SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
--------------- ---------------
Commission File No. 0-6456
INFRASTRUCTURE INTERNATIONAL, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 87-0287034
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(State or other jurisdiction of
incorporation or organization) (IRS Employer Identification No.)
One World Trade Centre, Suite 7865, New York, NY 10048
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(Address of principal executive offices)
(212) 938-0574
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(Issuer's telephone number)
REACT SYSTEMS, INC.
1787 East Ft. Union Blvd., Suite 106, Salt Lake City, UT 84121
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
------ ------
As of October 31, 1996, 524,227 shares of Common Stock of the issuer were
outstanding.
<PAGE>
INFRASTRUCTURE INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
Page
Number
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
Balance Sheets - September 30, 1996 and
December 31, 1995..............................................1
Statements of Operations - For the three months and
nine months ended September 30, 1996 and 1995..................2
Statements of Cash Flows - For the nine months
ended September 30, 1996 and 1995..............................3
Notes to Financial Statements..................................4
Item 2. - Management's Discussion and Analysis of
Financial Condition and Results of Operations.............5
PART II - OTHER INFORMATION............................................7
SIGNATURES...............................................................8
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INFRASTRUCTURE INTERNATIONAL, INC.
BALANCE SHEETS (Unaudited)
($000)
<TABLE>
<CAPTION>
September 30 December 31
1996 1995
------------ -----------
<S> <C> <C>
ASSETS
Loan receivable 3,013 0
--------- ---------
Total assets $ 0 $ 0
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 0 $ 94
Loans from shareholders 2 0
--------- ---------
Total current liabilities 2 94
Shareholder's Equity
Common stock, par value, $.001 1 149
Series A Preferred Stock, $.001 par value 1 -
Series B Preferred Stock, $.001 par value - -
Additional paid in capital 3,618 345
Accumulated Deficit (609) (588)
-------- --------
Total shareholder's equity 3,011 (94)
-------- --------
Total liabilities and
shareholder's equity $ 3,013 $ 0
======== ========
</TABLE>
See accompanying notes to condensed financial statements
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<PAGE>
INFRASTRUCTURE INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS (Unaudited)
($'000)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income $ 0 $ 0 $ 0 $ 0
-------- ------- -------- -------
Expenses:
Selling, general and administration 18 0 21 0
-------- ------- -------- -------
Net income (loss) $ (18) $ 0 $ (21) $ 0
======== ======= ======== =======
Net Loss Per Common Share $ (.04) $ 0 $ (.04) $ 0
======== ======= ======== =======
Weighted Average Number of Shares
Outstanding 524,227 99,471 524,227 99,471
======== ======= ======== =======
</TABLE>
See accompanying notes to condensed financial statements
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<PAGE>
INFRASTRUCTURE INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (21) $ 0
-------- -------
Net cash (used in) by operating activities: (21) 0
Cash flows from investing activities
Loan receivable (3,013) 0
-------- -------
Net cash (used in) investing activities (3,013) 0
-------- -------
Cash flows from financing activities:
Proceeds from sale of preferred stock 3,011 0
Proceeds from issuance of common stock 21 0
Advance from related parties 2 0
-------- -------
Net cash provided by financing activities 3,034 0
-------- -------
Net increase (decrease) in cash 0 0
Cash at beginning of period 0 0
-------- -------
Cash at end of period $ 0 $ 0
======== =======
Supplemental disclosure of noncash
investing and financing activities:
Conversion of notes payable to common stock $ 94 $ 0
======== =======
</TABLE>
See accompanying notes to condensed financial statements
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<PAGE>
INFRASTRUCTURE INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
1. Interim Financial Presentation
The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-QSB. The December 31, 1995 balance sheet data was
derived from audited financial statements but does not include all
disclosures required by generally accepted accounting principles. The
interim financial statements and notes thereto should be read in
conjunction with the financial statements and footnotes thereto included in
the Company's report on Form 10-KSB for the year ended December 31, 1995.
In the opinion of management, the interim financial statements reflect all
adjustments of a normal recurring nature necessary for a fair statement of
the results for the interim periods presented.
2. Shareholders' Equity
On August 30, 1996, the Company effected at one-for-thirty reverse stock
split. Accordingly the reverse split has been reflected in the accompanying
financial statements for each period presented and earnings per share have
been computed using this revised equity.
During the quarter ended September 30, 1996, the Company issued an
aggregate of 1,667 shares of common stock in full satisfaction of a note
payable in the amount of $94,000. Additionally, during the nine months
ended September 30, 1996, the Company issued an aggregate of 363,500 shares
of common stock as payment of operating expenses incurred during such
period in the amount of $21,000. All shares indicated above are after
giving effect to the reverse split discussed above.
3. Loan Receivable
In connection with the proposed acquisition of Guang Hui Highway Project
Company ("GHHP"), the Company loaned GHHP $3,013,000. There are no
definitive repayment terms for such loan.
During the quarter ended September 30, 1996, the Company issued an
aggregate of 3,000 shares of Series A Preferred Stock for $3,011,000. The
Series A Preferred Shares have a liquidation preference of $1,000 per share
and are convertible into common stock at the lesser of the market price on
the date of conversion or $1.00 per share.
4. Subsequent Event
On November 8, 1996, the Company amended its Articles of Incorporation
changing its name from React Systems, Inc. to Infrastructure International,
Inc. and changing its par value per common share to $.001.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Nine Months Ended September 30, 1996 Compared with Nine Months Ended September
30, 1995
The Company had no revenue for either the nine months ended September 30, 1996,
or the corresponding period of the prior year.
Selling, general and administration expenses increased by $21,000for the
nine months ended September 30, 1996, to $21,000 from $0 for the corresponding
period of the prior year. This increase in selling, general and administration
expenses resulted from expenses incurred in actively seeking a company with
which to merge.
CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company has not engaged in any material business operations during the
reporting periods except to seek out the acquisition of assets, property or a
business with which to combine.
At September 30, 1996, the Company had assets of $3,013,000 and had liabilities
of $2,000 as compared to no assets and liabilities of $94,000 for the comparable
period of 1995. The increase in assets resulted from the sale of preferrred
stock.
Cash used in operating activities increased to $21,000 for the nine months ended
September 30, 1996, from $0 for the corresponding period of the prior year. This
increase was attributable to the loss from operations incurred by the Company.
Cash provided by financing activities increased to $3,034,000 for the nine
months ended September 30, 1996, from $0 for the corresponding period of the
prior year. This increase was attributable to the issuance of common stock as
payment of operating expenses in the amount of $21,000 and a loan from a related
party in the amount of $2,000, and the sale of preferred stock for $3,011,000.
Cash flow used in investing activities increased to $3,013,000 for the nine
months ended September 30, 1996, from $0 for the corresponding period of the
prior year. The increase resulted from the Company making a loan of its
available cash in connection with a proposed acquisition.
During the nine months ended September 30, 1996, the Company issued 1,667 shares
of common stock, after giving effect to a 1-for-30 reverse split, in exchange
for foregiveness of $94,300 of notes payable Preferred Stock.
Based on the current economic and regulatory conditions, and its liquid assets
management believes that it is possible for an entity like the Company to
negotiate a merger or acquisition with a viable private company.
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<PAGE>
PART II. - OTHER INFORMATION
Item 5. Other Information
In connection with ongoing discussions relating to the potential acquisition of
an operating business, the Company has relocated its corporate office to One
World Trade Centre, Suite 7865, New York, New York 10048.
The Company has also amended and restated its Articles of Incorporation to
change its name to Infrastructure International, Inc., decrease its par value to
$.001 per share, provide for preferred stock and indemnification of its officers
and directors.
The Company filed a Certificate of Designation for 15,000 shares of Series A
preferred stock $.001 par value. These shares have no voting rights, a
redemption value of $1,000 per share, are redeemable at the Company's option at
anytime after December 31, 1997 and are convertible into common stock of the
Company at the option of the holder 45 days after purchase at the rate of 1,000
common shares for each share of Series A preferred stock.
The Company also filed a Certificate of Designation for 100,000 shares of Series
B preferred stock $.001 par value per share. These shares when issued will
always have a voting preference of 30% on all corporate matters and have a
liquidation preference of $.001 per share.
Item 6. Exhibits and Reports of Form 8-K
a. Exhibits
3.1 Amended and Restated Articles of Incorporation
3.2 By-laws
3.3 Certificate of Designation for Series A Preferred Stock
3.4 Certificate of Designation for Series B Preferred Stock
b. Reports Form 8-K
None
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
<TABLE>
<S> <C>
(REGISTRANT) INFRASTRUCTURE INTERNATIONAL, INC.
BY (SIGNATURE) /s/ Scott Crawford
(NAME AND TITLE) Scott Crawford, Chief Executive Officer
(DATE) November 19, 1996
BY (SIGNATURE) /s/ Karen Pollino
(NAME AND TITLE) Karen Pollino, Chief Financial Officer
(DATE) November 19, 1996
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 3,013
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,013
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,013
<CURRENT-LIABILITIES> 2
<BONDS> 0
0
1
<COMMON> 1
<OTHER-SE> 3,009
<TOTAL-LIABILITY-AND-EQUITY> 3,013
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 21
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (21)
<INCOME-TAX> 0
<INCOME-CONTINUING> (21)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
RESTATED ARTICLES OF INCORPORATION
OF
REACT SYSTEMS, INC.
We, the undersigned President and Secretary of React Systems, Inc. do
hereby certify:
That the board of directors and shareholders of said corporation at a
meeting duly convened on October 4, 1996, adopted resolutions to amend and
restate the Articles of Incorporation, and
That the number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 524,227; that said
amendments have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding
and entitled to vote thereon, and
That the text of Articles of Incorporation as amended to date reads as
herein set forth in full:
ARTICLE I
NAME
The name of the corporation (hereinafter called "Corporation") is
Infrastructure International, Inc.
ARTICLE II
PERIOD OF DURATION
The period of duration of the Corporation is perpetual.
ARTICLE III
PURPOSES AND POWERS
The purpose for which this Corporation is organized is to engage in the
business of investing in investments of all forms and nature and to engage in
any and all other lawful business.
<PAGE>
ARTICLE IV
CAPITALIZATION
The total number of shares of stock which the Corporation shall have the
authority to issue is fifty million (50,000,000) shares, consisting of twenty
five million (25,000,000) shares of Common Stock having a par value of $.05 per
share and twenty five million (25,000,000) shares of Preferred Stock having a
par value of $.05 per share.
A. Preferred Stock
The Board of Directors is authorized, subject to the limitations prescribed
by law and the provisions of this Article, to provide for the issuance of
the shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Nevada, to establish from
time to time the number of shares to be included in each such series and to
fix the designation, powers, preferences and rights of the shares of each
such series and the qualifications, limitations or restrictions thereof.
1. The authority of the Board with respect to each series shall include,
but not be limited to, determination of the following:
a. The number of shares constituting that series and the distinctive
designation of that series;
b. The dividend rate on the shares of that series, whether dividends
shall be cumulative, and if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on
shares of that series;
c. Whether that series shall have voting rights, in addition to the
voting rights provided by law, and if so, the terms of such
voting rights;
d. Whether that series shall have conversion privileges and, if so,
the terms and conditions of such conversion, including provision
for adjustment of the conversion rate in such events
<PAGE>
as the Board of Directors shall determine;
e. Whether or not the shares of that series shall be redeemable and,
if so, the terms and conditions of such redemption, including the
date or dates upon or after which they shall be redeemable and
the amount per share payable in case of redemption, which amount
may vary under different conditions and at different redemption
dates;
f. Whether that series shall have a sinking fund for the redemption
or purchase of shares of that series and, if so, the terms and
amount of such sinking fund;
g. The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of
payment of shares of that series; and
h. Any other relative rights, preferences and limitations of that
series.
2. Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment, before any dividends shall be paid
or declared and set apart for payment on Common Stock with respect to
the same dividend period.
3. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets available for distribution
to holders of shares of Preferred Stock of all series shall be
insufficient to pay such holders the full preferential amount to which
they are entitled, then such assets shall be distributed ratably among
the shares of all series of Preferred Stock in accordance with the
respective preferential amounts (including unpaid cumulative
dividends, if any) payable with respect thereto.
4. Unless otherwise provided in any resolution of the Board of Directors
providing for the issuance of any particular series of
<PAGE>
Preferred Stock, no holder of Preferred Stock shall have any
pre-emptive right as such holder to subscribe for, purchase or receive
any part of any new or additional issue of capital stock of any class
or series, including unissued and treasury stock, or obligations or
other securities convertible into or exchangeable for capital stock of
any class or series, or warrants or other instruments evidencing
rights or options to subscribe for, purchase or receive any capital
stock of any class or series, whether now or hereafter authorized and
whether issued for cash or other consideration or by way of dividend.
B. Common Stock
1. Subject to the prior and superior rights of the Preferred Stock and on
the conditions set forth in the foregoing parts of this Article or in
any resolution of the Board of Directors providing for the issuance of
any particular series of Preferred Stock, and not otherwise, such
dividends (payable in cash, stock or otherwise) as may be determined
by the Board of Directors may be declared and paid on the Common Stock
from time to time out of any funds legally available therefor.
2. Except as otherwise provided by law, by this Certificate of
Incorporation or by the resolution or resolutions of the Board of
Directors providing for the issue of any series of the Preferred
Stock, the Common Stock shall have the exclusive right to vote for the
election of directors and for all other purposes, each holder of the
Common Stock being entitled to one vote for each share held.
3. Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, and after the holders of the
Preferred Stock of each series shall have been paid in full the amount
to which they respectively shall be entitled, or a sum sufficient for
such payments in assets of the Corporation shall be distributed pro
rata to the holders of the Common Stock in accordance with their
respective rights and interests, to the exclusion of the holders of
the Preferred Stock.
<PAGE>
ARTICLE V
REGISTERED OFFICE AND AGENT
The address of the corporation's current registered office is 2716 Beaver
Creek Court, No. 201, Las Vegas, Nevada 89117; the name of the corporation's
current registered agent at such address is Andy Chudd.
ARTICLE VI
DIRECTORS
The Corporation shall be governed by a Board of Directors consisting of
such number of directors as shall be fixed the Corporation's bylaws. The number
of directors constituting the current board of directors of the corporation is
three and the names and addresses of the directors are as follows:
Name Address
Scott Crawford 2440 South Progress Dr.
Salt Lake City, Utah
Angela Morin 2440 South Progress Dr.
Salt Lake City, Utah
Karen Pollino 2440 South progress Dr.
Salt lake City, Utah
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
There shall be no preemptive right to acquire unissued and/or treasury
shares of the stock of the Corporation.
ARTICLE VIII
LIABILITY OF OFFICERS AND DIRECTORS
A director or officer of the Corporation shall not be liable to the
Corporation or its shareholders for damages for breach of fiduciary duty as a
director or officer unless the act or omission involves intentional misconduct,
<PAGE>
fraud, a knowing violation of law or the payment of an unlawful dividend in
violation of NRS 78.300.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall indemnify any and all persons who may serve or who
have served at any time as directors or officers or who, at the request of the
Board of Directors of the Corporation, may serve or at any time have served as
directors or officers of another corporation in which the Corporation at such
time owned or may own shares of stock or of which it was or may be a creditor,
and their respective heirs, administrators, successors and assigns, against any
and all expenses, including amounts paid upon judgments, counsel fees and
amounts paid in settlement (before or after suit is commenced), actually and
necessarily by such persons in connection with the defense or settlement of any
claim, action, suit or proceeding in which they, or any of them, are made
parties, or a party, or which may be asserted against them or any of them, by
reason of being or having been directors or officers of the Corporation, or of
such other corporation, except in relation to matters as to which any such
director or officer of the Corporation, or of such other corporation or former
director or officer or person shall be adjudged in any action, suit or
proceeding to be liable for his own negligence or misconduct in the performance
of his duty. Such indemnification shall be in addition to any other rights to
which those indemnified may be entitled under any law, by law, agreement, vote
of shareholder or otherwise.
DATED this 4th day of October, 1996.
<TABLE>
<S> <C>
(REGISTRANT) REACT SYSTEMS, INC.
BY (SIGNATURE) /s/ Scott Crawford
(NAME AND TITLE) Scott Crawford, President
(DATE) October 4, 1996
ATTEST:
BY (SIGNATURE) /s/ Karen Pollino
(NAME AND TITLE) Karen Pollino, Secretary
(DATE) October 4, 1996
</TABLE>
<PAGE>
STATE OF )
(
COUNTY OF )
On October 4, 1996, personally appeared before me, a Notary Public, Scott
Crawford, who acknowledged that he executed the above document in his capacity
as President of Energy Systems, Inc.
------------------------------------
Notary Public
STATE OF )
(
COUNTY OF )
On October 4, 1996, personally appeared before me, a Notary Public, Karen
Pollino, who acknowledged that she executed the above document in his capacity
as Secretary of Energy Systems, Inc.
------------------------------------
Notary Public
BYLAWS
OF
INFRASTRUCTURE INTERNATIONAL, INC.
ARTICLE I
OFFICES
1.01 REGISTERED OFFICE AND AGENT
The registered office of the Corporation shall be maintained at 2716 Beaver
Creek Court, No. 201, Las Vegas, Nevada 89117 in the State of Nevada. The
registered office or the registered agent, or both, may be changed by resolution
of the Board of Directors, upon filing the statement required by law.
1.02 PRINCIPAL OFFICE
The principal office of the Corporation shall be at One World Trade Centre,
Ste. 7865, New York, New York 10048 provided that the Board of Directors shall
have power to change the location of the principal office in its discretion.
1.03 OTHER OFFICES
The Corporation may also maintain other offices at such places within or
without the State of Nevada as the Board of Directors may from time to time
appoint or as the business of the Corporation may require.
ARTICLE II
SHAREHOLDERS
2.01 PLACE OF MEETING
All meetings of shareholders, both regular and special, shall be held
either at the registered office of the Corporation, or at such other place as
shall be designated in the notice of the meeting.
<PAGE>
2.02 ANNUAL MEETING
The annual meeting of shareholders for the election of directors and for
the transaction of all other business which may come before the meeting shall be
held on the 6th day of June in each year (if not a legal holiday and, if a legal
holiday, then on the next business day following) at the hour specified in the
notice of meeting.
If the election of directors shall not be held on the day above designated
for the annual meeting, the Board of Directors shall cause the election to be
held as soon thereafter as conveniently may be at a special meeting of the
shareholders called for the purpose of holding such election.
The annual meeting of shareholders may be held for any other purpose in
addition to the election of director which may be specified in a notice of such
meeting. The meeting may be called by resolution of the Board of Directors or by
a writing filed with the secretary signed either by a majority of the directors
or by shareholders owning a majority in amount of the entire capital stock of
the Corporation issued and outstanding and entitled to vote at any such meeting.
2.03 NOTICE OF SHAREHOLDERS' MEETING
A written or printed notice stating the place, day and hour of the meeting,
and in case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten (10) nor more than sixty (60)
days before the date of the meeting, either personally or by mail, by or at the
direction of the president, secretary or the officer or person calling the
meeting, to each shareholders of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
share transfer books of the Corporation, with postage thereon prepaid.
2.04 VOTING OF SHARES
Each outstanding share, regardless of class, shall be entitled to one 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 or by law.
Treasury shares, shares of its own stock owned by another corporation the
majority of the voting stock of which is owned or controlled by this
Corporation, and shares of its own stock held by this Corporation in a
-2-
<PAGE>
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
A shareholder may vote either in person or by proxy executed in writing by
the shareholder or by his duly authorized attorney-in-fact. No proxy shall be
valid after eleven (11) months from the date of its execution unless otherwise
provided in the proxy. Each proxy shall be revocable unless expressly provided
therein to be irrevocable, and in no event shall it remain irrevocable for a
period of more than eleven (11) months.
At each election for directors and every shareholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected and
for whose election he has a right to vote, or unless prohibited by the Articles
of Incorporation, to cumulate his votes by giving one candidate as many votes as
the number of such directors multiplied by the number of his shares shall equal,
or by distributing such votes on the same principal among any number of such
candidates. Any shareholder who intends to cumulate his votes as herein
authorized shall give written notice of such intention to the secretary of the
Corporation on or before the day preceding the election at which such
shareholder intends to cumulate his votes.
2.05 CLOSING TRANSFER BOOKS AND FIXING RECORD DATE
For the purpose of determining shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may provide
that the share transfer books shall be closed for a stated period not exceeding
sixty (60) days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten (10) days immediately
preceding such meeting. In lieu of closing the stock transfer books, the ByLaws
or, in the absence of an applicable ByLaw, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
not later than sixty (60) days and, in case of a meeting of shareholders, not
earlier than ten (10) days, prior to the date on which the particular action
requiring such determination of shareholders is to be taken. If the share
transfer books are not closed and no record date is fixed for the
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<PAGE>
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, except where the determination has been made
through the closing of share transfer books and the stated period of closing has
expired.
2.06 QUORUM OF SHAREHOLDERS
Unless otherwise provided in the Articles of Incorporation, the holders of
a majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders, but in no event shall a
quorum consist of the holders of less than one-third (1/3) of the shares
entitled to vote and thus represented at such meeting. The vote of the holders
of a majority of the shares entitled to vote and thus represented at a meeting
at which a quorum is present shall be the act of the shareholders' meeting,
unless the vote of a greater number is required by law, the Articles of
Incorporation or the ByLaws.
2.07 VOTING LISTS
The officer or agent having charge of the share transfer books for the
shares of the Corporation shall make, at least ten (10) days before each meeting
of shareholders, a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten (10) days prior to such meeting, shall be kept on file at the registered
office of the Corporation and shall be subject to inspection by any shareholders
at any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting. The original
share 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.
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2.08 ACTION BY CONSENT OF SHAREHOLDERS
In lieu of a formal meeting, action may be taken by written consent of such
number of the shareholders as is required by either State law or the
Corporation's Bylaws for passage of such corporate action.
ARTICLE III
DIRECTORS
3.01 BOARD OF DIRECTORS
The business and affairs of the Corporation shall be managed by a Board of
Directors. Directors need not be residents of the State of Nevada or
shareholders in the Corporation.
3.02 NUMBER AND ELECTION OF DIRECTORS
The number of directors shall be three (3) provided that the number may be
increased or decreased from time to time by an amendment to these ByLaws, but no
decrease shall have the effect of shortening the term of any incumbent director.
At each annual election the shareholders shall elect directors to hold office
until the next succeeding annual meeting.
3.03 VACANCIES
Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the remaining directors, though less than a quorum of the
Board. A director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any directorship to be filled by reason of an
increase in the number of directors shall be filled by election at an annual
meeting or at a special meeting of shareholders called for that purpose.
3.04 QUORUM OF DIRECTORS
A majority of the Board of Directors shall constitute a quorum for the
transaction of business. 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.
3.05 ANNUAL MEETING OF DIRECTORS
Within thirty (30) days after each annual meeting of shareholders, the
Board of Directors elected at such meeting shall hold an annual meeting at which
they shall elect officers and transact such other business as shall come before
the meeting.
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3.06 REGULAR MEETING OF DIRECTORS
A regular meeting of the Board of Directors may be held at such time as
shall be determined from time to time by resolution of the Board of Directors.
3.07 SPECIAL MEETINGS OF DIRECTORS
The secretary shall call a special meeting of the Board of Directors
whenever requested to do so by the President or by two directors. Such special
meeting shall be held at the time specified in the notice of meeting.
3.08 PLACE OF DIRECTORS MEETINGS
All meetings of the Board of Directors (annual, regular or special) shall
be held either at the principal office of the Corporation or at such other
place, either within or without the State of Nevada, as shall be specified in
the notice of meeting.
3.09 NOTICE OF DIRECTORS MEETINGS
All meetings of the Board of Directors (annual, regular or special) shall
be held upon five (5) days written notice stating the date, place and hour of
meeting delivered to each director either personally or by mail or at the
direction of the president or the secretary or the officer or person calling the
meeting.
In any case where all of the directors execute a waiver of notice of the
time and place of meeting, no notice thereof shall be required, and any such
meeting (whether annual, regular or special) shall be held at the time and at
the place (either within or without the State of Nevada) specified in the waiver
of notice. Attendance of a director at any meeting shall constitute a waiver of
notice of such meeting, except where the directors attends a meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any annual,
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
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3.10 COMPENSATION
Directors, as such, shall not receive any stated salary for their services,
but by resolution of the Board of Directors a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each annual, regular or
special meeting of the Board, provided, that nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
3.11 ACTION BY CONSENT OF DIRECTORS
In lieu of a formal meeting, action may be taken by written consent of such
number of the directors as is required by either State law or the Corporation's
Bylaws for passage of such corporate action.
ARTICLE IV
OFFICERS
4.01 OFFICERS ELECTION
The officers of the Corporation shall consist of a president, one or more
vice presidents, a secretary, and a treasurer. All such officers shall be
elected at the annual meeting of the Board of Directors provided for in Article
III, Section 5. If any office is not filled at such annual meeting, it may be
filled at any subsequent regular or special meeting of the Board. The Board of
Directors at such annual meeting, or at any subsequent regular or special
meeting may also elect or appoint such other officers and assistant officers and
agents as may be deemed necessary. Any two or more offices may be held by the
same person, except the offices of president and secretary.
All officers and assistant officers shall be elected to serve until the
next annual meeting of directors (following the next annual meeting of
shareholders) or until their successors are elected; provided, that any officer
or assistant officer elected or appointed by the Board of Directors may be
removed with or without cause at any regular or special meeting of the Board
whenever in the judgment of the Board of Directors the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Any agent appointed
shall serve for such term, not longer than the next annual meeting of the Board
of Directors, as shall be specified, subject to like right of removal by the
Board of Directors.
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4.02 VACANCIES
If any office becomes vacant for any reason, the vacancy may be filled by
the Board of Directors.
4.03 POWER OF OFFICERS
Each officer shall have, subject to these ByLaws, in addition to the duties
and powers specifically set forth herein, such powers and duties as are commonly
incident to his office and such duties and powers as the Board of Directors
shall from time to time designate. All officers shall perform their duties
subject to the directions and under the supervision of the Board of Directors.
The president may secure the fidelity of any and all officers by bond or
otherwise.
4.04 PRESIDENT
The president shall be the chief executive officer of the Corporation. He
shall preside at all meetings of the directors and shareholders. He shall see
that all orders and resolutions of the Board are carried out, subject however,
to the right of the directors to delegate specific powers, except such as may be
by statute exclusively conferred on the president, to any other officers of the
Corporation.
He or any vice president shall execute bonds, mortgages and other
instruments requiring a seal, in the name of the Corporation, and, when
authorized by the Board, he or any vice president may affix the seal to any
instrument requiring the same, and the seal when so affixed shall be attested by
the signature of either the secretary or an assistant secretary. He or any vice
president shall sign certificates of stock.
The president shall be ex-officio a member of all standing committees.
He shall submit a report of the operations of the Corporation for the year
to the directors at their meeting next preceding the annual meeting of the
shareholders and to the shareholders at their annual meeting.
4.05 VICE PRESIDENT
The vice president shall, in the absence or disability of the president,
perform the duties and exercise the powers of the president, and they shall
perform such other duties as the Board of Directors shall prescribe.
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4.06. SECRETARY AND ASSISTANT SECRETARIES
The secretary shall attend all meetings of the Board and all meetings of
the shareholders and shall record all votes and the minutes of all proceedings
and shall perform like duties for the standing committees when required. He
shall give or cause to be given notice of all meetings of the shareholders and
all meetings of the Board of Directors and shall perform such other duties as
may be prescribed by the Board. He shall keep in safe custody the seal of the
Corporation, and when authorized by the Board, affix the same to any instrument
requiring it, and when so affixed, it shall be attested by his signature or by
the signature of an assistant secretary.
The assistant secretary shall, in the absence or disability of the
secretary, perform the duties and exercise the powers of the secretary, and they
shall perform such other duties as the Board of Directors shall prescribe.
In the absence of the secretary or an assistant secretary, the minutes of
all meetings of the Board and shareholders shall be recorded by such person as
shall be designated by the president or by the Board of Directors.
4.07 TREASURER AND ASSISTANT TREASURERS
The treasurer shall have the custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such depositories as
may be designated by the Board of Directors.
The treasurer shall disburse the funds of the Corporation as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements. He
shall keep and maintain the Corporation's books of account and shall render to
the president and directors an account of all of his transactions as treasurer
and of the financial condition of the Corporation and exhibit his books, records
and accounts to the president or directors at any time. He shall disburse funds
for capital expenditures as authorized by the Board of Directors and in
accordance with the orders of the president, and present to the president for
his attention any requests for disbursing funds if in the judgment of the
treasurer any such request is not properly authorized. He shall perform such
other duties as may be directed by the Board of Directors or by the president.
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If required by the Board of Directors, he shall give the Corporation a bond
in such sum and with such surety or sureties as shall be satisfactory to the
Board for the faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
Corporation.
The assistant treasurers in the order of their seniority shall, in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer, and they shall perform such other duties as the Board
of Directors shall prescribe.
ARTICLE V
CERTIFICATES OF STOCK: TRANSFER, ETC.
5.01 CERTIFICATES OF STOCK
The certificates for shares of stock of the Corporation shall be numbered
and shall be entered in the Corporation as they are issued. They shall exhibit
the holder's name and number of shares and shall be signed by the president or a
vice president and the secretary or an assistant secretary or if the Board of
Directors determines, by any one of the afore named officers and shall be sealed
with the seal of the Corporation or a facsimile thereof. If the Corporation has
a transfer agent or a registrar, other than the Corporation itself or an
employee of the Corporation, the signatures of any such officer may be
facsimile. In case any officer or officers who shall have signed or whose
facsimile signature or signatures shall have been used on any such certificate
or certificates shall cease to be such officer or officers of the Corporation,
whether because of death, resignation or otherwise, before said certificate or
certificates shall have been issued, such certificate may nevertheless be issued
by the Corporation with the same effect as though the person or persons who
signed such certificates or whose facsimile signature or signatures shall have
been used thereon had been such officer or officers at the date of its issuance.
Certificates shall be in such form as shall in conformity to law be prescribed
from time to time by the Board of Directors.
The Corporation may appoint from time to time transfer agents and
registrars, who shall perform their duties under the supervision of the
secretary.
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5.02 TRANSFERS OF SHARES
Upon surrender to the Corporation or the transfer agent of the Corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction upon its books.
5.03 REGISTERED SHAREHOLDERS
The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and, accordingly shall
not be bound to recognize any equitable or other claim to or interest in such
share on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by law.
5.04 LOST CERTIFICATE
The Board of Directors may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to be lost. When
authorizing such issue of a new certificate or certificates, the Board of
Directors in its discretion and as a condition precedent to the issuance
thereof, may require the owner of such lost or destroyed certificate or
certificates or his legal representative to advertise the same in such manner as
it shall require or to give the corporation a bond with surety and in form
satisfactory to the Corporation (which bond shall also name the Corporation's
transfer agents and registrars, if any, as obligees) in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
or other obligees with respect to the certificate alleged to have been lost or
destroyed, or to advertise and also give such bond.
ARTICLE VI
DIVIDEND
6.01 DECLARATION
The Board of Directors may declare at any annual, regular or special
meeting of the Board and the Corporation may pay, dividends on the outstanding
shares in cash, property or in the shares of the Corporation to the extent
permitted by, and subject to the provisions of, the laws of the State of Nevada.
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6.02 RESERVES
Before payment of any dividend there may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the directors from
time to time in their absolute discretion think proper as a reserve fund to meet
contingencies or for equalizing dividends or for repairing or maintaining any
property of the Corporation or for such other purpose as the directors shall
think conducive to the interest of the Corporation, and the directors may
abolish any such reserve in the manner in which it was created.
ARTICLE VII
MISCELLANEOUS
7.01 INFORMAL ACTION
Any action required to be taken or which may be taken at a meeting of the
shareholders, directors or members of the executive committee, may be taken
without a meeting if a consent in writing setting forth the action so taken
shall be signed by all of the shareholders, directors, or members of the
executive committee, as the case may be, entitled to vote with respect to the
subject matter thereof, and such consent shall have the same force and effect as
a unanimous vote of the shareholders, directors, or members of the executive
committee, as the case may be, at a meeting of said body.
7.02 SEAL
The corporate seal shall be circular in form and shall contain the name of
the Corporation, the year of its incorporation and the words "State of Nevada",
and "CORPORATE SEAL". The seal may be used by causing it or a facsimile to be
impressed or affixed or in any other manner reproduced. The corporate seal may
be altered by order of the Board of Directors at any time.
7.03 CHECKS
All checks or demands for money and notes of the Corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
7.04 FISCAL YEAR
The fiscal year of the Corporation shall begin on the 31st day of December
in each and every year.
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7.05 DIRECTORS ANNUAL STATEMENT
The Board of Directors shall present at each annual meeting of shareholders
a full and clear statement of the business and condition of the Corporation.
7.06 CLOSE CORPORATIONS: MANAGEMENT BY SHAREHOLDERS
If the Articles of Incorporation of the Corporation and each certificate
representing its issued and outstanding shares states that the business and
affairs of the Corporation shall be managed by the shareholders of the
Corporation rather than by the Board of Directors, then, whenever the context so
requires the shareholders of the Corporation shall be deemed the directors of
the Corporation for the purposes of applying any provision of these ByLaws.
7.07 AMENDMENTS
These ByLaws may be altered, amended or repealed in whole or in part by the
affirmative vote of the Board of Directors.
ARTICLE VIII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The following Articles describes and sets out the parameters of
indemnification as set out in Article 2.02-1 of the Texas Business Corporations
Act.
"Article 2.02-1 of the Texas Business Corporation Act provides the
following with respect to indemnification of officers and directors:
Art. 2.02-1 Power to Indemnify and to Purchase Indemnity Insurance; Duty to
Indemnify.
A. 1. "Corporation" includes any domestic or foreign predecessor entity
of the corporation in a merger, consolidation, or other transaction
which the liabilities of the predecessor are transferred to the
corporation by operation of law and in any other transaction in which
the corporation assumes the liabilities of the predecessor but does
not specifically exclude liabilities that are the subject matter of
this article.
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A. 2. "Director" means any person who is or was a director of the
corporation and any person who, while a director of the corporation,
is or was serving at the request of the corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic corporation,
partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise.
A. 3. "Expenses" include court costs and attorney's fees.
A. 4. "Official capacity" means:
a. When used with respect to a director, the office of director in
the corporation, and
b. When used with respect to a person other than a director, the
elective or appointive office in the corporation held by the
officer or the employment or agency relationship undertaken by
the employee or agent in behalf of the corporation, but
c. In both paragraphs (a) and (b) does not include service for any
other foreign or domestic corporation or any partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or
other enterprise.
5. "Proceeding" means any threatened, pending, or completed action, suit,
or proceedings, whether civil, criminal, administrative, arbitrative,
or investigative, any appeal in such an action, suit, or proceeding,
and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
B. A corporation may indemnify a person who was, is or is threatened to be made
a named defendant or respondent in a proceeding because the person is or was
a director only if it is determined in accordance with Section F of this
article that the person:
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1. Conducted himself in good faith;
2. Reasonably believed;
a. In the case of conduct in his official capacity as a director of
the corporation, that his conduct was in the corporation's best
interest, and
b. In all other cases, that his conduct was at least not opposed to
the corporation's best interest; and
3. In the case of any criminal proceeding, had no reasonable cause to
believe his conduct was lawful.
C. A director may not be indemnified under Section B of this article for
obligations resulting from a proceeding:
1. In which the person is found liable on the basis that personal benefit
was improperly received by him, whether or not the benefit resulted
from an action taken in the persons' official capacity; or
2. In which the person is found liable to the corporation.
D. The termination of a proceeding by judgment, order, settlement, or
conviction, or on a plea of nolo contendere or its equivalent is not of
itself determinative that the person did not meet the requirements set
forth in Section B of this article.
E. A person may be indemnified under Section B of this article against
judgments, penalties (including excise and similar taxes), fines,
settlements, and reasonable expenses actually incurred by the person in
connection with the proceeding; but if the proceeding was brought by or in
behalf of the corporation, the indemnification is limited to reasonable
expenses actually incurred by the person in connection with the proceeding.
F. A determination of indemnification under Section B of this article must be
made:
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1. By a majority vote of a quorum consisting of directors who at the time
of the vote are not named defendants or respondents in the proceeding;
2. If such a quorum cannot be obtained, by a majority vote of a committee
of the board of directors, designated to act in the matter by a
majority vote of all directors, consisting solely of two or more
directors who at the time of the vote are not named defendants or
respondents in the proceeding.
3. By special legal counsel selected by the board of directors or a
committee of the board by vote as set for in Subsection (1) or (2) of
this section, or, if such quorum cannot be obtained and such a
committee cannot be established, by a majority vote of all directors;
or
4. By the shareholders in a vote that excludes the shares held by
directors who are named defendants or respondents in the proceeding.
G. Authorization of indemnification and determination as to reasonableness of
expenses must be made in the same manner as the determination that
indemnification is permissible, except that if the determination that
indemnification is permissible is made by special legal counsel,
authorization of indemnification and determination as to reasonableness of
expenses must be made in the manner specified by Subsection (3) of section
F of this article for the selected of special legal counsel. A provision
contained in the article of incorporation, bylaws, a resolution of
shareholders or directors, or an agreement that makes mandator the
indemnification permitted under section B of this article shall be deemed
to constitute authorization of indemnification in the manner required by
this section even though such provision may not have been adopted or
authorized in the same manner as the determination that indemnification is
permissible.
H. A corporation shall indemnify a director against reasonable expenses
incurred by him in connection with a proceeding in which he is a named
defendant or respondent because he is or was a director if he has been
wholly successful, on the merits or otherwise, in the defense of the
proceeding.
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I. If, in a suit for the indemnification required by section H of this
article, a court of competent jurisdiction determines that the director is
entitled to indemnification under that section, the court shall order
indemnification and shall award to the director the expenses incurred in
securing the indemnification.
J. If, upon application of a director, a court of competent jurisdiction
determines, after giving any notice the court considers necessary, that the
director is fairly and reasonably entitled to indemnification in view of
all the relevant circumstances, whether or not he has met the requirements
set forth in section B of this article or has been abjudged liable in the
circumstances described by section C of this article, the court may order
the indemnification that the court determines is proper and equitable. The
court shall limit indemnification to reasonable expenses if the proceeding
is brought by or on behalf of the corporation or if the director is found
liable on the basis that personal benefit was improperly received by him,
whether or not the benefit resulted from an action taken in the person's
official capacity.
K. Reasonable expenses incurred by a director who was, is, or is threatened to
be made a named defendant or respondent in a proceeding may be paid or
reimbursed by the corporation in advance of the final disposition of the
proceeding after:
1. The corporation receives a written affirmation by the director of his
good faith belief that he has met the standard of conduct necessary
for indemnification under this article and a written undertaking by or
on behalf of the director to repay the amount paid or reimbursed if it
is ultimately determined that he has not met those requirements; and
2. A determination that the facts then known to those making the
determination would not preclude indemnification under this article.
L. The written undertaking required by section K of this article must be an
unlimited general obligation of the director but need not be secured. It
may be accepted without reference to financial ability to make repayment.
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Determinations and authorizations of payments under section K of this
article must be made in the manner specified by section F of this article
for determining that indemnification is permissible.
M. A provision for a corporation to indemnify or to advance expenses to a
director who was, is, or is threatened to be made a named defendant or
respondent in a proceeding, whether contained in the articles of
incorporation, the bylaws, a resolution of shareholders or directors, an
agreement, or otherwise, except in accordance with section R of this
article, is valid only to the extent it is consistent with this article as
limited by the articles of incorporation, if such a limitation exists.
N. Notwithstanding any other provision of this article, a corporation may pay
or reimburse expenses incurred by a director in connection with his
appearance as a witness or the participation in a proceeding at a time when
he is not a named defendant or respondent in the proceeding.
O. An officer of the corporation shall be indemnified as, and to the same
extent, provided by section H, I, and J of this article for a director and
is entitled to seek indemnification under those sections to the same extent
as a director. A corporation may indemnify and advance expenses to an
officer, employee, or agent of the corporation to the same extent that it
may indemnify and advance expenses to directors under this article.
P. A corporation may indemnify and advance expenses to persons who are not or
were not officers, employees, or agents of the corporation but who are or
were serving at the request of the corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other
enterprise to the same extent that it may indemnify and advance expenses to
directors under this article.
Q. A corporation may indemnify and advance expenses to an officer, employee,
agent, or person identified in section P of this article and who is not a
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director to such further extent, consistent with law, as may be provided by
its articles of incorporation, bylaws, general or specific action of its
board of directors, or contract or as permitted or required by common law.
R. A corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee, or agent of the corporation or
who is or was serving at the request of the corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit
plan, or other enterprise, against any liability asserted against him and
incurred by him or in such a capacity or arising out of his status as such
a person, whether or not the corporation would have the power to indemnify
him against that liability under this article.
S. Any indemnification of or advance of expenses to a director in accordance
with this Article shall be reported in writing to the shareholders with or
before the notice or waiver of notice of the next shareholders' meeting or
with or before the next submission to shareholders of a consent to action
without a meeting pursuant to section A. Article 9.10 of this Act and, in
any case, within the twelve month period immediately following the date of
the indemnification or advance.
T. For purposes of this article, the corporation is deemed to have requested a
director to serve an employee benefit plan whenever the performance by him
of his duties to the corporation also imposes duties on or otherwise
involves services by him to the plan or participants or beneficiaries of
the plan. Excise taxes assessed on a director with respect to an employee
benefit plan pursuant to applicable law are deemed fines. Action taken or
omitted by him with respect to an employee benefit plan in the performance
of his duties for a purpose reasonably believed by him to be in the
interest of the participants and beneficiaries of the plan is deemed to be
for a purpose which is not opposed to the best interest of the corporation.
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U. The articles of incorporation of a corporation may restrict the
circumstances under which the corporation is required or permitted to
indemnify a person under sections H, I, J, O, P, or Q of this article."
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INFRASTRUCTURE INTERNATIONAL, INC.
Certificate of Designation, Preferences and Rights
of a Series of 15,000 Shares of Preferred Stock,
$.001 Par Value, Designated
"Series A Preferred Stock"
Infrastructure International, Inc., a Nevada Corporation (the
"Corporation"), by way of this Certificate of Designation, Preferences and
Rights (as it may hereafter be amended, modified or supplemented upon vote of
the Board of Directors of the Corporation and approval of all holders of Series
A Preferred Stock, as such term is hereinafter defined), this ("Certificate")
certifies that, pursuant to the authority expressly vested in the Board of
Directors by Article IV of the Corporation's Restated Articles of Incorporation,
and in accordance with the provisions of Section 78.195 of the Nevada Revised
Statutes, the Board of Directors of the Corporation has duly adopted the
following resolutions creating a series of its Preferred Stock designated as
Series A Preferred Stock:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of
Article IV of the Articles of Incorporation of the Corporation, as amended,
this Board of Directors hereby creates a series of Preferred Stock, $.001
par value, and this Board of Directors hereby fixes the designation and the
voting power, preferences and rights, and the qualifications, limitations
or restrictions thereof, of the shares of such series (in addition to the
powers, preferences and rights, and the qualifications, limitations or
restrictions thereon, set forth in the Articles of Incorporation, as
amended, which are applicable to all series of Preferred Stock of the
Corporation) as follows:
Fifteen thousand (15,000) shares of Preferred Stock, par value $.001 per
share, of the Corporation are hereby constituted as a series of Preferred
Stock designated as Series A Convertible Preferred Stock (the "Series A
Convertible Preferred Stock") with the voting powers and the preferences
and rights hereinafter set forth:
SECTION 1. DIVIDENDS. The holders of shares of Series A Convertible
Preferred Stock (the "Preferred Shares") shall be entitled to receive out of the
assets of the Corporation legally available for dividends such dividends in
cash, stock or property as the board of directors shall, in its discretion,
declare from time to time.
SECTION 2. LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution or winding up of the affairs of the Corporation, whether voluntary
or involuntary, the holders of the Preferred Shares shall be entitled to be paid
first out of the assets of the Corporation available for distribution to holders
of the Corporation's capital stock of all classes an amount equal to $1,000.00
per share of Series A Convertible Preferred Stock, and no more, before any
distribution shall be made to the holders of the Common Stock or any other class
of capital stock or series thereof ranking junior to the Preferred Shares with
respect to the distribution of assets. If the assets of the Corporation shall be
insufficient to permit the payment in full to the holders of the Preferred
Shares of the amounts thus distributable, then the entire assets of the
Corporation available for such distribution shall be distributed ratably among
the holders of the Preferred Shares in proportion to the full preferential
amount each such holder is otherwise entitled to receive.
<PAGE>
SECTION 3. VOTING RIGHTS. The holders of the Series A Preferred Stock shall
have no right to vote with respect to matters requiring the vote of the holders
of the Corporation's capital stock except as set forth below. Without the
approval of holders of a majority of the outstanding Preferred Shares, the
Corporation shall not (a) authorize, create or issue any shares of any class or
series ranking senior to the Preferred Shares as to liquidation rights, (b)
amend, alter or repeal, by any means, the Certificate of Incorporation if the
powers, preferences, or special rights of the Preferred Shares would be
adversely affected, or (c) become subject to any restriction on the Preferred
Shares, other than restrictions arising solely under the General Corporation Law
of the State of Nevada or existing under the Certificate of Incorporation.
SECTION 4. REDEMPTION. Preferred Shares shall be subject to redemption, at
the option of the Corporation, in whole or in part, on ten (10) days written
notice, at any time(s) after December 31, 1997 at a price equal to $1,000 per
share plus any accrued dividends.
SECTION 5. CONVERSION. (a) The holder of any Preferred Shares shall have
the right, at his option on delivery to the Corporation of written notice and
upon surrender of such shares to the Corporation, to convert part or all of the
Preferred Shares held into shares of Common Stock of the Corporation. In the
event the holder of any Preferred Shares has not notified the Corporation of his
election to convert the Preferred Shares into Common Stock on the terms set
forth herein on or before December 31, 1997, the right of the holders of such
Preferred Shares to convert the same into Common Stock shall expire, provided,
however, that all Preferred Shares remaining outstanding at such date shall, at
the option of the Corporation, be converted into Common Stock of the Corporation
on the terms set forth herein on such date.
(b) Conversion of the Preferred Shares shall be subject to the following
limitation: the outstanding Preferred Shares will become eligible for conversion
on or after the date which is 45 days after the closing date of the purchase of
such Preferred Shares (the "Closing Date"). Each conversion shall be effected by
surrendering the certificate(s) evidencing the Preferred Shares to be converted
to the Company with the form of conversion certificate executed by the holder
thereof as to all or a specified portion of the shares evidenced by such
certificate (subject to the limitations set forth above and provided that
conversions will not be permitted for Preferred Shares having an aggregate
liquidation preference of less than $100,000 except as may be required by the
foregoing limitation on conversion) and accompanied, if required by the Company,
by proper assignment in blank. The date of execution of such certificate and
delivery by facsimile to the Company at (713) 547-8910, shall be deemed to the
be "conversion date", provided that certificates evidencing the shares so
converted are delivered within three (3) business days to the Company or its
designated agent.
(c) The number of shares of Common Stock issuable upon conversion of each
share of Series A Convertible Preferred Stock shall equal the number of shares
of Preferred Shares to be converted multiplied by one thousand (1,000) and
divided by the "Conversion Factor." The Conversion Factor for purposes hereof
shall be equal to the lesser of the Market Price on the Conversion Date, or
$1.00.
<PAGE>
(d) For purposes hereof, the "Market Price" shall be the average closing
bid price of the Corporation's Common Stock as reported on the Nasdaq System (or
such other similar organization which may report such information if Nasdaq no
longer reports such information or, if not so available, the fair market price
as determined by the Board of Directors) for the five business days preceding
the date of notice of conversion.
(e) Neither fractional shares, nor scrip or other certificates evidencing
such shares, shall be issued by the Corporation on conversion of the Preferred
Shares as herein provided, but the Corporation shall round to the nearest whole
number the number of shares issuable in such event.
(f) Preferred Shares so converted shall be restored to the status of
authorized but unissued shares.
(g) The Corporation will reserve from its authorized and unissued shares of
Common Stock, and shall increase the number of reserved shares from time to
time, a number of shares sufficient to permit conversion of the Preferred
Shares.
IN WITNESS WHEREOF, Infrastructure International, Inc. has caused this
Certificate to be duly executed and attested effective as of the 17th day of
October, 1996.
<TABLE>
<S> <C>
(REGISTRANT) INFRASTRUCTURE INTERNATIONAL, INC.
BY (SIGNATURE) /s/ Scott Crawford
(NAME AND TITLE) Scott Crawford, President
(DATE) October 17, 1996
ATTEST:
BY (SIGNATURE) /s/ Karen Pollino
(NAME AND TITLE) Karen Pollino, Secretary
(DATE) October 17, 1996
</TABLE>
STATE OF UTAH )
(
COUNTY OF SCC )
I, ROBIN SYDDAL, a Notary Public, do hereby certify that on this 17th day
of October 1996, personally appeared before me Scott Crawford who, being by me
first duly sworn declared that he is the President of INFRASTRUCTURE
INTERNATIONAL, INC., that he signed the foregoing document as President of the
corporation, and that the statements therein contained are true and correct.
/s/ Robyn Syddal
- ------------------------------------------
Robyn Syddal, Notary Public in and for the
State of Utah
Printed Name of Notary Public - Robyn Syddal
My Commission Expires: May 10, 2000
INFRASTRUCTURE INTERNATIONAL, INC.
Certificate of Designation, Preferences and Rights
of a Series of 100,000 Shares of Preferred Stock,
$.001 Par Value, Designated
"Series B Preferred Stock"
Infrastructure International, Inc., a Nevada Corporation (the
"Corporation"), by way of this Certificate of Designation, Preferences and
Rights (as it may hereafter be amended, modified or supplemented upon vote of
the Board of Directors of the Corporation and approval of all holders of Series
B Preferred Stock,) as such term is hereinafter defined (this "Certificate")
certifies that, pursuant to the authority expressly vested in the Board of
Directors by Article IV of the Corporation's Restated Articles of Incorporation,
and in accordance with the provisions of Section 78.195 of the Nevada Revised
Statutes, the Board of Directors of the Corporation has duly adopted the
following resolutions creating a series of its Preferred Stock designated as
Series B Preferred Stock:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board of Directors of the Corporation by the provisions of
Article IV of the Restated Articles of Incorporation of the Corporation,
this Board of Directors hereby creates a series of Preferred Stock, $.001
par value, and this Board of Directors hereby fixes the designation and the
voting power, preferences and rights, and the qualifications, limitations or
restrictions thereof, of the shares of such series (in addition to the
powers, preferences and rights, and the qualifications, limitations or
restrictions thereon, set forth in the Restated Articles of Incorporation,
as amended, which are applicable to all series of Preferred Stock of the
Corporation) as follows:
One hundred thousand (100,000) shares of Preferred Stock, par value
$.001 per share, of the Corporation are hereby constituted as a series of
Preferred Stock designated as Series B Preferred Stock (the "Series B
Preferred Stock") with the voting powers and the preferences and rights
hereinafter set forth:
SECTION 1. DIVIDENDS. The holders of shares of Series B Preferred Stock
shall be entitled to receive out of the assets of the Corporation legally
available for dividends such dividends in cash, stock or property as the board
of directors shall, in its discretion, declare from time to time.
SECTION 2. LIQUIDATION PREFERENCE. In the event of any liquidation,
dissolution or winding up of the affairs of the Corporation, whether voluntary
or involuntary, the holders of Series B Preferred Stock shall be entitled to be
paid first out of the assets of the Corporation available for distribution to
holders of the Corporation's capital stock of all classes an amount equal to
$.001 per share of Series B Preferred Stock, and no more, before any
distribution of assets. If the assets of the Corporation shall be insufficient
to permit the payment in full to the holders of the Series A Preferred Stock of
the amounts thus distributable, then the entire assets of the Corporation
available for such distribution shall be distributed ratably among the holders
of the Series B Preferred Stock in proportion to the full preferential amount
each such holder is otherwise entitled to receive.
<PAGE>
SECTION 3. VOTING RIGHTS. The holders of the Series B Preferred Stock shall,
as a class, be entitled to such number of votes as shall constitute thirty
percent (30%) of the total eligible votes in all matters voted on by the
shareholders of the Corporation and shall be further entitled to such voting
rights as may be expressly required by law.
SECTION 4. RIGHTS OTHERWISE IDENTICAL. In all other respects, each share of
Series B Preferred Stock and the shares of all other series shall have identical
rights and privileges in every respect.
IN WITNESS WHEREOF, Infrastructure International, Inc. has caused this
Certificate to be duly executed and attested effective as of the 17th of
October, 1996.
<TABLE>
<S> <C>
(REGISTRANT) INFRASTRUCTURE INTERNATIONAL, INC.
BY (SIGNATURE) /s/ Scott Crawford
(NAME AND TITLE) Scott Crawford, President
(DATE) October 17, 1996
ATTEST:
BY (SIGNATURE) /s/ Karen Pollino
(NAME AND TITLE) Karen Pollino, Secretary
(DATE) October 17, 1996
<PAGE>
STATE OF UTAH (
)
COUNTY OF SLC (
I, ROBYN SYDDALL, a Notary Public, do hereby certify that on this 17th day
of October, 1996, personally appeared before me Scott Crawford, who, being by me
first duly sworn declared that he is the President of INFRASTRUCTURE
INTERNATIONAL, INC., that he signed the foregoing document as President of the
corporation, and that the statements therein contained are true and correct.
/s/ Robyn Syddall
Robyn Syddall
- -----------------------------------------
Notary Public in and for the
State of Utah
Printed Name of Notary Public: Robyn Syddall
My Commission Expires: May 10, 2000
STATE OF UTAH (
)
COUNTY OF SLC (
I, ROBYN SYDDALL, a Notary Public, do hereby certify that on this 17th day
of October 1996, personally appeared before me Karen Polino who, being by me
first duly sworn declared that she is the Secretary of INFRASTRUCTURE
INTERNATIONAL, INC., that she signed the foregoing document as Secretary of the
corporation, and that the statements therein contained are true and correct.
/s/ Robyn Syddall
Robyn Syddall
- -----------------------------------------
Notary Public in and for the
State of Utah
Printed Name of Notary Public: Robyn Syddall
My Commission Expires: May 10, 2000
</TABLE>
