SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 [Fee Required]
For the fiscal year ended December 31, 1998 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the transition period from________________ to __________________
Commission File No. 33-15096-D
MILESTONE CAPITAL, INC.
--------------------------------------------
(Name of Small Business Issuer in its Charter)
Colorado 84-1111224
- --------------------------------------------- -------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) Number)
26 West Dry Creek Circle, Suite 600
Littleton, Colorado 80120
- --------------------------------------------- -------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 794-9450
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
No Par Value Common Stock
-------------------------
(Title of Class)
Check whether the Registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes [ ] No [X]
As of April 30, 1999, 7,879,139 shares of the Registrant's no par value
Common Stock were outstanding. As of April 30, 1999, there was no market value
of the Registrant's no par value Common Stock, since such stock was not trading
on any exchange.
Check if there is no disclosure contained herein of delinquent filers in
response to Item 405 of Regulation S-B, and will not be contained, to the best
of the Registrant'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. [X]
The Registrant's revenues for its most recent fiscal year were negligible.
The following documents are incorporated by reference into Part III, Items
9 through 12 hereof: None.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
- -------------------------------
The following is a summary of certain information contained in this Report
and is qualified in its entirety by the detailed information and financial
statements that appear elsewhere herein. Except for the historical information
contained herein, the matters set forth in this Report include forward-looking
statements within the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to risks and uncertainties that may cause actual results to differ
materially. These risks and uncertainties are detailed throughout the Report and
will be further discussed from time to time in the Company's periodic reports
filed with the Commission. The forward-looking statements included in the Report
speak only as of the date hereof.
Introduction
Milestone Capital, Inc. (the "Company") was organized as Shield Enterprises
Corporation, a Colorado Corporation, on February 6, 1987. The Company was formed
for the purpose of engaging in a merger with, or acquisition of, one or a small
number of private companies, partnerships or sole proprietorships. In May, 1990,
the Company merged with Milestone Capital, Inc., a Delaware Corporation engaged
in the business of investing in and providing managerial assistance to
developing companies and the Company changed its name to Milestone Capital, Inc.
The Company is seeking business opportunities through the merger or acquisition
of one or more private companies and has had no material operations during the
past three years.
Decisions as to which business opportunities to merge with or acquire are
made by the Company's management acting without the consent, vote or approval of
the Company's stockholders. The Company has no agreement, understanding or
arrangement to acquire or participate in any specific business opportunity, nor
has it identified any opportunities for investigation.
The Company is using office space on a rent-free basis from an officer and
director at 26 West Dry Creek Circle, Suite 600, Littleton, Colorado 80120. The
Company's telephone number is (303) 794-9450.
Plan of Operation
The Company's principal business objective is to achieve long-term growth
through acquisition of a business opportunity.
For a number of years privately-held operating companies have used
widely-held or publicly-held "shell" companies (hereafter sometimes referred to
as "public shell(s)") as merger candidates in order to allow the privately-held
companies to become publicly-held without incurring the cost and time
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requirements of a traditional public offering. Generally, the public shell
company has no assets, liabilities, net worth or revenues but may have many
stockholders and often (but not necessarily), a limited public trading market
for its securities. By merging with such a public shell, the private company
succeeds to the widely-held stockholder base of the public shell.
In connection with its acquisition of a business opportunity, the Company
does not restrict its search to any specific business, industry or geographical
location, and may participate in a business venture of virtually any kind or
nature. The discussion of the proposed business is general and is not meant to
restrict the Company's unlimited discretion to participate in various business
opportunities. Management of the Company will not consult with the Company's
stockholders nor seek their approval with respect to identifying, investigating,
analyzing and acquiring a business opportunity for the Company. The Company's
potential success depends upon its management, which has virtually unlimited
discretion in searching for and entering into an agreement with a business
opportunity.
Management anticipates that the Company will be able to participate in only
one business opportunity, due to the Company's lack of assets and net worth. The
Company's primary efforts are toward acquiring or merging with a business which
does not need additional cash or assets but desires to establish a widely-held
stockholder base and a possible trading market for its securities. The Company
may also acquire assets and establish wholly-owned subsidiaries in various
businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and will entail a high degree of risk.
Because of general economic conditions, rapid technological advances being made
in some industries and shortages of available capital, management believes that
there are numerous firms seeking the benefits of a publicly-traded company. The
benefits of a publicly-traded company may include facilitating or improving the
terms upon which additional equity financing may be sought, providing liquidity
for the principals of a business, creating a means for providing incentive stock
options or similar benefits to key employees, providing liquidity (subject to
restrictions of applicable statutes) for stockholders, and other factors.
Business opportunities may occur in many different industries and at various
stages of development, all of which will make the task of investigation and
analysis of these business opportunities extremely difficult.
The Company has no capital with which to provide the owners of business
opportunities with cash or other assets. However, management believes the
Company will offer owners of business opportunities the ability to acquire a
controlling ownership interest in a widely-held company at substantially less
cost than is required to conduct an initial public offering. The owners of
business opportunities will, however, incur significant post-merger or
acquisition registration costs in the event they wish to register a portion of
their securities for subsequent sale. The Company will also incur significant
legal and accounting costs in connection with the acquisition of a business
opportunity, including the costs of preparing post-effective amendments, Forms
8-K, agreements and related reports and documents. Any such expenses will be
borne by the business opportunity, as the Company will not have the necessary
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funds. The Company's management has not conducted market research and is not
aware of statistical data which would support the perceived benefits of a merger
or acquisition transaction for the owners of a business opportunity. In the
event the Company is unable to obtain a merger candidate, it will become
inactive.
Evaluation of Opportunities
The analysis of business opportunities is undertaken by the officers and
directors of the Company, none of whom is a professional business analyst. The
Company has no funds to analyze and negotiate a possible merger and is forced to
rely upon the efforts of its officers and directors to provide the Company with
the necessary time to assist the Company in analyzing business opportunities. In
the event the Company's officers and directors do not provide these efforts, the
Company will not have the management time or funds to analyze or negotiate a
business opportunity, thereby further reducing the likelihood that the Company
can fulfill its business plans. In analyzing business opportunities, management
considers such matters as available technical, financial and managerial
resources; working capital and other financial requirements; history of
operation, if any; prospects for the future; the nature of present and expected
competition; quality and experience of management services which may be
available, including the depth of that management; the potential for further
research, development or exploration; specific risk factors not now foreseeable
but which may be anticipated to have an impact on the proposed activities of the
Company; the potential for growth or expansion; the potential for profit; the
perceived public recognition or acceptance of products, services or trades; name
identification; and other relevant factors. To the extent possible, the Company
utilizes written reports and personal investigation to evaluate the above
factors.
It may be anticipated that any business opportunity in which the Company
participates will present certain risks. Many of these risks cannot be
adequately identified prior to selection of the specific opportunity, and
stockholders must therefore depend upon the ability of management to identify
and evaluate these risks. In the case of some of the business opportunities
available to the Company, it may be anticipated that the promoters have been
unable to develop a going concern or the business is in its development stage in
that it has not generated significant revenues from its principal business
activity prior to the Company's participation, and there is a significant risk,
even after the Company's participation in the activity, that the combined
enterprises will still be unable to become a going concern or advance beyond the
development stage. Many of the opportunities may involve new and untested
products, processes or market strategies which may not succeed. These risks will
be assumed by the Company and, therefore, its stockholders.
The Company does not restrict its search to any specific kind of firms but
may acquire a venture which is in its preliminary or development stage, which is
already in operation, or in any stage of its business life. It is impossible to
predict at this time the requirements of any business in which the Company may
become involved in that the business may need additional capital which the
Company may be unable to provide, may merely desire to have its securities
publicly-traded, or may seek other perceived advantages which the Company may
offer.
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Acquisition of Opportunities
In implementing its participation in a particular business opportunity, the
Company may become party to a merger, consolidation, reorganization, joint
venture or licensing agreement with another corporation or entity or may acquire
stock or assets of an existing business. Moreover, the Company's principal
stockholders may sell all or a portion of their shares to the business
opportunity or to its officers, directors or principal stockholders. On the
consummation of a transaction, it is likely that the present management and
stockholders of the Company will not be in control of the merged entity. In
addition, a majority of all of the Company's directors may, as part of the terms
of the acquisition transaction, resign and be replaced by new directors without
a vote of the Company's stockholders.
The Company's stockholders will not be asked to vote upon any merger,
acquisition, share exchange or other arrangement with any business opportunity.
Such determination will be made solely by the Company's Board of Directors.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemptions from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of the transaction, the Company may agree to register the
securities either at the time the transaction is consummated, under certain
conditions, or at specified times thereafter. Any costs associated with the
registration must be paid by the Company's merger partner, since the Company
will have no funds available for that purpose. The issuance of substantial
additional securities and their potential sale into any trading market which may
develop in the Company's securities may have a depressive effect on such trading
market.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the transaction will be structured
as a so-called "tax-free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code of 1986, as amended (the "Code"). In certain circumstances
the criteria for determining whether or not an acquisition is a "tax-free"
reorganization under Section 368(a)(1) of the Code, depends upon the acquiring
corporation receiving ownership of the stock of the acquired corporation,
possessing at least 80% of the total combined voting power of all classes of
stock entitled to vote and at least 80% of the total number of shares of all
other classes of stock of the acquired corporation.
As part of the Company's investigation of business opportunities, its
officers and directors meet personally with management and key personnel, visit
and inspect material facilities, obtain independent analysis or verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited management expertise. Thereafter, the manner in which the Company
participates in an opportunity depends upon the nature of the opportunity, the
respective needs and desires of the Company and other parties, the management of
the parties and the relative negotiating strength of the parties.
4
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With respect to any mergers or acquisitions, negotiations with target
company management will be expected to focus on the percentage of the Company
which target company stockholders would acquire in exchange for their
stockholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's stockholders will hold a
substantially smaller percentage ownership interest in the Company following any
merger or acquisition. The percentage ownership may be subject to significant
reduction in the event the Company acquires a target company with substantial
assets. Any merger or acquisition effected by the Company can be expected to
have a significant dilutive effect on the percentage of shares held by the
Company's then-stockholders.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and possible costs for accountants and consultants. Any such costs
must be paid by the target company.
As is customary in the industry, the Company may pay a finder's fee in cash
or stock for locating a merger or acquisition candidate. If any such fee is
paid, it will be approved by the Company's board of directors. Due to the
Company's lack of capital, a merger or acquisition candidate may be required to
pay any cash finder's fee agreed to by the Company, unless the Company is able
to obtain funds from another source of which there can be no assurance.
Competition
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than the Company. In
view of the Company's lack of financial resources and limited management
availability, the Company will continue to be at a significant competitive
disadvantage compared to its competitors. The Company will also be competing
with a large number of small, widely-held companies located throughout the
United States, as well as other publicly-held companies.
Regulation
The 1940 Act defines an "investment company" as an issuer which is or holds
itself out as being engaged primarily in the business of investing, reinvesting
or trading of securities. While the Company does not intend to engage in such
activities, it could become subject to regulation under the 1940 Act in the
event it obtains or continues to hold a minority interest in a number of
enterprises. The Company will incur significant registration and compliance
costs if required to register under the 1940 Act. Accordingly, management will
review the Company's activities from time to time with a view to reducing the
likelihood that the Company would be classified an "investment company."
5
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Employees
The Company has no salaried employees, and none of its officers, directors
or principal stockholders will receive any compensation for any assistance they
may provide the Company.
Facilities
Currently, the Company is provided rent free office space by an officer and
director of the Company at 26 West Dry Creek Circle, Suite 600, Littleton,
Colorado 80120. The Company may be responsible for reimbursement for
out-of-pocket office expenses, such as telephone, postage or supplies and may be
responsible for travel, legal and accounting expenses.
Year 2000 Issues
The Year 2000 issue revolves around the inability of many computer systems
to correctly process dates after December 31, 1999. In the 1960s and 1970s,
computer storage and memory were very expensive. To conserve resources and
space, programmers stored year information as two digits instead of four (e.g.,
"59" rather than "1959"). Beginning in the year 2000, these date fields will
need to accept four digit entries to distinguish 21st century dates from 20th
century (or earlier) dates. As a result, computer systems and/or software
products used by many companies may need to be upgraded to comply with Year 2000
requirements.
As defined by the Company, Year 2000 compliance refers to applications and
systems which are capable of correct identification, manipulation and
calculation using dates outside the 1900-1999 year range and have been tested as
such. In this regard, the Company recognizes the complexity and significance of
the Year 2000 issue but does not believe that the problem will directly affect
the Company or its operations. As applicable, the Company will insure that any
merger candidate has addressed the Year 2000 problem.
ITEM 2. DESCRIPTION OF PROPERTY
- -------------------------------
The Company is provided rent free office space by an officer and director
of the Company at 26 West Dry Creek Circle, Suite 600, Littleton, Colorado
80120. The Company may be responsible for reimbursement for out-of-pocket office
expenses, such as telephone, postage or supplies.
ITEM 3. LEGAL PROCEEDINGS
- -------------------------
Not applicable.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------
Not applicable.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- ----------------------------------------------------------------
The Company's Common Stock is not traded on any market system.
As of May 31, 1999, the Company had approximately 123 record and beneficial
stockholders.
Dividend Policy
The Company has never paid cash dividends on its Common Stock and intends
to retain earnings, if any, for use in the operation and expansion of its
business. The amount of future dividends, if any, will be determined by the
Board of Directors based upon the Company's earnings, financial condition,
capital requirements and other conditions.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- -----------------------------------------------------------------
Results of Operations
Year Ended December 31, 1998 vs. Year Ended December 31, 1997
The Company was dormant in 1997. In 1998, the Company's efforts centered
around bringing its books and records up to date. No operating revenues were
generated in 1998 or 1997. Operating expenses increased by $11,948 to $12,068
for 1998 compared to $120 for 1997. This increase in operating expenses resulted
from professional fees incurred in connection with updating the Company's books
and records. The Company's net loss increased to $12,061 for 1998 compared to
$108 for 1997.
Liquidity and Capital Resources
As of December 31, 1998, the Company's working capital deficit was $15,781
compared to $3,720 at December 31, 1997. The working capital deficit increased
by $12,061 primarily as a result of increased accounts payable and loans payable
to stockholders for the funding of 1998 operating expenses.
In February 1999, the Company sold 3,750,000 shares of its common stock at
$.004 per share resulting in cash proceeds of $15,000. Also, in February 1999,
loans payable to a stockholder of $11,525 were converted at $.004 per share into
2,881,225 shares of the Company's common stock.
The Company does not have sufficient funds to continue its operating
activities. Future operating activities are expected to be funded by loans from
a major stockholder.
7
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ITEM 7. FINANCIAL STATEMENTS
LARRY LEGEL, CPA
5100 NORTH FEDERAL HIGHWAY, #409
FORT LAUDERDALE, FL 33308
(954) 493-8900
INDEPENDENT AUDITOR'S REPORT
----------------------------
Stockholders
Milestone Capital, Inc.
Englewood, Colorado
I have audited the accompanying balance sheet of Milestone Capital, Inc. as of
December 31, 1998 and 1997, and the related statements of operations, changes in
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, the
financial position of Milestone Capital, Inc. as of December 31, 1998 and 1997,
and the results of its operations and its cash flows for the years then ended,
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The continuation of the Company's business is
dependent upon its ability to maintain adequate financing arrangements and
ultimately, upon future profitable operations. These matters raise substantial
doubt about its ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Larry Legel
LARRY LEGEL
Certified Public Accountant
February 17, 1999
F-1
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<TABLE>
<CAPTION>
MILESTONE CAPITAL, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1998 AND 1997
1998 1997
---- ----
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents ...................... $ 59 $ 280
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable ............................... $ 4,315 $ 2,000
Loans payable to stockholder ................... 11,525 2,000
--------- ---------
Total current liabilities .................. 15,840 4,000
--------- ---------
STOCKHOLDERS' EQUITY:
Common stock, no par value, 20,000,000
shares authorized 1,247,914 shares
issued and outstanding ........................ 481,078 481,078
Treasury stock, 680 shares at cost ............. (200) (200)
Retained earnings (accumulated deficit) ........ (496,659) (484,598)
--------- ---------
Total stockholders' equity ................ (15,781) (3,720)
--------- ---------
TOTAL ..................................... $ 59 $ 280
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
MILESTONE CAPITAL, INC.
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
---- ----
<S> <C> <C>
REVENUES ......................................................... $ 7 $ 12
EXPENSES ......................................................... 12,068 120
---------- ----------
LOSS BEFORE TAXES ................................................ 12,061 108
PROVISION FOR INCOME TAXES ....................................... -0- -0-
---------- ----------
NET LOSS ......................................................... $ 12,061 $ 108
========== ==========
Net income (Loss) per share of
common stock:
Basic ............................................................ $ .01 $ .00
========== ==========
Diluted .......................................................... $ .01 $ .00
========== ==========
Weighted average number of common shares outstanding:
Basic ............................................................ 1,247,914 1,247,914
========== ==========
Diluted .......................................................... 1,247,914 1,247,914
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
MILESTONE CAPITAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
COMMON STOCK TREASURY STOCK
---------------------- -------------------- RETAINED
NO. OF NO NO. OF NO PAR EARNINGS
SHARES PAR VALUE SHARES VALUE (DEFICIT) TOTAL
------ --------- ------ ------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1996 ...................... 1,247,914 481,078 680 (200) (484,490) (3,612)
Net loss for year ended December 31, 1997 ........ (108) (108)
---------- ---------- ---------- ---------- ---------- ----------
Balance - December 31, 1997 ...................... 1,247,914 481,078 690 (200) (484,598) (3,720)
Net loss for year ended December 31, 1998 ........ (12,061) (12,061)
---------- ---------- ---------- ---------- ---------- ----------
Balance - December 31, 1998 ...................... 1,247,914 $481,078 680 (200) $ (496,659) $ (15,781)
========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
MILESTONE CAPITAL, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (Loss) ..................................... $(12,061) $ (108)
Adjustments to reconcile net income (Loss)
to net cash (used) by operating activities:
Increase in accounts payable .......................... 2,315 -0-
Increase in loans payable to stockholder .............. 9,525 -0-
-------- --------
Net cash (used) by operating activities ............... (221) (108)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES: ..................... -0- -0-
CASH FLOWS FROM FINANCING ACTIVITIES: ..................... -0- -0-
-------- --------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ..................................... (221) (108)
BEGINNING OF YEAR-
Cash and cash equivalents ................................ 280 388
-------- --------
END OF YEAR -
Cash and cash equivalents ................................ $ 59 $ 280
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
MILESTONE CAPITAL, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
- ---------------------------------------------------------------------
Milestone Capital, Inc. was incorporated under the laws of the State of
Colorado as Shield Enterprises Corporation on February 5, 1987. The articles
of incorporation were amended on May 8, 1990 and the name was changed to
Milestone Capital, Inc.
Basis of Presentation - The accompanying financial statements have been
prepared on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amount and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's continuation as a going
concern is dependent upon its ability to generate sufficient cash flow to
meet its obligations on a timely basis and to obtain additional financing as
may be required.
The Company's continued existence is dependent upon its ability to secure
loans from its President and/or a principal stockholder. Future operating
expenses will be funded by these loans. The Company's ability to continue to
meet its obligations is dependent upon obtaining the above loans.
Cash and Cash Equivalents - For purposes of the statements of cash flows, the
Company considers all highly liquid investments with a maturity of three
months or less at the date of purchase to be cash equivalents.
Net Income (Loss) Per Share of Common Stock - As of December 31, 1997, the
Company adopted Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings Per Share," which specifies the method of computation, presentation
and disclosure for earnings per share. SFAS No. 128 requires the presentation
of two earnings per share amounts, basic and diluted.
Basic earnings per share is calculated using the average number of common
shares outstanding. Diluted earnings per share is computed on the basis of
the average number of common shares outstanding plus the dilutive effect of
outstanding stock options using the "treasury stock" method.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that effect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
F-6
<PAGE>
MILESTONE CAPITAL, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 2 - HISTORY
- ----------------
The Company was actively engaged in the business of investing in and
providing managerial assistance to developing growth Companies until 1995.
All previous investments have been sold or become worthless. All debts
previous to those on the current balance sheet have been satisfied or
forgiven.
NOTE 3 - COMMON STOCK
- ---------------------
The Company has issued common stock since its inception in 1987 for both cash
and services. The Company sold stock in a public offering on June 16, 1989.
In the public offering, the Company issued units that contained both common
shares and warrants. All warrants expired June 16, 1992.
NOTE 4 COMMITMENTS AND CONTINGENCIES - THE YEAR 2000
- ----------------------------------------------------
The Company is currently working to resolve the potential impact of the Year
2000 on the processing of date-sensitive information by the Company's
computerized information systems. The Year 2000 problem is the result of
computer programs being written using two digits (rather than four) to define
the applicable year. Any of the Company's programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the
year 2000, which could result in miscalculations or system failures. Costs of
addressing potential problems are expensed as incurred and are not expected
to have a material adverse impact on the Company's financial position,
results of operations or cash flows in future periods. However, if the
Company or its vendors are unable to resolve such processing issues in a
timely manner, it could result in a material financial risk. Accordingly, the
Company plans to devote the necessary resources to resolve all significant
Year 2000 issues in a timely manner. While the Company does not at this time
anticipate significant problems with suppliers, it will develop contingency
plans, if required, with these third parties due to the possibility of
compliance issues.
F-7
<PAGE>
MILESTONE CAPITAL, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
NOTE 5 - INCOME TAXES
- ---------------------
Significant components of deferred income taxes as of December 31, 1998 and
1997 are as follows:
1998 1997
---- ----
Net operating loss carryforward $ 188,500 $ 188,500
---------- ----------
Total deferred tax asset 188,500 188,500
Less Valuation allowance (188,500) (188,500)
---------- ----------
Net deferred tax asset $ -0- $ -0-
========== ==========
The Company has assessed its past earnings history and trends and expiration
dates of carryforwards and has determined that it is more likely than not
that no deferred tax assets will be realized. A valuation allowance of
$188,500 as of December 31, 1998 and 1997 is maintained on deferred tax
assets which the Company has not determined to be more likely than not
realized at this time. The Company will continue to review this valuation on
an annual basis and make adjustments as appropriate.
As of December 31, 1998, the Company had net operating loss carryforwards of
approximately $495,000. The net operating losses can be carried forward
twenty years to offset future taxable income. The net operating loss
carryforwards expire in the years 2009 through 2018.
NOTE 6 - SUBSEQUENT EVENTS
- --------------------------
On February 8, 1999, there were two significant events relative to the debt
of the Company and the issuance of common stock.
2,881,225 common shares were issued to existing shareholders in liquidation
of $11,525 of Loans payable to stockholder on the balance sheet.
Also, on the same day, 3,750,000 common shares were issued to existing
shareholders in exchange for $15,000 of cash.
Therefore, as the end of the first quarter at March 31, 1999, 7,879,139
common shares are now outstanding.
F-8
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- --------------------------------------------------------------------------------
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
- --------------------------------------------------------------------------------
Officers and Directors
The name, age and position of each of the Company's executive officers and
directors are set forth below:
Officer/Director
Name Age Position Since
- ---- --- -------- ----------------
Earnest Mathis, Jr. 39 Chief Executive Officer, 1999
Chief Financial Officer, Secretary
and Director
Directors hold office for a period of one year from their election at the
annual meeting of stockholders or until their successors are duly elected and
qualified. Officers of the Company are elected by, and serve at the discretion
of, the Board of Directors. Board members do not receive any compensation for
time expended on behalf of the Company including attendance at Board meetings.
Background
The following is a summary of the business experience, for at least the
last five years, of each executive officer and director of the Company:
Earnest Mathis, Jr. Mr. Mathis has served as Chief Executive Officer, Chief
Financial Officer, Secretary and a Director of Milestone Capital, Inc. Since
January 1999. From January 1987 to the present, Mr. Mathis has been president
and a member of the Board of Directors of Inverness Investments, Inc., a firm
8
<PAGE>
investing in privately and publicly-held companies and mergers and acquisition
activities. Mr. Mathis has served as Secretary and Director of Creative Business
Concepts, Inc., a firm specializing in venture capital, mergers and acquisitions
From August 1993 until December of 1996. From October 1994 to June 1997, Mr.
Mathis has been Secretary, Treasurer and a Director of Landmark Reclamation,
Inc. From May 1988 to the present, Mr. Mathis has served as President and a
Director of Express Capital Concepts, Inc. From February 1998 to the present,
Mr. Mathis has served as manager of AmeriGolf, LLC, a golf course development
company. From April 1997 to the present, Mr. Mathis has served as President of
Integrated Medical Services, Inc., ("IMS"). IMS transports and processes medical
waste from small and large generators of medical waste. In March of 1999, IMS
sold 100% of its assets to publicly held Stericycle, Inc. From April 1994 to
March 1997, Mr. Mathis has served as President and a director of Galt Financial
Corporation. From May 1994 to the present, Mr. Mathis has served as President
and a Director of Dynasty Capital Corporation. Express Capital Concepts, Inc.,
Galt Financial Corporation, and Dynasty Capital Corporation are publicly-held
shell companies. From time to time, since 1986, Mr. Mathis has been an officer
and director of a number of publicly-held companies.
ITEM 10. EXECUTIVE COMPENSATION
- -------------------------------
None of the Company's executive officers or directors currently receive
compensation in excess of $100,000 per year and none of the Company's executive
officers, including its Chief Executive Officer, or directors currently receive
any compensation.
Option Grants in Last Year and Stock Option Grant
The following table provides information on option grants during the year
ended December 31, 1998, to the named executive officers:
Individual Grants
<TABLE>
<CAPTION>
% of Total Options
Granted to
Options Employees
Name Granted in Year Exercise Price Expiration Date
- ---- ------- ------------------- -------------- ---------------
<S> <C> <C> <C> <C>
Earnest Mathis, Jr. -0- 0% ------ ------
</TABLE>
Aggregate Option Exercise of Last Fiscal year and Fiscal Year-End Option Values
There were no executive officers' unexercised options at December 31, 1998.
No shares of Common Stock were acquired upon exercise of options during the
fiscal year ended December 31, 1998.
9
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -----------------------------------------------------------------------
The following table sets forth information concerning the holdings of
Common Stock by each person who, as of the date of this Report, holds of record
or is known by the Company to hold beneficially or of record, more than 5% of
the Company's Common Stock, by each director, and by all directors and executive
officers as a group. All shares are owned beneficially and of record and all
share amounts include stock options and Common Stock purchase warrants
exercisable within 60 days from the date hereof. The address of all persons is
in care of the Company at 26 West Dry Creek Circle, Suite 600, Littleton,
Colorado 80120.
Amount of Percent of
Name Ownership Class
- --------------- --------- ----------
Earnest Mathis, Jr. (1)
6,000,330 76.16%
The Ernest Dalton Mathis III Trust 416,667 5.29%
The William Cole Mathis Trust 416,666 5.29%
The Madeleine Paige Mathis Trust 416,666 5.29%
All officers and
directors as a
group (1 person)(1) 6,000,330 76.16%
(1) Represents 3,016,458 shares held in the name of Mathis Family Partners,
Ltd., a Colorado limited partnership of which Mr. Mathis is the general
partner, 2,690,612 shares held in the name of Inverness Investments Profit
Sharing Plan where Mr. Mathis is sole Trustee and 293,260 shares held in
the name of Pelican Holdings, L.L.C. of which Mr. Mathis is the sole
Trustee of Inverness Investments Profit Sharing Plan, the sole member of
Pelican Holdings, L.L.C..
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------
Management of the Company believes that the transactions described below
were no less fair than the terms of transactions which the Company might
otherwise have entered into with third party nonaffiliated entities. All related
party transactions must be approved by a majority of the disinterested members
of the Company's Board of Directors.
The Mathis Family Partners, Ltd. in October 1997 and Pelican Holdings,
L.L.C. in February 1998, both entities controlled by Earnest Mathis, Jr.,
acquired 325,845 and 293,260 shares, respectively, of the Company's Common Stock
from Gordon Burr for $.032 per share or an aggregate of $20,000. During 1998,
the Company borrowed an aggregate of $11,524.90 with no interest thereon from
Inverness Investments Profit Sharing Sharing Plan and the Mathis Family
10
<PAGE>
Partners, Ltd., both of which entities are controlled by Earnest Mathis, Jr. In
February 1999, Inverness Investments Profit Sharing Plan and the Mathis Family
Partners cancelled their loans totaling $11,524.90 in exchange for 1,440,612 and
1,440,613 shares, respectively, of the Company's Common Stock. In February 1999,
Inverness Investments Profit Sharing Plan, the Mathis Family Partners, The
Madeleine Paige Trust, The William Cole Mathis Trust and the Earnest Dalton
Mathis III Trust, all entities of which are controlled by Earnest Mathis, Jr.
purchased 1,250,000, 1,250,000, 416,666, 416,667, 416,666 shares respectively,
of the Company's Common Stock for $.004 per share or an aggregate of $15,000.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
a. Exhibits:
Exhibit No. Title
- ----------- -----
2.01 Articles of Incorporation of the Registrant
2.02 Articles of Amendment to the Articles of Incorporation
2.03 Bylaws of the Registrant
11
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized, in Littleton, Colorado, on June 14, 1999.
MILESTONE CAPITAL, INC.
By /s/ Earnest Mathis, Jr.
--------------------------------------
Earnest Mathis, Jr.
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on the dates
indicated.
Signature Title Date
--------- ----- ----
/s/ Earnest Mathis, Jr. Chief Executive Officer, Chief June 14, 1999
- ------------------------- Financial Officer (Principal
Earnest Mathis, Jr. Accounting Officer), Secretary
and Director
12
ARTICLES OF
INCORPORATION
OF
SHIELD ENTERPRISES
CORPORATION
The undersigned, a natural person of over the age of eighteen years, acting
as incorporator of a corporation under the Colorado Corporation Code, adopts the
following Articles of Incorporation for such corporation.
ARTICLE I
The name of the corporation is Shield Enterprises Corporation.
ARTICLE 11
The period of duration of the corporation is perpetual.
ARTICLE III
The purpose for which the corporation is organized is to transact any
lawful business or businesses for which corporations may be incorporated
pursuant to the Colorado Corporation Code.
ARTICLE IV
The corporation shall have and may exercise all powers and rights granted
or otherwise provided for by the Colorado Corporation Code, including but not
limited to, all powers necessary or convenient to effect the corporation's
purposes.
ARTICLE V
1. Authorized Shares. The aggregate number of shares which the corporation
shall have authority to issue is 2,000,000,000 shares of common stock which
shall have no par value. All shares will be equal to each other, and when
issued, will be fully paid and nonassessable, and the private property of
stockholders shall not be liable for corporate debts. Each shareholder of record
shall have one vote for each share of stock outstanding in his name on the books
of the Corporation and shall be entitled to vote such stock.
2. Transfer Restrictions. The corporation shall have the right to impose
restrictions upon the transfer of any of its authorized shares or any interest
therein. The Board of Directors is hereby authorized on behalf of the
Corporation to exercise the corporation's right so to impose such restrictions,
whether by provision in the By-laws or otherwise.
3. Denial of Cumulative Voting. Cumulative voting of shares in the election
of Directors is prohibited.
<PAGE>
4. Denial of Pre-Emptive Rights. No shareholder of the Corporation shall be
entitled as of right to acquire additional unissued or treasury shares of the
Corporation or securities convertible into shares or carrying a right to
subscribe to acquire such shares.
5. Negation of Equitable Interest in Shares and Rights. The Corporation
shall be entitled to treat the registered holder of any shares of the
Corporation as the owner thereof for all purposes, including all rights deriving
from such shares, and shall not be bound to recognize any equitable or other
claim to, or interest in, such shares or rights deriving from such shares, in
the part of any other person (including but not limiting the generality hereof,
a purchaser, assignee or transferee of such shares or rights deriving from such
shares) unless and until such purchaser, assignee, transferee or other person
becomes the registered holder of such shares, whether or not the Corporation
shall have either actual or constructive notice of the interest of such
purchaser, assignee or transferee or other person. The purchaser, assignee or
transferee of any of the shares of the Corporation shall not be entitled to
receive notice of the meeting of the shareholders; to vote at such meetings; to
examine a list of the shareholders; to be paid dividends or other sums payable
to shareholders; or to own, enjoy and exercise any other property or right
deriving from such shares against the Corporation, until such purchaser,
assignee or transferee has become the registered holder of such shares.
ARTICLE VI
No contract or other transaction between the Corporation and one or more of
its directors or officers, or any other corporation, firm, association or entity
in which one or more of its directors are directors are void or voidable solely
because of such relationship or interest or solely because such directors are
present at a meeting of the Board of Directors or a committee thereof, which
authorizes, approves or ratifies such contract or transaction solely because
their votes are counted for such purposes. Common or interested directors may be
counted in determining the presence of a quorum at a meeting or the Board of
Directors of a committee thereof which authorizes, approves or ratifies such
contract or transaction.
ARTICLE VII
The Corporation shall indemnify any and all of its directors or officers or
former directors or officers or any person who may have served at its request as
a director or officer of another corporation in which it owns shares of capital
stock or of which it is a creditor, against expenses actually and necessarily
incurred by them, in connection with the defense of any action, suit or
proceeding in which they or any of them, are made parties, or a party, by reason
of being or having been directors or officers of the Corporation, or of such
other corporation, except in relation to matters to which any such director or
officer or former director or person shall be adjudged in such action, suit or
proceeding to be liable for gross negligence or willful misconduct in the
performance of duty. Such indemnification shall not be deemed exclusive of any
other rights to which those indemnified may be entitled, under any By-Law
agreement, vote of shareholders or otherwise.
<PAGE>
ARTICLE VIII
The officers and directors of the Corporation shall be subject to the
doctrine of corporate opportunities only insofar as it applies to business
opportunities in which the Corporation has expressed an interest as determined
from time to time by the Corporation's Board of Directors as evidenced by
resolution appearing in the Corporation's minute book, and as otherwise properly
evidenced and provided for in contracts of employment or similar agreements
between the Corporation and its executive officers. When such areas of interest
are delineated, all such business opportunities within such areas of interest
which come to the attention of the officers, directors and other members of
management of the Corporation shall be presented to it. The Board of Directors
may reject any business opportunity presented to it and thereafter, any officer,
or director, or other member of management may avail himself of such
opportunity. Until such time as the Corporation, through its Board of Directors
has designated an area of interest, the officers, directors, or other members of
management of the Corporation shall be free to engage in such areas of interest
on their own and the provisions hereof shall not limit the rights of any
officer, director or other member of management of the Corporation, to continue
a business existing prior to the time that such area of interest is designated
by the Corporation. This Articles shall not be construed to release any employee
of the Corporation (other than an officer, director of member of management)
from any duties which he may have to the Corporation.
ARTICLE IX
The Board of Directors of the Corporation may, from time to time,
distribute to the Corporation's shareholders in partial liquidation, out of
stated capital or capital surplus of the Corporation, a portion of its assets,
in cash or properties, and if at the time the laws of Colorado so permit,
purchase the Corporation's outstanding shares with stated capital or capital
surplus of the Corporation, a portion of its assets, in cash or properties, and
if at the time the laws of Colorado so permit, purchase the Corporation's
outstanding shares with stated capital or capital surplus of the Corporation if
(a) at the time the Corporation is solvent; (b) such distribution or purchase
would not render the Corporation insolvent; (c) all cumulative dividends accrued
on all preferred or special class of shares entitled to preferential dividends
shall have been fully paid; (d) the distribution or purchase would not reduce
the remaining net assets of the Corporation below the aggregate preferential
amount payable having preferential rights to the assets of the Corporation in
the event of liquidation; (e) the distribution or purchase is not made out of
capital surplus arising from unrealized appreciation of assets or re-evaluation
or surplus; and (f) as regard to distribution, the distribution as identified as
the distribution and the source and amount per share paid from each source is
disclosed to all of the shareholders of the Corporation concurrently with the
distribution thereof.
ARTICLE X
With respect to any action to be taken by shareholders of the Corporation,
the affirmative vote or concurrence of the holders of a majority of all of the
outstanding shares of the Corporation entitled to vote shall be required.
ARTICLE XI
The address of the initial registered office of the Corporation is One DTC
Building, 5251 DTC Parkway, Suite PH3, Englewood, Colorado 80111 and the name of
the Corporation's initial registered agent is Robert D. Sichta.
<PAGE>
ARTICLE XII
The name and address of the incorporator is:
Robert D. Sichta
One DTC Building, 5251 DTC Parkway, Suite PH3
Englewood, Colorado 80111
ARTICLE XIII
The Corporation shall be entitled to have up to seven directors. The number
of directors constituting the initial board of the Corporation is three, who may
or may not be stockholders of this Corporation, and the following persons are
hereby named to manage the affairs of the Corporation for the first year of its
existence and until their successors shall be elected:
Charles S. Miller M Jerry Kliment
1375 Toedily Dr. 1375 Toedily Dr.
Boulder, CO 8030 Boulder, CO 80303
Sandra Harris
1375 Toedily Dr.
Boulder, CO 80303
ARTICLE XIV
In furtherance and not in limitation of the powers hereinabove conferred,
or conferred by the statutes and laws of the State of Colorado, the Board of
Directors shall have the following powers:
1. To make, alter, amend, or repeal the By-Laws of the Corporation.
2. From time to time, to fix and determine and to vary the amount of
working capital of the Corporation, to determine and direct the use and
disposition thereof, to set apart out of any funds of the Corporation available
for dividends from time to time out of any funds available therefore.
3. To designate by resolution passed by a majority of the Board, an
executive committee and such other committees as the Board shall deem desirable,
each committee to consist of at least two members of the Board, which committee
or committees, to the extent provided in such resolution, or the By-Laws, shall
have any may exercise the powers of the Board of Directors in the intervals
between meetings of the Board, and the management of the business and affairs of
the Corporation.
4. The Board of Directors shall also have power to authorize and cause to
be executed mortgages and liens on all property of the Corporation or any part
thereof, and from time to time, to sell, lease, exchange, pledge, assign,
transfer, list or otherwise dispose of all the property and assets of the
Corporation, including the goodwill and corporate franchise, upon such terms
and conditions and upon such consideration as the Board of Directors may deem to
be expedient and for the best interests of the Corporation provided, that the
sale, exchange, lease or disposition of all or the principal part, of the
business, assets, property, or franchise shall be authorized or ratified by the
affirmative vote of the holders of at least a majority of the common stock then
issued and outstanding (or of each class of common stock, if more than one
class), such vote to be taken at a meeting of stockholders duly called for that
purpose, as provided by the statutes of Colorado.
<PAGE>
5. To confer in its By-Laws, additional powers to the Board of Directors in
addition to the power and authority expressly conferred upon them by law and by
virtue of these Articles of Incorporation.
ARTICLES XV
The principal place of business of this Corporation shall be kept in the
City of Englewood, County of Arapahoe, State of Colorado. The Corporation may
have such other offices within or without the State of Colorado as it deems
proper for the carrying out of the business of the Corporation.
The stock books and ledgers and other books and records required by the
statutes of Colorado to be kept for inspection by stockholders or creditors
shall be kept at the principal place of business of the Corporation in the City
of Englewood, County of Arapahoe, State of Colorado.
Duplicate copies of the stock books and ledgers and other books and records
may be kept at any other place within or without the State of Colorado.
Meetings of the Board of Directors and of the shareholders may be held from
time to time within the State of Colorado at such times and places as may be
designated in the By-Laws or resolution of the Board of Directors.
One third (1/3) of the shareholders entitled to vote represented in person
or by proxy shall constitute a quorum at any meeting of the shareholders.
ARTICLE XVI
The Corporation reserves the right to amend its Articles of Incorporation
from time to time in accordance with the Colorado Corporation Code.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation on the 2nd day of February, 1987.
/s/ Robert D. Sichta
--------------------
ROBERT D. SICHTA
<PAGE>
STATE OF COLORADO
COUNTY OF ARAPAHOE
I, Cathy L. Jorgenson, a Notary Public, hereby certify that Robert D.
Sichta personally appeared before me, and after being by me duly sworn, declared
that he is the person who signed the foregoing Articles of Incorporation as
Incorporator and that the statements therein contained are true.
In witness whereof I have hereunto set my hand and seal on this 2nd day of
February, 1987.
My commission expires June 4, 1989.
/s/ Cathy L. Jorgenson
----------------------
Notary Public
5251 DTC Pkwy, Suite PH3A
Englewood, CO 80111
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF SHIELD ENTERPRISES CORPORATION
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned corporation adopts the following Articles of Amendment of its
Articles of Incorporation:
FIRST: The name of the corporation is Shield Enterprises Corporation.
SECOND: The Corporation has received cash or other consideration in
connection with the issuance of outstanding shares.
THIRD: The following amendments to the Articles of Incorporation were
adopted by the shareholders of this Corporation on the 8th day of May, 1990, in
the manner prescribed by the Colorado Corporation Code. Resolution setting
forth the proposed following amendments, directing such amendments be submitted
to the shareholders and calling a meeting of shareholders to consider such
amendments, were duly adopted by the Board of Directors by unanimous written
consent of its members. A meeting of shareholders was duly called and held, upon
notice duly given, and a quorum of shareholders was present at such meeting. The
number of shares voted for each of the amendments was sufficient for approval.
FOURTH: Article I of the Articles of Incorporation of this Corporation is
amended in its entirety to read as follows:
ARTICLE I
The name of the Corporation is Milestone Capital, Inc.
FIFTH: Paragraph 1 of Article V of the Articles of Incorporation is amended
in its entirety to read as follows:
ARTICLE V
1. On May 18, 1990, the authorized capital shares of the Corporation will
be decreased from 2,000,000,000 to 20,000,000 Common Shares, no par value. The
total number of shares which the Corporation shall then have the authority to
issue is 20,000,000 Common Shares, no par value. All shares when issued will be
fully paid and nonassessable. Each shareholder of record shall have one vote for
each Common Share outstanding in his name on the books of the Corporation and
shall be entitled to vote such shares. Each one thousand (1,000) Common Shares
issued and outstanding on May 18, 1990 will be changed, reclassified and
decreased to one (1) Common Share, with the no par value remaining constant. Any
fractional share that would be issuable pursuant to such change shall be
rounded up to the nearest whole Common Share.
<PAGE>
SIXTH: Article VII of the Articles of Incorporation is amended in its
entirety to read as follows:
ARTICLE VII
The personal liability of any director for monetary damages shall be
eliminated to the maximum extent permitted by law. A director who is or was
made a party to a proceeding because he is or was an officer, employee, or agent
of the corporation is entitled to the same right as if he were or had been made
a party because he was a director.
ARTICLE XV
One third (1/3) of the shareholders entitled to vote represented in
person or by proxy shall constitute a quorum at any meeting of the shareholders.
EIGHTH: These Articles of Amendment do not effect a change in the amount of
stated capital of this Corporation.
SHIELD ENTERPRISES CORPORATION
/s/ Signature on file
---------------------
Its President
/s/ Signature on file
---------------------
Its Secretary
Subscribed and sworn to before me this 8th day of May, 1990. My commission
expires July 8, 1991.
/s/ Phillis L. Herd
-------------------
Notary Public
(S E A L)
BYLAWS
OF
MILESTONE CAPITAL, INC.,
a Colorado corporation
<PAGE>
BYLAWS
Table of Contents
Article.....................................................................Page
I. Offices....................................................... 1
II. Shareholders.................................................. 1
III. Board of Directors............................................ 8
IV. Officers and Agents........................................... 12
V. Stock......................................................... 15
VI. Indemnification of Certain Persons............................ 17
VII. Provision of Insurance........................................ 20
VIII. Miscellaneous................................................. 20
Effective: February 8, 1999
<PAGE>
BYLAWS
OF
MILESTONE CAPITAL, INC.
ARTICLE I
Offices
The principal office of the corporation shall be designated from time to
time by the corporation and may be within or outside of Colorado.
The corporation may have such other offices, either within or outside
Colorado, as the board of directors may designate or as the business of the
corporation may require from time to time.
The registered office of the corporation required by the Colorado Business
Corporation Act to be maintained in Colorado may be, but need not be, identical
with the principal office, and the address of the registered office may be
changed from time to time by the board of directors.
ARTICLE II
Shareholders
Section 1. Annual Meeting. The annual meeting of the shareholders shall be
held each year on a date and at a time fixed by the board of directors of the
corporation (or by the president in the absence of action by the board of
directors), beginning with the year 1999, for the purpose of electing directors
and for the transaction of such other business as may come before the meeting.
If the election of directors is not held on the day fixed as provided herein for
any annual meeting of the shareholders, or any adjournment thereof, the board of
directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as it may conveniently be held.
A shareholder may apply to the district court in the county in Colorado
where the corporation's principal office is located or, if the corporation has
no principal office in Colorado, to the district court of the county in which
the corporation's registered office is located to seek an order that a
shareholder meeting be held (i) if an annual meeting was not held within six
months after the close of the corporation's most recently ended fiscal year or
fifteen months after its last annual meeting, whichever is earlier, or (ii) if
the shareholder participated in a proper call of or proper demand for a special
meeting and notice of the special meeting was not given within thirty days after
the date of the call or the date the last of the demands necessary to require
calling of the meeting was received by the corporation pursuant to C.R.S. ss.
7-107-102(1)(b), or the special meeting was not held in accordance with the
notice.
Section 2. Special Meetings. Unless otherwise prescribed by statute,
special meetings of the shareholders may be called for any purpose by the
president or by the board of directors. The president shall call a special
meeting of the shareholders if the corporation receives one or more written
demands for the meeting, stating the purpose or purposes for which it is to be
held, signed and dated by holders of shares representing at least ten percent of
all the votes entitled to be cast on any issue proposed to be considered at the
meeting.
1
<PAGE>
Section 3. Place of Meeting. The board of directors may designate any
place, either within or outside Colorado, as the place for any annual meeting or
any special meeting called by the board of directors. A waiver of notice signed
by all shareholders entitled to vote at a meeting may designate any place,
either within or outside Colorado, as the place for such meeting. If no
designation is made, or if a special meeting is called other than by the board,
the place of meeting shall be the principal office of the corporation.
Section 4. Notice of Meeting. Written notice stating the place, date, and
hour of the meeting shall be given not less than ten nor more than sixty days
before the date of the meeting, except that if any other longer notice period is
required by the Colorado Business Corporation Act. The secretary shall be
required to give such notice only to shareholders entitled to vote at the
meeting except as otherwise required by the Colorado Business Corporation Act.
Notice of a special meeting shall include a description of the purpose or
purposes of the meeting. Notice of an annual meeting need not include a
description of the purpose or purposes of the meeting except the purpose or
purposes shall be stated with respect to (i) an amendment to the articles of
incorporation of the corporation, (ii) a merger or share exchange in which the
corporation is a party and, with respect to a share exchange, in which the
corporation's shares will be acquired, (iii) a sale, lease, exchange or other
disposition, other than in the usual and regular course of business, of all or
substantially all of the property of the corporation or of another entity which
this corporation controls, in each case with or without the goodwill, (iv) a
dissolution of the corporation, (v) restatement of the articles of
incorporation, or (vi) any other purpose for which a statement of purpose is
required by the Colorado Business Corporation Act. Notice shall be given
personally or by mail, private carrier, telegraph, teletype, electronically
transmitted facsimile or other form of wire or wireless communication by or at
the direction of the president, the secretary, or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at such meeting. If
mailed and if in a comprehensible form, such notice shall be deemed to be given
and effective when deposited in the United States mail, properly addressed to
the shareholder at his address as it appears in the corporation's current record
of shareholders, with first class postage prepaid. If notice is given other than
by mail, and provided that such notice is in a comprehensible form, the notice
is given and effective on the date actually received by the shareholder.
If requested by the person or persons lawfully calling such meeting, the
secretary shall give notice thereof at corporate expense. No notice need be sent
to any shareholder if three successive notices mailed to the last known address
of such shareholder have been returned as undeliverable until such time as
another address for such shareholder is made known to the corporation by such
shareholder. In order to be entitled to receive notice of any meeting, a
shareholder shall advise the corporation in writing of any change in such
shareholder's mailing address as shown on the corporation's books and records.
2
<PAGE>
When a meeting is adjourned to another date, time or place, notice need not
be given of the new date, time or place if the new date, time or place of such
meeting is announced before adjournment at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
which may have been transacted at the original meeting. If the adjournment is
for more than 120 days, or if a new record date is fixed for the adjourned
meeting, a new notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting as of the new record date.
A shareholder may waive notice of a meeting before or after the time and
date of the meeting by a writing signed by such shareholder. Such waiver shall
be delivered to the corporation for filing with the corporate records, but this
delivery and filing shall not be conditions to the effectiveness of the waiver.
Further, by attending a meeting either in person or by proxy, a shareholder
waives objection to lack of notice or defective notice of the meeting unless the
shareholder objects at the beginning of the meeting to the holding of the
meeting or the transaction of business at the meeting because of lack of notice
or defective notice. By attending the meeting, the shareholder also waives any
objection to consideration at the meeting of a particular matter not within the
purpose or purposes described in the meeting notice unless the shareholder
objects to considering the matter when it is presented.
Section 5. Fixing of Record Date. For the purpose of determining
shareholders entitled to (i) notice of or vote at any meeting of shareholders or
any adjournment thereof, (ii) receive distributions or share dividends, (iii)
demand a special meeting, or (iv) make a determination of shareholders for any
other proper purpose, the board of directors may fix a future date as the record
date for any such determination of shareholders, such date in any case to be not
more than seventy days, and, in case of a meeting of shareholders, not less than
ten days, prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If no record date is fixed by the
directors, the record date shall be the day before the notice of the meeting is
given to shareholders, or the date on which the resolution of the board of
directors providing for a distribution is adopted, as the case may be. When a
determination of shareholders entitled to vote at any meeting of shareholders is
made as provided in this section, such determination shall apply to any
adjournment thereof unless the board of directors fixes a new record date, which
it must do if the meeting is adjourned to a date more than 120 days after the
date fixed for the original meeting. Unless otherwise specified when the record
date is fixed, the time of day for such determination shall be as of the
corporation's close of business on the record date.
Notwithstanding the above, the record date for determining the shareholders
entitled to take action without a meeting or entitled to be given notice of
action so taken shall be the date a writing upon which the action is taken is
first received by the corporation. The record date for determining shareholders
entitled to demand a special meeting shall be the date of the earliest of any of
the demands pursuant to which the meeting is called.
Section 6. Voting Lists. After a record date is fixed for a shareholders'
meeting, the secretary shall make, at the earlier of ten days before such
meeting or two business days after notice of the meeting has been given, a
complete list of the shareholders entitled to be given notice of such meeting or
any adjournment thereof. The list shall be arranged by voting groups and within
each voting group by class or series of shares, shall be in alphabetical order
within each class or series, and shall show the address of and the number of
shares of each class or series held by each shareholder. For the period
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beginning the earlier of ten days prior to the meeting or two business days
after notice of the meeting is given and continuing through the meeting and any
adjournment thereof, this list shall be kept on file at the principal office of
the corporation, or at a place (which shall be identified in the notice) in the
city where the meeting will be held. Such list shall be available for inspection
on written demand by any shareholder (including for the purpose of this Section
6 any holder of voting trust certificates) or his agent or attorney during
regular business hours and during the period available for inspection. The
original stock transfer books shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders.
Any shareholder, his agent or attorney may copy the list during regular
business hours and during the period it is available for inspection, provided
(i) the shareholder has been a shareholder for at least three months immediately
preceding the demand or holds at least five percent of all outstanding shares of
any class of shares as of the date of the demand, (ii) the demand is made in
good faith and for a purpose reasonably related to the demanding shareholder's
interest as a shareholder, (iii) the shareholder describes with reasonable
particularity the purpose and the records the shareholder desires to inspect,
(iv) the records are directly connected with the described purpose, and (v) the
shareholder pays a reasonable charge covering the costs of labor and material
for such copies, not to exceed the estimated cost of production and
reproduction.
Section 7. Recognition Procedure for Beneficial Owners. The board of
directors may adopt by resolution a procedure whereby a shareholder of the
corporation may certify in writing to the corporation that all or a portion of
the shares registered in the name of such shareholder are held for the account
of a specified person or persons. The resolution may set forth (i) the types of
nominees to which it applies, (ii) the rights or privileges that the corporation
will recognize in a beneficial owner, which may include rights and privileges
other than voting, (iii) the form of certification and the information to be
contained therein, (iv) if the certification is with respect to a record date,
the time within which the certification must be received by the corporation, (v)
the period for which the nominee's use of the procedure is effective, and (vi)
such other provisions with respect to the procedure as the board deems necessary
or desirable. Upon receipt by the corporation of a certificate complying with
the procedure established by the board of directors, the persons specified in
the certification shall be deemed, for the purpose or purposes set forth in the
certification, to be the registered holders of the number of shares specified in
place of the shareholder making the certification.
Section 8. Quorum and Manner of Acting. A majority of the votes entitled to
be cast on a matter by a voting group represented in person or by proxy, shall
constitute a quorum of that voting group for action on the matter. If less than
a majority of such votes are represented at a meeting, a majority of the votes
so represented may adjourn the meeting from time to time without further notice,
for a period not to exceed 120 days for any one adjournment. If a quorum is
present at such adjourned meeting, any business may be transacted which might
have been transacted at the meeting as originally noticed. The shareholders
present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum, unless the meeting is adjourned and a new record date is set for
the adjourned meeting.
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If a quorum exists, action on a matter other than the election of directors
by a voting group is approved if the votes cast within the voting group favoring
the action exceed the votes cast within the voting group opposing the action,
unless the vote of a greater number or voting by classes is required by law or
the articles of incorporation.
Section 9. Proxies. At all meetings of shareholders, a shareholder may vote
by proxy by signing an appointment form or similar writing, either personally or
by his duly authorized attorney-in-fact. A shareholder may also appoint a proxy
by transmitting or authorizing the transmission of a telegram, teletype, or
other electronic transmission providing a written statement of the appointment
to the proxy, a proxy solicitor, proxy support service organization, or other
person duly authorized by th proxy to receive appointments as agent for the
proxy, or to the corporation. The transmitted appointment shall set forth or be
transmitted with written evidence from which it can be determined that the
shareholder transmitted or authorized the transmission of the appointment. The
proxy appointment form or similar writing shall be filed with the secretary of
the corporation before or at the time of the meeting. The appointment of a proxy
is effective when received by the corporation and is valid for eleven months
unless a different period is expressly provided in the appointment form or
similar writing.
Any complete copy, including an electronically transmitted facsimile, of an
appointment of a proxy may be substituted for or used in lieu of the original
appointment for any purpose for which the original appointment could be used.
Revocation of a proxy does not affect the right of the corporation to
accept the proxy's authority unless (i) the corporation had notice that the
appointment was coupled with an interest and notice that such interest is
extinguished is received by the secretary or other officer or agent authorized
to tabulate votes before the proxy exercises his authority under the
appointment, or (ii) other notice of the revocation of the appointment is
received by the secretary or other officer or agent authorized to tabulate votes
before the proxy exercises his authority under the appointment. Other notice of
revocation may, in the discretion of the corporation, be deemed to include the
appearance at a shareholders' meeting of the shareholder who granted the proxy
and his voting in person on any matter subject to a vote at such meeting.
The death or incapacity of the shareholder appointing a proxy does not
affect the right of the corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment.
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The corporation shall not be required to recognize an appointment made
irrevocable if it has received a writing revoking the appointment signed by the
shareholder (including a shareholder who is a successor to the shareholder who
granted the proxy) either personally or by his attorney-in-fact, notwithstanding
that the revocation may be a breach of an obligation of the shareholder to
another person not to revoke the appointment.
Subject to Section 11 and any express limitation on the proxy's authority
appearing on the appointment form, the corporation is entitled to accept the
proxy's vote or other action as that of the shareholder making the appointment.
Section 10. Voting of Shares. Each outstanding share, regardless of class,
shall be entitled to one vote, except in the election of directors, and each
fractional share shall be entitled to a corresponding fractional vote on each
matter submitted to a vote at a meeting of shareholders, except to the extent
that the voting rights of the shares of any class or classes are limited or
denied by the articles of incorporation as permitted by the Colorado Business
Corporation Code. Cumulative voting shall not be permitted in the election of
directors or for any other purpose. Each record holder of stock shall be
entitled to vote in the election of directors and shall have as many votes for
each of the shares owned by him as there are directors to be elected and for
whose election he has the right to vote.
At each election of directors, that number of candidates equaling the
number of directors to be elected, having the highest number of votes cast in
favor of their election, shall be elected to the board of directors.
Except as otherwise ordered by a court of competent jurisdiction upon a
finding that the purpose of this Section would not be violated in the
circumstances presented to the court, the shares of the corporation are not
entitled to be voted if they are owned, directly or indirectly, by a second
corporation, domestic or foreign, and the first corporation owns, directly or
indirectly, a majority of the shares entitled to vote for directors of the
second corporation except to the extent the second corporation holds the shares
in a fiduciary capacity.
Redeemable shares are not entitled to be voted after notice of redemption
is mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company or other financial institution under an
irrevocable obligation to pay the holders the redemption price on surrender of
the shares.
Section 11. Corporation's Acceptance of Votes. If the name signed on a
vote, consent, waiver, proxy appointment, or proxy appointment revocation
corresponds to the name of a shareholder, the corporation, if acting in good
faith, is entitled to accept the vote, consent, waiver, proxy appointment or
proxy appointment revocation and give it effect as the act of the shareholder.
If the name signed on a vote, consent, waiver, proxy appointment or proxy
appointment revocation does not correspond to the name of a shareholder, the
corporation, if acting in good faith, is nevertheless entitled to accept the
vote, consent, waiver, proxy appointment or proxy appointment revocation and to
give it effect as the act of the shareholder if:
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(i) the shareholder is an entity and the name signed purports to be that
of an officer or agent of the entity;
(ii) the name signed purports to be that of an administrator, executor,
guardian or conservator representing the shareholder and, if the
corporation requests, evidence of fiduciary status acceptable to the
corporation has been presented with respect to the vote, consent,
waiver, proxy appointment or proxy appointment revocation;
(iii)the name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the corporation requests,
evidence of this status acceptable to the corporation has been
presented with respect to the vote, consent, waiver, proxy appointment
or proxy appointment revocation;
(iv) the name signed purports to be that of a pledgee, beneficial owner or
attorney-in-fact of the shareholder and, if the corporation requests,
evidence acceptable to the corporation of the signatory's authority to
sign for the shareholder has been presented with respect to the vote,
consent, waiver, proxy appointment or proxy appointment revocation;
(v) two or more persons are the shareholder as co-tenants or fiduciaries
and the name signed purports to be the name of at least one of the
co-tenants or fiduciaries, and the person signing appears to be acting
on behalf of all the co-tenants or fiduciaries; or
(vi) the acceptance of the vote, consent, waiver, proxy appointment or
proxy appointment revocation is otherwise proper under rules
established by the corporation that are not inconsistent with this
Section 11.
The corporation is entitled to reject a vote, consent, waiver, proxy
appointment or proxy appointment revocation if the secretary or other officer or
agent authorized to tabulate votes, acting in good faith, has reasonable basis
for doubt about the validity of the signature on it or about the signatory's
authority to sign for the shareholder.
Neither the corporation nor its officers nor any agent who accepts or
rejects a vote, consent, waiver, proxy appointment or proxy appointment
revocation in good faith and in accordance with the standards of this Section is
liable in damages for the consequences of the acceptance or rejection.
Section 12. Informal Action by Shareholders. Any action required or
permitted to be taken at a meeting of the shareholders may be taken without a
meeting if a written consent (or counterparts thereof) that sets forth the
action so taken is signed by all of the shareholders entitled to vote with
respect to the subject matter thereof and received by the corporation. Such
consent shall have the same force and effect as a unanimous vote of the
shareholders and may be stated as such in any document Action taken under this
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Section 12 is effective as of the date the last writing necessary to effect the
action is received by the corporation, unless all of the writings specify a
different effective date, in which case such specified date shall be the
effective date for such action. If any shareholder revokes his consent as
provided for herein prior to what would otherwise be the effective date, the
action proposed in the consent shall be invalid. The record date for determining
shareholders entitled to take action without a meeting is the date the
corporation first receives a writing upon which the action is taken.
Any shareholder who has signed a writing describing and consenting to
action taken pursuant to this Section 12 may revoke such consent by a writing
signed by the shareholder describing the action and stating that the
shareholder's prior consent thereto is revoked, if such writing is received by
the corporation before the effectiveness of the action.
Section 13. Meetings by Telecommunication. Any or all of the shareholders
may participate in an annual or special shareholders' meeting by, or the meeting
may be conducted through the use of, any means of communication by which all
persons participating in the meeting may hear each other during the meeting. A
shareholder participating in a meeting by this means is deemed to be present in
person at the meeting.
ARTICLE III
Board of Directors
Section 1. General Powers. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the corporation shall be
managed under the direction of, its board of directors, except as otherwise
provided in the Colorado Business Corporation Act or the articles of
incorporation.
Section 2. Number, Qualifications and Tenure. The number of directors of
the corporation shall be fixed from time to time by the board of directors,
within a range of no less than one or more than nine, but no decrease in the
number of directors shall have the effect of shortening the term of any
incumbent director. A director shall be a natural person who is eighteen years
of age or older. A director need not be a resident of Colorado or a shareholder
of the corporation.
Directors shall be elected at each annual meeting of shareholders. Each
director shall hold office until the next annual meeting of shareholders
following his election and thereafter until his successor shall have been
elected and qualified. Directors shall be removed in the manner provided by the
Colorado Business Corporation Act. Any director may be removed by the
shareholders of the voting group that elected the director, with or without
cause, at a meeting called for that purpose. The notice of the meeting shall
state that the purpose or one of the purposes of the meeting is removal of the
director. A director may be removed only if the number of votes cast in favor of
removal exceeds the number of votes cast against removal.
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Section 3. Vacancies. Any director may resign at any time by giving written
notice to the secretary. Such resignation shall take effect at the time the
notice is received by the secretary unless the notice specifies a later
effective date. Unless otherwise specified in the notice of resignation, the
corporation's acceptance of such resignation shall not be necessary to make it
effective. Any vacancy on the board of directors may be filled by the
affirmative vote of a majority of the shareholders at a special meeting called
for that purpose or by the board of directors. If the directors remaining in
office constitute fewer than a quorum of the board, the directors may fill the
vacancy by the affirmative vote of a majority of all the directors remaining in
office. If elected by the directors, the director shall hold office until the
next annual shareholders' meeting at which directors are elected. If elected by
the shareholders, the director shall hold office for the unexpired term of his
predecessor in office; except that, if the director's predecessor was elected by
the directors to fill a vacancy, the director elected by the shareholders shall
hold office for the unexpired term of the last predecessor elected by the
shareholders.
Section 4. Regular Meetings. A regular meeting of the board of directors
shall be held without notice immediately after and at the same place as the
annual meeting of shareholders. The board of directors may provide by resolution
the time and place, either within or outside Colorado, for the holding of
additional regular meetings without other notice.
Section 5. Special Meetings. Special meetings of the board of directors may
be called by or at the request of the president or any one (1) of the directors.
The person or persons authorized to call special meetings of the board of
directors may fix any place, either within or outside Colorado, as the place for
holding any special meeting of the board of directors called by them, provided
that no meeting shall be called outside the State of Colorado unless a majority
of the board of directors has so authorized.
Section 6. Notice. Notice of the date, time and place of any special
meeting shall be given to each director at least two days prior to the meeting
by written notice either personally delivered or mailed to each director at his
business address, or by notice transmitted by private courier, telegraph, telex,
electronically transmitted facsimile or other form of wire or wireless
communication. If mailed, such notice shall be deemed to be given and to be
effective on the earlier of (i) five days after such notice is deposited in the
United States mail, properly addressed, with first class postage prepaid, or
(ii) the date shown on the return receipt, if mailed by registered or certified
mail return receipt requested, provided that the return receipt is signed by the
director to whom the notice is addressed. If notice is given by telex,
electronically transmitted facsimile or other similar form of wire or wireless
communication, such notice shall be deemed to be given and to be effective when
sent, and with respect to a telegram, such notice shall be deemed to be given
and to be effective when the telegram is delivered to the telegraph company. If
a director has designated in writing one or more reasonable addresses or
facsimile numbers for delivery of notice to him, notice sent by mail, telegraph,
telex, electronically transmitted facsimile or other form of wire or wireless
communication shall not be deemed to have been given or to be effective unless
sent to such addresses or facsimile numbers, as the case may be.
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A director may waive notice of a meeting before or after the time and date
of the meeting by a writing signed by such director. Such waiver shall be
delivered to the secretary for filing with the corporate records, but such
delivery and filing shall not be conditions to the effectiveness of the waiver.
Further, a director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless at the beginning of the meeting, or
promptly upon his later arrival, the director objects to holding the meeting or
transacting business at the meeting because of lack of notice or defective
notice and does not thereafter vote for or assent to action taken at the
meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
Section 7. Quorum. A majority of the number of directors fixed by the board
of directors pursuant to Article III, Section 2 or, if no number is fixed, a
majority of the number in office immediately before the meeting begins, shall
constitute a quorum for the transaction of business at any meeting of the board
of directors.
Section 8. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.
Section 9. Compensation. By resolution of the board of directors, any
director may be paid any one or more of the following: his expenses, if any, of
attendance at meetings, a fixed sum for attendance at each meeting, a stated
salary as director, or such other compensation as the corporation and the
director may reasonably agree upon. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor.
Section 10. Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors or committee of the board at
which action on any corporate matter is taken shall be presumed to have assented
to all action taken at the meeting unless (i) the director objects at the
beginning of the meeting, or promptly upon his arrival, to the holding of the
meeting or the transaction of business at the meeting and does not thereafter
vote for or assent to any action taken a the meeting, (ii) the director
contemporaneously requests that his dissent or abstention as to any specific
action taken be entered in the minutes of the meeting, or (iii) the director
causes written notice of his dissent or abstention as to any specific action to
be received by the presiding officer of the meeting before its adjournment or by
the secretary promptly after the adjournment of the meeting. A director may
dissent to a specific action at a meeting, while assenting to others. The right
to dissent to a specific action taken at a meeting of the board of directors or
a committee of the board shall not be available to a director who voted in favor
of such action.
Section 11. Committees. By resolution adopted by a majority of all the
directors in office when the action is taken, the board of directors may
designate from among its members an executive committee and one or more other
committees, and appoint one or more members of the board of directors to serve
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on them. To the extent provided in the resolution, each committee shall have all
the authority of the board of directors, except that no such committee shall
have the authority to (i) authorize distributions, (ii) approve or propose to
shareholders actions or proposals required by the Colorado Business Corporation
Act to be approved by shareholders, (iii) fill vacancies on the board of
directors or any committee thereof, (iv) amend articles of incorporation, (v)
adopt, amend or repeal the bylaws, (vi) approve a plan of merger not requiring
shareholder approval, (vii) authorize or approve the reacquisition of shares
unless pursuant to a formula or method prescribed by the board of directors, or
(viii) authorize or approve the issuance or sale of shares, or contract for the
sale of shares or determine the designations and relative rights, preferences
and limitations of a class or series of shares, except that the board of
directors may authorize a committee or officer to do so within limits
specifically prescribed by the board of directors. The committee shall then have
full power within the limits set by the board of directors to adopt any final
resolution setting forth all preferences, limitations and relative rights of
such class or series and to authorize an amendment of the articles of
incorporation stating the preferences, limitations and relative rights of a
class or series for filing with the Secretary of State under the Colorado
Business Corporation Act.
Sections 4, 5, 6, 7, 8 or 12 of Article III, which govern meetings, notice,
waiver of notice, quorum, voting requirements and action without a meeting of
the board of directors, shall apply to committees and their members appointed
under this Section 11.
Neither the designation of any such committee, the delegation of authority
to such committee, nor any action by such committee pursuant to its authority
shall alone constitute compliance by any member of the board of directors or a
member of the committee in question with his responsibility to conform to the
standard of care set forth in Article III, Section 14 of these bylaws.
Section 12. Informal Action by Directors. Any action required or permitted
to be taken at a meeting of the directors or any committee designated by the
board of directors may be taken without a meeting if a written consent (or
counterparts thereof) that sets forth the action so taken is signed by all of
the directors entitled to vote with respect to the action taken. Such consent
shall have the same force and effect as a unanimous vote of the directors or
committee members and may be stated as such in any document. Unless the consent
specifies a different effective time or date, action taken under this Section 12
is effective at the time or date the last director signs a writing describing
the action taken, unless, before such time, any director has revoked his consent
by a writing signed by the director and received by the president or the
secretary of the corporation.
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Section 13. Telephonic Meetings. The board of directors may permit any
director (or any member of a committee designated by the board) to participate
in a regular or special meeting of the board of directors or a committee thereof
through the use of any means of communication by which all directors
participating in the meeting can hear each other during the meeting. A director
participating in a meeting in this manner is deemed to be present in person at
the meeting.
Section 14. Standard of Care. A director shall perform his duties as a
director, including without limitation his duties as a member of any committee
of the board, in good faith, in a manner he reasonably believes to be in the
best interests of the corporation, and with the care an ordinarily prudent
person in a like position would exercise under similar circumstances. In
performing his duties, a director shall be entitled to rely on information,
opinions, reports or statements, including financial statements and other
financial data, in each case prepared or presented by the persons herein
designated. However, he shall not be considered to be acting in good faith if he
has knowledge concerning the matter in question that would cause such reliance
to be unwarranted. A director shall not be liable to the corporation or its
shareholders for any action he takes or omits to take as a director if, in
connection with such action or omission, he performs his duties in compliance
with this Section 14.
The designated persons on whom a director is entitled to rely are (i) one
or more officers or employees of the corporation whom the director reasonably
believes to be reliable and competent in the matters presented, (ii) legal
counsel, public accountant, or other person as to matters which the director
reasonably believes to be within such person's professional or expert
competence, or (iii) a committee of the board of directors on which the director
does not serve if the director reasonably believes the committee merits
confidence.
ARTICLE IV
Officers and Agents
Section 1. General. The officers of the corporation shall be a president, a
secretary and a treasurer, and may also include one or more vice presidents,
each of which officer shall be appointed by the board of directors and shall be
a natural person eighteen years of age or older. One person may hold more than
one office. The board of directors or an officer or officers so authorized by
the board may appoint such other officers, assistant officers, committees and
agents, including a chairman of the board, assistant secretaries and assistant
treasurers, as they may consider necessary. Except as expressly prescribed by
these bylaws, the board of directors or the officer or officers authorized by
the board shall from time to time determine the procedure for the appointment of
officers, their authority and duties and their compensation, provided that the
board of directors may change the authority, duties and compensation of any
officer who is not appointed by the board.
Section 2. Appointment and Term of Office. The officers of the corporation
to be appointed by the board of directors shall be appointed at each annual
meeting of the board held after each annual meeting of the shareholders. If the
appointment of officers is not made at such meeting or if an officer or officers
are to be appointed by another officer or officers of the corporation, such
appointments shall be made as determined by the board of directors or the
appointing person or persons. Each officer shall hold office until the first of
the following occurs: his successor shall have been duly appointed and
qualified, his death, his resignation, or his removal in the manner provided in
Section 3.
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Section 3. Resignation and Removal. An officer may resign at any time by
giving written notice of resignation to the president, secretary or other person
who appoints such officer. The resignation is effective when the notice is
received by the corporation unless the notice specifies a later effective date.
Any officer or agent may be removed at any time with or without cause by
the board of directors or an officer or officers authorized by the board. Such
removal does not affect the contract rights, if any, of the corporation or of
the person so removed. The appointment of an officer or agent shall not in
itself create contract rights.
Section 4. Vacancies. A vacancy in any office, however occurring, may be
filled by the board of directors, or by the officer or officers authorized by
the board, for the unexpired portion of the officer's term. If an officer
resigns and his resignation is made effective at a later date, the board of
directors, or officer or officers authorized by the board, may permit the
officer to remain in office until the effective date and may fill the pending
vacancy before the effective date if the boar of directors or officer or
officers authorized by the board provide that the successor shall not take
office until the effective date. In the alternative, the board of directors, or
officer or officers authorized by the board of directors, may remove the officer
at any time before the effective date and may fill the resulting vacancy.
Section 5. President. The president shall preside at all meetings of
shareholders and all meetings of the board of directors unless the board of
directors has appointed a chairman, vice chairman, or other officer of the board
and has authorized such person to preside at meetings of the board of directors.
Subject to the direction and supervision of the board of directors, the
president shall be the chief executive officer of the corporation, and shall
have general and active control of its affairs and business and general
supervision of its officers, agents and employees. Unless otherwise directed by
the board of directors, the president shall attend in person or by substitute
appointed by him, or shall execute on behalf of the corporation written
instruments appointing a proxy or proxies to represent the corporation, at all
meetings of the stockholders of any other corporation in which the corporation
holds any stock. On behalf of the corporation, the president may in person or by
substitute or by proxy execute written waivers of notice and consents with
respect to any such meetings. At all such meetings and otherwise, the president,
in person or by substitute or proxy, may vote the stock held by the corporation,
execute written consents and other instruments with respect to such stock, and
exercise any and all rights and powers incident to the ownership of said stock,
subject to the instructions, if any, of the board of directors. The president
shall have custody of the treasurer's bond, if any. The president shall have
such additional authority and duties as are appropriate and customary for the
office of president and chief executive officer, except as the same may be
expanded or limited by the board of directors from time to time.
Section 6. Vice Presidents. The vice presidents shall assist the president
and shall perform such duties as may be assigned to them by the president or by
the board of directors. In the absence of the president, the vice president, if
any (or, if more than one, the vice presidents in the order designated by the
board of directors, or if the board makes no such designation, then the vice
president designated by the president, or if neither the board nor the president
makes any such designation, the senior vice president as determined by first
election to that office), shall have the powers and perform the duties of the
president.
13
<PAGE>
Section 7. Secretary. The secretary shall (i) prepare and maintain as
permanent records the minutes of the proceedings of the shareholders and the
board of directors, a record of all actions taken by the shareholders or board
of directors without a meeting, a record of all actions taken by a committee of
the board of directors in place of the board of directors on behalf of the
corporation, and a record of all waivers of notice of meetings of shareholders
and of the board of directors or any committee thereof, (ii) see that all
notices are duly given in accordance with the provisions of these bylaws and as
required by law, (iii) serve as custodian of the corporate records and of the
seal of the corporation and affix the seal to all documents when authorized by
the board of directors, (iv) keep at the corporation's registered office or
principal place of business a record containing the names and addresses of all
shareholders in a form that permits preparation of a list of shareholders
arrange by voting group and by class or series of shares within each voting
group, that is alphabetical within each class or series and that shows the
address of, and the number of shares of each class or series held by, each
shareholder, unless such a record shall be kept at the office of the
corporation's transfer agent or registrar, (v) maintain at the corporation's
principal office the originals or copies of the corporation's articles of
incorporation, bylaws, minutes of all shareholders' meetings and records of all
action taken by shareholders without a meeting for the past three years, all
written communications within the past three years to shareholders as a group or
to the holders of any class or series of shares as a group, a list of the names
and business addresses of the current directors and officers, a copy of the
corporation's most recent corporate report filed with the Secretary of State,
and financial statements showing in reasonable detail the corporation's assets
and liabilities and results of operations for the last three years, (vi) have
general charge of the stock transfer books of the corporation, unless the
corporation has a transfer agent, (vii) authenticate records of the corporation,
and (viii) in general, perform all duties incident to the office of secretary
and such other duties as from time to time may be assigned to him by the
president or by the board of directors. Assistant secretaries, if any, shall
have the same duties and powers, subject to supervision by the secretary. The
directors and/or shareholders may however respectively designate a person other
than the secretary or assistant secretary to keep the minutes of their
respective meetings.
Any books, records, or minutes of the corporation may be in written form or
in any form capable of being converted into written form within a reasonable
time.
Section 8. Treasurer. The treasurer shall be the principal financial
officer of the corporation, shall have the care and custody of all funds,
securities, evidences of indebtedness and other personal property of the
corporation and shall deposit the same in accordance with the instructions of
the board of directors. Subject to the limits imposed by the board of directors,
he shall receive and give receipts and acquittances for money paid in on account
of the corporation, and shall pay out of the corporation's funds on hand all
bills, payrolls and other just debts of the corporation of whatever nature upon
maturity. He shall perform all other duties incident to the office of the
14
<PAGE>
treasurer and, upon request of the board, shall make such reports to it as may
be required at any time. He shall, if required by the board, give the
corporation a bond in such sums and with such sureties as shall be satisfactory
to the board, conditioned upon the faithful performance of his duties and for
the restoration to the corporation of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the corporation. He shall have such other powers and perform such other
duties as may from time to time be prescribed by the board of directors or the
president. The assistant treasurers, if any, shall have the same powers and
duties, subject to the supervision of the treasurer.
The treasurer shall also be the principal accounting officer of the
corporation. He shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account as
required by the Colorado Business Corporation Act, prepare and file all local,
state and federal tax returns, prescribe and maintain an adequate system of
internal audit and prepare and furnish to the president and the board of
directors statements of account showing the financial position of the
corporation and the results of its operations.
ARTICLE V
Stock
Section 1. Certificates. The board of directors shall be authorized to
issue any of its classes of shares with or without certificates. The fact that
the shares are not represented by certificates shall have no effect on the
rights and obligations of shareholders. If the shares are-represented by
certificates, such shares shall be represented by consecutively numbered
certificates signed, either manually or by facsimile, in the name of the
corporation by the president. In case any officer wh has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, such certificate may
nonetheless be issued by the corporation with the same effect as if he were such
officer at the date of its issue. All certificates shall be consecutively
numbered, and the names of the owners, the number of shares, and the date of
issue shall be entered on the books of the corporation. Each certificate
representing shares shall state upon its face:
(i) That the corporation is organized under the laws of Colorado;
(ii) The name of the person to whom issued;
(iii)The number and class of the shares and the designation of the series,
if any, that the certificate represents;
(iv) The par value, if any, of each share represented by the certificate;
(v) Any restrictions imposed by the corporation upon the transfer of the
shares represented by the certificate.
15
<PAGE>
If shares are not represented by certificates, within a reasonable time
following the issue or transfer of such shares, the corporation shall send the
shareholder a complete written statement of all of the information required to
be provided to holders of uncertificated shares by the Colorado Business
Corporation Act.
Section 2. Consideration for Shares. Certificated or uncertificated shares
shall not be issued until the shares represented thereby are fully paid. The
board of directors may authorize the issuance of shares for consideration
consisting of any tangible or intangible property or benefit to the corporation,
including cash, promissory notes, services performed or other securities of the
corporation. Future services shall not constitute payment or partial payment for
shares of the corporation. The promissory note of a subscriber or an affiliate
of a subscriber shall not constitute payment or partial payment for shares of
the corporation unless the note is negotiable and is secured by collateral,
other than the shares being purchased, having a fair market value at least equal
to the principal amount of the note. For purposes of this Section 2, "promissory
note" means a negotiable instrument on which there is an obligation to pay
independent of collateral and does not include a non-recourse note
Section 3. Lost Certificates. In case of the alleged loss, destruction or
mutilation of a certificate of stock, the board of directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions in
conformity with law as the board may prescribe. The board of directors may in
its discretion require an affidavit of lost certificate and/or a bond in such
form and amount and with such surety as it may determine before issuing a new
certificate.
Section 4. Transfer of Shares. Upon surrender to the corporation or to a
transfer agent of the corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and receipt of such documentary stamps as may be required by law and
evidence of compliance with all applicable securities laws and other
restrictions, the corporation shall issue a new certificate to the person
entitled thereto, and cancel the old certificate. Every such transfer of stock
shall be entered on the stock books of the corporation which shall be kept at
its principal office or by the person and at the place designated by the board
of directors.
Except as otherwise expressly provided in Article II, Sections 7 and 11,
and except for the assertion of dissenters' rights to the extent provided in
Article 113 of the Colorado Business Corporation Act, the corporation shall be
entitled to treat the registered holder of any shares of the corporation as the
owner thereof for all purposes, and the corporation shall not be bound to
recognize any equitable or other claim to, or interest in, such shares or rights
deriving from such shares on the part of any person other than the registered
holder, including without limitation any purchaser, assignee or transferee of
such shares or rights deriving from such shares, unless and until such other
person becomes the registered holder of such shares, whether or not the
corporation shall have either actual or constructive notice of the claimed
interest of such other person.
16
<PAGE>
Section 5. Transfer Agent, Registrars and Paying Agents. The board may at
its discretion appoint one or more transfer agents, registrars and agents for
making payment upon any class of stock, bond, debenture or other security of the
corporation. Such agents and registrars may be located either within or outside
Colorado. They shall have such rights and duties and shall be entitled to such
compensation as may be agreed.
ARTICLE VI
Indemnification of Certain Persons
Section 1. Indemnification. For purposes of Article VI, a "Proper Person"
means any person (including the estate or personal representative of a director)
who was or is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, and whether formal or informal, by reason of
the fact that he is or was a director, officer, employee, fiduciary or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, fiduciary or agent of any foreign
or domestic profit or nonprofit corporation or of any partnership, joint
venture, trust, profit or nonprofit unincorporated association, limited
liability company, or other enterprise or employee benefit plan. The corporation
shall indemnify any Proper Person against reasonably incurred expenses
(including attorneys' fees), judgments, penalties, fines (including any excise
tax assessed with respect to an employee benefit plan) and amounts paid in
settlement reasonably incurred by him in connection with such action, suit or
proceeding if it is determined by the groups set forth in Section 4 of this
Article that he conducted himself in good faith and that he reasonably believed
(i) in the case of conduct in his official capacity with the corporation, that
his conduct was in the corporation's best interests, or (ii) in all other cases
(except criminal cases), that his conduct was at least not opposed to the
corporation's best interests, or (iii) in the case of any criminal proceeding,
that he had no reasonable cause to believe his conduct was unlawful. Official
capacity means, when used with respect to a director, the office of director
and, when used with respect to any other Proper Person, the office in a
corporation held by the officer or the employment, fiduciary or agency
relationship undertaken by the employee, fiduciary, or agent on behalf of the
corporation. Official capacity does not include service for any other domestic
or foreign corporation or other person or employee benefit plan.
A director's conduct with respect to an employee benefit plan for a purpose
the director reasonably believed to be in the interests of the participants in
or beneficiaries of the plan is conduct that satisfies the requirement in (ii)
of this Section 1. A director's conduct with respect to an employee benefit plan
for a purpose that the director did not reasonably believe to be in the
interests of the participants in or beneficiaries of the plan shall be deemed
not to satisfy the requirement of this section that he conduct himself in good
faith.
17
<PAGE>
No indemnification shall be made under this Article VI to a Proper Person
with respect to any claim, issue or matter in connection with a proceeding by or
in the right of a corporation in which the Proper Person was adjudged liable to
the corporation or in connection with any proceeding charging that the Proper
Person derived an improper personal benefit, whether or not involving action in
an official capacity, in which he was adjudged liable on the basis that he
derived an improper personal benefit. Further, indemnification under this
section in connection with a proceeding brought by or in the right of the
corporation shall be limited to reasonable expenses, including attorneys' fees,
incurred in connection with the proceeding.
Section 2. Right to Indemnification. The corporation shall indemnify any
Proper Person who was wholly successful, on the merits or otherwise, in defense
of any action, suit, or proceeding as to which he was entitled to
indemnification under Section 1 of this Article VI against expenses (including
attorneys' fees) reasonably incurred by him in connection with the proceeding
without the necessity of any action by the corporation other than the
determination in good faith that the defense has been wholly successful.
Section 3. Effect of Termination of Action. The termination of any action,
suit or proceeding by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent shall not of itself create a presumption
that the person seeking indemnification did not meet the standards of conduct
described in Section 1 of this Article VI. Entry of a judgment by consent as
part of a settlement shall not be deemed an adjudication of liability, as
described in Section 2 of this Articl VI.
Section 4. Groups Authorized to Make Indemnification Determination. Except
where there is a right to indemnification as set forth in Sections 1 or 2 of
this Article or where indemnification is ordered by a court in Section 5, any
indemnification shall be made by the corporation only as determined in the
specific case by a proper group that indemnification of the Proper Person is
permissible under the circumstances because he has met the applicable standards
of conduct set forth in Section 1 of this Article. This determination shall be
made by the board of directors by a majority vote of those present at a meeting
at which a quorum is present, which quorum shall consist of directors not
parties to the proceeding ("Quorum"). If a Quorum cannot be obtained, the
determination shall be made by a majority vote of a committee of the board of
directors designated by the board, which committee shall consist of two or more
directors not parties to the proceeding, except that directors who are parties t
the proceeding may participate in the designation of directors for the
committee. If a Quorum of the board of directors cannot be obtained and the
committee cannot be established, or even if a Quorum is obtained or the
committee is designated and a majority of the directors constituting such Quorum
or committee so directs, the determination shall be made by (i) independent
legal counsel selected by a vote of the board of directors or the committee in
the manner specified in this Section 4 or, if a Quorum of the full board of
directors cannot be obtained and a committee cannot be established, by
independent legal counsel selected by a majority vote of the full board
(including directors who are parties to the action) or (ii) a vote of the
shareholders.
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<PAGE>
Authorization of indemnification and advance of expenses shall be made in
the same manner as the determination that indemnification or advance of expenses
is permissible except that, if the determination that indemnification or advance
of expenses is permissible is made by independent legal counsel, authorization
of indemnification and advance of expenses shall be made by the body that
selected such counsel.
Section 5. Court-Ordered Indemnification. Any Proper Person may apply for
indemnification to the court conducting the proceeding or to another court of
competent jurisdiction for mandatory indemnification under Section 2 of this
Article, including indemnification for reasonable expenses incurred to obtain
court-ordered indemnification. If a court determines that the Proper Person is
entitled to indemnification under Section 2 of this Article, the court shall
order indemnification, including th Proper Person's reasonable expenses incurred
to obtain court-ordered indemnification. If the court determines that such
Proper Person is fairly and reasonably entitled to indemnification in view of
all the relevant circumstances, whether or not he met the standards of conduct
set forth in Section 1 of this Article or was adjudged liable in the proceeding,
the court may order such indemnification as the court deems proper except that
if the Proper Person has been adjudged liable, indemnification shall be limited
to reasonable expenses incurred in connection with the proceeding and reasonable
expenses incurred to obtain court-ordered indemnification.
Section 6. Advance of Expenses. Reasonable expenses (including attorneys'
fees) incurred in defending an action, suit or proceeding as described in
Section 1 may be paid by the corporation to any Proper Person in advance of the
final disposition of such action, suit or proceeding upon receipt of (i) a
written affirmation of such Proper Person's good faith belief that he has met
the standards of conduct prescribed by Section 1 of this Article VI, (ii) a
written undertaking, executed personally o on the Proper Person's behalf, to
repay such advances if it is ultimately determined that he did not meet the
prescribed standards of conduct (the undertaking shall be an unlimited general
obligation of the Proper Person but need not be secured and may be accepted
without reference to financial ability to make repayment), and (iii) a
determination is made by the proper group (as described in Section 4 of this
Article VI) that the facts as then known to the group would not preclude
indemnification. Determination and authorization of payments shall be made in
the same manner specified in Section 4 of this Article VI.
Section 7. Additional Indemnification to Certain Persons Other Than
Directors. In addition to the indemnification provided to officers, employees,
fiduciaries or agents because of their status as Proper Persons under this
Article, the corporation may also indemnify and advance expenses to them if they
are not directors of the corporation to a greater extent than is provided in
these bylaws, if not inconsistent with public policy, and if provided for by
general or specific action of its board of directors or shareholders or by
contract.
Section 8. Witness Expenses. The sections of this Article VI do not limit
the corporation's authority to pay or reimburse expenses incurred by a director
in connection with an appearance as a witness in a proceeding at a time when he
has not been made or named as a defendant or respondent in the proceeding.
Section 9. Report to Shareholders. Any indemnification of or advance of
expenses to a director in accordance with this Article VI, if arising out of a
proceeding by or on behalf of the corporation, shall be reported in writing to
the shareholders with or before the notice of the next shareholders' meeting. If
the next shareholder action is taken without a meeting at the instigation of the
board of directors, such notice shall be given to the shareholders at or before
the time the first shareholder signs a writing consenting to such action.
19
<PAGE>
ARTICLE VII
Section 1. Provision of Insurance. By action of the board of directors,
notwithstanding any interest of the directors in the action, the corporation may
purchase and maintain insurance, in such scope and amounts as the board of
directors deems appropriate, on behalf of any person who is or was a director,
officer, employee, fiduciary or agent of the corporation, or who, while a
director, officer, employee, fiduciary or agent of the corporation, is or was
serving at the request of the corporatio as a director, officer, partner,
trustee, employee, fiduciary or agent of any other foreign or domestic profit or
nonprofit corporation or of any partnership, joint venture, trust, profit or
nonprofit unincorporated association, limited liability company, other
enterprise or employee benefit plan, against any liability asserted against, or
incurred by, him in that capacity or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against such
liability unde the provisions of Article VI or applicable law. Any such
insurance may be procured from any insurance company designated by the board of
directors of the corporation, whether such insurance company is formed under the
laws of Colorado or any other jurisdiction of the United States or elsewhere,
including any insurance company in which the corporation has an equity interest
or any other interest, through stock ownership or otherwise.
ARTICLE VIII
Miscellaneous
Section 1. Seal. The board of directors may adopt a corporate seal, which
shall contain the name of the corporation and the words, "Seal, Colorado."
Section 2. Fiscal Year. The fiscal year of the corporation shall be as
established by the board of directors.
Section 3. Amendments. The board of directors shall have power, to the
maximum extent permitted by the Colorado Business Corporation Act, to make,
amend and repeal the bylaws of the corporation at any regular or special meeting
of the board unless the shareholders, in making, amending or repealing a
particular bylaw, expressly provide that the directors may not amend or repeal
such bylaw. The shareholders also shall have the power to make, amend or repeal
the bylaws of the corporation at any annual meeting or at any special meeting
called for that purpose.
Section 4. Receipt of Notices by the Corporation. Notices, shareholder
writings consenting to action, and other documents or writings shall be deemed
to have been received by the corporation when they are actually received: (1) at
the registered office of the corporation in Colorado; (2) at the principal
office of the corporation (as that office is designated in the most recent
document filed by the corporation with the secretary of state for Colorado
designating a principal office) addressed to the attention of the secretary of
the corporation; (3) by the secretary of the corporation wherever the secretary
may be found; or (4) by any other person authorized from time to time by the
board of directors or the president to receive such writings, wherever such
person is found.
Section 5. Gender. The masculine gender is used in these bylaws as a matter
of convenience only and shall be interpreted to include the feminine and neuter
genders as the circumstances indicate.
Section 6. Conflicts. In the event of any irreconcilable conflict between
these bylaws and either the corporation's articles of incorporation or
applicable law, the latter shall control.
Section 7. Definitions. Except as otherwise specifically provided in these
bylaws, all terms used in these bylaws shall have the same definition as in the
Colorado Business Corporation Act.
20
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