<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended December 31, 1994 Commission File No. 0-11484
MARQUEST MEDICAL PRODUCTS, INC.
(Exact name of Registrant as specified in its charter)
Colorado 84-0785259
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
11039 East Lansing Circle, Englewood, Colorado 80112
(Address of principal executive offices, including zip code)
(303) 790-4835
(Registrant's telephone number, including area code)
N/A
(Former name, former address, and former fiscal year, if changes since last
report)
Indicate by check mark whether the Registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceeding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Number of shares of common stock, no par value, of Registrant outstanding at
January 25, 1995.
8,081,880
<PAGE>
MARQUEST MEDICAL PRODUCTS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ASSETS
December 31, April 2,
1994 1994
------------ --------
(Unaudited)
<S> <C> <C>
Cash and cash equivalents $ 769 $ 1,662
Trade accounts receivable, less allowances for
doubtful accounts of $168 and $178, respectively 2,495 3,075
Notes and other receivables 38 74
Current portion of note from related party 225 300
Inventories 2,658 2,955
Prepaid items 220 212
------- -------
Total current assets 6,405 8,278
NOTE FROM RELATED PARTY -- 75
PROPERTY, PLANT AND EQUIPMENT
Land 1,265 1,265
Buildings 4,976 4,976
Machinery and equipment 8,326 8,920
Other 2,550 2,404
Construction in progress 19 --
------- -------
17,136 17,565
Less accumulated depreciation (9,411) (9,021)
------- -------
Net property, plant and equipment 7,725 8,544
OTHER ASSETS 43 32
------- -------
$14,173 $16,929
------- -------
------- -------
</TABLE>
The accompanying notes to Consolidated Financial Statements
are an integral part of these consolidated balance sheets.
Page 2
<PAGE>
MARQUEST MEDICAL PRODUCTS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
December 31, April 2,
1994 1994
------------ ---------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 1,441 $ 1,260
Accrued liabilities 3,057 3,355
Payable to related party 547 375
Swiss debt principal and interest 690 599
Current maturities of long-term debt 92 1,389
Current maturities of capital lease obligation 136 125
--------- --------
Total current liabilities 5,963 7,103
CAPITAL LEASE OBLIGATION 328 432
NOTE PAYABLE TO SCHERER 1,852 4,352
NOTE PAYABLE TO BANK 1,165 --
SWISS NOTES PAYABLE 2,677 2,875
OTHER LONG-TERM LIABILITIES 176 176
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock, no par value; 50,000,000 and
20,000,000 shares authorized; 8,102,720
and 4,505,466 shares issued and outstanding,
respectively 6,177 3,459
Warrants 612 632
Retained earnings(deficit) ($20,434 of retained
deficit eliminated at July 3, 1993 relating to the
quasi-reorganization) (4,707) (2,030)
Treasury stock, 20,840 shares (70) (70)
--------- --------
Total shareholders' equity (deficit) 2,012 1,991
--------- --------
$ 14,173 $ 16,929
--------- --------
--------- --------
</TABLE>
The accompanying notes to Consolidated Financial Statements
are an integral part of these consolidated balance sheets.
Page 3
<PAGE>
MARQUEST MEDICAL PRODUCTS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
December 31, January 1,
1994 1994
------------ ------------
<S> <C> <C>
NET REVENUES $ 5,234 $ 5,102
COST OF SALES (3,985) (4,156)
------------ ------------
GROSS PROFIT 1,249 946
COSTS AND EXPENSES
Selling and marketing expenses (1,015) (922)
General and administrative expenses (733) (766)
Research and development expenses (24) (28)
------------ ------------
OPERATING INCOME (LOSS) (523) (770)
OTHER INCOME (EXPENSE)
Interest and other income 11 28
Interest expense (145) (183)
Foreign exchange gain (loss) 11 48
Gain on sale of assets 7 --
Other expense (7) (75)
------------ ------------
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (646) (952)
Provision for income taxes -- --
------------ ------------
NET LOSS BEFORE EXTRAORDINARY ITEM (646) (952)
Gain on extinguishment of debt -- 11
------------ ------------
NET LOSS $ (646) $ (941)
------------ ------------
------------ ------------
EARNINGS (LOSS) PER COMMON SHARE
Before extraordinary item $ (0.08) $ (0.21)
Extraordinary item -- --
------------ ------------
Net earnings (loss) $ (0.08) $ (0.21)
------------ ------------
------------ ------------
Weighted average number of common shares
outstanding during the period 8,081,880 4,484,626
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to Consolidated Financial Statements
are an integral part of these consolidated statements.
Page 4
<PAGE>
MARQUEST MEDICAL PRODUCTS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Six Three
Months Months Months
Ended Ended Ended
December 31, January 1, July 3,
1994 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
NET REVENUES $ 14,730 $ 10,283 $ 5,327
COST OF SALES (11,280) (8,671) (4,513)
------------ ------------ ------------
GROSS PROFIT 3,450 1,612 814
COSTS AND EXPENSES
Selling and marketing expenses (3,287) (1,830) (969)
General and administrative expenses (2,264) (1,600) (941)
Research and development expenses (116) (65) (39)
------------ ------------ ------------
OPERATING INCOME (LOSS) (2,217) (1,883) (1,135)
OTHER INCOME (EXPENSE)
Interest and other income 37 92 109
Interest expense (476) (371) (81)
Foreign exchange gain (loss) (55) (30) 20
Gain on sale of assets 53 275 50
Other expense (19) (319) (5)
------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (2,677) (2,236) (1,042)
Provision for income taxes -- -- --
------------ ------------ ------------
NET LOSS BEFORE EXTRAORDINARY ITEM (2,677) (2,236) (1,042)
Gain on extinguishment of debt -- 11 706
------------ ------------ ------------
NET LOSS $ (2,677) $ (2,225) $ (336)
------------ ------------ ------------
------------ ------------ ------------
EARNINGS (LOSS) PER COMMON SHARE
Before extraordinary item $ (0.37) $ (0.50) $ (0.23)
Extraordinary item -- -- 0.16
------------ ------------ ------------
Net earnings (loss) $ (0.37) $ (0.50) $ (0.07)
------------ ------------ ------------
------------ ------------ ------------
Weighted average number of common shares
outstanding during the period 7,284,189 4,484,634 4,466,907
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The accompanying notes to Consolidated Financial Statements
are an integral part of these consolidated statements.
Page 5
<PAGE>
MARQUEST MEDICAL PRODUCTS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
December 31, January 1,
1994 1994
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,677) $ (2,561)
Adjustments to reconcile net loss to net cash used
in operations:
Depreciation and amortization 1,047 1,429
Provision for losses on accounts receivable 15 76
Gain from extinguishment of debt -- (717)
Foreign exchange (gain) loss 55 (128)
Gain on sale of assets (53) (275)
Increase(decrease) in operating assets and
liabilities:
Accounts receivable 565 (517)
Notes and other receivables 36 1,102
Inventories and prepaid items 289 340
Accounts payable, accrued liabilities and
payable to related party 55 (2,659)
Accrued interest on Swiss bonds 36 --
Other (11) 30
------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (643) (3,880)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from note from related party 150 150
Purchases of equipment (400) (1,524)
Proceeds from sale of assets 225 694
------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (25) (680)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable -- 1,750
Payments on note payable -- (1,750)
Principal payments on borrowings (225) (67)
Proceeds from capital lease -- 591
Issuance of common stock -- 24
Proceeds from sale of ABG line -- 4,500
------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (225) 5,048
</TABLE>
(Continued)
Page 6
<PAGE>
MARQUEST MEDICAL PRODUCTS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
December 31, January 1,
1994 1994
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (893) 488
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 1,662 966
------------ ------------
CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 769 $ 1,454
------------ ------------
------------ ------------
NONCASH INVESTING AND FINANCING
TRANSACTIONS:
Refinancing of Swiss bonds:
Warrants issued $ -- $ 714
Notes issued -- 6,745
Prospective interest on notes -- 3,246
------------ ------------
$ -- $ 10,705
------------ ------------
------------ ------------
Sale leaseback of ABG product line:
Warrants issued $ -- $ 3,290
Net book value of ABG assets -- 245
Deferred gain -- 965
------------ ------------
$ -- $ 4,500
------------ ------------
------------ ------------
Quasi-reorganization:
Prospective interest on notes $ -- $ (3,226)
Deferred gain -- (965)
Goodwill -- 4,283
Retained deficit -- 20,434
Common stock -- (17,125)
Warrants -- (3,456)
Treasury stock -- 55
------------ ------------
$ -- $ --
------------ ------------
------------ ------------
</TABLE>
(Continued)
Page 7
<PAGE>
MARQUEST MEDICAL PRODUCTS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------
December 31, January 1,
1994 1994
------------ ------------
<S> <C> <C>
Debt conversion:
Note payable converted $ (2,500) $ --
Common stock issued 2,500 --
------------ ------------
$ -- $ --
------------ ------------
------------ ------------
Refinancing of Industrial Revenue Bonds:
Bonds retired $ (1,300) $ --
Note payable issued to bank 1,300 --
------------ ------------
$ -- $ --
------------ ------------
------------ ------------
Income tax refund:
Income tax receivable $ -- $ (745)
Increase in common stock -- 745
------------ ------------
$ -- $ --
------------ ------------
------------ ------------
Warrants:
Warrants exercised $ (20) $ --
Common stock issued 218 --
Swiss notes retired (198) --
------------ ------------
$ -- $ --
------------ ------------
------------ ------------
</TABLE>
The accompanying notes to Consolidated Financial Statements
are an integral part of these statements.
Page 8
<PAGE>
MARQUEST MEDICAL PRODUCTS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. INVENTORIES:
Inventories consist of the following (in thousands of dollars):
<TABLE>
<CAPTION>
December 31, 1994 April 2, 1994
----------------- -------------
<S> <C> <C>
Raw materials $1,535 $1,372
Work in process 247 236
Finished goods 876 1,347
------ ------
$2,658 $2,955
====== ======
</TABLE>
2. REPORT OF MANAGEMENT:
The management of Marquest Medical Products, Inc. (the "Company") is
responsible for the integrity of the financial information presented. The
financial statements have been prepared in accordance with generally
accepted accounting principles and they include amounts that are based on
management's best estimates and judgment. These unaudited interim financial
statements reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results of the interim periods
presented.
Management relies upon the Company's system of internal controls in meeting
its responsibilities for maintaining reliable financial records. This
system is designed to provide reasonable assurance that assets are
safeguarded and that transactions are properly recorded and executed in
accordance with management's intentions. Judgments are required to assess
and balance the relative cost and expected benefits of such controls.
3. BASIS OF PRESENTATION:
The Company's consolidated financial statements have been presented on the
basis that it will continue as a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal
course of business.
In the first quarter of Fiscal 1995, the Company refinanced its Industrial
Revenue Bonds which were due December 31, 1993. Management has made
significant progress in reducing costs and improving gross margins since
the first quarter of Fiscal 1994. However, the Company continues to
generate an operating cash flow deficit and there remains doubt about the
Company's ability to continue as a going concern. The accompanying
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
9
<PAGE>
MARQUEST MEDICAL PRODUCTS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. LONG-TERM DEBT:
Long-term debt consists of the following (in thousands of dollars):
<TABLE>
<CAPTION>
December 31, 1994 April 2, 1994
----------------- -------------
<S> <C> <C>
Swiss Bond Issue, 720,000 Swiss Francs outstanding,
interest payable annually on March ll at a rate of 6%,
increased to 9% effective March 12, 1992; due March
11, 1994; unsecured; including $140,000 and $94,000
accrued interest, respectively $ 690 $ 599
Note payable to Scherer; 8% interest due semi-annually;
due March 31, 1999; unsecured; convertible into 2,468,800
and 5,802,000 shares of Marquest common stock,
respectively 1,852 4,352
Swiss notes payable; 8% interest due semi-annually;
due March 31, 1999; unsecured; denominated in U.S.
dollars 2,677 2,875
Note payable to bank; floating interest rate; currently
7.75%, interest and principal due monthly; secured by
receivables, inventory, and property, plant and
equipment, due June 30, 2004 1,165 --
Industrial Revenue Bonds; 7.5% interest; due December
31, 1993 -- 1,389
------- -------
$6,384 $9,215
Less current maturities 782 1,988
------- -------
Long-term debt $5,602 $7,227
======= =======
</TABLE>
On June 30, 1994, the Company refinanced $1.3 million of the Industrial
Revenue Bonds. As part of the loan agreement, the Company cannot, without
the written consent of the bank, declare or pay dividends on its common
stock.
In May, 1994, Scherer Healthcare, Inc., holder of the Company's 8%
convertible note payable, notified the Company's Board of Directors that it
had elected to convert $2,500,000 of the principal balance of the note into
3,333,333 shares of the Company's common stock at the conversion price of
$0.75 per share, pursuant to the terms of the note.
10
<PAGE>
MARQUEST MEDICAL PRODUCTS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. RELATED PARTY TRANSACTION:
In May, 1994, the Company executed a management agreement with Scherer
Healthcare, Inc., the Company's largest stockholder, to provide certain
management services, including financial and marketing consulting, for
approximately $29,000 per month.
6. WARRANTS:
In September, 1994, 263,921 of the Company's warrants to purchase common
stock at $0.75 per share were exercised. These warrants had been issued to
the Swiss bondholders in an exchange in Fiscal 1994, and, in accordance
with the warrant agreement, $198,000 of the Company's 8% Swiss notes
payable were used in lieu of cash to exercise the warrants.
7. QUASI-REORGANIZATION:
In June 1993, the Company's Board of Directors approved
quasi-reorganization procedures which were effective July 3, 1993, the end
of the Company's first quarter of Fiscal 1994. The Company has segregated
its Consolidated Statements of Operations for Fiscal 1994 into the
three-month period prior to and the six-month period subsequent to the
quasi-reorganization.
8. REGISTRATION STATEMENTS
In the third quarter of Fiscal 1995 the Company filed a registration
statement with the Securities and Exchange Commission for a secondary
offering of 873,363 warrants to purchase common stock and 1,137,287 shares
of common stock. The registration statement was effective December 12,
1994.
11
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Sales have increased 2.6% for the third quarter of Fiscal 1995 and
decreased 5.6% for the first nine months of Fiscal 1995 versus the same
periods in Fiscal 1994. The increase in sales in the third quarter is due
to a sales promotion for the Company's arterial blood gas products. The
Company entered the first quarter of Fiscal 1994 with a backorder due to
the closing of the Company's manufacturing plant in Nogales, Mexico and its
distribution center in Nogales, Arizona. At the beginning of the second
quarter of Fiscal 1995, the Company implemented a territorial
reorganization of its distributors. This reorganization expanded certain
distributors' sales territories and dropped other distributors from the
Company's network, resulting in a decrease in sales as not all business to
customers of the dropped distributors has been retained by the Company.
Sales have also decreased in the first nine months of Fiscal 1995 because
of a decline in hospital census due to uncertainties surrounding health
care reform.
The gross margin has increased from 18.5% in the third quarter of Fiscal
1994 to 23.9% in the third quarter of Fiscal 1995, and from 15.5% for the
first nine months of Fiscal 1994 to 23.4% for the same period in Fiscal
1995. During Fiscal 1994, the gross margin in the first nine months was
negatively impacted by the closing and relocation of the Company's
manufacturing and warehousing facilities in Nogales, Mexico; Nogales,
Arizona and Parker, Colorado to its prinicpal location in Englewood,
Colorado. The efficiencies of one manufacturing operation plus reductions
in personnel and a continued emphasis to improve operations and reduce
costs have favorably impacted the gross margin in the first nine months of
Fiscal 1995.
During the first quarter of Fiscal 1994, the Company reduced its sales and
marketing management to preserve cash. During the fourth quarter of Fiscal
1994 and the first quarter of Fiscal 1995, the Company has strategically
hired additional sales and marketing personnel to support the Company's
distributor network and refocus its marketing efforts.
General and administrative expenses have decreased in the third quarter of
Fiscal 1995 and for the nine months ended December 31, 1994 versus the same
periods in Fiscal 1994 because of reductions in the workforce implemented
in the second quarter of Fiscal 1995.
Interest expense decreased approximately $38,000 in the third quarter of
Fiscal 1995 over the same period of Fiscal 1994 due to Scherer Healthcare,
Inc.'s ("Scherer") conversion of debt to equity of the Company at the end
of May 1994 (first quarter of Fiscal 1995). The overall increase in
interest expense during the first nine months of Fiscal 1995 versus the
same period for Fiscal 1994 was primarily due to $4,352,000 of debt issued
to Scherer to purchase Scherer preferred stock used in the Swiss Bond
exchange during Fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of Fiscal 1995, the Company's operations were
funded by cash on hand at the beginning of the year. Sales were not
adequate to cover the level of the Company's operating expenses. In
response to this cash flow deficit, the Company reduced personnel in the
second quarter and has been concentrating on strictly controlling operating
expenses. In addition, the Company continues to phase-in implementation of
its in-house molding operation to lower costs of producing molded plastic
components.
The Company has no commitments for capital expenditures, and purchases of
equipment will be made as cash flow allows or as the Company is able to
obtain financing.
12
<PAGE>
PART II
OTHER INFORMATION
Item l. Legal Proceedings.
In an action filed in July 1993 in the Supreme Court of the State of New
York, a former advisor to the Company, The Argosy Group, L.P., brought suit
against the Company and Scherer Healthcare, Inc. seeking compensatory and
punitive damages in excess of $2.35 million. The plaintiff alleged that the
Company had refused to pay for financial services rendered, breached
agreements with the plaintiff, wrongfully interfered with their agreements
and business relationships and otherwise caused them harm. In January, 1995,
the Company settled with The Argosy Group, L.P. for $300,375, to be paid by
the Company in monthly payments through November, 1996.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Exhibit Page
------- ------- ----
3(b) By-Laws, as amended (Part II) 15
27 Financial Data Schedule (Part I) 29
(b) There have been no reports on Form 8-K filed during the quarter for
which this report on Form 10-Q is being filed.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 13, 1995 MARQUEST MEDICAL PRODUCTS, INC.
/s/ James E. Brands
________________________________
James E. Brands
Chief Executive Officer
/s/ Margaret Von der Schmidt
________________________________
Margaret Von der Schmidt
Vice President - Finance
14
<PAGE>
AMENDED AND RESTATED
BYLAWS
OF
MARQUEST MEDICAL PRODUCTS, INC.
(Adopted by the Board of Directors effective November 17, 1994)
ARTICLE I
SHAREHOLDERS
SECTION 1.1. ANNUAL MEETINGS. The annual meeting of the shareholders of
the corporation shall be held each year for the purposes of electing directors
and of transacting such other business as properly may be brought before the
meeting.
SECTION 1.2. SPECIAL MEETINGS. The corporation shall hold a special
meeting of shareholders on call of the Board of Directors, the Chairman, the
Chief Executive Officer or, upon delivery to the corporation's Secretary of a
signed and dated written request setting out the purpose or purposes for the
meeting, on call of the holders of twenty-five percent (25%) of the votes
entitled to be cast on any issue proposed to be considered at the proposed
special meeting. Only business within the purpose or purposes described in the
notice of special meeting required by Section 1.4 below may be conducted at a
special meeting of the shareholders.
SECTION 1.3. DATE, TIME AND PLACE OF MEETINGS. Annual meetings of the
shareholders shall be held at such time and place, within or without the State
of Colorado, as may be fixed by the Board of Directors. Special meetings of
shareholders shall be held on such date and at such time and place, within or
without the State of Colorado, as may be fixed from time to time by the Board of
Directors. The date, time and place of all meetings shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof. If no
designation is made, the place of the meeting shall be the principal business
office of the corporation.
SECTION 1.4. NOTICE OF MEETINGS. The Secretary or an Assistant Secretary
shall deliver, either personally or by first-class mail, a written notice of the
place, date, and time of all meetings of the shareholders not less than ten (10)
nor more than sixty (60) days before the meeting date to each shareholder of
record entitled to vote at such meeting, except that if the number of authorized
shares is to be increased by action taken at the meeting, at least thirty (30)
days' notice shall be given. Written notice is effective when mailed, if mailed
with first-class postage prepaid and correctly addressed to the shareholder's
address shown in the corporation's current record of shareholders. In the case
of a special meeting, the purpose
<PAGE>
or purposes for which the meeting is called shall be included in the notice of
the special meeting. If an annual or special shareholders' meeting is adjourned
to a different date, time, or place, notice of the new date, time, or place need
not be given if the new date, time, or place is announced at the meeting before
adjournment. However, if a new record date for the adjourned meeting is or must
be fixed under Section 1.5 herein, notice of the adjourned meeting must be given
to persons who are shareholders as of the new record date.
SECTION 1.5. RECORD DATE. The Board of Directors, in order to determine
the shareholders entitled to notice of or to vote at any meeting of the
shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or to receive payment of any dividend or
other distribution or allotment of any rights, or to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, shall fix in advance a record date, which record date
shall not precede the date upon which the resolution fixing the record is
adopted by the Board of Directors, that shall not be more than seventy (70) days
before the meeting or action requiring a determination of shareholders. Only
such shareholders as shall be shareholders of record on the date fixed shall be
entitled to such notice of or to vote at such meeting or any adjournment
thereof, or to receive payment of any such dividend or other distribution or
allotment of any rights, or to exercise any such rights in respect of stock, or
to take any such other lawful action, as the case may be, notwithstanding any
transfer of any stock on the books of the corporation after any such record date
fixed as aforesaid. The record date shall apply to any adjournment of the
meeting except that the Board of Directors shall fix a new record date for the
adjourned meeting if the meeting is adjourned to a date more than one hundred
twenty (120) days after the date fixed for the original meeting.
Notwithstanding the foregoing, the record date for determining shareholders
entitled to demand a special meeting pursuant to Section 1.2 above, is the date
of the earliest of any of the demands pursuant to which the meeting is called,
or the date that is sixty (60) days before the date the first of such demands is
received by the corporation, whichever is later.
SECTION 1.6. SHAREHOLDERS' LIST FOR MEETING. After fixing a record date
for a meeting, the corporation shall prepare or cause to be prepared an
alphabetical list arranged by voting groups and, within each voting group, by
class or series of shares, of the names of all shareholders who are entitled to
notice of the shareholders' meeting showing the address of each and the number
of shares registered in the name of each shareholder. The corporation shall
make the shareholders' list available for inspection by any shareholder for a
period beginning the earlier of ten (10) days prior to the meeting or two (2)
business days after notice of the meeting is given and continuing through the
meeting and any adjournment thereof, at the corporation's principal office or at
a place within the city
-2-
<PAGE>
where the the meeting is being held, which place shall be specified in the
notice of a meeting, or, if not so specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
shareholder or his agent or attorney at any time during the meeting or any
adjournment.
SECTION 1.7. QUORUM. Subject to any express provision of law, the articles
of incorporation or any other bylaw, a majority of the votes entitled to be cast
by all shares voting together as a group shall constitute a quorum for the
transaction of business at all meetings of the shareholders. Whenever a class
of shares or series of shares is entitled to vote as a separate voting group on
a matter, a majority of the votes entitled to be cast by each voting group so
entitled shall constitute a quorum for purposes of action on any matter
requiring such separate voting. Once a share is represented, either in person or
by proxy, for any purpose at a meeting other than solely to object to holding a
meeting or transacting business at the meeting, it is deemed present for quorum
purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is set for the adjourned meeting.
SECTION 1.8. ADJOURNMENT OF MEETINGS. At an adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. If after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each shareholder of record entitled to
vote at the adjourned meeting.
SECTION 1.9. VOTE REQUIRED. When 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 a greater number of
affirmative votes is required by the articles of incorporation or an express
provision of law. Unless otherwise provided in the articles of incorporation,
in the election of directors the number of candidates equaling the number of
directors to be elected, having the highest number of votes cast in favor of
their election, are elected to the Board of Directors. Shareholders do not have
the right to cumulate their votes unless the articles of incorporation so
provide.
SECTION 1.10. VOTING ENTITLEMENT OF SHARES. Unless otherwise provided in
the articles of incorporation, each shareholder, at every meeting of the
shareholders, shall be entitled to cast one vote, either in person or by written
proxy, for each share outstanding in his or her name on the books of the
corporation as of the record date. Each fractional share is entitled to a
corresponding fractional vote. A shareholder may vote his shares in person or
by proxy. An appointment of proxy
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is effective when received by the Secretary of the corporation or other officer
or agent authorized to tabulate votes and is valid for eleven (11) months unless
a longer period is expressly provided in the appointment of proxy form. An
appointment of proxy is revocable by the shareholder unless the appointment form
conspicuously states that it is irrevocable and the appointment is coupled with
an interest.
SECTION 1.11. NOTICE OF ACTION; NOMINATION OF DIRECTOR CANDIDATES . At any
meeting of the shareholders, only such business shall be conducted as shall have
been brought before the meeting (i) by or at the direction of the Board of
Directors or (ii) by any shareholder of the corporation who complies with the
notice procedures set forth in this Section 1.11; provided, in each case, that
such business proposed to be conducted is, under the law, an appropriate subject
for shareholder action. For such business to be properly brought before a
meeting by a shareholder, the shareholder must have given timely notice thereof
in writing to the Secretary of the corporation. To be timely, in the case of an
annual meeting of shareholders, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the corporation, in
accordance with Securities and Exchange Commission Rule 14a8(a)(3)(i), not less
than 120 calendar days prior to the date of the corporation's proxy statement
released to the shareholders in connection with the previous year's annual
meeting of shareholders, except if no annual meeting of shareholders was held in
the previous year or if the date of the annual meeting of shareholders has been
changed by more than 30 calendar days from the date contemplated at the time of
the previous year's proxy statement, the notice shall be received at the
principal offices of the corporation not less than 150 calendar days prior to
the date of the annual meeting. In the case of special meetings of shareholders,
a shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation in accordance with Securities and
Exchange Commission Rule 14a-8(a)(3)(i), not less than 120 calendar days prior
to the date of the special meeting. A shareholder's notice to the Secretary
shall set forth as to each matter such shareholder proposes to bring before the
meeting (i) a brief description of the business desired to be brought before the
meeting and the reasons for conducting the business at the meeting; (ii) the
name and address, as they appear on the corporation's books, of the shareholder
proposing such business; (iii) the class and number of shares that are
beneficially owned by such shareholder; (iv) the dates upon which the
shareholder acquired such shares; (v) documentary support for any claim of
beneficial ownership; (vi) any material interest of such shareholder in such
business; and (vii) a statement in support of the,matter and any other
information required by said Rule 14a-8. Notwithstanding, the foregoing,
nomination of candidates for election to the Board of Directors may only be made
by or at the direction of the Board of Directors and the name and address of
each candidate shall be submitted to the Secretary of the Corporation not less
than 120
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calendar days prior to the date of the annual or special meeting at which
directors are to be elected. The chairman of the shareholders meeting may, if
the facts warrant, determine and declare to the meeting that such business or
nomination was not properly brought before the meeting in accordance with the
provisions of this Section 1.11, and, if he should so determine, he shall so
declare to the meeting, and any such business so determined to be not properly
brought before the meeting shall not be transacted, or in the case of persons so
nominated, not be eligible for election.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1. GENERAL POWERS. Subject to the articles of incorporation, all
corporate powers shall be exercised by or under the authority of, and the
business and affairs of the corporation managed under the direction of, the
Board of Directors.
SECTION 2.2. NUMBER AND TENURE. The Board of Directors shall consist of at
least one (1) member and not more than seven (7) members, the exact number of
directors to be fixed from time to time by resolution of the shareholders or
Board of Directors of the corporation. No decrease in the number of directors,
through amendment of the articles of incorporation or of the bylaws or
otherwise, shall have the effect of shortening the term of any incumbent
director. Directors shall be elected at the annual meeting of shareholders and
their terms shall expire at the next annual shareholders' meeting; provided,
however, that despite the expiration of a director's term he or she shall
continue to serve until a successor is elected and qualified or until there is a
decrease in the number of directors.
SECTION 2.3. QUALIFICATIONS OF DIRECTORS. Directors shall be natural
persons who have attained the age of 18 years but need not be residents of the
State of Colorado or shareholders of the corporation.
SECTION 2.4. VACANCY ON THE BOARD. Unless the articles of incorporation
provide otherwise, if a vacancy occurs on the Board of Directors, including a
vacancy resulting from an increase in the number of directors, the vacancy may
be filled by the shareholders, Board of Directors, or, if the directors
remaining in office constitute fewer than a quorum of the board, by the
affirmative vote of a majority of all directors remaining in office. If the
vacant office was held by a director elected by a voting group of shareholders,
only the holders of shares of that voting group or the remaining directors
elected by that voting group are entitled to vote to fill the vacancy.
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SECTION 2.5. COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the whole board, designate from among its members one or more
committees, the duties of which shall be defined by resolution of the Board of
Directors. Each committee shall consist of one or more directors. Any such
committee, to the extent specified by the Board of Directors, articles of
incorporation or bylaws, shall have and may exercise all of the authority of the
Board of Directors in the management of the business affairs of the corporation,
but no such committee shall have the power or authority to authorize
distributions; approve or propose to shareholders action that is required to be
approved by shareholders; fill vacancies on the Board of Directors or on any of
its committees; amend the corporation's articles of incorporation; adopt, amend
or repeal the corporation's bylaws; approve a plan of merger; authorize or
approve the reacquisition of shares, except according to a formula or method
prescribed by the Board of Directors; or authorize or approve the issuance or
sale of shares, or a contract for the sale of shares, or determine the
designation and relative rights, preferences and limitations of a class or
series of shares unless authorized to do so within limits specifically
prescribed by the Board of Directors.
SECTION 2.6. MEETINGS. The Board of Directors shall meet annually, without
notice, immediately following and at the same place as the annual meeting of
shareholders. Regular meetings of the Board of Directors or any committee may
be held between annual meetings without notice at such time and at such place,
within or without the State of Colorado, as from time to time shall be
determined by the board or committee, as the case may be. The Chairman of the
board, if any, the President or a majority of the directors in office may call a
special meeting of the directors at any time by giving each director two (2)
days notice. Such notice may be given orally or in writing. If given in
writing, it is effective when received or five days after its deposit in the
mail if mailed with first-class postage pre-paid and correctly addressed.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting need be specified in the notice or any waiver of notice.
SECTION 2.7. QUORUM AND VOTING. At all meetings of the Board of Directors
or any committee thereof, a majority of the number of directors prescribed, or
if no number is prescribed, the number in office immediately before the meeting
begins, shall constitute a quorum for the transaction of business. The
affirmative vote of a majority of the directors present at any meeting at which
there is a quorum at the time of such act shall be the act of the board or of
the committee, except as might be otherwise specifically provided by law or by
the articles of incorporation or bylaws.
SECTION 2.8. ACTION WITHOUT MEETING. Unless the articles of incorporation
or bylaws provide otherwise, any action required or permitted to be taken at any
meeting of the Board of Directors
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or any committee thereof may be taken without a meeting if the action is taken
by all members of the board or committee, as the case may be. The action must
be evidenced by one or more written consents describing the action taken, signed
by each director, and filed with the minutes of the proceedings of the board or
committee or filed with the corporate records.
SECTION 2.9. REMOTE PARTICIPATION IN A MEETING. Unless otherwise
restricted by the articles of incorporation or the bylaws, any meeting of the
Board of Directors may be conducted by the use of any means of communication by
which all directors participating may simultaneously hear each other during the
meeting. A director participating in a meeting by this means is deemed to be
present in person at the meeting.
SECTION 2.10. COMPENSATION OF DIRECTORS. The Board of Directors may fix
the compensation of the directors for their services as directors. No provision
of these bylaws shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
SECTION 2.11. RESIGNATION OF DIRECTORS. Any director may resign at any
time upon written notice to the corporation.
SECTION 2.12. REMOVAL OF DIRECTORS BY SHAREHOLDERS. Subject to the
requirements of the Colorado Business Corporation Act Section 7-108-108 for the
removal of directors elected by cumulative voting or voting group, any one or
more directors may be removed from office, with or without cause, at any meeting
of shareholders with respect to which notice of such purpose has been given. A
removed director's successor may be elected at the same meeting or time to serve
the unexpired term.
ARTICLE III
NOTICES
SECTION 3.1. NOTICE. Whenever, under the provisions of the articles of
incorporation or of these bylaws or by law, notice is required to be given to
any director or shareholder, it shall not be construed to require personal
notice, but such notice may be given in writing, by mail, or by telegram, telex
or facsimile transmission and such notice shall be deemed to be effective when
received, or when delivered, properly addressed, to the addressee's last known
principal place of business or residence, or five days after the same shall be
deposited in the United States mail if mailed with first-class postage prepaid
and correctly addressed or on the date shown on the return receipt, if sent by
registered or certified mail, and the receipt is signed by or on behalf of the
addressee. Notice to any director or shareholder may also be oral if oral
notice is reasonable under the circumstances. If these forms of personal notice
are impractical, notice may be communicated by a newspaper of general
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circulation in the area where published, or by radio, television, or other form
of public broadcast communication.
SECTION 3.2. WAIVER OF NOTICE. Whenever any notice is required to be given
under provisions of the articles of incorporation or of these bylaws or by law,
a waiver thereof, signed by the person entitled to notice and delivered to the
corporation for inclusion in the minutes or filing with the corporate records,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting and of all objections to the place or time of the meeting or the
manner in which it has been called or convened, except when the person attends a
meeting for the express purpose of stating, at the beginning of the meeting, any
such objection and, in the case of a director, 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 shareholders, directors
or a committee of directors need be specified in any written waiver of notice
unless so required by the articles of incorporation or the bylaws.
ARTICLE IV
OFFICERS
SECTION 4.1. APPOINTMENT. The Board of Directors at each annual meeting of
directors shall elect such officers as it shall deem necessary who shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors. Any number of offices may be held by the same
person unless the articles of incorporation or these bylaws otherwise provide.
SECTION 4.2. RESIGNATION AND REMOVAL OF OFFICERS. An officer may resign at
any time by delivering notice to the corporation and such resignation is
effective when the notice is delivered unless the notice specifies a later
effective date. The Board of Directors, may remove any officer at any time with
or without cause.
SECTION 4.3. VACANCIES. Any vacancy in office resulting from any cause may
be filled by the Board of Directors.
SECTION 4.4. POWERS AND DUTIES. Each officer has the authority and shall
perform the duties set forth below or, to the extent consistent with these
bylaws, the duties prescribed by the Board of Directors or by direction of an
officer authorized by the Board of Directors to prescribe the duties of other
officers.
(a) CHAIRMAN. The Chairman shall be chosen from among the directors. The
Chairman shall preside at all meetings of the shareholders, the Board of
Directors and the executive
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committee. Except where by law the signature of the President is required,
the Chairman shall have the same powers as the President to sign all authorized
certificates, contracts, bonds, deeds, mortgages and other instruments. The
Chairman shall have the usual powers and duties incident to the position of
chairman of the board of directors of a corporation and such other powers and
duties as from time to time may be assigned by the board of directors.
(b) VICE CHAIRMAN. The Vice Chairman shall exercise such powers as shall
from time to time be designated by the Chairman and, in the absence or
disability of the Chairman, the Vice Chairman shall perform the duties and
exercise the powers of Chairman.
(c) CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be
designated by the Board of Directors and shall be chosen from among the
Chairman, Vice Chairman and President. The Chief Executive Officer shall
exercise such powers as are customary for the Chief Executive Officer and
as shall be designated from time to time by the Board of Directors.
(d) CHIEF OPERATING OFFICER. The Chief Operating Officer shall be
designated by the Board of Directors and shall be chosen from among the
Chairman, Vice Chairman and President. The Chief Operating Officer shall
exercise such powers as are customary for the Chief Operating Officer and
as shall be designated from time to time by the Board of Directors.
(e) PRESIDENT. The President shall be responsible for the administration
of the operations of the corporation. He or she also shall have such powers
and perform such duties as are specifically imposed by law and as may be
assigned by the Chairman or the Board of Directors.
(f) VICE PRESIDENTS. The Vice Presidents, if any, shall perform such
duties as vice presidents customarily perform and shall perform such other
duties and shall exercise such other powers as the President or the Board
of Directors may from time to time designate. The Vice President, in the
absence or disability or at the direction of the President, shall perform
the duties and exercise the powers of the President. If the corporation
has more than one Vice President, the one designated by the Board of
Directors shall act in lieu of the President, or, in the absence of any
such designation, then the Vice President first elected shall act in lieu
of the President.
(g) SECRETARY. The Secretary shall attend all meetings of the
shareholders and all meetings of the Board of Directors and shall record
all votes and minutes of all proceedings in books to be kept for that
purpose, and shall perform like duties for the standing committees when
required. He or she
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<PAGE>
shall have custody of the corporate seal of the corporation, shall have the
authority to affix the same to any instrument the execution of which on
behalf of the corporation under its seal is duly authorized and shall
attest to the same by his signature whenever required. The Board of
Directors may give general authority to any other officer to affix the seal
of the corporation and to attest to the same by his signature. The
Secretary shall give, or cause to be given, any notice required to be given
of any meetings of the shareholders, the Board of Directors and of the
standing committees when required. The Secretary shall cause to be kept
such books and records as the Board of Directors, the Chairman the
President may require and shall cause to be prepared, recorded,
transferred, issued, sealed and cancelled certificates of stock as required
by the transactions of the corporation and its shareholders. The Secretary
shall attend to such correspondence and shall perform such other duties as
may be incident to the office of a Secretary of a corporation or as may be
assigned to him or her by the Board of Directors, the Chairman or the
President.
(h) TREASURER. Unless otherwise provided by the Board of Directors, any
officer designated as Treasurer shall be charged with the management of
financial affairs of the corporation. He or she shall perform such duties
as treasurers usually perform and shall perform such other duties and shall
exercise such other powers as the Board of Directors, the Chairman or the
President may from time to time designate and shall render to the Chairman,
the President and to the Board of Directors, whenever requested, an account
of the financial condition of the corporation.
(i) ASSISTANT VICE PRESIDENT, ASSISTANT SECRETARY AND ASSISTANT
TREASURER. Any one or more persons designated as Assistant Vice President,
Assistant Secretary and Assistant Treasurer, in the absence or disability
of any Vice President, the Secretary or the Treasurer, respectively, shall
perform the duties and exercise the powers of those offices, and, in
general, they shall perform such other duties as shall be assigned to them
by the Board of Directors. Specifically the Assistant Secretary may affix
the corporate seal to all necessary documents and attest the signature of
any officer of the corporation.
SECTION 4.5. DELEGATION OF AUTHORITY. In case of the absence of any officer
of the corporation or for any other reason that the Board of Directors may deem
sufficient, the Board of Directors may delegate, for the time being, any or all
of the powers or duties of such officer to any other officer, assistant officer
or to any director.
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<PAGE>
ARTICLE V
CAPITAL STOCK
SECTION 5.1. SHARE CERTIFICATES. Unless the articles of incorporation or
these bylaws provide otherwise, the Board of Directors may authorize the
issuance of some or all of the shares of any or all of its classes or series
with or without certificates. Unless the Colorado Business Corporation Act
provides otherwise, there shall be no differences in the rights and obligations
of shareholders based on whether or not their shares are represented by
certificates.
In the event that the Board of Directors authorizes shares with
certificates, each certificate representing shares of stock of the corporation
shall be in such form as shall be approved by the Board of Directors and shall
set forth upon the face thereof the name of the corporation and that it is
organized under the laws of the State of Colorado, the name of the person to
whom the certificate is issued, and the number and class of shares and the
designation of the series, if any, the certificate represents. The Board of
Directors may designate any one or more officers to sign each share certificate,
either manually or by facsimile. In the absence of such designation, each share
certificate must be signed by the President or a Vice President and the
Secretary or an Assistant Secretary. If the person who signed a share
certificate, either manually or in facsimile, no longer holds office when the
certificate is issued, the certificate is nevertheless valid. If the
corporation is authorized to issue different classes of shares or different
series within a class, the certificate shall contain a summary, on the front and
back, of the designations, preferences, limitations and rights determined for
each series and the authority of the Board of Directors to determine variations
for future classes or series. Alternatively, each certificate may state
conspicuously on its front or back that the corporation may furnish to the
shareholder this information on request in writing and without charge.
SECTION 5.2. RECORD OF SHAREHOLDERS. The corporation or an agent
designated by the Board of Directors shall maintain a record of the
corporation's shareholders in a form that permits preparation of a list of names
and addresses of all shareholders, in alphabetical order by class or shares
showing the number and class of shares held by each shareholder.
SECTION 5.3. LOST CERTIFICATES. In the event that a share certificate is
lost, stolen or destroyed, the Board of Directors may direct that a new
certificate be issued in place of such certificate. When authorizing the issue
of a new certificate, the Board of Directors may require the owner of the lost,
stolen or destroyed certificate to give the corporation a bond in such sum as
the board may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
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<PAGE>
ARTICLE VI
INDEMNIFICATION AND INSURANCE
SECTION 6.01 RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact he or she, or a person of whom he or she is a legal
representative, is or was a director, or while a director, serves or served at
the corporation's request as a director, officer, partner, trustee, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, shall be indemnified and held
harmless by the corporation to the fullest extent authorized by the Colorado
Business Corporation Act, as the same exists or may hereafter be amended (but in
the case of any such amendment, only to the extent that such amendment permits
the corporation to provide broader indemnification rights than the Colorado
Business Corporation Act permitted the corporation to provide prior to such
amendment), against all expenses, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties, and amounts paid or to be
paid in settlement) actually and reasonably incurred or suffered by such
director in connection with any such proceeding. Such indemnification shall
continue as to a director who has ceased to be a director and shall inure to the
benefit of the director's heirs, executors and administrators. Except with
respect to proceedings to enforce rights to indemnification by a director, the
corporation shall indemnify any such director in connection with a proceeding
(or part thereof) initiated by such director only if such proceeding (or part
thereof) was authorized by the Board of Directors of the corporation. The right
to indemnification conferred in this Article shall be a contract right.
SECTION 6.02 ADVANCE OF EXPENSES. The corporation shall pay for or
reimburse the actual and reasonable expenses incurred by a director who is a
party to a proceeding in advance of final disposition of the proceeding if the
director furnishes the corporation: (i) a written affirmation of the director's
good faith belief that the director's conduct met the standard of conduct
described in Colorado Business Corporation Act Section 7-108-401 or successor
provisions; and (ii) a written undertaking, executed personally or on the
director's behalf, to repay any advances if it is ultimately determined that the
director is not entitled to indemnification for such expenses under this Article
or otherwise. The undertaking must be an unlimited general obligation of the
director but need not be secured and may be accepted without reference to the
director's financial ability to make repayment.
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SECTION 6.03. INDEMNIFICATION OF OFFICERS. EMPLOYEES AND AGENTS. The
corporation may indemnify and advance expenses to officers to the same extent as
directors, and may indemnify employees or agents who are not directors or
officers to the extent permitted by the articles of incorporation, the bylaws,
or by law.
SECTION 6.04. INSURANCE. The corporation may purchase and maintain
insurance, at its expense, on behalf of an individual 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 another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan, or other
enterprise, against liability asserted against or incurred by him or her in any
such capacity or arising from his status as a director, officer, employee,
fiduciary or agent, whether or not the corporation would have power to
indemnify him or her against the same liability under this Article.
ARTICLE VII
AMENDMENT OF BYLAWS
SECTION 7.1. AMENDMENT OF BYLAWS. These bylaws may be amended or repealed
and new bylaws may be adopted by the Board of Directors at any regular or
special meeting of the Board of Directors unless the articles of incorporation
or the Colorado Business Corporation Act reserve this power exclusively to the
shareholders in whole or in part, or the shareholders, in amending or repealing
the particular bylaw, provide expressly that the Board of Directors may not
amend or repeal that bylaw.
ARTICLE VIII
EMERGENCY BYLAWS
SECTION 8.1. EMERGENCY BYLAWS. This Article shall be operative during any
emergency resulting from some catastrophic event that prevents a quorum of the
Board of Directors or any committee thereof from being readily assembled (an
"emergency"), notwithstanding any different or conflicting provisions set forth
elsewhere in these bylaws or in the articles of incorporation. To the extent
not inconsistent with the provisions of this Article, the bylaws set forth
elsewhere herein and the provisions of the articles of incorporation shall
remain in effect during such emergency, and upon termination of such emergency,
the provisions of this Article shall cease to be operative.
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<PAGE>
SECTION 8.2. MEETINGS. During any emergency, a meeting of the Board of
Directors or any committee thereof may be called by any director, or by the
President, any Vice President, the Secretary or the Treasurer (the "Designated
Officers") of the corporation. Notice of the time and place of the meeting
shall be given by any available means of communication by the person calling the
meeting to such of the directors and/or designated officers as may be feasible
to reach. Such notice shall be given at such time in advance of the meeting as,
in the judgement of the person calling the meeting, circumstances permit.
SECTION 8.3 QUORUM. At any meeting of the Board of Directors or any
committee thereof called in accordance with this Article, the presence or
participation of two directors, one director and a designated officer, or two
designated officers shall constitute a quorum for the transaction of business.
SECTION 8.4 BYLAWS. At any meeting called in accordance with this
Article, the Board of Directors or committee thereof, as the case may be, may
modify, amend or add to the provisions of this Article so as to make any
provision that may be practical or necessary for the circumstance of the
emergency.
SECTION 8.5. LIABILITY. No officer, director or employee acting in
accordance with any emergency bylaws shall be liable except for willful
misconduct.
SECTION 8.6. REPEAL OR CHANGE. The provisions of this Article shall be
subject to repeal or change by further action of the Board of Directors or by
action of shareholders, but no such repeal or change shall modify the provisions
of the immediately proceeding Section of this Article with regard to action
taken prior to the time of such repeal or change.
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED DECEMBER 31, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> DEC-31-1994
<CASH> 769,000
<SECURITIES> 0
<RECEIVABLES> 2,663,000
<ALLOWANCES> 168,000
<INVENTORY> 2,658,000
<CURRENT-ASSETS> 6,405,000
<PP&E> 17,136,000
<DEPRECIATION> 9,411,000
<TOTAL-ASSETS> 14,173,000
<CURRENT-LIABILITIES> 5,963,000
<BONDS> 6,022,000
<COMMON> 6,177,000
0
0
<OTHER-SE> (4,165,000)
<TOTAL-LIABILITY-AND-EQUITY> 14,173,000
<SALES> 14,730,000
<TOTAL-REVENUES> 14,730,000
<CGS> 0
<TOTAL-COSTS> 11,280,000
<OTHER-EXPENSES> 5,667,000
<LOSS-PROVISION> 15,000
<INTEREST-EXPENSE> 476,000
<INCOME-PRETAX> (2,677,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,677,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,677,000)
<EPS-PRIMARY> (0.37)
<EPS-DILUTED> (0.37)
</TABLE>
