky law restrictions upon the ability of investors to sell the securities
and of purchasers to purchase the securities. Some jurisdictions may not
under any circumstances allow the trading or resale of blind-pool or
"blank-check" securities. Accordingly, investors should consider the
secondary market for the Company's securities to be a limited one.
<PAGE> 10
PART I
ITEM I. DESCRIPTION OF BUSINESS.
General
The Company was incorporated under the laws of the State of Colorado on
November 24, 1999, and is in the early developmental and promotional stages.
To date the Company's only activities have been organizational ones, directed
at developing its business plan and raising its initial capital. The Company
has not commenced any commercial operations. The Company has no full-time
employees and owns no real estate.
The proposed business activities described herein classify the Company as a
"blank check" or "shell company whose sole purpose at this time is to locate
and consummate a merger or acquisition with a private entity. Many states have
enacted statutes, rules and regulations limiting the sale of securities of
"blank check" companies in their respective jurisdictions. Management does
not believe it will undertake any efforts to cause a market to develop in the
Company's securities until such time as the Company has successfully
implemented its business plan described herein. However, if the Company
intends to facilitate the eventual creation of a public trading market in its
outstanding securities, it must consider that the Company's securities, when
available for trading, will be subject to a Securities and Exchange Commission
rule that imposes special sales practice requirements upon broker-dealers who
sell such securities to persons other than established customers or accredited
investors. For purposes of the rule, the phrase "accredited investors" means,
in general terms, institutions with assets in excess of $5,000,000, or
individuals having a net worth in excess of $1,000,000 or having an annual
income that exceeds $200,000 (or that, when combined with a spouse's income,
exceeds $300,000). For transactions covered by the rule, the broker-
dealer must make a special suitability determination for the purchaser and
receive the purchaser's written agreement to the transaction prior to the
sale. Consequently, the rule may affect the ability of broker-dealers to sell
the Company's securities and also may affect the ability of purchasers in this
offering to sell their securities in any market that might develop therefor.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1,
15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and 15g-7 under the Securities Exchange Act
of 1934, as amended. Because the securities of the Company may constitute
"penny stocks" within the meaning of the rules, the rules would apply to the
Company and to its securities. The rules may further affect the ability of
owners of Shares to sell the securities of the Company in any market that
might develop for them.
Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i)
control of the market for the security by one or a few broker-dealers that are
often related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) "boiler room" practices involving high-pressure sales tactics
<PAGE> 11
and unrealistic price projections by inexperienced sales persons; (iv) excessive
and undisclosed bid-ask differentials and markups by selling broker- dealers;
and (v) the wholesale dumping of the same securities by promoters and broker-
dealers after prices have been manipulated to a desired level, along with the
resulting inevitable collapse of those prices and with consequent investor
losses. The Company's management is aware of the abuses that have occurred
historically in the penny stock market.
Although the Company does not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to the Company's
securities.
As part of its business plan, this Company is filing this registration
statement on Form 10-SB on a voluntary basis in order to become a "public"
company by virtue of being subject to the reporting requirements of the
Securities Exchange Act of 1934.
The Company's business plan is to seek, investigate, and, if warranted,
acquire one or more properties or businesses, and to pursue other related
activities intended to enhance shareholder value. The acquisition of a
business opportunity may be made by purchase, merger, exchange of stock, or
otherwise, and may encompass assets or a business entity, such as a
corporation, joint venture, or partnership. The Company has very limited
capital, and it is unlikely that the Company will be able to take advantage of
more than one such business opportunity. The Company intends to seek
opportunities demonstrating the potential of long-term growth as opposed to
short-term earnings.
At the present time the Company has not identified any business opportunity
that it plans to pursue, nor has the Company reached any agreement or
definitive understanding with any person concerning an acquisition. The
Company's officers and directors have previously been involved in transactions
involving a merger between an established company and a shell entity, and
have a number of contacts within the field of corporate finance. As a result,
they have had preliminary contacts with representatives of numerous companies
concerning the general possibility of a merger or acquisition by a shell
company. However, none of these preliminary contacts or discussions involved
the possibility of a merger or acquisition transaction with the Company.
It is anticipated that the Company's officers and directors may contact
broker-dealers and other persons with whom they are acquainted who are
involved in corporate finance matters to advise them of the Company's
existence and to determine if any companies or businesses they represent have
an interest in considering a merger or acquisition with the Company. No
assurance can be given that the Company will be successful in finding or
acquiring a desirable business opportunity, given the limited funds that are
expected to be available for acquisitions, or that any acquisition that occurs
will be on terms that are favorable to the Company or its stockholders.
The Company's search will be directed toward small and medium-sized
enterprises which have a desire to become public corporations and which are
able to satisfy, or anticipate in the reasonably near future being able to
satisfy, the minimum asset requirements in order to qualify shares for trading
on NASDAQ or on a stock exchange (See "Investigation and Selection of Business
Opportunities"). The Company anticipates that the business opportunities
<PAGE> 12
presented to it will (i) be recently organized with no operating history, or a
history of losses attributable to under-capitalization or other factors; (ii)
be experiencing financial or operating difficulties; (iii) be in need of funds
to develop a new product or service or to expand into a new market; (iv) be
relying upon an untested product or marketing concept; or (v) have a
combination of the characteristics mentioned in (i) through (iv). The Company
intends to concentrate its acquisition efforts on properties or businesses
that it believes to be undervalued. Given the above factors, investors should
expect that any acquisition candidate may have a history of losses or low
profitability.
The Company does not propose to restrict its search for investment
opportunities to any particular geographical area or industry, and may,
therefore, engage in essentially any business, to the extent
of its limited resources. This includes industries such as service, finance,
natural resources, manufacturing, high technology, product development,
medical, communications and others. The Company's discretion in the selection
of business opportunities is unrestricted, subject to the availability of such
opportunities, economic conditions, and other factors.
As a consequence of this registration of its securities, any entity which has
an interest in being acquired by, or merging into the Company, is expected to
be an entity that desires to become a public company and establish a public
trading market for its securities. In connection with such a merger or
acquisition, it is highly likely that an amount of stock constituting control
of the Company would be issued by the Company or purchased from the current
principal shareholders of the Company by the acquiring entity or its
affiliates. If stock is purchased from the current shareholders, the
transaction is very likely to result in substantial gains to them relative to
their purchase price for such stock.
In the Company's judgment, none of its officers and directors would thereby
become an "underwriter" within the meaning of the Section 2(11) of the
Securities Act of 1933, as amended. The sale of a controlling interest by
certain principal shareholders of the Company could occur at a time when the
other shareholders of the Company remain subject to restrictions on the
transfer of their shares.
Depending upon the nature of the transaction, the current officers and
directors of the Company may resign their management positions with the
Company in connection with the Company's acquisition of a business
opportunity. See "Form of Acquisition," below, and "Risk Factors - The
Company - Lack of Continuity in Management." In the event of such a
resignation, the Company's current management would not have any control over
the conduct of the Company's business following the Company's combination with
a business opportunity.
It is anticipated that business opportunities will come to the Company's
attention from various sources, including its officers and directors, its
other stockholders, professional advisors such as attorneys and accountants,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals. The Company has
no plans, understandings, agreements, or commitments with any individual for
such person to act as a finder of opportunities for the Company.
<PAGE> 13
The Company does not foresee that it would enter into a merger or acquisition
transaction with any business with which its officers or directors are
currently affiliated. Should the Company determine in the future, contrary to
the foregoing expectations, that a transaction with an affiliate would be in
the best interests of the Company and its stockholders, the Company is in
general permitted by Colorado law to enter into such a transaction if:
1.The material facts as to the relationship or interest of the affiliate and
as to the contract or transaction are disclosed or are known to the Board of
Directors, and the Board in good faith authorizes the contract or transaction
by the affirmative vote of a majority of the disinterested directors, even
though the disinterested directors constitute less than a quorum; or
2.The material facts as to the relationship or interest of the affiliate and
as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or
3.The contract or transaction is fair as to the Company as of the time it is
authorized, approved or ratified, by the Board of Directors or the
stockholders.
Investigation and Selection of Business Opportunities
To a large extent, a decision to participate in a specific business
opportunity may be made upon management's analysis of the quality of the other
company's management and personnel, the anticipated acceptability of new
products or marketing concepts, the merit of technological changes, the
perceived benefit the company will derive from becoming a publicly held
entity, and numerous other factors which are difficult, if not impossible, to
analyze through the application of any objective criteria. In many instances,
it is anticipated that the historical operations of a specific business
opportunity may not necessarily be indicative of the potential for the future
because of the possible need to shift marketing approaches substantially,
expand significantly, change product emphasis, change or substantially augment
management, or make other changes. The Company will be dependent upon the
owners of a business opportunity to identify any such problems which may exist
and to implement, or be primarily responsible for the implementation of,
required changes.
Because the Company may participate in a business opportunity with a newly
organized firm or with a firm which is entering a new phase of growth, it
should be emphasized that the Company will incur further risks, because
management in many instances will not have proved its abilities or
effectiveness, the eventual market for such company's products or services
will likely not be established, and such company may not be profitable when
acquired.
<PAGE> 14
It is anticipated that the Company will not be able to diversify, but will
essentially be limited to one such venture because of the Company's limited
financing. This lack of diversification will not permit the Company to offset
potential losses from one business opportunity against profits from another,
and should be considered an adverse factor affecting any decision to purchase
the Company's securities.
It is emphasized that management of the Company may effect transactions having
a potentially adverse impact upon the Company's shareholders pursuant to the
authority and discretion of the Company's management to complete acquisitions
without submitting any proposal to the stockholders for their consideration.
Holders of the Company's securities should not anticipate that the Company
necessarily will furnish such holders, prior to any merger or acquisition,
with financial statements, or any other documentation, concerning a target
company or its business. In some instances, however, the proposed participation
in a business opportunity may be submitted to the stockholders for their
consideration, either voluntarily by such directors to seek the stockholders'
advice and consent or because state law so requires.
The analysis of business opportunities will be undertaken by or under the
supervision of the Company's President, who is not a professional business
analyst. See "Management." Since Company management has no current plans to
use any outside consultants or advisors to assist in the investigation and
selection of business opportunities, no policies have been adopted regarding
use of such consultants or advisors, the criteria to be used in selecting such
consultants or advisors, the services to be provided, the term of service, or
regarding the total amount of fees that may be paid. As of the date of this
filing, the Company owed $125,000 in organizational, legal and consulting fees
to Nadeau & Simmons, P.C., counsel for the Company, in connection with initial
reviews of the Company's business plan, organizational and operating
activities and preparation of this registration statement and all accompanying
documentation.
The Company anticipates that it will consider, among other things, the
following factors:
1.Potential for growth and profitability, indicated by new technology,
anticipated market expansion, or new products;
2.The Company's perception of how any particular business opportunity will be
received by the investment community and by the Company's stockholders;
3.Whether, following the business combination, the financial condition of the
business opportunity would be, or would have a significant prospect in the
foreseeable future of becoming sufficient to enable the securities of the
Company to qualify for listing on an exchange or on a national automated
securities quotation system, such as NASDAQ, so as to permit the trading of
such securities to be exempt from the requirements of Rule 15c2-6 recently
adopted by the Securities and Exchange Commission. See "Risk Factors - The
Company - Regulation of Penny Stocks."
<PAGE> 15
4.Capital requirements and anticipated availability of required funds, to be
provided by the Company or from operations, through the sale of additional
securities, through joint ventures or similar arrangements, or from other
sources;
5.The extent to which the business opportunity can be advanced;
6.Competitive position as compared to other companies of similar size and
experience within the industry segment as well as within the industry as a
whole;
7.Strength and diversity of existing management, or management prospects that
are scheduled for recruitment;
8.The cost of participation by the Company as compared to the perceived
tangible and intangible values and potential; and
9.The accessibility of required management expertise, personnel, raw
materials, services, professional assistance, and other required items.
In regard to the possibility that the shares of the Company would qualify for
listing on NASDAQ, the current standards include the requirements that the
issuer of the securities that are sought to be listed have total assets of at
least $4,000,000 and total capital and surplus of at least $2,000,000, and
proposals have recently been made to increase these qualifying amounts. Many,
and perhaps most, of the business opportunities that might be potential
candidates for a combination with the Company would not satisfy the NASDAQ
listing criteria.
No one of the factors described above will be controlling in the selection of
a business opportunity, and management will attempt to analyze all factors
appropriate to each opportunity and make a determination based upon reasonable
investigative measures and available data. 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.
Potential investors must recognize that, because of the Company's limited
capital available for investigation and management's limited experience in
business analysis, the Company may not discover or adequately evaluate adverse
facts about the opportunity to be acquired.
The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals and
the selection of a business opportunity may take
several months or more.
Prior to making a decision to participate in a business opportunity, the
Company will generally request that it be provided with written materials
regarding the business opportunity containing such items as a description of
products, services and company history; management resumes; financial
information; available projections, with related assumptions upon which they
are based; an explanation of proprietary products
<PAGE> 16
and services; evidence of existing patents, trademarks, or services marks, or
rights thereto; present and proposed forms of compensation to management; a
description of transactions between such company and its affiliates during
relevant periods; a description of present and required facilities; an analysis
of risks and competitive conditions; a financial plan of operation and estimated
capital requirements; audited financial statements, or if they are not
available, unaudited financial statements, together with reasonable assurances
that audited financial statements would be able to be produced within a
reasonable period of time not to exceed 60 days following completion of a
merger transaction; and other information deemed relevant.
As part of the Company's investigation, the Company's executive officers and
directors may meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis or 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. There will be no loan
agreements or understandings between the Company and third parties, nor does
the Company intend to raise any operating capital by implementing private
placements of restricted stock and/or public offerings of its common stock.
It is possible that the range of business opportunities that might be
available for consideration by the Company could be limited by the impact of
Securities and Exchange Commission regulations regarding purchase and sale of
"penny stocks." The regulations would affect, and possibly impair, any market
that might develop in the Company's securities until such time as they qualify
for listing on NASDAQ or on another exchange which would make them exempt from
applicability of the "penny stock" regulations. See "Risk Factors - -
Regulation of Penny Stocks."
Company management believes that various types of potential merger or
acquisition candidates might find a business combination with the Company to
be attractive. These include acquisition candidates desiring to create a public
market for their shares in order to enhance liquidity for current shareholders,
acquisition candidates which have long-term plans for raising capital through
the public sale of securities and believe that the possible prior existence of
a public market for their securities would be beneficial, and acquisition
candidates which plan to acquire additional assets through issuance of
securities rather than for cash, and believe that the possibility of development
of a public market for their securities will be of assistance in that process.
Acquisition candidates which have a need for an immediate cash infusion are
not likely to find a potential business combination with the Company to be an
attractive alternative.
Form of Acquisition
It is impossible to predict the manner in which the Company may participate in
a business opportunity. Specific business opportunities will be reviewed as
well as the respective needs and desires of the Company and the promoters of
the opportunity and, upon the basis of that review and the relative
<PAGE> 17
negotiating strength of the Company and such promoters, the legal structure or
method deemed by management to be suitable will be selected. Such structure
may include, but is not limited to leases, purchase and sale agreements,
licenses, joint ventures and other contractual arrangements. The Company may
act directly or indirectly through an interest in a partnership, corporation
or other form of organization. Implementing such structure may require the
merger, consolidation or reorganization of the Company with other corporations
or forms of business organization, and although it is likely, there is no
assurance that the Company would be the surviving entity. In addition, the
present management and stockholders of the Company most likely will not have
control of a majority of the voting shares of the Company following a
reorganization transaction. As part of such a transaction, the Company's
existing directors may resign and new directors may be appointed without any
vote by stockholders.
Management may actively negotiate or otherwise consent to the purchase of any
portion of their common shares as a condition to or in connection with a
proposed merger or acquisition transaction.
It is emphasized that management of the Company may effect transactions having
a potentially adverse impact upon the Company's shareholders pursuant to the
authority and discretion of the Company's management to complete acquisitions
without submitting any proposal to the stockholders for their consideration.
Holders of the Company's securities should not anticipate that the Company
necessarily will furnish such holders, prior to any merger or acquisition,
with financial statements, or any other documentation, concerning a target
company or its business. In some instances, however, the proposed participation
in a business opportunity may be submitted to the stockholders for their
consideration, either voluntarily by such directors to seek the stockholders'
advice and consent or because state law so requires.
It is likely that the Company will acquire its participation in a business
opportunity through the issuance of Common Stock or other securities of the
Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" reorganization under
the Internal Revenue Code of 1986, depends upon the issuance to the stockholders
of the acquired company of a controlling interest (i.e. 80% or more) of the
common stock of the combined entities immediately following the reorganization.
If a transaction were structured to take advantage of these provisions rather
than other "tax free" provisions provided under the Internal Revenue Code, the
Company's current stockholders would retain in the aggregate 20% or less of the
total issued and outstanding shares. This could result in substantial
additional dilution in the equity of those who were stockholders of the
Company prior to such reorganization. Any such issuance of additional shares
might also be done simultaneously with a sale or transfer of shares representing
a controlling interest in the Company by the current officers, directors and
principal shareholders. (See "Description of Business - General").
It is anticipated that any new securities issued in any reorganization would
be issued in reliance upon exemptions, if any are available, from registration
under applicable federal and state securities laws. In some circumstances,
however, as a negotiated element of the transaction, the Company may agree to
register such securities either at the time the transaction is consummated, or
under certain conditions or at specified times thereafter. The issuance of
substantial additional securities and their potential sale into any trading
market that might develop in the Company's securities may have a depressive
effect upon such market.
<PAGE> 18
The Company will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of such
agreement cannot be predicted, generally such an agreement would require
specific representations and warranties by all of the parties thereto, specify
certain events of default, detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing, outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.
As a general matter, the Company anticipates that it, and/or its officers and
principal shareholders will enter into a letter of intent with the management,
principals or owners of a prospective business opportunity prior to signing a
binding agreement. Such a letter of intent will set forth the terms of the
proposed acquisition but will not bind any of the parties to consummate the
transaction. Execution of a letter of intent will by no means indicate that
consummation of an acquisition is probable. Neither the Company nor any of
the other parties to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement concerning the acquisition
as described in the preceding paragraph is executed. Even after a definitive
agreement is executed, it is possible that the acquisition would not be
consummated should any party elect to exercise any right provided in the
agreement to terminate it on specified grounds.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others. If a
decision is made not to participate in a specific business opportunity, the
costs theretofore incurred in the related investigation would not be
recoverable. Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are provided,
the inability of the Company to pay until an indeterminate future time may
make it impossible to procure goods and services.
Investment Company Act and Other Regulation
The Company may participate in a business opportunity by purchasing, trading
or selling the securities of such business. The Company does not, however,
intend to engage primarily in such activities. Specifically, the Company
intends to conduct its activities so as to avoid being classified as an
"investment company" under the Investment Company Act of 1940 (the "Investment
Act"), and therefore to avoid application of the costly and restrictive
registration and other provisions of the Investment Act, and the regulations
promulgated thereunder.
Section 3(a) of the Investment Act contains the definition of an "investment
company," and it excludes any entity that does not engage primarily in the
business of investing, reinvesting or trading in securities, or that does not
engage in the business of investing, owning, holding or trading "investment
securities" (defined as "all securities other than government securities or
securities of
<PAGE> 19
majority-owned subsidiaries") the value of which exceeds 40% of the value of
its total assets (excluding government securities, cash or cash items). The
Company intends to implement its business plan in a manner which will result
in the availability of this exception from the definition of "investment
company." Consequently, the Company's participation in a business or
opportunity through the purchase and sale of investment securities will be
limited.
The Company's plan of business may involve changes in its capital structure,
management, control and business, especially if it consummates a
reorganization as discussed above. Each of these areas is regulated by the
Investment Act, in order to protect purchasers of investment company securities.
Since the Company will not register as an investment company, stockholders
will not be afforded these protections.
Any securities which the Company might acquire in exchange for its Common
Stock will be "restricted securities" within the meaning of the Securities Act
of 1933, as amended (the "Act"). If the Company elects to resell such
securities, such sale cannot proceed unless a registration statement has been
declared effective by the Securities and Exchange Commission or an exemption
from registration is available. Section 4(1) of the Act, which exempts sales of
securities not involving a distribution, would in all likelihood be available
to permit a private sale. Although the plan of operation does not contemplate
resale of securities acquired, if such a sale were to be necessary, the
Company would be required to comply with the provisions of the Act to effect
such resale.
An acquisition made by the Company may be in an industry which is regulated or
licensed by federal, state or local authorities. Compliance with such
regulations can be expected to be a
time-consuming and expensive process.
Competition
The Company expects to encounter substantial competition in its efforts to
locate attractive opportunities, primarily from business development
companies, venture capital partnerships and corporations, venture capital
affiliates of large industrial and financial companies, small investment
companies, and wealthy individuals. Many of these entities will have
significantly greater experience, resources and managerial capabilities than
the Company and will therefore be in a better position than the Company to
obtain access to attractive business opportunities. The Company also will
experience competition from other public "blind pool" companies, many of which
may have more funds available than does the Company.
Administrative Offices
The Company currently maintains its offices at 735 Broad Street, Suite 800,
Chattanooga, Tennessee 37402. The Company's telephone number is (423)
265-5062. Other than this mailing address, the Company does not currently
maintain any other office facilities, and does not anticipate the need for
maintaining additional office facilities at any time in the foreseeable
future. The Company pays no rent or other fees for the use of this address.
<PAGE> 20
Employees
The Company is a development stage company and currently has no employees.
Management of the Company expects to use consultants, attorneys and
accountants as necessary, and does not anticipate a need to engage any full-time
employees so long as it is seeking and evaluating business opportunities.
The need for employees and their availability will be addressed in connection
with the decision whether or not to acquire or participate in specific business
opportunities. Although there is no current plan with respect to its nature
or amount, remuneration may be paid to or accrued for the benefit of, the
Company's officers prior to, or in conjunction with, the completion of a
business acquisition. The Company's officers have accepted common stock for
services rendered for consulting, organizing the corporation, seeking merger
candidates and evaluating these candidates. See "Executive Compensation" and
under "Certain Relationships and Related Transactions."
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
General
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.
While the Company will attempt to obtain audited financial statements of a
target entity, there is no assurance that such audited financial statements
will be available. The Board of Directors does intend to obtain certain
assurances of value of the target entity's assets prior to consummating such a
transaction, with further assurances that an audited statement would be
provided within seventy-five days after closing of such a transaction. Closing
documents relative thereto will include representations that the value of the
assets conveyed to or otherwise so transferred will not materially differ from
the representations included in such closing documents.
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 an SEC reporting company. Any business
combination or transaction will likely result in a significant issuance of
shares and substantial dilution to present stockholders of the Company.
The 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
<PAGE> 21
interest in a publicly registered company without incurring the cost and time
required to conduct an initial public offering. The owners of the business
opportunities will, however, incur significant legal and accounting costs in
connection with the acquisition of a business opportunity, including the costs
of preparing Form 8-K's, 10-K's or 10-KSB's, agreements and related reports
and documents. The Securities Exchange Act of 1934 (the "34 Act"),
specifically requires that any merger or acquisition candidate comply with all
applicable reporting requirements, which include providing audited financial
statements to be included within the numerous filings relevant to complying
with the 34 Act. Nevertheless, the officers and directors of the Company have
not conducted market research and are not aware of statistical data which
would support the perceived benefits of a merger or acquisition transaction
for the owners of a business opportunity.
As stated hereinabove, 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 34
Act. Included in these requirements is the affirmative duty of the Company to
file independent audited financial statements as part of its Form 8-K to be
filed with the Securities and Exchange Commission upon consummation of a
merger or acquisition, as well as the Company's audited financial statements
included in its annual report on Form 10-K (or 10-KSB, as applicable). If
such audited financial statements are not available at closing, or within time
parameters necessary to insure the Company's compliance with the requirements
of the 34 Act, or if the audited financial statements provided do not conform
to the representations made by the candidate to be acquired in the closing
documents, the closing documents may provide that the proposed transaction
will be voidable, at the discretion of the present management of the Company.
The Company's officers and shareholders have verbally agreed that they will
advance to the Company any additional funds which the Company needs for
operating capital and for costs in connection with searching for or completing
an acquisition or merger. These persons have further agreed that such
advances will be made in proportion to each person's percentage ownership of
the Company. These persons have also agreed that such advances will be made
interest free without expectation of repayment unless the owners of the
business which the Company acquires or merges with agree to repay all or a
portion of such advances. Such repayment will in no way be a condition to the
selection of a target company. There is no dollar cap on the amount of money
which such persons will advance to the Company. The Company will not borrow
any funds from anyone other than its current shareholders for the purpose of
repaying advances made by the shareholders, and the Company will not borrow
any funds to make any payments to the Company's promoters, management or their
affiliates or associates.
Liquidity and Capital Resources
The Company remains in the development stage and, since inception, has
experienced no significant change in liquidity or capital resources or
stockholder's equity. The Company's balance sheet as of
December 31, 1999, reflects a current asset value of $4,265.00, and a total
asset value of $4,265 in the form of cash and capitalized organizational
costs.
<PAGE> 22
The Company will carry out its plan of business as discussed above. The
Company cannot predict to what extent its liquidity and capital resources will
be diminished prior to the consummation of a business combination or whether
its capital will be further depleted by the operating losses (if any) of the
business entity which the Company may eventually acquire.
Results of Operations
During the period from November 20, 1999 (inception) through December 31,
1999, the Company has engaged in no significant operations other than
organizational activities, acquisition of capital
and preparation for registration of its securities under the Securities
Exchange Act of 1934, as amended. No revenues were received by the Company
during this period.
For the current fiscal year, the Company anticipates incurring a loss as a
result of organizational expenses, expenses associated with registration under
the Securities Exchange Act of 1934, and expenses associated with locating and
evaluating acquisition candidates. The Company anticipates that until a
business combination is completed with an acquisition candidate, it will not
generate revenues other than interest income, and may continue to operate at a
loss after completing a business combination, depending upon the performance
of the acquired business.
Need for Additional Financing
The Company believes that its existing capital will be sufficient to meet the
Company's cash needs, including the costs of compliance with the continuing
reporting requirements of the Securities Exchange Act of 1934, as amended, for
a period of approximately one year. Accordingly, in the event the Company is
able to complete a business combination during this period, it anticipates
that its existing capital will be sufficient to allow it to accomplish the
goal of completing a business combination. There is no assurance, however,
that the available funds will ultimately prove to be adequate to allow it to
complete a business combination, and once a business combination is completed,
the Company's needs for additional financing are likely to increase
substantially.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109") issued by the Financial Accounting Standards Board ("FASB"), under which
deferred tax assets and liabilities are provided on differences between the
carrying amounts for financial reporting and the tax basis of assets and
liabilities for income tax purposes using the enacted tax rates.
Under SFAS 109, deferred tax assets may be recognized for temporary
differences that will result in deductible amounts in future periods. A
valuation allowance is recognized, if on the weight of available evidence, it
is more likely than not that some portion or all of the deferred tax asset
will not be realized.
<PAGE> 23
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
("SFAS 121") issued by the FASB, is effective for financial statements for
fiscal years beginning after December 15, 1995. The standard establishes new
guidelines regarding when impairment losses on long-lived assets, which
include plant and equipment, certain identifiable intangible assets, and
goodwill, should be recognized and how impairment losses should be measured.
The Company does not expect adoption to have a material effect on its
financial position or results of operations.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123") issued by the FASB, is effective for
specific transactions entered into after December 15, 1995. The disclosure
requirements of SFAS 123 are effective for financial statements for fiscal
years beginning no later than December 15, 1995. The new standard established
a fair value method of accounting for stock-based compensation plans and for
transactions in which an entity acquires goods or services from non-employees
in exchange for equity instruments. The Company does not expect adoption to
have a material effect on its financial position or results of operations.
Federal Income Tax Aspects of Investment in the Company
The discussion contained herein has been prepared by the Company and is based
on existing law as contained in the Code, amended United States Treasury
Regulations ("Treasury Regulations"), administrative rulings and court
decisions as of the date of this Registration Statement. No assurance can be
given that future legislative enactments, administrative rulings or court
decisions will not modify the legal basis for statements contained in this
discussion. Any such development may be applied retroactively to transactions
completed prior to the date thereof, and could contain provisions having an
adverse affect upon the Company and the holders of the Common Stock. In
addition, several of the issues dealt with in this summary are the subject of
proposed and temporary Treasury Regulations. No assurance can be given that
these regulations will be finally adopted in their present form.
Basis in Common Stock
The tax basis that a Shareholder will have in his Common Stock will equal his
cost in acquiring his Common Stock. If a Shareholder acquires Common Stock at
different times or at different prices, he must maintain records of those
transactions so that he can accurately report gain or loss realized upon
disposition of the Common Stock.
<PAGE> 24
Dividends on Common Stock
Distributions made by the Company with respect to the Common Stock will be
characterized as dividends that are taxable as ordinary income to the extent
of the Company's current or accumulated earnings and profits ("earnings and
profits"), if any, as determined for U.S. federal income tax purposes. To the
extent that a distribution on the Common Stock exceeds the holder's allocable
share of the Company's earnings and profits, such distribution will be treated
first as a return of capital that will reduce the holder's adjusted tax basis
in such Common Stock, and then as taxable gain to the extent the distribution
exceeds the holder's adjusted tax basis in such Common Stock. The gain will
generally be taxed as a long-term capital gain if the holder's holding period
for the Common Stock is more than one year.
The availability of earnings and profits in future years will depend on future
profits and losses which cannot be accurately predicted. Thus, there can be
no assurance that all or any portion of a distribution on the Common Stock
will be characterized as a dividend for general income tax purposes.
Corporate shareholders will not be entitled to claim the dividends received
deduction with respect to distributions that do not qualify as dividends. See
the discussion regarding the dividends received deduction below.
Redemption of Common Stock
The Company does not have the right to redeem any Common Stock. However, any
redemption of Common Stock, with the consent of the holder, will be a taxable
event to the redeemed holder.
The Company does not believe that the Common Stock will be treated as debt for
federal income tax purposes. However, in the event that the Common Stock is
treated as debt for federal tax purposes, a holder generally will recognize
gain or loss upon the redemption of the Common Stock measured by the difference
between the amount of cash or the fair market value of property received
and the holder's tax basis in the redeemed Common Stock. To the extent the
cash or property received are attributable to accrued interest, the holder may
recognize ordinary income rather than capital gain. Characterization of the
Common Stock as debt would also cause a variety of other tax implications,
some of which may be detrimental to either the holders, the Company, or both
(including, for example, original issue discount treatment to the Investors).
Potential Investors should consult their tax advisors as to the various
ramifications of debt characterization for federal income tax purposes.
Other Disposition of the Common Stock
Upon the sale or exchange of shares of Common Stock, to or with a person other
than the Company, a holder will recognize capital gain or loss equal to the
difference between the amount realized on such sale or exchange and the holder's
adjusted basis in such stock. Any capital gain or loss recognized will
generally be treated as a long-term capital gain or loss if the holder held
such stock for more than one year. For this purpose, the period for which the
Common Stock was held would be included in the holding period of the Common
Stock received upon a conversion.
<PAGE> 25
State, Local and Foreign Taxes
In addition to the federal income tax consequences described above,
prospective investors should consider potential state, local and foreign tax
consequences of an investment in the Common Stock.
ERISA Considerations for Tax-Exempt Investors/Shareholders
General Fiduciary Requirements
Title I of ERISA includes provisions governing the responsibility of
fiduciaries to their Qualified Plans. Qualified Plans must be administered
according to these rules. Keogh plans that cover only partners of a
partnership or self-employed owners of a business are not subject to the
fiduciary duty rules of ERISA, but are subject to the prohibited transaction
rules of the Code.
Under ERISA, any person who exercises any authority or control respecting the
management or disposition of the assets of a Qualified Plan is considered to
be a fiduciary of such Qualified Plan (subject to certain exceptions not here
relevant).
ERISA Section 404(a)(1) requires a fiduciary of a Qualified Plan to "discharge
his duties with respect to a plan solely in the interest of the participants
and beneficiaries and (A) for the exclusive purpose of: (i) providing benefits
to participants and their beneficiaries, and (ii) defraying reasonable
expenses of administering the plan; (B) with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent man acting in
a like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims; (C) by diversifying the
investments of a plan so as to minimize the risk of large losses, unless under
the circumstances it is clearly prudent not to do so; and (D) in accordance
with the documents and instruments governing the plan."
FIDUCIARIES WHO BREACH THE DUTIES THAT ERISA IMPOSES MAY SUFFER A WIDE VARIETY
OF LEGAL AND EQUITABLE REMEDIES, INCLUDING (i) THE REQUIREMENT TO RESTORE
QUALIFIED PLAN LOSSES AND TO PAY OVER ANY FIDUCIARY'S PROFITS TO THE QUALIFIED
PLAN; (ii) REMOVAL AS FIDUCIARY OF THE QUALIFIED PLAN; AND (iii) LIABILITY FOR
EXCISE TAXES THAT SECTION 4975 OF THE CODE IMPOSES.
<PAGE> 26
ITEM III. DESCRIPTION OF PROPERTY.
The Company currently maintains an office and mailing address at 735 Broad
Street, Suite 800, Chattanooga, Tennessee 37402. The Company pays no rent for
the use of this mailing address. The Company does not believe that it will
need to maintain additional offices at any time in the foreseeable future in
order to carry out its plan of operations described herein. The Company's
telephone number is (423) 265-5062.
ITEM IV. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth as of December 31, 1999, information with
respect to the beneficial ownership of the Company's outstanding Common Stock
by (i) each director and executive officer of the Company, (ii) all directors
and executive officers of the Company as a group, and (iii) each shareholder
who was known by the Company to be the beneficial owner of more than 5% of the
Company's outstanding Common Stock. Except as otherwise indicated, the
persons or entities listed below have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by them.
<TABLE>
<CAPTION>
Common Shares Owned
Name and Address Number of Percent of
Shares Owned Class Owned
Beneficially
<S> <C> <C>
Richard Nadeau, Jr. 100,000(1) 13.60%
1250 Turks Head Building
Providence, RI 02903
James R. Simmons 100,000(1) 13.60%
1250 Turks Head Building
Providence, RI 02903
Mark T. Thatcher 100,000(1) 13.60%
1250 Turks Head Building
Providence, RI 02903
<PAGE> 27
James H. Brennan, III 100,000(1) 13.60%
735 Broad Street, Suite 800
Chattanooga, TN 37402
Doug Dyer 100,000(1) 13.60%
735 Broad Street, Suite 800
Chattanooga, TN 37402
David W. Pequet 100,000(1) 13.60%
105 East First Street,
Suite 101
Hinsdale, IL 60521
Mark Margason 100,000(1) 13.60%
105 East First Street,
Suite 101
Hinsdale, IL 60521
All directors and executive
officers as a group
(3 persons) 700,000(1) 95.40%
</TABLE>
(1) The persons listed are the sole officers and directors of the Company.
Management has no plans to issue any additional securities to management,
promoters or their affiliates or associates and will do so only if such
issuance is in the best interests of shareholders of the Company and complies
with all applicable federal and state securities rules and regulations.
Although the Company has a very large amount of authorized but unissued common
and preferred stock that may be issued without further shareholder approval or
notice, it is the intention of the Company to avoid inhibiting certain
transactions with prospective acquisition or merger candidates,
based upon the perception by such candidate that they may be engaged in a
rapidly expanding industry (i.e. Internet) and cannot afford to proxy
shareholders each time their management needs to authorize additional shares.
<PAGE> 28
ITEM V. DIRECTORS, EXECUTIVE OFFICES, PROMOTERS AND CONTROL PERSONS
The directors and executive officers currently serving the Company are as
follows:
<TABLE>
<CAPTION>
Name Age Positions Held and Tenure
<S> <C> <C>
Richard Nadeau, Jr. 46 President and Director since
November 24, 1999
James R. Simmons 38 Vice President and Director since
November 24, 1999
Mark T. Thatcher 35 Secretary and Director since
November 24, 1999
</TABLE>
The directors named above will serve until the first annual meeting of the
Company's stockholders. Thereafter, directors will be elected for one-year
terms at the annual stockholders' meeting.
Officers will hold their positions at the pleasure of the board of directors,
absent any employment agreement, of which none currently exists or is
contemplated. There is no arrangement or understanding between the directors
and officers of the Company and any other person pursuant to which any
director or officer was or is to be selected as a director or officer.
The directors and officers of the Company will devote their time to the
Company's affairs on an "as needed" basis. As a result, the actual amount of
time which they will devote to the Company's affairs is unknown and is likely
to vary substantially from month to month.
Biographical Information
Richard Nadeau, Jr.--graduated with honors from Colby College in 1979 and from
Georgetown University Law School in 1982. During law school, Rick was a law
review editor and a clerk at several law firms, including Tobin & Silverstein
in Providence, Goldstein & Manello in Boston, and King & Newmyer in
Washington, D.C. After graduating from Georgetown, Rick was admitted to the
District of Columbia bar and became associated with King & Newmyer. Although
Rick is no longer actively practicing in Washington, he remains a member of
the D.C. bar. In 1982, Rick relocated to Rhode Island and became associated
with the Providence law firm of Wistow, Barylick & Bruzzi, where he was
responsible for the majority of the firm's commercial litigation. Rick started
the firm in 1985 and, since then, has engaged in a successful practice
concentrating in corporate law, commercial lending and creditors' rights. Rick
was also appointed Municipal Court Judge for the Towns of Burrillville and
North Smithfield in 1999.
<PAGE> 29
James R. Simmons--graduated magna cum laude from the University of Hartford in
1985 and received his law degree from George Washington University in 1988.
Before joining N&S, Jim practiced with Tillinghast Collins & Graham in its
corporate, commercial and real estate departments. Jim serves on the Banks and
Trusts Committee of the Rhode Island Bar Association and his practice is
concentrated in the areas of corporate law, banking and commercial law,
mortgage lending and real estate, bankruptcy, and creditors' rights. He is
admitted to practice law in both Rhode Island and Massachusetts.
Mark T. Thatcher--Mr. Thatcher attended the University of Denver where he
earned his law degree and masters in business administration. He is presently
a member of the State Bar of Colorado; Court of Appeals, District of Columbia;
Committee Member of the Securities Forum, Colorado, Washington, D.C. and the
American Bar Association; and Member of the International Society of Business
Law.
Mr. Thatcher has participated as a business and legal advisor for a number of
public and privately held companies. He has been retained for federal and
state securities compliance, venture capital analysis, public and private
mergers and acquisitions, corporate reorganization/restructuring, and
international franchising development. From 1991 through 1995, Mr. Thatcher
was "of counsel" to Daniel P. Edwards, P.C., an "AV" rated Colorado law firm.
The firm was "of counsel" to Hughes Dorsey, Denver, Colorado, Heron Burchette,
Washington, D.C. and Sparks, Dix and Enoch, Colorado Springs, Colorado. From
1995 through August of 1999 he served as general counsel to Acadia Group, Inc.
(Ticker "ANHS") and CollegeLink.com (Ticker "APS"). He has recently joined
the Providence-based law firm of Nadeau & Simmons, P.C. in an "of-counsel"
capacity. He is an honorary member of Alpha Kappa Delta, Sutton Award
candidate, and recipient of the E.V. Graham Scholarship Merit Award.
Indemnification of Officers and Directors
As permitted by Colorado law, the Company's Articles of Incorporation provide
that the Company will indemnify its directors and officers against expenses
and liabilities they incur to defend, settle, or satisfy any civil or criminal
action brought against them on account of their being or having been Company
directors or officers unless, in any such action, they are adjudged to have
acted with gross negligence or willful misconduct. Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in that Act and is, therefore, unenforceable.
<PAGE> 30
Exclusion of Liability
Pursuant to the Colorado Business Corporation Act, the Company's Articles of
Incorporation exclude personal liability for its directors for monetary
damages based upon any violation of their fiduciary duties as directors,
except as to liability for any breach of the duty of loyalty, acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, acts in violation of Section 7-106-401 of the Colorado Business
Corporation Act, or any transaction from which a director receives an improper
personal benefit. This exclusion of liability does not limit any right which a
director may have to be indemnified and does not affect any director's liability
under federal or applicable state securities laws.
Other Public Shell Activities
The Company's President, Vice President and Secretary have also recently
formed other shell companies, Providence Capital II, III, IV, V, VI, VII,
IX and X. Each of the persons who is currently a shareholder in the Company
is also a shareholder in these other shell companies.
Providence Capital II, III, IV, V, VI, VII, IX and X were formed
November 20, 1999, and will file a registration statement on Form 10-SB which
may become effective on or about May 31, 2000 as a result of lapse of time.
There is not currently a market for resale of the outstanding shares of
Providence Capital II, III, IV, V, VI, VII, IX and X.
The Company's Secretary, Mark T. Thatcher, also owns a controlling interest
in Oak Brook Capital IV, Inc., a shell company formed in May of 1998 that
has yet to complete a business combination transaction. The Company's
Directors, who are also counsel to the Company, may assist Mr. Thatcher in
locating an acquisition candidate. Such activity would place Oak Brook
Capital IV, Inc. in direct compeition with the Company.
Conflicts of Interest
The officers and directors of the Company will devote only a small portion of
their time to the affairs of the Company, estimated to be no more than
approximately 20 hours per week. There will be occasions when the time
requirements of the Company's business conflict with the demands of their
other business and investment activities. Such conflicts may require that the
Company attempt to employ additional personnel. There is no assurance that
the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.
The Company's sole officers and directors will promote all nine (9) "blank
check" entities noted above and will use the vehicles in an ascending
selection from Providence Capital I, Inc. to Providence Capital X, Inc. to
justify placing a particular privately held entity into one of the "blank
check" entities. Therefore, the first privately held entity that elects to
consummate an acquisition or merger with one of the Providence Capital
entities will be provided with Providence Capital I, Inc. Management does not
intend to promote any other "blank check" entities until business combination
transactions are completed on behalf of all nine (9) Providence Capital
entities and Oak Brook Capital IV, Inc..
There is no procedure in place which would allow Mr. Nadeau, Mr. Simmons or
Mr. Thatcher to resolve potential conflicts in an arms-length fashion.
Accordingly, they will be required to use their discretion to resolve them in
a manner which they consider appropriate.
<PAGE> 31
The Company's sole officers and directors may actively negotiate or otherwise
consent to the purchase of a portion of their common stock as a condition to,
or in connection with, a proposed merger or acquisition transaction. It is
anticipated that a substantial premium over the initial cost of such shares
may be paid by the purchaser in conjunction with any sale of shares by the
Company's officers and directors which is made as a condition to, or in
connection with, a proposed merger or acquisition transaction. The fact that
a substantial premium may be paid to the Company's sole officers and directors
to acquire their shares creates a potential conflict of interest for them in
satisfying their fiduciary duties to the Company and its other shareholders.
Even though such a sale could result in a substantial profit to them, they
would be legally required to make the decision based upon the best interests
of the Company and the Company's other shareholders, rather than their own
personal pecuniary benefit.
ITEM VI. EXECUTIVE COMPENSATION
At inception of the Company, its Directors, Richard Nadeau, Jr., James R.
Simmons and Mark T. Thatcher each received one hundred thousand (100,000)
shares of Common Stock valued at $0.0038 per share in consideration of
pre-incorporation services rendered to the Company related to investigating
and developing the Company's proposed business plan and capital structure, and
completion of the incorporation and organization of the Company. No officer
or director has received any other remuneration. Although there is no current
plan in existence, it is possible that the Company will adopt a plan to pay or
accrue compensation to its sole officers and directors for services related to
seeking business opportunities and completing a merger or acquisition
transaction. See "Certain Relationships and Related Transactions." The
Company has no stock option, retirement, pension, or profit-sharing programs
for the benefit of directors, officers or other employees, but the Board of
Directors may recommend adoption of one or more such programs in the future.
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 more 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.
<PAGE> 32
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. Also, there are no plans,
proposals, arrangements or understandings with respect to the sale or issuance
of additional securities by the Company prior to the location of an
acquisition or merger candidate. Please also see Item I, Description of
Business-General for information regarding the seeking out and selection of a
target company, addressing matters such as the manner of solicitation of
potential investors, the approximate number of persons who will be contacted
or solicited, their relationships to the Company's management, etc.
ITEM VII. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is no public market for PROVIDENCE CAPITAL Common Stock. The PROVIDENCE
CAPITAL Common Sock may be traded in the over-the-counter market in the near
future, however, there can be no assurance as to the price at which trading in
PROVIDENCE CAPITAL Common Stock will occur.
With respect to financial and other information relating to PROVIDENCE
CAPITAL, Nadeau & Simmons, P.C., whose address is 1250 Turks Head Building,
Providence, Rhode Island 02903 will file annual and periodic reports with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934. Copies of such reports may be inspected by anyone without charge at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington D.C. 20549, and copies may be obtained from the
Commission at prescribed rates. In addition, PROVIDENCE CAPITAL will provide
without charge, upon the request of any stockholder, a copy of its Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1999, to be filed
with the Commission. Any such requests should be directed to the President of
PROVIDENCE CAPITAL, address 1250 Turks Head Building, Providence, Rhode Island
02903.
Prior to the date of this Registration Statement, the Company issued to its
officers and directors a total of three hundred thousand (300,000) shares of
Common Stock for total services valued at $25,000.00. Certificates evidencing
the Common Stock issued by the Company to these persons have all been stamped
with a restrictive legend, and are subject to stop transfer orders by the
Company. For additional information concerning restrictions that are imposed
upon the securities held by current stockholders, and the responsibilities of
such stockholders to comply with federal securities laws in the disposition of
such Common Stock, see "Risk Factors -Rule 144 Sales."
No officer, director, promoter, or affiliate of the Company has or proposes to
have any direct or indirect material interest in any asset proposed to be
acquired by the Company through security holdings, contracts, options, or
otherwise.
Although there is no current plan in existence, it is possible that the
Company will adopt a plan to pay or accrue compensation to its sole officers
and directors for services related to seeking business opportunities and
completing a merger or acquisition transaction.
<PAGE> 33
The Company maintains a business address at the office of its investment
banker of record. As a result, it pays no rent and incurs no expenses for
maintenance of an office and does not anticipate paying rent or incurring
office expenses in the future.
Although management has no current plans to cause the Company to do so, it is
possible that the Company may enter into an agreement with an acquisition
candidate requiring the sale of all or a portion of the Common Stock held by
the Company's current stockholders to the acquisition candidate or principals
thereof, or to other individuals or business entities, or requiring some other
form of payment to the Company's current stockholders, or requiring the future
employment of specified officers and payment of salaries to them. It is more
likely than not that any sale of securities by the Company's current
stockholders to an acquisition candidate would be at a price substantially
higher than that originally paid by such stockholders. Any payment to current
stockholders in the context of an acquisition involving the Company would be
determined entirely by the largely unforeseeable terms of a future agreement
with an unidentified business entity.
ITEM VIII. DESCRIPTION OF SECURITIES
Common Stock
The Company's Articles of Incorporation authorize the issuance of 50,000,000
shares of Common Stock. Each record holder of Common Stock is entitled to one
vote for each share held on all matters properly submitted to the stockholders
for their vote. Cumulative voting for the election of directors is not
permitted by the Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to such dividends
as may be declared from time to time by the Board of Directors out of legally
available funds; and, in the event of liquidation, dissolution or winding up
of the affairs of the Company, holders are entitled to receive, ratably, the
net assets of the Company available to stockholders after distribution is made
to the preferred stockholders, if any, who are given preferred rights upon
liquidation. Holders of outstanding shares of Common Stock have no preemptive,
conversion or redemptive rights. All of the issued and outstanding shares of
Common Stock are, and all unissued shares when offered and sold will be, duly
authorized, validly issued, fully paid, and nonassessable. To the extent that
additional shares of the Company's Common Stock are issued, the relative
interests of then existing stockholders may be diluted.
Preferred Stock
The Company's Articles of Incorporation authorize the issuance of 50,000,000
shares of preferred stock. The Board of Directors of the Company is
authorized to issue the preferred stock from time to time in series and is
further authorized to establish such series, to fix and determine the variations
<PAGE> 34
in the relative rights and preferences as between series, to fix voting rights,
if any, for each series, and to allow for the conversion of preferred stock into
Common Stock. No preferred stock has been issued by the Company. The Company
anticipates that preferred stock may be utilized in making acquisitions.
Transfer Agent
The Company is currently serving as its own transfer agent, and plans to
continue to serve in that capacity until such time as management believes it
is necessary or appropriate to employ an independent transfer agent in order
to facilitate the creation of a public trading market for the Company's
securities. Since the Company does not currently expect any public market to
develop for its securities until after it has completed a business combination,
it does not currently anticipate that it will seek to employ an independent
transfer agent until it has completed such a transaction.
Reports to Stockholders
The Company plans to furnish its stockholders with an annual report for each
fiscal year containing financial statements audited by its independent
certified public accountants. In the event the Company enters into a business
combination with another company, it is the present intention of management to
continue furnishing annual reports to stockholders. Additionally, the Company
may, in its sole discretion, issue unaudited quarterly or other interim reports
to its stockholders when it deems appropriate. The Company intends to comply
with the periodic reporting requirements of the Securities Exchange Act of 1934
for so long as it is subject to those requirements.
PART II
ITEM I. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
No public trading market exists for the Company's securities and all of its
outstanding securities are restricted securities as defined in Rule 144.
There were eight (8) holders of record of the Company's common stock on
December 31, 1999. No dividends have been paid to date and the Company's
Board of Directors does not anticipate paying dividends in the foreseeable
future.
The Company does not plan to take affirmative steps to request or encourage
any broker-dealer to act as a market maker for the Company's securities.
There are to date no understandings, agreements or discussions in place with
any such broker-dealer. Although management has set forth disclosure throughout
this registration statement indicating it would consider the public "trading"
of its securities if such activity was in the best interests of its
shareholders, it presently has no plans to do so.
<PAGE> 35
(a) MARKET PRICE. The Company's Common Stock is not quoted at the present
time.
Effective August 11, 1993, 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 stocks in both public offerings 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.
The National Association of Securities Dealers, Inc. (the "NASD"), which
administers NASDAQ, has recently made changes in the criteria for initial
listing on the NASDAQ Small Cap market and for continued listing. For initial
listing, a company must have net tangible assets of $4 million, market
capitalization of $50 million or net income of $750,000 in the most recently
completed fiscal year or in two of the last three fiscal years. For initial
listing, the common stock must also have a minimum bid price of $4 per share.
In order to continue to be included on NASDAQ, a company must maintain
$1,000,000 in net tangible assets and a $1,000,000 market value of its
publicly-traded securities. In addition, continued inclusion requires two
market-makers and a minimum bid price of $1.00 per share.
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
<PAGE> 36
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.
(b) HOLDERS. There are eight (8) holders of the Company's Common Stock.
Prior to the date of this Registration Statement, the Company issued to its
officers and directors a total of three hundred thousand (300,000) shares of
Common Stock for a total services valued at $25,000.00.
Certificates evidencing the Common Stock issued by the Company to these
persons have all been stamped with a restrictive legend, and are subject to
stop transfer orders by the Company. For additional information concerning
restrictions that are imposed upon the securities held by current
stockholders, and the responsibilities of such stockholders to comply with
federal securities laws in the disposition of such Common Stock.
The Company has taken the following action to ensure that a public
re-distribution of the Shares does not take place:
(i)a "restrictive" legend will be placed on each stock certificate issued in
connection with the founder transactions;
(ii)"stop transfer" order instructions will be placed on each stock
certificate issued in connection with the founder transactions;
(iii)shareholders have been placed on notice that their securities will need
to be sold in compliance with Rule 144 of the Act, and may not be transferred
otherwise;
(iv)disclosure has been set forth throughout the Form 10SB describing the
above restrictions.
Redistribution - Rule 144
Rule 144 of the Securities Act lists criteria under which restricted
securities and securities held by affiliates or control persons may be resold
without registration. The rule prevents the creation of public markets in
securities when the issuers have not made adequate current information
available to the public. Preliminary Note to Securities Act Rule 144. The
requirements of Rule 144(b) through (i) include provisions that:
1)current public information be available regarding the issuer of the
securities;
2)at least one year elapse between the time the securities are acquired from
an issuer or affiliate and the date the securities are resold under the
rule;
<PAGE> 37
3)the amount of securities able to be sold is limited, depending on whether
the sale is by an affiliate or not;
4)the securities be sold in brokers' transactions or with a market maker;
5)Commission Form 144 be filed depending on the size of the transaction; and
6)the person filing the form has a bona fide intention to sell the securities
within a reasonable time.
State Exemptions Following the Section 4(2) Exemption:
A number of states exempt from their registration requirements offers and
sales exempt from federal registration by reason of Section 4(2) of the
Securities Act. That provision provides an exemption for transactions not
involving a public offering and constitutes the issuer private placement
exemption. The exemption may explicitly refer to Section 4(2) of the
Securities Act or may exempt non-public offerings. Of course, those
jurisdictions without general securities registration requirements, including
Colorado, District of Columbia, New York, and Nevada may also rely on the
Section 4(2) exemption.
The Company is relying on the following state exemptive provision's that are
applicable to the private placement contemplated herein and that no further
requirements are necessary in the respective jurisdictions to ensure the
availability of such states' various private placement exemptions:
No. of Shareholders Exemptive
State Receiving Shares Provision
Rhode Island 3 1992 Reenactment, General Laws of
Rhode Island, as amended,
Sec. 7-11-402(10)
Illinois 2 Illinois Rev. Statutes,
192 Laws 1990, H 1222, Sec. 11-51-308
Tennessee 2 Tenn. Rev. Statutes, Securities Act
of 1957, Sec. 5(581-5) IC
The Company has confirmed that the following states have adopted the National
Securities Markets Improvement Act of 1996 which provides for exemptive
provisions applicable to the status of secondary trading in the securities
following subsequent distributions to additional shareholders:
<PAGE> 38
Section 18(b) of the Securities Act of 1933, i.e., Subsection 18(b)(1),
18(b)(2), 18(b)(3) and 18(b)4 defines a "covered security" or "federal covered
security". Exempt from state regulation are (1) investment companies
registered under the Investment Company Act of 1940; (2) certain securities
listed on nationally-recognized stock exchanges; (3) offers or sales made to
qualified purchasers; (4) certain transactions exempt from registration under
the Securities Act of 1933; (5) investment advisers with assets over
$25,000,000; and (6) Rule 506 offerings. States are still allowed to regulate
smaller offerings, penny stocks, intrastate offerings, and certain limited
offerings. Except for certain exchange-listed securities, the states may
still require notice filings and have the power to require registration or
suspend offerings for which notices have not been filed.
In particular, Section 18(b)(4)(A) provides that a security is a covered
security with respect to a transaction that is exempt from registration
pursuant to paragraph (1) or (3) of Section 4, and the issuer of such security
files reports with the Commission pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Section 4(1) of the Act exempts transactions by any person other than an
issuer, underwriter, or dealer.
Section 4(3) of the Act exempts transactions by a dealer (including an
underwriter no longer acting as an underwriter in respect of the security
involved in such transaction), except--
(A) transactions taking place prior to the expiration of 40 days after the
first date upon which the security was bona fide offered to the public by the
issuer or by or through an underwriter;
(B) transactions in a security as to which a registration statement has been
filed taking place prior to the expiration of 40 days.
The following states have adopted laws and/or regulations addressing Section
(b)(4)(A) of NSMIA:
Arizona Georgia
Illinois Maine
Maryland Minnesota
New Jersey Rhode Island
Texas Wisconsin
Tennessee
Based upon the foregoing. We are of the opinion that "secondary trading"
opportunities may exist pursuant to Sections 18(b)(4)(A), 4(1), 4(3) or 4(4)
of the Act, in the states referenced above, provided that the Company
continues to timely files reports required under Section 13 or 15(d) of the
Exchange Act and effectuate any filings that may be required in each
respective state listed above, if any.
<PAGE> 39
Colorado:
To obtain the exemption for "non-issuer" secondary trading (Colorado Rev.
Statutes Sec. 11-51-308(1)(b)(V)), the Company will be required to file Form
ST with the Securities Commissioner in order for the transactional securities
registration exemption to apply.
Connecticut:
Section 4(1), 4(3) ane 4(4) of the Act have ben adopted and provide an
exemption for "non-issuer", secondary trading transactions. Regulations also
provide an exemption for sales made through registered "broker/dealers".
Florida:
Sec. 517.061, Florida Statutes provides that the offer or sale of securities
in a transaction exempt under Section 4(1) of the Act is an exempt
transaction, so long as the person has owned the securities for at least one
(1) year.
Mass.:
Section 4(1), 4(3) ane 4(4) of the Act have been adopted and provide an
exemption for "non-issuer", secondary trading transactions. Regulations also
provide an exemption for sales made through registered "broker/dealers".
New York:
Sec. 352-g of the New York Consolidated Laws, provides an exemption for
"secondary trading"
Although the above information may provide "secondary trading" exemptions for
the donees, provided they sell in full compliance with Rule 144 of the Act,
nonetheless, the Company must still timely file the reports required to be
filed as prescribed by Section 13 or 15(d) of the Exchange Act and must file
any required material with each respective state authority:
(c) DIVIDENDS. The Company has not paid any dividends to date, and has no
plans to do so in the immediate future.
<PAGE> 40
ITEM II. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated.
No director, officer or affiliate of the Company, and no owner of record or
beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse
to the Company or has a material interest adverse to the Company in reference
to pending litigation.
ITEM III. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Not applicable.
ITEM IV. RECENT SALES OF UNREGISTERED SECURITIES
Since November 24, 1999 (the date of the Company's formation), the Company has
sold its Common Stock to the persons listed in the table below in transactions
summarized as follows:
<TABLE>
<CAPTION>
Name Date of Shares Aggregate Purchase
Sale Purchase Price
Price per Share
<S> <C> <C> <C> <C>
Richard P. Nadeau 11-24-99 100,000 $380.00(1) $0.0038
James R. Simmons 11-24-99 100,000 $380.00(1) $0.0038
Mark T. Thatcher 11-24-99 100,000 $380.00(1) $0.0038
Jim Brennan 11-24-99 100,000 $380.00(1) $0.0038
Doug Dyer 11-24-99 100,000 $380.00(1) $0.0038
David Pequet 11-24-99 100,000 $380.00(1) $0.0038
Mark Margason 11-24-99 100,000 $380.00(1) $0.0038
</TABLE>
<PAGE> 41
(1) Consideration consisted of pre-incorporation consulting services rendered
to the Company related to investigating and developing the Company's proposed
business plan and capital structure and completing the organization and
incorporation of the Company.
With respect to the sales made, the Company relied on Section 4(2) of the
Securities Act of 1933, as amended. No advertising or general solicitation
was employed in offering the shares. The securities were offered for
investment only and not for the purpose of resale or distribution, and the
transfer thereof was appropriately restricted.
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.
Each of the sales listed above was made either for cash or for services.
Sales for which the consideration was services were made in reliance upon the
exemption from registration provided by Rule 701 adopted pursuant to Section
3(b) of the Securities Act of 1933. Sales for which the consideration was
cash were made in reliance upon the exemption from registration offered by
Section 4(2) of the Securities Act of 1933. Based upon the Preincorporation
Consultation and Subscription Agreement executed by the persons who acquired
shares for services, and the Subscription Agreement and Investment
Representations executed by persons who acquired shares for cash, and based
upon the pre-existing relationship between the cash subscribers and the
Company's officers and directors, the Company had reasonable grounds to
believe immediately prior to making an offer to the private investors, and
did in fact believe, when such subscriptions were accepted, that such purchasers
(1) were purchasing for investment and not with a view to distribution, and
(2) had such knowledge and experience in financial and business matters that
they were capable of evaluating the merits and risks of their investment and
were able to bear those risks. The purchasers had access to pertinent
information enabling them to ask informed questions. The shares were issued
without the benefit of registration. An appropriate restrictive legend is
imprinted upon each of the certificates representing such shares, and
stop-transfer instructions have been entered in the Company's transfer records.
All such sales were effected without the aid of underwriters, and no sales
commissions were paid.
<PAGE> 42
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Articles 7-109-101 through 7-109-109 of the Colorado Business Corporation Act
provides that any director or officer of a Colorado corporation may be
indemnified against judgments, penalties, fines, settlements and reasonable
expenses actually incurred by him in connection with or in defending any action,
suit or proceeding in which he is a party by reason of his position, so long
as it shall be determined that he conducted himself in good faith and that he
reasonably believed that his conduct was in the corporation's best interest.
If a director or officer is wholly successful, on the merits or otherwise, in
connection with such proceeding, such indemnification is mandatory.
The Company's articles of incorporation and bylaws contain provisions which
provide, among other things, that the Company shall indemnify certain persons,
including officers and directors, against judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection
with any action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interest of
the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. As to any action brought
by or in the right of the Company, such indemnification is limited to expenses
(including attorney's fees) actually and reasonably incurred in connection
with the defense or settlement of the case, and shall not be made, absent court
approval, if it was determined that such person was liable for negligence or
misconduct in the performance of his duty to the Company.
The Articles of Incorporation and the Bylaws of the Company, filed as Exhibits
3.1 and 3.2, respectively, provide that the Company will indemnify its
officers and directors for costs and expenses incurred in connection with the
defense of actions, suits, or proceedings where the officer or director acted
in good faith and in a manner he reasonably believed to be in the Company's
best interest and is a party by reason of his status as an officer or
director, absent a finding of negligence or misconduct in the performance of
duty.
<PAGE> F-1
FINANCIAL STATEMENTS
PROVIDENCE CAPITAL I, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
PERIOD ENDED DECEMBER 31, 1999
<PAGE> F-2
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Providence Capital I, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of PROVIDENCE CAPITAL I,
INC. (a development stage company) as of December 31, 1999 and the related
statements of operations, stockholders' equity and cash flows for the period
from November 24, 1999 to December 31, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
As discussed in Note 1 to the financial statements, the Company was
incorporated on November 24, 1999 and is in the development stage and had no
operations to date.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of PROVIDENCE CAPITAL
I, INC. as of December 31, 1999, and the results of its operations and its
cash flows for the period from November 24, 1999 to December 31, 1999 in
conformity with generally accepted accounting principles.
Providence, Rhode Island
February 3, 2000
/s/ Cayer Prescott Clune & Chatellier, LLP
<PAGE> F-3
PROVIDENCE CAPITAL I, INC.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 31, 1999
ASSETS
Total assets $ 0
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 125,000
Total current liabilities 125,000
Stockholders' deficit:
Common stock, no par value; 50,000,000 shares authorized,
734,000 shares issued and outstanding 2,789
Preferred stock, $100 par value, 50,000,000 shares
authorized, no shares outstanding
Deficit accumulated during the development stage (127,789)
Total stockholders' deficit (125,000)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 0
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> F-4
PROVIDENCE CAPITAL I, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
PERIOD FROM NOVEMBER 24, 1999 (DATE OF INCEPTION) TO DECEMBER 31, 1999
Revenue $ 0
Expenses:
Professional fees 125,000
Organization costs 2,789
Total expenses 127,789
Net loss $ (127,789)
Loss Per Common Share $ (.17)
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> F-5
PROVIDENCE CAPITAL I, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
PERIOD FROM NOVEMBER 24, 1999 (DATE OF INCEPTION) TO DECEMBER 31, 1999
Common
Stock
Shares Amount Deficit
Balance at November 24, 1999 0 $ 0 $ 0
Issuance of common stock:
Stock issued for services rendered at
inception 734,000 2,789
Net loss for the period from November 24,
1999 through December 31, 1999 (127,789)
Balance at December 31, 1999 734,000 $ 2,789 $ (127,789)
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> F-7
PROVIDENCE CAPITAL I, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
PERIOD FROM NOVEMBER 24, 1999 (DATE OF INCEPTION) TO DECEMBER 31, 1999
Cash flows from operating activities:
Net loss $ (127,789)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Services performed in exchange for stock 2,789
Increase in accounts payable 125,000
Net cash provided by operating activities 0
Increase in cash and cash equivalents 0
Cash and cash equivalents, beginning of period 0
Cash and cash equivalents, end of period $ 0
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> F-8
PROVIDENCE CAPITAL I, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Development Stage Operations
The Company was incorporated on November 24, 1999, in the State of
Colorado. The Company is in the development stage and its intent is to
operate as a capital market access corporation and to acquire one or more
existing businesses through merger or acquisition. The Company has had no
significant business activity to date. The Company has selected the calendar
year as its fiscal year.
Stock-Based Compensation
The Company accounts for stock-based compensation under Statement of
Financial Accounting Standards ("SFAS") No. 123 "Accounting for Stock-Based
Compensation". The Company accounts for stock-based compensation based on the
fair value of the consideration received or the fair value of the stock
issued, whichever is more reliably measurable.
Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's management to
make estimates and assumptions that affect the amounts reported in these
financial statements and accompanying notes. Actual results could differ from
those estimates.
2. STOCKHOLDERS' EQUITY
On November 24, 1999, the Company issued seven hundred thirty-four
thousand (734,000) shares of its no par value common stock for services valued
at their fair market value of $2,789. The shares were issued pursuant to Rule
701 of the Securities Act of 1933 (the "Act") and are restricted securities
within the meaning of Rule 144 of the Act.
The Company authorized 50,000,000 shares of Series A convertible
preferred stock with a par value of $100 per share. Currently, there are no
shares outstanding. Each share of preferred stock can be converted into one
share of common stock.
3. RELATED PARTY TRANSACTIONS
The accounts payable of $125,000 was for legal services rendered in connection
with business planning and compliance. Those legal services were rendered by
shareholders of the Company.
(CONTINUED)
<PAGE> F-9
PROVIDENCE CAPITAL I, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
4. INCOME TAXES
Due to the current period's operating loss, the Company has no provision for
income taxes for 1999.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The Company's net
deferred tax asset balances are attributable to net operating loss
carryforwards. At December 31, 1999, the Company's deferred tax asset
consisted of the following:
Deferred tax asset $ 38,000
Valuation allowance (38,000)
Net deferred tax assets recognized on the
accompanying balance sheets $ 0
The components of the income tax provision (benefit) consisted of the
following for the year ended December 31, 1999.
Current $ 0
Deferred 38,000
Tentative tax provision (benefit) 38,000
Change in valuation allowance (38,000)
Net income tax provision (benefit) $ 0
The Company has a net operating and economic loss carryforward of
approximately $125,000 available to offset future federal and state taxable
income through 2019 as follows:
Year of Expiration Amount
2019 $ 125,000
(CONCLUDED)
PART III
ITEM I. INDEX TO EXHIBITS
(b)Exhibits
3(a)Articles of Incorporation
3(b)Bylaws
4(a)Agreements Defining Certain Rights of Shareholders
4(b)Specimen Stock Certificate
7 Not applicable
9 Not applicable
11 Not applicable
14 Not applicable
16 Not applicable
21 Not applicable
23.1Consent of Counsel, Nadeau & Simmons, P.C.
24 Not applicable
27 Financial Data Schedule
28 Not applicable
99 Section 27(a) Compliance Statement
ITEM 2. DESCRIPTION OF EXHIBITS
See Item I above.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Company caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
PROVIDENCE CAPITAL I, INC.
By: /s/ Richard Nadeau, Jr.
______________________________
RICHARD NADEAU, JR.,
President
Date: March 17, 2000
ARTICLES OF INCORPORATION
OF
PROVIDENCE CAPITAL I, INC.
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned incorporator, being a natural person of the age of
eighteen (18) years or more, and desiring to form a corporation under the laws
of the State of Colorado, does hereby sign, verify and deliver in duplicate to
the Secretary of State of the State of Colorado these Articles of
Incorporation.
ARTICLE I
NAME
The name of the corporation shall be PROVIDENCE CAPITAL I, INC.
The principal office and address is 17 West Cheyenne Mtn. Blvd., Colorado
Springs, Colorado 80906.
ARTICLE II
PERIOD OF DURATION
This corporation shall exist perpetually unless dissolved according to
law.
ARTICLE III
PURPOSE
To engage in and to transact any lawful business or businesses for which
corporations may be incorporated pursuant to the Colorado Business Corporation
Act.
<PAGE>
ARTICLE IV
POWERS
In furtherance of the foregoing purposes the corporation shall have and
may exercise all of the rights, powers and privileges now or hereafter
conferred upon corporations organized under the Colorado Business Corporation
Act, as amended, or by law. In addition, it may do everything necessary,
suitable or proper for the accomplishment of any corporate purpose.
ARTICLE V
CAPITAL
The total number of shares of the capital stock which the Corporation has
authority to issue is one hundred million (100,000,000) shares, divided into
fifty million (50,000,000) shares of common stock with no par value per share
(the "Common Stock"), and fifty million (50,000,000) shares of Series A
Convertible Preferred Stock with a par value of $100 per share (hereinafter
sometimes referred to as the "Series A Convertible Preferred Stock" or the
"Preferred Stock").
The aggregate number of common shares which this corporation shall have
the authority to issue is fifty million (50,000,000), each without par value
which shares shall be designated common stock. No share shall be issued
without consideration being exchanged, and it shall thereafter be
nonassessable. The Board of Directors may determine by a majority vote if
gifts of shares will be allowed under certain circumstances.
Shares of the corporation not having a par value shall be issued for such
consideration expressed in dollars as may be fixed from time to time by the
vote of the director(s).
The following is a description of each class of stock of the Corporation
with the preferences, conversion and other rights, restrictions, voting
powers, limitations as to distributions, qualifications, and terms and
conditions of redemption of each class:
FIRST: In the event of any voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation, the holders of any Preferred
Stock then outstanding shall be paid out of the assets of the Corporation
available for distribution to its stockholders an amount equal to One Dollar
($1.00) per share plus an amount equal to all unpaid declared distributions
thereon, without interest, and no more, before any amount shall be paid or any
assets of the Corporation shall be distributed among the holders of the Common
Stock and, if the assets of the Corporation available for distribution to its
stockholders shall be insufficient to permit the payment in full to the
holders of the Preferred Stock, as aforesaid, then the entire assets of the
Corporation available for distribution to its stockholders shall be
distributed ratably among the holders of the Preferred Stock; then and
thereafter, the remaining assets of the Corporation available for distribution
to its stockholders shall be distributed among and paid to the holders of the
Preferred Stock and the Common Stock, share and share alike and without any
distinction as to class, in proportion to their respective stockholdings.
<PAGE>
A merger of the Corporation with or into any other corporation, a share
exchange involving the Corporation, or a sale, lease, exchange, or transfer of
all or any part of the assets of the Corporation which shall not in fact
result in the liquidation of the Corporation and the distribution of its
assets to its stockholders shall not be deemed to be a voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation within
the meaning of this Article SIXTH, paragraph 1.
SECOND: Except as hereinabove provided in paragraph 1 of this Article
SIXTH, the Preferred Stock and the Common Stock of the Corporation shall be
identical in all respects and for all purposes and the holders of the
Preferred Stock and the holders of the Common Stock voting together and
without distinction as to class shall be entitled to one vote per share in all
proceedings in which actions shall be taken by the stockholders of the
Corporation.
THIRD: The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
(1) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of its stock of any class,
whether now or hereafter authorized, or securities convertible into shares of
its stock of any class or classes, whether now or hereafter authorized.
(2) The Board of Directors of the Corporation may classify or reclassify
any unissued stock by setting or changing in any one or more respects, from
time to time before issuance of such stock, the preferences, conversion or
other rights, voting powers, restrictions, limitations as to distributions,
qualifications, and terms or conditions of redemption of such stock.
(3) The Board of Directors shall have power, if authorized by the Bylaws,
to designate by resolution or resolutions adopted by a majority of the whole
Board of Directors, one or more committees, each committee to consist of two
or more of the directors of the Corporation, which, to the extent provided in
said resolutions or in the Bylaws of the Corporation and permitted by the
Colorado Business Corporation Act, shall have and may exercise any or all of
the powers of the Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize the seal of the
Corporation to be affixed to all instruments and documents which may require
it.
(4) If the Bylaws so provide, the Board of Directors of the Corporation
shall have power to hold its meetings, to have an office or offices and,
subject to the provisions of the Colorado Business Corporation Act, to keep
the books of the Corporation, outside of said State at such place or places as
may from time to time be designated by it.
<PAGE>
(5) The Board of Directors shall have power to borrow or raise money,
from time to time and without limit, and upon any terms, for any corporate
purposes; and, subject to the Colorado Business Corporation Act, to authorize
the creation, issue, assumption or guaranty of bonds, notes or other evidences
of indebtedness for moneys so borrowed, to include therein such provisions as
to redeemability, convertibility or otherwise, as the Board of Directors, in
its sole discretion, may determine and to secure the payment of principal,
interest or sinking fund in respect thereof by mortgage upon, or the pledge
of, or the conveyance or assignment in trust of, the whole or any part of the
properties, assets and goodwill of the Corporation then owned or thereafter
acquired.
The enumeration and definition of a particular power of the Board of
Directors included in the foregoing shall in no way be limited or restricted
by reference to or inference from the terms of any other clause of this or any
other article of these Articles of Incorporation, or construed as or deemed by
inference or otherwise in any manner to exclude or limit any powers conferred
upon the Board of Directors under the laws of the State of Colorado now or
hereafter in force.
FOURTH: Notwithstanding any provision of law to the contrary, the
affirmative vote of a majority of all the votes entitled to be cast on the
matter shall be sufficient, valid and effective, after due authorization,
approval or advice of such action by the Board of Directors, as required by
law, to approve and authorize the following acts of the Corporation:
(i) the amendment of these Articles of Incorporation;
(ii) the merger of the Corporation into another corporation or the merger
of one or more other corporations into the Corporation;
(iii) the sale, lease, exchange or other transfer of all, or
substantially all, of the property and assets of the Corporation, including
its goodwill and franchises;
(iv) the participation by the Corporation in a share exchange (as defined
in the Colorado Business Corporation Act) as the corporation the stock of
which is to be acquired; and
(v) the voluntary or involuntary liquidation, dissolution or winding-up
of or the revocation of any such proceedings relating to the Corporation.
ARTICLE VI
AUTHORIZATION OF SERIES A CONVERTIBLE PREFERRED STOCK
The total number of shares of the capital stock which the Corporation has
authority to issue is one hundred million (100,000,000) shares, divided into
fifty million (50,000,000) shares of common stock with no par value per share
(the "Common Stock"), and fifty million (50,000,000) shares of Series A
Convertible Preferred Stock with a par value of $100 per share (hereinafter
sometimes referred to as the "Series A Convertible Preferred Stock" or the
"Preferred Stock").
<PAGE>
A description of the "Series A Convertible Preferred Stock", including
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to distributions, qualifications, and terms and conditions for
redemption, all as set by the Board of Directors of the Corporation, is as
follows:
1. Designation and Initial Number. The class of shares of Preferred Stock
hereby classified shall be designated the "Series A Convertible Preferred
Stock." The initial number of authorized shares of the Preferred Stock shall
be fifty million (50,000,000).
2. Distributions. Commencing on January 1, 2001, the holders of the
Preferred Stock shall be entitled to receive, out of funds at the time legally
available for payment of distributions in the State of Colorado, a
non-cumulative distribution at the rate of $1.00 per share per annum, payable
semi-annually in equal installments on the first days of January and July in
each year, if, as and when determined by the Board of Directors, before any
distribution shall be set apart or paid on any other capital stock for such
year.
3. Redemption. The Corporation, at the option of the Board of Directors,
may redeem the whole or any part of the Preferred Stock at any time
outstanding, at any time or from time to time after January 1, 2001, provided
that the Corporation, at any such time, shall have consummated a sale of its
securities pursuant to an effective registration statement (a "Public
Offering") filed with the Securities and Exchange Commission (the "SEC"), upon
at least 30 days' prior written notice to the holders of record of the
Preferred Stock to be redeemed, by paying a redemption price per share equal
to 150% of the par value thereof, plus all accrued and unpaid distributions
declared thereon, at the date fixed for redemption, without interest, in cash,
for each share of Preferred Stock so redeemed. The Board of Directors shall
have full power and authority, subject to the limitations and provisions
herein contained, to prescribe the manner in which and the terms and
conditions upon which the Preferred Stock shall be redeemed at any time and
from time to time. The notice of redemption to each stockholder whose shares
of Preferred Stock are to be redeemed shall specify the number of shares of
Preferred Stock of such stockholder to be redeemed, the date fixed for
redemption and the redemption price at which the shares of Preferred Stock are
to be redeemed, and shall specify where payment of the redemption price is to
be made upon surrender of such shares, shall state the conversion rate then in
effect, and that conversion rights of such shares shall terminate at the
closing of business on the date fixed for redemption. None of the Preferred
Stock acquired by the Corporation by redemption or otherwise shall be reissued
or disposed of but shall, from time to time, be retired in the manner provided
by law.
4. Liquidation or Dissolution. In the event of any voluntary or
involuntary liquidation, dissolution, or winding up of the affairs of the
Corporation, the holders of the issued and outstanding Preferred Stock shall
be entitled to receive for each share of Preferred Stock, before any
distribution of the assets of the Corporation shall be made to the holders of
any other capital stock, a dollar amount equal to the par value thereof plus
all accrued and unpaid distributions declared thereon, without interest. After
such payment shall have been made in full to the holders of the issued and
outstanding Preferred Stock, or funds necessary for such payment shall have
been set aside in trust for the account of the holders of the issued and
outstanding Preferred Stock so as to be and continue to be available therefor,
then, before any further distribution of the assets of the Corporation shall
<PAGE>
be made, a dollar amount equal to that already distributed to the holders of
the Preferred Stock shall be distributed pro-rata to the holders of the other
issued and outstanding capital stock of the Corporation, subject to the rights
of any other class of capital stock set forth in the Articles of Incorporation
of the Corporation or Amendments to the Articles of Incorporation to State
Terms of Series Shares filed by the Corporation. After such payment shall have
been made in full to the holders of such other issued and outstanding capital
stock, or funds necessary for such payment shall have been set aside in trust
for the account of the holders of such other issued and outstanding capital
stock so as to be and continue to be available therefor, the holders of the
issued and outstanding Preferred Stock shall be entitled to participate with
the holders of all other classes of issued and outstanding capital stock in
the final distribution of the remaining assets of the Corporation, and,
<PAGE>
subject to any rights of any other class of capital stock set forth in the
Articles of Incorporation of the Corporation or any Amendments to the Articles
of Incorporation to State Terms of Series Shares filed by the Corporation, the
remaining assets of the Corporation shall be divided and distributed ratably
among the holders of both the Preferred Stock and the other capital stock then
issued and outstanding according to the proportion by which their respective
record ownership of shares of the Preferred Stock and such capital stock bears
to the total number of shares of the Preferred Stock and such capital stock
then issued and outstanding. If, upon such liquidation, dissolution, or
winding up, the assets of the Corporation distributable, as aforesaid, among
the holders of the Preferred Stock shall be insufficient to permit the payment
to them of said amount, the entire assets shall be distributed ratably among
the holders of the Preferred Stock. A consolidation or merger of the
Corporation, a share exchange, a sale, lease, exchange or transfer of all or
substantially all of its assets as an entirety, or any purchase or redemption
of stock of the Corporation of any class, shall not be regarded as a
"liquidation, dissolution, or winding up of the affairs of the Corporation"
within the meaning of this paragraph 4.
5. Conversion Privilege. Preferred Stock shall be convertible into Common
Stock as hereinafter provided and, when so converted, shall be canceled and
retired and shall not be reissued as such:
(A) Any holder of the Preferred Stock may at any time or from time
to time convert such stock into the Common Stock of the Corporation, on
presentation and surrender to the Corporation, of the certificates of the
Preferred Stock to be so converted.
(B) Each holder of Preferred Stock shall have the right to convert
such Preferred Stock on and subject to the following terms and conditions:
(i) The Preferred Stock shall be converted into Common Stock at
the conversion rate, determined as hereinafter provided, in effect at the time
of conversion. Unless such conversion rate shall be adjusted as hereinafter
provided, the conversion rate shall be one share of Common Stock for each
share of Preferred Stock so converted.
(ii) In order to convert Preferred Stock into Common Stock, the
holder thereof shall on any business day surrender at the executive offices of
the Company at 735 Broad Street, Suite 800, Chattanooga, TN 37402 the
certificate or certificates representing such shares, duly endorsed to the
Corporation or in blank, and give written notice to the Corporation at said
office of the number of said shares which such holder elects to convert.
<PAGE>
Preferred Stock shall be deemed to have been converted immediately prior to the
close of business on the day of such surrender for conversion, and the person
or persons entitled to receive the Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such Common
Stock at such time. As promptly as practicable on or after the date of any
conversion, the Corporation shall issue and deliver a certificate or
certificates representing the number of shares of Common Stock issuable upon
such conversion, together with cash in lieu of any fraction of a share, as
provided in subparagraph (H) of this paragraph 5, to the person or persons
entitled to receive same. In case of the conversion of only a part of the
shares of any holder of Preferred Stock, the Corporation shall also issue and
deliver to such holder a new certificate of Preferred Stock representing the
number of shares of such Preferred Stock not converted by such holder.
(C) The conversion rate as hereinabove provided shall be subject to
adjustment as follows:
(i) In case the Corporation shall (a) pay a distribution in
shares of its capital stock, (b) subdivide its outstanding shares of Common
Stock into a greater number of shares, (c) combine its outstanding shares of
Common Stock into a smaller number of shares, or (d) issue by reclassification
of its shares of Common Stock any shares of its capital stock, the conversion
rate in effect immediately prior thereto shall be adjusted so that the holder
of a share of Preferred Stock surrendered for conversion after the record date
fixing stockholders to be affected by such event shall be entitled to receive,
upon conversion, the number of shares of Common Stock which such holder would
have owned or have been entitled to receive after the happening of such event
had such share of Preferred Stock been converted immediately prior to the
record date in the case of such dividend or the effective date in the case of
any such subdivision, combination or reclassification. An adjustment made pursua
nt to this subparagraph 5(C)(i) shall be made whenever any of such events
shall happen, but shall become effective retroactively after such record date
or such effective date, as the case may be, as to shares of Preferred Stock
converted between such record date or effective date and the date of happening
of any such event.
(ii) In case the Corporation shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share, which, when added to the amount
of consideration received or receivable by the Corporation for such right or
warrant, is less than the current market price (as hereinafter defined) per
share of Common Stock at the record date mentioned below, the conversion rate
shall be adjusted so that thereafter, until further adjusted, each share of
Preferred Stock shall be convertible into that number of shares of Common
Stock determined by multiplying the number of shares of Common Stock into
which such share of Preferred Stock was theretofore convertible by a fraction,
the numerator of which shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of additional shares of Common Stock issuable upon the exercise of such rights
or warrants, and the denominator of which shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or warrants
<PAGE>
plus the number of shares which an amount equal to the sum of (a) the
aggregate exercise price of the total number of shares of Common Stock
issuable upon the exercise of such rights or warrants, plus (b) the aggregate
amount of consideration, if any, received, or receivable by the Corporation
for any such rights or warrants, would purchase at such current market price.
Such adjustment shall be made whenever such rights or warrants are issued, but
shall also be effective retroactively as to shares of Preferred Stock
converted between the record date for the determination of stockholders
entitled to receive such rights or warrants and the date such rights or
warrants are exercised.
(iii) In case the Corporation shall distribute to all holders
of its Common Stock any one or more of the following: (a) evidence of its
indebtedness, (b) assets (excluding cash distributions, distributions made out
of current or retained earnings and distributions of the stock of any
subsidiary), or (c) rights or warrants to subscribe for or purchase securities
issued by, or property of, the Corporation (excluding those referred to in
subparagraph 5(C)(ii) above), then in each such case the conversion rate shall
be adjusted as provided below so that thereafter, until further adjusted, the
number of shares of Common Stock into which each share of Preferred Stock
shall be convertible shall be determined by multiplying the number of shares
of Common Stock into which such share of Preferred Stock was theretofore
convertible by a fraction, the numerator of which shall be the current market
price per share of Common Stock on the date of such distribution, and the
denominator of which shall be such current market price per share of the
Common Stock, less the then fair market value (as determined by the Board of
Directors of the Corporation, whose determination shall be conclusive) of the
portion of the assets or evidence of indebtedness so distributed or of such
rights or warrants applicable to one share of the Common Stock. Such
adjustment shall be made whenever any such distribution is made, but shall
also be effective retroactively as to shares of Preferred Stock converted
between the record date for the determination of stockholders entitled to
receive such distribution and the date such distribution is made.
(iv) For the purpose of any computation under subparagraphs
5(C)(ii) and (iii) above, the current market price per share of Common Stock
at any date shall be (a) if the Common Stock is listed on any national
securities exchange, the average of the daily closing prices for the 15
consecutive business days commencing 20 business days before the day in
question (the "Trading Period"); (b) if the Common Stock is not listed on any
national securities exchange but is quoted on the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ"), the average of
the high and low bids as reported on NASDAQ for the Trading Period; and (c) if
the Common Stock is neither listed on any national securities exchange nor
quoted on NASDAQ, the higher of (x) the conversion price then in effect, or
(y) the tangible book value per share as of the end of the Corporation's
immediately preceding fiscal year.
(v) No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of at least 1% in
such rate; provided, however, that any adjustments which by reason of this
subparagraph 5(C)(v) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
subparagraph 5(C) shall be made to the nearest one-hundredth of a share.
(D) No adjustment of the conversion rate shall be made in any of the
following cases:
(i) upon the grant or exercise of stock options hereafter
granted, or under any employee stock option plan now or hereafter authorized,
to the extent that the aggregate of the number of shares which may be
purchased under such options and the number of shares issued under such
<PAGE>
employee stock purchase plan is less than or equal to ten percent (10%) of the
number of shares of Common Stock outstanding on January 1 of the year of the
grant or exercise;
(ii) shares of Common Stock issued upon the conversion of
Preferred Stock;
(iii) shares issued in connection with the acquisition by the
Corporation or by any subsidiary of the Corporation of 80% or more of the
assets of another corporation, and shares issued in connection with the
acquisition by the Corporation or by any subsidiary of the Corporation of 80%
or more of the voting shares of another corporation (including shares issued
in connection with such acquisition of voting shares of such other corporation
subsequent to the acquisition of an aggregate of 80% of such voting shares),
shares issued in a merger of the Corporation or a subsidiary of the
Corporation with another corporation in which the Corporation or the
Corporation's subsidiary is the surviving corporation, and shares issued upon
the conversion of other securities issued in connection with any such
acquisition or in any such merger;
(iv) shares issued by way of dividend or other distribution on
Common Stock excluded from the calculation of the adjustment under this
subparagraph 5(D) or on Common Stock resulting from any subdivision or
combination of Common Stock so excluded; or
(v) shares issued pursuant to all stock options and warrants
outstanding on the date of the filing of these Articles.
(E) Whenever the conversion rate is adjusted as herein provided, the
Corporation shall prepare a certificate signed by the Treasurer of the
Corporation setting forth the adjusted conversion rate and showing in
reasonable detail the facts upon which such adjustment is based. As promptly
as practicable, the Corporation shall cause a copy of the certificate referred
to in this subparagraph 5(E) to be mailed to each holder of record of issued
and outstanding Preferred Stock at the address of such holder appearing on the
Corporation's books.
(F) The Corporation shall pay all taxes that may be payable in
respect of the issue or delivery of Common Stock on conversion of Preferred
Stock pursuant hereto, but shall not pay any tax which may be payable with
respect to income or gains of the holder of any Preferred Stock or Common
Stock or any tax which may be payable in respect of any transfer involved in
the issue and delivery of the Common Stock in a name other than that in which
the Preferred Stock so converted was registered, and no such issue or delivery
shall be made unless and until the person requesting such issue has paid to
the Corporation the amount of any such tax, or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(G) Upon conversion of any shares of Preferred Stock, the holders of
the shares of Preferred Stock so converted shall not be entitled to receive
any distributions declared with respect to such shares of Preferred Stock
unless such distributions shall have been declared by the Board of Directors
and the record date for such distributions shall have been on or before the
date such shares shall have been converted. No payment or adjustment shall be
made on account of distributions declared and payable to holders of Common
Stock of record on a date prior to the date of conversion.
<PAGE>
(H) No fractional shares or scrip representing fractional shares
shall be issued upon the conversion of any shares of Preferred Stock. If more
than one share of Preferred Stock shall be surrendered for conversion at one
time by the same holder, the number of full shares issuable upon conversion
thereof shall be computed on the basis of the aggregate number of such shares
so surrendered. If the conversion of any share of Preferred Stock results in a
fraction, an amount equal to such fraction multiplied by the current market
price (determined as provided in subparagraph 5(C)(iv) above) of the Common
Stock on the day of conversion shall be paid to such holder in cash by the
Corporation.
(I) The Corporation shall at all times reserve and keep available,
free from preemptive rights, out of its authorized Common Stock, for the
purpose of effecting the conversion of the issued and outstanding Preferred
Stock, the full number of shares of Common Stock then deliverable in the event
and upon the conversion of all of the Preferred Stock then issued and
outstanding.
6. Voting Rights. Except as otherwise provided in this paragraph 6, each
share of Preferred Stock is entitled to one vote, voting together with the
holders of shares of Common Stock and not as a class, on each matter submitted
to a vote at a meeting of stockholders of the Corporation. In the event that
at any time two consecutive semi-annual distributions payable on the Preferred
Stock shall be in default (a "Two Dividend Default"), then immediately upon
the happening of a Two Dividend Default and until the Two Dividend Default and
all defaults in the payment of semi-annual distributions subsequent to the Two
Dividend Default shall be cured, the holders of Preferred Stock shall have the
right, voting separately as a class, to elect one-third of the Directors of
the Corporation. In the event that at any time four consecutive semi-annual
distributions payable on the Preferred Stock shall be in default (a "Four
Dividend Default"), then immediately upon the happening of such Four Dividend
Default and until such Four Dividend Default and all defaults in the payment
of semi-annual distributions subsequent to the Four Dividend Default shall be
cured, the holders of Preferred Stock shall have the right, voting separately
as a class, to elect a majority of the Directors of the Corporation. The
foregoing voting rights are hereinafter collectively referred to as the
"Special Voting Rights." The Special Voting Rights shall be exercised only at
annual meetings of the stockholders of the Corporation, and only if the
holders of a majority of the outstanding shares of Preferred Stock entitled to
such Special Voting Rights are present in person or by proxy. Notwithstanding
the foregoing provisions of this paragraph 6, upon payment in full of all
defaults in the payment of semi-annual distributions subsequent to a Four
Dividend Default and of the distribution which resulted in the Four Dividend
Default, so that no more than three consecutive semi-annual distributions
remain in default, the Special Voting Rights of the holders of Preferred Stock
shall be reduced so that they shall have the right, voting separately as a
class, to elect one-third of the Directors of the Corporation. Notwithstanding
the foregoing provisions of this Paragraph 6, upon payment in full of (i) all
defaults in the payment of semi-annual distributions subsequent to a Two
Dividend Default and of the distribution which resulted in the Two Dividend
Default, or (ii) upon payment in full of all semi-annual distributions
subsequent to a Four Dividend Default and three of the distributions which
resulted in a Four Dividend Default, so that, in each such case, no more than
one semi-annual distribution remains in default, the Special Voting Rights
shall terminate, and the voting power in the election of Directors shall again
be vested equally in the holders of the Preferred Stock and the Common Stock,
who shall each be entitled to one vote per share. Each Director elected by the
holders of shares of Preferred Stock as a result of the Special Voting Rights
<PAGE>
set forth above shall serve only until the next annual meeting of
stockholders, or until the date the Special Voting Rights shall have
terminated as provided in this paragraph 6, whichever event first occurs.
7. Registration Rights.
(A) "Piggy-Back" Registration Rights:
(i) If, at any time and from time to time after the
Corporation's first Public Offering, the Corporation proposes to register any
of its securities on Forms S-1, S-2, S-3, SB-1 or SB-2, or any successor
forms, under the Securities Act of 1933 (the "Act") and applicable state
securities laws (the "State Acts"), the Corporation shall give prompt written
notice to each holder of Preferred Stock (or Common Stock into which it has
been converted) of its intention to do so, and, upon the written request of
any such stockholder made within 30 days after the receipt of any such notice,
which written request shall specify the number of shares such stockholder
desires to be registered, the Corporation shall use its reasonable efforts to
cause all such shares of such stockholder to be registered under the Act and
State Acts to permit the sale of such shares. Notwithstanding anything
contained herein to the contrary, the Corporation shall have the right to
discontinue any registration of such shares of such stockholder at any time
prior to the effective date of such registration if the registration of other
securities giving rise to such registration is discontinued.
(ii) If any stockholder shall request inclusion of any shares
held by such stockholder in the registration of other securities of the
Corporation and such proposed registration by the Corporation is, in whole or
in part, an underwritten Public Offering, and if the managing underwriter
determines and advises the Corporation in writing that inclusion in such
registration of all proposed securities (including securities being offered by
or on behalf of the Corporation and securities covered by requests for
registration) would adversely affect the marketability of the offering of the
securities proposed to be registered by the Corporation, then such stockholder
shall be entitled to participate pro-rata with the other stockholders having
similar incidental registration rights with respect to such registration to
the extent the managing underwriter determines that such shares may be
included without such adverse effect.
(iii) The rights of such stockholders to have their shares
included in such registration shall expire on the first to occur of January 1,
2010, or that date which is 10 years after the Corporation's first Public
Offering.
(B) Demand Registration Rights: At any time after the Corporation's
first Public Offering of its stock, the Corporation shall, upon receipt of a
written request from the holders of at least 25% of the aggregate issued and
outstanding Preferred Stock and the Common Stock into which it has been
converted, prepare and file under the Act a registration statement in respect
of such shares. In the event that not all of such shares have been registered
as herein set forth, the Corporation shall, upon receipt of a written request
from the holders of at least 25% of the aggregate remaining unregistered
Preferred Stock and the Common Stock into which it has been converted, prepare
and file under the Act no more than one additional registration statement to
register the remaining balance of the shares not so registered.
<PAGE>
(C) Expenses: The Corporation shall pay all expenses incident to its
performance of or compliance with the provisions of subparagraphs 7(A) and
7(B) hereof, including, without limitation, all registration and filing fees,
fees and expenses of compliance with the Act and State Acts, printing
expenses, messenger and delivery expenses, fees and disbursements of counsel
for the Corporation (but not the legal fees of any such stockholder) and all
independent public accountants and other persons retained by the Corporation,
and any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities (excluding underwriting commissions and discounts).
(D) Obligations of the Corporation: If and whenever the Corporation
is required to use its reasonable efforts to effect or cause the registration
of any shares under the Act as provided in this paragraph 7, the Corporation
shall, as expeditiously as possible:
(i) prepare and file with the SEC a registration statement with
respect to such shares and use its reasonable efforts to cause such
registration statement to become effective;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and such prospectus current for a period not in excess of nine
months as may be necessary in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement;
(iii) furnish to each seller of such shares such number of
copies of such registration statement and each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus included in such registration statement (including each preliminary
prospectus), in conformity with the requirements of the Act, and such other
documents as such seller may reasonably request in order to facilitate the
disposition of the shares owned by such seller;
(iv) use its reasonable efforts to register or qualify such
shares covered by such registration statement under such State Acts as each
seller reasonably requests, and do any and all other acts and things which may
be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the shares owned by such seller, except
that the Corporation shall not for any such purpose be required to qualify to
do business as a foreign corporation in any jurisdiction wherein it is not so
qualified, to subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction; and
(v) notify each seller of any such securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Act or upon the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and at the request of any such seller prepare and furnish to such
<PAGE>
seller a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing.
(E) Indemnification and Notification:
(i) The Corporation shall indemnify and hold harmless each
holder of any shares included in the Corporation's registration statement
pursuant to this paragraph 7, and each person, if any, who controls such
holder within the meaning of Section 15 of the Act, from and against any and
all losses, claims, damages, expenses and liabilities (including reasonable
attorneys' fees) caused by any untrue statement of a material fact contained
in any such registration statement, or contained in a prospectus furnished
thereunder, or in any amendment or supplement thereto or caused by any
omission to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading (provided, however, that the foregoing
indemnification and agreement to hold harmless shall not apply insofar as such
losses, claims, damages, expenses, and liabilities are caused by any such
untrue statement or omission is based upon information furnished in writing to
the Corporation by any such holder expressly for use in any registration
statement or prospectus).
(ii) Promptly after receipt by any holder of any shares
included in the Corporation's registration statement pursuant to this
paragraph 7 of notice of the commencement of any action, said holder shall, if
a claim in respect thereof is to be made against the Corporation under this
paragraph 7, notify the Corporation in writing of the commencement thereof,
but the omission so to notify the Corporation shall not relieve it from any
liability which it may have to them under this paragraph 7. In case any such
action is brought against any holder of any shares registered pursuant to this
paragraph 7 and the Corporation is notified of the commencement thereof as
provided herein, the Corporation shall be entitled to participate in, and, to
the extent that it may wish, to assume the defense thereof, with counsel
reasonably satisfactory to such holder, and after notice from the Corporation
to such holder of the Corporation's election so to assume the defense thereof,
the Corporation shall not be liable under this paragraph 7 for any legal or
other expense subsequently incurred by such holder in connection with the
defense thereof other than reasonable costs of investigation.
(iii) Each holder of any shares registered pursuant to this
paragraph 7 agrees to cooperate fully with the Corporation in effecting
registration and qualification of the Preferred Stock (or the Common Stock
into which it has been converted) and of such distribution, and shall
indemnify and hold harmless the Corporation and each person who may control
the Corporation within the meaning of Section 15 of the Act, each director of
the Corporation, and each officer who signed any registration statement from
and against any and all losses, claims, damages, expenses, and liabilities
(including reasonable attorneys' fees) caused by any untrue statement of a
material fact contained in any such registration statement, or contained in a
prospectus furnished thereunder, or any amendment or supplement thereto, or
caused by any omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, to the extent that
<PAGE>
such untrue statement or omission was made in reliance upon information
furnished to the Corporation by any such holder for inclusion therein.
8. Changes In Terms of Preferred Stock. The terms of the Preferred Stock
may not be amended, altered or repealed, and no class of capital stock or
securities convertible into capital stock shall be authorized which has
superior rights to the Preferred Stock as to distributions, liquidation or
vote, without the consent of the holders of at least two-thirds of the
outstanding shares of Preferred Stock.
9. No Implied Limitations. Except as otherwise provided by express
provisions of these Articles of Incorporation, nothing herein shall limit, by
inference or otherwise, the discretionary right of the Board of Directors to
classify and reclassify and issue any shares of Preferred Stock and to fix or
alter all terms thereof to the full extent provided in the Articles of
Incorporation of the Corporation.
10. General Provisions. In addition to the above provisions with respect
to the Preferred Stock, such Preferred Stock shall be subject to, and entitled
to the benefits Of, the provisions set forth in the Corporation's Articles of
Incorporation with respect to Preferred Stock generally.
11. Notices. All notices required or permitted to be given by the
Corporation with respect to the Preferred Stock shall be in writing, and if
delivered by first class United States mail, postage prepaid, to the holders
of the Preferred Stock at their last addresses as they shall appear upon the
books of the Corporation, shall be conclusively presumed to have been duly
given, whether or not the stockholder actually receives such notice; provided,
however, that failure to duly give such notice by mail, or any defect in such
notice, to the holders of any stock designated for redemption, shall not
affect the validity of the proceedings for the redemption of any other shares
of Preferred Stock.
ARTICLE VII
SPECIAL PROVISIONS WHEN TWO CLASSES OF COMMON STOCK ARE
AUTHORIZED IN THE ARTICLES OF INCORPORATION
Election and Filling of Vacancies. With respect to the election of the
Board of Directors of the Corporation:
(1) the holders of Class A Common Stock (a) shall nominate and elect one
(1) director who shall be known as the Class A Director, and (b) in the event
of the death, disability, removal, resignation or refusal to act of the Class
A Director, the holders of Class A Common Stock, to the exclusion of the
holders of all other classes of stock of the Corporation, shall nominate and
elect a director to fill the vacancy so created by such death, disability,
removal, resignation or refusal to act; and
(2) the holders of Class B Common Stock (a) shall nominate and elect two
(2) directors who shall be known as the Class B Directors, and (b) in the
event of the death, disability, removal, resignation or refusal to act of any
or all of the Class B Directors, the holders of the Class B Common Stock, to
the exclusion of the holders of all other classes of stock of the Corporation,
shall nominate and elect one or more directors to fill the vacancy or
vacancies so created by such death, disability, removal, resignation or
refusal to act.
ARTICLE VIII
HIGH QUORUM PROTECTIVE PROVISIONS
Quorum. The presence in person or by proxy of the holders of record of
all of the shares of the capital stock of the Corporation issued and
outstanding and entitled to vote thereat shall constitute a quorum at all
meetings of the stockholders, except as otherwise provided by the Colorado
Business Corporation Act, by the Articles of Incorporation or by these Bylaws.
If less than a quorum shall be in attendance at the time for which the meeting
shall have been called, the meeting may be adjourned from time to time by a
majority vote of the stockholders present or represented, without any notice
other than by announcement at the meeting, until a quorum shall attend. At any
adjourned meeting at which a quorum shall attend, any business may be
transacted which might have been transacted if the meeting had been held as
originally called.
<PAGE>
ARTICLE IX
PREEMPTIVE RIGHTS
A shareholder of the corporation shall not be entitled to a preemptive
or preferential right to purchase, subscribe for, or otherwise acquire any
unissued or treasury shares of stock of the corporation, or any options or
warrants to purchase, subscribe for or otherwise acquire any such unissued or
treasury shares, or any shares, bonds, notes, debentures, or other securities
convertible into or carrying options or warrants to purchase, subscribe for or
otherwise acquire any such unissued or treasury shares.
<PAGE>
ARTICLE X
CUMULATIVE VOTING
The shareholders shall not be entitled to cumulative voting.
ARTICLE XI
SHARE TRANSFER RESTRICTIONS
The corporation shall have the right to impose restrictions upon the
transfer of any of its authorized shares or any interest therein. The board
of directors is hereby authorized on behalf of the corporation to exercise the
corporation's right to so impose such restrictions.
ARTICLE XII
REGISTERED OFFICE AND AGENT
The address of the initial registered office of the corporation shall be
17 West Cheyenne Mountain Boulevard, Colorado Springs, CO 80906, and the name
of the initial registered agent at such address is Mark T. Thatcher, Esq.
Either the registered office or the registered agent may be changed in the
manner provided by law.
THE UNDERSIGNED CONSENTS TO THE APPOINTMENT AS THE
INITIAL REGISTERED AGENT
______________________________
REGISTERED AGENT
<PAGE>
ARTICLE XIII
BOARD OF DIRECTORS
The board of directors of the corporation shall consist of no more than
nine (9) directors, and the names and addresses of the persons who are serving
as directors until their successors are elected and shall qualify are as
follows:
Name Title Address
Richard Nadeau, Jr. President 1250 Turks Head Building
Providence, RI 02903
James R. Simmons Vice President 1250 Turks Head Building
Providence, RI 02903
Mark T. Thatcher Secretary 1250 Turks Head Building
Providence, RI 02903
The number of directors shall be fixed in accordance with the bylaws.
ARTICLE XIV
INDEMNIFICATION
The corporation may:
(A) Indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative (other
than an action by or in the right of the corporation), by reason of the fact
that he is or was a director, officer, employee, fiduciary or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses
(including attorney 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 a manner he reasonably
believed to be in the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, or conviction or upon a plea of nolo contendere
or its equivalent shall not of itself create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
the best interests of the corporation and, with respect to any criminal action
or proceeding, had reasonable cause to believe his conduct was unlawful.
<PAGE>
(B) The corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending, or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of
the corporation as a director, officer, employee, fiduciary or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorney 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 a manner he reasonably believed to be in the best
interests of the corporation; but no indemnification shall be made in respect
of any claim, issue, or matter as to which such person has been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation 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 circumstances of the case, such person is
fairly and reasonably entitled to indemnification for such expenses which such
court deems proper.
(C) To the extent that a director, officer, employee, fiduciary or
agent of a corporation has been successful on the merits in defense of any
action, suit, or proceeding referred to in (A) or (B) of this Article XI or in
defense of any claim, issue, or matter therein, he shall be indemnified
against expenses (including attorney fees) actually and reasonably incurred by
him in connection therewith.
(D) Any indemnification under (A) or (B) of this Article XI (unless
ordered by a court) and as distinguished from (C) of this Article shall be
made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee,
fiduciary or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in (A) or (B) above. 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 or, even if obtainable, if
a quorum of disinterested directors so directs, by independent legal counsel
in a written opinion, or by the shareholders.
(E) Expenses (including attorney 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 in
(C) or (D) of this Article XI upon receipt of an undertaking by or on behalf
of the director, officer, employee, fiduciary 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 XI.
(F) The indemnification provided by this Article XI shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
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 a person who has ceased to be a
director, officer, employee, fiduciary or agent and shall inure to the benefit
of heirs, executors, and administrators of such a person.
(G) The corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, fiduciary or agent of
the corporation or who is or was serving at the request of the corporation as
a director, officer, employee, fiduciary or agent of another corporation,
<PAGE>
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 provisions of this Article XI.
ARTICLE XV
TRANSACTIONS WITH INTERESTED DIRECTORS
No contract or other transaction between the corporation and one (1) or
more of its directors or any other corporation, firm, association, or entity
in which one (1) or more of its directors are directors or officers or are
financially interested shall be either void or voidable solely because of such
relationship or interest, or solely because such directors are present at the
meeting of the board of directors or a committee thereof which authorizes,
approves, or ratifies such contract or transaction, or solely because their
votes are counted for such purpose if:
(A) The fact of such relationship or interest is disclosed or known to
the board of directors or committee which authorizes, approves, or ratifies
the contract or transaction by a vote or consent sufficient for the purpose
without counting the votes or consents of such interested directors;
(B) The fact of such relationship or interest is disclosed or known to
the shareholders entitled to vote and they authorize, approve, or ratify such
contract or transaction by vote or written consent; or
(C) The contract or transaction is fair and reasonable to the
corporation.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or a committee
thereof which authorizes, approves, or ratifies such contract or
transaction.
ARTICLE XVI
VOTING OF SHAREHOLDERS
If a quorum is present, the affirmative vote of a majority of the
outstanding shares represented at the meeting and entitled to vote thereon, or
of any class or series, shall be the act of the shareholders.
<PAGE>
ARTICLE XVII
INCORPORATOR
The name and address of the incorporator is as follows:
Name Address
Mark T. Thatcher 17 W. Cheyenne Mtn. Blvd.
Colorado Springs, CO 80906
IN WITNESS WHEREOF, the above named incorporator signed these Articles of
Incorporation on November 24, 1999.
/s/ Mark T. Thatcher
______________________________
MARK T. THATCHER,
Incorporator
STATE OF RHODE ISLAND )
: ss
COUNTY OF )
I, the undersigned, a notary public, hereby certify that on November 24, 1999,
the above named incorporator personally appeared before me and being by me
first duly sworn declared that he is the person who signed the foregoing
document as incorporator, and that the statements therein contained are true.
WITNESS my hand and official seal.
______________________________
Notary Public
Address:
(Seal) My Commission Expires:
BYLAWS
OF
PROVIDENCE CAPITAL I, INC.
ARTICLE I
OFFICES
Section 1.1 PRINCIPAL OFFICE. The principal office of the corporation in
the State of Colorado shall be located in the City of Colorado Springs, County
of El Paso. The corporation may have such other offices, either within or
outside of the State of Colorado, as the Board of Directors may designate, or
as the business of the corporation may require from time to time.
Section 1.2 REGISTERED OFFICE. The registered office of the corporation,
required by the Colorado Business Corporation Act to be maintained in the
State of Colorado, may be, but need not be, identical with the principal
office in the State of Colorado, and the address of the registered office may
be changed from time to time by the Board of Directors.
ARTICLE II
SHAREHOLDERS
Section 2.1 ANNUAL MEETING. The annual meeting of the shareholders shall
be held on the last Tuesday of March in each year, commencing with the year
2000, at the hour of 10:00 A.M., or at such other time on such other day as
shall be fixed by the Board of Directors, for the purpose of electing
directors and for the transaction of such other business as may come before
the meeting. If the day fixed for the annual meeting shall be a legal holiday
in the State of Maine, such meeting shall be held on the next succeeding
business day. If the election of directors shall not be held on the day
designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be
held at a special meeting of the shareholders as soon thereafter as may be
convenient.
<PAGE>
A shareholder may apply to the district court in the county in Colorado
where the corporation's principal office is located or, if the corporation has
no principal office in Colorado, to the district court of the county in which
the corporation's registered office is located to seek an order that a
shareholder meeting be held (i) if an annual meeting was not held within six
months after the close of the corporation's most recently ended fiscal year or
fifteen months after its last annual meeting, whichever is earlier, or (ii) if
the shareholder participated in a proper call or of proper demand for a
special meeting and notice of the special meeting was not given within thirty
days after the date of the call or the date the last of the demands necessary
to require calling of the meeting was received by the corporation pursuant to
C.R.S. § 7-107-102(1)(b), or the special meeting was not held in
accordance with the notice.
Section 2.2 SPECIAL MEETINGS. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President or by the Board of Directors, and shall be called by the
President upon the receipt of one or more written demands for a special
meeting, stating the purpose or purposes for which it is to be held, signed
and dated by the holders of shares representing at least ten percent of all
the votes entitled to be cast on any issue proposed to be considered at the
meeting.
Section 2.3 PLACE OF MEETINGS. The Board of Directors may designate any
place, either within or outside of the State of Colorado, as the place of
meeting for any annual meeting or for any special meeting called by the Board
of Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the corporation
in the State of Colorado.
Section 2.4 NOTICE OF MEETING. Written notice stating the place, day and
hour of the meeting of shareholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall, unless otherwise
prescribed by statute, be delivered not less than ten nor more than sixty days
before the date of the meeting, either personally or by mail, by or at the
direction of the President, or the Secretary, or the officer or other persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting; provided, however, that if the number of authorized shares is to be
increased, at least thirty days' notice shall be given.
Notice of a special meeting shall include a description of the purpose or
purposes of the meeting. Notice of an annual meeting need not include a
description of the purpose or purposes of the meeting except the purpose or
purposes shall be stated with respect to (i) an amendment to the articles of
incorporation of the corporation, (ii) a merger or share exchange in which the
corporation is a party and, with respect to a share exchange, in which the
corporation's shares will be acquired, (iii) a sale, lease, exchange or other
disposition, other than in the usual and regular course of business, of all or
substantially all of the property of the corporation or of another entity
which this corporation controls, in each case with or without the goodwill,
(iv) a dissolution of the corporation, or (v) any other purpose for which a
statement of purpose is required by the Colorado Business Corporation Act.
<PAGE>
Notice shall be given personally or by mail, private carrier, telegraph,
teletype, electronically transmitted facsimile or other form of wire or
wireless communication by or at the direction of the president, the secretary,
or the officer or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed and if in a comprehensible form,
such notice shall be deemed to be given and effective when deposited in the
United States mail, addressed to the shareholder at his address as it appears
in the corporation's current record of shareholders, with postage prepaid. If
notice is given other than by mail, and provided that such notice is in a
comprehensible form, the notice is given and effective on the date received by
the shareholder.
If requested by the person or persons lawfully calling such meeting, the
notice shall be given at corporate expense.
When a meeting is adjourned to another date, time or place, notice need
not be given of the new date, time or place if the new date, time or place of
such meeting is announced before adjournment at the meeting at which the
adjournment is taken. At the adjourned meeting the corporation may transact
any business which may have been transacted at the original meeting. If the
adjournment is for more than 120 days, or if a new record date is fixed for
the adjourned meeting, a new notice of the adjourned meeting shall be given to
each shareholder of record entitled to vote at the meeting as of the new
record date.
A shareholder may waive notice of a meeting before or after the time and
date of the meeting by a writing signed by such shareholder. Such waiver shall
be delivered to the corporation for filing with the corporate records.
Further, by attending a meeting either in person or by proxy, a shareholder
waives objection to lack of notice or defective notice of the meeting unless
the shareholder objects at the beginning of the meeting to the holding of the
meeting or the transaction of business at the meeting because of lack of
notice or defective notice. By attending the meeting, the shareholder also
waives any objection to consideration in the meeting of a particular matter
not within the purpose or purposes described in the meeting notice unless the
shareholder objects to considering the matter when it is presented.
No notice need be sent to any shareholder if three successive notices
mailed to the last known address of such shareholder have been returned as
undeliverable until such time as another address for such shareholder is made
known to the corporation by such shareholder. In order to be entitled to
receive notice of any meeting, a shareholder shall advise the corporation in
writing of any change in such shareholder's mailing address as shown on the
corporation's books and records.
Section 2.5 MEETING OF ALL SHAREHOLDERS. If all of the shareholders shall
meet at any time and place, either within or outside of the State of Colorado,
and consent to the holding of a meeting at such time and place, such meeting
shall be valid without call or notice, and at such meeting any corporate
action may be taken.
Section 2.6 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled
to receive payment of any distribution, or in order to make a determination of
shareholders for any other purpose, the Board of Directors of the corporation
<PAGE>
may provide that the share transfer books shall be closed for a stated period
but not to exceed, in any case, seventy days. If the share transfer books
shall be closed for the purpose of determining shareholders entitled to notice
of or to vote at a meeting of shareholders, such books shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the
share transfer books, the Board of Directors may fix in advance a date as the
record date for any such determination of shareholders, such date in any case
to be not more than seventy days and, in case of a meeting of shareholders,
not less than ten days prior to the date on which the particular action,
requiring such determination of shareholders, is to be taken. If the share
transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a distribution,
the date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such distribution is adopted,
as the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof unless the meeting is
adjourned to a date more than one hundred twenty days after the date fixed for
the original meeting, in which case the Board of Directors shall make a new
determination as provided in this section.
Section 2.7 VOTING RECORD. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make, at least ten
days before such meeting of shareholders, a complete record of the
shareholders entitled to vote at each meeting of shareholders or any
adjournment thereof, arranged by voting groups and within each voting group by
class or series of shares, in alphabetical order within each class or series,
with the address of and the number of shares held by each shareholder in each
class or series. For a period beginning the earlier of ten days before the
meeting for which the record was prepared or two business days after notice of
the meeting is given and continuing through the meeting, the record shall be
kept on file at the principal office of the corporation or at a place
identified in the notice of the meeting in the city where the meeting will be
held, whether within or outside of the State of Colorado, and shall be subject
to inspection by any shareholder upon written demand at any time during usual
business hours. Such record shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purposes thereof.
The original stock transfer books shall be the prima facie evidence as to
who are the shareholders entitled to examine the record or transfer books or
to vote at any meeting of shareholders.
Section 2.8 QUORUM. A majority of the votes entitled to be cast on the
matter by a voting group, represented in person or by proxy, constitutes a
quorum of that voting group for action on that matter. If no specific voting
group is designated in the Articles of Incorporation or under the Colorado
Business Corporation Act for a particular matter, all outstanding shares of
the corporation entitled to vote, represented in person or by proxy, shall
constitute a voting group. In the absence of a quorum at any such meeting, a
majority of the shares so represented may adjourn the meeting from time to
time for a period not to exceed one hundred twenty days without further
notice. However, if the adjournment is for more than one hundred twenty days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each shareholder
of record entitled to vote at the meeting.
<PAGE>
At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted
at the meeting as originally noticed. The shareholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal during such meeting of that number of
shareholders whose absence would cause there to be less than a quorum.
Section 2.9 MANNER OF ACTING. If a quorum is present, an action is
approved if the votes cast favoring the action exceed the votes cast within
the voting group opposing the action and such action shall be the act of the
shareholders, unless the vote of a greater proportion or number or voting by
groups is otherwise required by the Colorado Business Corporation Act, the
Articles of Incorporation or these Bylaws.
Section 2.10 PROXIES. At all meetings of shareholders a shareholder may
vote by proxy by signing an appointment form or similar writing, either
personally or by his or her duly authorized attorney-in-fact. A shareholder
may also appoint a proxy by transmitting or authorizing the transmission of a
telegram, teletype, or other electronic transmission providing a written
statement of the appointment to the proxy, a proxy solicitor, proxy support
service organization, or other person duly authorized by the proxy to receive
appointments as agent for the proxy, or to the corporation. The transmitted
appointment shall set forth or be transmitted with written evidence from which
it can be determined that the shareholder transmitted or authorized the
transmission of the appointment. The proxy appointment form or similar writing
shall be filed with the secretary of the corporation before or at the time of
the meeting. The appointment of a proxy is effective when received by the
corporation and is valid for eleven months unless a different period is
expressly provided in the appointment form or similar writing.
Any complete copy, including an electronically transmitted facsimile, of
an appointment of a proxy may be substituted for or used in lieu of the
original appointment for any purpose for which the original appointment could
be used.
Revocation of a proxy does not affect the right of the corporation to
accept the proxy's authority unless (i) the corporation had notice that the
appointment was coupled with an interest and notice that such interest is
extinguished is received by the secretary or other officer or agent authorized
to tabulate votes before the proxy exercises his or her authority under the
appointment, or (ii) other notice of the revocation of the appointment is
received by the secretary or other officer or agent authorized to tabulate
votes before the proxy exercises his or her authority under the appointment.
Other notice of revocation may, in the discretion of the corporation, be
deemed to include the appearance at a shareholders' meeting of the shareholder
who granted the proxy and his or her voting in person on any matter subject to
a vote at such meeting.
The death or incapacity of the shareholder appointing a proxy does not
affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other
officer or agent authorized to tabulate votes before the proxy exercises his
or her authority under the appointment.
<PAGE>
The corporation shall not be required to recognize an appointment made
irrevocable if it has received a writing revoking the appointment signed by
the shareholder (including a shareholder who is a successor to the shareholder
who granted the proxy) either personally or by his or her attorney-in-fact,
notwithstanding that the revocation may be a breach of an obligation of the
shareholder to another person not to revoke the appointment.
Section 2.11 VOTING OF SHARES. Unless otherwise provided by these Bylaws
or the Articles of Incorporation, each outstanding share entitled to vote
shall be entitled to one vote upon each matter submitted to a vote at a
meeting of shareholders, and each fractional share shall be entitled to a
corresponding fractional vote on each such matter. Only shares are entitled to
vote.
Section 2.12 VOTING OF SHARES BY CERTAIN SHAREHOLDERS. If the name on a
vote, consent, waiver, proxy appointment, or proxy appointment revocation
corresponds to the name of a shareholder, the corporation, if acting in good
faith, is entitled to accept the vote, consent, waiver, proxy appointment or
proxy appointment revocation and give it effect as the act of the shareholder.
If the name signed on a vote, consent, waiver, proxy appointment or proxy
appointment revocation does not correspond to the name of a shareholder, the
corporation, if acting in good faith, is nevertheless entitled to accept the
vote, consent, waiver, proxy appointment or proxy appointment revocation and
to give it effect as the act of the shareholder if:
(i) the shareholder is an entity and the name signed purports to be that
of an officer or agent of the entity;
(ii) the name signed purports to be that of an administrator, executor,
guardian or conservator representing the shareholder and, if the corporation
requests, evidence of fiduciary status acceptable to the corporation has been
presented with respect to the vote, consent, waiver, proxy appointment or
proxy appointment revocation;
(iii) the name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the corporation requests, evidence of
this status acceptable to the corporation has been presented with respect to
the vote, consent, waiver, proxy appointment or proxy appointment revocation;
(iv) the name signed purports to be that of a pledgee, beneficial owner
or attorney-in-fact of the shareholder and, if the corporation requests,
evidence acceptable to the corporation of the signatory's authority to sign
for the shareholder has been presented with respect to the vote, consent,
waiver, proxy appointment or proxy appointment revocation;
(v) two or more persons are the shareholder as co-tenants or fiduciaries
and the name signed purports to be the name of at least one of the co-tenants
or fiduciaries, and the person signing appears to be acting on behalf of all
the co-tenants or fiduciaries; or
<PAGE>
(vi) the acceptance of the vote, consent, waiver, proxy appointment or
proxy appointment revocation is otherwise proper under rules established by
the corporation that are not inconsistent with this Section 2.12.
The corporation is entitled to reject a vote, consent, waiver, proxy
appointment or proxy appointment revocation if the secretary or other officer
or agent authorized to tabulate votes, acting in good faith, has reasonable
basis for doubt about the validity of the signature on it or about the
signatory's authority to sign for the shareholder.
Neither the corporation nor any of its directors, officers employees, or
agents who accepts or rejects a vote, consent, waiver, proxy appointment or
proxy appointment revocation in good faith and in accordance with the
standards of this Section is liable in damages for the consequences of the
acceptance or rejection.
Redeemable shares are not entitled to be voted after notice of redemption
is mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company or other financial institution under an
irrevocable obligation to pay the holders of the redemption price on surrender
of the shares.
Section 2.13 ACTION BY SHAREHOLDERS WITHOUT A MEETING. Unless the
Articles of Incorporation or these Bylaws provide otherwise, action required
or permitted to be taken at a meeting of shareholders may be taken without a
meeting if the action is evidenced by one or more written consents describing
the action taken, signed by each shareholder entitled to vote and delivered to
the Secretary of the corporation for inclusion in the minutes or for filing
with the corporate records. Action taken under this section is effective when
all shareholders entitled to vote have signed the consent, unless the consent
specifies a different effective date.
Any such writing may be received by the corporation by electronically
transmitted facsimile or other form of wire or wireless communication
providing the corporation with a complete copy thereof, including a copy of
the signature thereto. The shareholder so transmitting such a writing shall
furnish an original of such writing to the corporation, but the failure of the
corporation to receive or record such original writing shall not affect the
action so taken.
The record date for determining shareholders entitled to take action
without a meeting shall be the date the written consent is first received by
the corporation.
Section 2.14 VOTING BY BALLOT. Voting on any question or in any election
may be by voice vote unless the presiding officer shall order or any
shareholder shall demand that voting be by ballot.
Section 2.15 NO CUMULATIVE VOTING. No shareholder shall be permitted to
cumulate his or her votes.
<PAGE>
Section 2.16 WAIVER OF NOTICE. When any notice is required to be given to
any shareholder, a waiver thereof in writing signed by the person entitled to
such notice, whether before, at, or after the time stated therein, shall be
equivalent to the giving of such notice.
The attendance of a shareholder at any meeting shall constitute a waiver
of notice, waiver of objection to defective notice of such meeting, or a
waiver of objection to the consideration of a particular matter at the
shareholder meeting unless the shareholder, at the beginning of the meeting,
objects to the holding of the meeting, the transaction of business at the
meeting, or the consideration of a particular matter at the time it is
presented at the meeting.
Section 2.17 PARTICIPATION BY ELECTRONIC MEANS. Any shareholder may
participate in any meeting of the shareholders by means of telephone
conference or similar communications equipment by which all persons
participating in the meeting can hear each other at the same time. Such
participation shall constitute presence in person at the meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 GENERAL POWERS. The business and affairs of the corporation
shall be managed by its Board of Directors.
Section 3.2 PERFORMANCE OF DUTIES. A director of the corporation shall
perform his or her duties as a director, including his or her duties as a
member of any committee of the board upon which he or she may serve, in good
faith, in a manner he or she reasonably believes to be in the best interests
of the corporation, and with such care as an ordinarily prudent person in a
like position would use under similar circumstances. In performing his duties,
a director shall be entitled to rely on information, opinions, reports, or
statements, including financial statements and other financial data, in each
case prepared or presented by persons and groups listed in paragraphs (a),
(b), and (c) of this Section 3.2; but he or she shall not be considered to be
acting in good faith if he or she has knowledge concerning the matter in
question that would cause such reliance to be unwarranted. A person who so
performs his or her other duties shall not have any liability by reason of
being or having been a director of the corporation. Those persons and groups
on whose information, opinions, reports, and statements a director is entitled
to rely are:
(a) One or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the matters
presented;
(b) Legal counsel, public accountants, or other persons as to matters
which the director reasonably believes to be within such persons' professional
or expert competence; or
(c) A committee of the board upon which he or she does not serve, duly
designated in accordance with the provision of the Articles of Incorporation
or the Bylaws, as to matters within its designated authority, which committee
the director reasonably believes to merit confidence.
<PAGE>
Section 3.3 NUMBER, TENURE AND QUALIFICATIONS. The number of directors
of the corporation shall be fixed from time to time by resolution of the Board
of Directors, but in no instance shall there be less than one director. Each
director shall hold office as prescribed by written agreement, or until the
next annual meeting of shareholders, or until his or her successor shall have
been elected and qualified. Directors need not be residents of the State of
Colorado or shareholders of the corporation.
There shall be a Chairman of the Board, who has been elected from among
the directors. He or she shall preside at all meetings of the stockholders and
of the Board of Directors. He or she shall have such other powers and duties
as may be prescribed by the Board of Directors.
There shall be at least two (2) independent directors as defined by the
Colorado Business Corporation Act of 1994, as amended.
Section 3.4 REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after, and at
the same place as, the annual meeting of shareholders. The Board of Directors
may provide, by resolution, the time and place, either within or without the
State of Colorado, for the holding of additional regular meetings without
other notice than such resolution.
Section 3.5 SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the President or any two directors. The
person or persons authorized to call special meetings of the Board of
Directors may fix any place, either within or without the State of Colorado,
as the place for holding any special meeting of the Board of Directors called
by them.
Section 3.6 NOTICE. Written notice of any special meeting of directors
shall be given as follows:
By mail to each director at his or her business address at least two days
prior to the meeting; or
By personal delivery, facsimile or telegram at least twenty-four hours
prior to the meeting to the business address of each director, or in the event
such notice is given on a Saturday, Sunday or holiday, to the residence
address of each director. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, so addressed, with postage
thereon prepaid. If notice is given by facsimile, such notice shall be deemed
to be delivered when a confirmation of the transmission of the facsimile has
been received by the sender. If notice be given by telegram, such notice shall
be deemed to be delivered when the telegram is delivered to the telegraph
company.
Any director may waive notice of any meeting.
The attendance of a director at any meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
<PAGE>
Neither the business to be transacted at, nor the purpose of, any regular
or special meeting of the Board of Directors need be specified in the notice
or waiver of notice of such meeting.
When any notice is required to be given to a director, a waiver thereof
in writing signed by such director, whether before, at or after the time
stated therein, shall constitute the giving of such notice.
Section 3.7 QUORUM. A majority of the number of directors fixed by or
pursuant to Section 3.2 of this Article III, or if no such number is fixed, a
majority of the number of directors in office immediately before the meeting
begins, shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, but if less than such majority is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice.
Section 3.8 MANNER OF ACTING. Except as otherwise required by law or by
the Articles of Incorporation, the affirmative vote of the majority of the
directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
Section 3.9 INFORMAL ACTION BY DIRECTORS OR COMMITTEE MEMBERS. Unless the
Articles of Incorporation or these By-laws provide otherwise, any action
required or permitted to be taken at a meeting of the board of directors or
any committee designated by said board may be taken without a meeting if the
action is evidenced by one or more written consents describing the action
taken, signed by each director or committee member, and delivered to the
Secretary for inclusion in the minutes or for filing with the corporate
records. Action taken under this section is effective when all directors or
committee members have signed the consent, unless the consent specifies a
different effective date. Such consent has the same force and effect as a
unanimous vote of the directors or committee members and may be stated as such
in any document.
Section 3.10 PARTICIPATION BY ELECTRONIC MEANS. Any members of the Board
of Directors or any committee designated by such Board may participate in a
meeting of the Board of Directors or committee by means of telephone
conference or similar communications equipment by which all persons
participating in the meeting can hear each other at the same time. Such
participation shall constitute presence in person at the meeting.
Section 3.11 VACANCIES. Any vacancy on the Board of Directors may be
filled by the affirmative vote of a majority of the shareholders or the Board
of Directors. If the directors remaining in office constitute fewer than a
quorum of the board, the directors may fill the vacancy by the affirmative
vote of a majority of all the directors remaining in office.
If elected by the directors, the director shall hold office until the
next annual shareholders' meeting at which directors are elected. If elected
by the shareholders, the director shall hold office for the unexpired term of
his or her predecessor in office; except that, if the director's predecessor
was elected by the directors to fill a vacancy, the director elected by the
shareholders shall hold the office for the unexpired term of the last
predecessor elected by the shareholders.
<PAGE>
If the vacant office was held by a director elected by a voting group of
shareholders, only the holders of shares of that voting group are entitled to
vote to fill the vacancy if it is filled by the shareholders, and, if one or
more of the remaining directors were elected by the same voting group, only
such directors are entitled to vote to fill the vacancy if it is filled by the
directors.
Section 3.12 RESIGNATION. Any director of the corporation may resign at
any time by giving written notice to the Secretary of the corporation. The
resignation of any director shall take effect upon receipt of notice thereof
or at such later time as shall be specified in such notice; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. When one or more directors shall resign from
the board, effective at a future date, a majority of the directors then in
office, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective.
Section 3.13 REMOVAL. Subject to any limitations contained in the
Articles of Incorporation, any director or directors of the corporation may be
removed at any time, with or without cause, in the manner provided in the
Colorado Business Corporation Act.
Section 3.14 COMMITTEES. By resolution adopted by a majority of the Board
of Directors, the directors may designate two or more directors to constitute
a committee, any of which shall have such authority in the management of the
corporation as the Board of Directors shall designate and as shall be
prescribed by the Colorado Business Corporation Act and Article XI of these
Bylaws.
Section 3.15 COMPENSATION. By resolution of the Board of Directors and
irrespective of any personal interest of any of the members, or the Board of
Directors, each director may be paid his or her expenses, if any, of
attendance at each meeting of the Board of Directors, and may be paid a stated
salary as director or a fixed sum for attendance at each meeting of the Board
of Directors or both. No such payment shall preclude any director from serving
the corporation in any other capacity and receiving compensation therefor.
Section 3.16 PRESUMPTION OF ASSENT. A director of the corporation who is
present at a meeting of the Board of Directors or committee of the board at
which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless (i) the director objects at the beginning
of the meeting, or promptly upon his or her arrival, to the holding of the
meeting or the transaction of business at the meeting and does not thereafter
vote for or assent to any action taken at the meeting, (ii) the director
contemporaneously requests that his or her dissent or abstention as to any
specific action taken be entered in the minutes of the meeting, or (iii) the
director causes written notice of his or her dissent or abstention as to any
specific action to be received by the presiding officer or the meeting before
its adjournment or by the corporation promptly after the adjournment of the
meeting. A director may dissent to a specific action at a meeting, while
assenting to others. The right to dissent to a specific action taken at a
meeting of the Board of Directors or a committee of the board shall not be
available to a director who voted in favor of such action.
<PAGE>
ARTICLE IV
OFFICERS
Section 4.1 NUMBER. The officers of the corporation shall be a President,
a Secretary, and a Treasurer, each of whom must be a natural person who is
eighteen years or older and shall be elected by the Board of Directors. Such
other officers and assistant officers as may be deemed necessary may be
elected or appointed by the Board of Directors. Any two or more offices may be
held by the same person.
Section 4.2 ELECTION AND TERM OF OFFICE. The officers of the corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after the
annual meeting of the shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
practicable. Each officer shall hold office until his successor shall have
been duly elected and shall have qualified or until his or her death or until
he shall resign or shall have been removed in the manner hereinafter provided.
Section 4.3 REMOVAL AND RESIGNATION. Any officer or agent may be removed
by the Board of Directors at any time, with or without cause, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
An officer or agent may resign at any time by giving written notice of
resignation to the Secretary of the corporation. The resignation is effective
when the notice is received by the corporation unless the notice specifies a
later effective date.
Section 4.4 VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the
Board of Directors for the unexpired portion of the term.
Section 4.5 PRESIDENT. The President shall be the chief executive officer
of the corporation and, subject to the control of the Board of Directors,
shall, in general, supervise and control all of the business and affairs of
the corporation. He or she shall, when present, and in the absence of a Chair
of the Board, preside at all meetings of the shareholders and of the Board of
Directors. He or she may sign, with the Secretary or any other proper officer
of the corporation thereunto authorized by the Board of Directors,
certificates for shares of the corporation and deeds, mortgages, bonds,
contracts, or other instruments which the Board of Directors has authorized to
be executed, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these Bylaws to some other
officer or agent of the corporation, or shall be required by law to be
otherwise signed or executed; and in general shall perform all duties incident
to the office of President and such other duties as may be prescribed by the
Board of Directors from time to time.
<PAGE>
Section 4.6 VICE PRESIDENT. If elected or appointed by the Board of
Directors, the Vice President (or in the event there be more than one vice
president, the vice presidents in the order designated at the time of their
election, or in the absence of any designation, then in the order of their
election) shall, in the absence of the President or in the event of his or her
death, inability or refusal to act, perform all duties of the President, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice President may sign, with the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary, certificates for shares of the corporation; and shall perform such
other duties as from time to time may be assigned to him by the President or
by the Board of Directors.
Section 4.7 SECRETARY. The Secretary shall: (a) prepare and maintain as
permanent records the minutes of the proceedings of the shareholders and the
Board of Directors, a record of all actions taken by the shareholders or Board
of Directors without a meeting, a record of all actions taken by a committee
of the Board of Directors in place of the Board of Directors on behalf of the
corporation, and a record of all waivers of notice and meetings of
shareholders and of the Board of Directors or any committee thereof (b) ensure
that all notices are duly given in accordance with the provisions of these
Bylaws and as required by law, (c) serve as custodian of the corporate records
and of the seal of the corporation and affix the seal to all documents when
authorized by the Board of Directors, (d) keep at the corporation's registered
office or principal place of business a record containing the names and
addresses of all shareholders in a form that permits preparation of a list of
shareholders arranged by voting group and by class or series of shares within
each voting group, that is alphabetical within each class or series and that
shows the address of, and the number of shares of each class or series held
by, each shareholder, unless such a record shall be kept at the office of the
corporation's transfer agent or registrar, (e) maintain at the corporation's
principal office the originals or copies of the corporation's Articles of
Incorporation, Bylaws, minutes of all shareholders' meetings and records of
all action taken by shareholders without a meeting for the past three years,
all written communications within the past three years to shareholders as a
group or to the holders of any class or series of shares as a group, a list of
the names and business addresses of the current directors and officers, a copy
of the corporation's most recent corporate report filed with the Secretary of
State, and financial statements showing in reasonable detail the corporation's
assets and liabilities and results of operations for the last three years, (f)
have general charge of the stock transfer books of the corporation, unless the
corporation has a transfer agent, (g) authenticate records of the corporation,
and (h) in general, perform all duties incident to the office of secretary and
such other duties as from time to time may be assigned to him by the president
or by the board of the Board of Directors. Assistant Secretaries, if any,
shall have the same duties and powers, subject to supervision by the
Secretary. The directors and/or shareholders may however respectively
designate a person other than the Secretary or Assistant Secretary to keep the
minutes of their respective meetings.
Any books, records, or minutes of the corporation may be in written form
or in any form capable of being converted into written form within a
reasonable time.
<PAGE>
Section 4.8 TREASURER. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the corporation; (b)
receive and give receipts for moneys due and payable to the corporation from
any source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositories as shall be
selected in accordance with the provisions of Article V of these Bylaws; and
(c) in general perform all of the duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him or her by
the President or by the Board of Directors.
Section 4.9 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant
Secretaries, when authorized by the Board of Directors, may sign with the
Chair or Vice Chair of the Board of Directors or the President or a Vice
President certificates for shares of the corporation the issuance of which
shall have been authorized by a resolution of the Board of Directors. The
Assistant Secretaries and Assistant Treasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the President or the Board of Directors.
Section 4.10 BONDS. If the Board of Directors by resolution shall so
require, any officer or agent of the corporation shall give bond to the
corporation in such amount and with such surety as the Board of Directors may
deem sufficient, conditioned upon the faithful performance of their respective
duties and offices.
Section 4.11 SALARIES. The salaries of the officers shall be fixed from
time to time by the Board of Directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 5.1 CONTRACTS. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and
such authority may be general or confined to specific instances.
Section 5.2 LOANS. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Board of Directors. Such authority
may be general or confined to specific instances.
Section 5.3 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
Section 5.4 DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the Board of Directors may
select.
<PAGE>
ARTICLE VI
SHARES, CERTIFICATES FOR SHARES
AND TRANSFER OF SHARES
Section 6.1 REGULATION. The Board of Directors may make such rules and
regulations as it may deem appropriate concerning the issuance, transfer and
registration of certificates for shares of the corporation, including the
appointment of transfer agents and registrars.
Section 6.2 SHARES WITHOUT CERTIFICATES. Unless otherwise provided by the
Articles of Incorporation or these Bylaws, the board of directors may
authorize the issuance of any of its classes or series of shares without
certificates. Such authorization shall not affect shares already represented
by certificates until they are surrendered to the corporation.
Within a reasonable time following the issue or transfer of shares
without certificates, the corporation shall send the shareholder a complete
written statement of the information required on certificates by the Colorado
Business Corporation Act.
Section 6.3 CERTIFICATES FOR SHARES. If shares of the corporation are
represented by certificates, the certificates shall be respectively numbered
serially for each class of shares, or series thereof, as they are issued,
shall be impressed with the corporate seal or a facsimile thereof, and shall
be signed by the Chair or Vice Chair of the Board of Directors or by the
President or a Vice President and by the Treasurer or an Assistant Treasurer
or by the Secretary or an Assistant Secretary; provided that such signatures
may be facsimile if the certificate is countersigned by a transfer agent, or
registered by a registrar other than the corporation itself or its employee.
Each certificate shall state the name of the corporation, the fact that the
corporation is organized or incorporated under the laws of the State of
Colorado, the name of the person to whom issued, the date of issue, the class
(or series of any class), and the number of shares represented thereby. A
statement of the designations, preferences, qualifications, limitations,
restrictions and special or relative rights of the shares of each class shall
be set forth in full or summarized on the face or back of the certificates
which the corporation shall issue, or in lieu thereof, the certificate may set
forth that such a statement or summary will be furnished to any shareholder
upon request without charge. Each certificate shall be otherwise in such form
as may be prescribed by the Board of Directors and as shall conform to the
rules of any stock exchange on which the shares may be listed.
The corporation shall not issue certificates representing fractional
shares and shall not be obligated to make any transfers creating a fractional
interest in a share of stock. The corporation may, but shall not be obligated
to, issue scrip in lieu of any fractional shares, such scrip to have terms and
conditions specified by the Board of Directors.
Section 6.4 CANCELLATION OF CERTIFICATES. All certificates surrendered to
the corporation for transfer shall be canceled and no new certificates shall
be issued in lieu thereof until the former certificate for a like number of
shares shall have been surrendered and canceled, except as herein provided
with respect to lost, stolen or destroyed certificates.
<PAGE>
Section 6.5 LOST, STOLEN OR DESTROYED CERTIFICATES. Any shareholder
claiming that his certificate for shares is lost, stolen or destroyed may make
an affidavit or affirmation of that fact and lodge the same with the Secretary
of the corporation, accompanied by a signed application for a new certificate.
Thereupon, and upon the giving of a satisfactory bond of indemnity to the
corporation not exceeding an amount double the value of the shares as
represented by such certificate (the necessity for such bond and the amount
required to be determined by the President and Treasurer of the corporation),
a new certificate may be issued of the same tenor and representing the same
number, class and series of shares as were represented by the certificate
alleged to be lost, stolen or destroyed.
Section 6.6 TRANSFER OF SHARES. Subject to the terms of any shareholder
agreement relating to the transfer of shares or other transfer restrictions
contained in the Articles of Incorporation or authorized therein, shares of
the corporation shall be transferable on the books of the corporation by the
holder thereof in person or by his duly authorized attorney, upon the
surrender and cancellation of a certificate or certificates for a like number
of shares. Upon presentation and surrender of a certificate for shares
properly endorsed and payment of all taxes therefor, the transferee shall be
entitled to a new certificate or certificates in lieu thereof. As against the
corporation, a transfer of shares can be made only on the books of the
corporation and in the manner hereinabove provided, and the corporation shall
be entitled to treat the holder of record of any share as the owner thereof
and shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person, whether or not it
shall have express or other notice thereof, save as expressly provided by the
statutes of the State of Colorado.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall end on the 31st day of December
in each calendar year.
ARTICLE VIII
DISTRIBUTIONS
The Board of Directors may from time to time declare, and the corporation
may pay, distributions on its outstanding shares in the manner and upon the
terms and conditions provided by the Colorado Business Corporation Act and its
Articles of Incorporation.
<PAGE>
ARTICLE IX
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation
and the state of incorporation and the words "CORPORATE SEAL."
ARTICLE X
The Board of Directors shall have power, to the maximum extent permitted
by the Colorado Business Corporation Act, to make, amend and repeal the Bylaws
of the corporation at any regular or special meeting of the board unless the
shareholders, in making, amending or repealing a particular Bylaw, expressly
provide that the directors may not amend or repeal such Bylaw. The
shareholders also shall have the power to make, amend or repeal the Bylaws of
the corporation at any annual meeting or at any special meeting called for
that purpose.
AMENDMENTS
ARTICLE XI
EXECUTIVE COMMITTEE
Section 11.1 APPOINTMENT. The Board of Directors by resolution adopted by
a majority of the full Board, may designate two or more of its members to
constitute an Executive Committee. The designation of such Committee and the
delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
Section 11.2 AUTHORITY. The Executive Committee, when the Board of
Directors is not in session, shall have and may exercise all of the authority
of the Board of Directors except to the extent, if any, that such authority
shall be limited by the resolution appointing the Executive Committee and
except also that the Executive Committee shall not have the authority of the
Board of Directors in reference to authorizing distributions, filling
vacancies on the Board of Directors, authorizing reacquisition of shares,
authorizing and determining rights for shares, amending the Articles of
Incorporation, adopting a plan of merger or consolidation, recommending to the
shareholders the sale, lease or other disposition of all or substantially all
of the property and assets of the corporation otherwise than in the usual and
regular course of its business, recommending to the shareholders a voluntary
dissolution of the corporation or a revocation thereof, or amending the Bylaws
of the corporation.
Section 11.3 TENURE AND QUALIFICATIONS. Each member of the Executive
Committee shall hold office until the next regular annual meeting of the Board
of Directors following his or her designation and until his or her successor
is designated as a member of the Executive Committee and is elected and
qualified.
<PAGE>
Section 11.4 MEETINGS. Regular meetings of the Executive Committee may be
held without notice at such time and places as the Executive Committee may fix
from time to time by resolution. Special meetings of the Executive Committee
may be called by any member thereof upon not less than one day's notice
stating the place, date and hour of the meeting, which notice may be written
or oral, and if mailed, shall be deemed to be delivered when deposited in the
United States mail addressed to the member of the Executive Committee at his
or her business address. Any member of the Executive Committee may waive
notice of any meeting and no notice of any meeting need be given to any member
thereof who attends in person. The notice of a meeting of the Executive
Committee need not state the business proposed to be transacted at the
meeting.
Section 11.5 QUORUM. A majority of the members of the Executive Committee
shall constitute a quorum for the transaction of business at any meeting
thereof, and action of the Executive Committee must be authorized by the
affirmative vote of a majority of the members present at a meeting at which a
quorum is present.
Section 11.6 INFORMAL ACTION BY EXECUTIVE COMMITTEE. Any action required
or permitted to be taken by the Executive Committee at a meeting may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the members of the Executive Committee entitled to
vote with respect to the subject matter thereof.
Section 11.7 VACANCIES. Any vacancy in the Executive Committee may be
filled by a resolution adopted by a majority of the full Board of Directors.
Section 11.8 RESIGNATIONS AND REMOVAL. Any member of the Executive
Committee may be removed at any time with or without cause by resolution
adopted by a majority of the full Board of Directors. Any member of the
Executive Committee may resign from the Executive Committee at any time by
giving written notice to the President or Secretary of the corporation, and
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
Section 11.9 PROCEDURE. The Executive Committee shall elect a presiding
officer from its members and may fix its own rules of procedure which shall
not be inconsistent with these Bylaws. It shall keep regular minutes of its
proceedings and report the same to the Board of Directors for its information
at the meeting thereof held next after the proceedings shall have been taken.
<PAGE>
ARTICLE XII
EMERGENCY BY-LAWS
The Emergency Bylaws provided in this Article XII shall be operative
during any emergency in the conduct of the business of the corporation
resulting from a catastrophic event that prevents the normal functioning of
the offices of the Corporation, notwithstanding any different provision in the
preceding articles of the Bylaws or in the Articles of Incorporation of the
corporation or in the Colorado Business Corporation Act. To the extent not
inconsistent with the provisions of this Article, the Bylaws provided in the
preceding articles shall remain in effect during such emergency and upon its
termination the Emergency Bylaws shall cease to be operative.
During any such emergency:
(a) A meeting of the Board of Directors may be called by any officer or
director of the corporation. Notice of the time and place of the meeting shall
be given by the person calling the meeting to such of the directors as it may
be feasible to reach by any available means of communication. Such notice
shall be given at such time in advance of the meeting as circumstances permit
in the judgment of the person calling the meeting.
(b) At any such meeting of the Board of Directors, a quorum shall consist
of the number of directors in attendance at such meeting.
(c) The Board of Directors, either before or during any such emergency,
may, effective in the emergency, change the principal office or designate
several alternative principal offices or regional offices, or authorize the
officers so to do.
(d) The Board of Directors, either before or during any such emergency,
may provide, and from time to time modify, lines of succession in the event
that during such an emergency any or all officers or agents of the corporation
shall for any reason be rendered incapable of discharging their duties.
(e) No officer, director or employee acting in accordance with these
Emergency Bylaws shall be liable except for willful misconduct.
(f) These Emergency Bylaws shall be subject to repeal or change by
further action of the Board of Directors or by action of the shareholders, but
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action taken prior to the time of such repeal or
change. Any amendment of these Emergency Bylaws may make any further or
different provision that may be practical and necessary for the circumstances
of the emergency.
<PAGE>
CERTIFICATE
I hereby certify that the foregoing Bylaws, consisting of twenty (20) pages,
including this page, constitute the Bylaws of Providence Capital I, Inc.,
adopted by the Board of Directors and Shareholders of the corporation as of
November 24, 1999.
/S/ Mark T. Thatcher
_______________________________
MARK T. THATCHER,
Secretary
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
PROVIDENCE CAPITAL I, INC.
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned, being all of the Directors of PROVIDENCE CAPITAL I, INC. do hereby
waive any and all notice that may be required to be given with respect to a
meeting of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following actions, as of November 24, 1999:
1.RESOLVED, that these Minutes of action shall constitute the record of an
Annual Meeting of the Board of Directors of PROVIDENCE CAPITAL I, INC., and
when signed by all of the Directors, the Secretary of the Corporation, or any
other proper officer, is hereby authorized to certify any of the actions
hereinafter taken of this Corporation, on the date hereof, in accordance with
the requirements established by law.
2.RESOLVED, that the following provision is hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
The Board of Directors of the Corporation is hereby empowered to fix the value
of and to authorize the issuance from time to time of shares of its stock of
any class, whether now or hereafter authorized, or securities convertible
into shares of its stock of any class or classes, whether now or hereafter
authorized.
3.RESOLVED, that all other actions taken by the officers of the Corporation
since the date of the last Annual Minutes of the Board of Directors are
hereby ratified, approved and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above proceedings as of the date first above mentioned.
/s/ Mark T. Thatcher
_____________________________
MARK T. THATCHER,
Secretary
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
PROVIDENCE CAPITAL I, INC.
November 24, 1999
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned, being all of the Directors of PROVIDENCE CAPITAL I, INC. do hereby
waive any and all notice that may be required to be given with respect to a
meeting of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following actions, as of November 24, 1999:
1.RESOLVED, that these Minutes of action shall constitute the record of an
Annual Meeting of the Board of Directors of PROVIDENCE CAPITAL I, INC., and
when signed by all of the Directors, the Secretary of the Corporation, or any
other proper officer, is hereby authorized to certify any of the actions
hereinafter taken of this Corporation, on the date hereof, in accordance with
the requirements established by law.
2.RESOLVED, that the following provision is hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
The Board of Directors may classify or reclassify any unissued stock by
setting or changing in any one or more respects, from time to time before
issuance of such stock, the preferences, conversion or other rights, voting
powers, restrictions, limitations as to distributions, qualifications, and
terms or conditions of redemption of such stock.
3.RESOLVED, that all other actions taken by the officers of the Corporation
since the date of the last Annual Minutes of the Board of Directors are
hereby ratified, approved and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above proceedings as of the date first above mentioned.
/s/ Mark T. Thatcher
____________________________
MARK T. THATCHER, Secretary
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
PROVIDENCE CAPITAL I, INC.
November 24, 1999
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned, being all of the Directors of PROVIDENCE CAPITAL I, INC. do hereby
waive any and all notice that may be required to be given with respect to a
meeting of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following actions, as of November 24, 1999:
1.RESOLVED, that these Minutes of action shall constitute the record of an
Annual Meeting of the Board of Directors of PROVIDENCE CAPITAL I, INC., and
when signed by all of the Directors, the Secretary of the Corporation, or any
other proper officer, is hereby authorized to certify any of the actions
hereinafter taken of this Corporation, on the date hereof, in accordance with
the requirements established by law.
2.RESOLVED, that the following provision is hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
The Corporation shall issue shares of stock of any class now or hereafter
authorized, or any securities exchangeable for, or convertible into such
shares, or warrants or other instruments evidencing rights or options to
subscribe for, or otherwise acquire such shares, only if the issuance of such
shares or such securities exchangeable for, or convertible into such shares,
or such warrants or any other instruments evidencing rights or options to
subscribe for, purchase or otherwise acquire such shares, shall be authorized
by the unanimous vote of all of the directors comprising the Board of
Directors of the Corporation.
In the event that the issuance of such shares, or such securities exchangeable
for, or convertible into such shares, or such warrants or any other
instruments evidencing rights or options to subscribe for, purchase or
otherwise acquire such shares, shall be authorized by the unanimous vote of
all of the directors comprising the Board of Directors of the Corporation, the
issuance of such shares or such securities exchangeable for, or convertible
into such shares, or such warrants or, any other instruments evidencing rights
or options to subscribe for, purchase or otherwise acquire such shares, shall
be made for such consideration as the Board of Directors of the Corporation
by the unanimous vote of all of the directors thereof shall deem advisable.
3.RESOLVED, that all other actions taken by the officers of the Corporation
since the date of the last Annual Minutes of the Board of Directors are
hereby ratified, approved and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above proceedings as of the date first above mentioned.
/s/ Mark T. Thatcher
____________________________
MARK T. THATCHER, Secretary
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
PROVIDENCE CAPITAL I, INC.
November 24, 1999
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned, being all of the Directors of PROVIDENCE CAPITAL I, INC. do hereby
waive any and all notice that may be required to be given with respect to a
meeting of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following actions, as of November 24, 1999:
1.RESOLVED, that these Minutes of action shall constitute the record of an
Annual Meeting of the Board of Directors of PROVIDENCE CAPITAL I, INC., and
when signed by all of the Directors, the Secretary of the Corporation, or any
other proper officer, is hereby authorized to certify any of the actions
hereinafter taken of this Corporation, on the date hereof, in accordance with
the requirements established by law.
2.RESOLVED, that newly created directorships resulting from any increase of
the authorized number of Directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause shall be filled by a majority vote of the remaining
Directors, though less than a quorum, and the Directors so chosen shall hold
office for a term expiring at the next annual meeting of shareholders at which
a successor shall be elected and shall qualify. The shareholders shall not
be entitled to fill a vacancy created on the Board of Directors.
3.RESOLVED, that all other actions taken by the officers of the Corporation
since the date of the last Annual Minutes of the Board of Directors are
hereby ratified, approved and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above proceedings as of the date first above mentioned.
/s/ Mark T. Thatcher
_____________________________
MARK T. THATCHER, Secretary
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
PROVIDENCE CAPITAL I, INC.
November 24, 1999
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned, being all of the Directors of PROVIDENCE CAPITAL I, INC. do hereby
waive any and all notice that may be required to be given with respect to a
meeting of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following actions, as of November 24, 1999:
1.RESOLVED, that these Minutes of action shall constitute the record of an
Annual Meeting of the Board of Directors of PROVIDENCE CAPITAL I, INC., and
when signed by all of the Directors, the Secretary of the Corporation, or any
other proper officer, is hereby authorized to certify any of the actions
hereinafter taken of this Corporation, on the date hereof, in accordance with
the requirements established by law.
2.RESOLVED, that the officers shall be elected annually by the Board of
Directors at its first meeting following the annual meeting of stockholders,
except where a longer term is expressly provided in an employment contract
duly authorized and approved by the Board of Directors. In any such employment
contract, an officer may be employed for a term in excess of one year and for
so long a term as shall be determined by the Board of Directors otherwise in
accordance with the Colorado Business Corporation Act.
3.RESOLVED, that all other actions taken by the officers of the Corporation
since the date of the last Annual Minutes of the Board of Directors are
hereby ratified, approved and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above proceedings as of the date first above mentioned.
/s/ Mark T. Thatcher
____________________________
MARK T. THATCHER, Secretary
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
PROVIDENCE CAPITAL I, INC.
November 24, 1999
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned, being all of the Directors of PROVIDENCE CAPITAL I, INC. do hereby
waive any and all notice that may be required to be given with respect to a
meeting of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following actions, as of November 24, 1999:
1.RESOLVED, that these Minutes of action shall constitute the record of an
Annual Meeting of the Board of Directors of PROVIDENCE CAPITAL I, INC., and
when signed by all of the Directors, the Secretary of the Corporation, or any
other proper officer, is hereby authorized to certify any of the actions
hereinafter taken of this Corporation, on the date hereof, in accordance
with the requirements established by law.
2.RESOLVED, that Members of the Board of Directors and the shareholders at any
annual or special meeting may participate in a meeting by means of a
conference telephone, videolink or similar communications equipment if all
persons participating in the meeting can hear and speak to each other at the
same time. Participation in a meeting by these means constitutes presence in
person at a meeting.
3.RESOLVED, that all other actions taken by the officers of the Corporation
since the date of the last Annual Minutes of the Board of Directors are
hereby ratified, approved and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above proceedings as of the date first above mentioned.
/s/ Mark T. Thatcher
____________________________
MARK T. THATCHER, Secretary
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
PROVIDENCE CAPITAL I, INC.
November 24, 1999
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned, being all of the Directors of PROVIDENCE CAPITAL I, INC. do hereby
waive any and all notice that may be required to be given with respect to a
meeting of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following actions, as of November 24, 1999:
WHEREAS, certain individuals have performed useful and valuable services
for and on behalf of the Corporation without remuneration, and the Board of
Directors has determined that it is in the best interest of the Corporation
to issue stock to the individuals who have performed such services for and on
behalf of the Corporation in payment for such services.
1.RESOLVED: That the Corporation issue the following number of shares of
Common Stock to the following named persons, in consideration for past
services performed by such persons for and on behalf of the Corporation, as
described below, which services are deemed by the Board of Directors to have
values of not less than the amounts shown below:
Name Date of Shares Aggregate Purchase
Sale Purchase Price
Price per Share
Richard P. Nadeau 11-24-99 100,000 $380.00(1) $0.0038
James R. Simmons 11-24-99 100,000 $380.00(1) $0.0038
Mark T. Thatcher 11-24-99 100,000 $380.00(1) $0.0038
Jim Brennan 11-24-99 100,000 $380.00(1) $0.0038
Doug Dyer 11-24-99 100,000 $380.00(1) $0.0038
David Pequet 11-24-99 100,000 $380.00(1) $0.0038
Mark Margason 11-24-99 100,000 $380.00(1) $0.0038
2.RESOLVED, that these Minutes of action shall constitute the record of an
Annual Meeting of the Board of Directors of PROVIDENCE CAPITAL I, INC., and
when signed by all of the Directors, the Secretary of the Corporation, or any
other proper officer, is hereby authorized to certify any of the actions
hereinafter taken of this Corporation, on the date hereof, in accordance with
the requirements established by law.
3.RESOLVED, that all other actions taken by the officers of the Corporation
since the date of the last Annual Minutes of the Board of Directors are
hereby ratified, approved and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above proceedings as of the date first above mentioned.
/s/ Mark T. Thatcher
____________________________
MARK T. THATCHER, Secretary
PROVIDENCE CAPITAL I, INC.
THIS PRE-INCORPORATION CONSULTATION AND SUBSCRIPTION AGREEMENT
This Agreement (the "Agreement") is made and entered into this 24th day
of November, 1999, by and between Richard Nadeau, Jr., James
R. Simmons, Mark T. Thatcher, Jim Brennan, Doug Dyer, David Pequet,
Mark Margason and Chris Werner (hereinafter collectively referred to as
the "parties").
WHEREAS, the parties desire to form a corporation pursuant to
the laws of the State of Colorado, under the name of Providence Capital I,
Inc. (the "Company"), to engage, in the business of acting as a
capital market access vehicle by registering its securities with the U.S.
Securities and Exchange Commission under the Securities Exchange Act
of 1934, and thereafter seeking to acquire one or more existing businesses
through merger or acquisition; and
WHEREAS, the parties desire to subscribe for the acquisition of
stock to be issued upon formation of the Company, and have mutually
agreed that the consideration for the issuance of such shares shall be pre-
incorporation services and assistance to the Company relating to its
formation, determination of an appropriate capital structure, and in
developing its business plan.
NOW, THEREFORE, in consideration of the foregoing, and in
consideration of the mutual covenants and promises hereinafter set forth,
it is agreed as follows:
1. Agreement to Form Corporation. The undersigned parties hereby
agree to form a corporation pursuant to the laws of the State of Colorado,
under the name of PROVIDENCE CAPITAL I, INC. (the "Company"). The
corporation shall be formed for the purpose of acting as a capital market
access vehicle by registering its securities with the U.S. Securities and
Exchange Commission under the Securities Exchange Act of 1934, and
thereafter seeking to acquire one or more existing businesses through
merger or acquisition.
<PAGE>
2. Preincorporation Services. By execution of this Agreement, each of
the undersigned hereby agrees to provide such services as may be
necessary or appropriate prior to the incorporation of the Company, for
purposes of determining the feasibility of, and completing, the Company's
business plan, including, but not limited to, determining the Company's
capital needs, establishing an appropriate capital structure, investigating
the likelihood of finding a suitable merger or acquisition target, reviewing
applicable legal and regulatory restrictions imposed by the Securities and
Exchange Commission, the National Association of Securities Dealers,
and other governmental or regulatory organizations, and the like.
3. Agreement to Serve as Incorporator. By execution of this Agreement,
the parties hereby agree to serve as incorporator of the Company and
to provide services in conjunction with its incorporation and in
conjunction with the preparation of all necessary organizational
documents, including, but not limited to, articles of incorporation, bylaws,
subscription agreements, organizational meeting minutes, and the like.
4. Agreement to Serve as Officers and Directors. By execution of this
Agreement, the parties hereby agree to serve as officers and directors
of the Company following its incorporation, and in that capacity,
to assume responsibility for implementation of the Company's business plan.
5. Consideration. As consideration for the services described herein,
upon formation of the Company, the undersigned shall cause the
Company to issue and deliver to each of the parties hereto, and each of
the parties hereto hereby agrees to accept the following as full
consideration for the services rendered:
<TABLE>
<CAPTION>
Name Date of Shares Aggregate Purchase
Sale Purchase Price
Price per Share
<S> <C> <C> <C> <C>
Richard P. Nadeau 11-24-99 100,000 $380.00(1) $0.0038
James R. Simmons 11-24-99 100,000 $380.00(1) $0.0038
Mark T. Thatcher 11-24-99 100,000 $380.00(1) $0.0038
<PAGE>
Jim Brennan 11-24-99 100,000 $380.00(1) $0.0038
Doug Dyer 11-24-99 100,000 $380.00(1) $0.0038
David Pequet 11-24-99 100,000 $380.00(1) $0.0038
Mark Margason 11-24-99 100,000 $380.00(1) $0.0038
<FN>
<F1>Each unit consists of one share of Common Stock.
<F2>The agreed upon fair market value of the Units for purposes of this
Agreement is $0.0038 per Unit. Accordingly, upon issuance such Units
shall be valued on the books of the Company at $0.0038 per Unit.
</FN>
</TABLE>
6. Exemption from Registration. The parties hereto intend and agree that
this Agreement shall serve as a written compensatory contract which,
upon formation of the Company, satisfies the requirements of Rule 701
adopted by the Securities and Exchange Commission under the Securities
Act of 1933, as amended. Accordingly, it is the intent of the parties that
the exemption from registration provided by Rule 701 shall be applicable
to the issuance of the Units.
7. Representations and Acknowledgments. The parties hereto make the
following representations and acknowledgments:
(a) Neither the Units, nor the underlying securities shall, upon
issuance, have been registered under the Securities Act of 1933, as
amended (the "Act"), or under any State Blue Sky or securities laws and
only the Company can register such securities under the Act or under
applicable State Blue Sky or securities laws.
(b) Upon issuance, the Units and the underlying securities shall
constitute "restricted securities" as that term is defined in Rule 144 under
the Act.
(c) Following issuance, neither the Units nor the underlying securities
may be sold or transferred for value without registration under the
Securities Act of 1933, as amended, or under applicable State blue sky or
securities laws, or in the absence of an opinion of counsel acceptable to
the Company that such registration is not required under such Act or
Acts, and it is not anticipated that the Company will, at any time, seek to
register the Units or the underlying securities under the Act or under any
applicable state blue sky or securities laws.
<PAGE>
(d) Following its formation and the issuance of the Units, the
Company may, from time to time, make stop transfer notations in the
Company's records to assure compliance with the Act and any applicable
State blue sky or securities laws.
(e) In accordance with the foregoing restrictions, the parties hereby
agree that a legend substantially to the effect of the following may be
placed upon all certificates representing the shares and the warrants
comprising the Units:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER
OTHER SECURITIES LAWS. SUCH SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS (i)
THEY SHALL HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE
SECURITIES ACT, OR (ii) THE COMPANY SHALL HAVE BEEN
FURNISHED WITH AN OPINION OF COUNSEL, SATISFACTORY
TO COUNSEL FOR THE COMPANY, THAT REGISTRATION IS
NOT REQUIRED UNDER ANY OF SUCH ACTS."
(f) The parties hereto are acquiring the Units upon issuance solely for
their own account and not on behalf of any other person.
(g) The parties hereto are acquiring the Units upon issuance for
investment purposes and not with the present intent of reselling or
otherwise distributing the Units or the underlying securities.
(h) By execution of this Agreement, the parties hereto agree to
execute and deliver to the Company, following its formation, any
document, or do any other act or thing, which the Company may
reasonably request in connection with the acquisition of the Units.
8. Assignment. None of the parties hereto, or their heirs, executors,
representatives or assigns shall sell, assign, create a security interest in,
pledge, or otherwise transfer or encumber the Units to be issued
hereunder, or the underlying securities, without the express prior written
consent of each of the other parties hereto.
9. Colorado Law. This Agreement shall be governed by, and construed
in accordance with the laws of the State of Colorado.
<PAGE>
10. Binding Effect. This Agreement shall inure to the benefit of, and be
binding upon the parties, and their respective heirs, executors,
representatives and permitted assigns.
11. Entire Agreement. This Agreement supersedes all agreements
previously made between the parties relating to its subject matter. There
are no other understandings or agreements between the parties.
IN WITNESS WHEREOF, this Preincorporation Consultation and
Subscription Agreement Regarding PROVIDENCE CAPITAL I, INC., has been
executed as of the day and year first above written.
/s/Richard Nadeau, Jr.
/s/James R. Simmons
/s/Mark T. Thatcher
/s/Jim Brennan
/s/Doug Dyer
/s/David Pequet
/s/Mark Margason
/s/Chris Werner
PROVIDENCE CAPITAL I, INC.
SUBSCRIPTION AGREEMENT
AND INVESTOR QUESTIONNAIRE
<PAGE>
PROVIDENCE CAPITAL I, INC.
(THE "COMPANY")
INSTRUCTIONS TO SUBSCRIPTION AGREEMENT
This section must be completed by all
Wisconsin, Rhode Island, Illinois and Tennessee resident investors.
PLEASE FOLLOW DIRECTIONS BELOW.
1.Complete pages 2, 7, 9 (if applicable), 10 and 13. If you would like
a representative of the Company to contact you regarding any questions about
the Company call (423) 265-5062.
2.Make sure to complete the signature page 7.
3.Please make check payable in the amount of $___________, to PROVIDENCE
CAPITAL I, INC. (minimum investment: $0.0038/1,000 Shares).
<PAGE>
SUBSCRIPTION AGREEMENT
Providence Capital I, Inc.
735 Broad Street
Suite 800
Chattanooga, TN 37402
Re: Regulation D, Rule 506 Corporate Offering -
734,000 Shares at $0.0038/Share of Company Common Stock
Gentlemen:
1. Subscription. The undersigned hereby subscribes for and agrees to
purchase ___________________________ ( ) share(s) (the "Shares"), at a
price of $0.0038 per Share of common stock (the "Common Stock") of Providence
Capital I, Inc. (the "Company"), a Colorado corporation, for a total purchase
price of __________________ Dollars ($__________.00) (the "Purchase Price"),
in accordance with the terms and conditions of the offering (the "Offering")
made by the Company pursuant to the exemptions to registration afforded by
Rule 506 of the Securities Act of 1933 (the "Act") dated November 24, 1999,
(the "Disclosure Document"). This Subscription Agreement (the "Agreement") may
be rejected in whole or in part by the Company.
2. Payment of Purchase Price. The undersigned hereby tenders his or her
personal or certified check or a bank cashier's or treasurer's check made
payable to the order of "Providence Capital I, Inc." for the full amount of
the Purchase Price, namely, $0.0038) for each Share purchased by the
undersigned (the "Purchase Price"), together with a fully completed and signed
Confidential Investor Questionnaire, a copy of which is attached hereto as
Exhibit A. A stock certificate of the Company, representing the aggregate
number of shares of Common Stock of the Company that the undersigned is
purchasing (the "Shares"), will be delivered to the undersigned promptly after
the successful completion of the Offering.
3. Acknowledgment of Receipt of Certain Documents and Instruments. The
undersigned hereby acknowledges his or her receipt of this subscription
agreement. Also, the undersigned may request in writing to receive any one,
or all, of the exhibits set forth below for inspection:
<PAGE>
Exhibits Description
(1.1)- Articles of Incorporation of the Company, as amended;
(2.1)- Bylaws of the Company;
(3.1)- Specimen Form of the Company's Common Stock Certificate;
(4.1)- Instruments Defining Rights of Security Holders/Minutes of
Annual/Special Meetings of the Company;
(5.1)- Opinion of Nadeau & Simmons, P.C.
4. Representations and Warranties. The undersigned hereby represents and
warrants to the Company and its directors, officers and control persons, as
follows:
(a) He or she is a citizen of the United States and is at least 21
years of age.
(b) The residence of the undersigned set forth below is the true and
correct residence of the undersigned and he or she has no present intention of
becoming a resident or domiciliary of any other state, country or
jurisdiction.
(c) He or she has received and read, and is familiar with, the
contents of the Disclosure Document and all of the Exhibits thereto that have
been requested for inspection (itemized in Section 4, above).
(d) The shares of Common Stock of the Company for which the
undersigned hereby subscribes will be acquired by the undersigned for
investment only, for the undersigned's own account, and not with a view to,
for offer for sale or for sale in connection with, the distribution or
transfer thereof. The shares of Common Stock of the Company are not being
purchased for subdivision or fractionalization thereof; and the undersigned
has no contract, undertaking, agreement or arrangement with any person or
entity to sell, hypothecate, pledge, donate or otherwise transfer (with or
without consideration) to any such person or entity any shares of Common Stock
of the Company which the undersigned hereby subscribes, and the undersigned
has no present plans or intention to enter into any such contract,
undertaking, agreement or arrangement.
<PAGE>
(e) The present financial condition of the undersigned is such that
he or she is under no present or contemplated future need to dispose of any
portion of the shares of Common Stock of the Company for which the undersigned
hereby subscribes to satisfy any existing or contemplated undertaking, need or
indebtedness.
5. Acknowledgment of Certain Facts. The undersigned acknowledges his or
her awareness and understanding of the following:
(a) This Agreement may be rejected in whole or in part by the
Company in its sole and absolute discretion.
(b) The Company was organized in November, 1999.
(c) The purchase of one or more Shares is a speculative investment
which involves a high degree of risk of loss by the undersigned of his or her
entire investment in the Shares.
(d) Any "Risk Factors" set forth in a Disclosure Document.
(e) No federal or state agency has made any finding or determination
as to the fairness for public investment, nor any recommendation or
endorsement, of the Shares.
(f) Although there may not be restrictions on the transferability of
the shares of Common Stock of the Company; there may be no market for the
shares of Common Stock of the Company and, accordingly, it may not be possible
for the undersigned to liquidate readily, or at all, his or her investment in
the Company in case of an emergency or otherwise.
(g) The shares of Common Stock of the Company have not been
registered under either the federal Securities Act of 1933 (the "Act") or
applicable state securities laws (the "State Acts").
(h) The Company will file periodic reports with the Securities and
Exchange Commission ("SEC") pursuant to the provisions of the Securities
Exchange Act of 1934, as amended.
(i) All instruments, documents, records and books pertaining to this
investment have been made available for inspection by the undersigned's
attorney and accountant and the undersigned, and that the books and records of
the Company will be available upon reasonable notice, for inspection by
investors during reasonable business hours at its principal place of business.
There is available to the undersigned, by contacting Mark T. Thatcher,
President of the Company, the opportunity to ask questions and receive answers
concerning the terms and conditions of the Offering and to obtain any
additional information which the Company possesses or can obtain without
unreasonable effort or expenses that is necessary to verify the information
contained in the Disclosure Document.
<PAGE>
6. Notices. Any notices or other communications required or permitted
hereby shall be given by registered or certified, U. S. first-class mail,
postage prepaid, return receipt requested, and if to the Company, at the
address at the beginning of this Agreement, and if to the undersigned, at the
address set forth below his or her signature hereto, or to such other
addresses as either the Company or the undersigned shall designate to the
other by notice in writing. All such notices and other communications shall be
deemed to be received when given, as aforesaid.
7. Successors and Assigns. This Agreement shall be binding upon the
Company and shall inure to the benefit of the Company, its directors, officers
and control persons, and its respective successors, heirs, personal and legal
representatives, guardians and assigns. This Agreement shall be binding upon
and inure to the benefit of the undersigned and his or her heirs, personal and
legal representatives and guardians. Neither this Agreement nor any part of it
shall be assignable by the undersigned.
8. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Colorado, and to the
extent it involves any United States statute, in accordance with the laws of
the United States.
IN WITNESS WHEREOF, the undersigned has executed, sealed and delivered
this Subscription Agreement this ______________ day of November , 1999.
SUBSCRIPTION
(a) Minimum Subscription $ 3.80
(1,000 Shares @$0.0038/share)(1,000 Shares)
(b) Maximum Subscription $380.00
(100,000 Shares @$0.0038/share)(100,000 Shares)
(c) Number of Shares _______________
TOTAL COMMITMENT $______________
WITNESS:
(Signature of Subscriber)
STATE OF )
) ss:
CITY/COUNTY OF )
On __________________, 1999, before me, the undersigned, a Notary Public,
personally appeared __________________________, well known to me to be the
person(s) whose name(s) is/are subscribed to the foregoing instrument and
acknowledged that he/she/they executed the same.
WITNESS my hand and official seal.
Notary Public
My Commission Expires:
<PAGE>
EXHIBIT A
PROVIDENCE CAPITAL I, INC.
CONFIDENTIAL INVESTOR QUESTIONNAIRE
The Shares offered for sale pursuant to the registration exemption
afforded by Rule 506 of the Act and accompanying Disclosure Document dated
November 24, 1999, of the common stock (the "Common Stock") of Providence
Capital I, Inc. (the "Company") a Colorado corporation, have not been
registered under the Securities Act of 1933 (the "Act"), or under the
securities laws of any state (the "State Acts"), and are being offered for
sale and sold in reliance upon exemptions from the registration requirements
of the Act and the State Acts. As a result, this Questionnaire must be
completed by each potential investor in order to assist the Company in
determining whether the offer for sale and sale of the Shares will qualify
under such exemptions.
All information furnished is for the use of the Company and its
respective counsel and accountants. Such information will be held in
confidence by such persons, except that this Confidential Investor
Questionnaire may be furnished to such parties as the Company and its
respective counsel and accountants deem necessary or desirable to establish
compliance with federal or state securities laws.
<PAGE>
SPECIAL NOTE:
CORPORATIONS, PARTNERSHIPS, TRUSTS, AND OTHER ENTITIES
Subscribers which are corporations, partnerships, trusts, or other
entities should have an authorized corporate officer, general partner,
trustee, or other authorized representative complete Section I of this
Confidential Investor Questionnaire, giving information concerning such
representative, and may optionally complete Section II of the Confidential
Investor Questionnaire giving information concerning the entity. In addition,
the following information should be provided with respect to the entity:
1. Name of Subscriber (Entity):
Address:
City: County: State:
Telephone:
Form (i.e., corporation, partnership, trust, other entity):
State in which organized:
States in which business conducted:
State in which business primarily conducted:
2. Is the Subscriber subscribing for that number of Shares having a total
purchase price of at least $150,000 and which does not exceed 20% of the
Subscriber's net worth?
Yes No
3. Was the Subscriber organized for the specific purpose of purchasing the
Shares?
Yes No
<PAGE>
SECTION I
(ALL SUBSCRIBERS, OR THEIR AUTHORIZED CORPORATE OFFICER, GENERAL PARTNER,
TRUSTEE OR OTHER AUTHORIZED REPRESENTATIVE, IF THE SUBSCRIBER IS A
CORPORATION, PARTNERSHIP, TRUST, OR OTHER ENTITY, MUST COMPLETE THIS SECTION
I, GIVING INFORMATION CONCERNING HIMSELF OR HERSELF.)
(Please Print. Attach Additional Pages
Where Necessary to Answer Questions Fully.)
1. Name: Telephone:
Residence Address:
City: County: State: Zip:
Business Name:
Business Address:
City: County: Zip: Telephone:
Date of Birth: Social Security Number:
Communications should be sent to (check one):
Business: Residence Address:
<PAGE>
SECTION II
"ACCREDITED INVESTOR" STATUS
(ONLY "ACCREDITED INVESTORS" MAY SUBSCRIBE TO THIS OFFERING AND MUST SATISFY
ONE OF THE CRITERIA SET FORTH BELOW.)
(a) Accredited investor.
"Accredited investor" shall mean any person who comes within any of the
following categories, or who the issuer reasonably believes comes within any
of the following categories, at the time of the sale of the securities to that
person:
(1) Any bank as defined in section 3(a)(2) of the Act, or any savings and
loan association or other institution as defined in section 3(a)(5)(A) of the
Act whether acting in its individual or fiduciary capacity; any broker or
dealer registered pursuant to section 15 of the Securities Exchange Act of
1934; any insurance company as defined in section 2(13) of the Act; any
investment company registered under the Investment Company Act of 1940 or a
business development company as defined in section 2(a)(48) of that Act; any
Small Business Investment Company licensed by the U.S. Small Business
Administration under section 301(c) or (d) of the Small Business Investment
Act of 1958; any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total assets
in excess of $5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision is
made by a plan fiduciary, as defined in section 3(21) of such act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made
solely by persons that are accredited investors;
(2) Any private business development company as defined in section 202(a)(22)
of the Investment Advisers Act of 1940;
<PAGE>
(3) Any organization described in section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership,
not formed for the specific purpose of acquiring the securities offered, with
total assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the issuer of the
securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;
(5) Any natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his purchase exceeds $1,000,000;
(6) Any natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
(7) Any trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in §230.506(b)(2)(ii);
and
(8) Any entity in which all of the equity owners are accredited investors.
SUBSCRIBERS MAY BE REQUIRED TO SUBMIT ADDITIONAL INFORMATION TO THE COMPANY TO
ENABLE THE COMPANY TO DETERMINE THE SUBSCRIBER'S SUITABILITY UNDER APPLICABLE
FEDERAL OR STATE LAWS OR TO VERIFY THE INFORMATION PROVIDED.
The Subscriber acknowledges that the Company and its directors, officers, and
control persons are relying upon the representations and warranties concerning
the Subscriber set forth in this Confidential Investor Questionnaire. The
Subscriber affirms, represents, and warrants to the Company and its directors,
officers, and control persons that he/she has read this entire document and
that all information provided by such investor is true, correct, accurate, and
complete and may be relied upon for purposes of determining the availability
of an exemption from registration for the offer and sale of the Shares.
(Date) (Signature)
(Printed or typed name)
November 24, 1999
CONFIDENTIAL
The Shareholders
Providence Capital I, II, III, IV, V,
VI, VII, VIII, IX and X, Inc.
c/o Nadeau & Simmons, P.C.
1250 Turks Head Building
Providence, RI 02903
Re:Investment Representation Letter
Ladies and Gentlemen:
In connection with the issuance of the outstanding capital stock of Providence
Capital I, II, III, IV, V, VI, VII, VIII, IX and X, Inc., Colorado development
stage corporations ( hereinafter collectively referred to as "PC"), and
pursuant to issuances of stock in reliance on the exemptions from registration
prescribed by Rule 701 and Rule 506 of Regulation D of the Securities Act of
1933 (the "Securities Act") made to you as individual(s) who are officers,
directors, members or affiliates of PC (the "Stockholders"), you, the
undersigned, hereby make the following certifications and representations with
respect to the Common Stock that is being issued to you (the "Shares").
The undersigned is either an "accredited investor," as that term is defined in
Regulation D of the Securities Act or prior to the issuance of Common Stock,
(i) has been given an opportunity by PC to ask questions and receive answers
concerning PC and to obtain any additional information from PC that is
necessary to make an informed decision regarding the receipt of shares, and
(ii) has been advised by PC of the limitations on resale.
By answering the questions listed below, the undersigned further represents
that he/she has the educational background and the business and financial
knowledge and experience necessary to evaluate the prospective interest in PC,
or may rely on a representative to evaluate the interest on his/her behalf:
Page 2
The Shareholders
November 24, 1999
_____________________
1. Please describe your educational background, indicating degrees
obtained.
2.a) Please state your present occupation, employer, primary business
address, and business phone number.
(b) Please describe your occupational history briefly. Specific employers
need not be identified. What is sought is a description of your experience in
financial and business matters.
3. Please indicate your prior experience in investing in new, speculative,
companies.
4. Please indicate any other relevant investment experience.
5. Please describe any pre-existing personal or business relationship
between you and PC or any of its officers or directors.
6. If you have a background or experience in the business conducted by PC,
please describe.
Page 3
The Shareholders
November 24, 1999
_________________________
The undersigned represents and warrants that the undersigned is receiving the
Shares solely for the undersigned's account for investment and not with a view
to or for sale or distribution of the Shares or any part thereof. The
undersigned also represents that the entire legal and beneficial interests of
the Shares the undersigned is receiving will be held for the undersigned's
account only.
The undersigned understands that the Shares have not been registered under the
Securities Act on the basis that no distribution or public offering of the
Shares is to be effected. The undersigned realizes that the basis for the
exemption may not be present if, notwithstanding the undersigned's
representations, the undersigned has in mind merely receiving the Shares for a
fixed or determinable period in the future, or for a market rise, or for sale
if the market does not rise. The undersigned has no such intention.
The undersigned recognizes that the Shares being received must be held
indefinitely unless they are subsequently registered under the Securities Act
or an exemption from such registration is available. The undersigned is aware
that the Shares may not be sold pursuant to Rule 144 adopted under the
Securities Act ("Rule 144") unless certain conditions are met including, among
other things, (1) the availability of certain current public information about
PC, (2) the passage of required holding periods under Rule 144 and (3)
compliance with limitations on the volume of shares which may be sold during
any three-month period. The undersigned acknowledges that the certificates
representing the Shares will be legended to reflect these restrictions.
The undersigned further agrees not to make any disposition of all or any part
of the Shares being received in any event unless and until:
1.The Shares are transferred pursuant to Rule 144; or
2.PC shall have received a letter secured by the undersigned from the
Securities and Exchange Commission stating that no action will be recommended
to the Commission with respect to the proposed disposition; or
3.There is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in accordance
with said registration statement; or
Page 4
The Shareholders
November 24, 2000
_________________________
4.(i) The undersigned shall have notified PC of the proposed disposition and
shall have furnished PC with a detailed statement of the circumstances
surrounding the proposed disposition and (ii) the undersigned shall have
furnished PC with an opinion of counsel for the undersigned to the effect that
such disposition will not require registration of such Shares under the
Securities Act.
Signature
_________________________________
Print Name
__________________________________
We hereby consent to the use of our name as independent auditor in the Form
10SB12G Registration Statement filed pursuant to Section 12 of the Securities
Exchange Act of 1934 by PROVIDENCE CAPITAL I, INC.
/s/ Cayer Prescott Clune & Chatellier, LLC
CAYER PRESCOTT CLUNE & CHATELLIER, LLC
Providence, RI
CONSENT OF COUNSEL
We hereby consent to the use of our name as legal counsel in the Form 10SB12G
Registration Statement filed pursuant to Section 12 of the Securities Exchange
Act of 1934 by PROVIDENCE CAPITAL I, INC.
NADEAU & SIMMONS, P.C.
/s/ Nadeau & Simmons, P.C.
By:___________________
Providence, RI
EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD-LOOKING STATEMENTS
In passing the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"), 15 U.S.C.A. Sections 77z-2 and 78u-5 (Supp. 1996), Congress encouraged
public companies to make "forward-looking statements" by creating a safe
harbor to protect companies from securities law liability in connection with
forward-looking statements. PROVIDENCE CAPITAL I, INC. ("Providence Capital"
or the "Company") intends to qualify both its written and oral forward-looking
statements for protection under the Reform Act and any other similar safe
harbor provisions.
"Forward-looking statements" are defined by the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All
forward-looking statements are inherently uncertain as they are based on
various expectations and assumptions concerning future events and they are
subject to numerous known and unknown risks and uncertainties which could
cause actual events or results to differ materially from those projected. Due
to those uncertainties and risks, the investment community is urged not to
place undue reliance on written or oral forward-looking statements of
Providence Capital. The Company undertakes no obligation to update or revise
this Safe Harbor Compliance Statement for Forward-Looking Statements (the
"Safe Harbor Statement") to reflect future developments. In addition,
Providence Capital undertakes no obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of unanticipated
events or changes to future operating results over time.
