U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
|X| Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the quarterly period ended ________________
| | Transition report under Section 13 or 15(d) of the Exchange Act For the
transition period from ___________ to _____________
Commission file number 33-25129-LA
CHARTER COMMUNICATIONS INTERNATIONAL, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Nevada 84-1097751
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
17100 El Camino Real, Houston, Texas 77058
(Address of Principal Executive Offices)
(713) 486-8337
(Issuer's Telephone Number, Including Area Code)
Maui Capital Corporation (a Colorado corporation)
(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
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet, Income Statement and Cash Flow information for the
period ended March 31, 1995, has not been presented for comparative purposes as
the Company was a development stage company, without any business or operating
subsidiaries. Therefore, such information would not be relevant for comparision
purposes to the financial information for the period ended March 31, 1996.
Financial Information for the Company from inception to date is provided in the
Financial Statements.
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Developmental Stage Company)
Consolidated Financial Statements
As of and for the Three Months ended
and for the period from inception to
March 31, 1996
<PAGE>
Table of Contents
-----------------
Pages
-----
Accountants' Compilation Report
Consolidated Balance Sheets as of March 31, 1996
and December 31, 1995 (unaudited)
Consolidated Statements of Operations for the three
months ended and period from inception to
March 31, 1996 (unaudited)
Consolidated Statements of Cash Flows for the three
months ended and period from inception to
March 31, 1996 (unaudited)
Notes to Consolidated Financial Statements (unaudited)
<PAGE>
To the Board of Directors
Charter Communications International, Inc. and Subsidiaries
Houston, Texas
We have compiled the accompanying balance sheets of Charter Communications
International, Inc. and Subsidiaries (a development stage corporation) as of
March 31, 1996 and December 31, 1995, and the related statements of operations
and cash flows for the three months then ended and for the period from inception
to March 31, 1996 in accordance with Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and accordingly, do not express
an opinion or any other form of assurance on them.
Dickey, Rush & Co., P.C.
May 10, 1996
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Consolidated Balance Sheets
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Assets
Current Assets
Cash and Cash Equivalents $ 475,887 $ 43,841
Cash and Cash Equivalents - Restricted 179,177
Accounts Receivable, net of allowance for
doubtful accounts of $ 86,811 and $ 3,762 953,912 43,155
Receivables from Related Parties 73,992 34,181
Inventories 326,750
Prepaid Expenses and Other 257,705 28,169
------------ ------------
Total Current Assets 2,267,423 149,346
Property and Equipment, at cost
Property, Plant and Equipment 2,214,982 933,636
Accumulated Depreciation (399,894) (146,681)
------------ ------------
Total Property and Equipment 1,815,088 786,955
Other Assets
Advances Related to Acquisition 150,000
Deposits 47,756
Investment in Joint Venture 78,902
Intangible assets, net of accumulated
amortization of $ 87,098 2,238,243
------------ ------------
Total Other Assets 2,364,901 150,000
------------ ------------
Total Assets $ 6,447,412 $ 1,086,301
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Consolidated Balance Sheets
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable - Trade $ 1,420,460 $ 195,730
Accrued Expenses and Other 324,255 93,008
Due to Related Parties 16,564 129,167
Unearned Revenues 151,229
Current Portion of Long-term Notes Payable 177,085
Line of Credit 121,332 129,443
Loans from Shareholders 1,828 1,828
------------ ------------
Total Current Liabilities 2,212,753 549,176
Long Term Debt
Long-term Notes Payable, net 51,409
Senior Subordinated Notes, net 1,928,427 172,819
------------ ------------
Total Long-Term Liabilities 1,979,836 172,819
------------ ------------
Total Liabilities 4,192,589 721,995
Stockholders' Equity
Preferred Stock-.01 par value; 100,000
shares authorized, 550 shares issued
and outstanding; liquidation preference
of $ 1,999,800 6
Common Stock - .00001 par value; 45,000,000
shares authorized, 11,622,697 and 7,298,393
shares issued and outstanding 116 73
Additional Paid In Capital 4,834,035 2,235,902
Accumulated Deficit During
Development Stage (2,579,328) (1,871,675)
------------ ------------
Total Stockholders' Equity 2,254,823 364,306
------------ ------------
Total Liabilities and Stockholders' Equity $ 6,447,412 $ 1,086,301
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Operations
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Jan. 26, 1994
Ended (Inception) to
March 31, 1996 March 31, 1996
-------------- --------------
<S> <C> <C>
Revenues
Communications Services $ 57,843 $ 170,662
Hardware and Software 50,030 50,030
Internet Connection Services 323,849 323,849
-------------- --------------
Total Revenues 431,722 544,541
-------------- --------------
Cost of Revenues and Operating Expenses
Data Communications and Operations 219,685 251,124
Hardware and Software Costs 37,205 37,205
Sales and Marketing 180,147 180,147
General and Administrative 577,588 2,261,876
Bad Debts 3,762
Depreciation and Amortization 93,952 240,633
Interest Expense 44,518 167,579
Interest Income (938) (5,674)
-------------- --------------
Total Cost of Revenues
and Operating Expenses 1,152,157 3,136,652
-------------- --------------
Net Loss before Income Taxes
and Minority Interest in
Consolidated Subsidiary (720,435) (2,592,111)
Income Tax Provision (benefit) 0 0
Minority Interest in
Consolidated Subsidiary 12,783 12,783
-------------- --------------
Net Loss $ (707,652) $ (2,579,328)
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Operations
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Jan. 26, 1994
Ended (Inception) to
March 31, 1996 March 31, 1996
-------------- --------------
<S> <C> <C>
Loss Per Share $ (0.09) $ (0.44)
============== ==============
Number of shares used
in computing net loss per share 8,282,932 5,844,822
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Cash Flows
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Jan. 26, 1994
Ended (Inception) to
March 31, 1996 March 31, 1996
-------------- --------------
<S> <C> <C>
Cash Flows From Operating
Activities
Net Loss $ (707,652) $ (2,579,328)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 93,952 240,633
Bad Debts 3,762
Amortization of Discounts on
Senior Subordinated Notes 914 914
Non-Cash Consulting and
Services Fees 20,597 197,597
Decrease (increase) in
operating assets:
Accounts Receivable (55,024) (101,941)
Receivables from Related Parties 18,236 (15,945)
Inventory and Other Assets (42,399) (42,399)
Deposits (46,744) (46,744)
Prepaid Expenses and Other (206,153) (222,322)
Increase (decrease) in
operating liabilities:
Accounts Payable 272,865 468,596
Accrued Expenses and Other 16,147 109,155
Due to Related Parties (129,167)
Unearned Revenues 38,299 38,299
-------------- --------------
Total adjustments (18,477) 629,605
-------------- --------------
Net cash used in operating
activities (726,129) (1,949,723)
Cash Flows From Investing Activities
Purchase of Property and Equipment (847,954) (1,781,590)
Proceeds from Sale Leaseback 208,000 208,000
Investment in Joint Venture (76,902) (76,902)
Advances related to
subsequent acquisition 150,000
Acquisition of Subsidiary (525,000) (525,000)
Purchased Goodwill (6,000) (6,000)
------ ------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Consolidated Statements of Cash Flows
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Jan. 26, 1994
Ended (Inception) to
March 31, 1996 March 31, 1996
-------------- --------------
<S> <C> <C>
Net cash used in investing
activities (1,097,856) (2,181,492)
Cash Flows From Financing Activities
Loans from Shareholders 1,229,328
Repayment of Loans
from Shareholders (1,227,500)
Proceeds from Line of Credit 129,443
Repayments on Line of Credit (8,111) (8,111)
Proceeds from Senior
Subordinated Notes 1,754,694 1,927,513
Proceeds from Issuance of
Stock Warrants 265,306 292,487
Proceeds from the Issuance of
Common Stock 423,319 443,319
Proceeds from Issuance of
Preferred Stock 1,999,800
-------------- --------------
Net cash from financing
activities 2,435,208 4,786,279
-------------- --------------
Net Increase in Cash
and Cash Equivalents 611,223 655,064
Cash and Cash Equivalents
at beginning of period 43,841
-------------- --------------
Cash and Cash Equivalents
at End of Period $ 655,064 $ 655,064
============== ==============
Supplemental Disclosure of Cash Flow Information:
Interest Paid $ 5,387 $ 126,635
Taxes Paid 0 0
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 1996
(UNAUDITED)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidated Financial Statements
---------------------------------
The consolidated balance sheet of Charter Communications
International, Inc. (the "Company"), a Nevada corporation, and
it's wholly owned subsidiaries as of March 31, 1996 and the
related statements of operations and statements of cash flows for
the three months and period from inception to March 31, 1996, are
unaudited. In the opinion of management, all adjustments, which
include only normal recurring adjustments necessary to present
fairly the financial position, results of operations and cash
flows for the periods presented, have been made. All significant
intercompany items have been eliminated in consolidation.
Certain disclosures and other information required by generally
accepted accounting principals have been omitted from these
financial statements as permitted by reference to other Securities
and Exchange Commission filings. These statements should be read
in conjunction with the Company's Form 10-KSB Annual Report as of
December 31, 1995.
Revenue Recognition
-------------------
Revenues from telecommunications, Internet connections services
and networked computer sales and services are generally recognized
when the services are provided.
Invoices rendered and payments received for telecommunications
services and Internet access in advance of the period when
revenues are earned are recorded as unearned revenues and
recognized ratably over the period the services are provided or
the terms of the Internet subscription agreements, which are
generally 3 to 12 months. Sales of hardware are recognized when
installation has occurred and no further performance obligation
remains. Sales of pre-packaged software are recognized upon
delivery of the product.
Inventories
-----------
Inventories at March 31, 1996 consist of Internetworking and
network computer products as well as pre-packaged software used
for Internet access. All inventory is recorded as finished goods
and is available for sale. Inventories are stated at the lower of
cost or market. Cost is determined on the first-in, first-out
method.
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 1996
(UNAUDITED)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Cont.)
Income Taxes
------------
The provision for income taxes is computed on the pretax income
included in the consolidated statement of income. The asset and
liability approach is used to recognize deferred tax liabilities
and assets for the expected future tax consequences of temporary
differences between the carrying amounts and the tax basis of
assets and liabilities.
Net Loss Per Share
------------------
Loss Per Share - Net loss per share was computed by dividing the
net loss by the weighted average number of common and common
equivalent shares outstanding during the period. For purposes of
this calculation, dilutive outstanding warrants and employee stock
options are considered common stock equivalents. Due to the loss
incurred for the periods presented, all common stock equivalents
are considered anti-dilutive and have been omitted from the
respective earnings per share calculations.
Supplementary Loss Per Share - On March 8, 1996, the Series A
Preferred Stock was automatically converted into 2,847,412 shares
of the Company's common stock. Supplementary loss per share is
the loss per share amount adjusted to reflect the conversion of
preferred stock on March 8, 1996 as if the conversion had occurred
on the day the preferred stock was issued. Supplementary loss per
share for the three months ended March 31, 1996 and for the period
from inception on January 26, 1994 to March 31, 1996 was ($.07)
and ($.39), respectively.
Amortization
------------
The Company amortizes any purchased goodwill on acquisitions over
a period of not less than 60 months on a straight-line basis.
NOTE B - ACQUISITIONS
Phoenix DataNet, Inc.
---------------------
On January 8, 1996, the Company acquired 90 percent of the issued
and outstanding capital stock of Phoenix DataNet, Inc.(PDN), in
exchange for $ 525,000 in cash. PDN, a Texas corporation, was
formerly a subsidiary of Phoenix Data Systems, Inc. (Systems).
PDN was originally incorporated on February 21, 1995, and prior to
that date had operated as a division of Systems. Systems entered
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 1996
(UNAUDITED)
NOTE B - ACQUISITIONS(Cont.)
Phoenix DataNet, Inc.(Cont.)
----------------------------
into an agreement on December 22, 1995 to sell its 90 percent
ownership of the issued and outstanding shares of common stock of
PDN. On March 21, 1996, the Company acquired the remaining 10
percent in PDN through the issuance of 150,000 shares of the
Company's common stock, at a estimated fair market value of $2.00
per share at the time the transaction was consummated. The
acquisition has been accounted for as a purchase.
PDN engages in the business of providing Internet access to
businesses and individuals and a full range of related services,
including the creation and development on behalf of its customers
of Internet based advertising, customer service functions, on-line
sales and services and other on-line interactive services.
Additionally, PDN sells and services a complete line of
Internetworking products for Internet access.
Phoenix Data Systems, Inc.
--------------------------
On March 21, 1996, the Company acquired 100 percent of the issued
and outstanding capital stock of Systems. The transaction
involved the exchange of 1,000,000 shares of the Company's common
stock, 825,000 shares of which were immediately issued free and
clear of any adverse claims or encumbrances and 175,000 shares are
being retained by the Company in order to secure representations
and warranties and covenants of Systems and Systems shareholders
and will be subject to offset against claims against Systems. The
shares immediately issued in the transaction were valued at
$ 2.00 per share, the estimated fair market value as of the date
the transaction was consumated. A separate value will be placed
upon the retained shares when and if they are eventually issued.
The acquisition has been accounted for as a purchase.
Systems is in the business of providing computer network
integration, service, consulting and support for commercial
businesses.
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 1996
(UNAUDITED)
NOTE B - ACQUISTIONS(Cont.)
Phoenix Data Systems, Inc.
--------------------------
Unaudited pro forma revenues, net loss and loss per share assuming
the transaction had occurred at January 1, 1996 is as follows:
Historical Proforma
For the 3 Months Ended For the 3 Months Ended
March 31, 1996 March 31, 1996
-------------- --------------
Revenues $ 431,722 $ 1,797,194
Net Loss (707,652) (833,049)
Net Loss per share (.09) (.09)
Panama Phone Centers
--------------------
On March 30, 1996 the Company acquired the assets and rights to
operate long distance telephone centers at various U.S. military
installations in the Republic of Panama. Prior to March 30, 1996
the Company had been receiving royalties from telephone calls
placed at these phone centers, under a seperate contract. The
phone centers and rights to provide these service were acquired
for the price of $ 224,000 cash and 2,000 shares of common stock
of the Company valued at $2.00 per share. Simultaneously with the
purchase the Company entered into an agreement with a lease
finance company to sell and lease back a portion of the assets
acquired. Lease financing was obtained in the amount of $168,000,
the acquisition price of the majority of the phone center assets.
The term of the lease provides for monthly payments of $5,712,
beginning on April 1, 1996 and continuing through March 1, 1999.
This transaction is not considered to be a significant business
combination and accordingly, no proforma information is presented.
Joint Venture Agreement
-----------------------
On January 24, 1996 the Company entered into an agreement for
joint operations of international telecommunications service into
and out of various locations in the Country of Mexico. The
Company has agreed to incur various expenses to reactive the
international telecommunications service to various hotel
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 1996
(UNAUDITED)
NOTE B - ACQUISTIONS(Cont.)
Joint Venture Agreement(Cont.)
------------------------------
facilities, arrange for agreements with international carriers to
provide call termination and other services and contribute future
funds for equipment to connect new customers. As a result of
these contributions and efforts the Company will receive 50
percent of the net revenues generated from the joint operations of
this service.
NOTE C - INTANGIBLE ASSETS
Intangible assets consist of the following at March 31, 1996:
Organizational Costs $ 6,872
Non-Compete Covenant and Other 78,700
Goodwill 2,239,769
Accumulated Amortization (87,098)
------------
$ 2,238,243
------------
NOTE D - LONG-TERM NOTES PAYABLE
At March 31, 1996 the following long-term notes payable were
outstanding. These liabilities were assumed upon acquisition of
Phoenix Data Systems, Inc. and have been included in the
accompanying financial statements.
Promissory note payable to a bank,
collateralized by contracts, accounts
receivable, furniture, fixtures, equipment
and personal guarantee of a shareholder, payable
in monthly installments of $ 2,330, interest at
prime rate plus 2% through June 29, 1996. $ 6,578
Promissory note payable to a bank,
collateralized by an automobile, payable in monthly
installments of $ 445, interest at 8.5%
through January, 2000. 18,991
Promissory note payable to a bank,
collateralized by an automobile, payable in
monthly installments of $ 606, interest at 12.0%
through December 19, 1998. 17,195
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 1996
(UNAUDITED)
NOTE D - LONG-TERM NOTES PAYABLE(Cont.)
Promissory note payable to a bank,
collateralized by an automobile, payable in
monthly installments of $ 419, interest at 8.5%
through February, 2000. 16,692
Promissory note payable to a finance company,
collateralized by office equipment, payable
in monthly installments of $ 1,599, including
interest through February, 1997. 19,038
Promissory note payable to a bank,
collateralized by real estate owned by a related
company of a shareholder, payable in its entirety
with interest at prime rate plus 3%
on April 25, 1996. 150,000
---------
Total Long-term Notes Payable 228,494
Less current portion (177,085)
---------
Long-term Notes Payable, net $ 51,409
----------
NOTE E - SENIOR SUBORDINATED NOTES
Beginning in December, 1995, the Company made a private offering
of $2,500,000 of its 12% Senior Subordinated Notes due December
31, 2000, with attached warrants which will grant the purchasers
of the Notes the right to buy 2,000,000 shares of Company's Common
Stock. The warrants will grant the purchasers the right to
exchange the face amount of Notes at prices of $.70 per share in
1996, $1.25 in 1997, $1.75 in 1998, $2.25 in 1999 and $2.50 in
2000. Interest will be payable quarterly at the rate of 12% per
annum, in arrears. The notes are not secured by any asset or
guaranty of the Company.
Of the $2,500,000 in notes offered, $2,220,000 were issued prior
to March 31, 1996. The fair market value of the 1,776,000
warrants issued in conjunction with the notes was estimated by the
Company to be $292,487 and is recorded as additional paid in
capital and a discount on the notes. The notes are stated net of
discount, which is being amortized over the term of the notes.
Amortization of this discount included in the accompanying
financial statements for the three months and period from
inception to March 31, 1996, amounted to $914, and is included in
interest expense for those periods.
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 1996
(UNAUDITED)
NOTE F - LETTER OF CREDIT AGREEMENT AND RESTRICTED CASH
The Company issued an irrevocable letter of credit in favor of a
vendor of the Company to secure various vendor invoices in the
normal course of business. The vendor invoices totaled $179,177
and are included in trade accounts payable at March 31, 1996. The
irrevocable letter of credit is secured by a certificate of
deposit pledged to the issuing financial institution.
NOTE G - COMMON STOCK AND COMMON STOCK PURCHASE WARRANTS ISSUED
FOR SERVICES:
The Company issued 12,500 shares of common stock and granted
80,000 common stock purchase warrants to non employees for
services provided to the Company. These warrants expire between
six months and five years from the date of the grant and have an
exercise price between $.70 and $2.50 per share. The Company
recognizes an expense equivalent to the fair market value of the
services.
NOTE H - STOCKHOLDERS' EQUITY
Stock Warrants
--------------
During the three months ended March 31, 1996, the Company granted
54,400 common stock purchase warrants to certain key employees and
100,000 to outside directors. These warrants expire between six
months and five years from the date of grant and have an exercise
price between $.70 and $2.50 per share.
At March 31, 1996 the Company had outstanding warrants that gave
the holders the right to purchase 3,489,628 shares of the
Company's common stock at prices ranging from $.70 to $2.50 per
share.
Stock Options
-------------
During the three months ended March 31, 1996, the Company granted
160,000 stock options to certain employees. The exercise price of
the stock options granted to the employees ranged from $.70 to
$2.00 per share, the estimated fair market value of the Company's
common stock at the date of grant. No compensation expense has
been recognized in the financial statements related to the grant
of these options.
<PAGE>
Charter Communications International, Inc.
and Subsidiaries
(A Development Stage Company)
Notes to Financial Statements
March 31, 1996
(UNAUDITED)
NOTE H - STOCKHOLDERS' EQUITY(Cont.)
Stock Options(Cont.)
--------------------
The Company has established three stock option plans, the
Long-term Stock Option Plan, the Incentive Stock Option Plan and
the Non Employee Director Stock Option Plan. Each plan is
authorized to grant 500,000 shares of common stock options and the
exercise price of these shares must be at least equal to the fair
market value of the Company's common stock price at the date of
the grant. Options can be issued with varying terms and contain
various provisions pertaining to accelerated vesting in the event
of significant corporate changes. The following table represents
a summary of the outstanding options in the plans at March 31,
1996:
Option Price Number of
Stock Options Per Share Options
------------- ------------ --------
Outstanding, beginning of year $.70 1,250,000
Granted $.70 - $2.00 160,000
Canceled $.70 (493,500)
----------
Outstanding, end of quarter $.70 - $2.00 916,500
Exercisable, end of quarter 280,500
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
(a) Plan of Operation. Over the next twelve months, the Company intends to
vigorously pursue the expansion of its International Private Lines, Long
Distance Telephone, Network Systems Integration, Internet Access and Phone
Centers services. The Company intends to capitalize on the growing demand for
these services and gain market share by building its subscriber base both
domestically and internationally. Management believes the expansion will be
accomplished through the acquisition of additional licenses and concessions
allowing the Company to provide these services both in the United States and in
targeted Latin American countries. The Company intends to aggressively pursue
new customers by combining the highest possible level of service with an
expanded sales force and intensive marketing efforts. After thoroughly
investigating market demand, the Company expects to expand in major cities in
Latin America. Strategic alliances are expected to be formed with local business
groups and individuals in order to create successful operations within the
respective target Latin American countries.
The Company intends to continue to build an International Private Lines
communication network that will provide voice, data, facsimile, internet,
intranet, telecommuting, and video services to government and commercial
organizations operating throughout the United States and Latin America. The
building of this private line network is complementary to the Company's
objective of providing Internet access services. International private lines are
used to connect the remote points of presence ("POP's") to the Company's
Internet service node in Houston. Private lines are also used to connect
businesses to remote domestic or international offices for voice, data, and
video communications. Additionally, the Company intends to market its private
line services to foreign telephone companies (Post Telephone and Telegraph, or
"PTT's"). This service is intended to offer an alternative to the foreign PTT
which can carry its international telephone traffic at rates below current
prices offered by international satellite consortia. The Company is currently
licensed to provide international private line services in the United States,
Honduras, Venezuela, Mexico, and Panama. On December 5, 1995, the Company
obtained a license from HONDUTEL in Honduras to provide its private line
international telecommunications services to Honduras. The initial investment by
the Company to develop its license in Honduras to provide international private
lines will approximate $100,000 for the purchase of equipment. On April 18, 1996
the Company obtained a concession to provide international private lines to
Venezuela from CONATEL, the Venezuelan licensing authority. The Company has
identified seven key areas in Venezuela where a significant demand for its
communications services exists. Initially, approximately $150,000 will be
allocated for the building of the Company's first POP in Venezuela.
On January 10, 1996, the Company completed the acquisition of 90% of the
capital stock of Phoenix DataNet ("PDN") for $525,000. Through PDN, the Company
intends to vigorously pursue both the domestic and international expansion of
its Internet access business over the next twelve months. The Company's Internet
business continues to expand and is currentlty experiencing a growth rate at an
approximate annualized rate of 100%. In March, 1996, the Company formed Phoenix
DataNet de Panama and commenced offering internet services to businesses and
residential customers in Panama City, Panama. In the first month of operation,
the Company has acquired over 130 new customers.
<PAGE>
In March 1996, the Company acquired Phoenix Data Systems, Inc. ("PDS"), the
former parent company of PDN and the remaining 10% of the outstanding capital
stock of PDN in exchange for the issuance of 1,150,000 shares of the Company's
common stock. PDS was incorporated in 1988 and is in the business of providing
hardware and software to support enterprise networks for small, medium, and
large corporate customers. With the anticipated demand for equipment for local
area networks, metropolitan area networks, wide area networks and international
area networks by Charter and PDN, as well as development of the "Intranet"
business, the acquisition of PDS complements the Company's objectives.
The Company has completed the acquisition of the three phone centers in
Panama. The equipment cost of $228,000 was substantially financed through a
lease arrangement over a three year term. These phone centers serve US Military
troops stationed in or transiting three bases in Panama and the Company is
planning to expand its service offerings through the phone centers. The Company
is actively pursuing the rights to provide other similar phone centers in
military as well as tourist areas throughout Central America, South America, and
the Caribbean Basin.
At its Houston headquarters, capital expenditures were made to improve
the Company's international and domestic operations and facilities.
Approximately $89,000 was spent to upgrade the facilities in Houston to provide
greater bandwidth availability to the Internet from the Houston domestic and
international Internet POP. In the last week of March 1996, the Company
completed the construction of its second earth station in Houston for use in
providing communication services to customers in Central and South America.
The Company's available resources are not adequate to meet its
requirements for the next 12 months. The Company anticipates financing its
future needs for operational activities and capital asset acquisitions through
private placements and public offerings of equity or debt securities.
(b) Management's Discussion and Analysis of Financial Condition and
Results of Operations. Operations from inception (January 26, 1994) through
December 31, 1995 consisted primarily of raising capital, obtaining financing,
locating, acquiring, installing, and testing equipment, and administrative
activities such as license and concession acquisitions.
In the first quarter of 1996, the Company's first international private
line customers went on-line, the acquisition of Phoenix DataNet and Phoenix Data
Systems were completed, and the military phone centers in Panama were purchased.
Consolidated revenues from the operations of these combined businesses totaled
$431,722. Net loss totaled ($707,652).
During the first quarter of 1996, the Company invested approximately
$850,000 in fixed asset additions representing primarily the completion of the
earth station in Houston, the upgrade of the Internet access facilities in
Houston, the installation of the Internet POP in Panama, the equipment
installations in the Panama phone centers, and the earth station in Honduras. Of
this total, approximately $130,000 has been financed by a bank line of credit
which totals approximately $120,000 as of March 31, 1996.
The Company had general and administrative expenses of $577,588 for the
three month period ended March 31, 1996 reflecting administrative expenses
associated with the acquisition of PDN and PDS and the expansion in Panama.
Sales and marketing expenses for the first three months ended March 31, 1996 are
expected to decrease as a percentage of net sales proportionally with the
increase in sales volume over the remainder of 1996.
<PAGE>
It is anticipated that interest expenses will rise as the Company seeks
and acquires debt financing to expand its international operations. Certain of
the Company's credit facilities are variable rate notes tied to the Company's
lending institution's prime rate. Increases in the prime lending rate could
negatively affect the Company's earnings.
Net cash used in operations during the first quarter of 1996 of
$726,129 resulted principally from cash obtained from the private placement of
$2,500,000 of notes and warrants in the fourth quarter 1995 and completed in the
first quarter 1996. Additional cash was obtained from increases in accounts
receivable and inventory but was partially offset by the net losses from
operations, non-cash charges and the increase in accounts payable.
Although cash flow from operations at any given point in 1996 may be
negative, the entire year is expected to be positive. Several factors contribute
to this expectation. The rate of revenue growth in 1996 is expected to be high
because the Company anticipates commencing previously non-existent operations.
The Company expects revenue growth beyond that which can be funded by cash flow
from operations and will in fact require borrowing on the working capital line
of credit. Future infusions of cash required for operating costs and capital
equipment expansion will be dependent on the Company's success in obtaining new
customers and the closing of private placement financing or public offerings of
equity or debt securities.
Expenses incurred during 1995 and the first quarter of 1996 are costs
necessitated to develop, implement and market the Company's operating strategy.
As the business plan unfolds, future operating costs will substantially increase
and bear little resemblance to those incurred to date. The acquisitions of PDN,
PDS, and the phone centers in Panama as well as the revenue stream increases
anticipated from telecommunication sales are expected to propel the Company to
an on-going operating status in 1996 as compared to the costs incurred in 1995
and first quarter 1996 as a development stage company.
<PAGE>
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders.
On April 9, 1996, an annual meeting of the shareholders of the Company was
held at the offices of the Company. At the meeting, the board of directors,
consisting of nine persons, was elected. The persons elected as directors was as
follows: David G. Olson, William C. Comee, Stephen E. Raville, William P.
O'Reilly, Robert E. Conn, Roan L. Scraper, Billie C. Holbert, Jr., John S.
Reiland and F. Scott Yeager. The tabulation of the voting for directors is shown
in the table below.
In addition to the election of directors, the shareholders voted on a
proposal to reincorporate the Company in the State of Nevada, to change the
Company's name from "Maui Capital Corporation" to "Charter Communications
International, Inc.," to approve the election of Price Waterhouse LLP as the
independent accountants of the Company for the year ended December 31, 1995, and
to elect Price Waterhouse LLP as the independent accountants of the Company for
the year ending December 31, 1996. The tabulation of the voting on each of the
above matters is shown in the table below.
<TABLE>
<CAPTION>
Matter For Against Withheld Abstaining Non Vote
------ --- ------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
1) Election of Directors
Nominees:
William C. Comee 5,799,359 -0- -0- -0- 4,346,444
Robert E. Conn 5,799,359 -0- -0- -0- 4,346,444
Billie C. Holbert, Jr. 5,799,359 -0- -0- -0- 4,346,444
David G. Olson 5,799,359 -0- -0- -0- 4,346,444
Stephen E. Raville 5,799,359 -0- -0- -0- 4,346,444
John S. Reiland 5,799,359 -0- -0- -0- 4,346,444
William P. O'Reilly 5,799,359 -0- -0- -0- 4,346,444
Roan L. Scraper 5,799,359 -0- -0- -0- 4,346,444
F. Scott Yeager 5,799,359 -0- -0- -0- 4,346,444
2) Reincorporation 5,799,359 -0- -0- -0- 4,346,444
3) Change of Name 5,799,359 -0- -0- -0- 4,346,444
4) Auditors for 1995 5,799,359 -0- -0- -0- 4,346,444
5) Auditors for 1996 738,630 5,060,729 -0- -0- 4,346,444
</TABLE>
<PAGE>
Item 5. Other Information.
Pursuant to the approval received for the reincorporation and change of name of
the Company at the annual meeting of shareholders, effective April 23, 1996 (the
"Effective Time"), Maui Capital Corporation, a Colorado corporation ("Maui") was
merged into a newly formed wholly owned subsidiary of Maui named "Charter
Communications International, Inc.," a Nevada corporation ("Charter"), for the
purpose of accomplishing a change in the domicile of the corporation from
Colorado to Nevada and to accomplish a change in the corporation's name. Charter
had no business or assets prior to the merger with Maui and was formed solely
for the purpose of engaging in the merger with Maui.
The merger of Maui and Charter was effected pursuant to an Agreement and Plan
of Merger, a copy of which is attached hereto. At the Effective Time, Charter,
as the surviving corporation in the merger, succeeded to all the business,
properties, assets and liabilities of the Company. The Articles of Incorporation
and Bylaws of Charter are the Articles of Incorporation and Bylaws governing the
surviving corporation (copies of each of which are attached hereto).
Each share of common stock of Maui issued and outstanding immediately prior to
the Effective Time by virtue of the merger was converted into one share of
common stock, $.00001 par value, of Charter. Each option, warrant or other right
to acquire or purchase shares of capital stock of Maui was converted into an
identical option, warrant or right to acquire or purchase shares of capital
stock of Charter. At the Effective Time, certificates which immediately prior to
the Effective Time represented shares of common stock or the right to acquire or
purchase capital stock of Maui were deemed for all purposes to represent the
same number of shares or rights to acquire or purchase equivalent securities of
Charter. It was not necessary for shareholders or holders of options, warrants
or rights to acquire or purchase capital stock of Maui to exchange their
existing stock certificates, options, warrants or other rights for stock
certificates, options, warrants or rights of Charter, as each was deemed
automatically converted into equivalent instruments of Charter.
The reincorporation and change of name did not result in any change in the
business, management, assets or liabilities of the corporation. The common stock
of Charter is traded on the over the counter market under the symbol "CHRT" just
as the common stock of Maui was traded.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by Item 601 of Regulation S-B
Exhibit 2.01 -- Plan and Agreement of Merger
Exhibit 2.02 -- Articles of Merger
Exhibit 3.01 -- Articles of Incorporation of Charter Communications
International, Inc.
Exhibit 3.02 -- Bylaws of Charter Communications International, Inc.
Exhibit 27 -- Financial Data Schedule
(b) Reports on Form 8-K.
Reports on Form 8-K were filed during the quarter for which this report is
filed as follows:
<PAGE>
March23, 1996 - reporting the replacement of Dickey, Rush & Co., as independent
accountants and the appointment of Price Waterhouse LLP as independent
accountants.
January 23, 1996 - reporting the acquisition of Phoenix DataNet, Inc. (financial
statements to the report were filed on March 25, 1996).
April3, 1996 - reporting the acquisition of Phoenix Data Systems, Inc.
(financial statements to the report will be filed on or before June 4,
1996)
April23, 1996 - reporting the dismissal of Price Waterhouse LLP, as independent
accountants.
April30, 1996 - reporting the appointment of KPMG Peat Marwick as independent
accountants.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHARTER COMMUNICATIONS
INTERNATIONAL, INC.
Date: April 14, 1996 By: /s/ Roan L. Scraper
Roan L. Scraper
President
Date: April 14, 1996 By: /s/ John Slusser
John Slusser
Chief Accounting Officer
<PAGE>
Exhibit 2.01
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Plan" or "Merger Agreement") dated
as of April 19, 1996, between CHARTER COMMUNICATIONS INTERNATIONAL, INC., a
Nevada corporation ("Merger Subsidiary"), and MAUI CAPITAL CORPORATION, a
Colorado corporation ("Maui"). Merger Subsidiary and Maui are hereinafter
collectively referred to as the "Constituent Corporations."
W I T N E S S E T H:
WHEREAS, Merger Subsidiary is a corporation duly organized and existing
under the laws of the State of Nevada, having filed its Articles of
Incorporation in the office of the Secretary of State of Nevada on April___,
1996, and having total authorized capital stock of (i) 45,000,000 shares of
common stock, $.00001 par value ("Merger Subsidiary Common"), of which 1,000
shares are issued and outstanding and held by Maui and (ii) 100,000 shares of
Preferred Stock, $.01 par value ("Merger Subsidiary Preferred"), of which no
shares are issued and outstanding. Merger Subsidiary Common and Charter
Preferred are referred to herein, collectively, as the "Merger Subsidiary
Stock"; and
WHEREAS, Maui is a corporation duly organized and existing under the
laws of the State of Colorado, having filed its Articles of Incorporation in the
office of the Secretary of State of Colorado on August 8, 1988, and having an
authorized capital stock of (i) 45,000,000 shares of common stock, $.00001 par
value ("Maui Common"), of which 10,145,803 shares are issued and outstanding and
(ii) 100,000 shares of Preferred Stock, $.01 par value ("Maui Preferred"), of
which no shares are issued and outstanding (Maui Common and Maui Preferred are
referred to herein, collectively, as the "Maui Stock").
WHEREAS, the respective Boards of Directors of the Constituent
Corporations deem it advisable and in the best interests of the Constituent
Corporations and their shareholders that Maui be merged with and into Merger
Subsidiary, which shall be the surviving corporation, as authorized by the
statutes of the States of Nevada and Colorado, pursuant to the terms and
conditions hereinafter set forth, and each such Board has duly approved this
Agreement and Plan of Merger;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and for the purpose of setting forth
the terms of the merger (the "Merger") provided by this Merger Agreement, the
mode of carrying the same into effect and such other details and provisions as
are deemed necessary or desirable, the parties hereto have agreed and do hereby
agree, subject to the approval or adoption of this Merger Agreement by the
requisite vote of the shareholders of each Constituent Corporation, and subject
to the conditions hereinafter set forth, as follows:
<PAGE>
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the laws of Nevada and Colorado,
at the Effective Time (as defined in Section 1.02), Maui shall be merged with
and into Merger Subsidiary. As a result of the Merger, the separate corporate
existence of Maui shall cease and Merger Subsidiary shall continue as the
surviving corporation in the Merger (the "Surviving Corporation"). The name of
the Surviving Corporation shall remain "Charter Communications International,
Inc."
SECTION 1.02. Effective Time. As promptly as practicable after the approval
hereof by the shareholders of each Constituent Corporation and the execution and
delivery of this Agreement by each of the parties hereto, the parties hereto
shall cause the Merger to be consummated by filing of articles of merger (the
"Articles of Merger") with the Secretary of State of the States of Nevada and
Colorado, in such form as required by, and executed in accordance with the
relevant provisions of, the laws of Nevada and Colorado (the date and time of
such filing being the "Effective Time").
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the laws of the
State of Nevada. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, except as otherwise provided herein, all the
property, rights, privileges, powers and franchises of Maui and Merger
Subsidiary shall vest in the Surviving Corporation, and all debts, liabilities
and duties of Maui and Merger Subsidiary shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 1.04. Articles of Incorporation; By-Laws. At the Effective Time,
the Articles of Incorporation and the Bylaws of Merger Subsidiary, as in effect
immediately prior to the Effective Time, shall be the Articles of Incorporation
and the Bylaws of the Surviving Corporation.
SECTION 1.05. Directors and Officers. The directors of Maui immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
each to hold office in accordance with the Articles of Incorporation and Bylaws
of the Surviving Corporation, and the officers of Maui immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Merger Subsidiary, Maui or the
holders of any of the following securities:
(a) Each share of Maui Common issued and outstanding immediately prior to
the Effective Time, excluding any treasury shares held by Maui and Dissenting
Shares (as defined in Section 2.04), if any, shall be converted into the right
to receive one fully paid non-assessable share of Merger Subsidiary Common.
2
<PAGE>
(b) Each share of Maui Preferred issued and outstanding immediately prior
to the Effective Time, excluding any treasury shares held by Maui and Dissenting
Shares, if any, shall be converted into the right to receive one fully paid
non-assessable share of Merger Subsidiary Preferred.
(c) Each warrant, option or other instrument representing the right to
purchase Maui Common or Maui Preferred outstanding immediately prior to the
Effective Time ("Maui Right") shall be converted into an identical warrant,
option or other right to purchase Merger Subsidiary Common or Merger Subsidiary
Preferred ("Merger Subsidiary Right"). The date of grant of a Merger Subsidiary
Right issued in exchange for a Maui Right shall be deemed to be the date on
which such Maui Right was originally granted. Merger Subsidiary Rights issued in
exchange for Maui Rights pursuant hereto shall have the same schedule of vesting
(or acceleration) as applied to such Maui Rights and shall be identical in all
other respects.
(d) Each share of Merger Subsidiary Stock owned by Maui or any direct or
indirect wholly owned subsidiary of Maui immediately prior to the Effective Time
shall be canceled and extinguished without any conversion thereof and no payment
shall be made with respect thereto.
SECTION 2.02. Dissenting Shares. Notwithstanding any other provisions of
this Agreement to the contrary, shares of Maui Stock that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for such shares in
accordance with Colorado Law (collectively, the "Dissenting Shares") shall not
be converted into or represent the right to receive Merger Subsidiary Stock.
Such stockholders shall be entitled to receive payment of the appraised value of
such shares of Maui Stock held by them in accordance with the provisions of
Colorado Law, except that all Dissenting Shares held by stockholders who shall
have failed to perfect or who effectively shall have withdrawn or lost their
rights to appraisal of such shares of Maui Stock under Colorado Law shall
thereupon be deemed to have been converted into and to have become exchangeable,
as of the Effective Time, for the right to receive shares of Merger Subsidiary
Common and Merger Subsidiary Preferred, upon surrender, in the manner provided
in Section 2.02, of the certificate or certificates that formerly evidenced such
shares of Maui Stock.
ARTICLE III
Approval and Effective Time of the Merger
The Merger shall become effective when certified, executed and acknowledged
in accordance with the corporate laws of Nevada and Colorado and along with
Articles of Merger shall be filed and recorded in the office of the Secretary of
State of the States of Nevada and Colorado.
3
<PAGE>
ARTICLE IV
Miscellaneous Provisions
(a) For the convenience of the parties, any number of counterparts hereof
may be executed, and each such counterpart shall be deemed to be an original
instrument.
(b) It is the intention of the parties that the internal laws, and not the
laws of conflicts, of the State of Texas shall govern the enforceability and
validity of this Merger Agreement, the construction of its terms and the
interpretation of the rights and duties of the parties; provided, however, that
with respect to matters of law concerning the internal affairs of any entity
that is a party to or the subject of this Merger Agreement the law of the
jurisdiction of organization of such entity shall govern.
(c) This Merger Agreement may not be altered or amended except pursuant to
an instrument in writing signed on behalf of the parties hereto.
IN WITNESS WHEREOF, Maui has caused this Merger Agreement to be signed by
its President and attested by its Secretary and its corporate seal to be affixed
hereto pursuant to authorization contained in a resolution adopted by its Board
of Directors approving this Merger Agreement, and Merger Subsidiary has caused
this Merger Agreement to be signed by its President and attested by its
Secretary and its corporate seal to be affixed hereto pursuant to authorization
contained in a resolution adopted by its Board of Directors approving this
Merger Agreement, all on the date first above written.
[Signature pages to follow]
4
<PAGE>
MAUI CAPITAL CORPORATION
ATTEST:
By /s/ Anna Sterling By /s/ Roan L. Scraper
Anna Sterling, Secretary Roan L. Scraper, President
ATTEST: CHARTER COMMUNICATIONS INTERNATIONAL, INC.
By /s/ Anna Sterling By /s/ Roan L. Scraper
Anna Sterling, Secretary Roan L. Scraper, President
5
<PAGE>
ARTICLES OF MERGER
OF
MAUI CAPITAL CORPORATION
(a Colorado corporation)
AND
CHARTER COMMUNICATIONS INTERNATIONAL, INC.
(a Nevada corporation)
The undersigned officer of the Surviving Corporation to a Plan of
Merger submits the following Articles of Merger pursuant to the provisions of
Chapter 78 of the Nevada Revised Statutes[Article 7-111-105 of the Colorado
Business Corporation Act].
ARTICLE I
Name
----
The name and place of incorporation of each constituent corporation is:
A. MAUI CAPITAL CORPORATION, a Colorado corporation (the "Disappearing
Corporation");
B. CHARTER COMMUNICATIONS INTERNATIONAL, INC., a Nevada corporation (the
"Surviving Corporation").
ARTICLE II
Adoption of the Plan of Merger
------------------------------
The respective Boards of Directors of the Surviving Corporation and the
Disappearing Corporation have duly and validly adopted the Plan of Merger,
containing the information required by Section 78.451 of the Nevada Revised
Statutes and Article 7-111-103 of the Colorado Business Corporation Act has been
adopted by the board of directors of each corporation that is a party to the
merger.
ARTICLE III
Outstanding Stock
-----------------
On the date of notice of the special meeting called to consider the
Plan of Merger, there were outstanding shares of stock in the constituent
corporations the numbers and designations of which are as follows:
A. The Surviving Corporation had one thousand (1,000) outstanding shares
of common stock, par value $.00001 per share, each share being
entitled to one (1) vote for a total of one thousand (1,000) votes
entitled to be cast for or against the Plan of Merger;
B. The Disappearing Corporation had ten million one hundred forty five
thousand eight hundred three (10,145,803) outstanding shares of common
stock, par value $.00001 per share, each share being entitled to one
(1) vote for a total of ten million one hundred forty five thousand
eight hundred three (10,145,803) votes entitled to be cast for or
against the Plan of Merger.
<PAGE>
ARTICLE IV
Stockholder Approval
--------------------
The Plan of Merger was duly submitted to the stockholders of the
Surviving Corporation, in accordance with the laws of the State of Nevada, and
the stockholders of the Disappearing Corporation in accordance with the laws of
the State of Colorado, and approved thereby. The stockholders of the Surviving
Corporation cast one thousand (1,000) votes in favor and no (0) votes against
the Plan of Merger and the stockholders of the Disappearing Corporation cast
______________________ (________________) votes in favor and _________________
(___________________) votes against the Plan of Merger which votes cast in favor
thereof are of a sufficient number for the approval of the Plan of Merger by the
constituent corporations.
ARTICLE V
Articles of Incorporation
of the Surviving Corporation
----------------------------
The Articles of Incorporation of the Surviving Corporation shall
continue as the Articles of Incorporation of the Surviving Corporation in all
respects
ARTICLE VI
Plan of Merger
--------------
A. A copy of the Agreement and Plan of Merger is attached hereto as
Exhibit A. The Agreement and Plan of Merger is also on file at the
Surviving Corporation's principal place of business at 11200
Westheimer, Suite 615, Houston, Texas 77042.
B. A copy of the Plan of Merger shall be furnished, on request and
without cost, to any stockholder of a corporation which is a party to
the merger.
2
<PAGE>
IN WITNESS WHEREOF, the undersigned President and Secretary of the
Constituent Corporations, execute these Articles of Merger and verify that the
statements contained herein are true and complete and are the act and deed of
the constituent corporations this the ____ day of ____________________, 1996.
CHARTER COMMUNICATIONS
INTERNATIONAL, INC.
/s/ Roan L. Scraper
Roan L. Scraper, President
/s/ Anna Sterling
Anna Sterling, Secretary
MAUI CAPITAL CORPORATION
/s/ Roan L. Scraper
Roan L. Scraper, President
/s/ Anna Sterling
Anna Sterling, Secretary
3
<PAGE>
STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
On this ___ day of __________________, 1996, before me,
______________________, the undersigned officer, personally appeared ROAN L.
SCRAPER and ANNA STERLING, known personally to me to be the President and
Secretary, respectively, of CHARTER COMMUNICATIONS INTERNATIONAL, INC., and that
they, as such officers, being authorized to do so, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by themselves as such officers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
----------------------
Notary Public in and for the
State of T E X A S
STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
On this ___ day of __________________, 1996, before me,
______________________, the undersigned officer, personally appeared ROAN L.
SCRAPER and ANNA STERLING, known personally to me to be the President and
Secretary, respectively, of MAUI CAPITAL CORPORATION, and that they, as such
officers, being authorized to do so, executed the foregoing instrument for the
purposes therein contained, by signing the name of the corporation by themselves
as such officers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
------------------------
Notary Public in and for the
State of T E X A S
4
<PAGE>
Exhibit 2.02
ARTICLES OF MERGER
OF
MAUI CAPITAL CORPORATION
(a Colorado corporation)
AND
CHARTER COMMUNICATIONS INTERNATIONAL, INC.
(a Nevada corporation)
The undersigned officer of the Surviving Corporation to a Plan of Merger
submits the following Articles of Merger pursuant to the provisions of Chapter
78 of the Nevada Revised Statutes and Article 7-111-105 of the Colorado Business
Corporation Act.
ARTICLE I
Name
The name and place of incorporation of each constituent corporation is:
A. MAUI CAPITAL CORPORATION, a Colorado corporation (the "Disappearing
Corporation");
B. CHARTER COMMUNICATIONS INTERNATIONAL, INC., a Nevada corporation (the
"Surviving Corporation").
ARTICLE II
Adoption of the Plan of Merger
The respective Boards of Directors of the Surviving Corporation and the
Disappearing Corporation have duly and validly adopted the Plan of Merger,
containing the information required by Section 78.451 of the Nevada Revised
Statutes and Article 7-111-103 of the Colorado Business Corporation Act has been
adopted by the board of directors of each corporation that is a party to the
merger.
ARTICLE III
Outstanding Stock
On the date of notice of the special meeting called to consider the Plan of
Merger, there were outstanding shares of stock in the constituent corporations
the numbers and designations of which are as follows:
A. The Surviving Corporation had one thousand (1,000) outstanding shares
of common stock, par value $.00001 per share, each share being
entitled to one (1) vote for a total of one thousand (1,000) votes
entitled to be cast for or against the Plan of Merger;
<PAGE>
B. The Disappearing Corporation had ten million one hundred forty five
thousand eight hundred three (10,145,803) outstanding shares of common
stock, par value $.00001 per share, each share being entitled to one
(1) vote for a total of ten million one hundred forty five thousand
eight hundred three (10,145,803) votes entitled to be cast for or
against the Plan of Merger.
ARTICLE IV
Stockholder Approval
The Plan of Merger was duly submitted to the stockholders of the Surviving
Corporation, in accordance with the laws of the State of Nevada, and the
stockholders of the Disappearing Corporation in accordance with the laws of the
State of Colorado, and approved thereby. The stockholders of the Surviving
Corporation cast one thousand (1,000) votes in favor and no (0) votes against
the Plan of Merger and the stockholders of the Disappearing Corporation cast
five million seven hundred ninety-nine thousand three hundred fifty nine
(5,799,359) votes in favor and no (0) votes against the Plan of Merger which
votes cast in favor thereof are of a sufficient number for the approval of the
Plan of Merger by the constituent corporations.
ARTICLE V
Articles of Incorporation
of the Surviving Corporation
The Articles of Incorporation of the Surviving Corporation shall continue
as the Articles of Incorporation of the Surviving Corporation in all respects.
ARTICLE VI
Plan of Merger
A. A copy of the Agreement and Plan of Merger is attached hereto as
Exhibit A. The Agreement and Plan of Merger is also on file at the
Surviving Corporation's principal place of business at 11200
Westheimer, Suite 615, Houston, Texas 77042.
B. A copy of the Plan of Merger shall be furnished, on request and
without cost, to any stockholder of a corporation which is a party to
the merger.
C. The merger is to be effective immediately upon the filing of these
Articles.
<PAGE>
IN WITNESS WHEREOF, the undersigned President and Secretary of the
Constituent Corporations, execute these Articles of Merger and verify that the
statements contained herein are true and complete and are the act and deed of
the constituent corporations this the ____ day of ____________________, 1996.
CHARTER COMMUNICATIONS
INTERNATIONAL, INC.
------------------------------------
Roan L. Scraper, President
------------------------------------
Anna Sterling, Secretary
MAUI CAPITAL CORPORATION
------------------------------------
Roan L. Scraper, President
------------------------------------
Anna Sterling, Secretary
<PAGE>
STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
On this ___ day of __________________, 1996, before me,
______________________, the undersigned officer, personally appeared ROAN L.
SCRAPER and ANNA STERLING, known personally to me to be the President and
Secretary, respectively, of CHARTER COMMUNICATIONS INTERNATIONAL, INC., and that
they, as such officers, being authorized to do so, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by themselves as such officers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
----------------------------------------
Notary Public in and for the
State of T E X A S
STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
On this ___ day of __________________, 1996, before me,
______________________, the undersigned officer, personally appeared ROAN L.
SCRAPER and ANNA STERLING, known personally to me to be the President and
Secretary, respectively, of MAUI CAPITAL CORPORATION, and that they, as such
officers, being authorized to do so, executed the foregoing instrument for the
purposes therein contained, by signing the name of the corporation by themselves
as such officers.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
----------------------------------------
Notary Public in and for the
State of T E X A S
<PAGE>
Exhibit 3.01
ARTICLES OF INCORPORATION
OF
CHARTER COMMUNICATIONS INTERNATIONAL, INC.
The undersigned incorporator being a natural person of the age of eighteen
years or more and desiring to form a body corporate under the laws of the State
of Nevada does hereby sign, verify and deliver to the Secretary of State of the
State of Nevada, these Articles of Incorporation:
ARTICLE I
Name
The name of the Corporation is Charter Communications International, Inc.
(hereinafter referred to as the "Corporation").
ARTICLE II
Duration
The Corporation shall exist in perpetuity, from and after the date of
filing these Articles of Incorporation with the Secretary of State of the State
of Nevada unless dissolved according to law.
ARTICLE III
Registered Office and Resident Agent
The address of the Corporation's registered office is 400 West King Street,
Suite 302, Carson City, Nevada 89703. The name of the resident agent is Capitol
Document Services, Inc.
ARTICLE IV
Purpose
The nature of the business of the Corporation and the purpose for which it
is organized is to engage in any business and lawful act or activity.
ARTICLE V
Capital
The aggregate number of shares which the Corporation shall have the
authority to issue is forty five million (45,000,000) shares of a par value of
one one-thousandth of one cent ($0.00001), which shares shall be designated
"Common Stock", and one hundred thousand (100,000) shares of a par value of one
cent ($0.01), which shares shall be designated "Preferred Stock." Both the
Common Stock and the Preferred Stock may be subdivided and issued in series
pursuant to resolutions of the board of directors containing such designations,
limitations, rights and preferences which the board of directors, in its sole
discretion, may determine to be appropriate.
<PAGE>
A. Preferred Stock
1. Issuance in Series. The Preferred Stock may be divided into and issued
in one or more series. The board of directors is hereby vested with authority
from time to time to establish and designate series of unissued shares of any or
all Preferred Stock by fixing and determining the number of shares comprising
such series and the relative rights and preferences of any series so
established, such relative rights and preferences of any series may vary in any
and all respects, and to increase or decrease the number of shares within each
such series; provided, however, that the board of directors may not decrease the
number of shares within a series below the number of shares within such series
that is then issued. To establish a series of Preferred Stock, the board of
directors shall adopt a resolution setting forth the number of shares comprising
such series and the designation of the series and fixing and determining the
relative rights and preferences thereof. In decreasing or increasing the number
of shares of a series, the board of directors shall adopt a resolution fixing
and determining the new number of shares of each series in which the number of
shares is decreased or increased. The relative rights and preferences of all
shares of Preferred Stock, as determined by the board of directors, need not be
identical provided that all shares of the same series are identical in all
respects. Prior to the issuance of any shares of a series established by
resolution adopted by the board of directors, and prior to the issuance of any
shares of a series in which the number of shares has been decreased or increased
by resolution adopted by the board of directors, if such issuance is the first
issuance of shares of such series since such resolution was adopted, the
Corporation shall file with the Secretary of State a statement setting forth
such information as prescribed by the laws of the State of Nevada.
2. Dividends. The holders of each series of Preferred Stock at the time
outstanding shall be entitled to receive, when and as declared to be payable by
the board of directors, out of any funds legally available for the payment
thereof, dividends at the rate theretofore affixed by the board of directors for
such series of Preferred Stock, and no more, payable on the dates specified
therefor in the resolution of the board of directors establishing such series.
B. Common Stock
1. Dividends. Subject to all the rights of the Preferred Stock or any
series thereof set forth in any resolution of the board of directors providing
for the issuance of any series of Preferred Stock, the holders of the Common
Stock shall be entitled to receive, when, as and if declared by the board of
directors, out of funds legally available therefor, dividends payable in cash,
stock or otherwise.
2. Voting Rights. Each holder of Common Stock shall be entitled to one vote
for each share held.
<PAGE>
ARTICLE VI
Preemptive Rights
No holder of any shares of the Corporation, whether now or hereafter
authorized, shall have any preemptive or preferential right to acquire any
shares or securities of the Corporation, including shares or securities held in
the treasury of the Corporation.
ARTICLE VII
Governing Board
The members of the governing board shall be known as directors and the
number thereof shall be not less than one (1).
The name and post office box or street address, either residence or
business, of the members of the initial board of directors is as follows:
NAME ADDRESS
David G. Olson 11200 Westheimer, Suite 615
Houston, Texas 77042
John S. Reiland 11200 Westheimer, Suite 615
Houston, Texas 77042
Roan L. Scraper 11200 Westheimer, Suite 615
Houston, Texas 77042
The initial board of directors will serve as the board of directors until
the first annual meeting of the shareholders, or until their successors are
elected and qualified.
ARTICLE VIII
Business Combinations
This Corporation expressly elects not to be governed by the provisions of
Nevada Revised Statutes Sections 78.411 to 78.444, inclusive.
ARTICLE IX
Director Liability
To the fullest extent permitted by Nevada statutes, as the same exist or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits broader limitations than permitted prior to
such amendment), a director of this Corporation shall not be liable to the
Corporation or its shareholders for monetary damages for an act or omission in
the director's capacity as a director. Any repeal or amendment of this Article
by the shareholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation existing at the time of such repeal or amendment.
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<PAGE>
ARTICLE X
Transactions with Interested Directors
No contract or other transaction between the Corporation and one or more of
its directors or officers, or between a Corporation and any corporation, firm or
association in which one or more of its directors or officers are directors or
officers or are financially interested is void or voidable solely for this
reason or solely because any such director of officer is present at the meeting
of the board of directors or a committee thereof which authorizes or approves
the contract or transaction, or because the vote or votes of common or
interested directors are counted for that purpose, if the circumstances
specified in any of the following paragraphs exist:
(a) The fact of the common directorship, office or financial interest
is disclosed or known to the board of directors or committee and
noted in the minutes, and the board or committee authorizes,
approves or ratifies the contract or transaction in good faith by
a vote sufficient for the purpose without counting the vote or
votes of the common or interested director or directors.
(b) The fact of the common directorship, office or financial interest
is disclosed or known to the stockholders, and they approve or
ratify the contract or transaction in good faith by a majority
vote of stockholders holding a majority of the voting power. The
votes of the common or interested directors or officers must be
counted in any such vote of stockholders.
(c) The fact of the common directorship, office or financial interest
is not disclosed or known to the director or officer at the time
the transaction is brought before the board of directors of the
Corporation for action.
(d) The contract or transaction is fair as to the Corporation at the
time it is authorized or approved.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the board of directors or a committee thereof which
authorizes, approves, or ratifies such contract or transaction, and if the votes
of the common or interested directors are not counted at the meeting, then a
majority of the disinterested directors may authorize, approve or ratify a
contract or transaction.
ARTICLE XI
Corporate Opportunity
The officers, directors and other members of management of this 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 resolutions appearing in the Corporation's minutes. Once 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 disclosed promptly to
the Corporation and made available to it. The board of directors may reject any
business opportunity presented to it and thereafter any officer, 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 and other members of management of the
Corporation shall be free to engage in such areas of interest on their own and
this doctrine 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
provision shall not be construed to release any employee of the Corporation
(other than an officer, director or member of management) from any duties which
he may have to the Corporation.
-4-
<PAGE>
ARTICLE XII
Indemnification and Limitation of Liability
1. The Corporation shall indemnify any person 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,
except an action by or in the right of the Corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the Corporation or for amounts paid in settlement to the
Corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnify for such expenses as the court deems
proper.
3. To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense of
any claim, issue or matter therein, he must be indemnified by the Corporation
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense.
-5-
<PAGE>
4. Any indemnification under subsections 1 and 2, unless ordered by a court
or advanced pursuant to subsection 5, must be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances. The
determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting
of directors who were not parties to the act, suit or
proceedings;
(c) If a majority vote of a quorum consisting of directors who were
not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the
act, suit or proceedings cannot be obtained, by independent legal
counsel in a written opinion.
5. The Corporation shall pay the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding as they are
incurred and in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officers to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
Corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or ordered
by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under
the articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either
an action in his official capacity or an action in another
capacity while holding his office, except that indemnification,
unless ordered by a court pursuant to subsection 2 or for the
advancement of expenses made pursuant to subsection 5, may not be
made to or on behalf of any director of officer if a final
adjudication establishes that his acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law
and was material to the cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent an inures to the benefit of the heirs,
executors and administrators of such a person.
As used herein, the term "Corporation" includes this Corporation, and, in
addition, for purposes of this Article, references to "the Corporation" shall
also include any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article
with respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had continued.
-6-
<PAGE>
7. Insurance for Indemnification. The Corporation may purchase and maintain
insurance on behalf of a person who is or was a director, officer, employee,
fiduciary, or agent of the Corporation or who, while a director, officer,
employee, fiduciary, or agent of the Corporation, is or was serving at the
request of the Corporation as a director, officer, partner, trustee, employee,
fiduciary, or agent of any other foreign or domestic corporation or of any
partnership, joint venture, trust, other enterprise, or employee benefit plan
against any liability asserted against or incurred by him or her in any such
capacity or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her against such liability
under the provisions of this Article. 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 this state or any
other jurisdiction of the United States or elsewhere, including any insurance
company in which the Corporation has equity or any other interest, through stock
ownership or otherwise.
9. Indemnification of Heirs, Executors and Administrators. The
indemnification provided by this Article shall continue as to a person who has
ceased to be a director, officer, employee or agent, and shall inure to the
benefit of the heirs, executors and administrators of such a person.
ARTICLE XIII
Incorporator
The name and post office address of the incorporator signing the Articles
of Incorporation of the Corporation is as follows:
NAME ADDRESS
William T. Heller IV Brown, Parker & Leahy, L.L.P.
1200 Smith Street, Suite 3600
Houston, Texas 77002
DATED this ____ day of ________________, 1996.
--------------------------
William T. Heller IV
-7-
<PAGE>
STATE OF TEXAS )
) ss.
COUNTY OF HARRIS )
I, the undersigned, a Notary Public, hereby certify that on
________________, 1996, the above-named incorporator personally appeared before
me, and being by me first duly sworn declared that he/she is the person who
signed the foregoing document as incorporator and that the statements therein
contained are true.
WITNESS my hand and official seal.
Notary Public
Address:
My Commission Expires:
(N O T A R I A L S E A L)
-8-
<PAGE>
Exhibit 3.02
BYLAWS
OF
CHARTER COMMUNICATIONS INTERNATIONAL, INC.
ARTICLE I
OFFICES
1.01 Registered Office. The registered office shall be located at 502 East John
Street, Carson City, Nevada 89706.
1.02 Other Offices. The Corporation may also have offices at such other places
located within or without the State of Nevada as the Board of Directors may
from time to time determine, or as the business of the Corporation may
require.
ARTICLE II
STOCKHOLDERS
2.01 Location of Meetings. Meetings of stockholders shall be held at the
principal business office of the Corporation, or at any other location
which may be specified in the notice of the meeting or in a duly executed
waiver thereof. Meetings of stockholders may be held by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting, except where a person
participates in the 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.
2.02 Annual Meetings. Unless a unanimous consent of the stockholders is
submitted to the Corporation pursuant to Section 2.10, an annual meeting of
stockholders shall be held annually at such date and time as shall be
designated from time to time by the Board of Directors and stated in the
notice of meeting. At this meeting, the stockholders shall elect a Board of
Directors, and may transact other business properly brought before the
meeting. The failure to hold the annual meeting or to file the written
consent in lieu thereof will not cause a forfeiture or dissolution of the
Corporation.
2.03 List of Stockholders. At least ten (10) days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at said
meeting arranged in alphabetical order, with the address of each and the
number of voting shares held by each, shall be prepared by the office or
agent having charge of the stock transfer book. This list shall be kept on
file at the registered office of the Corporation and shall be subject to
inspection by any stockholder at any time during usual business hours for a
period of ten (10) days prior to such meeting. This list shall be produced
and kept open at the time and place of the meeting and shall be subject to
the inspection of any stockholder during the whole time of the meeting.
2.04 Special Meetings. Special meetings of the stockholders may be called by the
President, the Board of Directors, or the Chairman of the Board of
Directors, if one is appointed.
<PAGE>
2.05 Notice of Meetings. A written or printed notice stating the place, day and
hour of any meeting and, in the 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, the
Secretary or the officer or person calling the meeting, to each stockholder
of record entitled to vote at the meeting. If mailed, notice shall be
deemed to be delivered when deposited, postage prepaid, in the United
States mail, addressed to the stockholder at his address as it appears on
the stock transfer books of the Corporation. If a stockholder gives no
address, notice shall be deemed to have been given to the stockholder if
sent by mail or other written communication addressed to the place where
the Corporation's registered office is located, or if published at least
once in some newspaper of general circulation in the county in which the
Corporation's registered office is located. Where notice is required to be
given and notice of two (2) previous consecutive annual meetings or notices
of meetings or notice of taking of action without a meeting by written
consent have been mailed and addressed to a stockholder at the address as
shown on the records of the Corporation and have been returned
undeliverable, the giving of further notice to the stockholder is not
required.
2.06 Quorum. The holders of a majority of shares entitled to vote or, in the
event of any vote by class or classes, a majority of each class of the
shares entitled to vote as a class, represented in person or by proxy,
shall constitute a quorum at meetings of stockholders, except as otherwise
provided by statute, the Articles of Incorporation or these Bylaws. If,
however, a quorum shall not be present or represented at any meeting of the
stockholders, the stockholders present in person or represented by proxy
shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting. At any adjourned meeting at
which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
2.07 Majority May Conduct Business. When a quorum is present at the meeting, the
vote of the holders of a majority of all the shares entitled to vote
represented in person or by proxy shall be the act of the stockholders'
meeting, unless the vote of a greater number is required by statute, the
Articles of Incorporation or these Bylaws.
2.08 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 the
stockholders, except to the extent that the voting rights of the shares of
any class shall be limited or denied by the Articles of Incorporation and
except as otherwise provided by statute.
2.09 Proxies. A stockholder may vote either in person or by proxy executed in
writing by the stockholder 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 unless
otherwise made irrevocable by law. Each proxy shall be filed with the
Secretary of the Corporation not less than 48 hours prior to the meeting.
2.10 Action Without Meeting. Any action required by statute to be taken at a
meeting of the stockholders, or any action which may be taken at a meeting
of the stockholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
stockholders entitled to vote with respect to the subject matter thereof.
2
<PAGE>
2.11 Voting of Shares of Certain Holders.
(a) Shares standing in the name of another corporation may be voted by
such officer, agent or proxy as the bylaws of such corporation may
authorize, or in the absence of such authorization, as the Board of
Directors of such corporation may determine.
(b) Shares held by an administrator, executor, guardian, or conservator
may be voted by him so long as such shares are in the possession and
forming a part of the estate being served by him, either in person or
by proxy, without a transfer of the shares into his name. Shares
standing in the name of a trustee may be voted by him, either in
person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of the shares into his name as trustee.
(c) Shares standing in the name of a receiver may be voted by the
receiver, and shares held by or under the control of a receiver may be
voted by him without the transfer thereof into his name if authority
to do so is contained in an appropriate order of the court by which he
was appointed.
(d) A stockholder whose shares are pledged shall be entitled to vote such
shares until they have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the transferred
shares.
(e) Treasury shares, shares of its own stock owned by another corporation,
the majority of the voting stock of which is owned or controlled by
it, and shares of its own stock held by the Corporation in a 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.
2.12 Record Dates. For the purpose of determining stockholders entitled to
notice of, or to vote at, any meeting of stockholders or any adjournment
thereof, or entitled to receive payment of any dividend, or in order to
make a determination of stockholders for any other proper purpose, the
Board of Directors may provide that the stock transfer books shall be
closed for a stated period not to exceed sixty (60) days. If the stock
transfer books are closed for the purpose of determining stockholders
entitled to notice of, or to vote at, a meeting of stockholders, the books
shall be closed for at least ten (10) days immediately preceding the
meeting.
In lieu of closing the stock transfer books, the Board of Directors may fix
in advance as the record date for determination of stockholders, a date in any
case to be not more than sixty (60) in case of a meeting of stockholders, not
less than ten (10) days prior to the date on which the particular action
requiring the determination of stockholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for
the determination of stockholders entitled to notice of, or to vote at, a
meeting of stockholders, or entitled to receive payment of a dividend, the date
on which notice of the meeting is mailed and 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 determination of stockholders.
3
<PAGE>
When a determination of stockholders entitled to vote at any meeting of
stockholders 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 stock transfer books and the stated period of
closing has expired, in which case a new determination shall be made in
accordance with the provisions of this section.
ARTICLE III
DIRECTORS
3.01 Powers. The business and affairs of the Corporation shall be managed by its
Board of Directors, which may exercise all powers of the Corporation and do
all lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or
done by the stockholders.
3.02 Number and Election. Except as otherwise fixed pursuant to the provisions
of the Articles of Incorporation, as amended, the number of directors
constituting the initial Board of Directors of the Corporation shall be as
set forth in the Articles of Incorporation, as amended, and the number of
directors may be changed by the Board of Directors from time to time by
appropriate resolution of the Board. The directors shall be elected at the
annual meeting of the stockholders, except as provided in Section 3.03, and
each director elected shall hold office until the next succeeding annual
meeting and until his successor shall have been elected and qualified,
except as otherwise provided in the Articles of Incorporation or in these
Bylaws. Directors need not be residents of the State of Nevada or
stockholders of the Corporation.
3.03 Elections to Fill Vacancies. Any vacancy occurring on the Board of
Directors may be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors, or
by a sole remaining director. 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 may be filled by election at an annual or special meeting of
stockholders called for that purpose, or may be filled by the Board of
Directors, for a term of office continuing only until the election of one
or more directors by election at an annual or special meeting of
stockholders called for that purpose.
3.04 Location of Meetings. Meetings of the Board of Directors, regular or
special, may be held either within or without the State of Nevada. Members
of the Board of Directors or of committees thereof may participate in and
hold a meeting of the Board of Directors or committee thereof by means of
conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and
participation in such a meeting shall constitute presence in person at such
meeting, except where a person participates in the 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.
3.05 First Meeting of Newly Elected Board. The first meeting of each newly
elected Board of Directors shall be held at such time and place directly
following the annual meeting of the stockholders or as shall be fixed by
the vote of the stockholders at their annual meeting, and no notice of such
meeting shall be necessary to the newly elected directors in order legally
to constitute the meeting, provided that a quorum shall be present. In the
event such meeting is not held after the annual meeting of the stockholders
or in the event of a failure of the stockholders to fix the time and place
of the first meeting of the newly elected Board of Directors, or in the
event the meeting is not held at the time and place so fixed by the
stockholders, such meeting may be held at the time and place specified in a
notice given as provided for special meetings of the Board of Directors, or
as specified in a written waiver signed by all of the directors.
4
<PAGE>
3.06 Regular Meetings. Regular meetings of the Board of Directors may be held
without notice at such times and places as shall, from time to time, be
determined by the Board.
3.07 Special Meetings. Special meetings of the Board of Directors may be called
by the Chairman of the Board of Directors or the President. Notice of
special meetings of the Board of Directors may be given personally, either
verbally or in writing, or sent in writing by United States mail, or by
facsimile. In case the notice is mailed, the notice shall be deposited in
the mail at the place in which the principal business office of the
Corporation is located at least five (5) days prior to the time of the
holding of the meeting. In case the notice is delivered personally, either
verbally or in writing, or is sent by facsimile, the notice shall be so
delivered at least two (2) hours prior to the time of the holding of the
meeting. The delivery, mailing, or sending by facsimile as above provided
shall constitute due, legal and personal notice to the director. Notice
shall be given by the person calling the meeting or by the Secretary.
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 any
notice or waiver of notice, except as may otherwise be expressly provided
by statute, the Articles of Incorporation or these Bylaws.
3.08 Quorum. A majority of the directors shall constitute a quorum for the
transaction of business, and the act of a majority of the directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors, unless a greater number is required by statute, the Articles of
Incorporation or these Bylaws. If a quorum shall not be present thereat the
directors may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
3.09 Action Without Meeting. Any action that may be taken by the executive
committee, if any, or the Board of Directors at a meeting may be taken
without a meeting if a consent in writing setting forth the actions so
taken shall be signed by all of the members of the executive committee or
all of the directors.
3.10 Compensation. Directors, as such, shall not receive any salary for their
services, but, by resolution of the Board may receive a fixed sum and
necessary expenses of attendance of each regular or special meeting of the
Board. Members of the executive committee, by resolution of the Board of
Directors, may be allowed like compensation for attending committee
meetings. Nothing herein contained shall be construed to preclude any
director from serving the Corporation in another capacity and receiving
compensation therefor.
ARTICLE IV
NOTICES
4.01 Content and Method. Notices to directors and stockholders shall be in
writing unless otherwise provided in these Bylaws, shall specify the time
and place of the meeting, and shall be delivered personally or mailed to
the directors or stockholders at their addresses appearing on the books of
the Corporation. Notice by mail shall be deemed given at the time when the
notice is placed in the United States mail, postage prepaid. Notice to
directors may also be given by facsimile.
5
<PAGE>
4.02 Waiver of Notice. Whenever any notice is required to be given to any
stockholder or director under the provisions of applicable statutes, the
Articles of Incorporation or these Bylaws, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or
after the time stated therein, shall be equivalent to the giving of notice.
4.03 Attendance Construed as Waiver of Notice. Attendance of a stockholder, in
person or by proxy, or a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director or stockholder 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.
ARTICLE V
OFFICERS
5.01 Titles. The officers of the Corporation shall consist of a President, a
Secretary, a Treasurer and, in the discretion of the Board of Directors,
such other officers as are contemplated by Section 5.03 hereof, each of
whom shall be elected by the Board of Directors. Any two or more offices
may be held by the same person.
5.02 Election. The Board of Directors, at its first meeting after each annual
meeting of stockholders, shall elect a President, a Secretary, and a
Treasurer and may elect one or more Vice Presidents, none of whom needs to
be a member of the Board, and may appoint a member of the Board of
Directors as Chairman of the Board.
5.03 Other Officers. Such other officers and assistant officers and agents as
may be deemed necessary may be elected or appointed by the Board of
Directors.
5.04 Compensation. The compensation of the President, any Vice Presidents, the
Secretary and the Treasurer shall be fixed by the Board of Directors, but
the compensation of all minor officers and all other agents and employees
of the Corporation may be fixed by the President, unless by resolution the
Board of Directors shall determine otherwise.
5.05 Term of Office. Each officer of the Corporation shall hold office until his
successor is chosen and qualifies, or until his death or removal or
resignation from office. Any officer, agent or member of the executive
committee elected or appointed by the Board of Directors may be removed by
a majority vote of the Board of Directors whenever in its judgment 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 vacancy occurring in an office of the Corporation for any
reason may be filled by the Board of Directors.
5.06 Chairman of the Board. In the event that a Chairman of the Board is
designated by the Board of Directors, the Chairman shall preside over all
meetings of the stockholders and of the Board of Directors. He shall see
that all orders and resolutions of the Board of Directors are carried into
effect. The Chairman shall have such other powers and duties as usually
pertain to such office or as may be assigned to him from time to time by
the Board of Directors. In the event that a Vice-Chairman of the Board is
designated by the Board of Directors, the Vice- Chairman shall, in the
absence of the Chairman, exercise the powers and have the duties of the
Chairman.
6
<PAGE>
5.07 President. In the absence of the Chairman and Vice-Chairman of the Board,
the President shall preside at all meetings of the stockholders and, if the
President is also a member of the Board of Directors, at all meetings of
the directors. Unless the Board of Directors shall otherwise direct, the
President shall have general and active management responsibility for the
business of the Corporation.
5.08 Vice Presidents. In the event that the Board of Directors shall provide for
one or more Vice Presidents, then each of the Vice Presidents, in the order
of his seniority, unless otherwise determined by the Board of Directors,
shall in the absence or disability of the President, serve in the capacity
of the President and perform the duties and exercise the powers of the
President. Each Vice President shall perform such other duties and have
such other powers as the Board of Directors shall from time to time
prescribe.
5.09 Secretary. The Secretary shall:
(a) attend all meetings of the Board of Directors and of the stockholders,
and shall record all votes and keep the minutes of all such
proceedings in one or more books kept for that purpose;
(b) perform like services for the executive committee of the Board of
Directors, if any;
(c) give, or cause to be given, notice of all meetings of the stockholders
and special meetings of the Board of Directors;
(d) keep in safe custody the seal of the Corporation, and when authorized
by the Board of Directors, affix the same to any instrument requiring
it and when so affixed, it shall be attested by the Secretary's
signature, or by the signature of the Treasurer, if any, or any
Assistant Secretary or Assistant Treasurer; and
(e) perform all duties incidental to the office of Secretary and such
other duties as, from time to time, may be assigned to the Secretary
by the President or Board of Directors, under whose supervision the
Secretary shall function.
5.10 Assistant Secretaries. Each Assistant Secretary, if any, in the order of
his seniority, unless otherwise determined by the Board of Directors, in
the absence or disability of the Secretary, shall perform the duties and
exercise the powers of the Secretary, and shall perform such other duties
and have such other powers as the Board of Directors may, from time to
time, prescribe.
7
<PAGE>
5.11 Treasurer. The Treasurer shall:
(a) have custody of the corporate funds and securities;
(b) keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation;
(c) deposit all money and other valuable effects in the name and to the
credit of the Corporation;
(d) disburse such funds of the Corporation; taking proper vouchers for all
disbursements;
(e) render to the Board of Directors at the regular meetings of the Board
of Directors, or whenever the Board of Directors may require, an
account of all transactions entered into under this Section 5.11 and
of the financial condition of the Corporation; and
(f) perform all such other duties as, from time to time, may be assigned
to him by the Board of Directors.
5.12 Treasurer's Bond. If required by the Board of Directors, the Treasurer or
such other officer as designated by the Board of Directors to perform the
duties enumerated in Section 5.11 above shall give the Corporation a bond
in such sum and with such surety or sureties as shall be satisfactory to
the Board of Directors 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.
5.13 Assistant Treasurers. Each Assistant Treasurer, if any, in the order of his
seniority unless otherwise determined by the Board of Directors, shall in
the absence or disability of the Treasurer perform the duties and exercise
the powers of the Treasurer, and shall perform such other duties and have
such other powers as the Board of Directors may, from time to time,
prescribe.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
6.01 Description. The Corporation shall deliver certificates representing all
shares to which stockholders are entitled. Certificates shall be signed by
the President and the Secretary of the Corporation, or in the absence of
the President and/or Secretary, a Vice President and/or Assistant Secretary
if such offices have been appointed or elected by the Board of Directors
and may be sealed with the seal of the Corporation or a facsimile thereof.
No certificate shall be issued for any share until the consideration
therefor has been fully paid. Each certificate shall be consecutively
numbered and shall be entered in the books of the Corporation as issued.
Each certificate representing shares shall state upon the face thereof that
the Corporation is organized under the laws of the State of Nevada, the
name of the person to whom issued, the number and class of shares and the
designation of the series, if any, which such certificate represents.
8
<PAGE>
6.02 Facsimile Signatures. The signature of the President and the Secretary upon
a certificate may be facsimiles. In the event that an officer who has
signed or whose facsimile signature has been placed upon a certificate
shall cease to be such officer before the certificate is issued, the
certificate may be issued by the Corporation with the same effect as if he
were such officer at the date of issuance.
6.03 Lost Certificate. The Board of Directors may direct new certificate(s) to
be issued in place of any certificate(s) previously 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(s) to be lost
or destroyed. When authorizing such issuance of new certificate(s), the
Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of the lost or destroyed
certificate(s), or his legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a bond in such
sum and form and with such sureties as it may direct as an indemnity
against any claim that may be made against the Corporation with respect to
the certificate(s) alleged to have been lost or destroyed.
6.04 Transfer of Shares. Shares of stock shall be transferable only on the books
of the Corporation by the holder thereof in person or by his duly
authorized attorney-in-fact. 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.
6.05 Transfer Agents and Registrars. The Corporation may have one or more
transfer agents and one or more registrars of its stock, whose respective
duties the Board of Directors may, from time to time, define. No
certificate of stock shall be valid until countersigned by a transfer
agent, if the Corporation shall have a transfer agent, or until registered
by the registrar, if the Corporation shall have a registrar. The duties of
transfer agent and registrar may be combined.
6.06 Registered Owners. The Corporation shall be entitled to recognize the
exclusive rights of a person registered on its books as the owner of shares
to receive dividends and to vote as such owner, and shall not be bound to
recognize any equitable or other claim to, or interest in, such share or
shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws
of the State of Nevada.
ARTICLE VII
GENERAL PROVISIONS
7.01 Dividends. The Board of Directors may declare and the Corporation may pay
dividends on its outstanding shares in cash, property or its own shares,
pursuant to law and subject to the provisions of its Articles of
Incorporation.
7.02 Execution of Instruments. Unless otherwise authorized by the Board of
Directors, deeds, transferees, assignments, contracts, obligations,
certificates (other than certified copies of instruments, which need be
signed by only one of the following persons) and other instruments may be
signed on behalf of the Corporation by two persons, one of whom holds the
office of Chairman of the Board, Vice-Chairman of the Board or President or
Senior Vice- President or director and the other of whom holds one of the
said offices or holds the office of Vice-President, Secretary, Treasurer,
Assistant Secretary or Assistant Treasurer or any other office created by
bylaw or by resolution of the Board of Directors; provided that if the
Corporation has only one director, that director alone or the President
alone may sign any instrument on behalf of the Corporation. In addition,
the Board of Directors may from time to time direct the manner in which and
the person or persons by whom any instrument or instruments may or shall be
signed. Any signing officer may affix the corporate seal to any instrument
requiring the same but no instrument is invalid merely because the
corporate seal is not affixed thereto.
9
<PAGE>
7.03 Reserves. The Board of Directors may by resolution create a reserve or
reserves out of earned surplus for any purpose or purposes, and may abolish
any such reserve in the same manner.
7.04 Signatures. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or other person or persons as
the Board of Directors may, from time to time, designate.
7.05 Fiscal Year. The fiscal year of the Corporation shall be fixed by
resolution of the Board of Directors.
7.06 Corporate Seal. The corporate seal shall have inscribed thereon the name of
the Corporation and shall be in the form determined by the Board of
Directors. The seal may be used by causing it, or a facsimile thereof, to
be impressed, affixed or in any other manner reproduced. The use of the
seal is not necessary on any corporate document and its use or nonuse shall
not in any way affect the legality of the document.
ARTICLE VIII
INDEMNIFICATION
8.01.Third Party Actions. The Corporation shall indemnify any person 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 (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. 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 did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
10
<PAGE>
8.02.Actions by or in the Right of the Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the Corporation unless and only to the extent
that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
8.03.Determination of Conduct. The determination that an officer, director,
employee or agent, has met the applicable standard of conduct set forth in
Sections 8.01 and 8.02 (unless indemnification is ordered by a court) shall
be made (1) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such quorum is not obtainable, or even if obtainable
a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the stockholders.
8.04.Payment of Expenses in Advance. Expenses incurred in defending a civil or
criminal action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors in the specific case upon receipt of
an undertaking by or on behalf of the director, officer, employee or agent
to repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the corporation as authorized in this Article
VIII.
8.05.Definition. For purposes of this Article VIII, references to "the
Corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers, and employees or agents, so that any person who is or who was a
director, officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position
under the provisions of this Article VIII, with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
8.06.Indemnity Not Exclusive. The indemnification provided hereunder shall not
be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any other Bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
11
<PAGE>
8.07 Amendment or Repeal. Neither the amendment nor repeal of this Article VIII
of these Bylaws, nor the adoption of any provisions of these Bylaws, any
other bylaw or any statute inconsistent with this Article VIII of these
Bylaws shall eliminate or reduce the effect of this Article VIII of these
Bylaws in respect of any acts or omissions occurring prior to such
amendment, repeal or adoption of any inconsistent provision.
ARTICLE IX
AMENDMENTS
Unless otherwise provided in the Articles of Incorporation, these Bylaws
may be altered, amended or repealed, and new bylaws may be adopted by the
affirmative vote of a majority of either the Board of Directors or the holders
of a majority of the shares entitled to vote, present at any meeting at which a
quorum of each respective body is present, provided that notice of the proposed
alteration, amendment, repeal or adoption shall be contained in the notice of
the meeting. This power to alter, amend or repeal these Bylaws, and to adopt new
bylaws, may be modified or divested by action of the holders of a majority of
the shares entitled to vote taken at any regular or special meeting of the
stockholders.
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT MARCH 31, 1996 (UNAUDITED) AND THE
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31,
1996 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERNCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 655,064
<SECURITIES> 0
<RECEIVABLES> 1,040,723
<ALLOWANCES> 86,811
<INVENTORY> 326,750
<CURRENT-ASSETS> 2,267,423
<PP&E> 2,214,982
<DEPRECIATION> 399,894
<TOTAL-ASSETS> 6,447,412
<CURRENT-LIABILITIES> 2,212,753
<BONDS> 0
0
0
<COMMON> 116
<OTHER-SE> 4,834,035
<TOTAL-LIABILITY-AND-EQUITY> 6,447,412
<SALES> 431,722
<TOTAL-REVENUES> 431,722
<CGS> 256,890
<TOTAL-COSTS> 1,014,625
<OTHER-EXPENSES> 137,532
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44,518
<INCOME-PRETAX> (720,435)
<INCOME-TAX> 0
<INCOME-CONTINUING> (720,435)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (707,652)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
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