U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 1998
-----------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
------------- -------------
Commission File No. 2-97869-D
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TECON, INC.
-------------
(Name of Small Business Issuer in its Charter)
UTAH 87-0419571
---- ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
455 East 500 South #205
Salt Lake City, UT 84111
---------------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (801) 363-7411
14613 N.E. 87th
P.O. Box 2770
Redmond, Washington 98073
----------------------------
(Former Name or Former Address, if changed since last Report)
<PAGE>
Securities Registered under Section 12(b) of the Exchange Act: None.
Name of Each Exchange on Which Registered: None.
Securities Registered under Section 12(g) of the Exchange Act: None.
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State Issuer's revenues for its most recent fiscal year: March 31, 1998- $0
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days.
December 31, 1998 - $140.10. There are approximately 140,106 shares of
common voting stock of the Company held by non-affiliates. Because there has
been no "public market" for the Company's common stock during the past five
years, the Company has arbitrarily valued these shares at par value of $0.001
per share.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
None; Not applicable.
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of outstanding shares of each of the Issuer's classes of
common equity, as of the latest practicable date:
March 8, 1999
common - 1,199,962
preferred - 0
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
A description of "Documents Incorporated by Reference" is contained in
Item 13 of this Report.
Transitional Small Business Issuer Format Yes X No
--- ---
PART I
Item 1. Description of Business.
------------------------
Business Development.
- ---------------------
Organization and Charter Amendments.
-----------------------------------
Tecon, Inc. (the "Company") was incorporated under the laws of the State of
Utah under the name "B.U.D. Corp." on March 28, 1985, primarily for the purpose
of raising minimal capital to seek out, investigate and acquire interests in
assets of businesses deemed to have potential for success. It had an initial
authorized capital of $305,000 divided into 5,000,000 shares $.001 par value
preferred stock and 300,000,000 shares of $.001 par value common stock.
On December 20, 1986, the Company resolved to change its name to "Tecon,
Inc." from "B.U.D. Corp" and reverse split its outstanding common stock on a
basis of two to one (2 to 1); on January 23, 1989, the Company resolved to
reverse split its common stock on a basis of four to one(4 to 1); and on October
18, 1995, the Board of Directors resolved to reverse split its common stock on a
basis of 51.662 for 1, effective November 20, 1995. Appropriate adjustments in
the stated capital and capital surplus accounts of the Company were made on each
reverse while retaining the authorized capital and par value. See Part III, Item
13, for copies of the Amendments to the Articles of Incoporation affecting these
reverse splits and/or consent of Directors and related opinon of counsel. All
Computations herein take into account these reverse splits.
Public Offering.
---------------
The Company filed a Registration Statement on Form S-18 with the Securities
and Exchange Commission (the "Commission") on May 17, 1985, and pursuant to its
Prospectus dated August 9, 1985, the Company commenced the offer and sale to the
public of Units consisting of common stock and common stock purchase warrants
entitling the holder to purchase additional common stock. The offering was
closed on December 5, 1985, after receipt of $170,600 pursuant to the offering.
For more information on exercised warrants, see the caption "History of
Operations" below.
Material Changes of Control Since Inception and Related Business History.
------------------------------------------------------------------------
The Company acquired Tecon, Inc., a Washington corporation
("Tecon-Washington"), pursuant to an Agreement and Plan of Reorganization, which
was completed in September of 1986. The Company acquired 100% of the issued and
outstanding shares of all classes of stock of Tecon-Washington in exchange for
common and preferred stock.
On June 27, 1988, the Board of Directors adopted resolutions whereby the
outstanding shares of preferred stock issued to Tecon-Washington were acquired
by the Company in exchange for shares of Loki Systems, Inc., owned by the
Company. There are currently no preferred shares issued or outstanding.
Effective on March 31, 1992, Todd Ingram, Joe Vittuli and Wayne Smith
resigned as executive officers and directors of the Company in seriatim, and
confirmed the designation of Bradley C. Burningham, Sheryl Ross and Shelley Goff
as executive officers and directors of the Company.
Following the reverse split of the Company's outstanding common stock in
1985, the current Board of Directors, as a group, controlled 75% of the
outstanding voting securities of the Company. See the caption "Sale of
Unregistered and Restricted Securites" during the Past Three Years below.
Sales of "Unregistered" & "Restricted" Securities Over The Past Three Years.
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name and Address Date Number of Shares Consideration
- ---------------- ---- ---------------- -------------
<S> <C> <C> <C>
Duane S. Jenson(1)(2) 1/20/94 29,035 $1,500
5525 S. 900 E. #110 1/20/94 29,035 Services
Salt Lake City, UT at par value
Leonard W. Burningham, Esq.(1)(2) 1/20/94 96,783 Legal fees
455 E. 500 S. #205 at par value
Salt Lake City, UT
Bradley C. Burningham(1) 4/4/96 100,000 Services at par value
455 E. 500 S. #205 9/28/96 100,000 Services at par value
Salt Lake City, UT 1/14/98 100,000 Services at par value
Shelley Goff(1) 4/4/96 100,000 Services at par value
455 E. 500 S. #205 9/28/96 100,000 Services at par value
Salt Lake City, UT 1/14/98 100,000 Services at par value
Sheryl Ross(1) 4/4/96 100,000 Services at par value
455 E. 500 S. #205 9/28/96 100,000 Services at par value
Salt Lake City, UT 1/14/98 100,000 Services at par value
</TABLE>
(1) See Part II, Item 10 and Item 11, for information regarding executive
compensation and stock ownership.
(2) On January 20, 1994, the Company issued Leonard W. Burningham, Esq.,
96,783 shares for legal fees and 29,035 to Duane S. Jenson for $1,500 and an
additional 29,035 for services all based on par value.
History of Operations.
----------------------
From its acquisition of Tecon-Washington in 1985 and until the end of
fiscal 1989, the Company was primarily engaged in research and development of
computerized video imaging and multi-user, multi-task systems. See Item 13 of
the Company's Annual Report on Form 10-KSB for the year ended March 31, 1991,
and which is incorporated herein by this reference.
The only significant business conducted by the Company since its inception
has been through its wholly owned subsidiary, Tecon-Washington. The Company
ceased business operations March 31, 1992. All of the assets of Tecon-Washington
were acquired by Precision Digital Images, Corporation, (PDI) as a Transfer in
Partial Satisfaction of Security Interest. For more information on the
Disposition of Assets and related events, see Item 13 of the Company's Current
Report on Form 8-K, filed with the Commission on March 27, 1992, which is
incorporated herein by this reference.
Tecon-Washington was dissolved by the State of Washington on September 21,
1992, for failure to file an annual report.
Pursuant to the Company's Prospectus, dated August 9, 1985, the Company
sold certain common stock purchase warrants. All unexercised warrants expired on
May 9, 1989, a date to which the exercise period was extended by the Board of
Directors.
Business.
- ---------
Other than the above-referenced matters and seeking and investigating
potential assets, properties or businesses to acquire, the Company has had no
material business operations since 1992. To the extent that the Company intends
to continue to seek the acquisition of assets, property or business that may
benefit the Company and its stockholders, it is essentially a "blank check"
company. Because the Company has limited assets and conducts no material
business operations, management anticipates that any such acquisition would
require it to issue shares of its common or preferred stock as the sole
consideration for the acquisition. This may result in substantial dilution of
the shares of current stockholders. The Company's Board of Directors shall make
the final determination whether to complete any such acquisition; the approval
of stockholders will not be sought unless required by applicable laws, rules and
regulations, its Articles of Incorporation or Bylaws, or contract. The Company
makes no assurance that any future enterprise will be profitable or successful.
<PAGE>
The Company is not currently engaging in any substantive business activity
and has no plans to engage in any such activity in the foreseeable future. In
its present form, the Company may be deemed to be a vehicle to acquire or merge
with a business or company. The Company does not intend to restrict its search
to any particular business or industry, and the areas in which it will seek out
acquisitions, reorganizations or mergers may include, but will not be limited
to, the fields of high technology, manufacturing, natural resources, service,
research and development, communications, transportation, insurance, brokerage,
finance and all medically related fields, among others. The Company recognizes
that the number of suitable potential business ventures that may be available to
it may be extremely limited, and may be restricted to entities who desire to
avoid what these entities may deem to be the adverse factors related to an
initial public offering ("IPO"). The most prevalent of these factors include
substantial time requirements, legal and accounting costs, the inability to
obtain an underwriter who is willing to publicly offer and sell shares, the lack
of or the inability to obtain the required financial statements for such an
undertaking, limitations on the amount of dilution to public investors in
comparison to the stockholders of any such entities, along with other conditions
or requirements imposed by various federal and state securities laws, rules and
regulations. Any of these types of entities, regardless of their prospects,
would require the Company to issue a substantial number of shares of its common
stock to complete any such acquisition, reorganization or merger, usually
amounting to between 80 and 95 percent of the outstanding shares of the Company
following the completion of any such transaction; accordingly, investments in
any such private entity, if available, would be much more favorable than any
investment in the Company.
Although the Company has not entered into any agreements with any other
entity with respect to any potential merger or acquisition transaction,
management has reviewed the business plan for Titan Energy, Inc., a California
based company. However, management does not believe that any transaction with
Titan to be any more likely than with another company.
Further, the National Association of Securities Dealers, Inc. (the "NASD")
has adopted regulations requiring that all "non-reporting" companies whose
shares of common stock are quoted on the NASD's OTC Bulletin Board be dropped
from such quotations, and the quotation will not be accepted from
"non-reporting" Company. See the heading "Risk Factors," specifically "No Market
for Common Stock, No Market for Shares," herein.
In the event that the Company engages in any transaction resulting in a
change of control of the Company and/or the acquisition of a business, the
Company will be required to file with the Commission a Current Report on Form
8-K within 15 days of such transaction. A filing on Form 8-K also requires the
filing of audited financial statements of the business acquired, as well as pro
forma financial information consisting of a pro forma condensed balance sheet,
pro forma statements of income and accompanying explanatory notes.
Management intends to consider a number of factors prior to making any
decision as to whether to participate in any specific business endeavor, none of
which may be determinative or provide any assurance of success. These may
include, but will not be limited to an analysis of the quality of the entity's
management personnel; the anticipated acceptability of any new products or
marketing concepts; the merit of technological changes; its present financial
condition, projected growth potential and available technical, financial and
managerial resources; its working capital, history of operations and future
prospects; the nature of its present and expected competition; the quality and
experience of its management services and the depth of its management; its
potential for further research, development or exploration; risk factors
specifically related to its business operations; its potential for growth,
expansion and profit; the perceived public recognition or acceptance of its
products, services, trademarks and name identification; and numerous other
factors which are difficult, if not impossible, to properly or accurately
analyze, let alone describe or identify, without referring to specific objective
criteria.
<PAGE>
Regardless, the results of operations of any specific entity may not
necessarily be indicative of what may occur in the future, by reason of changing
market strategies, plant or product expansion, changes in product emphasis,
future management personnel and changes in innumerable other factors. Further,
in the case of a new business venture or one that is in a research and
development mode, the risks will be substantial, and there will be no objective
criteria to examine the effectiveness or the abilities of its management or its
business objectives. Also, a firm market for its products or services may yet
need to be established, and with no past track record, the profitability of any
such entity will be unproven and cannot be predicted with any certainty.
Management will attempt to meet personally with management and key
personnel of the entity sponsoring any business opportunity afforded to the
Company, visit and inspect material facilities, obtain independent analysis or
verification of information provided and gathered, check references of
management and key personnel and conduct other reasonably prudent measures
calculated to ensure a reasonably thorough review of any particular business
opportunity; however, due to time constraints of management, these activities
may be limited.
The Company is unable to predict the time as to when and if it may
actually participate in any specific business endeavor. The Company anticipates
that proposed business ventures will be made available to it through personal
contacts of directors, executive officers and principal stockholders,
professional advisors, broker dealers in securities, venture capital personnel,
members of the financial community and others who may present unsolicited
proposals. In certain cases, the Company may agree to pay a finder's fee or to
otherwise compensate the persons who submit a potential business endeavor in
which the Company eventually participates. Such persons may include the
Company's directors, executive officers, beneficial owners or their affiliates.
In this event, such fees may become a factor in negotiations regarding a
potential acquisition and, accordingly, may present a conflict of interest for
such individuals.
Although the Company has not identified any potential acquisition target,
the possibility exists that the Company may acquire or merge with a business or
company in which the Company's executive officers, directors, beneficial owners
or their affiliates may have an ownership interest. Current Company policy does
not prohibit such transactions. Because no such transaction is currently
contemplated, it is impossible to estimate the potential pecuniary benefits to
these persons.
Further, substantial fees are often paid in connection with the completion
of these types of acquisitions, reorganizations or mergers, ranging from a small
amount to as much as $250,000. These fees are usually divided among promoters or
founders, after deduction of legal, accounting and other related expenses, and
it is not unusual for a portion of these fees to be paid to members of
management or to principal stockholders as consideration for their agreement to
retire a portion of the shares of common stock owned by them. In the event that
such fees are paid, they may become a factor in negotiations regarding any
potential acquisition by the Company and, accordingly, may present a conflict of
interest for such individuals.
<PAGE>
Year 2000.
- ----------
Because the Company is not presently engaged in any substantial business
operations, management does not believe that computer problems associated with
the change of year to the year 2000 will have any material effect on its
operations. However, the possibility exists that the Company may merge with or
acquire a business that will be negatively affected by the "year 2000" problem.
The effect of such problem or the Company in the future can not be predicted
with any accuracy until such time as the Company identifies a merger or
acquisition target.
Principal Products and Services.
- ---------------------------------------
The limited business operations of the Company, as now contemplated,
involve those of a "blank check" company. The only activities to be conducted by
the Company are to manage its current limited assets and to seek out and
investigate the acquisition of any viable business opportunity by purchase and
exchange for securities of the Company or pursuant to a reorganization or merger
through which securities of the Company will be issued or exchanged.
Distribution Methods of the Products or Services.
- -----------------------------------------------------------
Management will seek out and investigate business opportunities through
every reasonably available fashion, including personal contacts, professionals,
securities broker dealers, venture capital personnel, members of the financial
community and others who may present unsolicited proposals; the Company may also
advertise its availability as a vehicle to bring a company to the public market
through a "reverse" reorganization or merger.
Status of any Publicly Announced New Product or Service.
- -----------------------------------------------------------------------
None; not applicable.
Competitive Business Conditions.
- -----------------------------------------
Management believes that there are literally thousands of "blank check"
companies engaged in endeavors similar to those engaged in by the Company; many
of these companies have substantial current assets and cash reserves.
Competitors also include thousands of other publicly-held companies whose
business operations have proven unsuccessful, and whose only viable business
opportunity is that of providing a publicly-held vehicle through which a private
entity may have access to the public capital markets. There is no reasonable way
to predict the competitive position of the Company or any other entity in the
strata of these endeavors; however, the Company, having limited assets and cash
reserves, will no doubt be at a competitive disadvantage in competing with
entities which have recently completed IPO's, have significant cash resources
and have recent operating histories when compared with the complete lack of any
substantive operations by the Company for the past several years.
Sources and Availability of Raw Materials and Names of Principal Suppliers.
- -----------
None; not applicable.
Dependence on One or a Few Major Customers.
- -------------------------------------------
None; not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions,
Royalty Agreements or Labor Contracts.
- ------------------------------
None; not applicable.
<PAGE>
Need for any Governmental Approval of Principal Products or Services.
- ---------
Because the Company currently produces no products or services, it is not
presently subject to any governmental regulation in this regard. However, in the
event that the Company engages in a merger or acquisition transaction with an
entity that engages in such activities, it will become subject to all
governmental approval requirements to which the merged or acquired entity is
subject.
Effect of Existing or Probable Governmental Regulations on Business.
- ---------
The integrated disclosure system for small business issuers adopted by the
Commission in Release No. 34-30968 and effective as of August 13, 1992,
substantially modified the information and financial requirements of a "Small
Business Issuer," defined to be an issuer that has revenues of less than $25
million; is a U.S. or Canadian issuer; is not an investment company; and if a
majority-owned subsidiary, the parent is also a small business issuer; provided,
however, an entity is not a small business issuer if it has a public float (the
aggregate market value of the issuer's outstanding securities held by
non-affiliates) of $25 million or more.
The Commission, state securities commissions and the North American
Securities Administrators Association, Inc. ("NASAA") have expressed an interest
in adopting policies that will streamline the registration process and make it
easier for a small business issuer to have access to the public capital markets.
The present laws, rules and regulations designed to promote availability to the
small business issuer of these capital markets and similar laws, rules and
regulations that may be adopted in the future will substantially limit the
demand for "blank check" companies like the Company, and may make the use of
these companies obsolete.
Research and Development.
- -------------------------
None; not applicable.
Cost and Effects of Compliance with Environmental Laws.
- -------------------------------------------------------
None; not applicable. However, environmental laws, rules and regulations
may have an adverse effect on any business venture viewed by the Company as an
attractive acquisition, reorganization or merger candidate, and these factors
may further limit the number of potential candidates available to the Company
for acquisition, reorganization or merger.
Number of Employees.
- --------------------
None.
<PAGE>
Item 2. Description of Property.
------------------------
Other than cash and certain prepaid assets, the Company has virtually no
assets, property or business; its principal executive office address and
telephone number are the business office address and telephone number of its
counsel, and are currently provided at no cost. Because the Company has had no
business, its activities will be limited to keeping itself in good standing in
the State of Utah, seeking out acquisitions, reorganizations or mergers and
preparing and filing the appropriate reports with the Commission. These
activities have consumed an insubstantial amount of management's time.
Item 3. Legal Proceedings.
------------------
The Company is not a party to any pending legal proceeding. To the
knowledge of management, no federal, state or local governmental agency is
presently contemplating any proceeding against the Company. No director,
executive officer or affiliate of the Company or owner of record or beneficially
of more than five percent of the Company's common stock is a party adverse to
the Company or has a material interest adverse to the Company in any proceeding.
For material documentation respecting the disposition of assets , see Item
13 and the Current Report on Form 8-K, dated April 27, 1992, which is
incorporated herein by this reference. Furthermore, effective January 10, 1997
for consideration of $10, Mr. Wayne Smith entered into a Covenant Not to Sue and
Compromise and Settlement of debt of the Company, a copy of which is attached
hereto and incorporated herein by reference. See Item 13 of this Report. Mr.
Smith entered into this Agreement so the Company would be able to pursue future
business operations without being hindered by potential litigation. Mr. Smith
holds less than 5% of the Company's common stock.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
No matter was submitted to a vote of the Company's security holders during
the fourth quarter of the calendar year covered by this Report or during the
seven previous calendar years.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
---------------------------------------------------------
<PAGE>
Market Information
- ------------------
There is no "public market" for shares of common stock of the Company. The
Company plans to submit for quotation regarding its common stock on the OTC
Bulletin Board of the National Association of Securities Dealers ("NASD");
however, management does not expect any public market to develop unless and
until the Company completes an acquisition, reorganization or merger. In any
event, no assurance can be given that any market for the Company's common stock
will develop or be maintained.
Sale of "Restricted Shares"
- --------------------------
Of the 1,199,962 outstanding shares of the Company's common stock, 900,024
are deemed to be "Restricted" securities within the meaning of Rule 144 of the
Securities Act of 1933 (the "1933 Act"). If a market for the Company's common
stock ever develops, Bradley C. Burningham, Shelley Goff and Sheryl Ross, the
owners of these securities, may begin selling them as early as 90 days after any
acquisitin, reorganization or merger. Such sales may have a negative effect on
the Company's stock price.
Holders
- -------
The number of record holders of the Company's common stock as of the date
of this Report is approximately 263.
Dividends
- ---------
The Company has not declared any cash dividends with respect to its common
stock and does not intend to declare dividends in the foreseeable future. The
future dividend policy of the Company cannot be ascertained with any certainty,
and until the Company completes any acquisition, reorganization or merger, as to
which no assurance may be given, no such policy will be formulated. There are no
material restrictions limiting, or that are likely to limit, the Company's
ability to pay dividends on its common stock.
Item 6. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
Plan of Operation.
- ------------------
The Company has not engaged in any material operations or had any revenues
from operations during the last two calendar years. The Company's plan of
operation for the next 12 months is to continue to seek the acquisition of
assets, properties or businesses that may benefit the Company and its
stockholders. Management anticipates that to achieve any such acquisition, the
Company will issue shares of its common stock as the sole consideration for such
acquisition.
During the next 12 months, the Company's only foreseeable cash requirements
will relate to maintaining the Company in good standing or the payment of
expenses associated with reviewing or investigating any potential business
venture, which may be the Company expects to pay from its cash resources. As of
March 31, 1998, it had no cash or cash equivalents. If additional funds are
required during this period, such funds may be advanced by management or
stockholders as loans to the Company. Because the Company has not identified any
such venture as of the date of this Report, it is impossible to predict the
amount of any such loan. However, any such loan should not exceed $25,000 and
will be on terms no less favorable to the Company than would be available from a
commercial lender in an arm's length transaction. As of the date of this Report,
the Company is not engaged in any negotiations with any person regarding any
such venture.
<PAGE>
Results of Operations.
- ----------------------
Other than restoring and maintaining its good corporate standing in the
State of Utah, compromising and settling its debts and seeking the acquisition
of assets, properties or businesses that may benefit the Company and its
stockholders, the Company has had no material business operations or since 1992.
At March 31, 1998, the Company's had no assets. See the Index to Financial
Statements, Item 7 of this Report.
During the fiscal year ended March 31, 1998, the Company had a net loss of
($2,286), due to general and administrative expenses. This compares to a net
loss of ($276), also attributable to general and administrative expenses during
the fiscal year ended March 31, 1997. The Company has received no revenues in
either of its two most recent calendar years. See the Index to Financial
Statements, Item 7 of this Report.
Liquidity.
- ---------
During the fiscal years ended March 31, 1998, and 1997, a shareholder and
consultant paid general and administrative expenses on behalf of the Company
totaling $1,686 and $276, respectively. The unsecured loan bears no interest and
is due on demand.
The Company has no assets and total liabilities of $1,962 for the year
ended March 31, 1998.
Item 7. Financial Statements.
---------------------
Financial Statements for the years ended
March 31, 1998 and 1997
Independent Auditors' Report
Balance Sheets - March 31, 1998 and 1997
Statements of Operations for the years ended
March 31, 1998 and 1997
Statements of Stockholders' Equity for the
years ended March 31, 1998 and 1997
Statements of Cash Flows for the years ended
March 31, 1998 and 1997
Notes to the Financial Statements
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ---------------------
There have been no changes in the Company's principal independent
accountant in the past two calendar years or as of the date of this Report.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
- --------------------------------------------------
Not Applicable under 15(d). Further, the Company files under 15(d) of the
Exchange Act of 1934.
Identification of Directors and Executive Officers
- --------------------------------------------------
The following table sets forth the names of all current directors and
executive officers of the Company. These persons will serve until the next
annual meeting of the stockholders or until their successors are elected or
appointed and qualified, or their prior resignation or termination.
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ---------- --------------
<TABLE>
<S> <C> <C> <C>
Sheryl Ross President 3/92 *
Director
Bradley C. Burningham Vice President 3/92 *
Director
Shelley Goff Secretary/ 3/92 *
Treasurer
Director
</TABLE>
* These persons presently serve in the capacities indicated.
<PAGE>
Business Experience.
- -------------------
Sheryl Ross. President and Director. Ms. Ross is 49 years of age and is
employed as an office manager and assistant by Leonard W. Burningham, Esq. Ms.
Ross has worked for Leonard W. Burningham, Esq. for the past 30 years.
Bradley C. Burningham. Vice President and Director. Mr. Burningham is 25
years of age. Mr. Burningham received a BS Degree in Political Science from the
University of Utah in 1996, and has been employed by his father, Leonard W.
Burningham, Esq., since 1992.
Shelley Goff. Secretary, Treasurer and Director. Ms. Goff is 38 years of
age and currently employed as a legal assistant for Leonard W. Burningham, Esq.
Ms. Goff received a BS Degree in Finance from the University of Utah in 1992, an
AS Degree in Business Management in 1986 and an AAS Degree in Data Processing in
1985 from Salt lake Community College. Ms. Goff has 20 years experience in the
Securities Industry, with a Series 24 License, General Securities Principal;
Series 7 License, General Securities Representative; and a Series 63, Universal
State License. Ms. Goff is also self employed doing bookkeeping from her home
for the last twelve years.
Significant Employees.
- ----------------------
The Company has no employees who are not executive officers, but who are
expected to make a significant contribution to the Company's business.
Family Relationships.
- ---------------------
There are no family relationships between any directors or executive
officers of the Company, either by blood or by marriage. However, Leonard W.
Burningham, Esq., who may be deemed to be an "affiliate" of the Company, is the
father of Bradley C. Burningham, and the employer of Messrs. Ross and Goff.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
Except as stated above, during the past five years, no director, person
nominated to become a director, executive officer, promoter or control person of
the Company:
(1) was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the bankruptcy or
two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
<PAGE>
Compliance with Section 16(a) of the Exchange Act
- -------------------------------------------------
No reports required to be filed during the preceding two calendar years or
since the bankruptcy proceedings of the Company in 1989 which were required to
be filed by directors of executive officers of the Company have not been timely
filed.
Item 10. Executive Compensation.
-----------------------
The following table sets forth the aggregate compensation paid by the
Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Years or Other Restricted Option/ LTIP All
Principal Periods $ $ Annual Stock SAR's Payouts Other
Position Ended Salary Bonus Compenstion($) Awards ($) ($) ($) Comp-
ensation
Sheryl
Ross, 3/31/98 0 0 0 0 0 0 (3)
President 3/31/97 0 0 0 0 0 0 (2)
3/31/96 0 0 0 0 0 0 (1)
Bradley C.
Burningham, 3/31/98 0 0 0 0 0 0 (3)
V.P. 3/31/97 0 0 0 0 0 0 (2)
3/31/96 0 0 0 0 0 0 (1)
Shelley
Goff, 3/31/98 0 0 0 0 0 0 (3)
Secretary, 3/31/97 0 0 0 0 0 0 (2)
Treasurer 3/31/96 0 0 0 0 0 0 (1)
</TABLE>
(1) On March 4, 1996 the Board of Directors resolved to issue 300,000
"unregistered" and "restricted" shares of its $0.001 par value shares of common
voting stock to the directors and executive officers of the Company for services
rendered, 100,000 shares to each. See the caption "Business Development" of Item
1, Part I, and Item 11, Part III, of this Report.
<PAGE>
(2) On September 18, 1997 the Board of Directors resolved to issue 300,000
"unregistered" and "restricted" shares of its $0.001 par value share of common
voting stock to the directors and executive officers of the Company for services
rendered, 100,000 shares to each. See the caption "Business Development" of Item
1, Part I, and Item 11, Part III, of this Report.
(3) On January 14, 1998 the Board of Directors resolved to issue 300,000
"unregistered" and "restricted" shares of its $0.001 par value share of common
voting stock to the directors and executive officers of the Company for services
rendered, 100,000 shares to each. See the caption "Business Development" of Item
1, Part I, and Item 11, Part III, of this Report.
No cash compensation, deferred compensation or long-term incentive plan
awards were issued or granted to the Company's management during the calendar
years ending December 31, 1997, 1996, or 1995, or the period ending on the date
of this Report.
Compensation of Directors.
- --------------------------
There are no standard arrangements pursuant to which the Company's directors
are compensated for any services provided as director. No additional amounts are
payable to the Company's directors for committee participation or special
assignments.
There are no arrangements pursuant to which any of the Company's directors
was compensated during the Company's last completed calendar year for any
service provided as director.
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements.
- -------------------------------
There are no employment contracts, compensatory plans or arrangements,
including payments to be received from the Company, with respect to any director
or executive officer of the Company which would in any way result in payments to
any such person because of his or her resignation, retirement or other
termination of employment with the Company or any subsidiary, any change in
control of the Company, or a change in the person's responsibilities following a
change in control of the Company.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
- ------------------------------------------------
The following table sets forth the shareholdings of those persons who
beneficially own more than five percent of the Company's common stock as of the
date of this Report, with the computations being based upon 1,199,962 shares of
common stock being outstanding.
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned of Class (1)
- ---------------- -------------- --------
<S> <C> <C>
Bradley C. Burningham 300,024 25%
455 S. 500 S. #205
Salt Lake City, UT 84111
Leonard W. Burningham, Esq. 98,993 8.25%
455 S. 500 S. #205
Salt Lake City, UT 84111
Shelley Goff 300,000 25%
455 S. 500 S. #205
Salt Lake City, UT 84111
Sheryl Ross 300,024 25%
455 S. 500 S. #205
Salt Lake City, UT 84111
Duane S. Jenson 60,749* 5.1%
5525 S. 900 E. #110
Salt Lake City, UT 84117
------ ----
1,059,790 88.32%
</TABLE>
*Includes 29 shares controlled by Duane S. Jenson, in the name of Jenson
Services, Inc ("Jenson Services") Mr. Jenson can be deemed to be a beneficial
owner of shares owned by Jenson Services because he is one of the directors and
executive officers and its principal stockholder.
<PAGE>
Security Ownership of Management.
- --------------------------------
The following table sets forth the share holdings of the Company's
directors and executive officers as of the date of this Report:
<TABLE>
<CAPTION>
Number of Percentage of
Name and Address Shares Beneficially Owned of Class *
- ---------------- ------------------------- --------
<S> <C> <C>
Bradley C. Burningham 300,024 25%
455 S. 500 S. #205
Salt Lake City, UT 84111
Shelley Goff 300,000 25%
455 S. 500 S. #205
Salt Lake City, UT 84111
Sheryl Ross 300,024 25%
455 S. 500 S. #205
Salt Lake City, UT 84111
--------- ------
All directors and executive
officers as a group 900,048 75%
(3 persons)
</TABLE>
Changes in Control.
- -------------------
There are no present arrangements or pledges of the Company's securities
which may result in a change in control of the Company.
Item 12. Certain Relationships and Related Transactions.
-----------------------------------------------
Transactions with Management and Others.
- ----------------------------------------
For a description of transactionss between members of management, five
percent stockholders, "affiliates", promoters and finders, see the caption
"Sales of "Unregistered" and "Restricted" Securities Over The Past Three Years"
of Item I.
<PAGE>
Item 13. Exhibits and Reports on Form 8-K.
- ---------------------------------
Reports on Form 8-K
- -------------------
**The Company filed with the Commission a Current Report on Form 8-K, as
filed on March 27, 1992, which is incorporated herein by this reference.
<TABLE>
<CAPTION>
Exhibit
Number Description*
- ------- ------------
<S> <C>
3.1 Initial Articles of Incorporation,
as filed March 28, 1985
3.2 By-laws
3.3i Articles of Amendment to the
Articles of Incorporation, as filed on
December 29, 1986
3.3ii Articles of Amendment to the
Articles of Incorporation, as filed on
March 14, 1989
27 Financial Data Schedule
99.1 Consent of Directors to reverse split on
a basis of 51.662 to 1
99.2 Legal opinion regarding reverse split
and no amendment being required
99.3 Covenant Not to Sue and Compromise and
Settlement of debt of Tecon, Inc.
Documents Incorporated by Reference
- -----------------------------------
**Registration Statement on form S-18, as amended, dated 8-5-85
**Form 10-KSB for the period ended 3-31-91
**Form 8-K, as filed on 3-27-92
</TABLE>
*Summaries of all exhibits contained within this Registration Statement are
modified in their entirety by reference to these Exhibits.
**These documents are incorporated herein by this reference and have been
previously filed with the Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TECON, INC.
Date: 3/10/99 /S/ SHERYL ROSS
Sheryl Ross
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Company and in the capacities and on the dates indicated:
TECON, INC.
Date: 3/10/99 /S/ SHERYL ROSS
Sheryl Ross
President and Director
Date: 3/10/99 /S/ SHELLEY GOFF
Shelley Goff
Secretary/Treasurer and Director
<PAGE>
TECON, INC.
[A Development Stage Company]
Financial Statements and Independent Auditors' Report
March 31, 1998
<PAGE>
<TABLE>
<CAPTION>
TECON, INC.
[A Development Stage Company]
TABLE OF CONTENTS
Page
<S> <C>
Independent Auditors' Report 1
Balance Sheet -- March 31, 1998 2
Statements of Operations for the years ended March 31, 1998 and 1997, and for
the Period from Reactivation [January 18, 1994] through March 31,
1998 3
Statements of Stockholders' Deficit for the Period from Reactivation
[January 18, 1994] through March 31, 1998 4
Statements of Cash Flows for the years ended March 31, 1998 and 1997, and for
the Period from Reactivation [January 18, 1994] through March 31,
1998 5
Notes to Financial Statements 6-8
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Tecon, Inc.[a development stage company]
We have audited the accompanying balance sheet of Tecon, Inc. [a development
stage company] as of March 31, 1998, and the related statements of operations,
stockholders' deficit, and cash flows for the years ended March 31, 1998 and
1997, and from the Period of Reactivation [January 18, 1994] through March 31,
1998. 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 audits provide 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 Tecon, Inc. [a development
stage company] as of March 31, 1998, and the results of operations and cash
flows for the years ended March 31, 1998 and 1997, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has accumulated losses from
operations, has no assets, and has a net working capital deficiency that raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Mantyla, McReynolds and Associates
Salt Lake City, Utah
July 15, 1998
<PAGE>
<TABLE>
<CAPTION>
Tecon, Inc.
[A Development Stage Company]
Balance Sheet
March 31, 1998
ASSETS
<S> <C> <C>
Assets $ -0-
---------------
Total Assets $ -0-
===============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities:
Current Liabilities:
Payable to Stockholders - NOTE 8 $ 1,962
---------------
Total Liabilities 1,962
Stockholders' Deficit:
Capital Stock -- 300,000,000 shares authorized having a
par value of $.001 per share; 1,199,962 shares issued
and outstanding - NOTE 9 1,200
Additional Paid-in Capital 2,114,138
Accumulated Deficit (2,117,300)
---------------
Total Stockholders' Deficit (1,962)
---------------
Total Liabilities and Stockholders' Deficit $ -0-
===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Tecon, Inc.
[A Development Stage Company]
Statements of Operations
For the Years Ended March 31, 1998 and 1997
Reactivation
through
March 31,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Revenues $ -0- $ -0- $ -0-
General & Administrative Expenses 2,286 276 10,862
------------ ---------- -------------
Operating Loss (2,286) (276) (10,862)
Net Loss Before Income Taxes (2,286) (276) (10,862)
Current Year Provision for Income Taxes -0- -0- -0-
------------ ---------- -------------
Net Loss $ (2,286) $ (276) $ (10,862)
============ ========== =============
Loss Per Share $ (.01) $ (.01) $ (.01)
============ ========== =============
Weighted Average Shares Outstanding 799,962 599,962 483,711
============ ========== =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Tecon, Inc.
[A Development Stage Company]
Statements of Stockholders' Deficit
For the Years Ended March 31, 1998 and 1997
Additional Net
Common Common Paid-in Accumulated Stockholders'
Shares Stock Capital Deficit Deficit
--------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 18, 1994, date 7,498,701 $ 7,499 $ 2,098,939 $ (2,106,438) $ -0-
of Reinstatement
Issued stock for cash and
services, January 20, 1994 8,000,000 8,000 8,000
Net loss for the Year Ended
March 31, 1994 (8,000) (8,000)
--------- ---------- ---------- ----------- -----------
Balance, March 31, 1994 15,498,701 $ 15,499 $ 2,098,939 $ (2,114,438) $ -0-
Net loss for the Year Ended
March 31, 1995 -0- -0-
--------- --------- ---------- ---------- -----------
Balance, March 31, 1995 15,498,701 $ 15,499 $ 2,098,939 $ (2,114,438) $ -0-
Reverse split (51.662 for 1),
November 20, 1995 (15,198,739) (15,199) 15,199 -0-
Issued 300,000 shares of
common stock to directors for
services (3/4/96) 300,000 300 300
Net loss for the Year Ended
March 31, 1996 (300) (300)
--------- --------- ---------- ----------- -----------
Balance, March 31, 1996 599,962 $ 600 $ 2,114,138 $ (2,114,738) $ -0-
Net loss for the Year Ended
March 31, 1997 (276) (276)
--------- --------- ---------- ------------ -----------
Balance, March 31, 1997 599,962 600 2,114,138 (2,115,014) (276)
Issued 300,000 shares of
common stock to directors for
services (9/18/97) 300,000 300 300
Issued 300,000 shares of
common stock to directors for
services (1/14/98) 300,000 300 300
Net loss for the Year Ended
March 31, 1998 (2,286) (2,286)
--------- --------- ---------- ---------- -----------
Balance, March 31, 1998 1,199,962 $ 1,200 $ 2,114,138 $ (2,117,300) $ (1,962)
========= ========= =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Tecon, Inc.
[A Development Stage Company]
Statements of Cash Flows
For the Years Ended March 31, 1998 and 1997
Reactivation
through
March 31,
1998 1997 1998
---- ---- ----
<S> <C> <C> <C>
Cash Flows Provided by/(Used for) Operating Activities
Net Loss $ (2,286) $ (276) $ (10,862)
Adjustments to reconcile net income to net cash
provided by operating activities:
Issued stock for director and legal fees 600 7,400
Increase in shareholder loan 1,686 276 1,962
--------- --------- -----------
Net Cash Used for Operating Activities -0- -0- (1,500)
Cash Flows Provided by Financing Activities
Issued stock for cash 1,500
--------- --------- -----------
Net Increase/(Decrease) in Cash -0- -0- -0-
Beginning Cash Balance -0- -0- -0-
--------- --------- -----------
Ending Cash Balance $ -0- $ -0- $ -0-
========= ========= ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest $ -0- $ -0- $ -0-
Cash paid during the year for income taxes $ -0- $ -0- $ -0-
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Tecon, Inc.
[A Development Stage Company]
Notes to Financial Statements
March 31, 1998
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
Tecon, Inc. [formerly known as B. U. D. Corp.] incorporated under the laws
of the State of Utah in 1985. The Company changed its name to Tecon, Inc.
after acquiring Tecon, Inc., a Washington corporation in August 1986. The
company engaged in research, development, assembly, and sale of computer
video imaging, multi-user multi-tasking systems and computer board
products. In 1992, the Company assigned all of its assets to Precision
Digital Images, Corporation [PDI], a creditor, in partial satisfaction of
debts owed and ceased all operations. Since that time the Company was left
dormant until January 18, 1994 when it was reactivated.
The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles. The following summarizes the
more significant of such policies:
(b) Income Taxes
Effective April 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109 [the Statement], Accounting for
Income Taxes. The Statement requires an asset and liability approach for
financial accounting and reporting for income taxes, and the recognition of
deferred tax assets and liabilities for the temporary differences between
the financial reporting bases and tax bases of the Company's assets and
liabilities at enacted tax rates expected to be in effect when such amounts
are realized or settled. The cumulative effect of this change in accounting
for income taxes as of March 31, 1998 is $0 due to the valuation allowance
established as described below.
(c) Net Loss Per Common Share
Net loss per common share is based on the weighted-average number of shares
outstanding.
(d) Statement of Cash Flows
For purposes of the statements of cash flows, the Company considers cash on
deposit in the bank to be cash. The Company had $0 cash at March 31, 1998.
<PAGE>
NOTE 1 ORGANIZATION AND SUMMAR OF SIGNIFICANT ACCOUNTING POLICIES
[continued]
(e) Use of Estimates in Preparation of Financial Statements The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 2 LIQUIDITY/GOING CONCERN
The Company has accumulated losses since inception through March 31, 1998
amounting to $2,117,300, has no assets, and has a net working capital
deficiency at March 31, 1998. These factors raise substantial doubt about
the Company's ability to continue as a going concern.
Management plans include finding a well-capitalized merger candidate to
recommence its operations. The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
NOTE 3 INCOME TAXES
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 109 [the Statement], Accounting for Income Taxes, as of April
1, 1993. Prior years' consolidated financial statements have not been
restated to apply the provisions of the Statement. No provision has been
made for income taxes in the consolidated financial statements because the
Company has accumulated substantial losses since inception.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax asset at March 31, 1998 have no impact on the
financial position of the Company. A valuation allowance is provided when
it is more likely than not that some portion of the deferred tax asset will
not be realized. Because of the lack of taxable earnings history, the
Company has established a valuation allowance for all future deductible
temporary differences.
<PAGE>
NOTE 4 RELATED-PARTY TRANSACTIONS
During the fiscal years ended March 31, 1998, and 1997, a shareholder and
consultant paid general and administrative expenses on behalf of the
Company totaling $1,686 and $276, respectively. The unsecured loan bears no
interest and is due on demand.
NOTE 5 ISSUANCE OF COMMON STOCK
For the year ended March 31, 1998, the Company issued 600,000 shares of
common stock as payment for fees for its directors.
<PAGE>
ARTICLES OF INCORPORATION
OF
B.U.D. CORP.
The undersigned incorporators being natural persons eighteen ears of age or
more and desiring to form a body corporate under The laws of the state of Utah
do hereby sign, verify and deliver in duplicate to the Secretary of State of the
state of Utah these articles of incorporation:
ARTICLE I
NAME
The name of the corporation shall be:
B.U.D. Corp.
ARTICLE II
PERIOD OF DURATION
The corporation shall continue in existence perpetually unless sooner
dissolved according to law.
ARTICLE III
PURPOSES AND POWERS
The corporation is organized for the following purpose or purposes:
Section 1. To seek, investigate, acquire interests in and dispose of
business opportunities, ventures, enterprizes, or assets; to own and operate any
enterprize whatsoever; to acquire, hold and dispose of real or personal property
and property of any kind or nature, tangible or intangible; and generally do any
act convenient to the foregoing.
Section 2. To engage in any lawful act of activity for which corporations
may be organized under the laws of the state of Utah.
<PAGE>
ARTICLE IV
AUTHORIZED SHARES
The total number of shares of all classes of stock which this corporation
shall have authority to issue is 305,000,000 shares; consisting of 5,000,000
shares of preferred stock, par value $0.001 per share (hereinafter the
"Preferred Stock"), and 300,000,000 shares of common stock, par value $0.001 per
share (hereinafter the "Common Stock").
ARTICLE V
CLASSES OF STOCK
A statement of the designations and the powers, preferences and rights, and
the qualifications, limitations or restrictions thereof, of the shares of stock
of each class which the corporation shall be authorized to issue is as follows:
(a) Preferred Stock. Shares of preferred stock may be issued from
time to time in one or more series as may from time to time be determined
by the board of directors. Each series shall be distinctly designated as
to distinguish the shares thereof from the shares of all other series or
classes. All shares of any one series of the preferred stock shall be
alike in every particular. The rights of each such series and
qualifications, limitations or restriction thereof, if any, may differ
from those of any and all other series at any time outstanding subject to
the limitations set forth in this paragraph (a) and subparagraph (ii) of
paragraph (c). No series of preferred stock shall be entitled to vote as a
class or otherwise on matters voted upon by the shareholders of the
corporation, except for those matters in which the consent of the holders
of the preferred stock is specifically required by the provisions of the
Utah Business Corporation Act, as amended. With respect to dividends, all
shares of preferred stock shall have a preference over the common stock,
be cumulative and be participating with the common Stock. All shares of
the class of preferred stock shall be subject to redemption by the
corporation, subject to the authority hereby expressly granted to the
board of directors to waive or reject by resolution or resolutions adopted
prior to the issuance of any shares of each particular series of preferred
stock the right of the corporation to redeem the shares of preferred stock
included in such series. Subject to the provisions of this paragraph (a)
and the provisions of subparagraph (ii) of paragraph (c) of this Article
V, the board of directors of this corporation is hereby expressly granted
authority to fix by resolution or resolutions adopted
<PAGE>
prior to the issuance of any shares of each particular series of preferred
stock, the designation, the rights, qualifications, limitations and
restrictions thereof, if any, of such series, set forth below:
(i)The distinctive designation of and the number of shares of
preferred stock which shall constitute the series, which number may be
increased (except as otherwise fixed by the board of directors) or
decreased (but not below the number of shares thereof outstanding) from
time to time by action of the board of directors;
(ii) The rate and times at which dividends on shares of the series
shall be paid;
(iii) The right, if any, of the holders of the shares of the series to
convert the same into, or exchange the same for, any other class or
classes of stock of this corporation and the terms and conditions of such
conversion or exchange;
(iv) Whether shares of the series shall be subject to redemption, and
the redemption price or prices, including, without limitation, a
redemption price or prices payable in shares of the common stock, cash or
other property and the time and times at which, and the terms and
conditions upon which, shares of the series may be redeemed;
(v) The rights, if any, of the holders of the shares of the series
upon voluntary or involuntary liquidation, merger, consolidated,
distribution or sale of assets, dissolution or winding up of this
corporation; and
(vi) The terms of the sinking fund or redemption or purchase account,
if any, to be provided for shares of the series.
(b) Common Stock. The common stock shall be non-
assessable and shall not have cumulative voting rights or pre-emptive rights.
In addition, the common stock shall have the following powers, preferences,
rights, qualifications, limitations and restrictions:
(i) After the requirements with respect to preferential dividends of
preferred stock (fixed in accordance with the provisions of paragraph (a)
of this Article V), if any, shall have been met after and this corporation
shall comply with the requirements if any, with respect to the setting
aside of funds as sinking
<PAGE>
funds or redemption of purchase accounts (fixed in accordance with
provisions of paragraph (a) of this Article V) and subject further to any
other conditions which may be fixed in accordance with the provisions of
paragraph (a) of this Article V, then, but not otherwise, the holders of
common stock shall be entitled to receive such dividends, if any, as may
be declared from time to time by the board of directors;
(ii) After distribution in full of the preferential amount (fixed in
accordance with the provisions of paragraph (a) of this Article V), if
any, to be distributed to the holders of preferred stock in the event of a
voluntary or involuntary liquidation, distribution or sale of assets,
dissolution or winding up of this corporation, the holders of the common
stock shall be entitled to receive all of the remaining assets of this
corporation, tangible and intangible, of whatever kind available for
distribution to stockholders, ratably in a proportion to the number of
shares of the common stock held by each; and
(iii) Except as may otherwise be required by law or these articles
of incorporation, each holder of common stock shall have one vote in
respect to each share of common stock held by such holder on each matter
voted upon by the shareholders; no shareholder shall be entitled to
cumulate his votes for the election of directors or for any other reason.
(c) Other Provisions.
(i) The relative powers, preferences and rights of each series of
preferred stock in relation to the powers, preferences and rights of each
other series of preferred stock shall, in each case, be as fixed from time
to time by the board of directors in the resolution or resolutions adopted
pursuant to authority granted in paragraph (a) of this Article V, and the
consent by class or series vote or otherwise, of the holders of the
preferred stock of such other series of preferred stock as are from time
to time outstanding should not be required for the issuance by the board
of directors of any other series of preferred stock whether the powers,
preferences and righs of such other series shall be fixed by the board of
directors as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series or any of them.
<PAGE>
(ii) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
issued by reason of any increase of the authorized capital stock of the
Corporation or of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the corporation of any class or series, or
carrying any rights to purchase stock for any class or series, but any
such unissued stock, additional authorized issue of shares of any class or
series of stock or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the board of directors to such persons, firms,
corporations or associations, whether such holders or others, and upon
such terms as may be deemed advisable by the board of directors in the
exercise of its sole discretion.
ARTICLE VI
TRANSACTIONS WITH INTERESTED DIRECTORS
No contract or other transaction between this corporation and any other
firm or corporation shall be affected by the fact that a director or officer of
this corporation has an interest in, or is a director or officer of such firm or
other corporation. Any officer or director, individually or with others, may be
a party to, or may have an interest in, any transaction of this corporation or
any transaction in which this corporation is a party or has an interest. Each
person who is now or may become an officer or director of this corporation is
hereby relieved from liability that he might otherwise obtain in the event such
officer of director contracts with this corporation individually or in behalf of
another corporation or entity in which he may have an interest; provided, that
such officer or director acts in good faith.
ARTICLE VII
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
The corporation may indemnify each director, officer, employee or agent of
the corporation and their respective heirs, administrators and executors,
against all liabilities and expenses
<PAGE>
reasonably incurred in connection with any action, suit or proceeding to
which he may be made a party by reason of his being or having been a director,
officer, employee or agent of the corporation, to the full extent permitted by
the laws of the state of Utah now existing or as such laws may hereafter be
amended.
ARTICLE VIII
AMENDMENTS
The corporation reserves the right to amend, alter, change or repeal all
or any portion of the provisions contained in its articles of incorporation from
time to time in accordance with the laws of the state of Utah, and all rights
conferred upon stockholders herein are granted subject to this reservation.
ARTICLE IX
ADOPTION AND AMENDMENT OF BYLAWS
The initial bylaws of the corporation shall be adopted by its board of
directors. The power to alter or amend or repeal the bylaws or adopt new bylaws
shall be vested in the board of sirectors, but the holders of Common Stock may
also alter, amend or repeal the bylaws or adopt new bylaws. The bylaws may
contain any provisions for the regulation and management of the affairs of the
corporation not inconsistent with law or the articles of incorporation.
ARTICLE X
REGISTERED OFFICE AND REGISTERED AGENT
The address of the corporation's principal office in the state of Utah is
3276 Alta Hills Drive, Salt Lake City, Utah 84092. The name and address of its
initial resident agent is Paul Burton, 3276 Alta Hills Drive, Salt Lake City,
Utah 84092. Either the registered office or the resident agent may be changed in
the manner provided by law.
ARTICLE XI
INITIAL BOARD OF DIRECTORS
The governing board of the corporation shall be known as the board of
directors and the directors may from time to time be increased or decreased in
the manner as shall be provided in the bylaws of the corporation, provided that
the number of directors
<PAGE>
shall not be reduced to less than three (3), except that in cases where all the
shares of the corporation are owned beneficially and of record by either one or
two stockholders, the number of directors may be less than three (3), but not
less than the number of stockholders.
The names and post office addresses of the first board of directors, which
shall be three (3) in number, and which shall serve until the first annual
meeting of shareholders and until their successors are elected and shall qualify
are as follows:
NAME ADDRESS
Paul Burton 3276 Alta Hills Drive
Salt Lake City, Utah 84092
Al A. Hasna 3276 Alta Hills Drive
Salt Lake City, Utah 84092
Arthur M. Miyazaki 3276 Alta Hills Drive
Salt Lake City, Utah 84092
ARTICLE XII
ACTIVITIES OUTSIDE THE STATE
Meetings of stockholders and the corporation's board of directors may be
held outside the state of Utah, if the bylaws so provide. The books of the
corporation may be kept (subject to any applicable provision of Utah law)
outside the state of Utah at such place or places as may be designated from time
to time by the board of directors in the bylaws.
ARTICLE XIII
COMMENCING BUSINESS
The corporation will not commence business until consideration of the
value of at least SI,000 has been received for the issuance of shares.
ARTICLE XIV
INCORPORATORS
The name and address of each of the incorporators signing the articles of
incorporation are as follows:
<PAGE>
NAME ADDRESS
Paul Burton 3276 Alta Hills Drive
Salt Lake City, Utah 84092
Al A. Hasna 3276 Alta Hills Drive
Salt Lake City, Utah 84092
Arthur M. Miyazaki 3276 Alta Hills Drive
Salt Lake City, Utah 84092
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
do make and file these articles of incorporation, hereby declaring that the
facts herein are true.
DATED this 13th day of March, 1985
By/S/ Paul Burton
Paul Burton
By/S/ Al A Hasna
Al A. Hasna
By/S/ Arthur M Miyazaki
Arthur M. Miyazaki
STATE OF UTAH
:ss
COUNTY OF SALT LAKE)
On this 13th day of March, 1985, before me, a Notary Public, personally
appeared Paul Burton, Al A. Hasna, and Arthur M. Miyazaki, who upon being first
duly sworn, severally acknowledged to me that they executed the foregoing
articles of incorporation.
By/S/ Sharon Allen
Notary Public
Residing in S.L. City, UT
My Commission Expires:2/26/86.
<PAGE>
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
B.U.D. CORP.
Pursuant to the provisions of Section 16-10-57 of the Utah Business
Corporation Act, the undersigned corporation hereby adopts the following
Articles of Amendment to its Articles of Incorporation.
FIRST: The name of the corporation is B.U.D. Corp.
SECOND: The following amendments to the Articles of Incorporation of B.U.D.
Corp. were duly adopted by the stockholders of the corporation at a meeting held
December 20, 1986, in the manner prescribed by the Utah Business Corporation
Act, to-wit:
ARTICLE I - NAME
The name of this corporation is TECON, INC.
THIRD: The number of shares of the corporation outstanding at the time of
the adoption of such amendments was 16,294,000, and the number entitled to vote
thereon was 16,294,000.
FOURTH: The designation and number of outstanding shares of each class
entitled to vote thereon as a class were as follows, to-wit:
CLASS NUMBER OF SHARES
Common 16,294,000
FIFTH: The number of shares voted for such amendments was 13,287,000 with 0
opposing and 0 abstaining.
SIXTH: Except as provided in Paragraph Seventh below, these amendments do
<PAGE>
not provide for any exchange, reclassification or cancellation of issued shares.
SEVENTH: These amendments do effect a change in the stated capital of the
corporation. Pursuant to the resolution adopted by the stockholders of the
corporation at the meeting held December 20, 1986, the 16,294,000 one mill
($0.001) par value common voting shares issued and outstanding were reverse
split on a basis of two for one (2 for 1), retaining the par value at one mill
($0.001) per share, with appropriate adjustments being made in the additional
paid in capital and stated capital accounts of the corporation, and resulting in
a total of 8,147,000 shares of one mill ($0.001) par value common voting stock
being issued and outstanding.
IN WITNESS WHEREOF, the undersigned President and Secretary, having been
thereunto duly authorized have executed the foregoing Articles of Amendment for
the corporation under the penalties of perjury this 20th day of December, 1986.
B.U.D. CORP.
By /S/ C. REX WELSH
C. Rex Welsh, President
Attest:
/S/ SCOTT SWITZER
Scott Switzer
Secretary/Treasurer
<PAGE>
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
TECON, INC.
Pursuant to the provisions of Section 16-10-57 of the Utah Business
Corporation Act, the undersigned corporation hereby adopts the following
Articles of Amendment to its Articles of Incorporation.
FIRST: The name of the corporation is Tecon, Inc.
SECOND: The following resolution amending the Articles of Incorporation of
the corporation was duly adopted by the shareholders of the corporation at a
meeting held January 23, 1989, in the manner prescribed by the Utah Business
Corporation Act, to-wit:
RESOLVED, that the issued and outstanding shares of common stock of the
company be reclassified as follows: Four shares of old common stock to one share
of new common stock, retaining the par value at one mill ($0.001) per share,
with appropriate adjustments being made in the additional paid in capital and
stated capital accounts of the corporation, and that all outstanding rights and
obligations (including option plans, options and option prices) relating to the
Company's common stock be mathematically adjusted so that the proportionate
ratio of such rights and obligations to the new shares will be equal to the
proportionate ratio of such rights and obligations to the old shares.
THIRD: The number of shares of the corporation outstanding at the time of
the adoption of such amendments was 9,843,992, and the number entitled to vote
thereon was 9,843,992.
FOURTH: The designation and number of outstanding shares of each class
entitled to vote thereon as a class were as follows, to-wit:
<PAGE>
CLASS NUMBER OF SHARES
Common 9,843,992
FIFTH: The number of shares voted for such amendments was 5,108,330, with
none opposing and none abstaining.
SIXTH: Except as provided in Paragraph Seventh below, these amendments do
not provide for any exchange, reclassification or cancellation of issued shares.
SEVENTH: These amendments do effect a change in the stated capital of the
corporation. Pursuant to the resolution adopted by the stockholders of the
corporation at the meeting held December 23, 1989, the 9,843,992 one mill
($0.001) par value common voting shares issued and outstanding were reverse
split on a basis of four for one (4 for 1), retaining the par value at one mill
($0.001) per share, with appropriate adjustments being made in the additional
paid in capital and stated capital accounts of the corporation, and resulting in
a total of 2,460,998 shares of one mill ($0.001) par value common voting stock
being issued and outstanding.
IN WITNESS WHEREOF, the undersigned President and Secretary, having been
thereunto duly authorized have executed the foregoing Articles of Amendment for
the corporation under the penalties of perjury this day of March, 1989.
TECON, INC.
By /S/ C. REX WELSH
President
Attest:
By/S/ James
- --------------------
Secretary
<PAGE>
BYLAWS
OF
TECON, INC.
ARTICLE I
OFFICES
Section 1.01 Location of Office. The corporation may maintain such offices
within or without the State of Utah as the Board of Directors may from time to
time designate or require.
Section 1.02 Principal Office. The address of the principal office of the
corporation shall be at the address of the registered office of the corporation
as so designated in the office of the Lieutenant Governor/Secretary of State of
the state of incorporation, or at such other address as the Board of Directors
shall from time to time determine.
ARTICLE II
SHAREHOLDERS
Section 2.0 Annual Meeting. The annual meeting of the shareholders shall
be held in May of each year or at such other time designated by the Board of
Directors and as is provided for in the notice of the meeting, 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 shall not be held on the day
designated for the annual meeting of the shareholders, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a special
meeting of the shareholders as soon thereafter as may be convenient.
Section 2.02 Special Meetings. Special meetings of the shareholders may be
called at any time by the chairman of the board, the president, or by the Board
of Directors, or in their absence or disability, by any vice president, and
shall be called by the president or, in his or her absence or disability, by a
vice president or by the secretary on the written request of the holders of not
less than one-tenth of all the shares entitled to vote at the meeting, such
written request to state the purpose or purposes of the meeting and to be
delivered to the president, each vice-president, or secretary. In case of
failure to call such meeting within 60 days after such request, such shareholder
or shareholders may call the same.
Section 2.03 Place of Meetings. The Board of Directors may designate any
place, either within or without the state of incorporation, as the place of
<PAGE>
meeting for any annual meeting or for 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 without the state of
incorporation, as the place for the holding of such meeting. If no designation
is made, or if a special meeting be otherwise called, the place of meeting shall
be at the principal office of the corporation.
Section 2.04 Notice of Meetings. The secretary or assistant secretary, if
any, shall cause notice of the time, place, and purpose or purposes of all
meetings of the shareholders (whether annual or special), to be mailed at least
ten (10) days, but not more than fifty (50) days, prior to the meeting, to each
shareholder of record entitled to vote.
Section 2.05 Waiver of Notice. Any shareholder may waive notice of any
meeting of shareholders (however called or noticed, whether or not called or
noticed and whether before, during, or after the meeting), by signing a written
waiver of notice or a consent to the holding of such meeting, or an approval of
the minutes thereof. Attendance at a meeting, in person or by proxy, shall
constitute waiver of all defects of call or notice regardless of whether waiver,
consent, or approval is signed or any objections are made. All such waivers,
consents, or approvals shall be made a part of the minutes of the meeting.
Section 2.06 Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any annual meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of the corporation may provide
that the share transfer books shall be closed, for the purpose of determining
shareholders entitled to notice of or to vote at such meeting, but not for a
period exceeding fifty (50) days. If the share transfer books are closed for the
purpose of determining shareholders entitled to notice of or to vote at such
meeting, such books shall be closed for at least ten (10) days immediately
preceding such meeting.
In lieu of closing the share transfer books, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than fifty (50) and, in case
of a meeting of shareholders, not less than ten (10) days prior to the date on
which the particular action requiring such determination of shareholders is to
be taken. If the share transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting or to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record
<PAGE>
date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this Section, such determination shall apply to any adjournment
thereof. Failure to comply with this Section shall not affect the validity of
any action taken at a meeting of shareholders.
Section 2.07 Voting Lists. The officer or agent of the corporation having
charge of the share transfer books for shares of the corporation shall make, at
least ten (10) days before each meeting of the shareholders, a complete list of
the shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of, and the number of shares
held by each, which list, for a period of ten (10) days prior to such meeting,
shall be kept on file at the registered office of the corporation and shall be
subject to inspection by any shareholder during the whole time of the meeting.
The original share transfer book shall be prima facia evidence as to the
shareholders who are entitled to examine such list or transfer books, or to vote
at any meeting of shareholders.
Section 2.08 Quorum. One-half of the total voting power of the outstanding
shares of the corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of the shareholders. If a quorum is
present, the affirmative vote of the majority of the voting power represented by
shares at the meeting and entitled to vote on the subject shall constitute
action by the shareholders, unless the vote of a greater number or voting by
classes is required by the laws of the state of incorporation of the corporation
or the Articles of Incorporation. If less than one-half of the outstanding
voting power is represented at a meeting, a majority of the voting power
represented by shares so present may adjourn the meeting from time to time
without further notice. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed.
Section 2.09 Voting of Shares. Each outstanding share of the corporation
entitled to vote shall be entitled to one vote on each matter submitted to vote
at a meeting of shareholders, except to the extent that the voting rights of the
shares of any class or series of stock are determined and specified as greater
or lesser than one vote per share in the manner provided by the Articles of
Incorporation.
Section 2.10 Proxies. At each meeting of the shareholders, each
shareholder entitled to vote shall be entitled to vote in person or by proxy;
provided, however, that the right to vote by proxy shall exist only in case the
instrument authorizing such proxy to act shall have been executed in writing by
the registered holder or holders of such shares, as the case may be, as shown on
the share transfer of the corporation or by his or her or her attorney
<PAGE>
thereunto duly authorized in writing. Such instrument authorizing a proxy to act
shall be delivered at the beginning of such meeting to the secretary of the
corporation or to such other officer or person who may, in the absence of the
secretary, be acting as secretary of the meeting. In the event that any such
instrument shall designate two or more persons to act as proxies, a majority of
such persons present at the meeting, or if only one be present, that one shall
(unless the instrument shall otherwise provide) have all of the powers conferred
by the instrument on all persons so designated. Persons holding stock in a
fiduciary capacity shall be entitled to vote the shares so held and the persons
whose shares are pledged shall be entitled to vote, unless in the transfer by
the pledge or on the books of the corporation he or she shall have expressly
empowered the pledgee to vote thereon, in which case the pledgee, or his or her
proxy, may represent such shares and vote thereon.
Section 2.11 Written Consent to Action by Shareholders. Any action
required to be taken at a meeting of the shareholders, or any other action which
may be taken at a meeting of the shareholders, may be taken without a meeting,
if a consent in writing, setting forth the action so taken, shall be signed by
all of the shareholders entitled to vote with respect to the subject matter
thereof.
ARTICLE III
DIRECTORS
Section 3.01 General Powers. The property, affairs, and business of the
corporation shall be managed by its Board of Directors. The Board of Directors
may exercise all the powers of the corporation whether derived from law or the
Articles of Incorporation, except such powers as are by statute, by the Articles
of Incorporation or by these Bylaws, vested solely in the shareholders of the
corporation.
Section 3.02 Number, Term, and Qualifications. The Board of Directors
shall consist of three to nine persons. Increases or decreases to said number
may be made, within the numbers authorized by the Articles of Incorporation, as
the Board of Directors shall from time to time determine by amendment to these
Bylaws. An increase or a decrease in the number of the members of the Board of
Directors may also be made upon amendment to these Bylaws by a majority vote of
all of the shareholders, and the number of directors to be so increased or
decreased shall be fixed upon a majority vote of all of the shareholders of the
corporation. Each director shall hold office until the next annual meeting of
shareholders of the corporation and until his or her successor shall have been
elected and shall have qualified. Directors need not be residents of the state
of incorporation or shareholders of the corporation.
<PAGE>
Section 3.03 Classification of Directors. In lieu of electing the entire
number of directors annually, the Board of Directors may provide that the
directors be divided into either two or three classes, each class to be as
nearly equal in number as possible, the term of office of the directors of the
first class to expire at the first annual meeting of shareholders after their
election, that of the second class to expire at the second annual meeting after
their election, and that of the third class, if any, to expire at the third
annual meeting after their election. At each annual meeting after such
classification, the number of directors equal to the number of the class whose
term expires at the time of such meeting shall be elected to hold office until
the second succeeding annual meeting, if there be two classes, or until the
third succeeding annual meeting, if there be three classes.
Section 3.04 Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately following, and at
the same place as, the annual meeting of shareholders. The Board of Directors
may provide by resolution the time and place, either within or without the state
of incorporation, for the holding of additional regular meetings without other
notice than such resolution.
Section 3.05 Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the president, vice president, or any two
directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the state of
incorporation, as the place for holding any special meeting of the Board of
Directors called by them.
Section 3.06 Meetings by Telephone Conference Call. Members of the Board
of Directors may participate in a meeting of the Board of Directors or a
committee of the Board of Directors by means of conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section shall constitute presence in person at such meeting.
Section 3.07 Notice. Notice of any special meeting shall be given at least
ten (10) days prior thereto by written notice delivered personally or mailed to
each director at his or her regular business address or residence, or by
telegram. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail so addressed, with postage thereon prepaid. If notice
be given by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. Any director may waive notice of
any meeting. Attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting solely for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
<PAGE>
Section 3.08 Quorum. A majority of the number of directors shall
constitute a quorum for the transaction of business or any meeting of the Board
of Directors, but if less than a majority is present at a meeting, a majority of
the directors present may adjourn the meeting from time to time without further
notice.
Section 3.09 Manner of Acting. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, and the individual directors shall have no power as such.
Section 3.10 Vacancies and Newly Created Directorship. If any vacancies
shall occur in the Board of Directors by reason of death, resignation or
otherwise, or if the number of directors shall be increased, the directors then
in office shall continue to act and such vacancies or newly created
directorships shall be filled by a vote of the directors then in office, though
less than a quorum, in any way approved by the meeting. Any directorship to be
filled by reason of removal of one or more directors by the shareholders may be
filled by election by the shareholders at the meeting at which the director or
directors are removed.
Section 3.11 Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 3.12 Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the minutes of the meeting, unless he or
she shall file his or her written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof, or shall forward
such dissent by registered or certified mail to the secretary of the corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
Section 3.13 Resignations. A director may resign at any time by delivering
a written resignation to either the president, a vice president, the secretary,
or assistant secretary, if any. The resignation shall become effective on its
acceptance by the Board of Directors; provided, that if the board has not acted
thereon within ten days (10) from the date presented, the resignation shall be
deemed accepted.
<PAGE>
Section 3.14 Written Consent to Action by Directors. Any action required
to be taken at a meeting of the directors of the corporation or any other action
which may be taken at a meeting of the directors or of a committee, may be taken
without a meeting, if a consent in writing, setting forth the action so taken,
shall be signed by all of the directors, or all of the members of the committee,
as the case may be. Such consent shall have the same legal effect as a unanimous
vote of all the directors or members of the committee.
Section 3.15 Removal. At a meeting expressly called for that purpose, one
or more directors may be removed by a vote of a majority of the shares of
outstanding stock of the corporation entitled to vote at an election of
directors.
ARTICLE IV
OFFICERS
Section 4.01 Number. The officers of the corporation shall be a president,
one or more vice-presidents, as shall be determined by resolution of the Board
of Directors, a secretary, a treasurer, and such other officers as may be
appointed by the Board of Directors. The Board of Directors may elect, but shall
not be required to elect, a chairman of the board and the Board of Directors may
appoint a general manager.
Section 4.02 Election, Term of Office, and Qualifications. The officers
shall be chosen by the Board of Directors annually at its annual meeting. In the
event of failure to choose officers at an annual meeting of the Board of
Directors, officers may be chosen at any regular or special meeting of the Board
of Directors. Each such officer (whether chosen at an annual meeting of the
Board of Directors to fill a vacancy or otherwise) shall hold his or her office
until the next ensuing annual meeting of the Board of Directors and until his or
her successor shall have been chosen and qualified, or until his or her death,
or until his or her resignation or removal in the manner provided in these
Bylaws. Any one person may hold any two or more of such offices, except that the
president shall not also be the secretary. No person holding two or more offices
shall act in or execute any instrument in the capacity of more than one office.
The chairman of the board, if any, shall be and remain a director of the
corporation during the term of his or her office. No other officer need be a
director.
Section 4.03 Subordinate Officers, Etc. The Board of Directors from time
to time may appoint such other officers or agents as it may deem advisable, each
of whom shall have such title, hold office for such period, have such authority,
and perform such duties as the Board of Directors from time to time may
determine. The Board of Directors from time to time may
<PAGE>
delegate to any officer or agent the power to appoint any such subordinate
officer or agents and to prescribe their respective titles, terms of office,
authorities, and duties. Subordinate officers need not be shareholders or
directors.
Section 4.04 Resignations. Any officer may resign at any time by
delivering a written resignation to the Board of Directors, the president, or
the secretary. Unless otherwise specified therein, such resignation shall take
effect on delivery.
Section 4.05 Removal. Any officer may be removed from office at any
special meeting of the Board of Directors called for that purpose or at a
regular meeting, by vote of a majority of the directors, with or without cause.
Any officer or agent appointed in accordance with the provisions of Section 4.03
hereof may also be removed, either with or without cause, by any officer on whom
such power of removal shall have been conferred by the Board of Directors.
Section 4.06 Vacancies and Newly Created Offices. If any vacancy shall
occur in any office by reason of death, resignation, removal, disqualification,
or any other cause, or if a new office shall be created, then such vacancies or
newly created offices may be filled by the Board of Directors at a regular or
special meeting.
Section 4.07 The Chairman of the Board. The Chairman of the Board, if
there be such an officer, shall have the following powers and duties:
(a) He or she shall preside at all shareholders' meetings;
(b) He or she shall preside at all meetings of the Board of Directors; and
(c) He or she shall be a member of the executive committee, if any.
Section 4.08 The President. The president shall have the following powers
and duties:
(a) If no general manager has been appointed, he or she shall be the chief
executive officer of the corporation, and, subject to the direction of the Board
of Directors, shall have general charge of the business, affairs, and property
of the corporation and general supervision over its officers, employees, and
agents;
<PAGE>
(b) If no chairman of the board has been chosen, or if such officer is
absent or disabled, he or she shall preside at meetings of the shareholders and
Board of Directors;
(c) He or she shall be a member of the executive committee, if any;
(d) He or she shall be empowered to sign certificates representing shares
of the corporation, the issuance of which shall have been authorized by the
Board of Directors; and
(e) He or she shall have all power and shall perform all duties normally
incident to the office of a president of a corporation, and shall exercise such
other powers and perform such other duties as from time to time may be assigned
to him or her by the Board of Directors.
Section 4.10 The Secretary. The secretary shall have the following powers
and duties:
(a) He or she shall keep or cause to be kept a record of all of the
proceedings of the meetings of the shareholders and of the Board of Directors in
books provided for that purpose;
(b) He or she shall cause all notices to be duly given in accordance with
the provisions of these Bylaws and as required by statute;
(c) He or she shall be the custodian of the records and of the seal of the
corporation, and shall cause such seal (or a facsimile thereof) to be affixed to
all certificates representing shares of the corporation prior to the issuance
thereof and to all instruments, the execution of which on behalf of the
corporation under its seal shall have been duly authorized in accordance with
these Bylaws, and when so affixed, he or she may attest the same;
(d) He or she shall assume responsibility that the books, reports,
statements, certificates, and other documents and records required by statute
are properly kept and filed;
(e) He or she shall have charge of the share books of the corporation and
cause the share transfer books to be kept in such manner as to show at any time
the amount of the shares of the corporation of each class issued and
outstanding, the manner in which and the time when such stock was paid for, the
names alphabetically arranged and the addresses of the holders of record
thereof, the number of shares held by each holder and time when each became such
holder or record; and he or she shall exhibit at all reasonable times to any
director, upon application, the original or duplicate share register. He or she
shall cause the share book referred to in
<PAGE>
Section 6.04 hereof to be kept and exhibited at the principal office of the
corporation, or at such other place as the Board of Directors shall determine,
in the manner and for the purposes provided in such Section;
(f) He or she shall be empowered to sign certificates representing shares
of the corporation, the issuance of which shall have been authorized by the
Board of Directors; and
(g) He or she shall perform in general all duties incident to the office
of secretary and such other duties as are given to him or her by these Bylaws or
as from time to time may be assigned to him or her by the Board of Directors or
the president.
Section 4.11 The Treasurer. The treasurer shall have the following powers
and duties:
(a) He or she shall have charge and supervision over and be responsible
for the monies, securities, receipts, and disbursements of the corporation;
(b) He or she shall cause the monies and other valuable effects of the
corporation to be deposited in the name and to the credit of the corporation in
such banks or trust companies or with such banks or other depositories as shall
be selected in accordance with Section 5.03 hereof;
(c) He or she shall cause the monies of the corporation to be disbursed by
checks or drafts (signed as provided in Section 5.04 hereof) drawn on the
authorized depositories of the corporation, and cause to be taken and preserved
property vouchers for all monies disbursed;
(d) He or she shall render to the Board of Directors or the president,
whenever requested, a statement of the financial condition of the corporation
and of all of this transactions as treasurer, and render a full financial report
at the annual meeting of the shareholders, if called upon to do so;
(e) He or she shall cause to be kept correct books of account of all the
business and transactions of the corporation and exhibit such books to any
director on request during business hours;
(f) He or she shall be empowered from time to time to require from all
officers or agents of the corporation reports or statements given such
information as he or she may desire with respect to any and all financial
transactions of the corporation; and
(g) He or she shall perform in general all duties incident to the office
of treasurer and such other duties as are given to him or her by these Bylaws
<PAGE>
or as from time to time may be assigned to him or her by the Board of Directors
or the president.
Section 4.12 General Manager. The Board of Directors may employ and
appoint a general manager who may, or may not, be one of the officers or
directors of the corporation. The general manager, if any, shall have the
following powers and duties;
(a) He or she shall be the chief executive officer of the corporation and,
subject to the directions of the Board of Directors, shall have general charge
of the business affairs and property of the corporation and general supervision
over its officers, employees, and agents;
(b) He or she shall be charged with the exclusive management of the
business of the corporation and of all of its dealings, but at all times be
subject to the control of the Board of Directors;
(c) Subject to the approval of the Board of Directors or the executive
committee, if any, he or she shall employ all employees of the corporation, or
delegate such employment to subordinate officers, and shall have authority to
discharge any person so employed; and
(d) He or she shall make a report to the president and directors as often
as required, setting forth the results of the operations under his or her
charge, together with suggestions looking toward improvement and betterment of
the condition of the corporation, and shall perform such other duties as the
Board of Directors may require.
Section 4.13 Salaries. The salaries and other compensation of the officers
of the corporation shall be fixed from time to time by the Board of Directors,
except that the Board of Directors may delegate to any person or group of
persons the power to fix the salaries or other compensation of any subordinate
officers or agents appointed in accordance with the provisions of Section 4.03
hereof. No officer shall be prevented from receiving any such salary or
compensation by reason of the fact that he or she is also a director of the
corporation.
Section 4.14 Surety Bonds. In case the Board of Directors shall so
require, any officer or agent of the corporation shall execute to the
corporation a bond in such sums and with such surety or sureties as the Board of
Directors may direct, conditioned upon the faithful performance of his or her
duties to the corporation, including responsibility for negligence and for the
accounting of all property, monies, or securities of the corporation which may
come into his or her hands.
<PAGE>
ARTICLE V
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY,
AND DEPOSIT OF CORPORATE FUNDS
Section 5.01 Execution of Instruments. Subject to any limitation contained
in the Articles of Incorporation or these Bylaws, the president or any vice
president or the general manager, if any, may, in the name and on behalf of the
corporation, execute and deliver any contract or other instrument authorized in
writing by the Board of Directors. The Board of Directors may, subject to any
limitation contained in the Articles of Incorporation or in these Bylaws,
authorize in writing any officer or agent to execute and deliver any contract or
other instrument in the name and on behalf of the corporation; any such
authorization may be general or confined to specific instances.
Section 5.02 Loans. No loans or advances shall be contracted on behalf of
the corporation, no negotiable paper or other evidence of its obligation under
any loan or advance shall be issued in its name, and no property of the
corporation shall be mortgaged, pledged, hypothecated, transferred, or conveyed
as security for the payment of any loan, advance, indebtedness, or liability of
the corporation, unless and except as authorized by the Board of Directors. Any
such authorization may be general or confined to specific instances.
Section 5.03 Deposits. All monies of the corporation not otherwise
employed shall be deposited from time to time to its credit in such banks and or
trust companies or with such bankers or other depositories as the Board of
Directors may select, or as from time to time may be selected by any officer or
agent authorized to do so by the Board of Directors.
Section 5.04 Checks, Drafts, Etc. All notes, drafts, acceptances, checks,
endorsements, and, evidences of indebtedness of the corporation, subject to the
provisions of these Bylaws, shall be signed by such officer or officers or such
agent or agents of the corporation and in such manner as the Board of Directors
from time to time may determine. Endorsements for deposit to the credit of the
corporation in any of its duly authorized depositories shall be in such manner
as the Board of Directors from time to time may determine.
Section 5.05 Bonds and Debentures. Every bond or debenture issued by the
corporation shall be evidenced by an appropriate instrument which shall be
signed by the president or vice president and by the secretary and sealed with
the seal of the corporation. The seal may be a facsimile, engraved or printed.
where such bond or debenture is authenticated with the manual signature of an
authorized officer of the corporation or other trustee designated by the
indenture of trust or other agreement under which such security is issued, the
signature of any of the corporation's officers named thereon may be a facsimile.
In case any officer who signed, or whose facsimile signature has
<PAGE>
been used on any such bond or debenture, should cease to be an officer of the
corporation for any reason before the same has been delivered by the
corporation, such bond or debenture may nevertheless be adopted by the
corporation and issued and delivered as through the person who signed it or
whose facsimile signature has been used thereon had not ceased to be such
officer.
Section 5.06 Sale, Transfer, Etc. of Securities. Sales, transfers,
endorsements, and assignments of stocks, bonds, and other securities owned by or
standing in the name of the corporation, and the execution and delivery on
behalf of the corporation of any and all instruments in writing incident to any
such sale, transfer, endorsement, or assignment, shall be effected by the
president, or by any vice president, together with the secretary, or by an
officer or agent thereunto authorized by the Board of Directors.
Section 5.07 Proxies. Proxies to vote with respect to shares of other
corporations owned by or standing in the name of the corporation shall be
executed and delivered on behalf of the corporation by the president or any vice
president and the secretary or assistant secretary of the corporation, or by any
officer or agent thereunder authorized by the Board of Directors.
ARTICLE VI
CAPITAL SHARES
Section 6.01 Share Certificates. Every holder of shares in the corporation
shall be entitled to have a certificate, signed by the president or any vice
president, and the secretary or assistant secretary, and sealed with the seal
(which may be a facsimile, engraved or printed) of the corporation, certifying
the number and kind, class or series of shares owned by him or her in the
corporation; provided, however, that where such a certificate is countersigned
by (a) a transfer agent or an assistant transfer agent, or (b) registered by a
registrar, the signature of any such president, vice president, secretary, or
assistant secretary may be a facsimile. In case any officer who shall have
signed, or whose facsimile signature or signatures shall have been used on any
such certificate, shall cease to be officer of the corporation, for any reason,
before the delivery of such certificate by the corporation, such certificate may
nevertheless be adopted by the corporation and be issued and delivered as though
the person who signed it, or whose facsimile signature or signatures shall have
been used thereon, has not ceased to be such officer. Certificates representing
shares of the corporation shall be in such form as provided by the statutes of
the state of incorporation. There shall be entered on the share books of the
corporation at the time of issuance of each share, the number of the certificate
issued, the name and address of the person owning the shares represented
thereby, the number and kind, class or series of such shares, and the date of
issuance thereof. Every certificate exchanged or
<PAGE>
returned to the corporation shall be marked "Canceled" with the date of
cancellation.
Section 6.02 Transfer of Shares. Transfers of shares of the corporation
shall be made on the books of the corporation by the holder of record thereof,
or by his or her attorney thereunto duly authorized by a power of attorney duly
executed in writing and filed with the secretary of the corporation or any of
its transfer agents, and on surrender of the certificate or certificates,
properly endorsed or accompanied by proper instruments or transfer, representing
such shares. Except as provided by law, the corporation and transfer agents and
registrars, if any, shall be entitled to treat the holder of record of any stock
as the absolute owner thereof for all purposes, and accordingly, shall not be
bound to recognize any legal, equitable, or other claim to or interest in such
shares on the part of any other person whether or not it or they shall have
express or other notice thereof.
Section 6.03 Regulations. Subject to the provisions of this Article VI and
of the Articles of Incorporation, the Board of Directors may make such rules and
regulations as they may deem expedient concerning the issuance, transfer,
redemption, and registration of certificates for shares of the corporation.
Section 6.04 Maintenance of Stock Ledger at Principal Place of Business. A
share book (or books where more than one kind, class, or series or stock is
outstanding) shall be kept at the principal place of business of the
corporation, or at such other place as the Board of Directors shall determine,
containing the names, alphabetically arranged, of original shareholders of the
corporation, their addresses, their interest, the amount paid on their shares,
and all transfers thereof and the number and class of shares held by each. Such
share books shall at all reasonable hours be subject to inspection by persons
entitled by law to inspect the same.
Section 6.05 Transfer Agents and Registrars. The Board of Directors may
appoint one or more transfer agents and one or more registrars with respect to
the certificates representing shares of the corporation, and may require all
such certificates to bear the signature of either or both. The Board of
Directors may from time to time define the respective duties of such transfer
agents and registrars. No certificate for shares shall be valid until
countersigned by a transfer agent, if at the date appearing thereon the
corporation had a transfer agent for such shares, and until registered by a
registrar, if at such date the corporation had a registrar for such shares.
Section 6.06 Closing of Transfer Books and Fixing of Record Date.
<PAGE>
(a) The Board of Directors shall have power to close the share books of
the corporation for a period of not to exceed fifty (50) days preceding the date
of any meeting of shareholders, or the date for payment of any dividend, or the
date for the allotment of rights, or capital shares shall go into effect, or a
date in connection with obtaining the consent of shareholder for any purpose.
(b) In lieu of closing the share transfer books as aforesaid, the Board of
Directors may fix in advance a date, not exceeding fifty (50) days preceding the
date of any meeting of shareholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital shares shall go into effect, or a date in
connection with obtaining any such consent, as a record date for the
determination of the shareholders entitled to a notice of, and to vote at, any
such meeting and any adjournment thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to give
such consent.
(c) If the share transfer books shall be closed or a record date set for
the purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for, or such record date
shall be, at least ten (10) days immediately preceding such meeting.
Section 6.07 Lost or Destroyed Certificates. The corporation may issue a
new certificate for shares of the corporation in place of any certificate
theretofore issued by it, alleged to have been lost or destroyed, and the Board
of Directors may, in its discretion, require the owner of the lost or destroyed
certificate or his or her legal representatives, to give the corporation a bond
in such form and amount as the Board of Directors may direct, and with such
surety or sureties as may be satisfactory to the board, to indemnify the
corporation and its transfer agents and registrars, if any, against any claims
that may be made against it or any such transfer agent or registrar on account
of the issuance of such new certificate. A new certificate may be issued without
requiring any bond when, in the judgement of the Board of Directors, it is
proper to do so.
Section 6.08 No Limitation on Voting Rights; Limitation on Dissenter's
Rights. To the extent permissible under the applicable law of any jurisdiction
to which the corporation may become subject by reason of the conduct of
business, the ownership of assets, the residence of shareholders, the location
of offices or facilities, or any other item, the corporation elects not to be
governed by the provisions of any statute that (i) limits, restricts, modifies,
suspends, terminates, or otherwise affects the rights of any shareholder to cast
one vote for each share of common stock registered in the name of such
<PAGE>
shareholder on the books of the corporation, without regard to whether such
shares were acquired directly from the corporation or from any other person and
without regard to whether such shareholder has the power to exercise or direct
the exercise of voting power over any specific fraction of the shares of the
corporation or from any other person and without regard to whether such
shareholder has the power to exercise or direct the exercise of voting power
over any specific fraction of the shares of common stock of the corporation
issued and outstanding or (ii) grants to any shareholder the right to have his
or her stock redeemed or purchased by the corporation or any other shareholder
on the acquisition by any person or group of persons of shares of the
corporation. In particular, to the extent permitted under the laws of the state
of incorporation, the corporation elects not to be governed by any such
provision, including, the provisions of the Utah Control Shares Acquisition Act,
Section 61-6-1 et seq., of the Utah Code Annotated, as amended, or any statute
of similar effect or tenor.
ARTICLE VII
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 7.01 How Constituted. The Board of Directors may designate an
executive committee and such other committees as the Board of Directors may deem
appropriate, each of which committees shall consist of two or more directors.
Members of the executive committee and of any such other committees shall be
designated annually at the annual meeting of the Board of Directors; provided,
however, that at any time the Board of Directors may abolish or reconstitute the
executive committee or any other committee. Each member of the executive
committee and of any other committee shall hold office until his or her
successor shall have been designated or until his or her resignation or removal
in the manner provided in these Bylaws.
Section 7.02 Powers. During the intervals between meetings of the Board of
Directors, the executive committee shall have and may exercise all powers of the
Board of Directors in the management of the business and affairs of the
corporation, except for the power to fill vacancies in the Board of Directors or
to amend these Bylaws, and except for such powers as by law may not be delegated
by the Board of Directors to an executive committee.
Section 7.03 Proceedings. The executive committee, and such other
committees as may be designated hereunder by the Board of Directors, may fix its
own presiding and recording officer or officers, and may meet at such place or
places, at such time or times and on such notice (or without notice) as it shall
determine from time to time. It will keep a record of its proceedings and shall
report such proceedings to the Board of Directors at the meeting of the Board of
Directors next following.
<PAGE>
Section 7.04 Quorum and Manner of Acting. At all meetings of the executive
committee, and of such other committees as may be designated hereunder by the
Board of Directors, the presence of members constituting a majority of the total
authorized membership of the committee shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the act of a majority
of the members present at any meeting at which a quorum is present shall be the
act of such committee. The members of the executive committee, and of such other
committees as may be designated hereunder by the Board of Directors, shall act
only as a committee and the individual members thereof shall have not powers as
such.
Section 7.05 Resignations. Any member of the executive committee, and of
such other committees as may be designated hereunder by the Board of Directors,
may resign at any time by delivering a written resignation to either the
president, the secretary, or assistant secretary, or to the presiding officer of
the committee of which he or she is a member, if any shall have been appointed
and shall be in office. Unless otherwise specified herein, such resignation
shall take effect on delivery.
Section 7.06 Removal. The Board of Directors may at any time remove any
member of the executive committee or of any other committee designated by it
hereunder either for or without cause.
Section 7.07 Vacancies. If any vacancies shall occur in the executive
committee or any other committee designated by the Board of Directors hereunder,
by reason of disqualification, death, resignation, removal, or otherwise, the
remaining members shall, until the filling of such vacancy, constitute the then
total authorized membership of the committee and, provided that two or more
members are remaining, continue to act. Such vacancy may be filled at any
meeting of the Board of Directors.
Section 7.07 Compensation. The Board of Directors may allow a fixed sum
and expenses of attendance to any member of the executive committee, or of any
other committee designated by it hereunder, who is not an active salaried
employee of the corporation for attendance at each meeting of said committee.
ARTICLE VIII
INDEMNIFICATION, INSURANCE, AND
OFFICER AND DIRECTOR CONTRACTS
Section 8.01 Indemnification: Third Party Actions. The corporation shall
have the power to indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action, or suit by
or in the right of the corporation to procure a judgement in its favor by
reason of the fact that he or she is or was a director, officer, employee, or
<PAGE>
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees) judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him or her in connection with any such action, suit or proceeding,
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interest of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, he or she had reasonable
cause to believe that his or her conduct was unlawful.
Section 8.02 Indemnification: Corporate Actions. The corporation shall
have the power to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he or she is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit, if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification shall be made
in respect of any claim, issue, or matter as to which such a person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his or her duty to the corporation, unless and only to the extent that the court
in which the action or suit was brought shall determine on application that,
despite the adjudication of liability but in view of all circumstances of the
case, the person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.
Section 8.03 Determination. To the extent that a director, officer,
employee, or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in Sections
8.01 and 8.02 hereof, or in defense of any claim, issue, or matter therein, he
or she shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection therewith. Any
other indemnification under Sections 8.01 and 8.02 hereof, shall be made to the
corporation upon a determination that indemnification of the officer, director,
employee, or agent is proper in the circumstances because he or she has met the
<PAGE>
applicable standard of conduct set forth in Sections 8.01 and 8.02 hereof. Such
determination shall be made either (i) by the Board of Directors by a majority
of a quorum consisting of directors who were not parties to such action, suit,
or proceeding; or (ii) by independent legal counsel on a written opinion; or
(iii) by the shareholders by a majority vote of a quorum of shareholders at any
meeting duly called for such purpose.
Section 8.04 General Indemnification. The indemnification provided by this
Section shall not be deemed exclusive of any other indemnification granted under
any provision of any statute, in the corporation's Articles of Incorporation,
these Bylaws, agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent, and shall inure to
the benefit of the heirs and legal representatives of such a person.
Section 8.05 Advances. Expenses incurred in defending a civil or criminal
action, suit or proceeding as contemplated in this Section may be paid by the
corporation in advance of the final disposition of such action, suit, or
proceeding upon a majority vote of a quorum of the Board of Directors and upon
receipt of an undertaking by or on behalf of the director, officers, employee,
or agent to repay such amount or amounts unless if it is ultimately determined
that he or she is to be indemnified by the corporation as authorized by this
Section.
Section 8.06 Scope of Indemnification. The indemnification authorized by
this Section shall apply to all present and future directors, officers,
employees, and agents of the corporation and shall continue as to such persons
who cease to be directors, officers, employees, or agents of the corporation,
and shall inure to the benefit of the heirs, executors, and administrators of
all such persons and shall be in addition to all other indemnification permitted
by law.
8.07 Insurance. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
or her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify him or her against any such liability and under the laws of the state
of incorporation, as the same may hereafter be amended or modified.
<PAGE>
ARTICLE IX
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE X
DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and on the terms and
conditions provided by the Articles of Incorporation and these Bylaws.
ARTICLE XI
AMENDMENTS
All Bylaws of the corporation, whether adopted by the Board of Directors
or the shareholders, shall be subject to amendment, alteration, or repeal, and
new Bylaws may be made, except that;
(a) No Bylaws adopted or amended by the shareholders shall be altered or
repealed by the Board of Directors;
(b) No Bylaws shall be adopted by the Board of Directors which shall
require more than a majority of the voting shares for a quorum at a meeting of
shareholders, or more than a majority of the votes cast to constitute action by
the shareholders, except where higher percentages are required by law; provided,
however that (I) if any Bylaw regulating an impending election of directors is
adopted or amended or repealed by the Board of Directors, there shall be set
forth in the notice of the next meeting of shareholders for the election of
directors, the Bylaws so adopted or amended or repealed, together with a concise
statement of the changes made; and (ii) no amendment, alteration or repeal of
this Article XI shall be made except by the shareholders.
<PAGE>
CERTIFICATE OF SECRETARY
The undersigned does hereby certify that he or she is the secretary of
Tecon, Inc., a corporation duly organized and existing under and by virtue of
the laws of the State of Utah; that the above and foregoing bylaws of said
corporation were duly and regularly adopted as such by the Board of Directors of
the corporation at a meeting of the board of Directors, which was duly and
regularly held on the 17th day of November, 1998 and that the above and
foregoing Bylaws are now in full force and effect.
DATED this 18th day of November, 1998.
By/S/ Shelley Goff
Shelley Goff, Secretary and Treasurer
<PAGE>
RESOLUTION OF THE BOARD OF DIRECTORS OF
TECON, INC.
The undersigned, being all of the duly elected and incumbent directors of
Tecon, Inc., a Utah corporation (the ("Corporation"), acting pursuant to Section
16-10a-821 of the Utah Revised Business Corporation Act, do hereby unanimously
consent to and adopt the following resolutions, effective the date hereof:
RESOLVED, that the Corporation shall undertake a reverse split of its
common stock on the basis of one share for approximately 51.662, effective
at 8:00 a.m., Mountain Standard Time, on November 20, 1995, provided that
no stockholder's holdings shall be reduced to less than one share as a
result of said reverse split, with all fractions being rounded up to the
nearest whole share, and further provided that certain principal
stockholders who have agreed to deliver up to 1000 shares to cover any
rounding do in fact deliver such shares for cancellation;
FURTHER, RESOLVED, that Leonard W. Burningham, Esq. is hereby
authorized to prepare such documentation and do such acts as are necesssar
to implement said reverse split; and
FURTHER, RESOLVED, that the bylaws of the Company be and they hereby
are amended to reflect that the provisions of the Utah Control Share
Acquisition Act shall not be applicable to the Company; and
FURTHER, RESOLVED, that Shelley Goff execute such amendment to the
Bylaws in her capacity as Secretary of the Company.
Date: 10-18-95 /S/ SHERYL ROSS
------------------------ -------------------
Sheryl Ross
Date: Oct. 12, 1995 /S/ Brad Burningham
------------------------ -------------------
Date: 10/18/95 /S/ Shelley Goff
------------------------ -------------------
<PAGE>
October 23, 1995
Interwest Stock Transfer
1981 E. Murray-Holladay Road
Salt Lake City, Utah 84117
Attention: Kurt Hughes
Re: 1 for approximately 51.662 reverse split of the common voting
stock of Tecon, Inc., a Utah corporation (the "Company")
Dear Kurt:
Pursuant to the attached resolution of the Board of Directors of the
Company, I am requesting you to reflect the above-referenced reverse split on
the records of the Company, effective as of 8:00 a.m. Mountain Standard Time, on
November 20, 1995.
This reverse split was accomplished by resolution of the Board of
Directors, without the necessity of filing an amendment to the Company's
Articles of Incorporation with the State of Utah. In my opinion as counsel to
the Company, this action follows the legal precedent of Seed Products
International, Inc. v. Owen, 768 P.2d 973 (Utah App. 1989) ("Owen"), in which
Atlas Stock Transfer was the Plaintiff.
In Owen, the Utah Court of Appeals discussed the types of corporate actions
for which an amendment to the corporation's Articles of Incorporation must be
filed. The court relied on the long-standing precedent of Jackson v. Crown Point
Mining Co., 59 P. 238 (1899), in which the Utah Supreme Court held that an
amendment to a corporation's Articles of Incorporation needs to be filed only in
cases of "fundamental corporate changes, i.e., those that alter the character of
a corporation, add or diminish the scope of its powers, or violate state
policy." 768 P.2d at 975.
The Owen court concluded that the 20 to 1 reverse split of Seed Products'
stock did not meet the "fundamentality" requirement of Jackson and that the
requirement of filing an amendment to its Articles of Incorporation did not
apply. 768 P.2d at 975.
The Utah Legislature has substantially revised the Utah Business
Corporation Act in the period following the issuance of the Owen decision in
1989. The Utah Revised Business Corporation Act (the "Revised Act") was
promulgated in 1992, a full three years after Owen. It is therefore apparent
that, if the Legislature had wanted to overrule Owen through legislation, it
could have done so in the Revised Act.
The Revised Act neither imposes nor specifically denies the requirement
that a corporation amend its Articles of Incorporation in connection with a
reverse split of its stock. This lack of legislation three years following Owen,
when it was still a fairly recent and "fresh" case, suggests that the
Legislature had no desire to overrule the precedent of that case.
Nor has Owen been overruled by the Utah courts. It remains as valid as it
was when the decision was issued.
The Revised Act does not require stockholder approval of reverse splits of
a corporation's stock. Section 16-10a-1003 discusses certain corporate actions
that require such approval. However, this Section is inapplicable to the
Company's reverse split for two reasons: (i) it pertains only to an amendment of
the Articles of Incorporation, which, as shown above, is not necessary here; and
(ii) even if Section 16-10a-1003 otherwise applied to this transaction, the only
reverse split-related event for which the Section requires a stockholder vote is
triggered when fractional shares are created; as stated in the attached
resolution, no fractional shares will be created here.
<PAGE>
I have requested the CUSIP Bureau to issue a new CUSIP number for the
Company's stock, and new stock certificates will be ordered. I will advise you
of the new number as soon as I receive it, and the new stock certificates will
be provided when printed.
Please be advised that the Company will not pay for any transfers as a
result of the reverse split; that responsibility will lie with any transferring
stockholders.
Round to end up with 300,000 shares, which is the purpose of the reverse
split. Principal stockholders will provide shares for any such rounding.
Please contact me if you have any questions or comments.
Yours very sincerely,
Leonard W. Burningham
<PAGE>
Tecon, Inc.
c/o Leonard W. Burningham, Esq.
Suite 205, Hermes Building
455 East 500 South Street
Salt Lake City, Utah 84111
Re: Covenant Not to Sue and Compromise and Settlement of debt of
Tecon, Inc., a Utah corporation ("Tecon"), to the undersigned,
Wayne Smith ("Mr. Smith")
Dear Ladies and Gentlemen:
In consideration of $10 and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned does
hereby represent, warrant and agree and follows, to-wit:
1. Mr. Smith is the holder of a firstt mortgage on all assets of Tecon and
its wholly owned subsidiary, Tecon, Inc., a Washington corporation ("Tecon
Washington"), which was foreclosed in 1992, leaving a balance due and owing to
him of approximately $750,000.
2. Mr. Smith is the owner all right, title and interest of the cloaims of
Care America, Inc. against Tecon or Tecon Washington, amounting to approximatley
$750,000.
3. Neither Tecon nor Tecon Washington have engaged in any business of which
Mr. Smith is aware (excluding the corporate restructuring of Tecon of which Mr.
Burningham has advised him) since March 31, 1992, and that the last unpaid debts
incurred by Tecon or Tecon Washington while Mr. Smith was a director or
executive officers thereof were incurred in the quarter ended September 30,
1991, and were debts related to utilities, telephone, electricity and the like.
4. Mr. Smith covenants not to sue Tecon or Tecon Washington on any debt
owed to him, personally or by virture of the assignment of Care America's claim
to him; and he hereby compromises and settles any such claims, including
principal, interest, cost or otherwise.
Dated: 1-10-97 /S/ WAYNE SMITH
------------ -------------------
Wayne Smith
<PAGE>
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