SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
X - Annual report under section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required] for the fiscal year ended January 31, 1997.
___- Transition report under section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] for the transition period from
___ to ___.
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, INC.
__________________________________________________________
(Exact name of registrant as specified in its charter)
Colorado 0-25868 84-1293167
__________________________________________________________
(State or other (Commission I.R.S.Employer
jurisdiction File Number) Identification No.)
of incorporation)
CEA TECH USA, Inc.
7 Waterfront Plaza, Suite 400
500 Ala Moana Blvd.
Honolulu, HI 96813
__________________________________________________________
(Address of Principal Office) (Zip Code)
(808)521-1801
__________________________________________________________
Issuer's telephone number
Securities to be registered under Section 12(b) of the Act:
Title of Each Class - Not applicable
Name of Exchange on which registered - Not applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock, no par value
(Title of class)
Class A Warrants to Purchase Common Stock
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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 ____
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-KSB or any amendment to this Form 10-KSB. ___
State issuer's revenue for its most recent fiscal year: $-0-.
State the aggregate market value of the voting stock held by non-
affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days. (See definition of affiliate in Rule 12b-2):
$510,000.
NOTE: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate
market value of the common equity held by non-affiliates on the basis of
reasonable assumptions, if the assumptions are stated.
(Issuers involved in bankruptcy proceedings during the past five years)
Check whether the issuer has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes ____ No ____
(Applicable only to corporate registrants) State the number of shares
outstanding of each of the issuer's classes of common equity, as of the
latest practicable date.
2,017,000 (as of March 15, 1997)
(Documents incorporated by reference. If the following documents are
incorporated by reference, briefly describe them and identify the part of
the Form 10-KSB (e.g. Part I, Part II, etc.) into which the document is
incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule
424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed
documents should be clearly described for identification purposes.
Transitional Small Business Disclosure
Format (Check one):
Yes ____ No X<PAGE>
PART I
Item 1. Description of Business.
GENERAL. The Company was incorporated under the laws of
the State of Colorado on January 19, 1995, under the name of Global
Capital Access Corporation, for the purpose of being a capital market
access vehicle. It was formed with limited capital and its business plan
at the time of formation was to seek to complete a merger or acquisition
transaction with a company or enterprise desiring to become a public
corporation.
The Company became a reporting company under the Securities
Exchange Act of 1934 on June 12, 1995, as a result of filing a
registration statement on Form 10-SB. Since that date, the Company has
filed all required periodical reports and as of the date hereof, is current
in its reporting obligations under the Securities Exchange Act of 1934.
On July 12, 1996, The Rally Group, Ltd., acquired control of the
Company by purchasing approximately 71% of its then outstanding stock
and approximately 93% of its then outstanding Class A Warrants. In
conjunction with this change in control, all of the previously issued and
outstanding Class B Warrants of the Company were cancelled.
As a precondition to the acquisition of control by The Rally
Group, Ltd., on June 21, 1996, the Company changed its name to
Controlled Environment Aquaculture Technology, Inc. In January,
1997, the Company also adopted the additional assumed name of
CEATECH USA, Inc.
The Company conducted no business activities until the last
quarter of fiscal 1996. At that time, the Company commenced activities
related to implementation of a new business plan involving
commercialization of state of the art technologies for intensive,
sustainable growout production of shrimp and finfish.
On or about October 31, 1996, in a stock for stock exchange, the
Company acquired all of the issued and outstanding stock of Aquacare
Environment, Inc., a Washington corporation, engaged in the business
of development and marketing of equipment and systems used in
intensive land-based fish farming. Acquisition of the stock of Aquacare
was subject to rescission by either party in the event that the audited
financial statements of Aquacare, upon completion, did not reflect a
specified minimum net worth. Pursuant to this provision, on March 3,
1997, the Aquacare transaction was rescinded, retroactive to October 31,
1996. Accordingly, financial information regarding Aquacare is not
included in the Company's financial statement as of January 31, 1997
(the end of its fiscal year).
In late 1996, the Company hired various key management
personnel and incorporated 3 wholly-owned subsidiaries, CEATECH
HHGI Breeding Corp, CEATECH Plantations, Inc., and Hawaii High
Health Seafood Corp. for the purpose of commencing operations.
CEATECH HHGI Breeding Corp. will function as the Aqua Breeding
Center and broodstock repository responsible for genetic development,
hatching and maturation, as well as production of "seed" (nauplii and
post larvae) for Company growout operations or potential sales to
selected clients. CEATECH Plantations, Inc. will operate the
Company's shrimp growout facilities, as well as production and harvest
of shrimp for processing and sales and future recovery of shell waste for
conversion to new products (chitin and by-products). Hawaii High
Health Seafood Corp. will engage in the processing, packing,
distribution and marketing of the Company's plantation raw shrimp and
"value added" cooked and prepared gourmet and dietary products.
On January 31, 1997, the Company received net proceeds of
approximately $496,000 from the sale of 5,000 shares of its Series A,
8.25% Cumulative Convertible Preferred Stock. The rights and
preferences of this class of preferred stock are described elsewhere in
this report (See "Note E" to the Financial Statements).
On or about March 15, 1997 (subsequent to the end of its fiscal
year), in a stock for stock exchange, the Company acquired all of the
issued and outstanding stock of Sunkiss Shrimp Co., Ltd., a Hawaii
corporation. Following completion of the transaction, Sunkiss became
a wholly-owned subsidiary of the Company.
Sunkiss primarily operates as a broodstock repository, hatchery,
and maturation facility for high health genetically improved shrimp, with
some production allocated to growout and sale of full-grown shrimp for
the local Hawaiian market. The current facility of Sunkiss, located in
Kekaha, Hawaii, on the island of Kauai, is fully permitted and consists
of approximately 5 acres. It includes 4 circular one-quarter acre grow-
out ponds, two additional nursery tanks, underground electrical systems,
underground plumbing systems including water supply and drainage
lines, and two small buildings housing office and storage space.
CURRENT OPERATIONS. Management is currently
concentrating on two major aspects of the Company's overall intended
business:
1. The production and expanded growth of a large scale
sustainable intensive shrimp growing agri-business located in the
Hawaiian Islands.
2. The breeding, production and usage of HHGI shrimp
hatchery products ("broodstock" - nauplii and post larvae) for the
Company's own operations, with the sale of surplus production to select
independent growers and community cooperative programs to be initiated
in the Hawaiian Islands, and elsewhere.
It is now generally recognized that shrimp farming is entering a
new era. Producers who do not adopt advanced technologies - domestic
populations of high health and genetically improved shrimp; disease
diagnosis, prevention, and treatment programs; advanced feeds and
management methods; and environmental control - will face the risk of
becoming non-competitive and failing. The time and impetus has arrived
for shrimp farming operations to upgrade from primitive technologies to
second generation technologies. Many of these second generation
technologies were developed and perfected at The Oceanic Institute in
Hawaii, as part of the U.S. Shrimp Farming Program sponsored by the
U.S. Department of Agriculture.
The Company evolved from the studies and research carried on
at The Oceanic Institute, which proved the efficiency of new technolo-
gies and methodologies developed to grow shrimp. Most of the
Company's key technical, management and operating personnel played
significant roles in and supervised many facets of this important work.
In addition, the Company's wholly owned subsidiary, Sunkiss Shrimp
Co. Ltd. at Kekaha, Kauai, Hawaii, has participated for several years in
the U.S. Shrimp Farming Program coordinated by The Oceanic Institute.
The technology used by the Company is an intensive, sustainable
controlled environment shrimp growout process which produces a yield
estimated to be 10 times that of conventional shrimp aquaculture. These
projections are based on controlled full-cycle growout studies conducted
over several years by The Oceanic Institute using prototype ponds. The
Company will continue the same technology using one-acre ponds.
Commercial harvests to date from the Company's newly acquired
subsidiary Sunkiss Shrimp Co., Ltd. have confirmed the yield results
previously experienced and projected in prior research and commercial
efforts. The Company projects that, in Hawaii, it can produce
approximately 40,000 lb. per acre per year (46 weeks) with 3 crops
(harvest). The published shrimp farming industry statistics indicate that
1,000 to 4,000 lb. per acre per year is the present average for
conventional shrimp aquaculture.
An expansion program underway at the Sunkiss facility will
substantially increase the production capabilities of the facility, which
serves as a repository for specific pathogen free shrimp broodstock,
utilizing their eggs as "seed" (nauplii and post larvae) in the hatchery
and maturation facilities to produce the high health genetically improved
shrimp in the Company's growout operations. Any surplus production,
when available, will find a ready market for other selected shrimp
farming operations.
Effective April 18, 1997 (subsequent to the end of its fiscal year),
the Company received approval to access approximately 120 acres
adjacent to the present Sunkiss facilities to commence construction of its
growout facilities. Pending receipt of final subdivision survey and
documentation being performed by the County of Kauai, the Company
will continue its negotiations with the State of Hawaii, Department of
Land and Natural Resources for the lease of substantial additional state
owned land for its projected future expansion and growth. Lease terms
are based on a minimum price per acre plus a royalty on product value
produced. Discussions relating to rates are presently confidential, but
the Company considers them to be fair and reasonable.
In order to finance these activities, the Company intends to
initiate a private placement offering of its securities during the first
quarter of its fiscal year, seeking to raise a minimum of $500,000 and
a maximum of $5,000,000. The securities to be offered are units, each
of which will consist of 20,000 shares of common stock and 10,000
Class A warrants to purchase an additional share of common stock at a
price of $2 per share. The subscription price per unit will be $50,000
(the equivalent of $2.50 per share).
The net proceeds from this offering will be allocated to payment
of costs associated with expansion of the hatchery and maturation
facilities at the Sunkiss facility, construction of up to 52 one-acre
growout ponds to be operated by CEATECH Plantations Inc., on
property adjacent to the current Sunkiss facility, expansion of inventory,
and working capital. Future plans through fiscal year 1999 call for
expenditure of operating revenue for purposes of increasing inventory,
additional expansion of hatchery facilities, and construction of up to 104
additional one-acre growout ponds.
In addition to efforts directed toward the foregoing operational
aspects of the Company's business, management is currently taking steps
necessary to initiate a public trading market in the Company's
outstanding common stock on the NASD Bulletin Board. As soon as the
Company is able to satisfy applicable eligibility requirements,
management intends to seek listing of the Company's outstanding
securities on NASDAQ and/or other recognized securities exchanges.
Item 2. DESCRIPTION OF PROPERTY.
The Company maintains its offices at 7 Waterfront Plaza, Suite
400, 500 Ala Moana Boulevard, Honolulu, Hawaii 96813. These offices
consist of approximately 1,000 square feet of office space pursuant to a
short-term lease agreement for annual rent of $24,000.00. All
administrative, accounting, purchasing, engineering, local sale, and
personnel functions are to be managed from this office. Sales and
marketing functions, including market research and database maintenance
are to be managed by the Director of Marketing from his offices at Dos
Aguilas International Trade Center in El Paso, Texas, with coordination
of Hawaii High Health Seafood Corp. Management in Honolulu, Hawaii.
As of the end of the Company's fiscal year ending January 31,
1997, it maintained no other property or facilities. However, as of
March 15, 1997 (subsequent to the end of its fiscal year), the Company
acquired all of the issued and outstanding stock of Sunkiss Shrimp Co.,
Ltd., a Hawaii corporation, and through this wholly-owned subsidiary,
it acquired certain important physical properties consisting of a breeding,
hatchery and maturation facility located on approximately 5 acres located
in Kekaha, Kauai, Hawaii, which are leased from the State of Hawaii.
In addition, as of April 18, 1997 (subsequent to the end of its fiscal
year), the Company received approval to access an additional 120 acres
adjacent to the Sunkiss facility to begin construction of its growout
facilities.
Item 3. LEGAL PROCEEDINGS.
The Company is not a party to any pending legal proceedings,
and no such proceedings are known to be contemplated.
No director, officer or affiliate of the Company, and no owner
of record or beneficial owner of more than 5.0% of the securities of the
Company, or any associate of any such director, officer or security
holder is a party adverse to the Company or has a material interest
adverse to the Company in reference to pending litigation.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
No matters were submitted to a vote of the security holders of the
Company during the fourth quarter of the fiscal year which ended
January 31, 1997.
PART II
Item 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
There is currently no public trading market for the Company's
securities. The outstanding common stock is held of record by a total
of approximately 50 persons.
Company management intends, during the second quarter of its
current fiscal year, to take steps necessary to initiate a public trading
market in the Company's outstanding common stock on the NASD
Bulletin Board. These steps include locating a registered broker-dealer
willing to act as an initial market maker in the Company's securities,
which will file a Form 15c2-11 Information Statement with the NASD.
There is no assurance as to when or whether a market will develop in
the Company's securities.
No dividends have been declared or paid on the Company's
common stock, and it is not anticipated that any dividends will be
declared or paid in the foreseeable future.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION.
OVERVIEW. The Company's balance sheet as of January 31,
1997, reflects total assets of $611,701, including current assets of
$581,000, in the form of cash. Current liabilities as of January 31,
1997, are $181,136, and stockholders' equity is $430,565. As of
January 31, 1996, the Company's balance sheet reflected total assets of
$865, including current assets of $469 in the form of cash, current
liabilities of $1,210, and total stockholders' equity of ($345). Revenues
for both fiscal years were $0.
The changes in financial condition of the Company from January
31, 1996, to January 31, 1997, are primarily the result of the Company's
sale on January 31, 1997, of 5,000 shares of its Series A, 8.25%
cumulative convertible preferred stock, and receipt by the Company of
loans and advances from shareholders totalling $150,278. Both the sale
of preferred stock and the receipt of funds in the form of loans and
advances from shareholders were completed in conjunction with
implementation of the Company's business plan to commercialize state
of the art technologies for intensive, sustainable growout production of
shrimp and finfish.
RECENT DEVELOPMENTS. As of March 15, 1997
(subsequent to the end of its fiscal year), the Company acquired all of
the issued and outstanding stock of Sunkiss Shrimp Co., Ltd., in a stock
for stock exchange. As of the date of filing this report on Form 10-
KSB, audited financial statements had not yet been completed for
Sunkiss. However, based upon unaudited financial information provided
by Sunkiss, management believes that the acquisition will result in an
increase in total assets of the Company to approximately $1,165,000,
and an increase in shareholder equity to approximately $1,050,000.
LIQUIDITY AND CAPITAL RESOURCES. The Company
requires additional working capital in order to proceed with the
implementation of its business plan. During the first quarter of its
current fiscal year, the Company plans to begin a private placement
offering of its securities seeking to raise a minimum of $500,000 and a
maximum of $5,000,000 of additional funds. There is no assurance as
to when or whether the Company will realize any net proceeds from this
offering. However, unless the Company receives at least a portion of
the anticipated net proceeds of this offering, or funds from some other
source, within the reasonably near future, it will not be able to proceed
with further activities related to the implementation of its business plan.
Assuming the Company is successful in selling its securities in
the private placement offering, $320,000 of the net offering proceeds has
been allocated to expansion of the Sunkiss hatchery facility, $2,080,000
has been allocated to construction of 52 one-acre "growout" ponds,
$1,200,000 has been allocated to investment in inventory, and the
balance of approximately $900,000 has been allocated to working
capital.
Item 7. FINANCIAL STATEMENTS.
See following pages.<PAGE>
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, INC.
(a development stage company)
AND SUBSIDIARIES
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
January 31, 1997
<PAGE>
C O N T E N T S
Report of Independent Certified Public Accountants
Consolidated Balance Sheet
Consolidated Statements of Operations
Consolidated Statement of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Financial Statements
<PAGE>
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, INC.
(a development stage company)
AND SUBSIDIARIES
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Controlled Environment Aquaculture Technology, Inc.
We have audited the accompanying consolidated balance sheet of Controlled
Environment Aquaculture Technology, Inc. (a development stage company)
and Subsidiaries as of January 31, 1997, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the year
then ended, and for the period from January 19, 1995 (date of inception)
through January 31, 1997. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audit. The Company's financial
statements as of and for the year ended January 31, 1996, and for the period
from January 19, 1995 (date of inception) through January 31, 1996, were
audited by other auditors whose report, dated February 8, 1996, expressed
an unqualified opinion on those statements. The financial statements for the
period from January 19, 1995 (date of inception) through January 31, 1996
reflect total revenues and net loss of $-0- and $(9,555), respectively, of the
related totals. The other auditors' report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for such prior period,
is based solely on the report of such other auditors.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit and the report
of other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the aforementioned report of other
auditors, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Controlled
Environment Aquaculture Technology, Inc. and Subsidiaries as of January
31, 1997, and the consolidated results of their operations and their cash
flows for the year then ended, and for the period from January 19, 1995
(date of inception) through January 31, 1997, in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplate
continuation of the company as a going concern; however, the Company has
losses since inception, and substantial doubt exists as to its continuation as
a going concern. Continuation is dependent upon the success of future
operations and obtaining additional capital. Management's plans in regard
to those matters also are described in Note B. The consolidated financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
Grant Thornton LLP
Honolulu, Hawaii
April 4, 1997<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC.
(a development stage company)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
January 31, 1997
<TABLE>
<CAPTION>
<S>
<C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash 581,000
EQUIPMENT - at cost 19,512
ORGANIZATIONAL COSTS 11,189
611,701
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 30,858
Notes payable to stockholder (note C) 80,000
Advances from stockholder 70,278
Total current liabilities 181,136
STOCKHOLDERS' EQUITY (note E)
Preferred stock - authorized, 10,000,000
shares without par; issued and outstanding,
5,000 shares of Series A 8.25% Cumulative
Convertible Preferred Stock at a stated value
of $100 per share 495,800
Common stock - authorized, 100,000,000
shares without par value; issued and
outstanding, 1,885,000 shares 9,585
Additional paid-in capital 2,075
507,460
Less receivable from stockholders (2,000)
Accumulated deficit during
development stage (74,895) 430,565
611,701
</TABLE>
The accompanying notes are an integral part of this statement.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC. (a development stage company)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION> Period from
Year ended Year ended January 19, 1995
January 31, January 31, (inception) through
1997 1996 January 31, 1997
<S> <C> <C> <C>
Revenues - - -
Expenses
Amortization 100 100 204
Bank charges 42 32 90
Directors' fees - - 1,238
Legal and professional 28,876 6,435 36,311
Organizational expenses 35,872 - 35,872
Rent 450 600 1,075
Other - 105 105
NET LOSS (65,340) (7,272) (74,895)
Per share:
Net loss (0.04) - (0.04)
</TABLE>
The accompanying notes are an integral part of these statements.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC. (a development stage company)
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Period from January 15, 1995 (inception)
through January 31, 1997
(page 1 of 2)
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
Number of Number of paid-in
Shares Amount Shares Amount Capital
<S> <C> <C> <C> <C> <C>
Issuance of stock for services
January 19, 1995 ($.005 per share) - - 347,500 1,738 -
Issuance of stock for cash during
January, 1995 ($.005 per share) - - 1,347,500 6,737 -
Rent provided at no charge - - - - 25
Loss for period ended January 31, 1995 - - - - -
Balance at January 31, 1995 - - 1,695,000 8,475 25
Issuance of stock for cash, December
15, 1995, ($.005 per share) - - 18,000 90 -
Issuance of stock for cash, January
12, 1996 ($.005 per share) - - 2,000 10 -
Issuance of stock for cash, January
24, 1996 ($.005 per share) - - 2,000 10 -
Rent provided at no charge - - - - 600
Loss for year ended January 31, 1996 - - - - -
Balance at January 31, 1996 - - 1,717,000 8,585 625
Issuance of stock, September
30, 1996 ($.01 per share) - - 200,000 1,000 1,000
Issuance of stock, November 1, 1996
(note E) - - 300,000 - -
Stock contributed back to Company,
January 31, 1997 (note E) - - (332,000) - -
Issuance of stock for cash, January
31, 1997 ($100 per share)
(note E) 5,000 495,800 - - -
Rent provided at no charge - - - - 450
Loss for the year ended
January 31, 1997 - - - - --
Balance at January 31, 1997 5,000 495,800 1,885,000 9,585 2,075
</TABLE>
The accompanying notes are an integral part of these statements.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC. (a development stage company)
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Period from January 15, 1995 (inception)
through January 31, 1997
(page 2 of 2)
<TABLE>
<CAPTION>
Receivable from Deficit Accumulated during Total Stockholders'
Stockholders the development stage equity
<S> <C> <C> <C>
Issuance of stock for services
January 19, 1995 ($.005 per share) - - 1,738
Issuance of stock for cash during
January, 1995 ($.005 per share) - - 6,737
Rent provided at no charge - - 25
Loss for period ended January 24, 1995 - (2,283) (2,283)
Balance at January 31, 1995 - (2,283) 6,217
Issuance of stock for cash, December
15, 1995 ($.005 per share) - - 90
Issuance of stock for cash, January
12, 1996 ($.005 per share) - - 10
Issuance of stock for cash, January
24, 1996 ($.005 per share) - - 10
Rent provided at no charge - - 600
Loss for year ended January 31, 1996 - (7,272) (7,272)
Balance at January 31, 1996 - (9,555) (345)
Issuance of stock September
30, 1996 ($.01 per share) (2,000) - -
Issuance of stock, November 1, 1996,
(note E) - - -
Stock contributed back to Company,
January 31, 1997 (note E) - - -
Issuance of stock for cash, January
31, 1997 ($100 per share)
(note E) - - 495,800
Rent provided at no charge - - 450
Loss for the year ended
January 31, 1997 - (65,340) (65,340)
Balance at January 31, 1997 (2,000) (74,895) 430,565
</TABLE>
The accompanying notes are an integral part of these statements.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC. (a development stage company)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION> Period from
Year ended Year ended January 19, 1995
January 31, January 31, (inception) through
1997 1996 January 31, 1997
<S> <C> <C> <C>
Increase (decrease) in cash
Cash flows from operating activities:
Net loss (65,340) (7,272) (74,895)
Adjustments to reconcile net loss to
net cash used in operating activities:
Rent 450 600 1,075
Amortization expense 100 100 204
Stock issued for services - - 1,238
Increase in accounts payable 29,648 1,210 30,858
Net cash used in operating
activities (35,142) (5,362) (41,520)
Cash flows from investing activities:
Payments for purchase of equipment (19,512) - (19,512)
Payments for organizational costs (10,893) - (10,893)
Net cash used in investing
activities (30,405) - (30,405)
Cash flows from financing activities:
Proceeds from issuance of preferred
stock 495,800 - 495,800
Proceeds from issuance of common
stock - 110 6,847
Proceeds from notes payable to
stockholder 80,000 - 80,000
Advances from stockholder 70,278 - 70,278
Net cash provided by financing
activities 646,078 110 652,925
NET INCREASE (DECREASE)
IN CASH AND
CASH EQUIVALENTS 580,531 (5,252) 581,000
Cash and cash equivalents at beginning
of period 469 5,721 -
Cash and cash equivalents at end
of period 581,000 469 581,000
</TABLE>
Supplemental disclosure on noncash investing and financing activities:
During 1997, the Company issued 200,000 shares of common stock at $0.01 per
share in exchange for a receivable from stockholders as an incentive to certain
key employees and for past services rendered.
Also, during 1997, the Company issued 300,000 shares of common stock and a
stockholder contributed back 332,000 shares of common stock to the Company.
The fair value of these shares of common stock is not reliably measurable.
The Company has incurred rent expense of $1,075 since inception which has been
designated as additional paid-in capital.
The accompanying notes are an integral part of these statements.<PAGE>
CONTROLLED ENVIRONMENTAL AQUACULTURE
TECHNOLOGY, INC. (a development stage company)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS JANUARY 31, 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Controlled Environment Aquaculture Technology, Inc. ("the
Company"), formerly known as Global Capital Access Corporation, was
incorporated under the laws of the State of Colorado on January 19,
1995.
1. DEVELOPMENT STAGE COMPANY. The Company is an
enterprise in the development stage as defined by Statement No. 7 of the
Financial Accounting Standards Board and has not engaged in any
business other than organizational efforts. The Company has made an
aggressive commitment to commercialize state of the art, second
generation technologies for intensive, sustainable growout production of
shrimp and finfish, utilizing high health genetically improved (HHGI)
specific pathogen free (SPF) broodstock, technologies and breeding
techniques developed and verified at commercial scales in the State of
Hawaii.
2. PRINCIPLES OF CONSOLIDATION. The consolidated
financial statements include the accounts of Controlled Environment
Aquaculture Technology, Inc. and its wholly-owned subsidiaries, C.E.A.
Tech HHGI Breeding Corp., CEA Tech Plantations, Inc., and Hawaii
High Health Seafood Corp. Significant intercompany transactions and
amounts have been eliminated in consolidation.
3. USE OF ESTIMATES. In preparing the Company's consolidated
financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
4. FISCAL YEAR. The Company has selected a January 31 fiscal
year end.
5. ORGANIZATIONAL COSTS. The Company is amortizing
organizational costs over a sixty-month period.
6. INCOME TAXES. The Company files a consolidated federal
income tax return. The subsidiaries pay to or receive from the Parent
Company the amount of federal income taxes they would have paid or
received had the subsidiaries filed separate federal income tax returns.
Deferred tax assets and liabilities are reflected at currently enacted
income tax rates applicable to the period in which the deferred tax assets
or liabilities are expected to be realized or settled. As changes in tax
laws or rates are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes.
7. NET LOSS PER SHARE. Net loss per share is based on the
weighted average number of shares outstanding of 1,853,652 for 1997,
1,697,395 for 1996, and 1,772,363 for the period from January 19, 1995
(inception) through January 31, 1997.
8. CONCENTRATION OF CREDIT RISK - CASH. The Company
maintains its cash balances in one financial institution located in
Honolulu, Hawaii, which at times, may exceed federally insured limits.
The Company has not experienced any losses in such account and
believes it is not exposed to any significant credit risk on cash and cash
equivalents.
9. STATEMENT OF CASH FLOWS. For the purposes of
presentation in the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments purchased with an original
maturity of three months or less to be cash equivalents.
NOTE B - GOING CONCERN
The accompanying consolidated financial statements have been prepared
in conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern. However,
the Company has sustained net losses since inception and continuation
is dependent upon the success of future operations and obtaining
additional capital.
The Company plans to utilize and breed high health, genetically
improved and specific pathogen free shrimp stocks. These stocks will
be used in a controlled environment, super intensive aquaculture
production facility. The Company plans to build this facility which will
utilize state-of-the-art technology. These breeding stocks and
technologies have been developed over the last ten years by the U.S.
Shrimp Farming Program under the direction of the Oceanic Institute.
Sunkiss Shrimp Co, Ltd. (Sunkiss) has participated in this program for
the last four years.
In accordance with the terms of an Agreement and Plan or
Reorganization dated January 14, 1997, on March 15, 1997, the
Company acquired all of the issued and outstanding stock of Sunkiss, a
Hawaii corporation, in a stock for stock exchange intended to qualify as
a tax-free reorganization under Section 368(a)(1)(B) of the Internal
Revenue Code of 1986. In the transaction, the Company issued 100,000
shares of its common stock to the former stockholders of Sunkiss, and
agreed to issue up to 100,000 additional shares of its common stock
("earn-out" shares) to the stockholders of Sunkiss upon completion of
certain conditions. Upon completion of the transaction, Sunkiss became
a wholly-owned subsidiary of the Company and the Company became
operational.
The conditions for issuance of the earn-out shares include (1) obtaining
a lease from the State of Hawaii on approximately 78 acres of real
property, (2) completion of construction of expanded hatchery facilities
and one-half acre growout ponds, (3) completion of stocking of the first
36 one-acre growout ponds on the newly leased property, and (4)
completion of the first full harvest of the 36 ponds. There is no
assurance as to when or whether these conditions will be satisfied.
Sunkiss primarily operates as a breeding, hatchery, and maturation
facility for high health genetically improved shrimp, with some
production allocated to growout and sale of full-grown shrimp for the
local Hawaiian market. The current facility of Sunkiss consists of
approximately five acres located in Kekaha, Hawaii, on the island of
Kauai. An expansion program now underway will increase the
production capability to raise sufficient brood stock and seed (nauplii and
post larvae) to supply all stock for the growing operations of the
Company, with sales of surplus, if any, to selected Hawaiian and U.S.
shrimp farm growing operations. The Company is also currently
negotiating with the State of Hawaii (State) for acquisition of leases on
additional adjoining acreage for the purpose of expanding future growout
operations.
The Company is planning a private placement offering up to $5,000,000
at $2.50 per share of restricted common stock to secure additional capital
which will be required for it to pursue its objectives in the field of
sustainable intensive aquaculture, particularly as it relates to the breeding
and growing of high health, genetically improved shrimp.
NOTE C - NOTES PAYABLE TO STOCKHOLDER
Notes payable to stockholder consist of two notes payable with unpaid
principal and interest at the rate of 8.25% payable on or before July 31,
1997. The stockholder has agreed to convert these notes to restricted
common stock at $2.50 per share in a private placement to be offered
prior to July 31, 1997.
NOTE D - INCOME TAXES
At January 31, 1997, an operating loss carryforward of approximately
$74,000 expiring in various years through 2012 is available to offset
future taxable income for financial reporting purposes. The deferred tax
asset resulting from the tax benefit of this operating loss carryforward
of $29,500 has been reduced in full by a valuation allowance. The
valuation allowance was increased by $28,000 during 1997 based upon
management's evaluation of the likelihood of realization.
NOTE E - STOCKHOLDERS' EQUITY
On November 1, 1996, the Company issued 50,000 shares of common
stock in consideration for services performed and for future services.
Also, on November 1, 1996, the Company issued 250,000 shares of
common stock in a trust for the benefit of new and future key employees
of the Company being recruited. On January 31, 1997, the shares were
reissued and transferred to such employees. The fair value of the
common stock issued, the services received and the future services are
not reliably measurable.
On January 31, 1997, a stockholder contributed back to the Company
332,000 shares of Company's common stock for no consideration. The
fair value of these shares is not reliably measurable. These shares are
to be issued in connection with the planned private placement offering.
As of January 31, 1997, the Company had 1,885,000 shares of its
common stock issued and outstanding, together with 1,875,000 Class A
warrants to purchase one additional share of common stock at $2.00.
All previously issued and outstanding Class B warrants were canceled in
conjunction with a change in control of the Company which occurred on
July 12, 1996. The warrants are exercisable from August 1, 1995, until
December 31, 2001, and are not cancelable. The shares of common
stock and warrants are restricted under Rule 144.
The Company also reserves the right to extend the expiration date or
reduce the exercise price of any or all classes of warrants upon giving
five days notice. The warrants can only be exercised when a current
registration statement is on file.
The Board of Directors determined a stated value for the common stock
of $0.005 per share, with any balance paid per share designated as
additional paid-in capital.
On January 31, 1997, the Company issued 5,000 shares of the Series A
8.25% cumulative convertible preferred stock at a price of $100 per
share. Proceeds from the sale of preferred stock were $495,800, net of
expenses. The convertible preferred stock is redeemable, in whole or
in part, at the option of the Company, at a redemption price of $110 per
share, plus any accrued and unpaid dividends. To the extent not
previously redeemed or converted into shares of common stock, the
Company shall redeem all issued and outstanding shares of this Series A
in quarterly installments of not less than $5 per share beginning on
December 15, 1999, and continuing thereafter until December 15, 2004,
at the mandatory redemption price of $100 per share, plus any accrued
and unpaid dividends. The convertible preferred stock has a liquidation
value of $100 and is convertible at the option of the holder into common
stock, at a conversion price of $100 per share, subject to adjustment in
certain events. Dividends on every share of preferred stock shall
accumulate, whether or not earned or declared, for a period of one year
from date of issuance. Thereafter, dividends at an annual rate of $8.25
per share are payable quarterly in arrears, when and as deemed by the
Board of Directors. The payment of dividends on this Series A shall be
preferred and in priority over dividends upon the common stock of the
Company. Holders of preferred stock have voting rights, the same and
identical as holders of common stock, and they are entitled to elect one
member of the Board of Directors. The shares of preferred stock are
restricted under Rule 144. The proceeds are to be utilized for the start-
up and construction of facilities to breed and grow shrimp and pay off
of one-half of the Sunkiss debt to the State, Department of Agriculture.
NOTE F - REGISTRATION OF SECURITIES
The Company has registered its common shares and units under Section
12(g) of the 1934 Exchange Act.
NOTE G - RELATED PARTY TRANSACTIONS
One of the Company's director and former vice president is a partner in
the law firm which is the Company's general and securities counsel.
Since inception, the Company has incurred $22,511 for legal services
rendered.
The former president of the Company provided office space at no charge
to the Company. For purposes of the financial statements, the Company
accrued $50 per month as additional paid-in capital for this use.
NOTE H - FINANCIAL INSTRUMENTS
The financial statements include various estimated fair value information
as of January 31, 1997. Such information, which pertains to the
Company's financial instruments, does not purport to represent the
aggregate net fair value of the Company.
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it was practicable
to estimate that value:
Cash: The carrying amount approximates its fair value.
The fair value of notes payable to stockholder and advances from a
stockholder is not practicable to estimate primarily due to the
relationship of the parties and the nature of these financial instruments.
<PAGE>
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUN-
TANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
As of the end of its fiscal year ending January 31, 1997, the
Company had no change in, or disagreement with, its principal
independent accountant since the date of inception. However,
subsequent to the end of its fiscal year, the Company did change
accountants.
Comiskey & Company, P.C., 2851 S. Parker Road, Suite 1125,
Aurora, Colorado 80014-9921, the independent accountants previously
engaged as the principal accountants to audit the Company's financial
statements, was dismissed, effective March 15, 1997. The report of
Comiskey & Company, P.C., on the financial statements of the
registrant for the immediately preceding fiscal years and for the initial
audit of the registrant at its inception, did contain an on-going concern
qualification but did not contain any other adverse opinion, disclaimer
of opinion or qualification as to uncertainty, audit scope or accounting
principles. The decision to change accountants was recommended and
approved by the board of directors of the registrant.
There were no disagreements with Comiskey & Company, P.C.,
at any time, on any matters of accounting principles or practices,
financial statement disclosures, or auditing scope or procedures.
The registrant has engaged a new independent accountant, Grant
Thornton LLP, Certified Public Accountants, 1132 Bishop Street, Suite
1000, Honolulu, Hawaii 96713, which completed the audited financial
statements included in this report. The date of the engagement was
March 15, 1997.
<PAGE>
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF
THE EXCHANGE ACT.
The names, ages and positions of all directors and executive
officers serving the Company as of the end of its fiscal year were as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Positions Held
J.A. Garcia 69 President, Chief Executive
Officer, & Chairman of the
Board
Ronald Ilsley 56 Chief Financial Officer,
Treasurer & Director
Ernest K. Dias 59 Senior Vice President, General
Manager of Operations &
Director
Gary S. Joiner 47 Secretary & Director
Paul Bienfang
Ph.D 49 Senior Vice President, Director
of Environmental
Compliance and Technology.
</TABLE>
BIOGRAPHICAL INFORMATION
J.A. GARCIA. President, Chief Executive Officer and Chairman of the
Board of Directors.
Mr. Garcia has served as President, Chief Executive Officer and
Chairman of the Board of The Rally Group, Ltd., Los Angeles,
California, a venture capital and financial consulting firm, since 1988.
Mr. Garcia's exposure to the shrimp industry began in the late
1950s when he served on the Board of Directors of Pearl Island Seafood
of Panama. He helped finance their expansion program and served as
exclusive marketing agent for shrimp sales in the United States. For
over 30 years since then, he has served as officer, director, and principal
shareholder of several publicly traded companies. He has demonstrated
a strong ability to develop, structure, and organize new businesses and
development stage companies.
Mr. Garcia is a graduate of the Georgetown University of
Foreign Service where he received his Bachelor of Science in Foreign
Service.
RONALD ILSLEY. Chief Financial Officer, Treasurer and Director.
Mr. Ilsley has served as Vice President and Chief Financial
Officer of Chemoil Corporation, San Francisco, California, since 1994.
Chemoil Corporation is recognized as the largest independent integrated
supplier of marine fuels in the United States. Chemoil's annual sales are
in excess of $400 million.
Mr. Ilsley served from 1985 - 1994 as Treasurer and Director of
Finance for Santa Fe International Corporation, Los Angeles, California,
a major multi-national company publicly traded on the New York Stock
Exchange.
Mr. Ilsley has served as Senior Executive and Manager for
domestic and international investment banking groups which include the
European American Bank, New York, New York, and Wells Fargo
Bank, N.A., San Francisco, California.
Mr. Ilsley received his Bachelor of Arts degree from California
State University Northridge and is a graduate of Pepperdine University
Graduate School of Business and Finance, Los Angeles, California. He
has served as a faculty member and lecturer in the Graduate School of
Banking and International Finance at Golden Gate University, San
Francisco, California.
ERNEST K. DIAS. Senior Vice President, General Manager of
Operations and Director.
Mr. Dias has served as Manager of Facilities Development and
Construction for The Oceanic Institute, Honolulu, Hawaii, since 1988.
As Manager, Mr. Dias was responsible for the planning, implementation
and construction of satellites on the islands of Hawaii and Molokai for
both The Center for Applied Aquaculture at Makapuu Point, Oahu, and
The Oceanic Institute. Mr. Dias directed the design and construction of
the Maryut Fish Farming Company hatchery and facilities in Alexandria,
Egypt. This operation consists of a 6,000 acre facility and hatchery,
construction of which was financed by World Bank/U.S.A.I.D. Mr.
Dias represented The Oceanic Institute in all negotiations with World
Bank/U.S.A.I.D., the Egyptian government and private sector
participants.
From 1960 to 1983, Mr. Dias held various key supervisory and
management positions with several major construction and engineering
firms which included: Peter Kiewit & Sons, Guy F. Atkinson, Gordon
Ball, Kassler Corp., and Polich-Benedict.
Mr. Dias received a Bachelor of Science in Engineering from San
Jose State University, San Jose, California. Mr. Dias attended the
Pepperdine University Graduate School of Business, Los Angeles,
California.
GARY S. JOINER. Secretary and Director.
Mr. Joiner is a partner at the office of Frascona, Joiner &
Goodman, P.C., a prominent law firm in Boulder, Colorado. His
specialty fields include, business organization, tax issues and financial
planning, securities law and estate planning.
He serves as officer, director, and principal shareholder of
several privately and publicly held companies. He has demonstrated a
strong ability to structure and organize new businesses and development
stage companies.
Mr. Joiner received a Bachelor of Science in Economics from
Northwestern University, Evanston, Illinois, in 1972. He received his
Juris Doctor from the University of Denver, Colorado of Law in 1975.
He also received his Masters of Law in taxation from the University of
Denver in 1978. Mr. Joiner is a certified financial planner. His
professional affiliations include the American Bar Association and the
Institute of Certified Financial Planners.
PAUL BIENFANG, Ph.D. Senior Vice President, Environmental
Compliance and Technology.
Dr. Bienfang has served as Vice President, Senior Scientist, and
Co-Chief Executive Officer for The Oceanic Institute where he has
worked since 1973. Dr. Bienfang was responsible for all phases of
research, development, and operations management at the Institute.
He formerly served on the Executive Committee for the Tropical
and Subtropical Aquaculture Region Center and the Board of Directors
of the Western Association of Marine Laboratories. He is currently a
member of the Governor's Hawaiian Aquaculture Council. He is a
recognized authority and evaluator of scientific research for the United
States government as well as technical journals in oceanography,
aquaculture, fisheries and marine environment.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
To the best knowledge and belief of the Company, each of the
directors, officers or beneficial owners of more than 10% of the
Company's securities named herein has filed all reports required to be
filed by Section 16(a) of the Securities Exchange Act of 1934. None of
such reports were filed on a timely manner following the changes in
control of the Company described herein.
Item 10. EXECUTIVE COMPENSATION.
During the fiscal year ending January 31, 1997, no officer or
director received any remuneration or other compensation from the
Company. It is anticipated that regular monthly compensation will be
established for the Company's executive officers in conjunction with the
commencement of regular business operations during the fiscal year
which commenced February 1, 1997. As of the end of its current fiscal
year, the Company had no stock option, retirement, pension, or
profit-sharing programs for the benefit of directors, officers or other
employees.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.
The following table sets forth, as of the end of the Company's
most recent fiscal year, the number of shares of Common Stock owned
of record and beneficially by executive officers, directors and persons
who hold 5.0% or more of the outstanding Common Stock of the
Company. Also included are the shares held by all persons who were
executive officers and directors as of the end of the most recent fiscal
year, as a group.
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address Amount and Nature of Percent of
of Beneficial Owner Owned Beneficially Class Owned
J.A. Garcia<F1>
and Ruth E. Garcia
16105 Woodvale Road
Encino, CA 91436 300,000<F2> 14.87%
Ernest K. Dias<F1> 300,000 14.87%
6871 Niumalu Loop
Honolulu, HI 98625
Ronald L. Ilsley<F1> 150,000 7.44%
1014 Riverside Dr., #144
Burbank, CA 91506
Gary S. Joiner<F1>
4750 Table Mesa Drive
Boulder, Colorado 80303 51,604 2.56%
Paul Bienfang, Ph.D.<F1> 50,000 2.48%
3586 Kumu Place
Honolulu, HI 96822
All officers and directors
as a group (5 in number) 851,604<F2> 42.22%
<FN>
<F1>
The person listed is an officer, a director, or both, of the Company.
<F2>
Does not include an additional 100,000 shares owned by The Rally
Group, Ltd., a California corporation, of which Mr. Garcia may be
deemed to be the beneficial owner.
</FN>
</TABLE>
The foregoing table does not take into account 1,875,000 shares which
may be acquired upon exercise of outstanding Class A warrants which
expire December 31, 2001. Such warrants may not be exercised unless
a registration statement for the shares underlying the warrants is filed
and becomes effective, and no such registration statement is currently
effective. The table also does not take into account up to 250,000 shares
of common stock issuable upon conversion of the 5,000 presently
outstanding shares of Series A, 8.25% cumulative convertible preferred
stock, held by Unity House, Inc. Unity House, Inc. is a non-profit
organization for the benefit of unionized workers. Founded and funded
originally by The Hawaii Teamster and Allied Workers Union, Local
996, and The Hotel, Restaurant and Bartenders Union, Local 5. The
Unity House portfolio funds and provides multiple benefits and services
for its membership, including child care, college scholarships, retiree
center and activities, low cost financing for home purchases, low cost
housing projects, and legislative lobby for member issues.
As of the end of its fiscal year, the Company had an agreement
in principle to acquire all of the issued and outstanding capital stock of
Sunkiss Shrimp Co., Ltd., a Hawaii corporation, in exchange for the
issuance of authorized but previously unissued shares of its common
stock. On March 15, 1997 (subsequent to the end of its fiscal year), the
Company completed the contemplated acquisition. As a result of
completion of the acquisition of all of the issued and outstanding stock
of Sunkiss Shrimp Co., Ltd., and the issuance of 32,000 shares for
members of the Technical Advisory Board, the total number of issued
and outstanding shares of the registrant increased from 1,885,000 to
2,017,000. The respective percentages of ownership shown in the
preceding table are based upon the assumption that the Company has
2,017,000 shares of common stock issued and outstanding.
Item 12. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
The Company was incorporated under the laws of the State of
Colorado on January 19, 1995, as Global Capital Access Corporation,
for the purpose of being a capital market access vehicle. Gary S. Joiner,
who is currently an officer and director of the Company, was one of the
promoters, and was an officer, director and principal shareholder of
Global Capital Access Corporation.
On July 12, 1996, The Rally Group, Ltd. acquired control of the
Company by purchasing 1,219,500 shares of common stock, representing
approximately 71% of the then issued and outstanding common stock,
and 2,539,000 Class A Warrants, representing approximately 93% of the
then issued and outstanding Class A Warrants of the Company. The
Rally Group, Ltd., purchased such shares and warrants from the then
principal shareholders of the Company, one of whom was Mr. Joiner.
The total purchase price paid by The Rally Group, Ltd. for such shares
and warrants was $30,000.
The Rally Group, Ltd. is controlled by J.A. Garcia, who is the
President, Chief Executive Officer, and a director of the Company.
The Rally Group, Ltd. acted as principal and agent in acquiring
such shares and warrants. It subsequently transferred a portion of such
shares and warrants to various key personnel as incentive to join the
Company, including 300,000 shares which were transferred to J.A. and
Ruth E. Garcia, as community property. In addition, The Rally Group,
Ltd. contributed 332,000 shares of common stock and 864,000 Class A
warrants back to the Company, without compensation, in order to
minimize potential dilution to other shareholders.
Item 13. EXHIBITS AND REPORTS ON FORM 10-KSB.
The Exhibits listed below are filed as part of this Annual Report.
<TABLE>
<CAPTION>
<S> <C>
Exhibit No. Document
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Warrant Agent Agreement
4.2 Specimen Class A Warrant Certificate
21 List of Subsidiaries
27 Financial Data Schedule
/TABLE
<PAGE>
The Company filed two reports on Form 8-K during the last
quarter of its fiscal year ending January 31, 1997, both of which were
dated October 31, 1996. The first such report which was filed
November 15, 1996, was for the purpose of reporting the acquisition of
all of the issued and outstanding stock of Aquacare Environment, Inc.
The second such report, which was filed February 11, 1997, was for the
purpose of reporting the audited financial statements of Aquacare
Environment, Inc., which had not been included in the initial filing.
Subsequent to the end of its fiscal year, the Company filed a third report
on Form 8-K which was also dated October 31, 1996. This report was
filed March 18, 1997, for the purpose of reporting the rescission of the
Aquacare transaction, retroactive to October 31, 1996
Signatures
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
CONTROLLED ENVIRONMENT AQUACULTURE TECHNOLOGY,
INC.
By: /s/ J. A. GARCIA
J.A. Garcia
President, CEO and Director
Date: April 25, 1997
By: /s/ RONALD L. ILSLEY
Ronald L. Ilsley
Chief Financial Officer and Director
Date: April 25, 1997
By: /s/ ERNEST K. DIAS
Ernest K. Dias
Director
Date: April 25, 1997
By: /s/ GARY S. JOINER
Gary S. Joiner
Secretary
Date: April 25, 1997
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
X - Annual report under section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required] for the fiscal year ended January 31, 1997.
CONTROLLED ENVIRONMENT AQUACULTURE
TECHNOLOGY, INC.
__________________________________________________________
(Exact name of registrant as specified in its charter)
Colorado 0-25868 84-1293167
__________________________________________________________
(State or other (Commission I.R.S.Employer
jurisdiction File Number) Identification No.)
of incorporation)
CEA TECH USA, Inc.
7 Waterfront Plaza, Suite 400
500 Ala Moana Blvd.
Honolulu, HI 96813
__________________________________________________________
(Address of Principal Office) (Zip Code)
(808)521-1801
__________________________________________________________
Issuer's telephone number
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C>
Exhibit
No. Document
3.1 Articles of Incorporation
3.2 Bylaws
4.1 Warrant Agent Agreement
4.2 Specimen Class A Warrant
Certificate
21 List of Subsidiaries
27 Financial Data Schedule
/TABLE
<PAGE>
EXHIBIT 3.1 - ARTICLES OF INCORPORATION (as amended)
Pursuant to the provisions of the Colorado Business Corporation
Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
FIRST: The name of the corporation is Controlled Environment
Aquaculture Technology, Inc.
SECOND: The corporation shall have and may exercise all of the
rights, powers and privileges now or hereafter conferred upon
corporations organized under the laws of Colorado. In addition, the
corporation may do everything necessary, suitable or proper for the
accomplishment of any of its corporate purposes. The corporation may
conduct part or all of its business in any part of Colorado, the United
States or the world and may hold, purchase, mortgage, lease and convey
real and personal property in any of such places.
THIRD: The aggregate number of shares which the corporation
shall have authority to issue is one hundred ten million (110,000,000)
shares of which a portion shall be common stock and a portion shall be
preferred stock, all as described below.
A. Common Stock. The aggregate number of common
shares which the corporation shall have the authority to issue is one
hundred million (100,000,000), which shares shall be designated
"Common Stock." Subject to all the rights of the Preferred Stock as
expressly provided herein, by law or by the Board of Directors pursuant
to this Article, the Common Stock of the corporation shall possess all
such rights and privileges as are afforded to capital stock by applicable
law in the absence of any express grant of rights or privileges in these
Articles of Incorporation, including, but not limited to, the following
rights and privileges:
(a) dividends may be declared and paid or set apart for
payment on the Common Stock out of any assets or funds of the
corporation legally available for the payment of dividends;
(b) the holders of Common Stock shall have unlimited voting
rights, including the right to vote for the election of directors and on all
other matters requiring stockholder action. Each holder of Common
Stock shall have one vote for each share of Common Stock standing in
his name on the books of the corporation and entitled to vote.
Cumulative voting shall not be permitted in the election of directors or
otherwise.
(c) on the voluntary or involuntary liquidation, dissolution or
winding up of the corporation, and after paying or adequately providing
for the payment of all of its obligations and amounts payable in
liquidation, dissolution or winding up, and subject to the rights of the
holders of Preferred Stock, if any, the net assets of the corporation shall
be distributed pro rata to the holders of the Common Stock.
B. Preferred Stock. The aggregate number of preferred
shares which this corporation shall have the authority to issue is ten
million (10,000,000) shares, each with no par value, which shares shall
be designated "Preferred Stock." Shares of Preferred Stock may be
issued from time to time in one or more series as determined by the
Board of Directors. The Board of Directors is hereby authorized, by
resolution or resolutions, to provide from time to time, out of the
unissued shares of Preferred Stock not then allocated to any series of
Preferred Stock, for a series of the Preferred Stock. Each such series
shall have distinctive serial designations. Before any shares of any such
series of Preferred Stock are issued, the Board of Directors shall fix and
determine, and is hereby expressly empowered to fix and determine, by
resolution or resolutions, the voting powers, full or limited, or no voting
powers, and the designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations and
restrictions thereof as provided by Colorado law. Before issuing any
shares of a class or series, the corporation shall deliver to the secretary
of state for filing articles of amendment to these articles of incorporation
that set forth information required by Colorado law, including but not
limited to, the designations, preferences, limitations, and relative rights
of the class or series of shares.
C. Voting. Unless otherwise ordered by a court of
competent jurisdiction, at all meetings of shareholders one-third of the
shares of a voting group entitled to vote at such meeting, represented in
person or by proxy, shall constitute a quorum of that voting group.
D. Series A 8.25% Cumulative Convertible Preferred Stock.
A class of preferred stock designated as the Series A 8.25% Cumulative
Convertible Preferred Stock is hereby created out of the Preferred Stock
authorized by these Articles of Incorporation. The aggregate number of
Series A Cumulative Convertible Preferred shares which this corporation
shall have the authority to issue is five thousand (5,000) shares, each
with no par value, which shares shall be designated "as the Series A
Preferred Stock."
The preferences, limitations and relative rights of this Series A
Preferred Stock are as follows:
(1) Dividends.
Dividends on each share of this Series A shall accumulate,
whether or not earned or declared, for a period of one year from the
date of its issuance. Thereafter, the holders of record of shares of this
Series A shall be entitled to receive, when and as declared by the board
of directors out of funds legally available therefor, cash dividends at the
rate of $8.25 per share per annum, payable quarterly, in arrears, on such
dates as may from time to time be determined by the board of directors.
The payment of dividends on this Series A shall be in preference to and
in priority over dividends upon the Common Stock of the Corporation
and all other shares of Preferred Stock of the Corporation which are by
their terms expressly made junior as to dividends to this Series A, but
subject to the prior rights of the holders of shares of other Series of
Preferred Stock of the Corporation which are by their terms expressly
made senior as to dividends to this Series A. The holders of shares of
this Series A shall not be entitled to any dividends other than the cash
dividends provided for in this Section 1. No dividends shall be declared
or paid on the Common Stock of the Corporation during any period
when the Corporation has failed to pay a quarter-annual dividend on this
Series A for any preceding quarter.
(2) Liquidation.
In the event of a liquidation, dissolution, or winding up of the
Corporation, the holders of shares of this Series A shall be entitled to
receive out of the assets of the Corporation an amount equal to $100 per
share, plus any accrued and unpaid dividends thereon to the date fixed
for distribution, in preference to and in priority over any such
distribution upon the Common Stock of the Corporation and all other
shares of Preferred Stock of the Corporation which are by their terms
expressly made junior as to liquidation preferences to this Series A, but
subject to the prior rights of the holders of shares of other Series of
Preferred Stock of the Corporation which are by their terms expressly
made senior as to liquidation preferences to this Series A. If the assets
of the Corporation are not sufficient to pay such amount in full to the
holders of this Series A and all other Series of Preferred Stock of the
Corporation ranking equally as to liquidation preferences with the shares
of this Series A, then the holders of this Series A and of all such other
Series shall share ratably in any such distribution of assets in accordance
with the amounts which would be payable on such distribution if the
amounts to which the holders of this and all such other Series are
entitled were paid in full.
(3) Redemption.
To the extent not previously converted into shares of common
stock, this Series A may be redeemed, in whole or in part, at the option
of the Corporation by resolution of its board of directors, at any time,
and from time to time, at a redemption price per share of $110, plus any
accrued and unpaid dividends thereon to the date fixed for redemption.
To the extent not previously redeemed or converted into shares
of common stock, the Corporation shall redeem all issued and
outstanding shares of this Series A, from any source of funds legally
available for such purpose, in quarterly installments of not less than
$125,000.00, beginning on December 15, 2002, and continuing
thereafter on each March 15, June 15, September 15 and December 15,
until December 15, 2007, whereupon any remaining outstanding shares
of this Series A shall be redeemed. For purposes of this mandatory
redemption, the redemption price shall be $100.00 per share, plus any
accrued and unpaid dividends thereon to the date fixed for redemption.
In the event that less than the entire number of the shares of this
Series A outstanding as of any redemption date is to be redeemed by the
Corporation at that time, the shares to be redeemed shall be selected by
lot in a manner determined by the board of directors of the Corporation.
Not less than ten, nor more than thirty days prior to the date
fixed for any redemption of this Series A or any part thereof, a notice
specifying the time and place of such redemption shall be given by first-
class mail, postage prepaid, to the holders of record of the shares of this
Series A selected for redemption at their respective addresses as the
same shall appear on the books of the Corporation, but no failure to mail
such notice or any defect therein or in the mailing thereof shall affect the
validity of the proceedings for redemption. Any notice which was
mailed in the manner herein provided shall be conclusively presumed to
have been duly given whether or not the holder receives the notice.
Until December 15, 2001, after the giving of any notice of
redemption and prior to the close of business on the date fixed for such
redemption, the holders of shares of this Series called for redemption
may convert such stock into Common Stock of the Corporation in
accordance with the conversion privileges set forth in Section 5. After
the date fixed for the redemption of shares of this Series A by the
Corporation, the holders of shares selected for redemption shall cease to
be stockholders, with respect to such shares and shall have no interest
in or claims against the Corporation by virtue thereof and shall have no
voting or other rights with respect to such shares, except the right to
receive the moneys payable upon such redemption from the Corporation,
without interest thereon, upon surrender (and endorsement, if required
by the corporation) of their certificates, and the shares represented
thereby shall no longer be deemed to be outstanding. The Corporation
may, at its option, at any time after a notice of redemption has been
given, deposit the redemption price for all shares of this Series A
designated for redemption and not yet redeemed, plus any accrued and
unpaid dividends thereon to the date fixed for the redemption, with the
transfer agent or agents for this Series A, as a trust fund for the benefit
of the holders of the shares of this Series A designated for redemption.
From and after the making of such deposit, the holders of the shares
designated for redemption shall cease to be stockholders with respect to
such shares and shall have no interest in or claim against the corporation
by virtue thereof and shall have no voting or other rights with respect to
such shares, except the right to receive from such trust fund the moneys
payable upon redemption, without interest thereon, upon surrender (and
endorsement, if required by the Corporation) of their certificates, and the
shares represented thereby shall no longer be deemed to be outstanding;
provided that such deposit shall not impair the right of conversion
provided for herein. Any moneys deposited by the Corporation pursuant
to this Section for the redemption of shares thereafter converted into
Common Stock shall be returned to the Corporation forthwith upon their
conversion, and any balance of such moneys remaining unclaimed at the
end of the five years commencing on the date fixed for redemption shall
be repaid to the Corporation upon its request expressed in a resolution
of its board of directors.
(4) Conversion Privilege and Price.
The holders of shares of this Series A shall have the right, at
their option, to convert such shares into fully-paid and nonassessable
shares of Common Stock of the Corporation at any time through and
including December 14, 2001. Subject to adjustment in accordance with
the provisions of subsection (7) hereof, the price at which shares of
Common Stock shall be delivered upon conversion shall be $2.00 per
share of Common Stock (the "Conversion Price").
Each share of this Series A shall be taken, for the purposes of
conversion, at a price of $100 per share. Such price shall be subject to
adjustment from time to time as provided in Section 6 and, as from time
to time adjusted, is herein called the "Conversion Price."
In case shares of this Series A are called for redemption by the
Corporation pursuant to subsection 3, the right to convert such shares
shall cease and terminate at the close of business on the date fixed for
redemption by the Corporation.
(5) Conversion Procedure.
In order to convert shares of this Series A into Common Stock,
the holder shall surrender at the office of any transfer agent for this
Series A designated for that purpose by the board of directors, or at any
such other office as may be designated by the board of directors, the
certificate or certificates therefor, duly endorsed or assigned to the
Corporation or in blank, and shall give written notice to the Corporation
at said office that he elects to convert such shares. Shares of this Series
A surrendered for conversion during the period from the close of
business on any record date for the payment of a dividend on the shares
of this Series A to the opening of business on the date for payment of
such dividend shall (except in the case of shares of this Series A which
have been called for redemption by the Corporation pursuant to Section
3 on a date within such period) be accompanied by payment to the
Corporation of an amount equal to the dividend payable on such dividend
payment date on the shares of this Series A being surrendered for
conversion. Except as provided in the preceding sentence, no payment
or adjustment shall be made upon any conversion on account of any
dividends accrued on the shares of this Series A surrendered for
conversion or on account of any dividends on the Common Stock issued
upon conversion.
Shares of this Series A shall be deemed to have been converted
immediately prior to the close of business on the day of the surrender of
such shares for conversion in accordance with the foregoing provisions
and the person or persons entitled to receive the Common Stock issuable
upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock at such time. As promptly as
practicable on or after the conversion date, the Company shall issue and
shall deliver at said office a certificate or certificates for the number of
full shares of Common Stock issuable upon such conversion, together
with a payment in lieu of any fraction of a share, as hereinafter
provided, to the person or persons entitled to receive the same.
No fractional shares of Common Stock shall be issued upon
conversion, but, instead of any fraction of a share which would
otherwise be issuable, the Corporation shall pay a cash adjustment in
respect of such fraction in an amount equal to the same fraction of the
market price per share of Common Stock at the close of business on the
day of conversion. The market value of a share of Common Stock shall
be the last reported closing bid price for such shares on the last business
day prior to the conversion date. If there is no current bid price, the
market value shall be the prevailing market value of the Common Stock
in the open market, as determined by the Corporation, which
determination shall be conclusive.
The Corporation will pay any and all documentary, stamp, or
similar taxes that may be payable in respect of the issuance or delivery
of shares of Common Stock on conversion of shares of this Series A.
The Corporation shall not, however, be required to pay any such tax
which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that in
which the shares of this Series A so converted were registered, and no
such issuance or delivery shall be made unless and until the person
requesting such issuance has paid to the Corporation the amount of any
such tax, or has established, to the satisfaction of the Corporation, that
such tax has been paid.
The Corporation shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued Common
Stock, for the purpose of effecting the conversion of the shares of this
Series A, the full number of shares of Common Stock then deliverable
upon the conversion of all shares of this Series A then outstanding.
(6) Adjustments in Conversion Price
In the event that the Corporation issues any "Additional Shares
of Common Stock" (as hereinafter defined), at any time during the two
year period beginning on the date hereof (the "Authorization Date"), an
adjustment shall be made in the Conversion Price of this Series A. For
purposes of this subsection 7, the term "Additional Shares of Common
Stock" shall mean all shares of Common Stock in excess of a total of
3,257,000 such shares, issued by the Corporation at any time during the
two-year period following the Authorization Date, other than shares of
Common Stock issued or issuable:
(A) For consideration per share which is equal to, or greater than, the
Conversion Price for this Series A in effect on the date of, and
immediately prior to, such issue.
(B) Upon conversion of this Series A Preferred Stock; and
(C) Upon exercise of the 3,000,000 Class A Warrants issued or
authorized for issuance as of the Authorization Date.
During the two-year period immediately following the
Authorization Date, the Conversion Price in effect with respect to this
Series A shall be reduced, concurrently with the issuance of any
Additional Shares of Common Stock, to a price (calculated to the nearest
cent) determined by multiplying such Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of shares of
Common Stock which the aggregate consideration received by the
Corporation for the total number of Additional Shares of Common Stock
so issued would purchase at such Conversion Price in effect immediately
prior to such issuance, and the denominator of which is the number of
shares of Common Stock outstanding immediately prior to such issue
plus the number of such Additional Shares of Common Stock so issued.
For the purpose of the above calculation, the number of shares of
Common Stock outstanding immediately prior to such issue shall be
calculated on a fully diluted basis, as if all shares of Series A Preferred
Stock and all other outstanding convertible securities of the Corporation
had been fully converted into shares of Common Stock immediately prior
to such issuance, and all authorized and issued Class A Warrants had
been fully exercised immediately prior to such issuance, but not
including in such calculation any additional shares of Common Stock
issuable with respect to shares of Series A Preferred Stock solely as a
result of the adjustment of the Conversion Price resulting from the
issuance of Additional Shares of Common Stock causing such
adjustment.
For purposes of this subsection 6, insofar as the consideration
received by the Corporation for the issuance of any Additional Shares of
Common Stock consists of cash, it shall be computed at the aggregate
amount of cash received by the Corporation. To the extent such
consideration consists of property other than cash, it shall be computed
at the fair market value thereof at the time of such issuance, as
determined in good faith by the Board of Directors.
In the event that the Corporation at any time or from time to time
shall declare or pay, without consideration, any dividend on the
Common Stock payable in Common Stock or in any right to acquire
Common Stock for no consideration, or shall effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of
Common Stock (by split, reclassification or otherwise than by payment
of a dividend in Common Stock or in any right to acquire Common
Stock), or in the event the outstanding shares of Common Stock shall be
combined or consolidated, by reclassification or otherwise, into a lesser
number of shares of Common Stock, then the Conversion Price for this
Series A Preferred Stock in effect immediately prior to such event shall,
concurrently with the effectiveness of such event, be proportionately
decreased or increased, as appropriate. In the event that the Corporation
shall declare or pay, without consideration, any dividend on the
Common Stock payable in any right to acquire Common Stock for no
consideration, then the Corporation shall be deemed to have made a
dividend payable in Common Stock in an amount of shares equal to the
maximum number of shares issuable upon exercise of such rights to
acquire Common Stock.
(7) Voting
The holders of all issued and outstanding shares of this Series A,
voting as a class, shall be entitled to elect one (1) member of the board
of directors. For purposes of election of a director by the holders of
shares of this Series A, each holder of an outstanding share of this Series
A, shall be entitled to one vote. For all purposes other than election of
directors, each holder of this Series A shall be entitled to one vote for
each share of this Series A standing in his name on the books of the
Corporation, with the same and identical voting rights as holders of
shares of Common Stock of the Corporation.
FOURTH: The number of directors of the corporation shall be fixed
by the bylaws, or if the bylaws fail to fix such a number, then by
resolution adopted from time to time by the board of directors, provided
that the number of directors shall not be more than five (5) nor less than
three (3). Five (5) directors shall constitute the initial board of
directors. The following persons are elected to serve as the
corporation's directors until the annual meeting of shareholders or until
their successors are duly elected and qualified:
<TABLE>
<CAPTION>
Name Address
<S> <C>
Gary S. Joiner 4750 Table Mesa Drive
Boulder, CO 80303
Grant W. Peck 4555 Kingston Street
Denver, CO 80239
Dean F. Sessions 2040 W. 10th Avenue, Apt.
E-301
Broomfield, CO 80020
</TABLE>
FIFTH: The street address of the initial registered office of the
corporation is 4750 Table Mesa Drive, Boulder, Colorado 80303. The
name of the initial registered agent of the corporation at such address is
Gary S. Joiner.
SIXTH: The address of the initial principal office of the
corporation is 2040 W. 10th Avenue, Apt. E-301, Broomfield, CO
80020.
SEVENTH: The following provisions are inserted for the management
of the business and for the conduct of the affairs of the corporation, and
the same are in furtherance of and not in limitation or exclusion of the
powers conferred by law.
(a) Conflicting Interest Transactions. As used in this
paragraph, "conflicting interest transaction" means any of the following:
(i) a loan or other assistance by the corporation to a director of the
corporation or to an entity in which a director of the corporation is a
director or officer or has a financial interest; (ii) a guaranty by the
corporation of an obligation of a director of the corporation or of an
obligation of an entity in which a director of the corporation is a director
or officer or has a financial interest; or (iii) a contract or transaction
between the corporation and a director of the corporation or between the
corporation and an entity in which a director of the corporation is a
director or officer or has a financial interest. No conflicting interest
transaction shall be void or voidable, be enjoined, be set aside, or give
rise to an award of damages or other sanctions in a proceeding by a
shareholder or by or in the right of the corporation, solely because the
conflicting interest transaction involves a director of the corporation or
an entity in which a director of the corporation is a director or officer
or has a financial interest, or solely because the director is present at or
participates in the meeting of the corporation's board of directors or of
the committee of the board of directors which authorized, approves or
ratifies a conflicting interest transaction, or solely because the director's
vote is counted for such purpose if: (A) the material facts as to the
director's relationship or interest and as to the conflicting interest
transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith
authorizes, approves or ratifies the conflicting interest transaction by the
affirmative vote of a majority of the disinterested directors, even though
the disinterested directors are less than a quorum; or (B) the material
facts as to the director's relationship or interest and as to the conflicting
interest transaction are disclosed or are known to the shareholders
entitled to vote thereon, and the conflicting interest transaction is
specifically authorized, approved or ratified in good faith by a vote of
the shareholders; or (C) a conflicting interest transaction is fair as to the
corporation as of the time it is authorized, approved or ratified by the
board of directors, a committee thereof, or the shareholders. Common
or interested directors may be counted in determining the presence of a
quorum at a meeting of the board of directors or of a committee which
authorizes, approves or ratifies the conflicting interest transaction.
(b) Loans and Guaranties for the Benefit of Directors.
Neither the board of directors nor any committee thereof shall authorize
a loan by the corporation to a director of the corporation or to an entity
in which a director of the corporation is a director or officer or has a
financial interest, or a guaranty by the corporation of an obligation of a
director of the corporation or of an obligation of an entity in which a
director of the corporation is a director or officer or has a financial
interest, until at least ten days after written notice of the proposed
authorization of the loan or guaranty has been given to the shareholders
who would be entitled to vote thereon if the issue of the loan or guaranty
were submitted to a vote of the shareholders. The requirements of this
paragraph (b) are in addition to, and not in substitution for, the
provisions of paragraph (a) of Article SEVENTH.
(c) Indemnification. The corporation shall indemnify,
to the maximum extent permitted by law, any person who is or was a
director, officer, agent, fiduciary or employee of the corporation against
any claim, liability or expenses arising against or incurred by such
person made party to a proceeding because he is or was a director,
officer, agent, fiduciary or employee of the corporation or because he
was a director, officer, agent, fiduciary or employee of the corporation
or because he is or was serving another entity as a director, officer,
partner, trustee, employee, fiduciary or agent at the corporation's
request. The corporation shall further have the authority to the
maximum extent permitted by law to purchase and maintain insurance
providing such indemnification.
(d) Limitation on Director's Liability. No director of
this corporation shall have any personal liability for monetary damages
to the corporation or its shareholders for breach of his fiduciary duty as
a director, except that this provision shall not eliminate or limit the
personal liability of a director to the corporation or its shareholders for
monetary damages for: (i) any breach of the director's duty of loyalty to
the corporation or its shareholders; (ii) acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of
law; (iii) voting for or assenting to a distribution in violation of Colorado
Revised Statutes Section 7-106-401 or the articles of incorporation if it
is established that the director did not perform his duties in compliance
with Colorado Revised Statutes Section 7-108-401, provided that the
personal liability of a director in this circumstance shall be limited to the
amount of the distribution which exceeds what could have been
distributed without violation of Colorado Revised Statutes Section 7-106-
401 or the articles of incorporation; or (iv) any transaction from which
the director directly or indirectly derives an improper personal benefit.
Nothing contained herein will be construed to deprive any director of his
right to all defenses ordinarily available to a director nor will anything
herein be construed to deprive any director of any right he may have for
contribution from any other director or other person.
(e) Negation of Equitable Interests in Shares or Rights.
Unless a person is recognized as a shareholder through procedures
established by the corporation pursuant to Colorado Revised Statutes
Section 7-107-204 or any similar law, the corporation shall be entitled
to treat the registered holder of any shares of the corporation as the
owner thereof for all purposes permitted by the Colorado Business
Corporation Act, including without limitation all rights deriving from
such shares, and the corporation shall not be bound to recognize any
equitable or other claim to, or interest in, such shares or rights deriving
from such shares on the part of any other person including without
limitation, a purchaser, assignee or transferee of such shares, unless and
until such other person becomes the registered holder of such shares or
is recognized as such, whether or not the corporation shall have either
actual or constructive notice of the claimed interest of such other person.
By way of example and not of limitation, until such other person has
become the registered holder of such shares or is recognized pursuant to
Colorado Revised Statutes Section 7-107-204 or any similar applicable
law, he shall not be entitled: (i) to receive notice of the meetings of the
shareholders; (ii) to vote at such meetings; (iii) to examine a list of the
shareholders; (iv) to be paid dividends or other distributions payable to
shareholders; or (v) to own, enjoy and exercise any other rights deriving
from such shares against the corporation. Nothing contained herein will
be construed to deprive any beneficial shareholder, as defined in
Colorado Revised Statutes Section 7-113-101(1), of any right he may
have pursuant to Article 113 of the Colorado Business Corporation Act
or any subsequent law.
EIGHTH: The name and address of the incorporator is: Gary S.
Joiner, 4750 Table Mesa Drive, Boulder, Colorado 80303.
/s/ Gary S. Joiner, Incorporator
Dated: January 18, 1995
Gary S. Joiner hereby consents to the appointment as the
initial registered agent for Controlled Environment Aquaculture
Technology, Inc. (formerly known as Global Capital Access
Corporation).
/s/ Gary S. Joiner, Initial Registered Agent
Dated: January 18, 1995
<PAGE>
EXHIBIT 3.2 - BYLAWS OF GLOBAL CAPITAL ACCESS
CORPORATION
ARTICLE I
Offices
The principal office of the corporation shall be designated from
time to time by the corporation and may be within or outside of
Colorado.
The corporation may have such other offices, either within or
outside Colorado, as the board of directors may designate or as the
business of the corporation may require from time to time.
The registered office of the corporation required by the Colorado
Business Corporation Act to be maintained in Colorado may be, but need
not be, identical with the principal office, and the address of the
registered office may be changed from time to time by the board of
directors.
ARTICLE II
Shareholders
Section 1. Annual Meeting. The annual meeting of the
shareholders shall be held during the month of September of each year
on a date and at a time fixed by the board of directors of the corporation
(or by the president in the absence of action by the board of directors),
beginning with the year 1996, for the purpose of electing directors and
for the transaction of such other business as may come before the
meeting. If the election of directors is not held on the day fixed as
provided herein for any annual meeting of the shareholders, or any
adjournment thereof, the board of directors shall cause the election to be
held at a special meeting of the shareholders as soon thereafter as it may
conveniently be held.
A shareholder may apply to the district court in the county in
Colorado where the corporation's principal office is located or, if the
corporation has no principal office in Colorado, to the district court of
the county in which the corporation's registered office is located to seek
an order that a shareholder meeting be held (i) if an annual meeting was
not held within six months after the close of the corporation's most
recently ended fiscal year or fifteen months after its last annual meeting,
whichever is earlier, or (ii) if the shareholder participated in a proper
call of or proper demand for a special meeting and notice of the special
meeting was not given within thirty days after the date of the call or the
date the last of the demands necessary to require calling of the meeting
was received by the corporation pursuant to C.R.S. Section 7-107-
102(1)(b), or the special meeting was not held in accordance with the
notice.
Section 2. Special Meetings. Unless otherwise prescribed by
statute, special meetings of the shareholders may be called for any
purpose by the president or by the board of directors. The president
shall call a special meeting of the shareholders if the corporation receives
one or more written demands for the meeting, stating the purpose or
purposes for which it is to be held, signed and dated by holders of shares
representing at least ten percent of all the votes entitled to be cast on any
issue proposed to be considered at the meeting.
Section 3. Place of Meeting. The board of directors may
designate any place, either within or outside Colorado, as the place for
any annual meeting or any special meeting called by the board of
directors. A waiver of notice signed by all shareholders entitled to vote
at a meeting may designate any place, either within or outside Colorado,
as the place for such meeting. If no designation is made, or if a special
meeting is called other than by the board, the place of meeting shall be
the principal office of the corporation.
Section 4. Notice of Meeting. Written notice stating the
place, date, and hour of the meeting shall be given not less than ten nor
more than sixty days before the date of the meeting, except that (i) if the
number of authorized shares is to be increased, at least thirty days'
notice shall be given, or (ii) any other longer notice period is required
by the Colorado Business Corporation Act. Notice of a special meeting
shall include a description of the purpose or purposes of the meeting.
Notice of an annual meeting need not include a description of the
purpose or purposes of the meeting except the purpose or purposes shall
be stated with respect to (i) an amendment to the articles of
incorporation of the corporation, (ii) a merger or share exchange in
which the corporation is a party and, with respect to a share exchange,
in which the corporation's shares will be acquired, (iii) a sale, lease,
exchange or other disposition, other than in the usual and regular course
of business, of all or substantially all of the property of the corporation
or of another entity which this corporation controls, in each case with or
without the goodwill, (iv) a dissolution of the corporation, or (v) any
other purpose for which a statement of purpose is required by the
Colorado Business Corporation Act. Notice shall be given personally or
by mail, private carrier, telegraph, teletype, electronically transmitted
facsimile or other form of wire or wireless communication by or at the
direction of the president, the secretary, or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed and if in a comprehensible form, such notice shall
be deemed to be given and effective when deposited in the United States
mail, addressed to the shareholder at his address as it appears in the
corporation's current record of shareholders, with postage prepaid. If
notice is given other than by mail, and provided that such notice is in a
comprehensible form, the notice is given and effective on the date
received by the shareholder.
If requested by the person or persons lawfully calling such
meeting, the secretary shall give notice thereof at corporation expense.
No notice need be sent to any shareholder if three successive notices
mailed to the last known address of such shareholder have been returned
as undeliverable until such time as another address for such shareholder
is made known to the corporation by such shareholder. In order to be
entitled to receive notice of any meeting, a shareholder shall advise the
corporation in writing of any change in such shareholder's mailing
address as shown on the corporation's books and records.
When a meeting is adjourned to another date, time or place,
notice need not be given of the new date, time or place if the new date,
time or place of such meeting is announced before adjournment at the
meeting at which the adjournment is taken. At the adjourned meeting
the corporation may transact any business which may have been
transacted at the original meeting. If the adjournment is for more than
120 days, or if a new record date is fixed for the adjourned meeting, a
new notice of the adjourned meeting shall be given to each shareholder
of record entitled to vote at the meeting as of the new record date.
A shareholder may waive notice of a meeting before or after the
time and date of the meeting by a writing signed by such shareholder.
Such waiver shall be delivered to the corporation for filing with the
corporate records. Further, by attending a meeting either in person or
by proxy, a shareholder waives objection to lack of notice or defective
notice of the meeting unless the shareholder objects at the beginning of
the meeting to the holding of the meeting or the transaction of business
at the meeting because of lack of notice or defective notice. By
attending the meeting, the shareholder also waives any objection to
consideration at the meeting of a particular matter not within the purpose
or purposes described in the meeting notice unless the shareholder
objects to considering the matter when it is presented.
Section 5. Fixing of Record Date. For the purposes of
determining shareholders entitled to (i) notice of or vote at any meeting
of shareholders or any adjournment thereof, (ii) receive distributions or
share dividends, or (ii) demand a special meeting, or to make a
determination of shareholders for any other proper purpose, the board
of directors may fix a future date as the record date for any such
determination of shareholders, such date in any case to be not more than
seventy days, and, in case of a meeting of shareholders not less than ten
days, prior to the date on which the particular action requiring such
determination of shareholders is to be taken. If no record date is fixed
by the directors, the record date shall be the date on which notice of the
meeting is mailed to shareholders, or the date on which the resolution of
the board of directors providing for a distribution is adopted, as the case
may be. When a determination of shareholders entitled to vote at any
meeting of shareholders is made as provided in this Section, such
determination shall apply to any adjournment thereof unless the board of
directors fixes a new record date, which it must do if the meeting is
adjourned to a date more than 120 days after the date fixed for the
original meeting.
Notwithstanding the above, the record date for determining the
shareholders entitled to take action without a meeting or entitled to be
given notice of action so taken shall be the date a writing upon which the
action is taken is first received by the corporation. The record date for
determining shareholders entitled to demand a special meeting shall be
the date of the earliest of any of the demands pursuant to which the
meeting is called.
Section 6. Voting Lists. The secretary shall make, at the
earlier of ten days before each meeting of shareholders or two business
days after notice of the meeting has been given, a complete list of the
shareholders entitled to be given notice of such meeting or any
adjournment thereof. The list shall be arranged by voting groups and
within each voting group by class or series of shares, shall be in
alphabetical order within each class or series, and shall show the address
of and the number of shares of each class or series held by each
shareholder. For the period beginning the earlier of ten days prior to the
meeting or two business days after notice of the meeting is given and
continuing through the meeting and any adjournment thereof, this list
shall be kept on file at the principal office of the corporation, or at a
place (which shall be identified in the notice) in the city where the
meeting will be held. Such list shall be available for inspection on
written demand by any shareholder (including for the purpose of this
Section 6 any holder of voting trust certificates) or his agent or attorney
during regular business hours and during the period available for
inspection. The original stock transfer books shall be prima facie
evidence as to the shareholders entitled to examine such list or to vote
at any meeting of shareholders.
Any shareholder, his agent or attorney may copy the list during
regular business hours and during the period it is available for
inspection, provided (i) the shareholder has been a shareholder for at
least three months immediately preceding the demand or holds at least
five percent of all outstanding shares of any class of shares as of the date
of the demand, (ii) the demand is made in good faith and for a purpose
reasonably related to the demanding shareholder's interest as a
shareholder, (iii) the shareholder describes with reasonable particularity
the purpose and the records the shareholder desires to inspect, (iv) the
records are directly connected with the described purpose and (v) the
shareholder pays a reasonable charge covering the costs of labor and
material for such copies, not to exceed the estimated cost of production
and reproduction.
Section 7. Recognition Procedure for Beneficial Owners. The
board of directors may adopt by resolution a procedure whereby a
shareholder of the corporation may certify in writing to the corporation
that all or a portion of the shares registered in the name of such
shareholder are held for the account of a specified person or persons.
The resolution may set forth (i) the types of nominees to which it
applies, (ii) the rights or privileges that the corporation will recognize
in a beneficial owner, which may include rights and privileges other than
voting; (iii) the form of certification and the information to be contained
therein, (iv) if the certification is with respect to a record date, the time
within which the certification must be received by the corporation, (v)
the period for which the nominee's use of the procedure is effective, and
(vi) such other provisions with respect to the procedure as the board
deems necessary or desirable. Upon receipt by the corporation of a
certificate complying with the procedure established by the board of
directors, the persons specified in the certification shall be deemed, for
the purpose or purposes set forth in the certification, to be the registered
holders of the number of shares specified in place of the shareholder
making the certification.
Section 8. Quorum and Manner of Acting. One-third of the
votes entitled to be cast on a matter by a voting group shall constitute a
quorum of that voting group for action on the matter. If less than one-
third of such votes are represented at a meeting, a majority of the votes
so represented may adjourn the meeting from time to time without
further notice, for a period not to exceed 120 days for any one
adjournment. If a quorum is present at such adjourned meeting, any
business may be transacted which might have been transacted at the
meeting as originally noticed. The shareholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than
a quorum, unless the meeting is adjourned and a new record date is set
for the adjourned meeting.
If a quorum exists, action on a matter other than the election of
directors by a voting group is approved if the votes cast within the
voting group favoring the action exceed the votes cast within the voting
group opposing the action, unless the vote of a greater number or voting
by classes is required by law or the articles of incorporation.
Section 9. Proxies. At all meetings of shareholders, a
shareholder may vote by proxy by signing an appointment form or
similar writing, either personally or by his duly authorized attorney-in-
fact. A shareholder may also appoint a proxy by transmitting or
authorizing the transmission of a telegram, teletype, or other electronic
transmission providing a written statement of the appointment to the
proxy, a proxy solicitor, proxy support service organization, or other
person duly authorized by the proxy to receive appointments as agent for
the proxy, or to the corporation. The transmitted appointment shall set
forth or be transmitted with written evidence from which it can be
determined that the shareholder transmitted or authorized the
transmission of the appointment. The proxy appointment form or similar
writing shall be filed with the secretary of the corporation before or at
the time of the meeting. The appointment of a proxy is effective when
received by the corporation and is valid for eleven months unless a
different period is expressly provided in the appointment form or similar
writing.
Any complete copy, including an electronically transmitted
facsimile, of an appointment of a proxy may be substituted for or used
in lieu of the original appointment for any purpose for which the original
appointment could be used.
Revocation of a proxy does not affect the right of the corporation
to accept the proxy's authority unless (i) the corporation had notice that
the appointment was coupled with an interest and notice that such
interest is extinguished is received by the secretary or other officer or
agent authorized to tabulate votes before the proxy exercises his
authority under the appointment, or (ii) other notice of the revocation of
the appointment is received by the secretary or other officer or agent
authorized to tabulate votes before the proxy exercises his authority
under the appointment. Other notice of revocation may, in the discretion
of the corporation, be deemed to include the appearance at a
shareholders' meeting of the shareholder who granted the proxy and his
voting in person on any matter subject to a vote at such meeting.
The death or incapacity of the shareholder appointing a proxy
does not affect the right of the corporation to accept the proxy's
authority unless notice of the death or incapacity is received by the
secretary or other officer or agent authorized to tabulate votes before the
proxy exercises his authority under the appointment.
The corporation shall not be required to recognize an appointment
made irrevocable if it has received a writing revoking the appointment
signed by the shareholder (including a shareholder who is a successor to
the shareholder who granted the proxy) either personally or by his
attorney-in-fact, notwithstanding that the revocation may be a breach of
an obligation of the shareholder to another person not to revoke the
appointment.
Subject to Section 11 and any express limitation on the proxy's
authority appearing on the appointment form, the corporation is entitled
to accept the proxy's vote or other action as that of the shareholder
making the appointment.
Section 10. Voting of Shares. Each outstanding share,
regardless of class, shall be entitled to one vote, except in the election
of directors, and each fractional share shall be entitled to a
corresponding fractional vote on each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting rights of the
shares of any class or classes are limited or denied by the articles of
incorporation as permitted by the Colorado Business Corporation Act.
Cumulative voting shall not be permitted in the election of directors or
for any other purpose. Each record holder of stock shall be entitled to
vote in the election of directors and shall have as many votes for each
of the shares owned by him as there are directors to be elected and for
whose election he has the right to vote.
At each election of directors, that number of candidates equaling
the number of directors to be elected, having the highest number of votes
cast in favor of their election, shall be elected to the board of directors.
Except as otherwise ordered by a court of competent jurisdiction
upon a finding that the purpose of this Section would not be violated in
the circumstances presented to the court, the shares of the corporation
are not entitled to be voted if they are owned, directly or indirectly, by
a second corporation, domestic or foreign, and the first corporation
owns, directly or indirectly, a majority of the shares entitled to vote for
directors of the second corporation except to the extent the second
corporation holds the shares in a fiduciary capacity.
Redeemable shares are not entitled to be voted after notice of
redemption is mailed to the holders and a sum sufficient to redeem the
shares has been deposited with a bank, trust company or other financial
institution under an irrevocable obligation to pay the holders the
redemption price on surrender of the shares.
Section 11. Corporation's Acceptance of Votes. If the name
signed on a vote, consent, waiver, proxy appointment, or proxy
appointment revocation corresponds to the name of a shareholder, the
corporation, if acting in good faith, is entitled to accept the vote,
consent, waiver, proxy appointment or proxy appointment revocation and
give it effect as the act of the shareholder. If the name signed on a vote,
consent, waiver, proxy appointment or proxy appointment revocation
does not correspond to the name of a shareholder, the corporation, if
acting in good faith, is nevertheless entitled to accept the vote, consent,
waiver, proxy appointment or proxy appointment revocation and to give
it effect as the act of the shareholder if:
(i) the shareholder is an entity and the name signed
purports to be that of an officer or agent of the entity;
(ii) the name signed purports to be that of an
administrator, executor, guardian or conservator representing the
shareholder and, if the corporation requests, evidence of fiduciary status
acceptable to the corporation has been presented with respect to the vote,
consent, waiver, proxy appointment or proxy appointment revocation;
(iii) the name signed purports to be that of a receiver
or trustee in bankruptcy of the shareholder and, if the corporation
requests, evidence of this status acceptable to the corporation has been
presented with respect to the vote, consent, waiver, proxy appointment
or proxy appointment revocation;
(iv) the name signed purports to be that of a pledgee,
beneficial owner or attorney-in-fact of the shareholder and, if the
corporation requests, evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder has been presented with
respect to the vote, consent, waiver, proxy appointment or proxy
appointment revocation;
(v) two or more persons are the shareholder as co-
tenants or fiduciaries and the name signed purports to be the name of at
least one of the co-tenants or fiduciaries, and the person signing appears
to be acting on behalf of all the co-tenants or fiduciaries; or
(vi) the acceptance of the vote, consent, waiver, proxy
appointment or proxy appointment revocation is otherwise proper under
rules established by the corporation that are not inconsistent with this
Section 11.
The corporation is entitled to reject a vote, consent, waiver,
proxy appointment or proxy appointment revocation if the secretary or
other officer or agent authorized to tabulate votes, acting in good faith,
has reasonable basis for doubt about the validity of the signature on it or
about the signatory's authority to sign for the shareholder.
Neither the corporation nor its officers nor any agent who accepts
or rejects a vote, consent, waiver, proxy appointment or proxy
appointment revocation in good faith and in accordance with the
standards of this Section is liable in damages for the consequences of the
acceptance or rejection.
Section 12. Informal Action by Shareholders. Any action
required or permitted to be taken at a meeting of the shareholders may
be taken without a meeting if a written consent (or counterparts thereof)
that sets forth the action so taken is signed by all of the shareholders
entitled to vote with respect to the subject matter thereof and received by
the corporation. Such consent shall have the same force and effect as a
unanimous vote of the shareholders and may be stated as such in the
document. Action taken under this Section 12 is effective as of the date
the last writing necessary to effect this action is received by the
corporation, unless all of the writings specify a different effective date,
in which case such specified date shall be the effective date for such
action. If any shareholder revokes his consent as provided for herein
prior to what would otherwise be the effective date, the action proposed
in the consent shall be invalid. The record date for determining
shareholders entitled to take action without a meeting is the date the
corporation receives a writing upon which the action is taken.
Any shareholder who has signed a writing describing and
consenting to action taken pursuant to this Section 12 may revoke such
consent by a writing signed by the shareholder describing the action and
stating that the shareholder's prior consent thereto is revoked, if such
writing is received by the corporation before the effectiveness of the
action.
Section 13. Meetings by Telecommunication. Any or all of the
shareholders may participate in an annual or special shareholders'
meeting by, or the meeting may be conducted through the use of, any
means of communication by which all persons participating in the
meeting may hear each other during the meeting. A shareholder
participating in a meeting by this means is deemed to be present in
person at the meeting.
ARTICLE III
Board of Directors
Section 1. General Powers. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of
the corporation shall be managed under the direction of its board of
directors, except as otherwise provided in the Colorado Business
Corporation Act or the articles of incorporation.
Section 2. Number, Qualifications and Tenure. The number
of directors of the corporation shall be fixed from time to time by the
board of directors, within a range of no less than three or more than
five. A director shall be a natural person who is eighteen years of age
or older. A director need not be a resident of Colorado or a shareholder
of the corporation.
Directors shall be elected at each annual meeting of shareholders.
Each director shall hold office until the next annual meeting of
shareholders following his election and thereafter until his successor shall
have been elected and qualified. Directors shall be removed in the
manner provided by the Colorado Business Corporation Act.
Section 3. Vacancies. Any director may resign at any time
by giving written notice to the corporation. Such resignation shall take
effect at the time the notice is received by the corporation unless the
notice specifies a later effective date. Unless otherwise specified in the
notice of resignation, the corporation's acceptance of such resignation
shall not be necessary to make it effective. Any vacancy on the board
of directors may be filled by the affirmative vote of a majority of the
shareholders or the board of directors. If the directors remaining in
office constitute fewer than a quorum of the board, the directors may fill
the vacancy by the affirmative vote of a majority of all the directors
remaining in office. If elected by the directors, the director shall hold
office until the next annual shareholder's meeting at which directors are
elected. If elected by the shareholders, the director shall hold office for
the unexpired term of his predecessor in office; except that, if the
director's predecessor was elected by the directors to fill a vacancy, the
director elected by the shareholders shall hold office for the unexpired
term of the last predecessor elected by the shareholders.
Section 4. Regular Meetings. A regular meeting of the board
of directors shall be held without notice immediately after and at the
same place as the annual meeting of shareholders. The board of
directors may provide by resolution the time and place, either within or
outside Colorado, for the holding of additional regular meetings without
other notice.
Section 5. Special Meetings. Special meetings of the board
of directors may be called by or at the request of the president or any
two directors. The person or persons authorized to call special meetings
of the board of directors may fix any place, either within or outside
Colorado, as the place for holding any special meeting of the board of
directors called by them, provided that no meeting shall be called outside
the State of Colorado unless a majority of the board of directors has so
authorized.
Section 6. Notice. Notice of any special meeting shall be
given at least two days prior to the meeting by written notice either
personally delivered or mailed to each director at his business address,
or by notice transmitted by telegraph, telex, electronically transmitted
facsimile or other form of wire or wireless communication. If mailed,
such notice shall be deemed to be given and to be effective on the earlier
of (i) three days after such notice is deposited in the United States mail,
properly addressed, with postage prepaid, or (ii) the date shown on the
return receipt, if mailed by registered or certified mail return receipt
requested. If notice is given by telex, electronically transmitted
facsimile or other similar form of wire or wireless communication, such
notice shall be deemed to be given and to be effective when sent, and
with respect to a telegram, such notice shall be deemed to be given and
to be effective when the telegram is delivered to the telegraph company.
If a director has designated in writing one or more reasonable addresses
or facsimile numbers for delivery of notice to him, notice sent by mail,
telegram, telex, electronically transmitted facsimile or other form of wire
or wireless communication shall not be deemed to have been given or to
be effective unless sent to such addresses or facsimile numbers, as the
case may be.
A director may waive notice of a meeting before or after the time
and date of the meeting by a writing signed by such director. Such
waiver shall be delivered to the corporation for filing with the corporate
records. Further, a director's attendance at or participation in a meeting
waives any required notice to him of the meeting unless at the beginning
of the meeting, or promptly upon his arrival, the director objects to
holding the meeting or transacting business at the meeting because of
lack of notice or defective notice and does not thereafter vote for or
assent to action taken at the meeting. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
board of directors need be specified in the notice or waiver of notice of
such meeting.
Section 7. Quorum. A majority of the number of directors
fixed by the board of directors pursuant to Section 2 or, if no number is
fixed, a majority of the number in office immediately before the meeting
begins, shall constitute a quorum for the transaction of business at any
meeting of the board of directors. If less than such majority is present
at a meeting, a majority of the directors present may adjourn the meeting
from time to time without further notice, for a period not to exceed sixty
days at any one adjournment.
Section 8. Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the
act of the board of directors. No director may vote or act by proxy at
any meeting of directors.
Section 9. Compensation. By resolution of the board of
directors, any director may be paid any one or more of the following:
his expenses, if any, of attendance at meetings, a fixed sum for
attendance at each meeting, a stated salary as director, or such other
compensation as the corporation and the director may reasonably agree
upon. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
Section 10. Presumption of Assent. A director of the
corporation who is present at a meeting of the board of directors or
committee of the board at which action on any corporate matter is taken
shall be presumed to have assented to the action taken unless (i) the
director objects at the beginning of the meeting, or promptly upon his
arrival, to the holding of the meeting or the transaction of business at the
meeting and does not thereafter vote for or assent to any action taken at
the meeting, (ii) the director contemporaneously requests that his dissent
or abstention as to any specific action taken be entered in the minutes of
the meeting, or (iii) the director causes written notice of his dissent or
abstention as to any specific action to be received by the presiding
officer of the meeting before its adjournment or by the corporation
promptly after the adjournment of the meeting. A director may dissent
to a specific action at a meeting, while assenting to others. The right to
dissent to a specific action taken at a meeting of the board of directors
or a committee of the board shall not be available to a director who
voted in favor of such action.
Section 11. Committees. By resolution adopted by a majority
of all the directors in office when the action is taken, the board of
directors may designate from among its members an executive committee
and one or more other committees, and appoint one or more members
of the board of directors to serve on them. To the extent provided in the
resolution, each committee shall have all the authority of the board of
directors, except that no such committee shall have the authority to (i)
authorize distributions, (ii) approve or propose to shareholders actions
or proposals required by the Colorado Business Corporation Act to be
approved by shareholders, (iii) fill vacancies on the board of directors
or any committee thereof, (iv) amend articles of incorporation, (v) adopt,
amend or repeal the bylaws, (vi) approve a plan of merger not requiring
shareholder approval, (vii) authorize or approve the reacquisition of
shares unless pursuant to a formula or method prescribed by the board
of directors, or (viii) authorize or approve the issuance or sale of shares,
or contract for the sale of shares or determine the designations and
relative rights, preferences and limitations of a class or series of shares,
except that the board of directors may authorize a committee or officer
to do so within limits specifically prescribed by the board of directors.
The committee shall then have full power within the limits set by the
board of directors to adopt any final resolution setting forth all
preferences, limitations and relative rights of such class or series and to
authorize an amendment of the articles of incorporation stating the
preferences, limitations and relative rights of a class or series for filing
with the Secretary of State under the Colorado Business Corporation
Act.
Sections 4, 5, 6, 7, 8 and 12 of Article III, which govern
meetings, notice, waiver of notice, quorum, voting requirements and
action without a meeting of the board of directors, shall apply to
committees and their members appointed under this Section 11.
Neither the designation of any such committee, the delegation of
authority to such committee, nor any action by such committee pursuant
to its authority shall alone constitute compliance by any member of the
board of directors or a member of the committee in question with his
responsibility to conform to the standards of care set forth in Article III,
Section 14 of these bylaws.
Section 12. Action Without a Meeting. Any action required
or permitted to be taken at a meeting of the directors or any committee
designated by the board of directors may be taken without a meeting if
a written consent (or counterparts thereof) that sets forth the action so
taken is signed by all of the directors entitled to vote with respect to the
action taken. Such consent shall have the same force and effect as a
unanimous vote of the directors or committee members and may be
stated as such in any document. Unless the consent specifies a different
effective date, action taken under this Section 12 is effective at the time
the last director signs a writing describing the action taken, unless,
before such time, any director has revoked his consent by a writing
signed by the director and received by the president or secretary of the
corporation.
Section 13. Telephonic Meetings. The board of directors may
permit any director (or any member of a committee designated by the
board) to participate in a regular or special meeting of the board of
directors or a committee thereof through the use of any means of
communication by which all directors participating in the meeting can
hear each other during the meeting. A director participating in a
meeting in this manner is deemed to be present in person at the meeting.
Section 14. Standard of Care. A director shall perform his
duties as a director, including, without limitation his duties as a member
of any committee of the board, in good faith, in a manner he reasonably
believes to be in the best interests of the corporation, and with the care
an ordinarily prudent person in a like position would exercise under
similar circumstances. In performing his duties, a director shall be
entitled to rely on information, opinions, reports or statements, including
financial statements and other financial data, in each case prepared or
presented by the persons herein designated. However, he shall not be
considered to be acting in good faith if he has knowledge concerning the
matter in question that would cause such reliance to be unwarranted. A
director shall not be liable to the corporation or its shareholders for any
action he takes or omits to take as a director if, in connection with such
action or omission, he performs his duties in compliance with this
Section 14.
The designated persons on whom a director is entitled to rely are
(i) one or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the matters
presented, (ii) legal counsel, public accountant, or other person as to
matters which the director reasonably believes to be within such person's
professional or expert competence, or (iii) a committee of the board of
directors on which the director does not serve if the director reasonably
believes the committee merits confidence.
ARTICLE IV
Officers and Agents
Section 1. General. The officers of the corporation shall be
a president, one or more vice presidents, a secretary and a treasurer,
each of whom shall be a natural person eighteen years of age or older.
The board of directors or an officer or officers authorized by the board
may appoint such other officers, assistant officers, committees and
agents, including a chairman of the board, assistant secretaries and
assistant treasurers, as they may consider necessary. The board of
directors or the officer or officers authorized by the board shall from
time to time determine the procedure for the appointment of officers,
their term of office, their authority and duties and their compensation.
One person may hold more than one office. In all cases where the
duties of any officer, agent or employee are not prescribed by the
bylaws, or by the board of directors, such officer, agent or employee
shall follow the orders and instructions of the president of the
corporation.
Section 2. Appointment and Term of Office. The officers of
the corporation shall be appointed by the board of directors at each
annual meeting of the board held after each annual meeting of the
shareholders. If the appointment of officers is not made at such meeting
or if an officer or officers are to be appointed by another officer or
officers of the corporation, such appointment shall be made as soon
thereafter as conveniently may be. Each officer shall hold office until
the first of the following occurs: his successor shall have been duly
appointed and qualified, his death, his resignation, or his removal in the
manner provided in Section 3.
Section 3. Resignation and Removal. An officer may resign
at any time by giving written notice of resignation to the corporation.
The resignation is effective when the notice is received by the
corporation unless the notice specifies a later effective date.
Any officer or agent may be removed at any time with or without
cause by the board of directors or an officer or officers authorized by the
board. Such removal does not affect the contract rights, if any, of the
corporation or of the person so removed. The appointment of an officer
or agent shall not in itself create contract rights.
Section 4. Vacancies. A vacancy in any office, however
occurring, may be filled by the board of directors, or by the officer or
officers authorized by the board, for the unexpired portion of the
officer's term. If an officer resigns and his resignation is made effective
at a later date, the board of directors, or officer or officers authorized
by the board, may permit the officer to remain in office until the
effective date and may fill the pending vacancy before the effective date
if the board of directors or officer or officers authorized by the board
provide that the successor shall not take office until the effective date.
In the alternative, the board of directors, or officer or officers authorized
by the board of directors, may remove the officer at any time before the
effective date and may fill the resulting vacancy.
Section 5. President. Subject to the direction and supervision
of the board of directors, the president shall be the chief executive
officer of the corporation, and shall have general and active control of
its affairs and business and general supervision of its officers, agents and
employees. Unless otherwise directed by the board of directors, the
president shall attend in person or by substitute appointed by him, or
shall execute on behalf of the corporation written instruments appointing
a proxy or proxies to represent the corporation, at all meetings of the
stockholders of any other corporation in which the corporation holds any
stock. On behalf of the corporation, the president may in person or by
substitute or by proxy execute written waivers of notice and consents
with respect to any such meetings. At all such meetings and otherwise,
the president, in person or by substitute or proxy, may vote the stock
held by the corporation, execute written consents and other instruments
with respect to such stock, and exercise any and all rights and powers
incident to the ownership or said stock, subject to the instructions, if
any, of the board of directors. The president shall have custody of the
treasurer's bond, if any.
Section 6. Vice Presidents. The vice presidents shall assist
the president and shall perform such duties as may be assigned to them
by the president or by the board of directors. In the absence of the
president, the vice president, if any (or, if more than one, the vice
presidents in the order designated by the board of directors, or if the
board makes no such designation, then the vice president designated by
the president, or if neither the board nor the president makes any such
designation, the senior vice president as determined by first election to
that office), shall have the powers and perform the duties of the
president.
Section 7. Secretary. The secretary shall (i) prepare and
maintain as permanent records the minutes of the proceedings of the
shareholders and the board of directors, a record of all actions taken by
the shareholders or board of directors without a meeting, a record of all
actions taken by a committee of the board of directors in place of the
board of directors on behalf of the corporation, and a record of all
waivers of notice of meetings of shareholders and of the board of
directors or any committee thereof, (ii) see that all notices are duly given
in accordance with the provisions of these bylaws and as required by
law, (iii) serve as custodian of the corporate records and of the seal of
the corporation and affix the seal to all documents when authorized by
the board of directors, (iv) keep at the corporation's registered office or
principal place of business a record containing the names and addresses
of all shareholders in a form that permits preparation of a list of
shareholders arranged by voting group and by class or series of shares
within each group, that is alphabetical within each class or series and
that shows the address of, and the number of shares of each class or
series held by each shareholder, unless such a record shall be kept at the
office of the corporation's transfer agent or registrar, (v) maintain at the
corporation's principal office the originals or copies of the corporation's
articles of incorporation, bylaws, minutes of all shareholders' meetings
and records of all action taken by shareholders without a meeting for the
past three years, all written communications within the past three years
to shareholders as a group or to the holders of any class or series of
shares as a group, a list of the name and business addresses of the
current directors and officers, a copy of the corporation's most recent
corporate report filed with the Secretary of State, and financial
statements showing in reasonable detail the corporation's assets and
liabilities and results of operations for the last three years, (vi) have
general charge of the stock transfer books of the corporation, unless the
corporation has a transfer agent, (vii) authenticate records of the
corporation, and (vii) in general, perform all duties incident to the office
of secretary and such other duties as from time to time may be assigned
to him by the president or by the board of directors. Assistant
secretaries, if any, shall have the same duties and powers subject to
supervision by the secretary. The directors and/or shareholders may
however respectively designate a person other than the secretary or
assistant secretary to keep the minutes of their respective meetings.
Any books, records, or minutes of the corporation may be in
written form or in any form capable of being converted into written form
within a reasonable time.
Section 8. Treasurer. The treasurer shall be the principal
financial officer of the corporation, shall have the care and custody of
all funds, securities, evidences of indebtedness and other personal
property of the corporation and shall deposit the same in accordance with
the instructions of the board of directors. He shall receive and give
receipts and acquittances for money paid in on account of the
corporation, and shall pay out of the corporation's funds on hand all
bills, payrolls and other just debts of the corporation of whatever nature
upon maturity. He shall perform all other duties incident to the office
of the treasurer and, upon request of the board, shall make such reports
to it as may be required at any time. He shall, if required by the board,
give the corporation a bond in such sums and with such sureties as shall
be satisfactory to the board, conditioned upon the faithful performance
of his duties and for the restoration to the corporation of all books,
papers, vouchers, money and other property of whatever kind in his
possession or under his control belonging to the corporation. He shall
have such other powers and perform such other duties as may from time
to time be prescribed by the board of directors or the president. The
assistant treasurers, if any, shall have the same powers and duties,
subject to the supervision of the treasurer.
The treasurer shall also be the principal accounting officer of the
corporation. He shall prescribe and maintain the methods and systems
of accounting to be followed, keep complete books and records of
account as required by the Colorado Business Corporation Act, prepare
and file all local, state and federal tax returns, prescribe and maintain an
adequate system of internal audit and prepare and furnish to the president
and the board of directors statements of account showing the financial
position of the corporation and the results of its operations.
ARTICLE V
Stock
Section 1. Certificates. The board of directors shall be
authorized to issue any of its classes of shares with or without
certificates. The fact that the shares are not represented by certificates
shall have no effect on the rights and obligations of shareholders. If the
shares are represented by certificates, such shares shall be represented
by consecutively numbered certificates signed, either manually or by
facsimile, in the name of the corporation by one or more persons
designated by the board of directors. In case any officer who has signed
or whose facsimile signature has been placed upon such certificate shall
have ceased to be such officer before such certificate is issued, such
certificate may nonetheless be issued by the corporation with the same
effect as if he were such officer at the date of its issue. Certificates of
stock shall be in such form and shall contain such information consistent
with law as shall be prescribed by the board of directors. If shares are
not represented by certificates, within a reasonable time following the
issue or transfer of such shares, the corporation shall send the
shareholder a complete written statement of all of the information
required to be provided to holders of uncertificated shares by the
Colorado Business Corporation Act.
Section 2. Consideration for Shares. Certificated or
uncertificated shares shall not be issued until the shares represented
thereby are fully paid. The board of directors may authorize the
issuance of shares for consideration consisting of any tangible or
intangible property or benefit to the corporation, including cash,
promissory notes, services performed or other securities of the
corporation. Future services shall not constitute payment or partial
payment for shares of the corporation. The promissory note of a
subscriber or an affiliate of a subscriber shall not constitute payment or
partial payment for shares of the corporation unless the note is negotiable
and is secured by collateral, other than the shares being purchased,
having a fair market value at least equal to the principal amount of the
note. For purposes of this Section 2, "promissory note" means a
negotiable instrument on which there is an obligation to pay independent
of collateral and does not include a non-recourse note.
Section 3. Lost Certificates. In case of the alleged loss,
destruction or mutilation of a certificate of stock, the board of directors
may direct the issuance of a new certificate in lieu thereof upon such
terms and conditions in conformity with law as the board may prescribe.
The board of directors may in its discretion require an affidavit of lost
certificate and/or a bond in such form and amount and with such surety
as it may determine before issuing a new certificate.
Section 4. Transfer of Shares. Upon surrender to the
corporation or to a transfer agent of the corporation of a certificate of
stock duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, and receipt of such documentary
stamps as may be required by law and evidence of compliance with all
applicable securities laws and other restrictions, the corporation shall
issue a new certificate to the person entitled thereto, and cancel the old
certificate. Every such transfer of stock shall be entered on the stock
books of the corporation which shall be kept at its principal office or by
the person and at the place designated by the board of directors.
Except as otherwise expressly provided in Article II, Sections 7
and 11, and except for the assertion of dissenters' rights to the extent
provided in Article 113 of the Colorado Business Corporation Act, the
corporation shall be entitled to treat the registered holder of any shares
of the corporation as the owner thereof for all purposes, and the
corporation shall not be bound to recognize any equitable or other claim
to, or interest in, such shares or rights deriving from such shares on the
part of any person other than the registered holder, including without
limitation any purchaser, assignee or transferee of such shares or rights
deriving from such shares, unless and until such other person becomes
the registered holder of such shares, whether or not the corporation shall
have either actual or constructive notice of the claimed interest of such
other person.
Section 5. Transfer Agent, Registrars and Paying Agents.
The board may at its discretion appoint one or more transfer agents,
registrars and agents for making payment upon any class of stock, bond,
debenture or other security of the corporation. Such agents and
registrars may be located either within or outside Colorado. They shall
have such rights and duties and shall be entitled to such compensation as
may be agreed.
ARTICLE VI
Indemnification of Certain Persons
Section 1. Indemnification. For purposes of Article VI, a
"Proper Person" means any person who was or is a party or is
threatened to be made a party to any threatened, pending, or complete
action, suit or proceeding, whether civil, criminal, administrative or
investigative, and whether formal or informal, by reason of the fact that
he is or was a director, officer, employee, fiduciary or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, fiduciary or agent of any
foreign or domestic profit or nonprofit corporation or of any partnership,
joint venture, trust, profit or nonprofit unincorporated association,
limited liability company, or other enterprise or employee benefit plan.
The corporation shall indemnify any Proper Person against reasonably
incurred expenses (including any attorneys' fees), judgments, penalties,
fines (including any excise tax assessed with respect to an employee
benefit plan) and amounts paid in settlement reasonably incurred by him
in connection with such action, suit or proceeding if it is determined by
the groups set forth in Section 4 of this Article that he conducted himself
in good faith and that he reasonably believed (i) in the case of conduct
in his official capacity with the corporation, that his conduct was in the
corporation's best interests, or (ii) in all other cases (except criminal
cases), that his conduct was at least not opposed to the corporation's best
interests, or (iii) in the case of any criminal proceeding, that he had no
reasonable cause to believe his conduct was unlawful. A Proper Person
will be deemed to be acting in his official capacity while acting as a
director, officer, employee or agent on behalf of this corporation and not
while acting on this corporation's behalf for some other entity.
No indemnification shall be made under this Article VI to a
Proper Person with respect to any claim, issue or matter in connection
with a proceeding by or in the right of a corporation in which the Proper
Person was adjudged liable to the corporation or in connection with any
proceeding charging that the Proper Person derived an improper personal
benefit, whether or not involving action in an official capacity, in which
he was adjudged liable on the basis that he derived an improper personal
benefit. Further, indemnification under this Section in connection with
a proceeding brought by or in the right of the corporation shall be
limited to reasonable expenses, including attorneys' fees, incurred in
connection with the proceeding.
Section 2. Right to Indemnification. The corporation shall
indemnify any Proper Person who was wholly successful, on the merits
or otherwise, in defense of any action, suit, or proceeding as to which
he was entitled to indemnification under Section 1 of this Article VI
against expenses (including attorneys' fees) reasonably incurred by him
in connection with the proceeding without the necessity of any action by
the corporation other than the determination in good faith that the
defense has been wholly successful.
Section 3. Effect of Termination of Action. The termination
of any action, suit or proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not
of itself create a presumption that the person seeking indemnification did
not meet the standards of conduct described in Section 1 of this Article
VI. Entry of a judgment by consent as part of a settlement shall not be
deemed an adjudication of liability, as described in Section 2 of this
Article VI.
Section 4. Groups Authorized to Make Indemnification
Determination. Except where there is a right to indemnification as set
forth in Sections 1 or 2 of this Article or where indemnification is
ordered by a court in Section 5, any indemnification shall be made by
the corporation only as authorized in the specific case upon a
determination by a proper group that indemnification of the Proper
Person is permissible under the circumstances because he has met the
applicable standards of conduct set forth in Section 1 of this Article.
This determination shall be made by the board of directors by a majority
vote of those present at a meeting at which a quorum is present, which
quorum shall consist of directors not parties to the proceeding
("Quorum"). If a Quorum cannot be obtained, the determination shall
be made by a majority vote of a committee of the board of directors
designated by the board, which committee shall consist of two or more
directors not parties to the proceeding, except that directors who are
parties to the proceeding may participate in the designation of directors
for the committee. If a Quorum of the board of directors cannot be
obtained and the committee cannot be established, or even if a Quorum
is obtained or the committee is designated and a majority of the directors
constituting such Quorum or committee so directs, the determination
shall be made by (i) independent legal counsel selected by a vote of the
board of directors or the committee in the manner specified in this
Section 4, or, if a Quorum of the full board of directors cannot be
obtained and a committee cannot be established, by independent legal
counsel selected by a majority vote of the full board (including directors
who are parties to the action) or (ii) a vote of the shareholders.
Section 5. Court-Ordered Indemnification. Any Proper
Person may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction for mandatory
indemnification under Section 2 of this Article, including indemnification
for reasonable expenses incurred to obtain court-ordered indemnification.
If the court determines that such Proper Person is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances,
whether or not he met the standards of conduct set forth in Section 1 of
this Article or was adjudged liable in the proceeding, the court may
order such indemnification as the court deems proper except that if the
Proper Person has been adjudged liable, indemnification shall be limited
to reasonable expenses incurred in connection with the proceeding and
reasonable expenses incurred to obtain court-ordered indemnification.
Section 6. Advance of Expenses. Reasonable expenses
(including attorneys' fees) incurred in defending an action, suit or
proceeding as described in Section 1 may be paid by the corporation to
any Proper Person in advance of the final disposition of such action, suit
or proceeding upon receipt of (i) a written affirmation of such Proper
Person's good faith belief that he has met the standards of conduct
prescribed by Section 1 of this Article VI, (ii) a written undertaking,
executed personally or on the Proper Person's behalf, to repay such
advances if it is ultimately determined that he did not meet the
prescribed standards of conduct (the undertaking shall be an unlimited
general obligation of the Proper Person but need not be secured and may
be accepted without reference to financial ability to make repayment),
and (iii) a determination is made by the proper group (as described in
Section 3 of this Article VI) that the facts as then known to the group
would not preclude indemnification. Determination and authorization of
payments shall be made in the same manner specified in Section 4 of this
Article VI.
Section 7. Witness Expenses. The sections of this Article VI
do not limit the corporation's authority to pay or reimburse expenses
incurred by a director in connection with an appearance as a witness in
a proceeding at a time when he has not been a named defendant or
respondent in the proceeding.
Section 8. Report to Shareholders. Any indemnification of
or advance of expenses to a director in accordance with this Article VI,
if arising out of a proceeding by or on behalf of the corporation, shall
be reported in writing to the shareholders with or before the notice of the
next shareholders' meeting. If the next shareholder action is taken
without a meeting at the instigation of the board of directors, such notice
shall be given to the shareholders at or before the time the first
shareholder signs a writing consenting to such action.
ARTICLE VII
Provision of Insurance
By action of the board of directors, notwithstanding any interest
of the directors in the action, the corporation may purchase and maintain
insurance, in such scope and amounts as the board of directors deems
appropriate on behalf of any person who is or was a director, officer,
employee, fiduciary or agent of the corporation, or who, while a
director, officer, employee, fiduciary or agent of the corporation, is or
was serving at the request of the 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, profit or
nonprofit unincorporated association, limited liability company or other
enterprise or employee benefit plan, against any liability asserted against,
or incurred by, him in that capacity arising out of his status as such,
whether or not the corporation would have the power to indemnify him
against such liability under the provisions of Article VI or applicable
law. Any such insurance may be procured from any insurance company
designated by the board of directors of the corporation, whether such
insurance company is formed under the laws of Colorado or any other
jurisdiction of the United States or elsewhere, including any insurance
company in which the corporation has an equity interest or any other
interest, through stock ownership or otherwise.
ARTICLE VIII
Miscellaneous
Section 1. Seal. The corporate seal of the corporation shall
be circular in form and shall contain the name of the corporation and the
words, "Seal, Colorado."
Section 2. Fiscal Year. The fiscal year of the corporation
shall be as established by the board of directors.
Section 3. Amendments. The board of directors shall have
power, to the maximum extent permitted by the Colorado Business
Corporation Act, to make, amend and repeal the bylaws of the
corporation at any regular or special meeting of the board unless the
shareholders, in making, amending or repealing a particular bylaw,
expressly provide that the directors may not amend or repeal such
bylaw. The shareholders also shall have the power to make, amend or
repeal the bylaws of the corporation at any annual meeting or at any
special meeting called for that purpose.
Section 4. Gender. The masculine gender is used in these
bylaws as a matter of convenience only and shall be interpreted to
include the feminine and neuter genders as the circumstances indicate.
Section 5. Conflicts. In the event of any irreconcilable
conflict between these bylaws and either the corporation's articles of
incorporation or applicable law, the latter shall control.
Section 6. Definitions. Except as otherwise specifically
provided in these bylaws, all terms used in these bylaws shall have the
same definition as in the Colorado Business Corporation Act.
THE FOREGOING BYLAWS, consisting of eighteen (18) pages,
including this page, constitute the bylaws of Global Capital Access
Corporation adopted by the board of directors of the corporation as of
January 19, 1995.
/s/
Secretary<PAGE>
EXHIBIT 4.1 - WARRANT AGENT AGREEMENT
AGREEMENT, dated this 1st day of January, 1997, between
Controlled Environment Aquaculture Technology, Inc., a Colorado
corporation (the "Company"), and U.S. Stock Transfer, Inc., as warrant
agent (the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, the Company has issued 1,875,000 Class A
Common Stock Purchase Warrants ("Class A Warrants"), each such
warrant to purchase one (1) share of the Company's Common Stock, no
par value per share (the "Common Stock"), and all such Class A
Warrants are hereinafter collectively referred to as the "Warrants;" and
WHEREAS, each Warrant entitles the registered holder to
purchase one (1) share of Common Stock; and
WHEREAS, the Company desires to provide for the issuance of
certificates representing the Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing so to act, in
connection with the issuance, registration, transfer and exchange of
certificates representing the Warrants and the exercise of the Warrants;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, and for the purpose of defining
the terms and provisions of the Warrants and the certificates representing
the Warrants and the respective rights and obligations thereunder of the
Company, the holders of certificates representing the Warrants, and the
Warrant Agent, the parties hereto agree as follows:
SECTION 1. Definitions.
For purposes of this Agreement, the terms listed below shall have
the respective meanings set forth below in this Section, unless the
context shall require otherwise.
(a) "Common Stock" shall mean common stock of the
Company, whether now or hereafter authorized, which has the right to
participate in the distribution of earnings and assets of the Company
without limit as to amount or percentage, which as authorized at the date
hereof consists of 100,000,000 shares.
(b) "Warrant Expiration Date" shall mean 5 p.m. (Mountain
Time) on December 31, 2001, or if such a date shall, in the State of
Colorado, be a holiday or a day on which banks are authorized to close,
then 5 p.m. (Mountain Time) on the next following day which, in the
State of Colorado, is not a holiday or a day on which banks are
authorized to close. The Warrant Expiration Date may be extended from
time to time for an indefinite period, by action of the Company, upon
giving five (5) days prior notice to the Warrant Agent. Unless exercised
during the Warrant Exercise Period, as defined below, the Warrants will
thereafter automatically expire.
(c) "Warrant Exercise Period" shall mean from August 1,
1995, until the Warrant Expiration Date.
(d) "Corporate Office" shall mean the office of the Warrant
Agent (or its successor) at which at any particular time its principal
business in Denver, Colorado, shall be administered, which office is
located at the date hereof at 1745 Gardena Avenue, Glendale, California
91204.
(e) "Exercise Date" shall mean the date a certificate
representing a Warrant is surrendered for exercise.
(f) "Purchase Price" shall mean $2.00 per share of Common
Stock, unless such purchase price shall have been reduced as hereinafter
provided. The Company may, in its sole discretion, reduce the Purchase
Price upon five (5) days prior notice to the Warrant Agent. Subject to
the provisions of Sections 4 and 5 and the other conditions set forth in
this Agreement, each Warrant is exercisable for one (1) share of
Common Stock upon payment of the Purchase Price at any time during
the Warrant Exercise Period.
(g) "Registered Holder" shall mean the person in whose name
any certificate representing Warrants shall be registered on the books
maintained by the Warrant Agent pursuant to Section 7.
(h) "Subsidiary" or "Subsidiaries" shall mean any corporation
or corporations, as the case may be, of which stock having ordinary
power to elect a majority of the Board of Directors of such corporation
(regardless of whether at the time stock of any other class or classes of
such corporation shall have or may have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned
by the Company or by one or more subsidiaries, or by the Company and
one or more Subsidiaries.
(i) "Transfer Agent" shall mean U.S. Stock Transfer, Inc.,
Glendale, California, or its authorized successor.
(j) "Warrant Certificate" shall mean a certificate representing
Warrants.
SECTION 2. Warrants and Issuance of Warrant Certificates;
Stop-Transfer Order.
(a) Each Warrant shall entitle the Registered Holder of the
Warrant Certificate representing such Warrant to purchase one share of
Common Stock upon the exercise thereof. Until the Company shall have
consummated a business combination that does not result in the
cancellation of the Warrants pursuant to Section 5(a), the Warrants (i)
shall be subject to a stop-transfer order, and (ii) may not be transferred
on the books and records of the Company. Unless the Warrants shall
have been cancelled pursuant to Section 5(a), the Warrants shall become
freely transferable upon the consummation of a business combination by
the Company.
(b) Upon execution of this Agreement, Warrant Certificates
representing up to an aggregate of 1,875,000 Class A Warrants to
purchase an aggregate of 1,875,000 shares of Common Stock shall be
executed by the Company and delivered to the Warrant Agent and, after
the corresponding certificates for Warrants shall have been duly
countersigned by the Transfer Agent of the Company's Common Stock,
shall be countersigned, issued and delivered by the Warrant Agent upon
written order of the Company signed by its Chief Executive Officer,
President, or a Vice President and its Treasurer or an Assistant
Treasurer or its Secretary or Assistant Secretary.
(c) From time to time, up to the Warrant Expiration Date,
plus such additional time as may reasonably be required to perform,
accomplish and complete necessary administrative functions connected
with the exercise of the Warrants, the Transfer Agent shall countersign
and deliver stock certificates representing up to an aggregate of
1,875,000 shares of Common Stock upon the exercise of the Class A
Warrants pursuant to the terms of this Agreement.
(d) From time to time, up to the Warrant Expiration Date, the
Warrant Agent shall countersign and deliver Warrant Certificates in
required whole number denominations to the persons entitled thereto in
connection with any transfer or exchange permitted under this
Agreement. Except as provided in Section 8 hereof, no Warrant
Certificates shall be issued except (i) Warrant Certificates initially issued
hereunder, (ii) Warrant Certificates issued upon the exercise of any
Warrants, to evidence the unexercised Warrants held by the exercising
Registered Holder, and (iii) Warrant Certificates issued upon any
transfer or exchange of Warrants.
SECTION 3. Form and Execution of Warrant Certificates.
The Warrant Certificate shall be substantially in the form annexed
hereto as Exhibit A (the provisions of which are incorporated herein by
this reference) and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Company
may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any law or with
any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Class A Warrants may be
listed, or to conform to usage. The Warrant Certificates shall be dated
the date of issuance thereof (whether upon initial issuance, transfer,
exchange or in lieu of mutilated, lost, stolen or destroyed Warrant
Certificates). Class A Warrants shall be numbered serially with the
letters W-A, or other similar designation, on Class A Warrants of all
denominations.
Warrant Certificates shall be executed on behalf of the Company
by its Chief Executive Officer, President or any Vice President and its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant
Secretary, by manual signatures or by facsimile signatures printed
thereon, and shall have imprinted thereon a facsimile of the Company's
seal. Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have
signed any of the Warrant Certificates shall cease to be such officer of
the Company before the date of issuance of the Warrant Certificates or
before countersignature by the Warrant Agent and issue and delivery
thereof, such Warrant Certificates, nevertheless, may be countersigned
by the Warrant Agent, issued and delivered with the same force and
effect as though the person who signed such Warrant Certificates had not
ceased to be such officer of the Company.
SECTION 4. Exercise of Warrants.
Subject to (i) the provisions of Section 5 and the other conditions
set forth in this Agreement, (ii) the current prospectus requirements of
the Securities Act of 1933, as amended, and (iii) any additional
conditions set forth in the applicable Warrant Certificate, each Warrant
represented by a Warrant Certificate may be exercised during the
applicable Warrant Exercise Period upon the terms set forth herein and
in the applicable Warrant Certificate. A Warrant shall be deemed to
have been exercised immediately prior to the close of business on the
applicable Exercise Date, provided that the Warrant Certificate
representing such Warrant, with the appropriate exercise form thereon
duly executed by the Registered Holder thereof or his or her attorney
duly authorized in writing, together with payment in cash, or by official
bank or certified check made payable to the Company, of an amount
equal to the applicable Purchase Price has been timely received by the
Warrant Agent. Payment must be made in United States funds. The
person entitled to receive the securities deliverable upon such exercise
shall be treated, for all purposes, as the holder of such securities as of
the close of business on the Exercise Date. The Company shall not be
obligated to issue any fractional share interests or fractional warrant
interests upon the exercise of any Warrant or Warrants. As soon as
practicable on or after the Exercise Date, and in any event within thirty
(30) days after such date, if a Warrant has been exercised, the Warrant
Agent, on behalf of the Company, shall cause to be issued to the person
or persons entitled to receive the same, a Common Stock certificate or
certificates for the shares of Common Stock, and the Warrant Agent
shall deliver the same to the person or persons entitled thereto. No
adjustment shall be made in respect of dividends on any shares delivered
upon exercise of any Warrant. Upon the exercise of any Warrants, the
Warrant Agent shall promptly notify the Company in writing of such fact
and of the number of securities delivered upon such exercise and shall
cause all payments of an amount in cash or check made payable to the
order of the Company, equal to the Purchase Price, to be deposited
promptly into the Company's bank account.
Notwithstanding the other provisions hereof, no Warrants may be
exercised unless the Company maintains a current registration statement
with the U.S. Securities and Exchange Commission ("Registration
Statement") in effect during the exercise period of the Warrants. The
Company will use its best efforts to file a Registration Statement, and to
keep the information on the Company therein current during the period
during which the Warrants may be exercised. The Company will have
no obligation, however, to file or to keep the Registration Statement
current for Common Stock to be issued pursuant to a class of Warrants
when the market bid price for the Company's Common Stock is below
the exercise price of such class of Warrants, or when there is no current
public market for the Company's Common Stock.
SECTION 5. Cancellation of Warrants. Anything in this
Agreement or in the applicable Warrant Certificate to the contrary
notwithstanding, the Warrants shall be subject to cancellation by the
Company as follows:
(a) Subject to the limitations set forth below in this Subsection
(a), all, but not less than all, of the Warrants may be cancelled by the
Company at any time prior to the declaration by the Securities and
Exchange Commission of the effectiveness of a Registration Statement
under which the Common Stock shall have been registered without prior
written notice to the registered holders of the Warrants and without any
right on the part of the holders of the Warrants to exercise their purchase
rights prior to the cancellation date. Upon cancellation, the
Warrantholder will forfeit his right to purchase the Common Stock
underlying the Warrants. Because the Warrants may be exercised only
so long as the Company meets the current prospectus requirements of the
Securities Act of 1933, as amended, a cancellation of the Warrants
pursuant to this Subsection (a) will mean that the Warrantholder shall
never have received an opportunity to exercise the Warrants following
the acquisition of a business opportunity by the Company. The
Company's right to cancel the Warrants in accordance with this
Subsection (a) may be exercised, however, only in the event that
management of a business opportunity that is the target of a business
combination with the Company shall have required, in writing, that the
cancellation of the Warrants shall be a condition precedent to the
consummation of the business combination between the Company and the
target company. The cancellation is to become effective only upon the
closing of such a business combination. Should the contemplated
business combination fail to close, the cancellation shall be void and the
exercisability of the Warrants covered by the cancellation shall not be
affected. The failure of one or more business combinations to close
shall not, however, impair the Company's right to cancel Warrants under
this Subsection (a) if the Company enters into arrangements for a
subsequent business combination featuring the warrant-cancellation
condition described in this Subsection (a). To the extent that the
management of a business opportunity that consummates a business
combination with the Company does not require cancellation of Warrants
as a condition of closing, the right of the Company to cancel Warrants
under this Subsection (a) shall be extinguished.
(b) In addition to the cancellation mechanism described in
Subsection (a), above, all or any number of the Warrants can be
cancelled by the Company at any time during their exercise term upon
a minimum of thirty (30) days prior written notice mailed to the
registered holders of the Warrants to exercise their purchase rights
between the date of any notice of cancellation up to and including the
cancellation date given by the company. The notice period may be
extended, at the discretion of the Company, upon giving subsequent
notice to the Warrant Agent and to registered holders of the Warrants.
Any holder who does not exercise his Warrants prior to the date set for
cancellation will forfeit his right to purchase the Common Stock
underlying the Warrants.
SECTION 6. Reservation of Shares; Listing; Payment of Taxes;
etc.
The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issue upon exercise of Warrants, such number of shares of Common
Stock as shall then be issuable upon the exercise of all outstanding
Warrants. The Company covenants that all shares of Common Stock
which shall be issuable upon exercise of Warrants shall be duly and
validly issued and fully paid and nonassessable and free from all taxes,
liens and charges with respect to the issue thereof, and that upon
issuance, such shares shall be listed on each national securities exchange,
if any, on which the other shares of outstanding Common Stock of the
Company are then listed.
If any securities to be reserved for the purpose of exercise of
Warrants hereunder require registration with or approval of any
governmental authority under any federal or state law, before such
securities may be validly issued or delivered upon such exercise, then the
Company covenants that it will, in good faith and as expeditiously as
possible, endeavor to secure such registration or approval, as the case
may be, provided, however, that the Company need not endeavor to seek
such registration or approval in a state in which the Warrants were not
sold by the Company pursuant to the Registration Statement unless an
exemption from registration under such state's laws is available or such
registration or approval may be obtained with reasonable efforts and
expenses, and provided further, that Warrants may not be exercised by,
or shares of Common Stock issued to, any Registered Holder in any
state in which such exercise would be unlawful.
The Company shall pay all documentary, stamp or similar taxes
and other governmental charges that may be imposed with respect to the
issuance of Warrants, or the issuance or delivery of any shares upon
exercise of the said Warrants; provided, however, that if shares of
Common Stock are to be delivered in a name other than the name of the
Registered Holder of the Warrant Certificate representing any Warrant
being exercised, then no such delivery shall be made unless the person
requesting the same has paid to the Warrant Agent the amount of
transfer taxes or charges incident thereto, if any.
The Warrant Agent, unless it is already acting as such, is hereby
irrevocably authorized to requisition the Transfer Agent from time to
time for certificates representing shares of Common Stock required upon
exercise of the Warrants, and the Company will authorize the Transfer
Agent to comply with all such requisitions. The Company will file with
the Warrant Agent a statement setting forth the name and address of the
Transfer Agent for shares of Common Stock or other capital stock
issuable upon exercise of the Warrants and of each successor Transfer
Agent.
SECTION 7. Exchange and Registration of Transfer.
Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants or may
be transferred in whole or in part. Warrant Certificates to be so
exchanged shall be surrendered to the Warrant Agent at its Corporate
Office, accompanied by an Assignment, when necessary, and the
Company shall execute and the Warrant Agent shall countersign, issue
and deliver in exchange therefor, the Warrant Certificate or Certificates
which the Registered Holder making the exchange shall be entitled to
receive.
The Warrant Agent shall keep at such office, books in which,
subject to such reasonable regulations as it may prescribe, it shall
register Warrant Certificates and the transfer thereof. Upon due
presentment for registration of transfer of any Warrant Certificate at
such office, the Company shall execute and the Warrant Agent shall
issue and deliver to the transferee or transferees a new Warrant
Certificate or Certificates representing an equal aggregate number of
Warrants.
With respect to all Warrant Certificates presented for registration
or transfer, or for exchange or exercise, the subscription form on the
reverse thereof shall be duly endorsed, or be accompanied by a written
instrument or instruments of transfer and subscription, in form
satisfactory to the Company and the Warrant Agent, duly executed by
the Registered Holder thereof or his or her attorney duly authorized in
writing.
A service charge shall be made for any exchange or registration
or transfer of Warrant Certificates. In addition, the Company may
require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
All Warrant Certificates so surrendered for exercise or for
exchange in case of mutilated Warrant Certificates shall be promptly
cancelled by the Warrant Agent and thereafter retained by the Warrant
Agent until termination of the agency.
Prior to due presentment for registration of transfer thereof, the
Company and the Warrant Agent may deem and treat the Registered
Holder of any Warrant Certificate as the absolute owner thereof and of
each Warrant represented thereby (notwithstanding any notations of
ownership or writing thereon made by anyone other than the Company
or the Warrant Agent) for all purposes and shall not be affected by any
notice to the contrary.
SECTION 8. Loss or Mutilation.
Upon receipt by the Company and the Warrant Agent of evidence
satisfactory to them of the ownership of and the loss, theft, destruction
or mutilation of any Warrant Certificate and (in the case of loss, theft or
destruction) of indemnity satisfactory to them, and (in the case of
mutilation) upon surrender and cancellation thereof, the Company shall
execute and the Warrant Agent shall countersign and deliver in lieu
thereof, a new Warrant Certificate representing an equal aggregate
number of Warrants. Applicants for a substitute Warrant Certificate
shall also comply with such other reasonable regulations and pay such
other reasonable charges as the Warrant Agent may prescribe.
SECTION 9. Adjustment of Purchase Price and Number of
Shares Deliverable After a Recapitalization or Restructuring of the
Company.
(a) After each adjustment of the Purchase Price, pursuant to
this Section 9, the number of Common Stock purchasable upon the
exercise of each Warrant shall be the number derived by dividing such
adjusted Purchase Price into the original Purchase Price as defined in
Section 1(f). In addition to this Section 9, the Company's Board of
Directors may, in its discretion, reduce the applicable purchase price
upon the giving of five (5) days prior notice to the registered holders of
the Warrants and to the Warrant Agent. Such reductions shall not be
subject to the adjustment provisions of this Section 9.
(b) The Purchase Price shall be subject to adjustment as set
forth below:
(i) In case the Company shall hereafter (A) pay a dividend or
make a distribution on its Common Stock in shares of its capital stock
(whether shares of Common Stock or of capital stock of any other class),
(B) subdivide its outstanding shares of Common Stock, (C) combine its
outstanding shares of Common Stock into a smaller number or shares,
or (D) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Company, the Purchase Price in effect
immediately prior to such action shall be adjusted so that the Registered
Holder of any Warrant thereafter exercised shall be entitled to receive
the number of shares of capital stock of the Company which he or she
would have owned immediately following such action had such Warrant
been exercised immediately prior thereto.
(ii) An adjustment made pursuant to this subsection shall
become effective immediately after the record date in the case of a
dividend and shall become effective immediately after the effective date
in the case of a subdivision, combination, reclassification or issue. If,
as a result of an adjustment made pursuant to this subsection, the
Registered Holder of any Warrant thereafter exercised shall become
entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors (whose determination shall be
conclusive and shall be described in a statement filed with the Warrant
Agent) shall determine the allocation of the adjusted Purchase Price
between or among shares of such classes of capital stock.
(iii) No adjustment in the Purchase Price shall be required to
be made unless such adjustment would require an increase or decrease
of at least $.01; provided, however, that any adjustments, which by
reason of this subsection, are not required to be made, shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 9 shall be made to the earnest one-
hundredth of a share, as the case may be, but in no event shall the
Company be obligated to issue fractional shares upon the exercise of any
Warrant.
(iv) In the event that at any time as a result of an adjustment
made pursuant to subsection (i) of this Section 9(b), the Registered
Holder of any Warrant thereafter exercised shall become entitled to
receive any shares of the Company other than shares of its Common
Stock, thereafter the Purchase price of such other shares so receivable
upon exercise of any Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to Common Stock contained in subsections
(i) through (iii) of this Section 9(b).
(c) In case of any reclassification or change of outstanding
shares of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from
no par value to par value or as a result of a subdivision or combination),
or in case of any consolidation or merger of the Company with or into
another corporation (other than a merger with a Subsidiary in which
merger the Company is the continuing corporation and which does not
result in any reclassification or change of the then outstanding shares of
Common Stock or other capital stock issuable upon exercise of the
Warrants [other than a change in par value, or from par value to no par
value, or from no par value to par value or as a result of a subdivision
or combination]) or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or
substantially as an entirety, then, as a condition of such reclassification,
change, consolidation, merger, sale or conveyance, the Company, or
such successor or purchasing corporation, as the case may be, shall
make lawful and adequate provision whereby the Registered Holder of
each Warrant then outstanding shall have the right thereafter to receive
on exercise of such Warrant, the kind and amount of securities and
property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance by a Holder of the number of securities
issuable upon exercise of such Warrant immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance and
shall forthwith file at the Corporate Office of the Warrant Agent, a
statement signed by its Chief Executive Officer, President or a Vice
President and its Treasurer or an Assistant Treasurer or its Secretary or
an Assistant Secretary evidencing such provisions. Such provisions shall
include provision for adjustment which shall be as nearly equivalent as
may be practicable to the adjustments provided for in Section 9(b). The
above provisions of this Section 9(c) shall similarly apply to the
successive reclassifications and changes of shares of Common Stock and
to successive consolidations, mergers, sales or conveyances.
(d) Before taking any action which would cause an adjustment
reducing the Purchase Price below the then par value of the shares of
Common Stock issuable upon exercise of the Warrants, the Company
will take any corporate action which may, in the opinion of its counsel,
be necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of such Common Stock at such
adjusted Purchase Price.
(i) Upon any adjustment of the Purchase Price required to be
made pursuant to this Section 9, the Company within thirty (30) days
thereafter shall (A) cause to be filed with the Warrant Agent a certificate
of a firm of independent accountants setting forth the Purchase Price
after such adjustment and setting forth in reasonable detail the method
of calculation and the facts upon which such calculation is based, which
certificate shall be conclusive evidence of the correctness of such
adjustment, and (B) cause to be mailed to each of the Registered Holders
of Warrant Certificates written notice of such adjustment. Where
appropriate, such notice may be given in advance and included as a part
of the notice required to be mailed under the provisions of Subsection
9(d)(ii).
(ii) In case at any time:
(A) The Company shall declare any dividend upon its
Common Stock payable otherwise than in cash or in Common Stock of
the Company; or
(B) The Company shall offer for subscription to all the holders
of its Common Stock, but not to the public generally, any additional
shares of stock of any class or any other securities convertible into
shares of stock or any rights to subscribe therefore; or
(C) There shall be any capital reorganization or reclassification
of the capital stock of the Company, or a sale of all or substantially all
of the assets of the Company, or a consolidation or merger of the
Company with another corporation (other than a merger with a
Subsidiary in which merger the Company is the continuing corporation
and which does not result in any reclassification or change of the then
outstanding shares of Common Stock or other capital stock issuable upon
exercise of the Warrants [other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result
of subdivision or combination]); or
(D) There shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall cause to be
mailed to each of the Registered Holders of Warrants, at the earliest
practicable time (and, in any event, not less than twenty (20) days before
any record date or other date set for definitive action), written notice of
the date on which the books of the Company shall close or a record shall
be taken for such dividend, distribution or subscription rights or such
reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up shall taken place, as the case may be. Such
notice shall also set forth such facts as shall indicate the effect of such
action (to the extent that such effect may be known at the date of such
notice) on the Purchase Price and the kind and amount of the shares of
stock and other securities and property deliverable upon exercise of the
Warrants. Such notice shall also specify the date as of which the holders
of the Common Stock of record shall participate in said dividend,
distribution or subscription rights or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be (on which date, in the
event of voluntary or involuntary dissolution, liquidation or winding up
of the Company, the right to exercise the Warrants shall terminate).
(iii) Without limiting the obligation of the Company to provide
notice to the Registered Holders of corporation actions hereunder, it is
agreed that failure of the Company to give notice shall not invalidate
such corporation action of the Company.
SECTION 10. Concerning the Warrant Agent.
The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company, and its duties shall be determined solely by
the provisions hereof. The Warrant Agent shall not, by issuing and
delivering Warrant Certificates or by any other act hereunder, be deemed
to make any representations as to the validity or value or authorization
of the Warrant Certificate or the Warrants represented thereby or of any
securities or other property delivered upon exercise of any Warrant or
whether any stock issued upon exercise of any Warrant is fully paid and
nonassessable.
The Warrant Agent shall not at any time (i) be liable for any
recital or statement of fact contained herein or for any action taken,
suffered or omitted by it in reliance on any Warrant Certificate or other
document or instrument believed by it in good faith to be genuine and
to have been signed or presented by the proper party or parties, (ii) be
responsible for any failure on the part of the Company to comply with
any of its covenants and obligations contained in this Agreement or in
any Warrant Certificate, or (iii) be liable for any act or omissions in
connection with this Agreement except for its own negligence or willful
misconduct.
The Warrant Agent may at any time consult with counsel for the
Company and shall incur no liability or responsibility for any action
taken, suffered or omitted by it in good faith in accordance with the
option or advice of such counsel.
Any notice, statement, instruction, request, direction, order or
demand of the Company shall be sufficiently evidenced by an instrument
signed by its Chief Executive Officer, President, a Vice President, its
Treasurer, an Assistant Treasurer, its Secretary, or an Assistant
Secretary (unless other evidence in respect thereof is herein specifically
prescribed). The Warrant Agent shall not be liable for any action taken,
suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand.
The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its
reasonable expenses hereunder; it further agrees to indemnify the
Warrant Agent and save it harmless against any and all losses, expenses
and liabilities, including judgments, costs and counsel fees, for anything
done or omitted by the Warrant Agent in the execution of its duties and
powers hereunder except losses, expenses and liabilities arising as a
result of the Warrant Agent's negligence or willful misconduct.
The Warrant Agent may resign its duties and be discharged from
all further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence or willful misconduct),
after giving thirty (30) days prior written notice to the Company. At
least fifteen (15) days prior to the date, such resignation is to become
effective, the Warrant Agent shall cause a copy of such notice of
resignation to be mailed to the Registered Holder of each Warrant
Certificate at the Company's expense. Upon such resignation, the
company shall appoint in writing, a new warrant agent. If the company
shall fail to make such appointment within a period of thirty (30) days
after it has been notified in writing of such resignation by the resigning
Warrant Agent, then the Registered Holder of any Warrant Certificate
may apply in any court of competent jurisdiction for the appointment of
a new warrant agent. Any new warrant agent, whether appointed by the
Company or by such a court, shall be a bank or trust company having
a capital and surplus, as shown by its last published report of its
stockholders, of not less than $1,000,000 or a stock transfer company
doing business in the Denver, Colorado, metropolitan area. After
acceptance in writing of such appointment by the new warrant agent is
received by the Company, such new warrant agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named herein as the warrant agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be
necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the
Company and shall be legally and validly executed and delivered by the
resigning Warrant Agent. Not later than the effective date of any such
appointment, the Company shall file notice thereof with the resigning
Warrant Agent and shall forthwith cause a copy of such notice to be
mailed to the Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new
warrant agent may be converted or merged or any corporation resulting
from any consolidation to which the Warrant Agent or any new warrant
agent shall be a party or any corporation succeeding to the corporate
trust business of the Warrant Agent shall be a successor warrant agent
under this Agreement without any further act, provided that such
corporation is eligible for appointment as successor to the Warrant Agent
under the provisions of the preceding paragraph. Any such successor
warrant agent shall promptly cause notice of its succession as warrant
agent to be mailed to the Company and to the Registered Holder of each
Warrant Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of its
or their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the
same manner and to the same extent and with like effect as though it
were not the Warrant Agent. Nothing herein shall preclude the Warrant
Agent from acting in any capacity for the Company or for any other
legal entity.
The Warrant Agent and the Company may by supplemental
agreement, make any changes or corrections in this Agreement (i) that
they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or manifest mistake or error herein
contained; or (ii) that they may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Warrant
Certificates; provided, however, that this Agreement shall not otherwise
be modified, supplemented or altered in any respect except with the
consent in writing of the Registered Holders of Warrant Certificates
representing not less than 50% of the Warrants then outstanding; and
provided, further, that no change in the number or nature of the
securities purchasable upon the exercise of any Warrant, or an increase
in the Purchase Price therefor, or the acceleration of the applicable
Warrant Expiration Date, shall be made without the consent in writing
of the Registered Holders of the Warrant Certificate representing such
Warrant, other than such changes as are specifically prescribed by this
Agreement as originally executed.
SECTION 11. Notices.
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been made
when delivered or mailed, first-class postage prepaid, or delivered to a
telegraph office for transmissions: if to the Registered Holder of the
Warrant Certificate, at the address of such holder as shown on the
registry books maintained by the Warrant Agent; if to the Company, at
c/o Frascona, Joiner and Goodman, P.C., 4750 Table Mesa Drive,
Boulder, Colorado 80303, Attention: Gary S. Joiner, or at such other
address as may have been furnished to the Warrant Agent in writing by
the Company, in each case with a copy at the same time to Frascona,
Joiner and Goodman, P.C., Attention: Gary S. Joiner, Esq., 4750 Table
Mesa Drive, Boulder, Colorado 80303-5575; and, if to the Warrant
Agent, at the Corporate office.
SECTION 12. Governing law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
SECTION 13. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
the Company, the Warrant Agent and their respective successors and
assigns, and the Registered Holders from time to time of Warrant
Certificates or any of them. Nothing in this Agreement is intended or
shall be construed to confer upon any other person any right, remedy or
claim or to impose upon any other person any duty, liability or
obligation.
SECTION 14. Counterparts.
This Agreement may be executed in several counterparts, which
taken together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have cause this
Agreement to be duly executed as of the date first above written.
CONTROLLED ENVIRONMENT AQUACULTURE TECHNOLOGY,
INC.
By: /s/ J.A. Garcia, Its President
U.S. STOCK TRANSFER CORPORATION, as Warrant Agent
By: /s/
<PAGE>
EXHIBIT 4.2 - CLASS A WARRANT CERTIFICATE NO. W-A ____
___________ CLASS A WARRANTS
CONTROLLED ENVIRONMENT AQUACULTURE TECHNOLOGY,
INC.
(a Colorado corporation)
CLASS A WARRANT CERTIFICATE
For the Purchase of Common Stock
CUSIP 21239H 11 9
THIS CERTIFIES THAT, for value received,
_________________ ("Warrantholder"), is the registered owner of the
above-stated number of Class A Warrants ("Class A Warrants") of
CONTROLLED ENVIRONMENT AQUACULTURE TECHNOLOGY,
INC., a Colorado corporation ("Company"), expiring on December 31,
2001, unless extended ("Expiration Date"). Subject to limitations as
described below, each Class A Warrant entitles the Warrantholder to
purchase one share of the common stock no par value ("Common Stock"
or "Shares"), of the Company, at a purchase price of $2.00 per Share
("Exercise Price"), at any time beginning August 1, 1995 and until the
Expiration Date, upon surrender of this Certificate with the exercise
form on the reverse side hereof duly completed and executed,
accompanied by payment of the Exercise Price, to U.S. Stock Transfer
Corporation ("Warrant Agent"), 1745 Gardena Avenue, Glendale,
California 91204-2991. This Certificate and exercise of these Class A
Warrants will be subject to the provisions of the Warrant Agent
Agreement dated to be effective as of January 1, 1997 ("Warrant
Agreement"), between the Company and the Warrant Agent, to which
provisions the Warrantholder agrees by acceptance of this Certificate.
The provisions of the Warrant Agreement and those set forth on this
Certificate are fully incorporated by reference into this Certificate as if
fully set forth herein.
If all Class A Warrants represented by this Certificate shall not
have been duly exercised on or before the Expiration Date, as it may be
extended, the unexercised Class A Warrants shall expire and this
Certificate shall become void. The Expiration Date may be extended
from time to time for an indefinite period, or the Exercise Price may be
reduced, at the discretion of the Company upon giving notice thereof to
the Warrant Agent and giving subsequent notice thereof to holders of
Class A Warrants then listed on its books.
The Warrantholder may exercise all or any of the Class A
Warrants in the manner and during the period stated above, but only for
an even number of Shares if less than all are exercised, upon due
presentment of this Certificate to the Warrant Agent. The Exercise Price
must be paid in lawful money of the United States of America, in cash
or by personal check, bank check or certified check payable to the order
of the Company. If fewer than all of the above number of Class A
Warrants are exercised, the Warrant Agent shall execute and deliver to
the Warrantholder a new Class A Warrant certificate of like tenor
evidencing the number of Class A Warrants not exercised. Should any
or all the Class A Warrants be assigned, then upon due presentment of
this Certificate by the assignee to the Warrant Agent accompanied by
payment of the sum of $10.00 per Class A Warrant certificate to be
issued and of all transfer taxes and other governmental charges due, if
any, the Warrant Agent shall transfer the Class A Warrants assigned on
the transfer books and shall (subject to the Warrant Agreement) execute
and deliver to the assignee a Class A Warrant certificate of like tenor
representing the number of Class A Warrants assigned, and if less than
all of the Class A Warrants are assigned, execute and deliver to the
Warrantholder a Class A Warrant certificate of like tenor representing
the number of Class A Warrants not assigned.
The Company has not undertaken to maintain a current registration
statement in effect for the Common Stock at any time.
These Class A Warrants shall not entitle the Warrantholder to any
of the rights of stockholders or to any dividend declared upon the
Common Stock unless the Warrantholder shall have exercised these
Class A Warrants and purchased the Shares of Common Stock prior to
the record date fixed by the Board of Directors of the Company for the
determination of holders of Common Stock entitled to such dividend or
other right. Holders of Class A Warrants are protected against dilution
of their interests represented by the underlying shares of Common Stock
upon the occurrence of stock dividends, stock splits or reclassifications
of the Common Stock, as provided in the Warrant Agreement.
This Certificate shall not be valid unless countersigned by the
Warrant Agent.
WITNESS the facsimile seal of the Company and the facsimile
signature of its duly authorized officer.
Dated: January 1, 1997
CONTROLLED ENVIRONMENT AQUACULTURE TECHNOLOGY,
INC.
/s/ J.A. Garcia, President
COUNTERSIGNED WARRANT AGENT:
U.S. STOCK TRANSFER CORPORATION
1745 Gardena Avenue
Glendale, California 91204
/s/ Gary S. Joiner, Secretary
Authorized Agent
<PAGE>
EXHIBIT 21 - LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
Name and State of Name Under Which
Incorporation Does Business
<S> <C>
C.E.A. Tech HHGI Breeding Same
Corp., a Hawaii corporation
CEA Tech Plantations, Inc., Same
a Hawaii corporation
Hawaii High Health Seafood Corp., Same
a Hawaii corporation
Sunkiss Shrimp Co., Ltd., Same
a Hawaii corporation<F1>
<FN>
<F1>
The Company acquired all of the issued and outstanding stock of Sunkiss
Shrimp Co., Ltd. on March 15, 1997 (subsequent to the end of its fiscal
year) in a stock for stock exchange.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 581,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 581,000
<PP&E> 19,512
<DEPRECIATION> 0
<TOTAL-ASSETS> 611,701
<CURRENT-LIABILITIES> 181,136
<BONDS> 0
495,800
0
<COMMON> 9,585
<OTHER-SE> 2,075
<TOTAL-LIABILITY-AND-EQUITY> 611,701
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 65,340
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (65,340)
<INCOME-TAX> 0
<INCOME-CONTINUING> (65,340)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (65,340)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.03)
</TABLE>
