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
TABATHA II, INC.
(Name of Small Business Issuer in its charter)
Colorado 84-1536518
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1926 S. Oswego Way
Aurora, Colorado 80014
(Address of Principal Office) Zip Code
Issuer's telephone number: (303) 752-4637
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered - N/A
Name of each exchange on which each class is to be
registered - N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
PART I -
Item 1. DESCRIPTION OF BUSINESS
General
The Company was incorporated under the laws of the State of
Colorado on March 17, 2000, 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 Company has elected to file this Form 10-SB registration
statement on a voluntary basis in order to become a reporting
company under the Securities Exchange Act of 1934. The Company
is a "blind pool" or "blank check" company, whose 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.
Prior to the effective date of this registration statement, it is
anticipated that the Company's officers, directors, and
non-management principal shareholders named herein will 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 a general interest in considering a merger or
acquisition with a blind pool or blank check entity. No direct
discussions regarding the possibility of a merger with the Company
are expected to occur until after the effective date of this registration
statement. However, 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
an exchange such as the American Stock Exchange. (See
"Investigation and Selection of Business Opportunities"). The
Company anticipates that the business opportunities presented to it
will (i) either be in the process of formation, or be recently organized
with limited 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 or that it believes may
realize a substantial benefit from being publicly owned. Given the
above factors, investors should expect that any acquisition candidate
may have little or no operating history, or 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 either
be issued by the Company or be 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 be a private transaction rather than a public distribution
of securities, but is also likely to result in substantial gains to the
current shareholders 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 Section 2(11)
of the Securities Act of 1933, as amended, as long as the transaction
is a private transaction rather than a public distribution of securities.
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 a change in control of
the Company or its 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 change in control or
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.
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, approves or ratifies 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 authorized, approved or ratified 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 business
opportunity 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, the Company will incur
further risks, because management in many instances will not have
proven its abilities or effectiveness, the eventual market for the
products or services of the business opportunity will likely not be
established, and the business opportunity may not be profitable when
acquired.
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 officers and directors, none
of whom are professional business analysts (See "Management").
Although there are no current plans to do so, Company management
might hire an outside consultant to assist in the investigation and
selection of business opportunities, and might pay a finder's fee.
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.
However, because of the limited resources of the Company, it is
likely that any such fee the Company agrees to pay would be paid in
stock and not in cash. Otherwise, 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 adopted by the
Securities and Exchange Commission (See "Risk Factors - The
Company - Regulation of Penny Stocks").
(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 for
initial listing include, among other requirements, that the Company (i)
have net tangible assets of at least $4,000,000, or a market
capitalization of $50,000,000, or net income of not less than $750,000
in its latest fiscal year or in two of the last three fiscal years; (ii) have
a public float (i.e. shares that are not held by any officer, director or
10% shareholder) of at least 1,000,000 shares; (iii) have a minimum
bid price of at least $4.00; (iv) have at least 300 round lot
shareholders (i.e. shareholders who own not less than 100 shares);
and (v) have an operating history of at least one year or a market
capitalization of at least $50,000,000. 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 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
assurance 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.
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 an 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 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. 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 merger or
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.
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 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.
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
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 Regulations
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.
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 are expected to 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 public distribution by persons other than
the issuer, 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 may have significantly greater experience, resources and
managerial capabilities than the Company and in that event, will 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, and from several other
blind pool companies formed by Company management (See "Item 5.
Directors, Executive Officers, Promoters and Control Persons - Other
Blind Pool Activities").
Administrative Offices
The Company currently maintains a mailing address at 1926 S.
Oswego Way, Aurora, Colorado 80014, which is the office address of
its Secretary/Treasurer. The Company's telephone number there is
(303) 752-4637. Other than this mailing address, the Company does
not currently maintain any other office facilities, and does not
anticipate the need for maintaining office facilities at any time in the
foreseeable future. The Company pays no rent or other fees for the
use of this mailing address.
Employees
The Company is in the development stage 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.
Risk Factors
Our shares are speculative and involve a high degree of risk,
including, but not necessarily limited to, the several factors described
below. Each prospective investor should carefully consider the
following risk factors inherent in and affecting the proposed business
of Tabatha II, Inc. before purchasing shares.
WE WERE ORGANIZED RECENTLY, HAVE LIMITED
RESOURCES AND NO PRESENT SOURCE OF REVENUES
Tabatha II, Inc. was incorporated on March 17, 2000, and is
in the development stage. We have not as yet attempted to seek a
business combination. Our management has no prior experience
relating to the identification, evaluation and acquisition by a blank
check company of an acquired business. To date, our efforts have
been limited primarily to organizational activities and initial funding.
We have limited resources and have had no revenues to date. We will
not achieve any revenues until the consummation of a business
combination, if at all. There can be no assurance that any acquired
business, at the time of the Company's consummation of a business
combination or at any time thereafter, will derive any material
revenues from its operations or operate on a profitable basis.
WE MAY NOT BE ABLE TO FIND A SUITABLE BUSINESS
COMBINATION
Although we will attempt to locate potential business
combinations, there can be no assurance that any business or assets
worthy of even preliminary investigation will come to the Company's
attention or that we will be able to negotiate and close on a business
combination transaction.
NO ASSURANCE OF PUBLIC MARKET FOR OUR SHARES
As of the date of this registration statement, there is no public
trading market for our Shares. We anticipate that at some time in the
future, following the effective date of this registration statement, we
will seek to have our common stock trading in the over-the-counter
market through publication of quotations on the OTC Bulletin Board.
There can be no assurance that any application for approval to publish
quotations on the OTC Bulletin Board will be approved, or, if
approved, that a market will develop for our common stock. We do
not currently expect that an application will be submitted to permit
publication of quotations on the OTC Bulletin Board until after we
have completed a business combination. Even in the event that we do
complete a business combination, there is no assurance that a market
for our common stock will develop.
We currently have 34 record holders of our Common Stock.
WE CANNOT GIVE YOU A SUBSTANTIVE DISCLOSURE
RELATED TO PROSPECTIVE BUSINESS COMBINATIONS
"Blank check" companies are inherently characterized by an
absence of substantive disclosure. The Company has not yet identified
a prospective acquired business. Accordingly, our shareholders will
have virtually no substantive information available for advance
consideration of any specific business combination.
WE ARE SEEKING A BUSINESS COMBINATION IN AN
UNSPECIFIED INDUSTRY WHICH MAY BE SUBJECT TO
UNASCERTAINABLE RISKS
To date, we have not selected any particular industry or any
acquired business in which to concentrate our business combination
efforts. Accordingly, there is no current basis for prospective
investors in this offering to evaluate the possible merits or risks of
any acquired business or the particular industry in which the Company
may ultimately operate. To the extent the Company effects a business
combination with a financially unstable company or an entity in its
early stage of development or growth (including entities without
established records of sales or earnings), the Company will become
subject to numerous risks inherent in the business operations of
financially unstable and early stage or potential emerging growth
companies. In addition, to the extent that the Company effects a
Business Combination with an entity in an industry characterized by a
high level of risk, the Company will become subject to the currently
unascertainable risk of that industry. An extremely high level of risk
frequently characterizes certain industries which experience rapid
growth. Although management will endeavor to evaluate the risks
inherent in a particular industry or acquired business, there can be no
assurance that the Company will properly ascertain or assess all such
significant risk factors.
PROBABLE LACK OF BUSINESS DIVERSIFICATION
It is likely that we will have the ability to effect only a single
business combination. Accordingly, the prospects for our success will
be entirely dependent upon the future performance of a single
business. Unlike certain entities which have the resources to
consummate several business combinations or entities operating in
multiple industries or multiple areas of a single industry, it is highly
likely that we will not have the resources to diversify our operations
or benefit from the possible spreading of risks or offsetting of losses.
In addition, by consummating a business combination with only a
single entity, the prospects for the Company's success may become
dependent upon the development or market acceptance of a single or
limited number of products, processes or services. Consequently,
there can be no assurance that the acquired business will prove to be
commercially viable.
WE HAVE THREE OFFICERS AND DIRECTORS AND THEY
HAVE LIMITED EXPERIENCE IN BUSINESS COMBINATIONS
The ability of the Company to successfully effect business
Combination will be largely dependent upon the efforts of its officers
and directors who expect to devote only a limited portion of their time
to the affairs of the Company. However, our officers and directors
have limited prior experience with respect to the successful
completion of a business combination involving a "blank check"
company. See "Management."
THERE WILL BE A CHANGE IN CONTROL AND
MANAGEMENT AFTER A BUSINESS COMBINATION
Although we have no present plans, understandings or
arrangements respecting any business combination, the successful
completion of such a transaction is likely to result in a change in
control of the Company. This could result from the issuance of a
large percentage of the Company's authorized securities or the sale by
the present shareholders of all or a portion of their stock, or a
combination thereof. Any change in control may also result in the
resignation or removal of the Company's present officers and
directors. If there is a change in management, no assurance can be
given as to the experience or qualifications of the persons who replace
present management respecting either the operation of the Company's
activities or the operation of the business, assets or property being
acquired.
WE HAVE LIMITED ABILITY TO EVALUATE THE
MANAGEMENT OF ANY ACQUIRED BUSINESS
While our ability to successfully effect a business combination
will be dependent upon certain of our management, the future role of
such personnel in the acquired business cannot presently be stated
with any certainty. It is unlikely that any of the Company's key
personnel will remain associated in any operational capacity with the
Company following a business combination. Moreover, there can be
no assurance that such personnel will have significant experience or
knowledge relating to the operations of the particular acquired
business. Furthermore, although the Company intends to closely
scrutinize the management of a prospective acquired business, there
can be no assurance that the Company's assessment of such
management will prove to be correct, especially in light of the likely
inexperience of current key personnel of the Company in evaluating
most types of businesses. In addition, there can be no assurance that
such future management will have the necessary skills, qualifications
or abilities to manage a public company. The Company may also
seek to recruit additional managers to supplement the incumbent
management of the acquired business. There can be no assurance that
the Company will have the ability to recruit such additional managers,
or that such additional managers will have the requisite skills,
knowledge or experience necessary to enhance the incumbent
management.
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.
POSSIBLE RELIANCE UPON UNAUDITED FINANCIAL
STATEMENTS.
The Company generally will require audited financial
statements from any business 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 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, including audited financial statements, for any existing
business it may acquire. Consequently, acquisition prospects that do
not have, or are unable to provide reasonable assurance 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 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.
COMPETITION FOR ACQUISITIONS
We expect to encounter intense competition from other entities
having a business objective similar to that of the Company. Many of
these entities are well-established and have extensive experience in
connection with identifying and effecting business combinations
directly or through affiliates. Many of these competitors possess
greater financial, marketing, technical, personnel and other resources
than the Company and there can be no assurance that the Company
will have the ability to compete successfully. Our financial resources
will be relatively limited when contrasted with those of many of our
competitors.
WE ARE FACED WITH UNCERTAINTY AS TO COMPETITIVE
ENVIRONMENT OF ANY ACQUIRED BUSINESS
In the event that we succeed in effecting a business
combination, we will, in all likelihood, become subject to intense
competition from competitors of the acquired business. In particular,
certain industries which experience rapid growth frequently attract an
increasing number of competitors, including competitors with greater
financial, marketing, technical and other resources than the initial
competitors in the industry. The degree of competition characterizing
the industry of any prospective acquired business cannot presently be
ascertained. There can be no assurance that, subsequent to a business
combination, we will have the resources to compete effectively,
especially to the extent that the acquired business is in a high growth
industry.
POSSIBLE NEED FOR ADDITIONAL FINANCING OF
ACQUIRED BUSINESS
In the event of consummation of a business combination, we
cannot ascertain with any degree of certainty the capital requirements
for any particular acquired business because we have not yet identified
any prospective acquired business candidates. To the extent the
business combination results in the acquired business requiring
additional financing, such additional financing (which, among other
forms, could be derived from the public or private offering of
securities or from the acquisition of debt through conventional bank
financing), may not be available because, among other things, the
acquired business does not have sufficient (i) credit or operating
history; (ii) income stream; (iii) profit level; (iv) asset base eligible to
be collateralized; or (v) market for its securities.
As no specific business combination or industry has been
targeted, it is not possible to predict the specific reasons why
conventional private or public financing or conventional bank
financing might not become available. There can be no assurance
that, in the event of a consummation of a business combination,
sufficient financing to fund the operations or growth of the acquired
business will be available upon terms satisfactory to the Company,
nor can there be any assurance that financing would be available at
all.
LACK OF OPERATING FUNDS
As of the date of this registration statement we currently have
no plans or arrangements with respect to the possible acquisition of
additional funds which may be required to continue the operations of
the Company. In the event we are unable to obtain necessary
additional funds, we may have to curtail operations.
WE ARE AUTHORIZED TO ISSUE ADDITIONAL SHARES OF
STOCK
Our Articles of Incorporation authorize the issuance of
100,000,000 shares of common stock and 10,000,000 shares of
preferred stock. Since there are currently only 9,962,500 shares of
common stock issued and outstanding, and no shares of preferred
stock issued and outstanding, there are currently 90,037,500 shares of
authorized but unissued common stock and 10,000,000 shares of
authorized but unissued preferred stock available for issuance.
Although the Company has no commitments as of the date of this
registration statement to issue any additional shares of stock, the
Company will, in all likelihood, issue a substantial number of shares
of stock in connection with a business combination. The issuance of
additional shares of either common or preferred stock may result in
the dilution of the interests of the Company's current shareholders.
INVESTMENT COMPANY ACT CONSIDERATIONS
The regulatory scope of the Investment Company Act of 1940,
as amended (the "Investment Company Act"), which was enacted
principally for the purpose of regulating vehicles for pooled
investments in securities, extends generally to companies engaged
primarily in the business of investing, reinvesting, owning, holding or
trading in securities. The Investment Company Act may, however,
also be deemed to be applicable to a company which does not intend
to be characterized as an investment company but which, nevertheless,
engages in activities which may be deemed to be within the
definitional scope of certain provisions of the Investment Company
Act. We believe that our anticipated activities, which will involve
acquiring control of an operating company, will not subject the
Company to regulation under the Investment Company Act.
Nevertheless, there can be no assurance that we will not be deemed to
be an investment company. In the event we are deemed to be an
investment company, we may become subject to certain restrictions
relating to our activities, including restrictions on the nature of our
investments and the issuance of securities. In addition, the Investment
Company Act imposes certain requirements on companies deemed to
be within its regulatory scope, including registration as an investment
company, adoption of a specific form of corporate structure and
compliance with certain burdensome reporting, record keeping,
voting, proxy, disclosure and other rules and regulations. In the
event of characterization of the Company as an investment company,
the failure by the Company to satisfy such regulatory requirements,
whether on a timely basis or at all, would, under certain
circumstances, have a material adverse effect on the Company.
TAX CONSIDERATIONS
As a general rule, federal and state tax laws and regulations
have a significant impact upon the structuring of business
combinations. We will evaluate the possible tax consequences of any
prospective business combination and will endeavor to structure the
business combination so as to achieve the most favorable tax treatment
to the Company, the acquired business and their respective
shareholders. There can be no assurance, however, that the Internal
Revenue Service (the "IRS") or appropriate state tax authorities will
ultimately assent to the Company's tax treatment of a consummated
business combination. To the extent the IRS or state tax authorities
ultimately prevail in recharacterizing the tax treatment of a business
combination, there may be adverse tax consequences to the Company,
the acquired business and their respective shareholders.
NO DIVIDENDS
We have not paid dividends on our Common Stock to date and
do not presently intend to pay cash dividends prior to the
consummation of a business combination. The payment of dividends
after a business combination, if any, will be contingent upon the
Company's revenues and earnings, if any, capital requirements and
general financial condition subsequent to consummation of a business
combination. The payment of any dividends subsequent to
consummation of a business combination will be within the discretion
of the Company's then Board of Directors. It is the present intention
of the Board of Directors to retain all earnings, if any, for use in the
Company's business operations and, accordingly, the Board does not
anticipate paying any cash dividends in the foreseeable future. See
"Description of Securities - Dividends."
POSSIBLE RESTRICTION ON RESALES OF THE SHARES
Shareholders may engage in resale transactions in the Shares
only in jurisdictions in which an applicable exemption is available. It
is currently not known by the Company which states will permit
resale transactions in the Shares.
PENNY STOCK RULES MAY LIMIT RESALE OPPORTUNITIES
There is no current trading market for the Shares and there can
be no assurance that a trading market will develop, or, if such a
trading market does develop, that it will be sustained. The trading of
the Shares, to the extent that a market develops for the Shares at all,
of which there can be no assurance, will likely be conducted through
what is customarily known as the "pink sheets" and/or the Bulletin
Board. Any market for the Shares which may result will likely be
less well developed than if the Shares were traded on the NASDAQ
market or an exchange.
As long as our shares are not listed on NASDAQ or an
exchange and the Company has net tangible assets of $2,000,000 or
less, transactions in the Shares would be subject to certain rules
promulgated under the Securities Exchange Act of 1934. Under such
rules, broker-dealers who recommend such securities to persons other
than institutional accredited investors (generally institutions with assets
in excess of $5,000,000) must make a special written suitability
determination for the purchaser, receive the purchaser's written
agreement to a transaction prior to sale and provide the purchaser
with risk disclosure documents which identify certain risks associated
with investing in "penny stocks" and which describes the market
therefor as well as a purchaser's legal remedies. Further, the
broker-dealer must also obtain a signed and dated acknowledgment
from the purchaser demonstrating that the purchaser has actually
received the required risk disclosure document before a transaction in
a "penny stock" can be consummated. Since our shares are subject to
such rules, broker-dealers may find it difficult to effectuate customer
transactions and/or trading activity in the Shares; thus, the market
price, if any, may be depressed, and an investor may find it more
difficult to dispose of the Shares.
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 the Company's shareholders to sell their shares in any public
market which might develop.
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.
If a public market develops for the Company's Common
Stock, the market liquidity for such stock could be adversely affected
by limiting the ability of broker/dealers to sell the Company's
common stock and the ability of purchaser's in this offering to sell
their securities in the secondary market. There can be no assurance
that trading in the Company's securities will not be subject to these or
other regulations that would adversely affect the market for such
securities.
LOSS FROM ANALYSIS AND INVESTIGATION OF BUSINESS
PROSPECTS
The Company will be required, in all probability, to expend
funds in the preliminary investigation or examination of assets,
business or properties, whether or not an investment occurs. To the
extent management determines that the potential investment has little
or no value, the monies spent on investigation will be a total loss.
CONFLICTS OF INTEREST.
Certain conflicts of interest exist between the Company and its
officers and directors. They have other business interests to which
they currently devote attention, and are expected to continue to do so.
As a result, conflicts of interest may arise that can be resolved only
through their exercise of judgment in a manner which is consistent
with their fiduciary duties to the Company. See "Management," and
"Conflicts of Interest."
In particular, the Company's officers, directors and principal
shareholders formed four other blind pool or blank check companies
simultaneously with the formation of the Company, which have a
structure and a business plan identical to that of the Company. It is
also likely that the Company's officers and directors will form
additional blind pool or blank check companies in the future, with a
business plan similar or identical to that of the Company. The four
other blind pool or blank check companies which were formed at the
same time as the Company and have an identical structure and
business plan may be considered to be in direct competition with the
Company for available business opportunities, but that competition
does not currently create a conflict of interest with the Company
because each of such companies currently has an identical group of
shareholders. However, any additional blind pool or blank check
companies formed in the future, which do not have the same
shareholders and an identical capital structure as the Company, would
be in direct competition with the Company for available business
opportunities and would create the potential for conflicts of interest
(See Item 5 - "Directors, Executive Officers, Promoters and Control
Persons - Conflicts of Interest").
It is anticipated that the Company's principal shareholders 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 principal shareholders 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."
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.
DEPENDENCE UPON MANAGEMENT; LIMITED
PARTICIPATION OF MANAGEMENT
The Company will be heavily dependent upon the skills,
talents, and abilities of its officers and directors to implement its
business plan, and may, from time to time, find that the inability of
such persons to devote their full time attention to the business of the
Company results in a delay in progress toward implementing its
business plan. Furthermore, the Company will be entirely dependent
upon the experience of its officers and directors 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 officers and directors.
LACK OF CONTINUITY IN MANAGEMENT
The Company does not have an employment agreement with
any of its officers or 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.
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 officers
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 officers of the Company consider it necessary to hire outside
advisors, they may elect to hire persons who are affiliates, if those
affiliates are able to provide the required services.
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 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.
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. There is 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 at least 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. The Securities
and Exchange Commission recently made public a letter it had
previously sent to the NASD Division of Market Regulation in which
it expressed the opinion that promoters of blind pool or blank check
companies and their affiliates and transferees could never rely on Rule
144 to make sales of their shares. The SEC expressed this opinion in
the context of questions about initial applications on behalf of blind
pool or blank check companies for approval to publish quotations for
their shares on the OTC Bulletin Board. In the event the SEC and
NASD maintain this position even following the completion of a
business combination, the initial promoters of the Company, and their
affiliates and transferees, will be unable to rely upon Rule 144 for any
sales of their shares. They will instead be required to file a
registration statement under the Securities Act of 1933 in order to
complete any public sales of their shares.
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 allow the trading or resale of
blind pool or "blank check" securities under any circumstances.
Accordingly, investors should consider the secondary market for the
Company's securities to be a limited one.
Item 2. Management's Discussion and Analysis or Plan of
Operations.
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 other than the receipt of proceeds in
the amount of $11,100 from its inside capitalization funds.
Consequently, the Company's balance sheet for the period of March
17, 2000 (inception) through September 30, 2000, reflects a current
asset value of $10,066 and a total asset value of $10,066, of which
$9,979 is in the form of cash.
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 March 17, 2000 (inception) through
September 30, 2000, 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
limited interest income. The Company may also continue to operate
at a loss after completing a business combination, depending upon the
performance of the acquired business.
Plan of Operations
During its current fiscal year ending December 31, 2000, the
Company plans to complete its registration under the Securities
Exchange Act of 1934 and thereafter to initiate efforts to locate a
suitable business acquisition candidate. There is no assurance as to
when or whether the Company will locate a suitable business
acquisition candidate or complete a business acquisition transaction.
Need for Additional Capital
The Company's existing capital is expected to be sufficient to
enable it to meet its cash needs in conjunction with completing its
registration under the Securities Exchange Act of 1934, compliance
with its reporting obligations under such Act following completion of
its registration, and payment of costs expected to be incurred in
conjunction with efforts to locate a suitable business acquisition
candidate for a period of twelve months following the date hereof.
Accordingly, the Company does not anticipate that it will require
additional capital during the current fiscal year.
Regardless of whether the Company's cash assets prove to be
adequate to meet the Company's operational needs, the Company
might seek to compensate providers of services by issuances of stock
in lieu of cash. For information as to the Company's policy in regard
to payment for consulting services, see "Certain Relationships and
Transactions."
Item 3. Description of Property.
The Company currently maintains a mailing address at 1926 S.
Oswego Way, Aurora, Colorado 80014, which is the address of its
Secretary/Treasurer. The Company pays no rent for the use of this
mailing address. The Company does not believe that it will need to
maintain an office at any time in the foreseeable future in order to
carry out its plan of operations described herein. The Company's
telephone number is (303) 752-4637.
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth, as of the date of this
Registration Statement, the number of shares of Common Stock
owned of record and beneficially by executive officers, directors and
persons who hold 5% or more of the outstanding Common Stock of
the Company. Also included are the shares held by all executive
officers and directors as a group.
<TABLE>
<CAPTION>
%
Number of of
Name and Shares Owned Class
Address Beneficially Owned
<S> <C> <C>
Robert L. Smith <F1>
769 Garfield Street
Denver, CO 80206 3,000,000<F1> 30.12%
Diane Thelen <F1>
1926 S. Oswego Way
Aurora, CO 80014 3,000,000<F1> 30.12%
John Ballard
6754 W. Hinsdale Place
Littleton, CO 80128 3,000,000 30.12%
Kip R. Pedrie <F1>
5873 S. Kenton Way
Englewood, CO 80111-3950 340,000 3.42%
All directors and executive
officers (3 persons) 6,340,000 63.64%
<FN>
<F1> The person listed is an officer, a director, or both, of the Company.
</FN>
</TABLE>
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers currently serving the Company are as
follows:
<TABLE>
<CAPTION>
Positions Held
and
Name Age Tenure
<S> <C> <C>
Diane Thelen 54 Secretary, Treasurer, and
a Director since March, 2000
Robert L. Smith 55 President and a
Director since March, 2000
Kip R. Pedrie 41 Director since April, 2000
</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 any of the directors or 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, and there is no arrangement, plan or
understanding as to whether non-management shareholders will
exercise their voting rights to continue to elect the current directors to
the Company's board. There are also no arrangements, agreements or
understandings between non-management shareholders and
management under which non-management shareholders may directly
or indirectly participate in or influence the management of the
Company's affairs.
The directors and officers will devote their time to the
Company's affairs on an "as needed" basis, which, depending on the
circumstances, could amount to as little as two hours per month, or
more than forty hours per month, but more than likely will fall within
the range of five to ten hours per month. There are no agreements or
understandings for any officer or director to resign at the request of
another person, and none of the officers or directors are acting on
behalf of, or will act at the direction of, any other person.
Biographical Information
Robert L. Smith
Robert L. Smith, President and a director, has worked in
sales, sales management and marketing for over 27 years. Mr. Smith
has been Executive Vice President, co-owner and member of the
board of directors of Rocky Mountain Securities & Investments, Inc.
for ten years.
Mr. Smith is also currently and officer and director of four
other corporations which were incorporated on March 17, 2000 and
which were formed to seek acquisitions. He is the president and
director of Tabatha I, Inc., Tabatha III, Inc., Tabatha IV, Inc. and
Tabatha V, Inc.
Prior to Rocky Mountain Securities & Investments, Inc., Mr.
Smith was employed with Allergan Pharmaceuticals as a regional sales
manager.
Mr. Smith holds a B.A. from Western State College.
Diane Thelen
Diane Thelen, the Company's Secretary/Treasurer and a
director, has managed and developed luxury high-rise residential,
retail, industrial and large office building complexes for over twenty-
two years. She has written numerous articles on safety issues
regarding large office complexes, as well as articles advocating the
needs of real estate managers to state legislators.
Ms. Thelen is an officer and director of four other
corporations which were incorporated on March 17, 2000 and which
were formed to seek acquisitions. She is the Secretary/Treasurer of
Tabatha I, Inc., Tabatha III, Inc., Tabatha IV, Inc., and Tabatha V,
Inc.
Ms. Thelen is a Certified Property Manager (CPM) (Institute
of Real Estate Management) and a Real Property Administrator (RPA)
(Building Owners and Managers Association.)
Kip R. Pedrie
Mr. Pedrie, a director of the Company, has been Vice
President of Rocky Mountain Securities & Investments, Inc. for 18
years.
Mr. Pedrie attended the University of Northern Colorado,
where he majored in finance.
Other Blind Pool Activities
Each of the Company's executive officers, directors, and
principal shareholders is also an officer, director and/or principal
shareholder of several other blind pool or blank check companies. The
Company and each of these other entities will be in competition with
each other for prospective companies to acquire. See "Conflicts of
Interest" below.
Item 6. Executive Compensation.
No officer or director has received any remuneration or
compensation from the Company. Until the Company acquires
additional capital, it is not anticipated that any officer or director will
receive additional compensation from the Company other than
reimbursement for out-of-pocket expenses incurred on behalf of the
Company. 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.
The Company may employ a spouse of an officer or director,
or an employee of a company owned by an officer or director, to
perform administrative or secretarial services required by the
Company. Such individuals would be paid standard, "going rate"
hourly compensation for services rendered.
Item 7. Certain Relationships and Related Transactions.
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. The Company has adopted
a policy under which any consulting or finder's fee that may be paid
to a third party for consulting services to assist management in
evaluating a prospective business opportunity would be paid in stock
rather than in cash. Any such issuance of stock would be made on an
ad hoc basis. Accordingly, the Company is unable to predict
whether, or in what amount, such a stock issuance might be made.
It is not currently anticipated that any salary, consulting fee, or
finder's fee shall be paid to any of the Company's directors or
executive officers, or to any other affiliate of the Company except as
described under "Executive Compensation" above.
The Company does not maintain an office, but it does maintain
a mailing address at the residence of its Secretary/Treasurer, for
which it pays no rent, and for which it does not anticipate paying rent
in the future. It is likely that the Company will not establish an office
until it has completed a business acquisition transaction, but it is not
possible to predict what arrangements will actually be made with
respect to future office facilities.
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 8. Description of Securities.
Common Stock
The Company's Articles of Incorporation authorize the
issuance of 100,000,000 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. In
the election of Directors, a plurality of the votes cast shall elect. In all
other matters, the action shall be approved if the number of votes cast
in favor of the action exceed the number of votes cast in opposition to
the action.
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.
Transfer Agent
The Company's Transfer Agent is Corporate Stock Transfer,
3200 Cherry Creek Drive South, Suite 430, Denver, Colorado,
80209. The phone number is (303) 282-4800.
Reports to Stockholders
The Company plans to furnish its stockholders with an annual
report for each fiscal year ending December 31 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.
PART II
Item 1. 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. As of the date of this registration statement, there are
approximately 34 holders of record of the Company's common stock.
No dividends have been paid to date and the Company's Board of
Directors does not anticipate paying dividends in the foreseeable
future.
Item 2. 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 3. Changes in and Disagreements with Accountants.
Not applicable.
Item 4. Recent Sales of Unregistered Securities.
Since March 17, 2000 (the date of inception) the Company has
issued 9,962,5000 shares of Common Stock for a total consideration of
$11,100 in cash and $43,525 in services to a total of 34 parties, per the
following table:
<TABLE>
<CAPTION>
Aggregate Purchase
Name Date of Shares Purchase Price
Sale Price Per Share
<S> <C> <C> <C> <C>
John Ballard 3/1/00 3,000,000 $ 1,500 0.005
$13,500 in services
Robert Smith 3/1/00 3,000,000 $ 1,500 0.005
$13,500 in services
Diane Thelen 3/1/00 3,000,000 $ 1,500 0.005
$13,500 in services
Kip R. Pedrie 4/1/00 300,000 $ 3,000 0.01
in services
Kip R. Pedrie 5/22/00 40,000 $ 400 0.01
Teresa McClaran 4/3/00 10,000 $ 100 0.01
Carl D. Ormond 4/3/00 10,000 $ 100 0.01
Mary Siefert 4/4/00 10,000 $ 100 0.01
Michael G. Sprinkle 4/4/00 2,500 $ 25 0.01
Michael E. Oday 4/6/00 10,000 $ 100 0.01
David B. Latham 4/7/00 10,000 $ 100 0.01
Steven M.
Wostenberg 4/7/00 5,000 $ 50 0.01
Carolyn and Karl J.
Ziegler 4/8/00 20,000 $ 200 0.01
Karen Z. Slusher 4/9/00 2,500 $ 25 0.01
Nancy Richardson 4/10/00 2,500 $ 25 0.01
Yolanda S. Ziegler 4/10/00 2,500 $ 25 0.01
Charles J. Siefert 4/11/00 40,000 $ 400 0.01
James Ballard 4/12/00 20,000 $ 200 0.01
Phillip Junot 4/12/00 20,000 $ 200 0.01
Diane Smith 4/12/00 10,000 $ 100 0.01
Taliaferro Holmes
Taylor, Jr. 4/15/00 10,000 $ 100 0.01
Marie M. Smith 4/19/00 50,000 $ 500 0.01
Katherine B. Wiley 4/27/00 10,000 $ 100 0.01
Virginia B. Nihart 4/30/00 10,000 $ 100 0.01
James F. Hansen 5/5/00 50,000 $ 500 0.01
Lilton Nance 5/5/00 40,000 $ 400 0.01
Donald A. Gillmore 5/10/00 150,000 $ 1,500 0.01
Marissa Sinclair 5/10/00 25,000 $ 250 0.01
Gerald H. Harty 5/12/00 50,000 $ 500 0.01
Steve A. Millenson 5/12/00 20,000 $ 200 0.01
Rosabelle White 5/13/00 5,000 $ 50 0.01
Gabriela Q. Bahena 5/17/00 5,000 $ 50 0.01
Betty L. Turner 5/18/00 2,500 $ 25 0.01
in services
Mary Ballard 5/30/00 20,000 $ 200 0.01
</TABLE>
Each of the sales listed above was made for cash in reliance
upon the exemption from registration offered by Regulation D and
Section 4(2) of the Securities Act of 1933. Based upon the
Subscription Agreement executed by each of the purchasers, 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 invest-
ment 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.
Item 5. Indemnification of Directors and Officers
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.
FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements for Tabatha II, Inc. for the initial
period from inception (March 17, 1999) to September 30, 2000 are
attached. See following pages.
TABATHA II, INC.
(A Development Stage Company)
Financial Statements
For the initial period from inception (March 17, 2000)
to September 30, 2000.
TABATHA II, INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
[S] [C]
Report of Independent Public Accountants 41
Balance Sheets 42
Statements of Operations 43
Statements of Cash Flows 44
Statement of Stockholders' Equity 46
Notes to Financial Statements 49
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders of Tabatha II, Inc.
We have audited the accompanying balance sheet of Tabatha II, Inc.
(a development stage company) as of June 30, 2000, and the related
statements of operations, stockholders' equity, and cash flows for the
initial period from inception (March 17, 2000) to June 30, 2000.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Tabatha II,
Inc. as of June 30, 2000, and the results of its operations and cash
flows for the initial period then ended in conformity with generally
accepted accounting principles.
Comiskey & Company
Denver, Colorado
July 17, 2000
PROFESSIONAL CORPORATION
TABATHA II, INC.
(A development stage company)
Balance Sheets
<TABLE>
<CAPTION>
Unaudited
June 30 9/30
ASSETS 2000, 2000
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 9,922 $ 9,979
Prepaid legal 87 87
10,009 10,066
Total current assets $ 10,009 $ 10,066
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $ - $ -
Total current liabilities - -
STOCKHOLDERS' EQUITY
Preferred stock, no par value;
10,000,000 shares authorized; no
shares issued and outstanding - -
Common stock, no par value;
100,000,000 shares authorized;
9,962,500 shares issued and
outstanding 54,775 54,925
Deficit accumulated during the
development stage (44,766) (44,859)
10,009 10,066
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 10,009 $ 10,066
</TABLE>
The accompanying notes are an integral part of the financial statements.
TABATHA II, INC.
(A development stage company)
Statements of Operations
<TABLE>
<CAPTION>
<CAPTION>
Unaudited
Unaudited Inception
Inception For the three (March 17,
(March 17, 2000) Months Ended 2000) to
to June 30, September 30, September 30
2000 2000 2000
<S> <C> <C> <C>
REVENUES
Interest Income $ 30 $ 57 $ 87
EXPENSES
Selling, general
and administrative 44,796 150 44,946
Total expenses 44,796 150 44,946
NET LOSS (44,766) (93) (44,859)
Accumulated Deficit
Balance,
beginning of period - (44,766) -
Balance,
end of period $(44,766) $(44,859) $(44,859)
NET LOSS PER SHARE (NIL) (NIL) (NIL)
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 9,962,500 9,962,500 9,962,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
TABATHA II, INC.
(A development stage company)
Statements of Cash Flows
<TABLE>
<CAPTION>
Unaudited
Unaudited Inception
Inception For the three (March 17,
(March 17, 2000) Months Ended 2000) to
to June 30, September 30, September 30
2000 2000 2000
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(44,766) (93) $(44,859)
Adjustments to reconcile net loss
to net cash used by
operating activities:
Rent expense 150 150 300
Stock issued for
services 43,525 - 43,525
Increase in prepaid expenses (87) - (87)
Net cash flows from operating
activities (1,178) 57 (1,121)
CASH FLOWS FROM INVESTING
ACTIVITIES - - -
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 11,100 - 11,100
Net cash flows from financing
activities 11,100 - 11,100
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 9,922 57 9,979
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD - 57 9,979
CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 9,922 $ 9,979 $ 9,979
</TABLE>
The accompanying notes are an integral part of the financial statements.
TABATHA II, INC.
(A development stage company)
Statement of Stockholders' Equity
For the initial period from inception (March 17, 2000) to June 30, 2000
(page 1 of 2)
<TABLE>
<CAPTION>
Price Common stock
per Number of
share shares Amount
<S> <C> <C> <C>
Common stock issued
for cash, March 1, 2000 $0.005 900,000 $ 4,500
Common stock issued for
services, March 1, 2000 0.005 8,100,000 40,500
Common stock issued for
services, April 1, 2000 0.01 300,000 3,000
Common stock issued for
cash, April 3, 2000 through
May 30, 2000 0.01 660,000 6,600
Common stock issued for
services May 18, 2000 0.01 2,500 25
Rent at no charge 150
Net loss for the period
ended June 30, 2000 - -
Balance, June 30, 2000 9,962,500 $ 54,775
Rent at no charge - 150
Net loss for the period
ended September 30, 2000 - -
Balance, September 30, 2000 9,962,500 $ 54,925
</TABLE>
The accompanying notes are an integral part of the financial statements
TABATHA II, INC.
(A development stage company)
Statement of Stockholders' Equity
For the initial period from inception (March 17, 2000) to June 30, 2000
(page 2 of 2)
<TABLE>
<CAPTION>
Deficit
accumulated
during the Total
development stockholders'
stage equity
<S> <C> <C>
Common stock issued
for cash, March 1, 2000 $ - $ 4,500
Common stock issued for
services, March 1, 2000 - 40,500
Common stock issued for
services, April 1, 2000 - 3,000
Common stock issued for
cash, April 3, 2000 through
May 30, 2000 - 6,600
Common stock issued for
services May 18, 2000 - 25
Rent at no charge - 150
Net loss for the period
ended June 30, 2000 (44,766) (44,766)
Balance, June 30, 2000 $(44,766) $ 10,009
Rent at no charge - 150
Net loss for the period
ended September 30, 2000 (93) (93)
Balance, September 30, 2000 $(44,859) $ 10,066
</TABLE>
The accompanying notes are an integral part of the financial statements
TABATHA II, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
1. Summary of Significant Accounting Policies
Development Stage Company
Tabatha II, Inc. (a development stage company) (the "Company") was
incorporated under the laws of the State of Colorado on March 17,
2000. The principal office of the corporation is 1926 South Oswego
Way, Aurora, Colorado 80014.
The Company is a new enterprise in the development stage as defined
by Statement No. 7 of the Financial Accounting Standards Board and
has not engaged in any business other than organizational efforts. It
has no full-time employees and owns no real property. The Company
intends to operate as a capital market access corporation by registering
with the U.S. Securities and Exchange Commission under the
Securities Exchange Act of 1934. After this, the Company intends to
seek to acquire one or more existing businesses that have existing
management, through merger or acquisition. Management of the
Company will have virtually unlimited discretion in determining the
business activities in which the Company might engage.
Accounting Method
The Company records income and expenses on the accrual method.
Fiscal Year
The fiscal year of the corporation is June 30.
Loss per Share
Loss per share was computed using the weighted average number of
shares outstanding during the period. Shares issued to insiders in
anticipation of any public offering have been accounted for as
outstanding since inception.
Financial Instruments
Unless otherwise indicated, the fair value of all reported assets and
liabilities that represent financial instruments (none of which are held
for trading purposes) approximate the carrying values of such amount.
Organization Costs
Costs to incorporate the Company were expensed as incurred.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers
all highly liquid debt instruments purchased with an original maturity
of three months or less to be cash equivalents.
Use of 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 effect the
amounts reported in these financial statements and accompanying
notes. Actual results could differ from those estimates.
Consideration of Other Comprehensive Income Items
SFAF 130 - Reporting Comprehensive Income, requires companies to
present comprehensive income (consisting primarily of net income
plus other direct equity changes and credits) and its components as
part of the basic financial statements. For the year ended June 30,
2000, the Company's financial statements do not contain any changes
in equity that are required to be reported separately in comprehensive
income.
Stock Basis
Shares of common stock issued for other than cash have been assigned
amounts equivalent to the fair value of the service or assets received
in exchange.
2. Stockholders' Equity
As of June 30, 2000, 100,000,000 shares of the Company's no par
value common stock had been authorized, of which 9,962,500 were
issued and outstanding.
The Company is authorized to issue up to 10,000,000 shares of
preferred stock, in series, as determined by the Board of Directors.
As of June 30, 2000, no preferred shares have been designated or
issued.
3. Related Party Transactions
As of the date hereof, officers and directors of the Company are the
owners of 6,340,000 shares of its issued and outstanding common
stock, constituting approximately 64% of the Company's issued and
outstanding common stock. The shares were issued for cash and
services equal to $0.005 per share.
Officers and directors are reimbursed for all out-of-pocket expenses.
4. Income Taxes
The tax benefit of approximately $9,000 related to deductible
temporary differences and operating loss carryforwards has been
offset by a full allowance for realization. Such carryforwards may be
limited upon consummation of a business combination under Section
381 of the Internal Revenue Code.
PART III
Item 1. INDEX TO EXHIBITS
The Exhibits listed below are filed as part of this Registration
Statement.
<TABLE>
<CAPTION>
Exhibit
No. Document
<S> <C>
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Stock Certificate
27 Financial Data Schedule
</TABLE>
SIGNATURE
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
TABATHA II, INC.
By: /s/ ROBERT L. SMITH
Robert L. Smith, President and Director
Date: October 11, 2000
U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUER
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
TABATHA II, INC.
(Name of Small Business Issuer in its charter)
Colorado 84-1536518
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1926 S. Oswego Way
Aurora, Colorado 80014
(Address of Principal Office) Zip Code
Issuer's telephone number: (303) 752-4637
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Document
<S> <C>
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Specimen Stock Certificate
27 Financial Data Schedule
</TABLE>
EXHIBIT 3.1 ARTICLES OF INCORPORATION OF TABATHA
II, INC.
ARTICLES OF INCORPORATION
OF
TABATHA II, INC.
The undersigned, who, if a natural person, is eighteen years of
age or older, hereby establishes a corporation pursuant to the
Colorado Business Corporation Act as amended and adopts the
following Articles of Incorporation:
FIRST: The name of the corporation is Tabatha II, Inc.
SECOND: The corporation shall have and may exercise all
of the rights, powers and privileges now or hereafter conferred upon
corporations organized under the laws of Colorado. In addition, the
corporation may do everything necessary, suitable or proper for the
accomplishment of any of its corporate purposes. The corporation
may conduct part or all of its business in any part of Colorado, the
United States or the world, and may hold, purchase, mortgage, lease
and convey real and personal property in any of such places.
THIRD: The aggregate number of shares which the
corporation shall have authority to issue is one hundred ten million
(110,000,000) shares of which a portion shall be common stock and a
portion shall be preferred stock, all as described below.
A. Common Stock. The aggregate number of common shares
which the corporation shall have the authority to issue is one hundred
million (100,000,000), which shares shall be designated "Common
Stock." Subject to all the rights of the Preferred Stock as expressly
provided herein, by law or by the Board of Directors pursuant to this
Article, the Common Stock of the corporation shall possess all such
rights and privileges as are afforded to capital stock by applicable law
in the absence of any express grant of rights or privileges in these
Articles of Incorporation, including, but not limited to, the following
rights and privileges:
(a) dividends may be declared and paid or set apart for
payment on the Common Stock out of any assets or funds of the
corporation legally available for the payment of dividends;
(b) the holders of Common Stock shall have unlimited
voting rights, including the right to vote for the election of directors
and on all other matters requiring stockholder action. Each holder of
Common Stock shall have one vote for each share of Common Stock
standing in his name on the books of the corporation and entitled to
vote, except that in the election of directors each holder of Common
Stock shall have as many votes for each share of Common Stock held
by him as there are directors to be elected and for whose election the
holder of Common Stock has a right to vote. Cumulative voting
shall not be permitted in the election of directors or otherwise.
(c) on the voluntary or involuntary liquidation,
dissolution or winding up of the corporation, and after paying or
adequately providing for the payment of all of its obligations and
amounts payable in liquidation, dissolution or winding up, and subject
to the rights of the holders of Preferred Stock, if any, the net assets of
the corporation shall be distributed pro rata to the holders of the
Common Stock.
B. Preferred Stock. The aggregate number of preferred
shares which this corporation shall have the authority to issue is ten
million (10,000,000) shares, each with no par value, which shares
shall be designated "Preferred Stock." Shares of Preferred Stock may
be issued from time to time in one or more series as determined by
the Board of Directors. The Board of Directors is hereby authorized,
by resolution or resolutions, to provide from time to time, out of the
unissued shares of Preferred Stock not then allocated to any series of
Preferred Stock, for a series of the Preferred Stock. Each such series
shall have distinctive serial designations. Before any shares of any
such series of Preferred Stock are issued, the Board of Directors shall
fix and determine, and is hereby expressly empowered to fix and
determine, by resolution or resolutions, the voting powers, full or
limited, or no voting powers, and the designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations and restrictions thereof as provided by
Colorado law. Before issuing any shares of a class or series, the
corporation shall deliver to the secretary of state for filing articles of
amendment to these articles of incorporation that set forth information
required by Colorado law, including but not limited to, the
designations, preferences, limitations, and relative rights of the class
or series of shares.
C. Voting. Unless otherwise ordered by a court of
competent jurisdiction, at all meetings of shareholders one-third of the
shares of a voting group entitled to vote at such meeting, represented
in person or by proxy, shall constitute a quorum of that voting group.
FOURTH: The number of directors of the corporation shall
be fixed by the bylaws, should the bylaws fail to fix such a number,
then by resolution adopted from time to time by the board of
directors, provided that the number of directors shall not be more than
five (5) nor less than two (2). Two (2) directors shall constitute the
initial board of directors. The following persons are elected to serve
as the corporation's initial directors until the first annual meeting of
shareholders or until their successors are duly elected and qualified:
Name Address
Robert L. Smith 769 Garfield St.
Denver, CO 80206
Diane Thelen 1926 S. Oswego Way
Aurora, CO 80014
FIFTH: The street address of the initial registered office
of the corporation is 1926 S. Oswego Way, Aurora, CO 80014. The
name of the initial registered agent of the corporation at such address
is Diane Thelen.
SIXTH: The address of the initial principal office of the
corporation is 1926 S. Oswego Way, Aurora, CO 80014.
SEVENTH: The following provisions are inserted for the
management of the business and for the conduct of the affairs of the
corporation, and the same are in furtherance of and not in limitation
or exclusion of the powers conferred by law.
(a) Conflicting Interest Transactions. As used in this
paragraph, "conflicting interest transaction" means any of the
following: (i) a loan or other assistance by the corporation to a
director of the corporation or to an entity in which a director of the
corporation is a director or officer or has a financial interest; (ii) a
guaranty by the corporation of an obligation of a director of the
corporation or of an obligation of an entity in which a director of the
corporation is a director or officer or has a financial interest; or (iii) a
contract or transaction between the corporation and a director of the
corporation or between the corporation and an entity in which a
director of the corporation is a director or officer or has a financial
interest. No conflicting interest transaction shall be void or voidable,
be enjoined, be set aside, or give rise to an award of damages or
other sanctions in a proceeding by a shareholder or by or in the right
of the corporation, solely because the conflicting interest transaction
involves a director of the corporation or an entity in which a director
of the corporation is a director or officer or has a financial interest, or
solely because the director is present at or participates in the meeting
of the corporation's board of directors or of the committee of the
board of directors which authorized, approves or ratifies a conflicting
interest transaction, or solely because the director's vote is counted
for such purpose if: (A) the material facts as to the director's
relationship or interest and as to the conflicting interest transaction are
disclosed or are known to the board of directors or the committee,
and the board of directors or committee in good faith authorizes,
approves or ratifies the conflicting interest transaction by the
affirmative vote of a majority of the disinterested directors, even
though the disinterested directors are less than a quorum; or (B) the
material facts as to the director's relationship or interest and as to the
conflicting interest transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the conflicting interest
transaction is specifically authorized, approved or ratified in good
faith by a vote of the shareholders; or (C) a conflicting interest
transaction is fair as to the corporation as of the time it is authorized,
approved or ratified by the board of directors, a committee thereof, or
the shareholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of
directors or of a committee which authorizes, approves or ratifies the
conflicting interest transaction.
(b) Loans and Guaranties for the Benefit of Directors.
Neither the board of directors nor any committee thereof shall
authorize a loan by the corporation to a director of the corporation or
to an entity in which a director of the corporation is a director or
officer or has a financial interest, or a guaranty by the corporation of
an obligation of a director of the corporation or of an obligation of an
entity in which a director of the corporation is a director or officer or
has a financial interest, until at least ten days after written notice of
the proposed authorization of the loan or guaranty has been given to
the shareholders who would be entitled to vote thereon if the issue of
the loan or guaranty were submitted to a vote of the shareholders.
The requirements of this paragraph (b) are in addition to, and not in
substitution for, the provisions of paragraph (a) of Article SEVENTH.
(c) Indemnification. The corporation shall indemnify,
to the maximum extent permitted by law, any person who is or was a
director, officer, agent, fiduciary or employee of the corporation
against any claim, liability or expenses arising against or incurred by
such person made party to a proceeding because he is or was a
director, officer, agent, fiduciary or employee of the corporation or
because he was a director, officer, agent, fiduciary or employee of the
corporation or because he is or was serving another entity as a
director, officer, partner, trustee, employee, fiduciary or agent at the
corporation's request. The corporation shall further have the
authority to the maximum extent permitted by law to purchase and
maintain insurance providing such indemnification.
(d) Limitation on Director's Liability. No director of
this corporation shall have any personal liability for monetary
damages to the corporation or its shareholders for breach of his
fiduciary duty as a director, except that this provision shall not
eliminate or limit the personal liability of a director to the corporation
or its shareholders for monetary damages for: (i) any breach of the
director's duty of loyalty to the corporation or its shareholders; (ii)
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) voting for or assenting
to a distribution in violation of Colorado Revised Statutes Section
7-106-401 or the articles of incorporation if it is established that the
director did not perform his duties in compliance with Colorado
Revised Statutes Section 7-108-401, provided that the personal
liability of a director in this circumstance shall be limited to the
amount of the distribution which exceeds what could have been
distributed without violation of Colorado Revised Statutes Section
7-106-401 or the articles of incorporation; or (iv) any transaction from
which the director directly or indirectly derives an improper personal
benefit. Nothing contained herein will be construed to deprive any
director of his right to all defenses ordinarily available to a director
nor will anything herein be construed to deprive any director of any
right he may have for contribution from any other director or other
person.
(e) Negation of Equitable Interests in Shares or Rights.
Unless a person is recognized as a shareholder through procedures
established by the corporation pursuant to Colorado Revised Statutes
Section 7-107-204 or any similar law, the corporation shall be entitled
to treat the registered holder of any shares of the corporation as the
owner thereof for all purposes permitted by the Colorado Business
Corporation Act, including without limitation all rights deriving from
such shares, and the corporation shall not be bound to recognize any
equitable or other claim to, or interest in, such shares or rights
deriving from such shares on the part of any other person including
without limitation, a purchaser, assignee or transferee of such shares,
unless and until such other person becomes the registered holder of
such shares or is recognized as such, whether or not the corporation
shall have either actual or constructive notice of the claimed interest
of such other person. By way of example and not of limitation, until
such other person has become the registered holder of such shares or
is recognized pursuant to Colorado Revised Statutes Section 7-107-204
or any similar applicable law, he shall not be entitled: (i) to receive
notice of the meetings of the shareholders; (ii) to vote at such
meetings; (iii) to examine a list of the shareholders; (iv) to be paid
dividends or other distributions payable to shareholders; or (v) to
own, enjoy and exercise any other rights deriving from such shares
against the corporation. Nothing contained herein will be construed to
deprive any beneficial shareholder, as defined in Colorado Revised
Statutes 7-113-101(1), of any right he may have pursuant to Article
113 of the Colorado Business Corporation Act or any subsequent law.
EIGHTH: The name and address of the incorporator is:
Gary S. Joiner
4750 Table Mesa Drive
Boulder, Colorado 80305
DATED the 15th day of March, 2000.
/s/ Gary S. Joiner
Incorporator
Diane Thelen hereby consents to the appointment as the initial
registered agent for Tabatha II, Inc.
/s/ Diane Thelen
Initial Registered Agent
DATED the 15th day of March, 2000.
EXHIBIT 3.12 BYLAWS OF TABATHA II, INC.
BYLAWS
OF
TABATHA II, INC.
ARTICLE I
Offices
The principal office of the corporation shall be designated from
time to time by the corporation and may be within or outside of
Colorado.
The corporation may have such other offices, either within or
outside Colorado, as the board of directors may designate or as the
business of the corporation may require from time to time.
The registered office of the corporation required by the
Colorado Business Corporation Act to be maintained in Colorado may
be, but need not be, identical with the principal office, and the
address of the registered office may be changed from time to time by
the board of directors.
ARTICLE II
Shareholders
Section 1. Annual Meeting. The annual meeting of the
shareholders shall be held during the month of June of each year on a
date and at a time fixed by the board of directors of the corporation
(or by the president in the absence of action by the board of
directors), beginning with the year 2001, for the purpose of electing
directors and for the transaction of such other business as may come
before the meeting. If the election of directors is not held on the day
fixed as provided herein for any annual meeting of the shareholders,
or 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 it may conveniently be held.
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 of or 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. Section 7-107-102(1)(b), or the special meeting
was not held in accordance with the notice.
Section 2. Special Meetings. Unless otherwise prescribed
by statute, special meetings of the shareholders may be called for any
purpose by the president or by the board of directors. The president
shall call a special meeting of the shareholders if the corporation
receives one or more written demands for the meeting, stating the
purpose or purposes for which it is to be held, signed and dated by
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 3. Place of Meeting. The board of directors may
designate any place, either within or outside Colorado, as the place
for any annual meeting or any special meeting called by the board of
directors. A waiver of notice signed by all shareholders entitled to
vote at a meeting may designate any place, either within or outside
Colorado, as the place for such meeting. If no designation is made,
or if a special meeting is called other than by the board, the place of
meeting shall be the principal office of the corporation.
Section 4. Notice of Meeting. Written notice stating the
place, date, and hour of the meeting shall be given not less than ten
nor more than sixty days before the date of the meeting, except that
(i) if the number of authorized shares is to be increased, at least thirty
days' notice shall be given, or (ii) any other longer notice period is
required by the Colorado Business Corporation Act. 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. 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 secretary shall give notice thereof at corporation
expense. 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.
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 at 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.
Section 5. Fixing of Record Date. For the purposes of
determining shareholders entitled to (i) notice of or vote at any
meeting of shareholders or any adjournment thereof, (ii) receive
distributions or share dividends, or (ii) demand a special meeting, or
to make a determination of shareholders for any other proper purpose,
the board of directors may fix a future 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 no
record date is fixed by the directors, the record date shall be the date
on which notice of the meeting is mailed to shareholders, or the date
on which the resolution of the board of directors providing for a
distribution is adopted, as the case may be. When a determination of
shareholders entitled to vote at any meeting of shareholders is made as
provided in this Section, such determination shall apply to any
adjournment thereof unless the board of directors fixes a new record
date, which it must do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
Notwithstanding the above, the record date for determining the
shareholders entitled to take action without a meeting or entitled to be
given notice of action so taken shall be the date a writing upon which
the action is taken is first received by the corporation. The record
date for determining shareholders entitled to demand a special meeting
shall be the date of the earliest of any of the demands pursuant to
which the meeting is called.
Section 6. Voting Lists. The secretary shall make, at the
earlier of ten days before each meeting of shareholders or two
business days after notice of the meeting has been given, a complete
list of the shareholders entitled to be given notice of such meeting or
any adjournment thereof. The list shall be arranged by voting groups
and within each voting group by class or series of shares, shall be in
alphabetical order within each class or series, and shall show the
address of and the number of shares of each class or series held by
each shareholder. For the period beginning the earlier of ten days
prior to the meeting or two business days after notice of the meeting
is given and continuing through the meeting and any adjournment
thereof, this list shall be kept on file at the principal office of the
corporation, or at a place (which shall be identified in the notice) in
the city where the meeting will be held. Such list shall be available
for inspection on written demand by any shareholder (including for
the purpose of this Section 6 any holder of voting trust certificates) or
his agent or attorney during regular business hours and during the
period available for inspection. The original stock transfer books
shall be prima facie evidence as to the shareholders entitled to
examine such list or to vote at any meeting of shareholders.
Any shareholder, his agent or attorney may copy the list
during regular business hours and during the period it is available for
inspection, provided (i) the shareholder has been a shareholder for at
least three months immediately preceding the demand or holds at least
five percent of all outstanding shares of any class of shares as of the
date of the demand, (ii) the demand is made in good faith and for a
purpose reasonably related to the demanding shareholder's interest as
a shareholder, (iii) the shareholder describes with reasonable
particularity the purpose and the records the shareholder desires to
inspect, (iv) the records are directly connected with the described
purpose and (v) the shareholder pays a reasonable charge covering the
costs of labor and material for such copies, not to exceed the
estimated cost of production and reproduction.
Section 7. Recognition Procedure for Beneficial Owners.
The board of directors may adopt by resolution a procedure whereby
a shareholder of the corporation may certify in writing to the
corporation that all or a portion of the shares registered in the name
of such shareholder are held for the account of a specified person or
persons. The resolution may set forth (i) the types of nominees to
which it applies, (ii) the rights or privileges that the corporation will
recognize in a beneficial owner, which may include rights and
privileges other than voting; (iii) the form of certification and the
information to be contained therein, (iv) if the certification is with
respect to a record date, the time within which the certification must
be received by the corporation, (v) the period for which the nominee's
use of the procedure is effective, and (vi) such other provisions with
respect to the procedure as the board deems necessary or desirable.
Upon receipt by the corporation of a certificate complying with the
procedure established by the board of directors, the persons specified
in the certification shall be deemed, for the purpose or purposes set
forth in the certification, to be the registered holders of the number of
shares specified in place of the shareholder making the certification.
Section 8. Quorum and Manner of Acting. One-third of the votes
entitled to be cast on a matter by a voting group shall constitute a
quorum of that voting group for action on the matter. If less than
one-third of such votes are represented at a meeting, a majority of the
votes so represented may adjourn the meeting from time to time
without further notice, for a period not to exceed 120 days for any
one adjournment. If a quorum is present at such adjourned meeting,
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 of enough shareholders
to leave less than a quorum, unless the meeting is adjourned and a
new record date is set for the adjourned meeting.
If a quorum exists, action on a matter other than the election
of directors by a voting group is approved if the votes cast within the
voting group favoring the action exceed the votes cast within the
voting group opposing the action, unless the vote of a greater number
or voting by classes is required by law or the articles of
incorporation.
Section 9. 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 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 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 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 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 authority under the appointment.
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 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.
Subject to Section 11 and any express limitation on the proxy's
authority appearing on the appointment form, the corporation is
entitled to accept the proxy's vote or other action as that of the
shareholder making the appointment.
Section 10. Voting of Shares. Each outstanding share,
regardless of class, shall be entitled to one vote, except in the election
of directors, and each fractional share shall be entitled to a
corresponding fractional vote on each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting rights of
the shares of any class or classes are limited or denied by the articles
of incorporation as permitted by the Colorado Business Corporation
Act. Cumulative voting shall not be permitted in the election of
directors or for any other purpose. Each record holder of stock shall
be entitled to vote in the election of directors and shall have as many
votes for each of the shares owned by him as there are directors to be
elected and for whose election he has the right to vote.
At each election of directors, that number of candidates
equaling the number of directors to be elected, having the highest
number of votes cast in favor of their election, shall be elected to the
board of directors.
Except as otherwise ordered by a court of competent
jurisdiction upon a finding that the purpose of this Section would not
be violated in the circumstances presented to the court, the shares of
the corporation are not entitled to be voted if they are owned, directly
or indirectly, by a second corporation, domestic or foreign, and the
first corporation owns, directly or indirectly, a majority of the shares
entitled to vote for directors of the second corporation except to the
extent the second corporation holds the shares in a fiduciary capacity.
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
the redemption price on surrender of the shares.
Section 11. Corporation's Acceptance of Votes. If the name
signed 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
(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 11.
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 its officers nor any agent 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.
Section 12. Informal Action by Shareholders. Any action
required or permitted to be taken at a meeting of the shareholders may
be taken without a meeting if a written consent (or counterparts
thereof) that sets forth the action so taken is signed by all of the
shareholders entitled to vote with respect to the subject matter thereof
and received by the corporation. Such consent shall have the same
force and effect as a unanimous vote of the shareholders and may be
stated as such in the document. Action taken under this Section 12 is
effective as of the date the last writing necessary to effect this action
is received by the corporation, unless all of the writings specify a
different effective date, in which case such specified date shall be the
effective date for such action. If any shareholder revokes his consent
as provided for herein prior to what would otherwise be the effective
date, the action proposed in the consent shall be invalid. The record
date for determining shareholders entitled to take action without a
meeting is the date the corporation receives a writing upon which the
action is taken.
Any shareholder who has signed a writing describing and
consenting to action taken pursuant to this Section 12 may revoke
such consent by a writing signed by the shareholder describing the
action and stating that the shareholder's prior consent thereto is
revoked, if such writing is received by the corporation before the
effectiveness of the action.
Section 13. Meetings by Telecommunication. Any or all of
the shareholders may participate in an annual or special shareholders'
meeting by, or the meeting may be conducted through the use of, any
means of communication by which all persons participating in the
meeting may hear each other during the meeting. A shareholder
participating in a meeting by this means is deemed to be present in
person at the meeting.
ARTICLE III
Board of Directors
Section 1. General Powers. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of
the corporation shall be managed under the direction of its board of
directors, except as otherwise provided in the Colorado Business
Corporation Act or the articles of incorporation.
Section 2. Number, Qualifications and Tenure. The
number of directors of the corporation shall be fixed from time to
time by the board of directors, within a range of no less than two or
more than five. A director shall be a natural person who is eighteen
years of age or older. A director need not be a resident of Colorado
or a shareholder of the corporation. Directors shall be elected at each
annual meeting of shareholders. Each director shall hold office until
the next annual meeting of shareholders following his election and
thereafter until his successor shall have been elected and qualified.
Directors shall be removed in the manner provided by the Colorado
Business Corporation Act.
Section 3. Vacancies. Any director may resign at any time
by giving written notice to the corporation. Such resignation shall
take effect at the time the notice is received by the corporation unless
the notice specifies a later effective date. Unless otherwise specified
in the notice of resignation, the corporation's acceptance of such
resignation shall not be necessary to make it effective. 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 shareholder's
meeting at which directors are elected. If elected by the shareholders,
the director shall hold office for the unexpired term of his 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 office for the unexpired term of the last predecessor elected
by the shareholders.
Section 4. Regular Meetings. A regular meeting of the
board of directors shall be held without notice 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 outside Colorado, for the holding of additional regular
meetings without other notice.
Section 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
outside Colorado, as the place for holding any special meeting of the
board of directors called by them, provided that no meeting shall be
called outside the State of Colorado unless a majority of the board of
directors has so authorized.
Section 6. Notice. Notice of any special meeting shall be
given at least two days prior to the meeting by written notice either
personally delivered or mailed to each director at his business address,
or by notice transmitted by telegraph, telex, electronically transmitted
facsimile or other form of wire or wireless communication. If
mailed, such notice shall be deemed to be given and to be effective on
the earlier of (i) three days after such notice is deposited in the United
States mail, properly addressed, with postage prepaid, or (ii) the date
shown on the return receipt, if mailed by registered or certified mail
return receipt requested. If notice is given by telex, electronically
transmitted facsimile or other similar form of wire or wireless
communication, such notice shall be deemed to be given and to be
effective when sent, and with respect to a telegram, such notice shall
be deemed to be given and to be effective when the telegram is
delivered to the telegraph company. If a director has designated in
writing one or more reasonable addresses or facsimile numbers for
delivery of notice to him, notice sent by mail, telegram, telex,
electronically transmitted facsimile or other form of wire or wireless
communication shall not be deemed to have been given or to be
effective unless sent to such addresses or facsimile numbers, as the
case may be.
A director may waive notice of a meeting before or after the
time and date of the meeting by a writing signed by such director.
Such waiver shall be delivered to the corporation for filing with
the corporate records. Further, a director's attendance at or
participation in a meeting waives any required notice to him of the
meeting unless at the beginning of the meeting, or promptly upon his
arrival, the director objects to holding the meeting or transacting
business at the meeting because of lack of notice or defective notice
and does not thereafter vote for or assent to action taken at the
meeting. Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
Section 7. Quorum. A majority of the number of directors
fixed by the board of directors pursuant to Section 2 or, if no number
is fixed, a majority of the number in office immediately before the
meeting begins, shall constitute a quorum for the transaction of
business at any meeting of the board of directors. 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, for
a period not to exceed sixty days at any one adjournment.
Section 8. Manner of Acting. The act of the majority of
the directors present at a meeting at which a quorum is present shall
be the act of the board of directors. No director may vote or act by
proxy at any meeting of directors.
Section 9. Compensation. By resolution of the board of
directors, any director may be paid any one or more of the following:
his expenses, if any, of attendance at meetings, a fixed sum for
attendance at each meeting, a stated salary as director, or such other
compensation as the corporation and the director may reasonably
agree upon. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving
compensation therefor.
Section 10. 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 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 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 dissent or abstention as to any specific action to be received by
the presiding officer of 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.
Section 11. Committees. By resolution adopted by a
majority of all the directors in office when the action is taken, the
board of directors may designate from among its members an
executive committee and one or more other committees, and appoint
one or more members of the board of directors to serve on them. To
the extent provided in the resolution, each committee shall have all
the authority of the board of directors, except that no such committee
shall have the authority to (i) authorize distributions, (ii) approve or
propose to shareholders actions or proposals required by the Colorado
Business Corporation Act to be approved by shareholders, (iii) fill
vacancies on the board of directors or any committee thereof, (iv)
amend articles of incorporation, (v) adopt, amend or repeal the
bylaws, (vi) approve a plan of merger not requiring shareholder
approval, (vii) authorize or approve the reacquisition of shares unless
pursuant to a formula or method prescribed by the board of directors,
or (viii) authorize or approve the issuance or sale of shares, or
contract for the sale of shares or determine the designations and
relative rights, preferences and limitations of a class or series of
shares, except that the board of directors may authorize a committee
or officer to do so within limits specifically prescribed by the board of
directors. The committee shall then have full power within the limits
set by the board of directors to adopt any final resolution setting forth
all preferences, limitations and relative rights of such class or series
and to authorize an amendment of the articles of incorporation stating
the preferences, limitations and relative rights of a class or series for
filing with the Secretary of State under the Colorado Business
Corporation Act.
Sections 4, 5, 6, 7, 8 and 12 of Article VIII, which govern
meetings, notice, waiver of notice, quorum, voting requirements and
action without a meeting of the board of directors, shall apply to
committees and their members appointed under this Section 11.
Neither the designation of any such committee, the delegation
of authority to such committee, nor any action by such committee
pursuant to its authority shall alone constitute compliance by any
member of the board of directors or a member of the committee in
question with his responsibility to conform to the standards of care set
forth in Article VIII, Section 14 of these bylaws.
Section 12. Action Without a Meeting. Any action required
or permitted to be taken at a meeting of the directors or any
committee designated by the board of directors may be taken without
a meeting if a written consent (or counterparts thereof) that sets forth
the action so taken is signed by all of the directors entitled to vote
with respect to the action taken. Such consent shall have the same
force and effect as a unanimous vote of the directors or committee
members and may be stated as such in any document. Unless the
consent specifies a different effective date, action taken under this
Section 12 is effective at the time the last director signs a writing
describing the action taken, unless, before such time, any director has
revoked his consent by a writing signed by the director and received
by the president or secretary of the corporation.
Section 13. Telephonic Meetings. The board of directors
may permit any director (or any member of a committee designated
by the board) to participate in a regular or special meeting of the
board of directors or a committee thereof through the use of any
means of communication by which all directors participating in the
meeting can hear each other during the meeting. A director
participating in a meeting in this manner is deemed to be present in
person at the meeting.
Section 14. Standard of Care. A director shall perform his
duties as a director, including, without limitation his duties as a
member of any committee of the board, in good faith, in a manner he
reasonably believes to be in the best interests of the corporation, and
with the care an ordinarily prudent person in a like position would
exercise 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 the persons herein designated.
However, he shall not be considered to be acting in good faith if he
has knowledge concerning the matter in question that would cause
such reliance to be unwarranted. A director shall not be liable to the
corporation or its shareholders for any action he takes or omits to take
as a director if, in connection with such action or omission, he
performs his duties in compliance with this Section 14.
The designated persons on whom a director is entitled to rely
are (i) one or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the
matters presented, (ii) legal counsel, public accountant, or other
person as to matters which the director reasonably believes to be
within such person's professional or expert competence, or (iii) a
committee of the board of directors on which the director does not
serve if the director reasonably believes the committee merits
confidence.
ARTICLE IV
Officers and Agents
Section 1. General. The officers of the corporation shall
be a president, a secretary, a treasurer, and/or such other officers as
may be appointed from time to time by the board of directors, each of
whom shall be a natural person eighteen years of age or older. The
board of directors or an officer or officers authorized by the board
may appoint such other officers, assistant officers, committees and
agents, including a chairman of the board, assistant secretaries and
assistant treasurers, as they may consider necessary. The board of
directors or the officer or officers authorized by the board shall from
time to time determine the procedure for the appointment of officers,
their term of office, their authority and duties and their compensation.
One person may hold more than one office. In all cases where the
duties of any officer, agent or employee are not prescribed by the
bylaws, or by the board of directors, such officer, agent or employee
shall follow the orders and instructions of the president of the
corporation.
Section 2. Appointment and Term of Office. The officers
of the corporation shall be appointed by the board of directors at each
annual meeting of the board held after each annual meeting of the
shareholders. If the appointment of officers is not made at such
meeting or if an officer or officers are to be appointed by another
officer or officers of the corporation, such appointment shall be made
as soon thereafter as conveniently may be. Each officer shall hold
office until the first of the following occurs: his successor shall have
been duly appointed and qualified, his death, his resignation, or his
removal in the manner provided in Section 3.
Section 3. Resignation and Removal. An officer may
resign at any time by giving written notice of resignation to the
corporation. The resignation is effective when the notice is received
by the corporation unless the notice specifies a later effective date.
Any officer or agent may be removed at any time with or
without cause by the board of directors or an officer or officers
authorized by the board. Such removal does not affect the contract
rights, if any, of the corporation or of the person so removed. The
appointment of an officer or agent shall not in itself create contract
rights.
Section 4. Vacancies. A vacancy in any office, however
occurring, may be filled by the board of directors, or by the officer or
officers authorized by the board, for the unexpired portion of the
officer's term. If an officer resigns and his resignation is made
effective at a later date, the board of directors, or officer or officers
authorized by the board, may permit the officer to remain in office
until the effective date and may fill the pending vacancy before the
effective date if the board of directors or officer or officers authorized
by the board provide that the successor shall not take office until the
effective date. In the alternative, the board of directors, or officer or
officers authorized by the board of directors, may remove the officer
at any time before the effective date and may fill the resulting
vacancy.
Section 5. President. Subject to the direction and
supervision of the board of directors, the president shall be the chief
executive officer of the corporation, and shall have general and active
control of its affairs and business and general supervision of its
officers, agents and employees. Unless otherwise directed by the
board of directors, the president shall attend in person or by substitute
appointed by him, or shall execute on behalf of the corporation
written instruments appointing a proxy or proxies to represent the
corporation, at all meetings of the stockholders of any other
corporation in which the corporation holds any stock. On behalf of
the corporation, the president may in person or by substitute or by
proxy execute written waivers of notice and consents with respect to
any such meetings. At all such meetings and otherwise, the president,
in person or by substitute or proxy, may vote the stock held by the
corporation, execute written consents and other instruments with
respect to such stock, and exercise any and all rights and powers
incident to the ownership or said stock, subject to the instructions, if
any, of the board of directors. The president shall have custody of
the treasurer's bond, if any.
Section 6. Vice Presidents. The vice presidents, if any,
shall assist the president and shall perform such duties as may be
assigned to them by the president or by the board of directors. In the
absence of the president, the vice president, if any (or, if more than
one, the vice presidents in the order designated by the board of
directors, or if the board makes no such designation, then the vice
president designated by the president, or if neither the board nor the
president makes any such designation, the senior vice president as
determined by first election to that office), shall have the powers and
perform the duties of the president.
Section 7. Secretary. The secretary shall (i) 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 of meetings of shareholders and of the board of
directors or any committee thereof, (ii) see that all notices are duly
given in accordance with the provisions of these bylaws and as
required by law, (iii) 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, (iv) 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 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, (v) 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 name 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, (vi) have general charge of the
stock transfer books of the corporation, unless the corporation has a
transfer agent, (vii) authenticate records of the corporation, and (vii)
in general, perform all duties incident to the office of secretary and
such other duties as from time to time may be assigned to him by the
president or by 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.
Section 8. Treasurer. The treasurer shall be the principal
financial officer of the corporation, shall have the care and custody of
all funds, securities, evidences of indebtedness and other personal
property of the corporation and shall deposit the same in accordance
with the instructions of the board of directors. He shall receive and
give receipts and acquittances for money paid in on account of the
corporation, and shall pay out of the corporation's funds on hand all
bills, payrolls and other just debts of the corporation of whatever
nature upon maturity. He shall perform all other duties incident to
the office of the treasurer and, upon request of the board, shall make
such reports to it as may be required at any time. He shall, if
required by the board, give the corporation a bond in such sums and
with such sureties as shall be satisfactory to the board, conditioned
upon the faithful performance of his duties and for the restoration to
the corporation of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control
belonging to the corporation. He shall have such other powers and
perform such other duties as may from time to time be prescribed by
the board of directors or the president. The assistant treasurers, if
any, shall have the same powers and duties, subject to the supervision
of the treasurer.
The treasurer shall also be the principal accounting officer of
the corporation. He shall prescribe and maintain the methods and
systems of accounting to be followed, keep complete books and
records of account as required by the Colorado Business Corporation
Act, prepare and file all local, state and federal tax returns, prescribe
and maintain an adequate system of internal audit and prepare and
furnish to the president and the board of directors statements of
account showing the financial position of the corporation and the
results of its operations.
ARTICLE V
Stock
Section 1. Certificates. The board of directors shall be
authorized to issue any of its classes of shares with or without
certificates. The fact that the shares are not represented by
certificates shall have no effect on the rights and obligations of
shareholders. If the shares are represented by certificates, such shares
shall be represented by consecutively numbered certificates signed,
either manually or by facsimile, in the name of the corporation by one
or more persons designated by the board of directors. In case any
officer who has signed or whose facsimile signature has been placed
upon such certificate shall have ceased to be such officer before such
certificate is issued, such certificate may nonetheless be issued by the
corporation with the same effect as if he were such officer at the date
of its issue. Certificates of stock shall be in such form and shall
contain such information consistent with law as shall be prescribed by
the board of directors. If shares are not represented by certificates,
within a reasonable time following the issue or transfer of such
shares, the corporation shall send the shareholder a complete written
statement of all of the information required to be provided to holders
of uncertificated shares by the Colorado Business Corporation Act.
Section 2. Consideration for Shares. Certificated or
uncertificated shares shall not be issued until the shares represented
thereby are fully paid. The board of directors may authorize the
issuance of shares for consideration consisting of any tangible or
intangible property or benefit to the corporation, including cash,
promissory notes, services performed or other securities of the
corporation. Future services shall not constitute payment or partial
payment for shares of the corporation. The promissory note of a
subscriber or an affiliate of a subscriber shall not constitute payment
or partial payment for shares of the corporation unless the note is
negotiable and is secured by collateral, other than the shares being
purchased, having a fair market value at least equal to the principal
amount of the note. For purposes of this Section 2, "promissory
note" means a negotiable instrument on which there is an obligation to
pay independent of collateral and does not include a non-recourse
note.
Section 3. Lost Certificates. In case of the alleged loss,
destruction or mutilation of a certificate of stock, the board of
directors may direct the issuance of a new certificate in lieu thereof
upon such terms and conditions in conformity with law as the board
may prescribe. The board of directors may in its discretion require
an affidavit of lost certificate and/or a bond in such form and amount
and with such surety as it may determine before issuing a new
certificate.
Section 4. Transfer of Shares. Upon surrender to the
corporation or to a transfer agent of the corporation of a certificate of
stock duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, and receipt of such
documentary stamps as may be required by law and evidence of
compliance with all applicable securities laws and other restrictions,
the corporation shall issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock
shall be entered on the stock books of the corporation which shall be
kept at its principal office or by the person and at the place designated
by the board of directors.
Except as otherwise expressly provided in Article VIII,
Sections 7 and 11, and except for the assertion of dissenters' rights to
the extent provided in Article 113 of the Colorado Business
Corporation Act, the corporation shall be entitled to treat the
registered holder of any shares of the corporation as the owner thereof
for all purposes, and the corporation shall not be bound to recognize
any equitable or other claim to, or interest in, such shares or rights
deriving from such shares on the part of any person other than the
registered holder, including without limitation any purchaser, assignee
or transferee of such shares or rights deriving from such shares,
unless and until such other person becomes the registered holder of
such shares, whether or not the corporation shall have either actual or
constructive notice of the claimed interest of such other person.
Section 5. Transfer Agent, Registrars and Paying Agents.
The board may at its discretion appoint one or more transfer agents,
registrars and agents for making payment upon any class of stock,
bond, debenture or other security of the corporation. Such agents and
registrars may be located either within or outside Colorado. They
shall have such rights and duties and shall be entitled to such
compensation as may be agreed.
ARTICLE VI
Indemnification of Certain Persons
Section 1. Indemnification. For purposes of Article VIII, a
"Proper Person" means any person who was or is a party or is
threatened to be made a party to any threatened, pending, or complete
action, suit or proceeding, whether civil, criminal, administrative or
investigative, and whether formal or informal, 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, partner, trustee, employee, fiduciary or agent of
any foreign or domestic profit or nonprofit corporation or of any
partnership, joint venture, trust, profit or nonprofit unincorporated
association, limited liability company, or other enterprise or employee
benefit plan. The corporation shall indemnify any Proper Person
against reasonably incurred expenses (including any attorneys' fees),
judgments, penalties, fines (including any excise tax assessed with
respect to an employee benefit plan) and amounts paid in settlement
reasonably incurred by him in connection with such action, suit or
proceeding if it is determined by the groups set forth in Section 4 of
this Article that he conducted himself in good faith and that he
reasonably believed (i) in the case of conduct in his official capacity
with the corporation, that his conduct was in the corporation's best
interests, or (ii) in all other cases (except criminal cases), that his
conduct was at least not opposed to the corporation's best interests, or
(iii) in the case of any criminal proceeding, that he had no reasonable
cause to believe his conduct was unlawful. A Proper Person will be
deemed to be acting in his official capacity while acting as a director,
officer, employee or agent on behalf of this corporation and not while
acting on this corporation's behalf for some other entity.
No indemnification shall be made under this Article VI to a
Proper Person with respect to any claim, issue or matter in connection
with a proceeding by or in the right of a corporation in which the
Proper Person was adjudged liable to the corporation or in connection
with any proceeding charging that the Proper Person derived an
improper personal benefit, whether or not involving action in an
official capacity, in which he was adjudged liable on the basis that he
derived an improper personal benefit. Further, indemnification under
this Section in connection with a proceeding brought by or in the right
of the corporation shall be limited to reasonable expenses, including
attorneys' fees, incurred in connection with the proceeding.
Section 2. Right to Indemnification. The corporation shall
indemnify any Proper Person who was wholly successful, on the
merits or otherwise, in defense of any action, suit, or proceeding as to
which he was entitled to indemnification under Section 1 of this
Article VI against expenses (including attorneys' fees) reasonably
incurred by him in connection with the proceeding without the
necessity of any action by the corporation other than the determination
in good faith that the defense has been wholly successful.
Section 3. Effect of Termination of Action. 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 seeking
indemnification did not meet the standards of conduct described in
Section 1 of this Article VI. Entry of a judgment by consent as part
of a settlement shall not be deemed an adjudication of liability, as
described in Section 2 of this Article VI.
Section 4. Groups Authorized to Make Indemnification
Determination. Except where there is a right to indemnification as set
forth in Sections 1 or 2 of this Article or where indemnification is
ordered by a court in Section 5, any indemnification shall be made by
the corporation only as authorized in the specific case upon a
determination by a proper group that indemnification of the Proper
Person is permissible under the circumstances because he has met the
applicable standards of conduct set forth in Section 1 of this Article.
This determination shall be made by the board of directors by a
majority vote of those present at a meeting at which a quorum is
present, which quorum shall consist of directors not parties to the
proceeding ("Quorum"). If a Quorum cannot be obtained, the
determination shall be made by a majority vote of a committee of the
board of directors designated by the board, which committee shall
consist of two or more directors not parties to the proceeding, except
that directors who are parties to the proceeding may participate in the
designation of directors for the committee. If a Quorum of the board
of directors cannot be obtained and the committee cannot be
established, or even if a Quorum is obtained or the committee is
designated and a majority of the directors constituting such Quorum
or committee so directs, the determination shall be made by (i)
independent legal counsel selected by a vote of the board of directors
or the committee in the manner specified in this Section 4, or, if a
Quorum of the full board of directors cannot be obtained and a
committee cannot be established, by independent legal counsel
selected by a majority vote of the full board (including directors who
are parties to the action) or (ii) a vote of the shareholders.
Section 5. Court-Ordered Indemnification. Any Proper
Person may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction for
mandatory indemnification under Section 2 of this Article, including
indemnification for reasonable expenses incurred to obtain
court-ordered indemnification. If the court determines that such
Proper Person is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not he met the
standards of conduct set forth in Section 1 of this Article or was
adjudged liable in the proceeding, the court may order such
indemnification as the court deems proper except that if the Proper
Person has been adjudged liable, indemnification shall be limited to
reasonable expenses incurred in connection with the proceeding and
reasonable expenses incurred to obtain court-ordered indemnification.
Section 6. Advance of Expenses. Reasonable expenses
(including attorneys' fees) incurred in defending an action, suit or
proceeding as described in Section 1 may be paid by the corporation
to any Proper Person in advance of the final disposition of such
action, suit or proceeding upon receipt of (i) a written affirmation of
such Proper Person's good faith belief that he has met the standards
of conduct prescribed by Section 1 of this Article VIII, (ii) a written
undertaking, executed personally or on the Proper Person's behalf, to
repay such advances if it is ultimately determined that he did not meet
the prescribed standards of conduct (the undertaking shall be an
unlimited general obligation of the Proper Person but need not be
secured and may be accepted without reference to financial ability to
make repayment), and (iii) a determination is made by the proper
group (as described in Section 3 of this Article VI) that the facts as
then known to the group would not preclude indemnification.
Determination and authorization of payments shall be made in the
same manner specified in Section 4 of this Article VI.
Section 7. Witness Expenses. The sections of this Article
VI do not limit the corporation's authority to pay or reimburse
expenses incurred by a director in connection with an appearance as a
witness in a proceeding at a time when he has not been a named
defendant or respondent in the proceeding.
Section 8. Report to Shareholders. Any indemnification of
or advance of expenses to a director in accordance with this Article
VIII, if arising out of a proceeding by or on behalf of the corporation,
shall be reported in writing to the shareholders with or before the
notice of the next shareholders' meeting. If the next shareholder
action is taken without a meeting at the instigation of the board of
directors, such notice shall be given to the shareholders at or before
the time the first shareholder signs a writing consenting to such
action.
ARTICLE VII
Provision of Insurance
By action of the board of directors, notwithstanding any
interest of the directors in the action, the corporation may purchase
and maintain insurance, in such scope and amounts as the board of
directors deems appropriate on behalf of any person who is or was a
director, officer, employee, fiduciary or agent of the corporation, or
who, while a director, officer, employee, fiduciary or agent of the
corporation, is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, fiduciary or agent of any
other foreign or domestic corporation or of any partnership, joint
venture, trust, profit or nonprofit unincorporated association, limited
liability company or other enterprise or employee benefit plan, against
any liability asserted against, or incurred by, him in that capacity
arising out of his status as such, whether or not the corporation would
have the power to indemnify him against such liability under the
provisions of Article VI or applicable law. Any such insurance may
be procured from any insurance company designated by the board of
directors of the corporation, whether such insurance company is
formed under the laws of Colorado or any other jurisdiction of the
United States or elsewhere, including any insurance company in which
the corporation has an equity interest or any other interest, through
stock ownership or otherwise.
ARTICLE VIII
Miscellaneous
Section 1. Seal. The corporate seal of the corporation shall
be circular in form and shall contain the name of the corporation and
the words, "Seal, Colorado."
Section 2. Fiscal Year. The fiscal year of the corporation
shall be as established by the board of directors.
Section 3. Amendments. 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.
Section 4. Gender. The masculine gender is used in these
bylaws as a matter of convenience only and shall be interpreted to
include the feminine and neuter genders as the circumstances indicate.
Section 5. Conflicts. In the event of any irreconcilable
conflict between these bylaws and either the corporation's articles of
incorporation or applicable law, the latter shall control.
Section 6. Definitions. Except as otherwise specifically
provided in these bylaws, all terms used in these bylaws shall have
the same definition as in the Colorado Business Corporation Act.
THE FOREGOING BYLAWS, consisting of eighteen (18)
pages, including this page, constitute the bylaws of Tabatha II, Inc.,
adopted by the board of directors of the corporation as of March 15,
2000.
/s/ Diane Thelen
Secretary
EXHIBIT 4.1 - SPECIMEN STOCK CERTIFICATE
CONTENTS:
State of Incorporation
Name of Company
Number of authorized shares of common stock
Name of individual shareholder
Number of shares owned by individual shareholder
Fully paid and non-assessable shares
Date of issuance of certificate
Signatures of President and Secretary
Restrictive transfer legend
EXHIBIT 27 - Financial Data Schedule
