UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10SB-12G
General Form For Registration of Securities
of Small Business Issuers
Pursuant to Sections 12(b) and (g) of
the Securities Exchange Act of 1934
Nevada 84-1517723
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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Securities to be registered pursuant to Section 12(b) of the Act:
Title of each Class Name of each exchange on which
to be so registered each class is to be registered
NONE NONE
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Securities to be registered pursuant to Section 12(g) of the Act:
TABLE OF CONTENTS
PART I
Item 1. DESCRIPTION of BUSINESS ........................................ 4
Background ................................................... 4
Forward-Looking Statements ................................... 4
Exchange Act Registration .................................... 5
Proposed Business ............................................ 5
Pre-Combination Activities ................................ 5
Combination Suitability Standards ......................... 6
Form of Acquisition ....................................... 8
Post-Combination Activities ............................... 9
Potential Benefits to Insiders ............................... 10
Use of Consultants and Finders ............................... 10
State Securities Law Considerations .......................... 10
No Investment Company Regulation ............................. 11
Competition .................................................. 11
Employees .................................................... 11
Item 2. MANAGEMENT'S DISCUSSION and ANALYSIS or PLAN of OPERATION ...... 11
Results of Operations ........................................ 11
Liquidity and Capital Resources .............................. 12
Year 2000 Issues ............................................. 12
Item 3. DESCRIPTION of PROPERTY ........................................ 13
Item 4. SECURITY OWNERSHIP of CERTAIN
BENEFICIAL OWNERS and MANAGEMENT .............................. 13
Beneficial Ownership ......................................... 13
Changes in Control ........................................... 14
Item 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS and CONTROL PERSONS ................................. 14
Biographical Information ..................................... 14
Prior Experience with Blank Check Companies................... 15
Potential Conflicts of Interest .............................. 15
Indemnification of Directors and Officers .................... 16
Exclusion of Director Liability .............................. 16
Item 6. EXECUTIVE COMPENSATION ......................................... 16
Cash and Other Compensation .................................. 16
Compensation Pursuant to Plans ............................... 17
Employee Stock Compensation Plan ............................. 17
Compensatory Stock Option Plan ............................... 17
Employment Contracts ......................................... 17
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Item 7. CERTAIN RELATIONSHIPS and RELATED TRANSACTIONS ................. 17
Item 8. DESCRIPTION of SECURITIES ...................................... 18
Common Stock ................................................. 18
Preferred Stock .............................................. 18
Annual Reports ............................................... 19
Transfer Agent ............................................... 19
PART II
Item 1. MARKET PRICE of and DIVIDENDS on the REGISTRANT'S COMMON
EQUITY and OTHER SHAREHOLDER MATTERS .......................... 19
Price Range of the Common Stock .............................. 19
Dividends .................................................... 19
Public Market for the Common Shares .......................... 19
Rule 144 Resales ............................................. 20
Item 2. LEGAL PROCEEDINGS .............................................. 20
Item 3. CHANGES in and DISAGREEMENTS with ACCOUNTANTS
on ACCOUNTING and FINANCIAL DISCLOSURE ........................ 20
Item 4. RECENT SALES of UNREGISTERED SECURITIES ........................ 20
Item 5. INDEMNIFICATION of DIRECTORS and OFFICERS ...................... 21
PART F/S
FINANCIAL STATEMENTS ........................................... 21
PART III
Item 1. LIST of EXHIBITS ............................................... 22
SIGNATURES ..................................................... 22
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PART I
ITEM 1. DESCRIPTION of BUSINESS.
BACKGROUND
MNS Eagle Equity Group III, Inc., a Nevada corporation ("MNS" or "Company"), was incorporated on February 28, 1997. MNS issued 725,000 shares of common stock to MNS Eagle Equity Group, Inc. (its former parent) for cash, organization costs and deferred offering costs. MNS is in the development stage with no significant assets or liabilities and has been essentially inactive, except for organizational activities and the private placement offering described below.
The Company's parent offered for sale, at the price of US$1.00 per unit, a total of 100,000 Units. Each Unit consisted of a share of common stock in six different corporations for a total of six (6) shares of stock, including one share of common stock, $.001 par value per share, of MNS Eagle Equity Group, Inc., the former parent, and one share of common stock, $.001 par value per share, of each of the following corporations organized in the State of Nevada and which were at that time wholly owned subsidiaries of the Parent, namely: MNS Eagle Equity Group I, Inc., MNS Eagle Equity Group II, Inc., MNS Eagle Equity Group III, Inc., MNS Eagle Equity Group IV, Inc. and MNS Eagle Equity Group V, Inc. No minimum number of Units had to be sold.
On October 31, 1997, the Company's former parent closed the private placement offering. A total of 7,500 units were sold for $7,500. The proceeds were allocated by the Company's parent as follows: $5,000 to the parent and $500 to each of the wholly owned subsidiaries.
MNS owns no real estate and has no full time employees, and it will have no operations of its own unless and until it engages in one or more of the activities described below under this ITEM 1. MNS is a "blank check" company which intends to enter into a business combination with one or more as yet unidentified privately held businesses.
FORWARD-LOOKING STATEMENTS
This Registration Statement contains certain forward-looking statements and information relating to MNS that are based on the beliefs of its management as well as assumptions made by and information currently available to its management. When used in this report, the words "anticipate", "believe", "estimate", "expect", "intend", "plan" and similar expressions, as they relate to MNS or its management, are intended to identify forward-looking statements. These statements reflect management's current view of MNS concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: a general economic downturn; a downturn in the securities markets; a general lack of interest for any reason in going public by means of transactions involving public blank check companies; federal or state laws or regulations having an adverse effect on blank check companies, Securities and Exchange Commission regulations which affect trading in the securities of "penny stocks," and other risks and uncertainties.
Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report as anticipated, estimated or expected. Readers should realize that MNS is in the development stage, with only very limited assets, and that for MNS to succeed requires that it either originate a successful business (for which it lacks the funds) or acquire a successful business. MNS's realization of its business aims as stated herein will depend in the near future principally on the successful completion of its acquisition of a business, as discussed below.
EXCHANGE ACT REGISTRATION
MNS has voluntarily filed this registration statement on Form 10-SB with the Securities and Exchange Commission ("SEC" or "Commission") in order to register MNS's common stock under Section 12(g) of the Securities Exchange Act of 1934, as amended ("Exchange Act"). Upon effectiveness of this registration statement, MNS will be required to file quarterly, annual and other reports and other information with the SEC as required by the Exchange Act. Management believes it is in the shareholders' best interests for MNS to register under the Exchange Act, in order that MNS's common stock can be quoted on the OTC Bulletin Board. Additionally, management believes that potential combination candidates will find MNS more attractive as a public blank check company if it is subject to Exchange Act reporting requirements and files annual and quarterly financial statements with the SEC. If MNS's duty to file reports under the Exchange Act is suspended, MNS intends to nonetheless continue filing reports on a voluntary basis.
PROPOSED BUSINESS
MNS intends to enter into a business combination with one or more as yet unidentified privately held businesses. Management believes that MNS will be attractive to privately held companies interested in becoming publicly traded by means of a business combination with MNS, without offering their own securities to the public. MNS intends to pursue negotiations with qualified candidates after effectiveness of this Registration Statement. MNS will not be restricted in its search for business combination candidates to any particular geographical area, industry or industry segment, and may enter into a combination with a private business engaged in any line of business. Management's discretion is, as a practical matter, unlimited in the selection of a combination candidate. MNS has not entered into any agreement, arrangement or understanding of any kind with any person regarding a business combination. MNS does not intend to enter into any business combination involving any business or venture with which its sole officer or director is affiliated.
Depending upon the nature of the transaction, the current officers and directors of MNS probably will resign their directorship and officer positions with MNS in connection with MNS's consummation of a business combination. See "Form of Acquisition" below. MNS's current management will not have any control over the conduct of MNS's business following MNS's completion of a business combination.
It is anticipated that business opportunities will come to MNS's attention from various sources, including its management, its other stockholders, professional advisors such as attorneys and accountants, securities broker-dealers, venture capitalists, members of the financial community, and others who may present unsolicited proposals. MNS has no plans, understandings, agreements, or commitments with any individual or entity to act as a finder of or as a business consultant in regard to any business opportunities for MNS. There are no plans to use advertisements, notices or any general solicitation in the search for combination candidates.
PRE-COMBINATION ACTIVITIES. MNS is a "blank check" company, defined as an inactive company with nominal assets and liabilities. With these characteristics, management believes that MNS will be attractive to privately held companies interested in becoming publicly traded by means of a business combination with MNS, without offering their own securities to the public. MNS intends to pursue negotiations with qualified candidates after effectiveness of this Registration Statement and become publicly quoted.
The term "business combination" (or "combination") means the result of (i) a statutory merger of a combination candidate into or its consolidation with MNS or a wholly owned subsidiary of MNS formed for the purpose of the merger or consolidation, (ii) the exchange of securities of MNS for the assets or outstanding equity securities of a privately held business, or (iii) the sale of securities by MNS for cash or other value to a business entity or individual, and similar transactions. A combination may be structured in one of the foregoing ways or in any other form which will result in the combined entity being a publicly held corporation. It is unlikely that any proposed combination will be submitted for the approval of MNS's shareholders prior to consummation.
Pending negotiation and consummation of a combination, MNS anticipates that it will have no business activities or sources of revenues and will incur no significant expenses or liabilities other than expenses related to this Registration Statement, related to ongoing filings required by the Exchange Act, or related to the negotiation and consummation of a combination.
The Company anticipates that the business opportunities presented to it will (1) be recently organized with no operating history, or a history of losses attributable to under-capitalization or other factors; (2) be experiencing financial or operating difficulties; (3) be in need of funds to develop a new product or service or to expand into a new market; (4) be relying upon an untested product or marketing concept; or (5) have a combination of the foregoing characteristics. Given the above factors, it should be expected that any acquisition candidate may have a history of losses or low profitability.
MNS will not be restricted in its search for business combination candidates to any particular geographical area, industry or industry segment, and may enter into a combination with a private business engaged in any line of business, including service, finance, mining, manufacturing, real estate, oil and gas, distribution, transportation, medical, communications, high technology, biotechnology or any other. Management's discretion is, as a practical matter, unlimited in the selection of a combination candidate. Management of MNS will seek combination candidates in the United States and other countries, as available time permits, through existing associations and by word of mouth.
MNS has not entered into any agreement or understanding of any kind with any person regarding a business combination. There is no assurance that MNS will be successful in locating a suitable combination candidate or in concluding a business combination on terms acceptable to MNS. MNS's Board of Directors has not established a time limitation by which it must consummate a suitable combination; however, if MNS is unable to consummate a suitable combination within a reasonable period, such period to be determined at the discretion of MNS's Board of Directors, the Board of Directors will probably recommend its liquidation and dissolution. It is anticipated that MNS will not be able to diversify, but will essentially be limited to one such venture because of MNS's lack of capital. This lack of diversification will not permit MNS to offset potential losses from one acquisition against profits from another, and should be considered an adverse factor affecting any decision to purchase MNS's securities.
MNS's management has the authority and discretion to effect transactions having a potentially adverse impact upon MNS's shareholders and to complete a combination without submitting any proposal to the stockholders for their prior approval. MNS's shareholders should not anticipate that they will have any meaningful opportunity to consider or vote upon any candidate selected by MNS management for acquisition. However, it is anticipated that MNS's shareholders will, prior to completion of any combination, be given information about the candidate company's business, financial condition, management and other information required by ITEMs 6(a), (d), (e), 7 and 8 of Schedule 14A of Regulation 14A under the Exchange Act.
COMBINATION SUITABILITY STANDARDS. The analysis of candidate companies will be undertaken by or under the supervision of MNS's President, who is not a professional business analyst. See "MANAGEMENT" below.
To a large extent, a decision to participate in a specific combination may be made upon management's analysis of the quality of the candidate company's management and personnel, the anticipated acceptability of new products or marketing concepts, the merit of technological changes, the perceived benefit the candidate will derive from becoming a publicly held entity, and numerous other factors which are difficult, if not impossible, to objectively quantify or analyze. In many instances, it is anticipated that the historical operations of a specific candidate may not necessarily be indicative of the potential for the future because of the possible need to shift marketing approaches substantially, expand significantly, change product emphasis, change or substantially augment
management, or make other changes. MNS will be dependent upon the owners and management of a candidate to identify any such problems which may exist and to implement, or be primarily responsible for the implementation of, required changes. Because MNS may participate in a business combination with a newly organized candidate or with a candidate which is entering a new phase of growth, it should be emphasized that MNS will incur further risks, because management in many instances will not have proved its abilities or effectiveness, the eventual market for the candidate's products or services will likely not be established, and the candidate may not be profitable when acquired.
Otherwise, MNS anticipates that it may consider, among other things, the following factors:
1. Potential for growth and profitability, indicated by new technology, anticipated market expansion, or new products;
2. MNS's perception of how any particular candidate will be received by the investment community and by MNS's stockholders;
3. Whether, following the business combination, the financial condition of the candidate would be, or would have a significant prospect in the foreseeable future of becoming sufficient to enable the securities of MNS to qualify for listing on an exchange or on NASDAQ, so as to permit the trading of such securities to be exempt from the requirements of the federal "penny stock" rules adopted by the SEC.
4. Capital requirements and anticipated availability of required funds, to be provided by MNS or from operations, through the sale of additional securities, through joint ventures or similar arrangements, or from other sources;
5. The extent to which the candidate can be advanced;
6. Competitive position as compared to other companies of similar size and experience within the industry segment as well as within the industry as a whole;
7. Strength and diversity of existing management, or management prospects that are scheduled for recruitment;
8. The cost of participation by MNS as compared to the perceived tangible and intangible values and potential; and
9. The accessibility of required management expertise, personnel, raw materials, services, professional assistance, and other required items.
No one of the factors described above will be controlling in the selection of a candidate. Potentially available candidates may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. It should be recognized that, because of MNS's limited capital available for investigation and management's limited experience in business analysis, MNS may not discover or adequately evaluate adverse facts about the opportunity to be acquired. MNS cannot predict when it may participate in a business combination. It expects, however, that the analysis of specific proposals and the selection of a candidate may take several months or more.
Management believes that various types of potential merger or acquisition candidates might find a business combination with MNS to be attractive. These include acquisition candidates desiring to create a public market for their shares in order to enhance liquidity for current shareholders, acquisition candidates which have long-term plans for raising capital through the public sale of securities and believe that the possible prior existence of a public
market for their securities would be beneficial, and acquisition candidates which plan to acquire additional assets through issuance of securities rather than for cash, and believe that the possibility of development of a public market for their securities will be of assistance in that process. Acquisition candidates which have a need for an immediate cash infusion are not likely to find a potential business combination with MNS to be an attractive alternative.
Prior to consummation of any combination (other than a mere sale by MNS insiders of a controlling interest in MNS's common stock) MNS intends to require that the combination candidate provide MNS the financial statements required by ITEM 310 of Regulation S-B, including at the least an audited balance sheet as of the most recent fiscal year end and statements of operations, changes in stockholders' equity and cash flows for the two most recent fiscal years, audited by certified public accountants acceptable to MNS's management, and the necessary unaudited interim financial statements. Such financial statements must be adequate to satisfy MNS's reporting obligations under Section 15(d) or 13 of the Exchange Act. If the required audited financial statements are not available at the time of closing, MNS management must reasonably believe that the audit can be obtained in less than 60 days. This requirement to provide audited financial statements may significantly narrow the pool of potential combination candidates available, since most private companies are not already audited. Some private companies will either not be able to obtain an audit or will find the audit process too expensive. In addition, some private companies on closer examination may find the entire process of being a reporting company after a combination with MNS too burdensome and expensive in light of the perceived potential benefits from a combination.
FORM OF ACQUISITION. It is impossible to predict the manner in which MNS may participate in a business opportunity. Specific business opportunities will be reviewed as well as the respective needs and desires of MNS and the promoters of the opportunity and, upon the basis of that review and the relative negotiating strength of MNS and such promoters, the legal structure or method deemed by management to be suitable will be selected. Such structure may include, but is not limited to leases, purchase and sale agreements, licenses, joint ventures and other contractual arrangements. MNS may act directly or indirectly through an interest in a partnership, corporation or other form of organization. Implementing such structure may require the merger, consolidation or reorganization of MNS with other corporations or forms of business organization, and although it is likely, there is no assurance that MNS would be the surviving entity. In addition, the present management and stockholders of MNS most likely will not have control of a majority of the voting shares of MNS following a reorganization transaction. As part of such a transaction, MNS's existing directors may resign and new directors may be appointed without any vote or opportunity for approval by MNS's shareholders.
It is likely that MNS will acquire its participation in a business opportunity through the issuance of Common Stock or other securities of MNS. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called "tax free" reorganization under the Internal Revenue Code of 1986, depends upon the issuance to the stockholders of the acquired company of a controlling interest (i.e. 80% or more) of the common stock of the combined entities immediately following the reorganization. If a transaction were structured to take advantage of these provisions rather than other "tax free" provisions provided under the Internal Revenue Code, MNS's current stockholders would retain in the aggregate 20% or less of the total issued and outstanding shares. This could result in substantial additional dilution in the equity of those who were stockholders of MNS prior to such reorganization. Any such issuance of additional shares might also be done simultaneously with a sale or transfer of shares representing a controlling interest in MNS by the current officers, directors and principal shareholders.
It is anticipated that any new securities issued in any reorganization would be issued in reliance upon exemptions, if any are available, from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of the transaction, MNS may agree to register such securities either at the time the transaction is consummated, or under certain conditions or at specified times thereafter. The
issuance of substantial additional securities and their potential sale into any trading market that might develop in MNS's securities may have a depressive effect upon such market.
MNS will participate in a business opportunity only after the negotiation and execution of a written agreement. Although the terms of such agreement cannot be predicted, generally such an agreement would require specific representations and warranties by all of the parties thereto, specify certain events of default, detail the terms of closing and the conditions which must be satisfied by each of the parties thereto prior to such closing, outline the manner of bearing costs if the transaction is not closed, set forth remedies upon default, and include miscellaneous other terms.
As a general matter, MNS anticipates that it, and/or its officers and principal shareholders will enter into a letter of intent with the management, principals or owners of a prospective business opportunity prior to signing a binding agreement. Such a letter of intent will set forth the terms of the proposed acquisition but will not bind any of the parties to consummate the transaction. Execution of a letter of intent will by no means indicate that consummation of an acquisition is probable. Neither MNS nor any of the other parties to the letter of intent will be bound to consummate the acquisition unless and until a definitive agreement concerning the acquisition as described in the preceding paragraph is executed. Even after a definitive agreement is executed, it is possible that the acquisition would not be consummated should any party elect to exercise any right provided in the agreement to terminate it on specified grounds.
It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation would not be recoverable. Moreover, because many providers of goods and services require compensation at the time or soon after the goods and services are provided, the inability of MNS to pay until an indeterminate future time may make it impossible to procure goods and services.
POST-COMBINATION ACTIVITIES. Management anticipates that, following consummation of a combination, control of MNS will change as a result of the issuance of additional Common Stock to the shareholders of the business acquired in the combination. Once ownership control has changed, it is likely that the new controlling shareholders will call a meeting for the purpose of replacing the incumbent directors of MNS with candidates of their own, and that the new directors will then replace the incumbent officers with their own nominees. Rule 14f-1 under the Exchange Act requires that, if in connection with a business combination or sale of control of MNS there should arise any arrangement or understanding for a change in a majority of MNS's directors and the change in the board of directors is not approved in advance by MNS's shareholders at a shareholder meeting, then none of the new directors may take office until at least ten (10) days after an information statement has been filed with the Securities and Exchange Commission and sent to MNS's shareholders. The information statement furnished must as a practical matter include the information required by ITEMs 6(a), (d) and (e), 7 and 8 of Schedule 14A of Regulation 14A in a proxy statement.
Following consummation of a combination, management anticipates that MNS will file a current report on Form 8-K with the Commission which discloses among other things the date and manner of the combination, material terms of the definitive agreement, the assets and consideration involved, the identity of the person or persons from whom the assets or other property was acquired, changes in management and biographies of the new directors and executive officers, identity of principal shareholders following the combination, and contains the required financial statements. The Form 8-K report also will be required to include all information as to the business acquired called for by ITEM 101 of Regulation S-B.
POTENTIAL BENEFITS to INSIDERS
In connection with a business combination, it is possible that shares of common stock constituting control of MNS may be purchased from the current principal shareholders ("insiders") of MNS by the acquiring entity or its affiliates. If stock is purchased from the insiders, the transaction is very likely to result in substantial gains to them relative to the price they originally paid for the stock. In MNS's judgment, none of its officers and directors would as a result of such a sale become an " underwriter" within the meaning of the Section 2(11) of the Securities Act of 1933, as amended. No bylaw or charter provision MNS prevents insiders from negotiating or consummating such a sale of their shares. The sale of a controlling interest by MNS insiders could occur at a time when the other shareholders of the Company remain subject to restrictions on the transfer of their shares, and it is unlikely that MNS shareholders generally will be given the opportunity to participate in any such sale of shares. Moreover, MNS shareholders probably will not be afforded any opportunity to review or approve any such buyout of shares held by an officer, director or other affiliate, should such a buyout occur.
MNS may require that a company being acquired repay all advances made to MNS by MNS shareholders and management, at or prior to closing of a combination. Otherwise, there are no conditions that any combination or combination candidate must meet, such as buying stock from MNS insiders or paying compensation to any MNS officer, director or shareholder or their respective affiliates.
USE OF CONSULTANTS and FINDERS
Although there are no current plans to do so, MNS management might hire and pay an outside consultant to assist in the investigation and selection of candidates, and might pay a finder's fee to a person who introduces a candidate with which MNS completes a combination. Since MNS management has no current plans to use any outside consultants or finders to assist in the investigation and selection of candidates, no policies have been adopted regarding use of consultants or finders, the criteria to be used in selecting such consultants or finders, the services to be provided, the term of service, or the structure or amount of fees that may be paid to them. However, because of the limited resources of MNS, it is likely that any such fee MNS agrees to pay would be paid in stock and not in cash. MNS has had no discussions, and has entered into no arrangements or understandings, with any consultant or finder. MNS's officers and directors have not in the past used any particular consultant or finder on a regular basis and have no plan to either use any consultant or recommend that any particular consultant be engaged by MNS on any basis.
It is possible that compensation in the form of common stock, options, warrants or other securities of MNS, cash or any combination thereof, may be paid to outside consultants or finders. No securities of MNS will be paid to officers, directors or promoters of MNS nor any of their respective affiliates. Any payments of cash to a consultant or finder would be made by the business acquired or persons affiliated or associated with it, and not by MNS. It is possible that the payment of such compensation may become a factor in any negotiations for MNS's acquisition of a business opportunity. Any such negotiations and compensation may present conflicts of interest between the interests of persons seeking compensation and those of MNS's shareholders, and there is no assurance that any such conflicts will be resolved in favor of MNS's shareholders.
STATE SECURITIES LAWS CONSIDERATIONS
Section 18 of the Securities Act of 1933, as amended in 1996, provides that
no law, rule, regulation, order or administrative action of any state may
require registration or qualification of securities or securities transactions
that involve the sale of a "covered security." The term "covered security" is
defined in Section 18 to include among other things transactions by "any person
not an issuer, underwriter or dealer," (in other words, secondary transactions
in securities already outstanding) that are exempted from registration by
Section 4(1) of the Securities Act of 1933, provided the issuer of the security
is a "reporting company," meaning that it files reports with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act.
Section 18 as amended preserves the authority of the states to require certain limited notice filings by issuers and to collect fees as to certain categories of covered securities, specifically including Section 4(1) secondary transactions in the securities of reporting companies. Section 18 expressly provides, however, that a state may not "directly or indirectly prohibit, limit, or impose conditions based on the merits of such offering or issuer, upon the offer or sale of any (covered) security. This provision prohibits states from requiring registration or qualification of securities of an Exchange Act reporting company which is current in its filings with the SEC.
The states generally are free to enact legislation or adopt rules that prohibit secondary trading in the securities of "blank check" companies like MNS. Section 18, however, of the Act preempts state law as to covered securities of reporting companies. Thus, while the states may require certain limited notice filings and payment of filing fees by MNS as a precondition to secondary trading of its shares in those states, they cannot, so long as MNS is a reporting issuer, prohibit, limit or condition trading in MNS's securities based on the fact that MNS is or ever was a blank check company. MNS will comply with such state limited notice filings as may be necessary in regard to secondary trading. At this time, MNS's stock is not actively traded in any market, and an active market in its common stock is not expected to arise, if ever, until after completion of a business combination.
NO INVESTMENT COMPANY ACT REGULATION
Prior to completing a combination, MNS will not engage in the business of investing or reinvesting in, or owning, holding or trading in securities, or otherwise engaging in activities which would cause it to be classified as an "investment company" under the 1940 Act. To avoid becoming an investment company, not more than 40% of the value of MNS's assets (excluding government securities and cash and cash equivalents) may consist of "investment securities," which is defined to include all securities other than U.S. government securities and securities of majority-owned subsidiaries. Because MNS will not own less than a majority of any assets or business acquired, it will not be regulated as an investment company. MNS will not pursue any combination unless it will result in MNS owning at least a majority interest in the business acquired.
COMPETITION
MNS will be in direct competition with many entities in its efforts to locate suitable business opportunities. Included in the competition will be business development companies, venture capital partnerships and corporations, small business investment companies, venture capital affiliates of industrial and financial companies, broker-dealers and investment bankers, management and management consultant firms and private individual investors. Most of these entities will possess greater financial resources and will be able to assume greater risks than those which MNS, with its limited capital, could consider. Many of these competing entities will also possess significantly greater experience and contacts than MNS's Management. Moreover, MNS also will be competing with numerous other blank check companies for such opportunities.
EMPLOYEES
The only employees of MNS currently are its officers. It is not expected that MNS will have additional employees except as a result of completing a combination.
ITEM 2. MANAGEMENT'S DISCUSSION and ANALYSIS or PLAN of OPERATION.
MNS's plan of operation over the next twelve months is set forth above under ITEM 1 (Description of Business). This plan of operation has been adopted in order to attempt to create value for MNS's shareholders.
RESULTS of OPERATIONS
MNS has never had operations or revenues and is still in the development stage. MNS anticipates no operations unless and until it completes a business combination as described above.
LIQUIDITY and CAPITAL RESOURCES
As of the date of this Registration Statement, MNS has no cash and minimal debts. MNS has no commitments for any capital expenditure and foresees none. However, MNS will incur routine fees and expenses incident to its reporting duties as a public company, and it will incur fees and expenses in the event it makes or attempts to make an acquisition. As a practical matter, MNS expects no significant operating costs other than professional fees payable to attorneys and accountants. To the extent accounting services are performed by President Stephen M. Siedow, an accountant, he has agreed not to charge MNS for those services, although any other accountants utilized are expected to charge MNS their customary rates.
MNS does not anticipate that funding will be necessary in order to complete a proposed combination, except possibly for fees and costs of MNS's professional advisers. Accordingly, there are no plans to raise capital to finance any business combination, nor does management believe that any combination candidate will expect cash from MNS. MNS hopes to require the candidate companies to deposit with MNS an advance which MNS can use to defray professional fees and costs and travel, lodging and other due diligence costs of MNS's management. Otherwise, management would have to advance such costs out of their own pockets, and there is no assurance they will advance such costs.
Other routine expenses, such as making required filings with the Securities and Exchange Commission, inevitably will be incurred. In order to pay these, MNS will be forced to borrow money or prevail upon existing shareholders to contribute additional funds, whether as a loan or investment, to MNS. It is by no means certain that existing shareholders will want or be financially able to do so. There are no plans to sell additional securities of MNS to raise capital. MNS's failure to timely file reports required under the Securities Exchange Act of 1934, as amended, could subject it to fines and penalties and make it less desirable to a potential combination candidate. None of these sources of funds is assured and, if no funds can be raised, MNS may be effectively unable to pursue its business plan.
MNS shareholders and management members who advance money to MNS to cover operating expenses will expect to reimbursed by the company acquired, prior to or at the time of completing the combination. MNS has no intention of borrowing money to pay any officer, director or shareholder of MNS or their affiliates.
YEAR 2000 ISSUES
Many computers and computer programs in use around the world for purposes of economy contain only two fields for expression of dates and were programmed to assume that all dates entered are for years in the twentieth century beginning with "19" (e.g., 99 means 1999). It is believed that many computers and software programs will crash on commencement of the year 2000, because they will not recognize dates beginning with "20" instead of "19" and that widespread computer crashes will have significant economic effects on governments, companies and individuals. This is known as the "Y2K" problem or the "milennium bug." The extent, severity and duration of the Y2K problem are unknown and impossible to forecast. Moreover, experts disagree on the extent, severity and duration of the Y2K problem, and on the economic losses and other damage that may occur as a result of it.
MNS has no operations or revenues, does no business with customers, vendors or suppliers, and has no material relationships with other companies. MNS therefore does not anticipate that it will suffer any losses as a result of Y2K issues. However, if general economic problems resulting from Y2K issues are severe and prolonged, demand for blank check companies could be reduced or eliminated for an unknown (and unknowable) period of time. Because MNS regularly backs up its records and documents maintained on computer, any computer failure should not directly cause MNS more than a modest inconvenience at worst.
ITEM 3. DESCRIPTION of PROPERTY.
MNS neither owns nor leases any real estate or other properties. MNS's offices are located at 12373 E. Cornell Avenue, Aurora, Colorado 80014, and are provided at no charge by its President. This arrangement is entirely adequate for MNS's current needs. MNS does not have any plans to acquire any properties or lease offices, and management does not anticipate that MNS will take office space unless and until it has completed a business combination, in which case MNS's offices almost certainly will be the same as those of the business opportunity acquired.
ITEM 4. SECURITY OWNERSHIP of CERTAIN BENEFICIAL OWNERS and MANAGEMENT.
BENEFICIAL OWNERSHIP
The following table sets forth, as of the date of this Registration Statement, the stock ownership of each executive officer and director of MNS, of all executive officers and directors of MNS as a group, and of each person known by MNS to be a beneficial owner of 5% or more of its Common Stock. Except as otherwise noted, each person listed below is the sole beneficial owner of the shares and has sole investment and voting power as such shares. No person listed below has any option, warrant or other right to acquire additional securities of MNS, except as may be otherwise noted.
Name and Address Amount & Nature
of Beneficial of Beneficial Percent
Owner Ownership of Class
----------------------------- ----------------- --------
*Stephen M. Siedow 269,689 (1,3) 44.6%
12373 E. Cornell Avenue
Aurora, Colorado 80014
John D. Brasher Jr. 246,689 (2,3) 44.2%
90 Madison Street, Suite 707
Denver, Colorado 80206
MNS Eagle Equity Group, Inc. 34,916 (3) 5.1%
12373 E. Cornell Avenue
Aurora, Colorado 80014
*All directors & officers 269,689 44.6%
as a group (1 person)
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(1) Mr. Siedow disclaims beneficial ownership of 12,500 shares of common stock owned by his wife, Linda M. Siedow, of 10,000 shares of common stock held by his wife as custodian for his minor children, and of 5,000 shares of common stock held by his daughter.
(2) Mr. Brasher disclaims beneficial ownership of 10,000 shares of common stock owned by his wife, Lisa K. Brasher, and of 5,000 shares of common stock held by his wife as trustee for a trust established for his minor children. Includes 20,000 shares of common stock held by Yakima Corp., a corporation controlled by Mr. Brasher and his wife.
(3) Includes 34,916 shares of common stock held by MNS Eagle Equity Group, Inc. (former parent), a corporation controlled by Mr. Brasher and Mr. Siedow.
Despite not having received any compensation and not having otherwise engaged in any transactions involving the acquisition or disposition of assets with MNS, the current officers and directors of MNS may be deemed to be "promoters" and "founders" of MNS.
CHANGES in CONTROL
A change of control of MNS probably will occur upon consummation of a business combination, which is anticipated to involve significant change in ownership of MNS and in the membership of the board of directors. The extent of any such change of control in ownership or board composition cannot be predicted at this time.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS and CONTROL PERSONS.
Directors are elected for one-year terms or until the next annual meeting of shareholders and until their successors are duly elected and qualified. Executive officers (none of whom have an employment or similar contract) continue in office at the pleasure of the Board of Directors. The following table sets forth the name, age, position held and tenure of each director and executive officer:
Name Age Position Held and Tenure
---- --- ------------------------
Stephen M. Siedow 49 President, CEO, Director, Chairman of the Board,
since inception
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There are no family relationships among the officers and directors. There is no arrangement or understanding between MNS (or any of its directors or officers) and any other person pursuant to which such person was or is to be selected as a director or officer, or under which any officer or director will resign at the request of another person, and no officer or director is acting or will act on behalf of or at the direction of any other person. The directors and officers are expected to devote their time to MNS's affairs on an "as needed" basis, but are not required to make any specific portion of their time available to MNS. It is anticipated that officers and directors will, on the average, devote no more than 15 hours per week to MNS's affairs.
BIOGRAPHICAL INFORMATION
STEPHEN M. SIEDOW. Mr. Siedow is president and sole shareholder of Stephen M. Siedow, P.C., a professional accounting firm providing auditing, management consulting, tax services and write-up services to corporations, partnerships and individuals since 1982. Mr. Siedow specializes in public and SEC accounting and has experience in industries including mining (gold and coal), oil and gas, construction, and mergers/acquisitions/liquidations. Prior to that, he was with the audit department of Ernst & Young, Certified Public Accountants in Denver, Colorado, for eight years. Mr. Siedow is a member of the American Institute of Certified Public Accountants and the Colorado Society of Certified Public Accountants.
Mr. Siedow also is a director, executive officer, promoter or control person of the following companies with business plans substantially identical to those of MNS:
o Chairman, CEO, President and significant shareholder of EQUICAP, INC., a formerly active California corporation no longer in the development stage but which has scant assets.
o Chairman, CEO, President and significant shareholder of GALLAGHER RESEARCH (NEV.) CORPORATION, a formerly active Colorado corporation no longer in the development stage but which has scant assets.
o Chairman, CEO, President and significant shareholder of MNS EAGLE EQUITY GROUP, INC., MNS EAGLE EQUITY GROUP I, INC., MNS EAGLE EQUITY GROUP II, INC., and MNS EAGLE EQUITY GROUP IV, INC., all Nevada corporations in the development stage.
PRIOR EXPERIENCE with BLANK CHECK COMPANIES
Mr. Siedow has never been an executive officer or director of a blank check or "blind pool" company which conducted a public offering. Mr. Siedow has, however, been an executive officer and director of several reporting blank check companies (those required to file reports with the SEC), and his experience is detailed below.
1. WHITNEY AMERICAN CORPORATION ("WHAM") - Organized 1987 in Delaware. Effective on March 10, 1998, WHAM acquired Kemron Environmental Services, Inc. a New York company, in a stock-for-stock exchange. In the exchange, WHAM issued to the shareholders of Kemron Environmental Services, Inc. a total of 3,500,000 common shares. WHAM's common stock is quoted on the OTC Bulletin Board under the symbol WHAM and trades sporadically. Mr. Siedow was not an officer or director of WHAM following consummation of the merger. Neither Mr. Siedow nor any other officer, director or shareholder of WHAM, nor their respective affiliates, sold any stock in connection with the acquisition of Kemron Environmental Services, Inc.
2. CASHBUILDER, INC. ("CBI") - Organized 1982 in Colorado. Mr. Siedow sold shares of CBI amounting to control of CBI in a private transaction for an aggregate of $50,000 in 1994. Otherwise, no officer, director or shareholder of CBI, nor their respective affiliates, sold any stock in connection with any acquisition made.
POTENTIAL CONFLICTS of INTEREST
The Company's Officers and Directors are affiliated with other companies having a similar business plan to that of MNS ("Affiliated Companies") which may compete directly or indirectly with MNS. MNS has not identified a specific business area, industry or industry segment in which it will seek combination candidates. MNS has made a determination that it will not concentrate its search for combination candidates in any particular business, industry or industry segment, since any such determination is potentially limiting and confers no advantage to MNS or its shareholders. Certain specific conflicts of interest may include those discussed below.
1. The interests of any Affiliated Companies from time to time may be inconsistent in some respects with the interests of MNS. The nature of these conflicts of interest may vary. There may be circumstances in which an Affiliated Company may take advantage of an opportunity that might be suitable for MNS. Although there can be no assurance that conflicts of interest will not arise or that resolutions of any such conflicts will be made in a manner most favorable to MNS and its shareholders, the officers and directors of MNS have a fiduciary responsibility to MNS and its shareholders and, therefore, must adhere to a standard of good faith and integrity in their dealings with and for MNS and its shareholders.
2. The officers and directors of MNS serve as officers or directors of one or more Affiliated Companies and may serve as officers and directors of other Affiliated Companies in the future. MNS's officers and directors are required to devote only so much of their time to MNS's affairs as they deem appropriate, in their sole discretion. As a result, MNS's officers and directors may have conflicts of interest in allocating their management time, services, and functions among MNS and any current and future Affiliated Companies which they may serve, as well as any other business ventures in which they are now or may later become involved.
3. The Affiliated Companies may compete directly or indirectly with that of MNS for the acquisition of available, desirable combination candidates. There may be factors unique to MNS or an Affiliated Company which respectively makes it more or less desirable to a potential combination candidate, such as age of the company, name, capitalization, state of incorporation, contents of the articles of incorporation, etc. However, any such direct conflicts are not expected to be resolved through arm's- length negotiation, but rather in the discretion of management. While any such resolution will be made with due regard to the fiduciary duty owed to MNS and its shareholders, there can be no assurance that all potential conflicts can be resolved in a manner most favorable to MNS as if no conflicts existed. Members of MNS's management who also are members of management of another Affiliated Company will also owe the same fiduciary duty to the shareholders of the other Affiliated Company.
4. Certain conflicts of interest exist and will continue to exist between MNS and its officers and directors due to the fact that each has other employment or business interests to which he devotes his primary attention. Each
officer and director is expected to continue to do so in order to make a living, notwithstanding the fact that management time should be devoted to MNS's affairs. MNS has not established policies or procedures for the resolution of current or potential conflicts of interest between MNS and its management.
As a practical matter, such potential conflicts could be alleviated only if the Affiliated Companies either are not seeking a combination candidate at the same time as the Company, have already identified a combination candidate, are seeking a combination candidate in a specifically identified business area, or are seeking a combination candidate that would not otherwise meet MNS's selection criteria. It is likely, however, that the combination criteria of MNS and any Affiliated Companies will be substantially identical. Ultimately, MNS's shareholders ultimately must rely on the fiduciary responsibility owed to them by MNS's officers and directors.
There can be no assurance that members of management will resolve all conflicts of interest in MNS's favor. The officers and directors are accountable to MNS and its shareholders as fiduciaries, which means that they are legally obligated to exercise good faith and integrity in handling MNS's affairs and in their dealings with MNS. Failure by them to conduct MNS's business in its best interests may result in liability to them. The area of fiduciary responsibility is a rapidly developing area of law, and persons who have questions concerning the duties of the officers and directors to MNS should consult their counsel.
INDEMNIFICATION of DIRECTORS and OFFICERS
See discussion under Part II, ITEM 5 below.
EXCLUSION of DIRECTOR LIABILITY
Pursuant to the General Corporation Law of Nevada, MNS's Certificate of Incorporation excludes personal liability on the part of its directors to MNS for monetary damages based upon any violation of their fiduciary duties as directors, except as to liability for any acts or omissions which involve intentional misconduct, fraud or a knowing violation of law or for improper payment of dividends. This exclusion of liability does not limit any right which a director may have to be indemnified and does not affect any director's liability under federal or applicable state securities laws.
ITEM 6. EXECUTIVE COMPENSATION.
CASH and OTHER COMPENSATION
Since inception of MNS and through the date of this Registration Statement, no director or executive officer has received cash or cash equivalent compensation from MNS. MNS has no other agreement or understanding, express or implied, with any director or executive officer concerning employment or cash or other compensation for services. MNS will undoubtedly pay compensation to officers and other employees should it succeed in acquiring a business and funds exist for compensation.
COMPENSATION PURSUANT to PLANS
Since inception of MNS and through the date of this Registration Statement, no director or executive officer has received compensation from MNS pursuant to any compensatory or benefit plan. There is no plan or understanding, express or implied, to pay any compensation to any director or executive officer pursuant to any compensatory or benefit plan of MNS, although MNS anticipates that it will compensate its officers and directors for services to MNS with stock or options to purchase stock, in lieu of cash.
MNS currently has in place an employee stock compensation plan and compensatory stock option plan. MNS has no long-term incentive plans, as that term is defined in the rules and regulations of the Securities and Exchange
Commission. There are no other compensatory or benefit plans, such as retirement or pension plans, in effect or anticipated to be adopted, although other plans may be adopted by new management following completion of a business combination.
EMPLOYEE STOCK COMPENSATION PLAN
MNS has adopted the 1997 Employee Stock Compensation Plan for employees, officers, directors of MNS and advisors to MNS (the "ESC Plan"). MNS has reserved a maximum of 1,000,000 Common Shares to be issued upon the grant of awards under the ESC Plan. Employees will recognize taxable income upon the grant of Common Stock equal to the fair market value of the Common Stock on the date of the grant and MNS will recognize a compensating deduction for compensation expense at such time. The ESC Plan will be administered by the Board of Directors or a committee of directors. No shares have been awarded or currently are anticipated to be awarded under the ESC Plan.
COMPENSATORY STOCK OPTION PLAN
MNS has adopted the 1997 Compensatory Stock Option Plan for officers, employees, directors and advisors (the "CSO Plan"). MNS has reserved a maximum of 1,500,000 Common Shares to be issued upon the exercise of options granted under the CSO Plan. The CSO Plan will not qualify as an "incentive stock option" plan under Section 422 of the Internal Revenue Code of 1986, as amended. Options will be granted under the CSO Plan at exercise prices to be determined by the Board of Directors or other CSO Plan administrator. With respect to options granted pursuant to the CSO Plan, optionees will not recognize taxable income upon the grant of options granted at or in excess of fair market value. However, optionees will realize income at the time of exercising an option to the extent the market price of the common stock at that time exceeds the option exercise price, and MNS must recognize a compensation expense in an amount equal to any taxable income realized by an optionee as a result of exercising the option. The CSO Plan will be administered by the Board of Directors or a committee of directors. No options have been granted or currently are anticipated to granted under the CSO Plan.
EMPLOYMENT CONTRACTS
No person has entered into any employment or similar contract with MNS. It is not anticipated that MNS will enter into any employment or similar contract unless in conjunction with or following completion of a business combination.
ITEM 7. CERTAIN RELATIONSHIPS and RELATED TRANSACTIONS.
On November 18, 1997, a stockholder of the Company surrendered 50,000 shares of the Company's $.001 par value common stock back to the Company for no consideration. These shares were cancelled by the Company.
At September 30, 1999 MNS was indebted to MNS Eagle Equity Group, Inc. (former parent) in the amount of $359 for costs and expenses advanced on its behalf. MNS is not indebted to any other officer, director, promoter or control person. MNS has no understanding with its officers, directors or shareholders, pursuant to which such persons are required to contribute capital to MNS, loan money or otherwise provide funds to MNS, although management expects that one or more of such persons may make funds available to MNS in the event of need to cover operating expenses.
There were no transactions, or series of transactions, for the year ended December 31, 1998 nor are there any currently proposed transactions, or series of transactions, to which MNS is a party, in which the amount exceeds $60,000, and in which to the knowledge of MNS any director, executive officer, nominee, five percent or greater shareholder, or any member of the immediate family of any of the foregoing persons, have or will have any direct or indirect material interest.
ITEM 8. DESCRIPTION of SECURITIES.
The authorized capital stock of MNS consists of 50,000,000 shares of Common Stock, $.001 par value, and 10,000,000 shares of Preferred Stock, $.001 par value.
COMMON STOCK
At September 30, 1999, there were 682,5000 shares of Common Stock outstanding. The holders of Common Stock are entitled to one vote for each share held. MNS's Certificate of Incorporation provides that the affirmative vote of a majority of the votes cast at a shareholder's meeting is sufficient to effect any corporate action upon which shareholders may or must vote. Common Shares do not carry cumulative voting rights, thus holders of more than 50% of the Common Stock have the power to elect all directors if they wish and, as a practical matter, to control MNS. Holders of Common Stock are not entitled to preemptive rights, and the Common Stock is not subject to redemption.
MNS's bylaws provide for a board of one director, all of whom are elected for one-year terms at the annual meeting of shareholders. The affirmative vote of a simple majority of the outstanding Common Stock is necessary to remove a director. A special meeting of shareholders may be called by the Chairman of the Board, the President, a majority of the Board of Directors, or shareholders owning in the aggregate 10% or more of the Common Stock. Holders of Common Stock are entitled to receive, pro rata dividends if, when and as declared by the Board of Directors out of funds legally available therefor.
Upon liquidation, dissolution or winding up of MNS, holders of Common Stock are entitled to share ratably in MNS's assets legally available for distribution to its shareholders after payment of liquidation preference and outstanding redemption rights (if any) on any Preferred Stock outstanding and are not subject to further calls or assessments.
PREFERRED STOCK
Although no shares of Preferred Stock are being registered in this Registration Statement or have previously been registered under the Exchange Act, this discussion is included to enhance the reader's understanding of MNS. No Preferred Shares are issued or outstanding, and MNS has no plans to issue any Preferred Shares. The Board of Directors has the authority to issue Preferred Stock in one or more series and to fix the voting powers, conversion rights, other special rights and qualifications, limitations and restrictions of each series, without any further vote or action by the shareholders. It is not possible to state the actual effect of the authorization of any Preferred Stock upon the rights of holders of the Common Stock, until the Board of Directors determines the specific rights of the holders of the Preferred Stock. However, the Preferred Stock may have adverse effects upon the holders of the Common Stock, including (i) restrictions on dividends on the Common Stock if dividends on the Preferred Stock have not been paid, (ii) dilution of the voting power of the Common Stock to the extent that the Preferred Stock has voting rights, (iii) dilution of the equity interest of the Common Stock to the extent that the Preferred Stock is converted into Common Stock, or (iv) the Common Stock not being entitled to share in MNS's assets upon liquidation until satisfaction of any liquidation preference granted the holders of the Preferred Stock. MNS does not currently anticipate that it will issue Preferred Stock in connection with any business combination, but issuance for this purpose is a possibility. MNS has not authorized such number of Preferred Shares for anti-takeover or similar purposes.
ANNUAL REPORTS
MNS will furnish its shareholders with annual reports containing financial statements of MNS as examined and reported upon by independent certified public accountants. MNS will distribute other reports as determined by the Board of Directors.
TRANSFER AGENT
MNS has not appointed a transfer agent or registrar for its Common Shares and, in order to minimize expenses, does not expect to do so unless and until it appears that its Common Shares will commence to trade.
PART II
ITEM 1. MARKET PRICE of and DIVIDENDS on the REGISTRANT'S COMMON EQUITY and OTHER SHAREHOLDER MATTERS.
PRICE RANGE of the COMMON STOCK
Not applicable.
DIVIDENDS
MNS has not declared or paid any dividends on its Common Stock to date. Management anticipates that any future earnings will be retained as working capital and used for business purposes. Accordingly, it is unlikely that MNS will declare or pay any such dividends in the foreseeable future.
PUBLIC MARKET for the COMMON SHARES
There currently is no public market for MNS's common stock, and no assurance can be given that a market will develop or that a shareholder ever will be able to liquidate his investment without considerable delay, if at all. If a market should develop, the price may be highly volatile. Unless and until MNS's common shares are quoted on the NASDAQ system or listed on a national securities exchange, it is likely that the common shares will be defined as "penny stocks" under the Exchange Act and SEC rules thereunder. The Exchange Act and penny stock rules generally impose additional sales practice and disclosure requirements upon broker-dealers who sell penny stocks to persons other than certain "accredited investors" (generally, institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly with spouse) or in transactions not recommended by the broker-dealer.
For transactions covered by the penny stock rules, the broker-dealer must make a suitability determination for each purchaser and receive the purchaser's written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the SEC. So long as MNS's common shares are considered "penny stocks", many brokers will be reluctant or will refuse to effect transactions in MNS's shares, and many lending institutions will not permit the use of penny stocks as collateral for any loans.
RULE 144 RESALES
MNS has 682,500 common shares issued and outstanding, of which approximately 68,700 shares are unrestricted and may be freely traded in the securities markets. There are in addition approximately 613,800 common shares which have been issued and outstanding, and fully paid, for more than two years which could be resold pursuant to Rule 144 under the Securities Act of 1933, as amended. Rule 144 provides that a person who acquired securities in a private placement transaction and has beneficially owned those securities, fully paid, for a period of at least one year may, under certain conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed one percent (1%) of the issuer's outstanding common stock. For issuers whose shares are listed on a stock exchange or NASDAQ, a shareholder may alternatively sell a number of shares that does not exceed the average weekly trading volume during the four calendar weeks prior to his or her sale.
However, if a person has beneficially owned securities for a period of two years and has not been an affiliate (control person) of the issuer for the preceding three-month period, the person may request that all restrictive legends affecting the securities be removed, and there is no limit on the number of shares that the non-affiliate may then sell. The sale of a substantial number of shares of MNS under Rule 144 or under any other exemption from the Act could have a depressive effect upon the price of MNS's common shares in any market that may develop. Under current SEC rules, no MNS common shares may be resold under Rule 144 during the ninety (90)-day period following effectiveness of this Registration Statement.
ITEM 2. LEGAL PROCEEDINGS.
There are no legal proceedings which are pending or have been threatened against MNS or any officer, director or control person of which management is aware.
ITEM 3. CHANGES in and DISAGREEMENTS with ACCOUNTANTS on ACCOUNTING and FINANCIAL DISCLOSURE.
Not applicable.
ITEM 4. RECENT SALES of UNREGISTERED SECURITIES.
The following sets forth certain information with respect to all common stock of MNS sold during the three-year period or since inception prior to the filing of this Registration Statement.
(1) On February 28, 1997, the Company issued 725,000 shares of common stock to MNS Eagle Equity Group, Inc. (its former parent) for cash, organization costs and deferred offering costs. These common shares were valued at $.01 per share. These securities were issued without registration under the Securities Act of 1933, as amended, and exemption for such sale(s) from registration under such Act is claimed under Section 4(2) thereof on the basis that such sale was a transaction not involving any public offering. MNS Eagle Equity Group, Inc. executed a customary form of investment letter concerning such purchase. Appropriate precautions against transfer were taken, including the placement of an investment legend on the certificate(s) evidencing such shares and placement of a stop transfer notation in the stock records concerning such shares.
(2) Private Placement. The Company's parent offered for sale, at the price of US$1.00 per unit, a total of 100,000 Units. Each Unit consisted of a share of common stock in six different corporations for a total of six (6) shares of stock, including one share of common stock, $.001 par value per share, of MNS Eagle Equity Group, Inc., the former parent, and one share of common stock, $.001 par value per share, of each of the following corporations organized in the State of Nevada and which were at that time wholly owned subsidiaries of the Parent, namely: MNS Eagle Equity Group I, Inc., MNS Eagle Equity Group II, Inc., MNS Eagle Equity Group III, Inc., MNS Eagle Equity Group IV, Inc. and MNS Eagle Equity Group V, Inc. No minimum number of Units had to be sold. On October 31, 1997, the Company's former parent closed the private placement offering. A total of 7,500 units were sold for $7,500. The proceeds were allocated by the Company's parent as follows: $5,000 to the parent and $500 to each of the wholly owned subsidiaries. The offering was not registered under the Securities Act of 1933, as amended ("Act"), and was offered to qualified investors in reliance upon the exemption from such registration requirements provided by Section 4(2) of the Act and/or Rule 505 of Regulation D under the Act and applicable state laws. Accordingly, the Units and component shares were deemed "restricted securities" and are subject to significant restrictions on transfer. Appropriate precautions against transfer were taken, including the placement of an investment legend on the certificate(s) evidencing such shares and placement of a stop transfer notation in the stock records concerning such shares.
ITEM 5. INDEMNIFICATION of DIRECTORS and OFFICERS.
As permitted by Nevada law, MNS's Certificate of Incorporation provides that MNS will indemnify its officers and directors against attorneys' fees and other expenses and liabilities they incur to defend, settle or satisfy any civil or criminal action brought against them arising out of their association with or activities on behalf of MNS unless, in any such action, they are adjudged to have acted with gross negligence or to have engaged in willful misconduct. MNS may also bear the expenses of such litigation for any such persons upon their promise to repay such sums if it is ultimately determined that they are not entitled to indemnification. Such expenditures could be substantial and may not be recouped, even if MNS is so entitled. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling MNS pursuant to the foregoing provisions, MNS has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in that Act and is, therefore, unenforceable. Furthermore, it should be noted that a successful indemnification of any officer or director could deplete the assets of MNS.
PART F/S
(1) AUDITED FINANCIAL STATEMENTS.
Independent Auditor's Report .................................... F-1
Balance Sheets as of December 31, 1998 and 1997.................. F-2
Statements of Operations for the year ended
December 31, 1998, period from February 28, 1997
(inception) to December 31, 1997 and for the
period February 28, 1997 (inception)
to December 31, 1998............................................ F-3
Statement of Stockholders' Equity for the period
February 28, 1997 (inception) to December 31, 1998.............. F-4
Statements of Cash Flows for the year ended
December 31, 1998, period from February 28, 1997
(inception) to December 31, 1997 and for the
period February 28, 1997 (inception) to
December 31, 1998............................................... F-5
Notes to Financial Statements ................................... F-6
(2) MANAGEMENT PREPARED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Balance Sheets as of September 30, 1999 and
December 31, 1998 (audited)..................................... F-1
Statements of Operations for the nine months
ended September 30, 1999 and 1998 and for the
period February 28, 1997 (inception) to September 30, 1999...... F-2
Statement of Stockholders' Equity (Deficit) for
the period February 28, 1997
(inception) to September 30, 1999............................... F-3
Statements of Cash Flows for the nine months
ended September 30, 1999 and 1998 and for the
period February 28, 1997 (inception) to September 30, 1999...... F-4
Notes to Financial Statement .................................... F-5
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PART III
ITEM 1. LIST OF EXHIBITS.
The following exhibits are either filed with this registration statement or have previously been filed with the Securities and Exchange Commission and are incorporated by reference to another report, registration statement or form. As to any shareholder of record requesting a paper copy of this registration statement, MNS will furnish any exhibit indicated in the list below as filed with this report upon payment to MNS of its expenses in furnishing the information.
3.1 Certificate of Incorporation of MNS as filed with the
Nevada Secretary of State on February 28, 1997.......... 1
3.4 Bylaws of MNS ........................................... 1
4.1 Specimen common stock certificate ....................... 1
10.1 1997 Compensatory Stock Option Plan of MNS .............. 1
10.2 1997 Employee Stock Compensation Plan of MNS ............ 1
1 - Filed herewith as an exhibit.
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2 - Incorporated by reference to another registration statement, report or document.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Company has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
DATED: October 8, 1999
MNS Eagle Equity Group III, Inc.
By /s/ Stephen M. Siedow
----------------------------------------
Stephen M. Siedow, President and CEO
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Larry O'Donnell, CPA, P.C.
Telephone (303)745-4545 2280 South Xanadu Way
Suite 370
Aurora, Colorado 80014
Independent Auditor's Report
Board of Directors and Stockholders
MNS Eagle Equity Group III, Inc.
I have audited the accompanying balance sheets of MNS Eagle Equity Group III Inc. as of December 31, 1998 and 1997 and the related statements of operations, changes in stockholders' equity and cash flows for the year ended December 31, 1998, period from inception February 28, 1997 to December 31, 1997 and for the period from inception February 28, 1997 to December 31, 1998. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MNS Eagle Equity Group III, Inc. as of December 31, 1998 and 1997 and the results of its operations and their cash flows for the year ended December 31, 1998, period from inception February 28, 1997 to December 31, 1997 and for the period from inception February 28, 1997 to December 31, 1998 in conformity with generally accepted accounting principles.
Larry O'Donnell, CPA, P.C.
August 4, 1999
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
December 31,
1998 1997
----- -----
Current assets:
Cash $ 176 $ 510
----- -----
Other assets:
Organization costs, net 282 371
----- -----
$ 458 $ 881
===== =====
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: $ -- $ --
----- -----
Stockholders' equity:
Preferred stock; $.001 par value; authorized -
5,000,000 shares; issued - none -- --
Common stock; $.001 par value; authorized -
50,000,000 shares; issued and outstanding -
682,500 shares 682 682
Additional paid-in capital 368 368
Deficit accumulated during the development stage (592) (169)
----- -----
Total stockholders' equity 458 881
----- -----
$ 458 $ 881
===== =====
|
The accompanying notes are an integral part of the financial statements.
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Statement of Operations
Year Feb. 28, 1997 Feb. 28, 1997
Ended (inception) to (inception) to
December 31, December 31, December 31,
1998 1997 1998
------------ -------------- --------------
Costs and expenses:
Amortization $ 89 $ 74 $ 163
General and administrative, related party 334 95 429
--------- --------- ---------
Net loss $ (423) $ (169) $ (592)
========= ========= =========
Loss per common share $ (.0006) $ (.0002)
========= =========
Weighted average common shares outstanding 682,500 682,500
========= =========
The accompanying notes are an integral part of the financial statements.
F-3
|
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
For the Period February 28, 1997 (Inception) to December 31, 1998
Deficit
Common Stock Additional Accumulated
------------------------ Paid-in from
Shares Amount Capital Inception
------- -------- ---------- -----------
Balances, February 28, 1997 (inception) -- $ -- $ -- $ --
Common stock issued for cash,
organization costs, and deferred offering
costs, valued at $.001 per share 725,000 725 -- --
Common stock issued for cash, net
of offering costs of $175 7,500 7 318 --
Cancellation of common stock (50,000) (50) 50 --
Net loss for the period (169)
-------- -------- -------- --------
Balances, December 31, 1997 682,500 682 368 (169)
Net loss (423)
-------- -------- -------- --------
Balances, December 31, 1998 682,500 $ 682 $ 368 $ (592)
======== ======== ======== ========
The accompanying notes are an integral part of the financial statements.
F-4
|
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Statement of Cash Flows
Year Feb. 28, 1997 Feb. 28, 1997
Ended (inception) to (inception) to
December 31, December 31, December 31,
1998 1997 1998
------------ -------------- --------------
Cash flows from operating activities:
Net loss $(423) $(169) $(592)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization 89 74 163
Common stock issued for services -- -- --
Changes in assets and liabilities:
Increase (decrease) in accounts payable -- -- --
Increase (decrease) in amounts
due to an officer/stockholder -- -- --
----- ----- -----
Net cash used in operating activities (334) (95) (429)
----- ----- -----
Cash flows from investing activities:
Organization costs -- (100) (100)
----- ----- -----
Net cash used in investing activities -- (100) (100)
----- ----- -----
Cash flows from financing activities:
Proceeds from sale of common stock -- 803 803
Deferred offering costs -- (98) (98)
----- ----- -----
Net cash provided by financing activities -- 705 705
----- ----- -----
Net increase (decrease) in cash (334) 510 176
Cash at beginning of year 510 -- --
----- ----- -----
Cash at end of year $ 176 $ 510 $ 176
===== ===== =====
Supplemental disclosure of noncash investing and financing activities:
Common stock issued for organizational costs $ -- $ 345 $ 345
===== ===== =====
Common stock issued for deferred offering costs $ -- $ 77 $ 77
===== ===== =====
Common stock issued for services $ -- $ -- $ --
===== ===== =====
The accompanying notes are an integral part of the financial statements.
F-5
|
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
The financial statements presented are those of MNS Eagle Equity Group III, Inc., a development stage company (the "Company"). The Company was organized under the laws of the State of Nevada on February 28, 1997. The Company's activities, to date, have been organizational in nature, and have been directed towards the raising of capital and to discussions of potential business combinations. Should the Company eventually engage in a business combination, future consolidated operations of the Company would depend on the operations of the company with which it combines.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reporting amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Costs incurred directly related to the private placement offering are capitalized. Such costs will be offset against the proceeds received from the private placement.
Organization costs are amortized over five years.
The fair value of the Company's payable due to officers/stockholders is not practicable to estimate due to the related party nature of the underlying transactions and the indefinite payment terms.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Notes to Financial Statements
bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date.
Loss per common share is computed by dividing the net loss by the weighted average shares outstanding during the period.
Note 2 - Stockholders' Equity
On February 28, 1997, the Company issued 725,000 shares of common stock to MNS Eagle Equity Group, Inc. (its former parent) for cash, organization costs and deferred offering costs. These common shares were valued at $.001 per share.
On April 25, 1997, the Company's parent granted two year options on a pro-rata basis to its officers, directors and stockholders to purchase 687,500 shares of the 725,000 shares that it owned in the Company.
The Company's parent offered for sale, at the price of US$1.00 per unit, a total of 100,000 Units. Each Unit consisted of a share of common stock in six different corporations for a total of six (6) shares of stock, including one share of common stock, $.001 par value per share, of MNS Eagle Equity Group, Inc., the former parent, and one share of common stock, $.001 par value per share, of each of the following corporations organized in the State of Nevada and which were at that time wholly owned subsidiaries of the Parent, namely: MNS Eagle Equity Group I, Inc., MNS Eagle Equity Group II, Inc., MNS Eagle Equity Group III, Inc., MNS Eagle Equity Group IV, Inc. and MNS Eagle Equity Group V, Inc. No minimum number of Units had to be sold. The offering was not registered
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Notes to Financial Statements
under the Securities Act of 1933, as amended ("Act"), and was offered to qualified investors in reliance upon the exemption from such registration requirements provided by Section 4(2) of the Act and/or Rule 505 of Regulation D under the Act and applicable state laws. Accordingly, the Units and component shares were deemed "restricted securities" and are subject to significant restrictions on transfer.
On June 18, 1997, the officers and directors of the parent exercised the stock options held by them. Options on 616,378 of the 687,500 optioned shares of the Company's common stock were exercised.
On October 31, 1997, the Company's former parent closed the private placement offering. A total of 7,500 units were sold for $7,500. The proceeds were allocated by the Company's parent as follows: $5,000 to the parent and $500 to each of the wholly owned subsidiaries. Offering costs of $175 were incurred by each subsidiary.
On November 18, 1997, a stockholder of the Company surrendered 50,000 shares of the Company's $.001 par value common stock back to the Company for no consideration. These shares were cancelled by the Company. Options on 47,416 of the 687,500 optioned shares of the Company's common stock were also cancelled.
On November 25, 1997, a stockholder of the former parent exercised the stock options held by them. Options on 23,706 of the 687,500 optioned shares of the Company's common stock were exercised.
Dividends may be paid on outstanding shares as declared by the Board of Directors. Each share of common stock is entitled to one vote.
No shares of preferred stock have been issued or are outstanding. Dividends, voting rights and other terms, rights and preferences of the preferred shares have not been designated but may be designated by the Board of Directors from time to time.
The Company has adopted a stock option plan (the "CSO Plan") which allows for the issuance of options to purchase up to 1,000,000 shares of stock to employees, officers, directors and consultants of the Company. The CSO Plan is not intended to qualify as an "incentive stock option plan" under Section 422 of the Internal Revenue Code. Options will be granted under the CSO Plan at exercise prices to be determined by the Board of Directors or other CSO Plan
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Notes to Financial Statements
administrator. The Company will incur compensation expense to the extent that the market value of the stock at date of grant exceeds the amount the grantee is required to pay for the options. No options have been granted under the CSO Plan to date.
The Company has adopted an employee stock compensation plan (the "ESC Plan") which allows for the issuance of up to 1,500,000 shares of stock to employees, officers, directors and consultants of the Company. The Company will incur compensation expense to the extent the market value of the stock at date of grant exceeds the amount the employee is required to pay for the stock (if any). The ESC Plan will be administered by the Board of Directors or a committee of directors. No stock has been awarded under the ESC Plan to date.
Note 3 - Income Taxes
There is no provision for income taxes since the Company has incurred net operating losses.
Income taxes at the federal statutory rate is reconciled to the Company's actual
income taxes as follows:
December 31,
---------------------------
1998 1997
---------- ----------
Federal income tax benefit at statutory rate (15%) $ (63) $ (25)
State income tax benefit net of federal tax effect -- --
Deferred income tax valuation allowance 63 25
---------- ---------
$ -- $ --
========== ==========
The Company's deferred tax assets are as follows:
Accrued expenses $ -- $ --
Net operating loss carryforward 88 25
Valuation allowance (88) (25)
---------- ----------
$ -- $ --
========== ==========
|
At December 31, 1998, the Company has net operating loss carryforwards of $592 which may be available to offset future taxable income through 2018.
Note 4 - Related Party Transaction
The Company utilizes office space provided by the President of the Company at no charge.
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Balance Sheets (Unaudited)
ASSETS
September 30, December 31,
1999 1998
------------- ------------
Current assets:
Cash $ -- $ 176
------- -------
Other assets:
Organization costs, net 215 282
------- -------
$ 215 $ 458
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ -- $ --
Due to an officer/stockholder 359 --
------- -------
359 --
------- -------
Stockholders' equity (deficit):
Preferred stock; $.001 par value; authorized -
5,000,000 shares; issued - none -- --
Common stock; $.001 par value; authorized -
50,000,000 shares; issued and outstanding -
682,500 shares 682 682
Additional paid-in capital 368 368
Deficit accumulated during the development stage (1,194) (592)
------- -------
Total stockholders' equity (deficit) (144) 458
------- -------
$ 215 $ 458
======= =======
The accompanying notes are an integral part of the financial statements.
F-1
|
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Statements of Operations (Unaudited)
Nine Nine Feb 28, 1997
Months Ended Months Ended (inception) to
September 30, September 30, September 30,
1999 1998 1999
------------- ------------- --------------
Costs and expenses:
Amortization $ 67 $ 67 $ 230
General and administrative, related party 535 334 964
--------- --------- ---------
Net loss $ (602) $ (401) $ (1,194)
========= ========= =========
Loss per common share $ (.001) $ (.001)
========= =========
Weighted average shares outstanding 682,500 682,500
========= =========
The accompanying notes are an integral part of the financial statements.
F-2
|
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Statements of Changes in Stockholders' Equity (Deficit) (Unaudited)
For the Period February 28, 1997 (Inception) to September 30, 1999
Deficit
Common Stock Additional Accumulated
---------------------- Paid-in from
Shares Amount Capital Inception
------ ------ ---------- ------------
Balances, February 28, 1997 (inception) -- $ -- $ -- $ --
Common stock issued for cash,
organization costs, and deferred offering
costs, valued at $.001 per share 725,000 725 -- --
Common stock issued for cash, net
of offering costs of $175 7,500 7 318 --
Cancellation of common stock (50,000) (50) 50 --
Net loss for the period (169)
-------- -------- -------- --------
Balances, December 31, 1997 682,500 682 368 (169)
Net loss (423)
-------- -------- -------- --------
Balances, December 31, 1998 682,500 682 368 (592)
Net loss for the period (602)
-------- -------- -------- --------
Balances, September 30, 1999 682,500 $ 682 $ 368 $ (1,194)
======== ======== ======== ========
The accompanying notes are an integral part of the financial statements.
F-3
|
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Statements of Cash Flows (Unaudited)
Nine Nine Feb 28, 1997,
Months Ended Months Ended (inception) to
September 30, September 30, September 30,
1999 1998 1999
------------- ------------- -------------
Cash flows from operating activities:
Net loss $ (602) $ (401) $(1,194)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization 67 67 230
Common stock issued for services -- -- --
Changes in assets and liabilities:
Increase (decrease) in accounts payable -- -- --
Increase (decrease) in amounts due
to an officer/stockholder 359 -- 359
------- ------- -------
Net cash used in operating activities (176) (334) (605)
------- ------- -------
Cash flows from investing activities:
Organization costs -- -- (100)
------- ------- -------
Net cash used in investing activities -- -- (100)
------- ------- -------
Cash flows from financing activities:
Proceeds from sale of common stock -- -- 803
Deferred offering costs -- -- (98)
------- ------- -------
Net cash provided by financing activities -- -- 705
------- ------- -------
Net increase (decrease) in cash (176) (334) --
Cash at beginning of year 176 510 --
------- ------- -------
Cash at end of period $ -- $ 176 $ --
======= ======= =======
Supplemental disclosure of noncash investing and financing activities:
Common stock issued for organizational costs $ -- $ -- $ 345
======= ======= =======
Common stock issued for deferred offering costs $ -- $ -- $ 77
======= ======= =======
Common stock issued for services $ -- $ -- $ --
======= ======= =======
The accompanying notes are an integral part of the financial statements.
F-4
|
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
Note 1 - Summary of Significant Accounting Policies
The financial statements presented are those of MNS Eagle Equity Group III, Inc., a development stage company (the "Company"). The Company was organized under the laws of the State of Nevada on February 28, 1997. The Company's activities, to date, have been organizational in nature, and have been directed towards the raising of capital and to discussions of potential business combinations. Should the Company eventually engage in a business combination, future consolidated operations of the Company would depend on the operations of the company with which it combines.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reporting amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Costs incurred directly related to the private placement offering are capitalized. Such costs will be offset against the proceeds received from the private placement.
Organization costs are amortized over five years.
The fair value of the Company's payables due to officers/stockholders is not practicable to estimate due to the related party nature of the underlying transactions and the indefinite payment terms.
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date.
Loss per common share is computed by dividing the net loss by the weighted average shares outstanding during the period.
The unaudited financial statements of the Company have been prepared on the accrual basis and includes all of the information and footnotes required by generally accepted accounting principles. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
Note 2 - Stockholders' Equity (Deficit)
On February 28, 1997, the Company issued 725,000 shares of common stock to MNS Eagle Equity Group, Inc. (its former parent) for cash, organization costs and deferred offering costs. These common shares were valued at $.001 per share.
On April 25, 1997, the Company's parent granted two year options on a pro-rata basis to its officers, directors and stockholders to purchase 687,500 shares of the 725,000 shares that it owned in the Company.
The Company's parent offered for sale, at the price of US$1.00 per unit, a total of 100,000 Units. Each Unit consisted of a share of common stock in six different corporations for a total of six (6) shares of stock, including one share of common stock, $.001 par value per share, of MNS Eagle Equity Group, Inc., the former parent, and one share of common stock, $.001 par value per share, of each of the following corporations organized in the State of Nevada and which were at that time wholly owned subsidiaries of the Parent, namely: MNS Eagle Equity Group I, Inc., MNS Eagle Equity Group II, Inc., MNS Eagle Equity Group III, Inc., MNS Eagle Equity Group IV, Inc. and MNS Eagle Equity Group V, Inc. No minimum number of Units had to be sold. The offering was not registered
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
under the Securities Act of 1933, as amended ("Act"), and was offered to qualified investors in reliance upon the exemption from such registration requirements provided by Section 4(2) of the Act and/or Rule 505 of Regulation D under the Act and applicable state laws. Accordingly, the Units and component shares were deemed "restricted securities" and are subject to significant restrictions on transfer.
On June 18, 1997, the officers and directors of the parent exercised the stock options held by them. Options on 616,378 of the 687,500 optioned shares of the Company's common stock were exercised.
On October 31, 1997, the Company's former parent closed the private placement offering. A total of 7,500 units were sold for $7,500. The proceeds were allocated by the Company's parent as follows: $5,000 to the parent and $500 to each of the wholly owned subsidiaries. Offering costs of $175 were incurred by each subsidiary.
On November 18, 1997, a stockholder of the Company surrendered 50,000 shares of the Company's $.001 par value common stock back to the Company for no consideration. These shares were cancelled by the Company. Options on 47,416 of the 687,500 optioned shares of the Company's common stock were also cancelled.
On November 25, 1997, a stockholder of the former parent exercised the stock options held by them. Options on 23,706 of the 687,500 optioned shares of the Company's common stock were exercised.
Dividends may be paid on outstanding shares as declared by the Board of Directors. Each share of common stock is entitled to one vote.
No shares of preferred stock have been issued or are outstanding. Dividends, voting rights and other terms, rights and preferences of the preferred shares have not been designated but may be designated by the Board of Directors from time to time.
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
The Company has adopted a stock option plan (the "CSO Plan") which allows for the issuance of options to purchase up to 1,000,000 shares of stock to employees, officers, directors and consultants of the Company. The CSO Plan is not intended to qualify as an "incentive stock option plan" under Section 422 of the Internal Revenue Code. Options will be granted under the CSO Plan at exercise prices to be determined by the Board of Directors or other CSO Plan administrator. The Company will incur compensation expense to the extent that the market value of the stock at date of grant exceeds the amount the grantee is required to pay for the options. No options have been granted under the CSO Plan to date.
The Company has adopted an employee stock compensation plan (the "ESC Plan") which allows for the issuance of up to 1,500,000 shares of stock to employees, officers, directors and consultants of the Company. The Company will incur compensation expense to the extent the market value of the stock at date of grant exceeds the amount the employee is required to pay for the stock (if any). The ESC Plan will be administered by the Board of Directors or a committee of directors. No stock has been awarded under the ESC Plan to date.
Note 3 - Income Taxes
There is no provision for income taxes since the Company has incurred net operating losses.
Income taxes at the federal statutory rate is reconciled to the Company's actual
income taxes as follows:
September 30,
----------------------------
1999 1998
----------- ------------
Federal income tax benefit at statutory rate (15%) $ (90) $ (60)
State income tax benefit net of federal tax effect -- --
Deferred income tax valuation allowance 90 60
--------- ---------
$ -- $ --
========== ==========
The Company's deferred tax assets are as follows:
Accrued expenses $ -- $ --
Net operating loss carryforward 178 85
Valuation allowance (178) (85)
---------- ----------
$ -- $ --
========== ==========
|
At September 30, 1999, the Company has net operating loss carryforwards of $1,194 which may be available to offset future taxable income through 2019.
Note 4 - Related Party Transaction
The Company utilizes office space provided by the President of the Company at no charge.
Exhibit 3.1
CERTIFICATE OF INCORPORATION
of
MNS EAGLE EQUITY GROUP III, INC.
(A Nevada Corporation)
FIRST. The name of this corporation is MNS EAGLE EQUITY GROUP III, INC.
SECOND. The Corporation's Registered Office in the State of Nevada is located at 2533 N. Carson Street, Carson City, Nevada 89706. The Corporation's Resident Agent at this address is Laughlin Associates, Inc.
THIRD. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Nevada. The Corporation may conduct all or any part of its business, and may hold, purchase, mortgage, lease and convey real and personal property, anywhere in the world. The Corporation shall have perpetual duration.
FOURTH. The name and mailing address of the Incorporator is:
Name Mailing Address
---- ---------------
John D. Brasher Jr. 90 Madison Street, Suite 707
Denver, Colorado 80206
|
Upon the filing of this Certificate of Incorporation the powers of the Incorporator shall terminate. The names and addresses of the person or persons who are to serve as directors until the first annual meeting of shareholders or until their successors are duly elected and have qualified are:
Name Mailing Address
---- ---------------
John D. Brasher Jr. 90 Madison Street, Suite 707
Denver, Colorado 80206
Stephen M. Siedow 12373 E. Cornell Avenue
Aurora, Colorado 80014
|
{CAPITAL STOCK}
FIFTH. The aggregate number of shares of capital stock of all classes which the Corporation shall have authority to issue is FIFTY-FIVE MILLION (55,000,000), of which FIFTY MILLION (50,000,000) shares having a par value of $.001 per share shall be of a class designated "Common Stock" (or "Common Shares") and FIVE MILLION (5,000,000) shares having a par value of $.001 per share shall be of a class designated "Preferred Stock" (or "Preferred Shares"). All shares of the Corporation shall be issued for such consideration or considerations as the Board of Directors may from time to time determine. The designations, voting powers, preferences, optional or other special rights and qualifications, limitations, or restrictions of the above classes of stock shall be as follows:
I. PREFERRED STOCK
(a) Issuance in Class and Series. Shares of Preferred Stock may be issued in one or more classes or series at such time or times as the Board of Directors may determine. All shares of any one series shall be of equal rank and identical in all respects.
(b) Authority of Board for Issuance. Authority is hereby expressly granted to the Board of Directors to fix from time
to time, by resolution or resolutions providing for the issuance of any class or series of Preferred Stock, the designation of such classes and series and the powers, preferences and rights of the shares of such classes and series, and the qualifications, limitations or restrictions thereof, including the following:
1. The distinctive designation and number of shares comprising such class or series, which number may (except where otherwise provided by the Board of Directors in creating such class or series) be increased or decreased (but not below the number of shares then outstanding) from time to time by action of the Board of Directors;
2. The rate of dividend, if any, on the shares of that class or series, whether dividends shall be cumulative and, if so, from which date or dates, the relative rights of priority, if any, of payment of dividends on shares of that class or series over shares of any other class or series;
3. Whether the shares of that class or series shall be redeemable at the option of the Corporation or of the holder of the shares or of another person or upon the occurrence of a designated event and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and different redemption dates;
4. Whether that class or series shall have a sinking fund for the redemption or purchase of shares of that class or series and, if so, the terms and amounts payable into such sinking fund;
5. The rights to which the holders of the shares of that series shall be entitled in the event of voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up of the Corporation, relative rights of priority; if any, of payment of shares of that class or series;
6. Whether the shares of that class or series shall be convertible into or exchangeable for shares of stock of any class or any other series of Preferred Stock and, if so, the terms and conditions of such conversion or exchange, including the method of adjusting the rates of conversion or exchange in the event of a stock split, stock dividend, combination of shares or similar event;
7. Whether the issuance of any additional shares of such class or series, or of any shares of any other class or series, shall be subject to restrictions as to issuance, or as to the powers, preferences or rights of any such other class or series;
8. Any other preferences, privileges and powers, and relative, participating, optional or other special rights, and qualifications, limitations or restrictions of such class or series, as the Board of Directors may deem advisable and as shall not be inconsistent with the provisions of the Corporation's Charter, as from time to time amended, and to the full extent now or hereinafter permitted by the laws of Nevada.
(c) Dividends. Payment of dividends shall be as follows:
1. The holders of Preferred Stock of each class or series, in preference to the holders of Common Stock, shall be entitled to receive, as and when declared by the Board of Directors out of funds legally available therefor, all dividends, at the rate for such class or series fixed in accordance with the provisions of this Article FIFTH and no more;
2. Dividends may be paid upon, or declared or set aside for, any class or series of Preferred Stock in preference to the holders of any other class or series of Preferred Stock in the manner determined by the resolutions of the Board of Directors authorizing and creating such class or series;
3. So long as any shares of Preferred Stock shall be outstanding, in no event shall any dividend, whether in cash or in property, be paid or declared nor shall any distribution be made, on the Common Stock, nor shall any shares of Common Stock be purchased, redeemed or otherwise acquired for value by the Corporation, unless all dividends on all cumulative classes and series Preferred Stock with respect to all past dividend periods, and unless all dividends on all classes and series of Preferred Stock for the
then current dividend period shall have been paid or declared, and provided for, and unless the Corporation shall not be in default with respect to any of its obligations with respect to any sinking fund for any class or series of Preferred Stock. The foregoing provisions of this subparagraph (3) shall not, however, apply to any dividend payable in Common Stock;
4. No dividend shall be deemed to have accrued on any share of Preferred Stock of any class or series with respect to any period prior to the date of the original issue of such share or the dividend payment date immediately preceding or following such date of original issue, as may be provided in the resolutions of the Board of Directors creating such class or series. Preferred Stock shall not be entitled to participate in any dividends declared and paid on Common Stock, whether payable in cash, stock or otherwise. Accruals of dividends shall not pay interest.
(d) Dissolution or Liquidation. In the event of any voluntary or involuntary liquidation, dissolution of assets or winding-up of the Corporation, the holders of the shares of each class or series of Preferred Stock then outstanding shall be entitled to receive out of the net assets of the Corporation, but only in accordance with the preferences, if any, provided for such series, before any distribution or payment shall be made to the holders of Common Stock, the amount per share fixed by the resolution or resolutions of the Board of Directors to be received by the holder of each such share on such voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up, as the case may be. If such payment shall have been made in full to the holders of all outstanding Preferred Stock of all classes and series, or duly provided for, the remaining assets of the Corporation shall be available for distribution among the holders of Common Stock as provided in this Article FIFTH. If upon any such liquidation, dissolution, distribution of assets or winding-up, the net assets of the Corporation available for distribution among the holders of any one or more classes or series of Preferred Stock which (i) are entitled to a preference over the holders of Common Stock upon such liquidation, dissolution, distribution of assets or winding-up, and (ii) rank equally in connection therewith, shall be insufficient to make payment for the preferential amount to which the holders of such shares shall be entitled, then such assets shall be distributed among the holders of each such series of Preferred Stock ratably according to the respective amounts to which they would be entitled in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. Neither the consolidation nor merger of the Corporation, nor the exchange, sale, lease or conveyance (whether for cash, securities or other property) of all, substantially all or any part of its assets, shall be deemed a liquidation, dissolution, distribution of assets or winding-up of the Corporation within the meaning of this provision.
(e) Voting Rights. Except to the extent otherwise required by law or provided in the resolution of the Board of Directors adopted pursuant to authority granted in this Article FIFTH, the shares of Preferred Stock shall have no voting power with respect to any matter whatsoever. The Board of Directors may determine whether the shares of any class or series shall have limited, contingent, full or no voting rights, in addition to the voting rights provided by law and, if so, the terms of such voting rights. Whenever holders of Preferred Stock are entitled to vote on a matter, each holder of record of Preferred Stock shall be entitled to one vote for each share standing in his name on the books of the Corporation and entitled to vote.
II. COMMON STOCK
(a) Issuance. The Common Stock may be issued from time to time in one or more classes or series in any manner permitted by law, as determined by the Board of Directors and stated in the resolution or resolutions providing for issuance thereof. Each class or series shall be appropriately designated, prior to issuance of any shares thereof, by some distinguishing letter, number or title. All shares of each class or series of Common Stock shall be alike in every particular and shall be of equal rank and have the same power, preferences and rights, and shall be subject to the same qualifications, limitations and restrictions, if any.
(b) Voting Powers. The Common Stock may have such voting powers (full, limited, contingent or no voting powers), such designations, preferences and relative, participating, optional or other special rights, and be subject to such qualifications, limitations and restrictions, as the Board of Directors shall determine by resolution or resolutions. Unless otherwise resolved by the Board of Directors at the time of issuing Common Shares, (i) each Common Stock share shall be of the same class, without any designation, preference or relative, participating, optional or other special rights, and subject to no qualification, limitation or restriction, and (ii) Common Shares shall have unlimited voting rights, including but not limited to the right to vote in elections for directors, and each holder of record of Common Shares entitled to vote shall have one vote for each share of stock standing in his name on the books of the Corporation and entitled to vote, except that in the election of directors each holder shall have as many votes for each share held by him as there are directors.
(c) Dividends. After the requirements with respect to preferential dividends, if any, on Preferred Stock, and after the Corporation shall have complied with all requirements, if any, with respect to the setting aside of sums in a sinking fund for the purchase or redemption of shares of any class or series of Preferred Stock, then and not otherwise, the holders of Common Stock shall receive, to the extent permitted by law, such dividends as may be declared from time to time by the Board of Directors.
(d) Dissolution or Liquidation. After distribution in full of the preferential amount, if any, to be distributed to the holders of Preferred Stock, in the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding-up of the Corporation, the holders of Common Stock shall be entitled to receive all the remaining assets of the Corporation of whatever kind available for distribution to shareholders ratably in proportion to the number of shares of Common Stock respectively held by them.
III. GENERAL MATTERS
(a) Capital. The portion of the consideration received by the Corporation upon issuance of any of its shares that shall constitute "capital" within the meaning of the General Corporation Law of Nevada shall be (1) in the case of par-value shares, the par value thereof, and (2) in the case of shares without par value, the stated value of such shares as determined by the Board of Directors at the time of issuance; provided, that if no stated value is determined at the time that shares without par value are issued, the entire consideration to be received for the shares shall constitute capital.
(b) Fully Paid and Nonassessable. Any and all shares of Common or Preferred Stock issued by the Corporation for which not less than the portion of the consideration to be received determined to be "capital" has been paid to the Corporation, provided the Corporation has received a promissory note or other binding legal obligation of the purchaser to pay the balance thereof, shall be deemed fully paid and nonassessable shares.
(c) Amendment of Shareholder Rights. So long as no shares of any class or series established by resolution of the Board of Directors have been issued, the voting rights, designations, preferences and relative, optional, participating or other rights of these shares may be amended by resolution of the Board of Directors.
(d) Status of Certain Shares. Shares of Preferred or Common Stock which have redeemed, converted, exchanged, purchased, retired or surrendered to the Corporation, or which have been reacquired in any other manner, shall have the status of authorized and unissued shares and may be reissued by the Board of Directors as shares of the same or any other series, unless otherwise provided herein or in the resolution authorizing and establishing the shares.
(e) Denial of Preemptive Rights. No holder of any shares of the Corporation shall be entitled as a matter of right to subscribe for or purchase any part of any new or additional issue of stock of any class or of securities convertible into or exchangeable for stock of any class, whether now or hereafter authorized or whether issued for money, for a consideration other than money, or by way of dividend.
(f) Convertibility. Common Shares or other shares of any class or series, and notes, debentures, bonds and other debt instruments issued by the Company or any affiliated company, may be made convertible into or exchangeable for, at the option of the Corporation or the holder or upon the occurrence of a specified event, shares of any other class or classes or any other series of the same or any other class or classes of shares of the Corporation, at such price or prices or at such rate or rates of exchange and with such adjustments as shall be set forth in the resolution or resolutions providing for the issuance of such convertible or exchangeable shares adopted by the Board of Directors.
(g) Redeemability. Common Shares may be made redeemable at the option of the Corporation or upon the occurrence of a designated event, if and to the extent now or subsequently allowed by the General Corporation Law of Nevada, as such law may subsequently be amended, and the terms and conditions of redemption, including the date or dates upon or after which they shall be redeemable, the amount per share payable in case of redemption and any variance in the amount or amounts payable, among other terms, conditions and limitations which may be imposed, may be fixed and established by the Board of Directors in the resolution or resolutions authorizing the issuance of redeemable Common Shares.
{VOTING OF SHAREHOLDERS}
SIXTH. The following provisions are hereby adopted for the purpose of regulating certain matters relating to the voting of shareholders of the Corporation:
(a) Definitions. Whenever the term "total voting power" appears in this Charter, it shall mean all shares of the Corporation entitled to vote at a meeting or on a question presented for shareholder approval, and of every class or series of shares entitled to vote by class or series. Whenever the term "votes cast" appears in this Charter, it shall mean the total number of voting shares out of the total voting power which were unequivocally voted in favor of or against a director standing for election or a matter presented for shareholder approval at a legal meeting which commenced with a quorum.
(b) Quorum. A majority of the total voting power, or where a separate vote by class or series is required, a majority of the voting shares of each such class or series, represented in person or by proxy, shall constitute a quorum at any meeting of the Corporation's shareholders.
(c) Vote Required. Any action to be taken by the Corporation's shareholders at any valid meeting which commenced with a quorum shall require the affirmative vote only of a majority of the votes cast, except where this Charter or the Corporation's Bylaws then in effect requires the affirmative vote of a higher proportion of the votes cast or requires the affirmative vote of a proportion of the total voting power, and except where the Nevada General Corporation Law specifically requires the affirmative vote of a majority of all the votes entitled to be cast. Directors shall be elected by plurality vote. Abstentions from voting shall not be considered in the tallying of votes. Nothing contained in this Article SIXTH shall affect the voting rights of holders of any class or series of shares entitled to vote as a class or by series. The Bylaws may provide for the vote necessary at any adjournment of a duly called meeting for which a quorum was not obtained. Cumulative voting shall not be allowed in voting for directors.
(d) Manner of Voting; Etc. The vote of shareholders may be taken at a meeting by a show of hands or other method authorized by the Board of Directors. Written ballots shall be used only upon authorization of the Board of Directors or as provided in the Corporation's Bylaws. Cumulative voting shall not be allowed in the election of directors.
(e) Action Without Meeting. Any action by the shareholders may be taken by written consent, in lieu of a meeting and without prior notice or vote, by the holders of a majority of the total voting power, except where a higher proportion of the total voting power is expressly required herein to authorize such action. The manner of obtaining any such written consent shall be governed by the Corporation's Bylaws.
(f) Shareholder Ratification. Any contract, transaction, or act of the Corporation or of the directors which shall be ratified by vote of the shareholders at any annual meeting, or at any special meeting called for such purpose, or by means of a written consent of shareholders in lieu of a meeting, shall so far as permitted by law be as valid and as binding as though ratified by every shareholder of the Corporation.
{CONCERNING SHAREHOLDERS, DIRECTORS AND OFFICERS}
SEVENTH. The following provisions are hereby adopted for the purpose of defining, limiting, and regulating the powers of the Corporation and of the directors, officers and shareholders:
(a) Number of Directors. The number of Directors shall be as fixed in the Bylaws. In the absence of such provision in the Bylaws, the Corporation shall have two (2) Directors. Directors shall be elected by plurality vote and need not be elected by written ballot, except as provided in the Bylaws.
(b) Removal of Directors. A director of the Corporation, or the entire Board of Directors of the Corporation, may be removed by the shareholders, with or without cause, only upon the affirmative vote of the holders of not less than two-thirds (2/3) of the total voting power, without considering the vote of the director or directors sought to be removed.
As used herein, "cause" for the removal of a director shall be deemed to exist if (A) there has been a finding by not less than 2/3 of the entire Board of Directors that cause exists and the directors have recommended removal to the shareholders, or (B) any other cause defined by law.
(c) Removal of Officers and Employees. Unless the Bylaws otherwise provide, any officer or employee of the Corporation may be removed at any time with or without cause by the Board of Directors or by any committee or superior officer upon whom such power of removal may be conferred by the Bylaws or by authority of the Board of Directors, without prejudice, however, to existing contractual rights.
(d) Corporate Opportunities. The officers, directors and other members of
management of the Corporation shall be subject to the doctrine of "corporate
opportunities" only insofar as it applies to any business opportunity (i) of a
type falling within the regular business or operations of the Corporation, or
(ii) in which the Corporation has expressed an interest as determined from time
to time by the Corporation's Board of Directors as evidenced by resolutions
appearing in the Corporation's minutes. All such business opportunities which
come to the attention of the officers, directors, and other members of
management of the Corporation shall be disclosed promptly to the Corporation and
made available to it. The Board of Directors may reject any business opportunity
presented to it, and only thereafter may any officer, director or other member
of management avail himself of such opportunity. The provisions of this
paragraph (d) shall not be construed to release any employee of the Corporation
from any fiduciary duties which he may have to the Corporation.
{BYLAWS}
EIGHTH. The initial Bylaws of the Corporation shall be adopted by its Board of Directors. The power to alter, amend or repeal the Bylaws or adopt new Bylaws shall be vested in the Board of Directors, subject to the right of the shareholders to alter, amend or repeal such Bylaws or adopt new Bylaws by the affirmative vote of at least a majority of the total voting power. The Bylaws may contain any provisions for the regulation and management of the affairs of the Corporation not inconsistent with law or this Charter.
{INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS}
NINTH. The following provisions are hereby adopted for the purpose of defining and regulating certain rights of directors, officers and others in respect of indemnification and related matters.
(a) Actions, Suits or Proceedings Other than by or in the Right of the Corporation. The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he is or was or has agreed to become a director, officer, employee or agent of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation or that, with respect to any criminal proceeding, he had reasonable cause to believe that his conduct was unlawful.
(b) Actions or Suits by or in the Right of the Corporation. The Corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was or has agreed to become a director, officer, employee or agent of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including amounts paid in settlement and attorney's fees) actually and reasonably incurred by him or on his behalf in connection with the defense or settlement of such action or suit and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation. No indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged by a court of competent jurisdiction after exhaustion of all appeals therefrom to be liable to the Corporation or for amounts paid in settlement to the Corporation unless and only to the extent that the court in which such action or suit was brought or other court of competent jurisdiction shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the court shall deem proper.
(c) Indemnification for Costs, Charges and Expenses of Successful Party. Notwithstanding the other provisions of this Article NINTH, to the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise, including, without limitation, the dismissal of an action without prejudice, in defense of any action, suit or proceeding referred to in Sections (a) and (b) of this Article NINTH, or in defense of any claim, issue or matter therein, he shall be indemnified against all costs, charges and expenses (including attorney's fees) actually and reasonably incurred by him or on his behalf in connection therewith.
(d) Determination of Right to Indemnification. Any indemnification under Sections (a) and (b) of this Article NINTH (unless ordered by a court) shall be paid by the Corporation unless a determination is made (i) by a disinterested majority of the Board of Directors who were not parties to such action, suit or proceeding, or (ii) if such disinterested majority of the Board of Directors so directs or cannot be obtained, by independent legal counsel in a written opinion, or (iii) by the shareholders, that indemnification of the director or officer is not proper in the circumstances because he has not met the applicable standard of conduct set forth in Sections (a) and (b) of this Article NINTH.
(e) Advances of Costs, Charges and Expenses. Costs, charges and expenses
(including attorney's fees) incurred by a person referred to in Sections (a) or
(b) of this Article NINTH in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding; provided, however, that the payment of such
costs, charges and expenses incurred by a director or officer in his capacity as
a director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer) in advance of the final
disposition of such action, suit or proceeding shall be made only upon receipt
of an undertaking by or on behalf of the director or officer to repay all
amounts so advanced in the event that it shall ultimately be determined that
such director or officer is not entitled to be indemnified by the Corporation as
authorized in this Article, accompanied by evidence satisfactory to the Board of
Directors of ability to make such repayment. Such costs, charges and expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the majority of the Directors deems appropriate. The
majority of the Directors may, in the manner set forth above, and upon approval
of such director, officer, employee or agent of the Corporation, authorize the
Corporation's counsel to represent such person, in any action, suit or
proceeding, whether or not the Corporation is a party to such action, suit or
proceeding.
(f) Procedure for Indemnification. Any indemnification under Sections (a),
(b) and (c), or advance of costs, charges and expenses under Section (e) of this
Article NINTH, shall be made promptly, and in any event within 60 days, upon the
written request of the director or officer. The right to indemnification or
advances as granted by this Article shall be enforceable by the director or
officer in any court of competent jurisdiction if the Corporation denies such
request, in whole or in part, or if no disposition thereof is made within 60
days. Such person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for the advance
of costs, charges and expenses under Section (e) of this Article NINTH where the
required undertaking, if any, has been received by the Corporation) that the
claimant has not met the standard of conduct set forth in Sections (a) or (b) of
this Article NINTH, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel and its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections (a) or (b) of this Article NINTH, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel and its shareholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.
(g) Settlement. If in any action, suit or proceeding, including any appeal, within the scope of Sections (a) or (b) of this Article NINTH, the person to be indemnified shall have unreasonably failed to enter into a settlement thereof, then, notwithstanding any other provision hereof, the indemnification obligation of the Corporation to such person in connection with such action, suit or proceeding shall not exceed the total of the amount at which settlement could have been made and the expenses by such person prior to the time such settlement could reasonably have been effected.
(h) Other Rights; Continuation of Right to Indemnification. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which any director, officer, employee or agent seeking indemnification may be entitled under any law (common or statutory), agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation, and shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the estate, heirs, executors and administrators of such person. All rights to indemnification under this Article shall be deemed to be a contract between the Corporation and each director or officer of the Corporation who serves or served in such capacity at any time while this Article NINTH is in effect. Any repeal or modification of this Article NINTH or any repeal or modification of relevant provisions of the General Corporation Law of Nevada or any other applicable laws shall not in any way diminish any rights to indemnification of such director, officer, employee or agent or the obligations of the Corporation arising hereunder. This Article NINTH shall be binding upon any successor corporation to this Corporation, whether by way of acquisition, merger, consolidation or otherwise.
(i) Exceptions to Indemnification Right. Notwithstanding any other language in this Charter, the Company shall not be obligated pursuant to the terms of this Charter:
(1) Claims Initiated by Indemnitee. To indemnify or advance expenses to any person with respect to proceedings or claims initiated or brought voluntarily by him or her and not by way of defense, expect with respect to proceedings brought to establish or enforce a right to indemnification under this Charter or any other statue or law or otherwise as required under the General Corporation Law of Nevada, but such indemnification or advancement of expenses may be provided by the Corporation in specific cases if the Board of Directors finds it to be appropriate; or
(2) Lack of Good Faith. To indemnify any person for any expenses incurred by him or her with respect to any proceeding instituted by him or her to enforce or interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by him or her in such proceeding was not made in good faith or was frivolous;
(3) Insured Claims. To indemnify any person for expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) which have been paid directly to him or her by an insurance carrier under a policy of officers' and directors' liability insurance maintained by the Corporation.
(4) Claims Under Section 16(b). To indemnify any person for expenses or the payment of profits arising from the purchase and sale by him or her of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar or successor statute.
(j) Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was or has agreed to become a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him or on his behalf in any such capacity,
or 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 this Article NINTH; provided, however, that such insurance is available on acceptable terms, which determination shall be made by a vote of a majority of the Directors.
(k) Savings Clause. If this Article NINTH or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation (i) shall nevertheless indemnify each director and officer of the Corporation and (ii) may nevertheless indemnify each employee and agent of the Corporation, as to any cost, charge and expense (including attorney's fees), judgment, fine and amount paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Article NINTH that shall not have been invalidated and to the full extent permitted by applicable law.
(l) Amendment. The affirmative vote of at least a majority of the total voting power shall be required to amend, repeal, or adopt any provision inconsistent with, this Article NINTH. No amendment, termination or repeal of this Article NINTH shall affect or impair in any way the rights of any director or officer of the Corporation to indemnification under the provisions hereof with respect to any action, suit or proceeding arising out of, or relating to, any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or appeal.
(m) Subsequent Legislation. If the General Corporation Law of Nevada is amended after adoption of this Charter to further expand the indemnification permitted to directors, officers, employees or agents of the Corporation, then the Corporation shall indemnify such persons to the fullest extent permitted by the General Corporation Law of Nevada, as so amended.
(n) Restriction. Notwithstanding any other provision hereof whatsoever, no
person shall be indemnified under this Article NINTH who is adjudged liable for
(i) a breach of duty to the Company or its shareholders that resulted in
personal enrichment to which he was not legally entitled, (ii) intentional fraud
or dishonesty or illegal conduct, or (iii) for any other cause prohibited by
applicable state or federal law, unless a court determines otherwise.
{EXCLUSION OF DIRECTOR LIABILITY}
TENTH. As authorized by Section 78.037(1) of the General Corporation Law of Nevada, no director or officer of the Company shall be personally liable to the Company or any shareholder thereof for monetary damages for breach of his fiduciary duty as a director or officer, except for liability for (a) any acts or omissions which involve intentional misconduct, fraud or a knowing violation of law, or (b) any payment of dividends in violation of Section 78.300 of the General Corporation Law of Nevada, as it now exists or may hereafter be amended. This Article TENTH shall apply to a person who has ceased to be a director or officer of the Company with respect to any breach of fiduciary duty which occurred when such person was serving as a director or officer. This Article TENTH shall not be construed to limit or modify in any way any director's or officer's right to indemnification or other right whatsoever under this Charter, the Company's ByLaws or the General Corporation Law of Nevada.
If the General Corporation Law of Nevada hereafter is amended to authorize the further elimination or limitation of the liability of directors or officers generally, then the liability of the Company's directors and officers, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the General Corporation Law of Nevada as so amended. Any repeal or modification of this Article TENTH by the shareholders shall be prospective only and shall not adversely affect any limitation on the personal liability of any director or officer existing at the time of such repeal or modification. The affirmative vote of at least a majority of the total voting power shall be required to amend or repeal, or adopt any provision inconsistent with, this Article TENTH.
{AMENDMENT}
ELEVENTH. The Corporation reserves the right to amend, restate or repeal any provision contained in this Charter, in the manner now or hereafter prescribed by statute, and all rights conferred on shareholders are granted subject to this reservation. The affirmative vote of a majority of the votes cast is necessary to amend or restate provisions of this Charter, except such provisions which expressly require a higher proportion of the votes cast or require a proportion of the total voting power. The affirmative vote of a majority of the total voting power is necessary to repeal this Charter in its entirety and adopt a new charter in its stead.
{CERTAIN POWERS RESERVED TO DIRECTORS}
TWELFTH. The Corporation hereby reserves solely to the Board of Directors the power and authority to borrow from time to time on behalf and in the name of the Corporation and to determine the amount, terms, provisions and conditions of any such borrowing; and in connection therewith to create, issue and deliver instruments of indebtedness, including but not limited to promissory notes, bonds, debentures and similar instruments containing such terms, provisions and conditions as the Board of Directors deems necessary or advisable in its sole discretion.
In connection with the creation, issuance or delivery of any such form or evidence of indebtedness, there is also reserved solely to the Board of Directors the power and authority to create, enter into and execute indentures of trust, conveyances, mortgages and similar instruments containing such terms, provisions and conditions as the Board of Directors deems necessary or advisable in its sole discretion; and, without need of prior or subsequent shareholder approval, to pledge, mortgage or convey any or all property, assets, rights, privileges or franchises now or hereafter belonging to the Corporation in order to secure the payment when due of the principal, interest and other charges due upon any such promissory notes, bonds or debentures or other obligations or evidences of indetedness of the Corporation; and to create, issue and deliver additional amounts or series of obligations under the terms of any such indenture, conveyance or mortgage after creation and issuance of the original obligations thereunder. Any form of indebtedness authorized by the Board of Directors may be made convertible into Common Stock or other securities of the Corporation and may be made redeemable at such time and on such terms (including the use of a sinking fund or similar arrangement) as the Board of Directors deems necessary or advisable in its sole discretion.
The affirmative vote of a majority of the total voting power shall be required to amend, repeal or adopt any provision inconsistent with this Article TWELFTH.
{INAPPLICABILITY OF CONTROL SHARE ACQUISITION STATUTE}
THIRTEENTH. The Corporation expressly elects not to be governed by Sections 78.378 through 78.3793 of the General Corporation Law of Nevada (concerning acquisitions of controlling interest in corporations), as it now exists or may hereafter be amended, or any successor statute. The affirmative vote of at least a majority of the total voting power shall be required to amend, repeal or adopt any provision inconsistent with this Article THIRTEENTH.
IN WITNESS WHEREOF, the undersigned, being the Incorporator named above, for the purpose of forming a corporation pursuant to the General Corporation Law of Nevada, does hereby make and file this Certificate of Incorporation for MNS EAGLE EQUITY GROUP III, INC.
DATED: February 5, 1997
INCORPORATOR:
By /S/ John D. Brasher Jr.
----------------------------------
John D. Brasher Jr.
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State of Colorado )
)ss
County of Denver )
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On this day the 5th day of February, 1997, before me, Elisabeth M. Crosse., the above signed incorporator, personally appeared John D. Brasher Jr., known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same for the purposes therein contained. In witness whereof, I hereunto set my hand and official seal.
By /s/ Elisabeth M. Crosse
(SEAL) -----------------------------------
Notary Public
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Exhibit 3.4
BYLAWS
of
MNS EAGLE EQUITY GROUP III, INC.
(A Nevada Corporation)
ARTICLE I
General
1.01 Applicability. These Bylaws provide rules for conducting the business of this corporation (the "Company"). Every shareholder and person who subsequently becomes a shareholder, the Board of Directors, Committees and Officers of the Company shall comply with these Bylaws, as amended from time to time. All bylaws and resolutions heretofore adopted by the Board of Directors are hereby repealed, to the extent in conflict with the provisions of these Bylaws.
1.02 Offices. The principal office of the Company shall be selected by the Board of Directors from time to time and may be within or without the State of Nevada. The Company may have such other offices, within or without the State of Nevada, as the Board of Directors may, from time to time, determine. The registered office of the Company required by the General Corporation Law of Nevada to be maintained in Nevada may be, but need not be, identical with the principal office if in Nevada, and the address of the registered office may be changed from time to time by the Board of Directors.
1.03 Definition of Terms. Terms defined in the Company's Certificate of Incorporation, as amended and restated from time to time (the "Charter"), shall have the same meanings when used in these Bylaws.
ARTICLE II
Stock Certificates
2.01 Stock Certificates. The shares of the Company's capital stock shall be represented by consecutively numbered certificates signed by the President or a Vice President and the Secretary or Assistant Secretary of the Company, and sealed with the seal of the Company, or a facsimile thereof. If certificates are signed by a transfer agent and registrar other than the Company or an employee thereof, the signatures of the officers of the Company may be facsimile. In case any officer who has signed (by real or facsimile signature) a certificate shall have ceased to hold such office before the certificate is issued, it may be issued by the Company with the same effect as if he continued to hold such office on the date of issue. Each certificate representing shares shall state upon the face thereof: (i) that the Company is organized under the laws of the State of Nevada; (ii) the name of the person to whom issued; (iii) the number, class and series (if any) of shares which such certificate represents; and (iv) the par value, if any, of the shares represented by such certificate, or a statement that the shares have no par value.
If any class or series of shares is subject to special powers, designations, preferences or relative, participating or other special rights, then such (together with all qualifications, limitations or restrictions of such preferences or rights) shall be set forth in full or summarized on the certificate representing such class or series. Moreover, each certificate shall state that the Company will furnish, without charge, to the registered holder of the shares represented by such certificate who so requests a statement setting forth such information in full.
Each certificate also shall set forth restrictions upon transfer, if any, or a reference thereto, as shall be adopted by the Board of Directors or by the shareholders, or as may be contained in this Article II. Any shares issued without registration under the Securities Act of 1933, as amended ("Act"), shall bear a legend restricting transfer unless such shares are registered under such act or an exemption from registration is available for a proposed transfer.
2.02 Consideration for Shares. Shares of the Company shall be issued, and treasury shares may be disposed of, for such consideration or considerations as shall be fixed from time to time by the Board of Directors. No shares shall be issued for less than the par value thereof. The consideration for the issuance of shares may be paid, in whole or in part, in money, in other property, tangible or intangible, or in labor or services actually performed for the Company, or as permitted in the Charter.
2.03 Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Company alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate
of stock to be lost, and the Board of Directors when authorizing such issue of a new certificate or certificates may in its discretion, and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates or his legal representative to advertise the same in such manner as it shall require, and/or furnish to the Company a bond in such sum as it may direct, as indemnity against any claim that may be made against the Company. Except as herein above in this section provided, no new certificate or certificates evidencing shares of stock shall be issued unless and until the old certificate or certificates, in lieu of which the new certificate or certificates are issued, shall be surrendered for cancellation.
2.04 Registered Holder as Owner. The Company shall be entitled to treat the registered holder of any shares of the Company as the owner of such shares, and shall not be bound to recognize any equitable or other claim to, or interest in, such shares or rights deriving from such shares, unless and until such purchaser, assignee, transferee or other person becomes the registered holder of such shares, whether or not the Company shall have either actual or constructive notice of the interests of such purchaser, assignee, or transferee or other person. The purchaser, assignee, or transferee of any of the shares of the Company shall not be entitled: to receive notice of the meetings of the shareholders; to vote at such meetings; to examine a list of the shareholders; to be paid dividends or other sums payable to shareholders; or to own, enjoy and exercise any other property or rights deriving from such shares against the Company, until such purchaser, assignee, or transferee has become the registered holder of such shares.
2.05 Reversions. Cash, property or share dividends, shares issuable to shareholders in connection with a reclassification of stock, and the redemption price of redeemed shares, which are not claimed by the shareholders entitled thereto within TWO years after the dividend or redemption price became payable or the shares became issuable, despite reasonable efforts by the Company to pay the dividend or redemption price or deliver the certificate(s) for the shares to such shareholders within such time shall, at the expiration of such time, revert in full ownership to the Company, and the Company's obligation to pay any such dividend or redemption price or issue such shares, as the case may be, shall thereupon cease; provided, that the Board of Directors may at any time and for any reason satisfactory to it, but need not, authorize (i) payment of the amount of cash or property dividend or (ii) issuance of any shares, ownership of which has reverted to the Company pursuant to this Section of Article II, to the person or entity who or which would be entitled thereto had such reversion not occurred.
2.06 Returned Certificates. All certificates for shares changed or returned to the Company for transfer shall be marked by the Secretary "CANCELLED," with the date of cancellation, and the transaction shall be immediately recorded in the certificate book opposite the memorandum of their issue. The returned certificate may be inserted in the certificate book.
2.07 Transfer of Shares. Upon surrender to the Company or to a transfer agent of the Company of a certificate of stock endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, and such documentary stamps as may be required by law, it shall be the duty of the Company to issue a new certificate, upon payment by the transferee of such nominal charge therefor as the Company or its transfer agent may impose. Each such transfer of stock shall be entered on the stock book of the Company. Respecting any securities issued in reliance upon Rule 903 of Regulation S under the Act at any time when the Company is not a "reporting issuer" as defined in Rule 902 of Regulation S, no transfer of such securities shall be registered unless made in accordance with the provisions of Regulation S.
2.08 Transfer Agent. The Board of Directors shall have power to appoint one or more transfer agents and registrars for the transfer and registration of certificates of stock of any class, and may require that stock certificates shall be countersigned and registered by one or more of such transfer agents and registrars. Any powers or duties with respect to the transfer and registration of certificates may be delegated to the transfer agent and registrar.
ARTICLE III
Meetings of the Shareholders
3.01 Annual Meeting. The annual meeting of the shareholders shall be held between the 90th and 180th day after the tax year end, at such date and time and at such place, within or without the State of Nevada, as is designated from time to time by the Board of Directors and stated in the notice of the meeting. At each annual meeting the shareholders shall elect a Board of Directors in accordance with the Charter and shall transact such other business as may properly be brought before the meeting.
3.02 Special Meetings. Unless otherwise proscribed by law, the Charter or these Bylaws, special meetings of the shareholders may be called by the Chairman
of the Board, the President, or a majority of the Board of Directors. The President shall call a special meeting upon the Secretary's receipt of written demand therefor by the holders of not less than ten percent (10%) of the total voting power. Requests for special meetings shall state the purpose or purposes of the proposed meeting.
3.03 Notice of Meetings. Except as otherwise provided by law, the Charter or these Bylaws, written notice of any annual or special meeting of the shareholders shall state the place, date, and time thereof and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given to each shareholder of record entitled to vote at such meeting not fewer than 10 nor more than 60 days prior to the meeting by any means permitted in Section 8.01 hereof. No business other than that specified in the notice of a special meeting shall be transacted at any such special meeting.
3.04 Record Date. In order that the Company may determine shareholders of record who are entitled (i) to notice of or to vote at any shareholders meeting or adjournment thereof, (ii) to express written consent to corporate action in lieu of a meeting, (iii) to receive payment of any dividend or other distribution, or (iv) to allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock, or in order that the Company may make a determination of shareholders of record for any other lawful purpose, the Board of Directors may fix in advance a date as the record date for any such determination. Such date shall not be more than 60 days, and in case of a meeting of shareholders, not less than 10 days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken, and in no event may the record date precede the date upon which the Directors adopt a resolution fixing the record date.
If no record date is fixed for the determination of shareholders entitled
to notice of or to vote at a meeting of shareholders, or shareholders entitled
to receive payment of a dividend, the date on which notice of the meeting is
given (as defined in Section 8.01 hereof) or the date on which the resolution of
the Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of the shareholders. When a
determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in this Section such determination shall apply to any
adjournment thereof, unless the Board of Directors fixes a new record date for
the adjournment. The record date for determining shareholders entitled to
consent to corporate actions without a meeting shall be fixed as provided in
Section 3.12 hereof.
3.05 Voting List. At least 10 days but nor more than 60 days before any meeting of shareholders, the officer or transfer agent in charge of the Company's stock transfer books shall prepare a complete alphabetical list of the shareholders entitled to vote at such meeting, which list shows the address of each shareholder and the number of shares registered in his or her name. The list so prepared shall be maintained at the corporate offices of the Company and shall be open to inspection by any shareholder, for any purpose germane to the meeting, at any time during usual business hours during a period of no fewer than 10 days prior to the meeting. The list shall also be produced and kept open at any shareholders meeting and, except as otherwise provided by law, may be inspected by any shareholder or proxy of a shareholder who is present in person at the meeting. The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine the list of shareholders and to vote at any meeting of shareholders.
3.06 Quorum; Adjournments. (a) The holders of a majority of the total voting power at any shareholders meeting present in person or by proxy shall be necessary to and shall constitute a quorum for the transaction of business at all shareholders meetings, except as otherwise provided by law or by the Articles.
(b) If a quorum is not present in person or by proxy at any shareholders meeting, a majority of the voting shares present or represented shall have the power to adjourn the meeting from time to time to the same or another place within 30 days thereof and no further notice of such adjourned meeting need be given if the time and place thereof are announced at the meeting at which the adjournment is taken.
(c) Even if a quorum is present in person or by proxy at any shareholders meeting, a majority of the voting shares present or represented shall have the power to adjourn the meeting from time to time, for good cause, without notice of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjourment is taken, until a new date which is not more than 30 days after the date of the original meeting.
(d) Any business which might have been transacted at a shareholders meeting as originally called may be transacted at any meeting held after adjournment as provided in this Section 3.06 at which reconvened meeting a quorum is present in person or by proxy. Anything in paragraph (b) of this Section to the contrary notwithstanding, if an adjournment is for more than 30 days, or if after an adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each shareholder of record entitled to vote thereat.
(e) The shareholders present at a duly called meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum.
3.07 Proxies. At all meetings of shareholders, a shareholder may vote by proxy, executed in writing by the shareholder or by his duly authorized attorney in fact. Any proxyholder shall be authorized to sign, on the shareholder's behalf, any written consent for shareholder action taken in lieu of a meeting. Such proxy shall be filed with the Secretary of the Company before or at the time of the meeting. No proxy shall be valid after the expiration of six (6) months from the date of its execution, unless coupled with an interest, or unless the person executing it specifies therein the length of time for which it is to continue in force, which in no case shall exceed three (3) years from the date of its execution.
3.08 Voting of Shares. At any shareholders meeting every shareholder having the right to vote shall be entitled to vote in person or by proxy. Except as otherwise provided by law, by the Articles or in the Board resolution authorizing the issuance of shares, each shareholder of record shall be entitled to one vote (on each matter submitted to a vote) for each share of capital stock registered in his, her or its name on the Company's books. Except as otherwise provided by law or by the Articles, all matters submitted to the shareholders for approval shall be determined by a majority of the votes cast (not counting abstentions) at a legal meeting commenced with a quorum.
3.09 Voting of Shares by Certain Holders. Neither treasury shares, nor shares of its own stock held by the Company in a fiduciary capacity, nor shares held by another corporation if the majority of the shares entitled to vote for the election of directors of such other corporation is held by the Company, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time.
Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent, or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine.
Shares held by an administrator, executor, personal representative, guardian, or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so be contained in an appropriate order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.
3.10 Chairman. The Chairman of the Board of Directors of the Company, if there is one, or in his absence, the President, shall act as chairman at all meetings of shareholders.
3.11 Manner of Shareholder Voting. Voting at any shareholders' meeting shall be oral or by show of hands; provided, however, that voting shall be by written ballot if such demand is made by any shareholder present in person or by proxy and entitled to vote.
3.12 Informal Action by Shareholders; Record Date. Any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by a majority of the total voting power; provided, that where an action requires a greater proportion of the total voting power, then the consent shall be signed by such greater proportion. No written consent will be effective unless written consents, signed by a sufficient proportion of shareholders to take action, are delivered to the Company within sixty (60) days of the date of the earliest such consent. Such consent shall have the same force and effect as a vote of the shareholders, and
may be stated as such in any document filed with the Secretary of State of Nevada under the General Corporation Law of Nevada. Prompt notice of such action by written consent of less than all shareholders entitled to vote shall be given to all shareholders who have not consented in writing to the action taken.
The record date for determining shareholders entitled to consent to corporate actions in writing without a meeting (the "consent record date") shall not precede, and shall not be more than ten (10) days after, the date upon which the resolution fixing the record date was adopted. However, if no consent record date is fixed, the consent record date shall be, respectively, (i) if prior action by the Board of Directors is required under the General Corporation Law of Nevada for the consent to be validly taken, the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and (ii) if prior action by the Board of Directors is not required, the first date on which a properly signed and dated consent setting forth the action taken or proposed to be taken is delivered as required above.
3.13 Presiding Officers; Order of Business. (a) Shareholders meetings shall be presided over by the Chairman of the Board; or if the Chairman (and Vice Chairman) is not present, by the President; or if the President is not present, by a Vice President; or if a Vice President is not present, by such person chosen by the Board of Directors; or if none, by a chairperson to be chosen at the meeting by shareholders present in person or by proxy who own a majority of the voting power present. The Secretary of a shareholders meeting shall be the Secretary of the Company; or if the Secretary is not present, an Assistant Secretary; or if an Assistant Secretary is not present, such person as may be chosen by the Board of Directors; or if none, by such person who is chosen by the chairperson at the meeting.
(b) The following order of business, unless otherwise ordered at the shareholders meeting by the chairperson thereof, shall be observed as far as practicable and consistent with the purposes of the meeting:
1. Calling of the shareholders' meeting to order.
2. Presentation of proof of mailing of the notice of the meeting and, if a special meeting, the call thereof.
3. Presentation of proxies.
4. Determination and announcement that a quorum is present.
5. Reading and approval (or waiver thereof) of the minutes of the previous meeting of shareholders.
6. Reports, if any, of officers.
7. Election of directors, if the meeting is an annual meeting or a meeting called for such purpose.
8. Consideration of the specific purpose or purposes for which the meeting has been called, other than election of directors.
9. Transaction of such other business as may properly come before the meeting.
10. Adjournment.
3.14 Annual Report. The President of the Company shall prepare an annual report which will set forth a statement of affairs of the Company as of the end of its last fiscal year, including a balance sheet, an income statement and a statement of changes in financial position, which need not be audited, and present them at the annual meeting of shareholders. Failure to prepare or present an annual report shall not affect the validity of any shareholder meeting. No such report need be prepared or presented for any fiscal year in which the Company was inactive. This Section shall not apply as to any fiscal year if the Company (i) was at the year end subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, and subsequently furnishes to the shareholders an annual report or report on Form 10-K under such Act covering such fiscal year, or (ii) furnishes to shareholders an Information Statement which conforms to the requirements of Rule 15c2-11 of the Securities and Exchange Commission.
ARTICLE IV
Directors, Powers and Meetings
4.01 General Powers. All corporate powers shall be exercised, and the Company's business and affairs shall be managed, by or under the authority of its Board of Directors, except as otherwise provided in the General Corporation Law of Nevada or the Charter.
4.02 Number, Tenure and Qualifications. The Company's Board of Directors shall consist of not less than one (1) and not more than seven (7) Directors, as resolved from time to time by the Board of Directors. If such number is not so fixed, the Company shall have one Director. Directors shall be elected at each annual meeting of shareholders, except as otherwise provided below. Each Director shall hold office until the next annual meeting of shareholders and thereafter until his successor shall have been elected and duly qualified. Directors need not be residents of Nevada or shareholders of the Company. Directors shall be elected by plurality vote. At least one-fourth in number of the Directors must be elected annually. No decrease in the number of Directors shall shorten the term of any incumbent Director.
4.03 Vacancies; Resignation. (a) Any vacancy occurring in the Board of Directors, except resulting from an increase in the number of directors, may be filled by the affirmative vote of a majority of the remaining Directors, though less than a quorum, or by a sole remaining Director. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Any directorship to be filled by reason of an increase in the number of Directors shall be filled by the affirmative vote of a majority of the entire board or by a majority of the total voting power at any annual meeting or at a special meeting of shareholders called for that purpose, or by means of written shareholder consents taken in lieu of a meeting. Every director chosen to fill a vacancy as provided in this Section shall hold office until the next annual meeting of shareholders or until his successor has been elected and qualified.
(b) Any Director may resign at any time by giving written notice to the Board, the Chairman of the Board, the President or the Secretary of the Company. Unless otherwise specified in such written notice, a resignation shall take effect upon delivery to the Board or the designated officer. A resignation need not be accepted in order for it to be effective.
4.04 Removal of Directors. Any Director may be removed only by the shareholders in the manner provided in the Company's Charter and, if no such provision appears therein, then as provided by law. Such action may be taken at any special meeting called for that purpose or by means of written shareholder consents. In case any vacancy so created shall not be filled by the shareholders at such meeting or in the written consent effecting removal, such vacancy may be filled by a majority of the Board of Directors.
4.05 Place of Meetings. The Board of Directors may hold both regular and special meetings either within or without the State of Nevada, at such place as the Board of Directors from time to time deems advisable.
4.06 Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than these Bylaws 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 for the holding of additional regular meetings without other notice than such resolution; provided, that any Director not present when any such resolution is passed is given notice of the resolution.
4.07 Special Meetings. A special meeting of the Board of Directors shall be held without other notice than these Bylaws immediately after and at the same place as every special meeting of shareholders. Special meetings of the Board of Directors also may be called by or at the request of the Chairman of the Board, the President, or any two Directors upon two days' notice to each director if such notice is delivered personally or sent by telegram, or upon five days' notice if sent by mail.
4.08 Telephonic Meetings. One or more members of the Board of Directors or any committee designated by the Board may participate in a meeting of the Board of Directors or committee by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear one another at the same time. Such participation shall constitute presence
in person at the meeting. All participants in any meeting of Directors, by virtue of their participation and without further action on their part, shall be deemed to have consented to the recording of such meeting by electronic device or otherwise, and to the making of a written transcript thereof, in order that minutes thereof shall be available for the Company's records.
4.09 Notice. Except as otherwise provided above, notice of the time, date and place, of every special meeting of Directors or any committee thereof shall be given. Any Director may waive notice of any meeting. The attendance of a Director at a meeting shall constitute a waiver of notice of such meeting, except where a Director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. 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.
4.10 Quorum; Adjournments. A majority of the number of directors then in office, present in person or by means of conference telephone or similar equipment, shall constitute a quorum for the transaction of business at every Board meeting, and 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, except as may otherwise specifically be provided by law, the Charter or these Bylaws. If a quorum is not present at any Board meeting, the directors present may adjourn the meeting, from time to time, without notice other than announcement of the meeting, until a quorum is present.
4.11 Compensation. Directors shall be entitled to such compensation for their services as directors as from time to time may be fixed by the Board and shall be entitled to reimbursement of all reasonable expenses incurred by them in attending Board meetings. A director may waive compensation for any Board meeting. No director who receives compensation as a director shall be barred from serving the Company in any other capacity or from receiving compensation and reimbursement of reasonable expenses for any or all such other services.
4.12 Presumption of Assent. A Director of the Company who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof, or shall forward such dissent by registered or certified mail, first class, postage prepaid, to the Secretary of the Company, provided such mailing is postmarked within ten calendar days after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action.
4.13 Action by Directors Without Meeting. Any action required to be taken at a meeting of the Directors of the Company or of a committee of Directors or any action which may be taken at such a meeting, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the Directors entitled to vote with respect to the subject matter thereof. A consent shall be sufficient for this Section if it is executed in counterparts, in which event all of such counterparts, when taken together, shall constitute one and the same consent.
4.14 Bank Accounts, etc. Anything herein to the contrary notwithstanding, the Board of Directors may, except as may otherwise be required by law, authorize any officer or officers, agent or agents, in the name of and on behalf of the Company, to sign checks, drafts, or other orders for the payment of money or notes or other evidences of indebtedness, to endorse for deposit, deposit to the credit of the Company at any bank or trust company or banking institution in which the Company may maintain an account or to cash checks, notes, drafts, or other bankable securities or instruments, and such authority may be general or confined to specific instances, as the Board of Directors may elect.
4.15 Inspection of Records. Every Director shall have the absolute right at any reasonable time to inspect all books, records, documents of every kind, and the physical properties, of the Company and of its subsidiaries. Such inspection may be made personally or by an agent and includes the right to make copies and extracts.
4.16 Executive Committee. (a) The Board of Directors may, by resolution adopted by a majority of the whole Board, appoint two or more of its members to constitute an Executive Committee. One of such directors shall be designated as Chairman of the Executive Committee. Each member of the Executive Committee shall continue as a member thereof until the expiration of his term as a director, or until his earlier resignation from the Executive Committee, in either case unless sooner removed as a director or member of the Executive Committee by any means authorized by the Charter or herein.
(b) The Executive Committee shall have and may exercise, to the extent provided in such resolution and except as prohibited by law, all of the rights, power and authority of the Board of Directors.
(c) The Executive Committee shall fix its own rules of procedure and shall meet at such times and at such place or places as may be provided by its rules. The Chairman of the Executive Committee, or in the absence of the Chairman, a member of the Executive Committee chosen by a majority of the members present, shall preside at all meetings of the Executive Committee, and another member thereof chosen by the Executive Committee shall act as Secretary. A majority of the Executive Committee shall constitute a quorum for the transaction of business, and the affirmative vote of a majority of the members thereof shall be required for any action of the Executive Committee. The Executive Committee shall keep minutes of its meetings and deliver such minutes to the Board of Directors.
4.17 Other Committees. The Board of Directors may, by resolution duly adopted by a majority of directors at a meeting at which a quorum is present, appoint an audit committee, compensation committee, and such other committee or committees as it shall deem advisable and with such limited authority as the Board of Directors shall from time to time determine.
4.18 Other Provisions Regarding Committees. (a) The Board of Directors shall have the power at any time to fill vacancies in, change the membership of, or discharge any committee. The members of any committee present at any meeting of a committee, whether or not they constitute a quorum, may appoint a director to act in the place of an absent member.
(b) Members of any committee shall be entitled to such compensation for their services as such as from time to time may be fixed by the Board of Directors and in any event shall be entitled to reimbursement of all reasonable expenses incurred in attending committee meetings. Any member of a committee may waive compensation for any meeting. No member of a committee who receives compensation as a member of one or more committees shall be barred from serving the Company in any other capacity or from receiving compensation and reimbursement of reasonable expenses for any or all such other services.
(c) Unless otherwise prohibited by law, the provisions above concerning action by written consent of directors and meetings of directors by telephonic or similar means shall apply to all committees from time to time created by the Board of Directors.
ARTICLE V
Officers and Agents
5.01 Positions. The Company's officers generally shall be chosen by the Board of Directors and shall consist of a Chairman of the Board, a President, one or more Vice Presidents if desired, a Secretary and a Treasurer. The Board of Directors may appoint one or more other officers, assistant officers and agents as it from time to time deems necessary or appropriate, who shall be chosen in such manner and hold their offices for such terms and have such authority and duties as from time to time may be determined by the Board of Directors. The Board may delegate to the Chairman of the Board the authority to appoint any officer or agent of the Company and to fill a vacancy other than the Chairman of the Board or President. Any two or more offices may be held by the same person, except that no person may simultaneously hold the offices of President and Secretary and of President and Vice President. In all cases where the duties of any officer, agent or employee are not prescribed by these bylaws or by the Board of Directors, such officer, agent or employee shall follow the orders and instructions of the President.
5.02 Term of Office; Removal. Each officer of the Company shall hold office at the pleasure of the Board and any officer may be removed, with or without cause, at any time by the affirmative vote of a majority of the directors then in office; provided, that any officer appointed by the Chairman of the Board pursuant to authority delegated by the Board may be removed, with or without cause, at any time by the Chairman whenever the Chairman in his or her absolute discretion shall consider that the Company's best interests shall be served by such removal. Removal of an officer by the Board (or the Chairman, as the case may be) shall not prejudice the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not in itself create contract rights.
5.03 Vacancies. A vacancy in any office, however occurring, may be filled by the Board or the Executive Committee, for the unexpired portion of the term by majority vote of its members, or by the Chairman of the Board in the case of a vacancy occurring in an office to which the Chairman has been delegated authority to make appointments.
5.04 Compensation. The salaries of all officers of the Company shall be fixed from time to time by the Board, and no officer shall be prevented from receiving a salary by reason of the fact that he also receives compensation from the Company in any other capacity. 5.05 Chairman of the Board. The Chairman of the Board ("Chairman"), if such officer shall be chosen by the Board of Directors, shall preside at all meetings of the Board of Directors and meetings of shareholders at which he is present and shall exercise general supervision and direction over the implementation of Board policy affecting the affairs of the Company. Any act which may be performed by the Chief Executive Officer or President may be performed by the Chairman.
5.06 Chief Executive Officer; Chief Operating Officer. The Chairman of the Board shall, unless the Board determines otherwise, serve as the Chief Executive Officer ("CEO") of the Company. If the Chairman is not designated the CEO, then the President shall serve as CEO. The Board may, from time to time, designate from among the executive officers of the Company an officer to serve as Chief Operating Officer ("COO") of the Company. If the Chairman serves as the CEO, then the President shall serve as COO. If the President is designated CEO, then the Executive Vice President (or if there is none, then the next most senior Vice President) shall serve as COO. A person designated to serve in the capacity of CEO or COO shall serve at the pleasure of the Board.
A person designated Chief Executive Officer (CEO) shall have primary responsibility for and active charge of the management and supervision of the Company's business and affairs. The CEO may execute in the name of the Company authorized corporate obligations and other instruments, shall perform such other duties as may be prescribed by the Board (or Chairman, as the case may be) from time to time and, in the absence or disability of the President, shall exercise all of the duties and powers of the President. In the event that the President is not the CEO, then the CEO shall supervise the performance of the President and shall be responsible for the execution of the policies and directives of the Board. The CEO shall report directly to the Board. The CEO shall perform such other duties as may be assigned by the Board (or Chairman, as the case may be). The CEO may perform any act which might be performed by the President.
A person designated Chief Operating Officer (COO) shall be responsible for the day-to-day management of the Company's operations, subject to the authority of the CEO. The COO shall report directly to the CEO of the Company and shall consult with the CEO on all matters of corporate policy and material business activities of the Company. The COO shall perform such other duties as may be assigned by the Board or the CEO.
5.07 President. The President shall have general active management of the business of the Company, subject to the authority of the Chief Executive Officer if the President is not designated as such, and general supervision of its officers, agents and employees. In the absence of the Chairman and Chief Executive Officer, he shall preside at all meetings of the shareholders and of the Board. In the absence of a designated Chief Executive Officer he shall see that all policies and directives of the Board are carried into effect.
He shall, unless otherwise directed by the Board of Directors, attend in person or by substitute appointed by him, or shall execute in behalf of the Company written instruments appointing a proxy or proxies to represent the Company, at all meetings of the stockholders of any other company in which the Company shall hold any stock. He may, on behalf of the Company, 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 as aforesaid, may vote the stock so held by the Company and may execute written consent and other instruments and power incident to the ownership of said stock, subject however to the instructions, if any, of the Chairman or the Board of Directors. The President shall have custody of the Treasurer's bond, if any.
5.08 Executive Vice President. The Executive Vice President, if any, shall assist the President in the discharge of supervisory, managerial and executive duties and functions. In the absence of the President or in the event of his death, or inability or refusal to act, the Executive Vice President shall perform the duties of the President and when so acting shall have the duties and powers of the President. He shall perform such other duties as from time to time may be assigned to him by the President, Chairman or Board of directors.
5.09 Vice Presidents. The Vice Presidents, if any, shall assist the President and Executive Vice President and shall perform such duties as may be prescribed by the Board, the Chairman or the President. Vice Presidents in the order of their seniority shall, in the absence or disability of the Chairman and President, exercise all of the duties and powers of such officers. The Executive Vice President, if any, shall be the most senior of Vice Presidents, and the
Senior Vice President, if any, shall be the next most senior of Vice Presidents. In regard to other Vice Presidents, they shall have the respective ranks designated by the Board of Directors, or if none has been so designated, as designated by the Chairman, or if none has been so designated by the Chairman, they shall rank in the order of their respective elections to such office. The execution of any instrument on the Company's behalf by a Vice President shall be conclusive evidence, as to third parties, of his authority to act in the stead of the President and Executive Vice President.
5.10 Secretary. The Secretary shall: (i) keep the minutes of the
proceedings of the shareholders and the Board of Directors and record all votes
and proceedings thereof in a book kept for that purpose; (ii) see that all
notices are duly given in accordance with the provisions of these Bylaws or as
required by law; (iii) be custodian of the corporate records and of the seal of
the Company and affix the seal to all documents when authorized by the Board of
Directors; (iv) keep at its registered office or principal place of business
within or outside Delaware a record containing the names and addresses of all
shareholders and the number and class of shares held by each, unless such a
record shall be kept at the office of the Company's transfer agent or registrar;
(v) sign with the President, or a Vice President, certificates for shares of the
Company, the issuance of which shall have been authorized by resolution of the
Board of Directors; (vi) have general charge of the stock transfer books of the
Company, unless the Company has a transfer agent; 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 the Board of Directors.
The Board of Directors may give general authority to officers other than the
Secretary or any Assistant Secretary to affix the Company's seal and to attest
the fixing thereof by his or her signature.
5.11 Assistant Secretary. The Assistant Secretary, if any (or if there is more than one, the Assistant Secretaries in the order designated, or in the absence of any designation, in the order of their appointment), in the absence or disability of the Secretary, shall perform the duties and exercise the powers of the Secretary. The Assistant Secretary(ies) shall perform such other duties and have such other powers as from time to time may be prescribed by the Board, the Chairman or the Chief Executive Officer. The Chairman may appoint one or more Assistant Secretary(ies) to office.
5.12 Treasurer. The Treasurer shall, unless the Board otherwise resolves, be the principal financial officer and principal accounting officer of the Company and shall have the care and custody of all funds, securities, evidence of indebtedness and other valuable effects of the Company, shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company and shall deposit all money and other valuable effects of the Company in the name and to the credit of the Company in such depositories as from time to time may be designated by the Board. The Treasurer shall disburse the funds of the Company in such manner as may be ordered by the Board from time to time and shall render to the Chairman of the Board, the President and the Board, at regular Board meetings or whenever any of them may so require, an account of all transactions and of the Company's financial condition.
5.13 Assistant Treasurer. The Assistant Treasurer, if any (or if there is more than one, the Assistant Treasurers in the order designated, or in the absence of any designation, in the order of their appointment), in the absence or disability of the Treasurer, shall perform the duties and exercise the powers of the Treasurer. The Assistant Treasurer(s) shall perform such other duties and have such other powers as from time to time may be prescribed by the Board, the Chairman or the Chief Executive Officer. The Chairman may appoint one or more Assistant Treasurer(s) to office.
5.14 Resignations. Any officer may resign at any time by giving written notice to the Board or to the Chairman. Such resignation shall take effect at the time specified therein and, unless specified therein, no acceptance of the resignation shall be required for the resignation to be effective.
5.15 Delegation of Duties. In the event of the absence or disability of any officer of the Company, or for any other reason the Board shall deem sufficient, the Board may temporarily designate the powers and duties, or particular powers and duties, of such officer to any other officer, or to any director.
5.16 Fidelity Bonds. The Board of Directors shall have the power, to the extent permitted by law, to require any officer, agent or employee of the Company to give bond for the faithful discharge of his duties in such form and with such surety or sureties as the Board deems advisable.
ARTICLE VI
Indemnification
Every Director, officer, employee and agent of the Company, and every person serving at the Company's request as a director, officer (or in a position functionally equivalent to that of officer or director), employee or agent of another corporation, partnership, joint venture, trust or other entity, shall be indemnified to the extent and in the manner provided by the Company's Charter, as it may be amended, and in the absence of any such provision therein, in accordance with Nevada law.
ARTICLE VII
Execution of Instruments and Deposit of Corporate Funds
7.01 Execution of Instruments Generally. The Chairman of the Board, the President, any Vice President, the Secretary or the Treasurer, subject to the approval of the Board of Directors, may enter into any contract or execute and deliver any instrument in the name and on behalf of the Company. The Board of Directors may authorize any officer or officers, or agent or agents, to enter into any contract or execute and deliver any instrument in the name and on behalf of the Company, and such authorization may be general or confined to specific instances.
7.02 Borrowing. Unless and except as authorized by the Board of Directors, no loans or advances shall be obtained or contracted for, by or on behalf of the Company, and no negotiable paper shall be issued in its name. Such authorization may be general or confined to specific instances. Any officer or agent of the Company thereunto so authorized may attain loans and advances for the Company and for such loans and advances may make, execute and deliver any promissory notes, bonds, or other evidences of indebtedness of the Company. Any officer or agent of the Company so authorized may pledge, hypothecate or transfer as security for the payment of any and all loans, advances, indebtedness and liabilities of the Company, any and all stocks, bonds other securites and other personal property at any time held by the Company, and to that end may endorse, assign and deliver the same and do every act and thing necessary or proper in connection therewith.
7.03 Deposits. All funds of the Company not otherwise employed shall be deposited from time to time to its credit in such banks or trust companies or with such bankers or other depositaries as the Board of Directors may select, or as may be selected by any officer or officers or agent or agents authorized to do so by the Board of Directors. Endorsements for deposit to the credit of the Company in any of its duly authorized depositaries shall be made in such manner as the Board of Directors from time to time may determine.
7.04 Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, and all notes or other evidence of indebtedness issued in the name of the Company, shall be signed by such officer or officers or agent or agents of the Company and in such manner as the Board of Directors from time to time may determine.
7.05 Proxies. Proxies to vote with respect to shares of stock of other corporations owned by, or standing in the name of, the Company may be executed and delivered from time to time on behalf of the Company by the Chairman of the Board, the President or any Vice President or by any other person or persons thereunto authorized by the Board of Directors.
ARTICLE VIII
Miscellaneous
8.01 Declaration of Dividends. The Board of Directors at any regular or special meeting may declare dividends payable, whenever in the exercise of its discretion it may deem such declaration advisable and such is permitted by law. Such dividends may be paid in cash, property, or shares of the Company.
8.02 Benefit Plans. Directors shall have the power to install and authorize any pension, profit sharing, stock option, stock award or stock bonus, insurance, welfare, educational, bonus, health and accident or other benefit program which the Board deems to be in the interest of the Company, at the expense of the Company, and to amend or revoke any plan so adopted. Any such plan may adopted and have full force and effect by resolution of the Board of Directors, except where applicable laws, rules or regulations require prior approval of the Company's shareholders of such plan in order for the plan to be valid.
8.03 Seal. The corporate seal of the Company shall be circular in form and shall contain the name of the Company, the year incorporated and the words "Seal" and "Nevada".
8.04 Fiscal Year. The Board of Directors shall have the power to fix, and from time to time change, the fiscal year of the Company. Any such adoption of or change in a fiscal year shall not constitute or require an amendment to these Bylaws.
8.05 Amendment of Bylaws. These Bylaws may be amended or repealed in the manner provided for in the Charter, or if none is there provided: by majority vote of the Board of Directors, taken at any meeting or by written consent, subject to the shareholders' right to change or repeal any Bylaws so made or adopt new Bylaws by vote of at least a majority of the total voting power. Bylaws amendments may be proposed by any Director or shareholder. Any action duly taken by the Board or the shareholders which conflicts or is inconsistent with these Bylaws (as they may be amended) shall constitute an amendment of the Bylaws, if the action was taken by such number of directors or shares voting as would be sufficient for amendment of the Bylaws.
8.06 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.
8.07 Conflicts. In the event of any irreconcilable conflict between these Bylaws and either the Company's Charter or applicable law, the latter shall control.
8.08 Definitions. Except as these Bylaws otherwise specifically provide, all terms used in these Bylaws shall have the definitions given them in the Company's Charter or the Nevada General Corporation Law.
ARTICLE IX
Notices
9.01 Receipt of Notices by the Company. Notices, shareholder writings consenting to action, and other documents or writings shall be deemed to have been received by the Company when they are actually received: (i) at the registered office of the Company in Nevada; (ii) at the principal office of the Company (as designated in the most recent document filed by the Company with the Nevada Secretary of State designating a principal office) addressed to the attention of the Secretary of the Company; (iii) by the Secretary of the Company wherever the Secretary may be found; or (iv) by any other person authorized from time to time by the Board of Directors or the President to receive such writings, wherever such person is found.
9.02 Giving of Notice. Except as otherwise provided by the General
Corporation Law of Nevada, these Bylaws, the Charter or resolution of the Board
of Directors, every meeting notice or other notice, demand, bill, statement or
other communication (collectively, "Notice") from the Company to a Director,
Officer or shareholder shall be duly given if it is written or printed and is
(i) sent by first class or express mail, postage prepaid, (ii) sent by any
commercial overnight air courier service, such as DHL, Federal Express, Emery,
Airborne, UPS or similar service, (iii) sent by telegraph, cablegram, telex,
telecopier, facsimile or similar transmission, (iv) delivered by any commercial
messenger service which regularly retains its receipts, or (v) personally
delivered, provided a receipt is obtained reflecting the date of delivery.
Notice shall not be duly given unless all delivery or postage charges are
prepaid. Notice shall be given to an addressee's most recent address as it
appears on the Company's records or to such other address as has been provided
in writing to the Secretary. A Notice shall be deemed "given" when dispatched
for delivery, when personally delivered, when transmitted electronically, or if
mailed, on the date postmarked. This Section shall not have the effect of
shortening any notice period provided for in these Bylaws.
9.03 Waiver of Notice. Any Notice required or permitted by the General Corporation Law of Nevada, the Charter or these Bylaws may be waived in writing at any time by the person entitled to the Notice, and such waiver shall be equivalent to the giving of notice. Notice of any shareholders' meeting shall be waived by attendance, in person or by proxy, at the meeting, unless any question of lack of or defect in a Notice is raised prior to conclusion of the meeting. A waiver of Notice of a special meeting of shareholders shall state the purpose for which the meeting was called or the business to be transacted thereat.
APPROVED AND ADOPTED by the Board of Directors as of February 28, 1997.
SECRETARY'S CERTIFICATION
I, the undersigned Secretary of this corporation, hereby certify that the foregoing Bylaws were duly adopted by its Board of Directors on the date above indicated and that the foregoing text of the Bylaws are currently in full force and effect and have not been revoked, suspended or amended since adoption thereof.
Dated: February 28, 1997
MNS EAGLE EQUITY GROUP, INC.
By /s/ John D. Brasher Jr.
(SEAL) -------------------------------------
John D. Brasher Jr.
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Exhibit 4.1
NUMBER SHARES
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
MNS EAGLE EQUITY GROUP III, INC.
The Corporation is authorized to issue 50,000,000 Common Shares - Par Value $.001 each
This Certifies that____________________________________________________ is the registered holder of ___________________________________________________Shares Fully paid and non-assessable transferable only on the books of the Corporation by the holder hereof in person or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized officers and its Corporate Seal to be hereunto affixed this _________ day of ______________ A.D.____________
----------------------------------- --------------------------------------
SECRETARY PRESIDENT
(CORPORATE SEAL
OMITTED)
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For Value Received, ______________ hereby sell, assign and transfer unto ___________________________________________, ________________________Shares represented by the within Certificate, and do hereby irrevocably constitute and appoint _____________________ Attorney to transfer the said Shares on the books of the within named Corporation with full power of substitution in the premises.
Dated___________________ ________
In presence of _________________________________________
___________________________________
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NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Exhibit 10.1
MNS EAGLE EQUITY GROUP III, INC.
1997 COMPENSATORY STOCK OPTION PLAN
1. Purpose of this Plan.
This 1997 Compensatory Stock Option Plan ("Plan") is intended as an employment incentive, to aid in attracting and retaining in the employ or service of MNS EAGLE EQUITY GROUP III, INC. ("Company"), a Nevada corporation, and any Affiliated Corporation, persons of experience and ability and whose services are considered valuable, to encourage the sense of proprietorship in such persons, and to stimulate the active interest of such persons in the development and success of the Company. This Plan provides for the issuance of non-statutory stock options ("CSOs" or "options") which are not intended to qualify as "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended ("Code"). Certain other terms also are defined in Paragraph 17 and elsewhere of this Plan.
2. Administration of this Plan.
The Company's Board of Directors ("Board") may appoint and maintain as administrator of this Plan the Compensation Committee ("Committee") of the Board which shall consist of at least two members of the Board. At any time that the Committee is not duly constituted, the Board itself shall have and fulfill the duties herein allocated to the Committee. The Committee shall have full power and authority to designate Plan participants, to determine the provisions and terms of respective CSOs (which need not be identical as to number of shares covered by any CSO, the method of exercise as related to exercise in whole or in installments, or otherwise), including the CSO price, and to interpret the provisions and supervise the administration of this Plan. The Committee may in its discretion provide that certain CSOs not vest (that is, become exercisable) until expiration of a certain period after issuance or until other conditions are satisfied, so long as not contrary to this Plan.
A majority of the members of the Committee shall consititue a quorum. All decisions and selections made by the Committee pursuant to this Plan's provisions shall be made by a majority of its members. Any decision reduced to writing and signed by all of the members shall be fully effective as if it had been made by a majority at a meeting duly held. The Committee shall select one of its members as its chairman and shall hold its meetings at such times and places as it deems advisable. If at any time the Board shall consist of seven or more members, then the Board may amend this Plan to provide that the Committee shall consist only of Board members who shall not have been eligible to participate in this Plan (or similar stock or stock option plan) of the Company or its affiliates at any time within one year prior to appointment to the Committee. Shareholder approval of this Plan shall be required, and all CSOs granted under this Plan will be subject to, and may not be exercised before, the approval of this Plan by the shareholders. Each CSO shall be evidenced by a written agreement containing terms and conditions established by the Committee consistent with the provisions of this Plan.
3. Designation of Participants.
Only Employees shall be eligible for participation in this Plan. The Committee shall have full power to designate, from among eligible individuals, the persons to whom CSOs may be granted. A person who has been granted a CSO hereunder may be granted an additional CSO or CSOs, if the Committee shall so determine. The granting of a CSO shall not be construed as a contract of employment or as entitling the recipient thereof to any rights of continued employment or engagement by the Company or an Affiliated Corporation. Persons eligible under this Plan additionally may be granted one or more options under any other compensation or stock option plan or awarded shares under any other benefit plan of the Company.
4. Stock Reserved for this Plan.
Subject to adjustment as provided in Paragraph 9 below, a total of 1,500,000 shares of Common Stock of the Company ("Plan Stock" or "Plan Shares") shall be subject to this Plan. The Plan Stock subject to this Plan shall consist of unissued shares of Common Stock or previously issued shares of Common Stock reacquired and held by the Company or any Affiliated Corporation, and such number of Plan Shares shall be and is hereby reserved for sale for such purpose. Any Plan Shares which may remain unsold and which are not subject to outstanding
CSOs at the termination of this Plan shall cease to be reserved for the purpose of this Plan, but until termination of this Plan the Company shall at all times reserve a sufficient number of shares to meet the requirements of this Plan. Should any CSO expire or be cancelled prior to its exercise in full, the unexercised Plan Shares theretofore subject to such CSO may again be subjected to a CSO under this Plan.
5. Option Exercise Price.
The purchase price of each share of Plan Stock made subject to a CSO shall
not be less than one hundred percent (100%) of the fair market value of a share
of Common Stock on the date the CSO is granted. The fair market value of a share
of Plan Stock on a particular date shall be deemed to be the average of either
(i) the highest and lowest prices at which shares of Common Stock were sold on
the date of grant, if traded on a national securities exchange, (ii) the high
and low sale prices reported on the date of grant, if traded on the Nasdaq Small
Cap Market or National Market System, or (iii) the high bid and low asked price,
or if unavailable, the closing high bid and low asked price, on the date of
grant, if quoted on the OTC Electronic Bulletin Board. If no transactions in the
Common Stock occur on the date of grant, the fair market value shall be
determined as of the next earliest day for which reports or quotations are
available. If the Common Stock not then quoted on any exchange or in any
quotation medium at the time the option is granted, then the Board of Directors
or Committee will use its discretion in selecting a good faith value believed to
represent fair market value based on factors then known to them. The cash
proceeds from the sale of Plan Stock are to be added to the general funds of the
Company.
6. Exercise Period; Vesting.
(a) The CSO exercise period shall be a term of not more than five (5) years from the date of granting of each CSO and shall automatically terminate:
(i) Upon termination of the optionee's employment with the Company for cause (defined as termination for reasons other than layoff due to lack of work, injury, illness, disability, or due to economic reasons unrelated to the optionee's job performance, or for a reason stated in subparagraph 6(b) of this Plan);
(ii) At the expiration of six (6) months from the date of termination without cause of the optionee's employment with the Company for any reason other than death; provided, that if the optionee dies within such six-month period, sub-clause (iii) below shall apply; or
(iii) At the expiration of fifteen (15) months after the date of death of the optionee.
(b) "Employment with the Company" as used in this Plan shall include employment with (or in the case of a consultant, adviser or agent, engagement by) any Affiliated Corporation in any capacity, even if employment or engagement in another capacity ceases, and CSOs granted under this Plan shall not be affected by an employee's transfer of employment among the Company and any Parent or Subsidiary thereof. An optionee's employment with the Company shall not be deemed interrupted or terminated by a bona fide leave of absence (such as sabbatical leave or employment by the Government) duly approved, military leave or sick leave.
(c) The Board or Committee may determine at the time of grant that a CSO granted hereunder shall not vest immediately but over a specified time, in specified amounts per time period, or subject to other restrictions or limitations. Unless otherwise set forth in the granting resolution, a CSO shall vest immediately upon grant. If employment with the Company ceases before a CSO vests, then vesting shall never take place, and unvested CSOs shall then be lost forever.
7. Exercise of Options.
(a) The Committee, in granting CSOs, shall have discretion to determine the terms upon which CSOs shall be exercisable, subject to applicable provisions of this Plan. Once available for purchase, unpurchased Plan Shares shall remain subject to purchase until the CSO expires or terminates in accordance with Paragraph 6 above. Unless otherwise provided in the CSO, a CSO may be exercised in whole or in part, one or more times, but no CSO may be exercised for a fractional share. Resulting fractions shall be rounded up or down, as appropriate.
(b) CSOs may be exercised solely by the optionee or a permitted transferee during his lifetime or by a spouse or former spouse pursuant to a qualified domestic relations order, or after his death (with respect to the number of shares which the optionee could have purchased at the time of death) by the person or persons entitled thereto under the decedent's will or the laws of descent and distribution.
(c) The purchase price of the Plan Shares as to which a CSO is exercised shall be paid in full at the time of exercise and no Plan Shares shall be issued until full payment is made therefor. Payment shall be made either (i) in cash, represented by bank or cashier's check, certified check or money order, or made by bank wire transfer; (ii) by delivering shares of the Company's Common Stock which have been beneficially owned by the optionee, the optionee's spouse, or both of them for a period of at least six (6) months prior to the time of exercise (the "Delivered Stock"), in a number equal to the number of Plan Shares being purchased upon exercise of the CSO; (iii) a combination of cash and Delivered Stock; (iv) by delivery of shares of corporate stock which are freely tradeable without restriction and which are part of a class of securities which has been listed for trading on the NASDAQ system or a national securities exchange, with an aggregate fair market value equal to or greater than the exercise price of the Plan Shares being purchased under the CSO ("Other Shares"), or (v) a combination of cash, Delivered Stock and Other Shares. A CSO shall be deemed exercised when written notice thereof, accompanied by the appropriate payment in full, is received by the Company. No holder of a CSO shall be, or have any of the rights and privileges of, a shareholder of the Company in respect of any Plan Shares purchasable upon exercise of a CSO unless and until certificates representing such shares shall have been issued by the Company to him or her. The Committee shall have absolute discretion whether to accept Other Shares offered and in valuing such shares.
8. Assignability.
No CSO shall be assignable or otherwise transferable except by will or by operation of law, pursuant to a qualified domestic relations order (as defined in Rule 16b-3 of the Securities and Exchange Commission, or any successor rule), or pursuant to Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), or rules thereunder. No CSO shall be pledged or hypothecated in any manner, whether by operation of law or otherwise, nor be subject to execution, attachment or similar process.
9. Reorganizations and Recapitalizations of the Company.
(a) The existence of this Plan and CSOs granted hereunder shall not affect in any way the right or power of the Company or its shareholders to make or authorize any and all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures or other indebtedness, or any preferred or prior preference stocks senior to or affecting the Company's Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale, exchange or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
(b) The Plan Shares with respect to which CSOs may be granted hereunder are shares of the Common Stock of the Company as currently constituted. If, and whenever, prior to delivery by the Company of all of the Plan Shares which are subject to CSOs granted hereunder, the Company shall effect a split or combination of the Common Stock or other capital readjustment, the payment of a Common Stock dividend, or recapitalization or other increase or reduction of the number of shares of the Common Stock outstanding without receiving compensation therefor in money, services or property, then the number of Plan Shares available under this Plan and the number of Plan Shares with respect to which CSOs granted hereunder may thereafter be exercised shall (i) in the event of an increase in the number of outstanding shares of Common Stock, be proportionately increased, and the cash consideration payable per share shall be proportionately reduced; and (ii) in the event of a reduction in the number of outstanding shares of Common Stock, be proportionately reduced, and the cash consideration payable per share shall be proportionately increased.
(c) If the Company is reorganized, merged, consolidated or party to a plan of exchange with another corporation pursuant to which shareholders of the Company receive any shares of stock or other securities in exchange for the Common Stock, there shall be substituted for the Plan Shares subject to the unexercised portions of outstanding CSOs an appropriate number of shares of each class of stock or other securities which were distributed to the shareholders of the Company in respect of the Common Stock in the case of a reorganization, merger, consolidation or plan of exchange; provided, however, that all
outstanding CSOs may be cancelled by the Company as of the effective date of a reorganization, merger, consolidation, plan of exchange, or any dissolution or liquidation of the Company, by giving notice to each optionee or his personal representative of its intention to do so and by permitting the purchase of all the Plan Shares subject to such outstanding CSOs for a period of not less than thirty (30) days during the sixty (60) days immediately preceding such effective date.
(d) Except as expressly provided above, the Company's issuance of shares of its capital stock of any class, or securities convertible into shares of its capital stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into or exchangeable for shares of capital stock or other securities of the Company, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of Plan Shares subject to CSOs granted hereunder or the purchase price of such shares.
10. Purchase for Investment.
Unless the Plan Shares covered by this Plan have been registered under the Act prior to issuance, each person exercising a CSO under this Plan may be required by the Company to give a representation in writing that he is acquiring such shares for his or her own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.
11. Effective Date and Expiration of this Plan.
This Plan shall be effective as of February 28, 1997, the date of its adoption by the Board, and no CSO shall be granted pursuant to this Plan after its expiration. This Plan shall expire on February 28, 2007 except as to CSOs then outstanding, which shall remain in effect until they have expired or been exercised.
12. Amendments or Termination.
The Committee or Board may amend, alter or discontinue this Plan at any time in such respects as it shall deem advisable in order to conform to any change in any other applicable law, or in order to comply with the provisions of any rule or regulation of the Securities and Exchange Commission required to exempt this Plan or any CSOs granted thereunder from the operation of Section 16(b) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), or in any other respect not inconsistent with Section 16(b) of the Exchange Act; provided, that no amendment or alteration shall be made which would impair the rights of any participant under any CSO theretofore granted, without his consent (unless made solely to conform such CSO to, and necessary because of, changes in the foregoing laws, rules or regulations), and except that no amendment or alteration shall be made without the approval of shareholders which would increase the total number of shares reserved for the purposes of this Plan (except as provided in Paragraph 9) or extend the expiration date of this Plan as set forth in Paragraph 11.
13. Government Regulations.
This Plan, and the granting and exercise of CSOs hereunder, and the obligation of the Company to sell and deliver Plan Shares under such CSOs, shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.
14. Liability.
No member of the Board of Directors or the Committee, nor any officers, employees or agents of the Company or any Affiliated Corporation shall be personally liable for any action, omission or determination made in good faith in connection with this Plan.
15. Options in Substitution for Other Options.
The Committee may, in its sole discretion, at any time during the term of this Plan, grant new options to an employee under this Plan or any other stock option plan of the Company on the condition that such employee shall surrender for cancellation one or more outstanding options which represent the right to purchase (after giving effect to any previous partial exercise thereof) a number of shares, in relation to the number of shares to be covered by the new conditional grant hereunder, determined by the Committee. If the Committee shall have so determined to grant such new options on such a conditional basis ("New Conditional Options"), no such New Conditional Option shall become exercisable
in the absence of such employee's consent to the condition and surrender and cancellation as appropriate. New Conditional Options shall be treated in all respects under this Plan as newly granted options. Options may be granted under this Plan from time to time in substitution for similar rights held by employees of other corporations who are about to become employees of the Company or an Affiliated Corporation as a result of a merger or consolidation of the employing corporation with the Company or an Affiliated Corporation, or the acquisition by the Company or an Affiliated Corporation of the assets of the employing corporation, or the acquisition by the Company or an Affiliated Corporation of stock of the employing corporation as the result of which such other corporation becomes an Affiliated Corporation.
16. Withholding Taxes.
Pursuant to applicable federal and state laws, the Company may be required to collect withholding taxes upon the exercise of a CSO. The Company may require, as a condition to the exercise of a CSO, that the optionee concurrently pay to the Company the entire amount or a portion of any taxes which the Company is required to withhold by reason of such exercise, in such amount as the Committee or the Company in its discretion may determine. In lieu of part or all of any such payment, the optionee may elect to have the Company withhold from the shares to be issued upon exercise of the option that number of shares having a Fair Market Value equal to the amount which the Company is required to withhold.
17. Definitions.
Whenever used in this Plan, except where the context might clearly indicate otherwise, the following terms shall have the meanings set forth below:
(a) "Act" means the U.S. Securities Act of 1933, as amended.
(b) "Affiliated Corporation" means any Parent or Subsidiary of the Company.
(c) "Award" or "grant" means any grant of a CSO (option) made under this Plan.
(d) "Board of Directors" means the Board of Directors of the Company. The term "Committee" is defined in Section 2 of this Plan.
(e) "Common Stock" or "Common Shares" means the common stock, $.001 par value per share, of the Company, or in the event that the outstanding Common Shares are hereafter changed into or exchanged for different shares or securities of the Company or any other issuer, such other shares or securities.
(f) "Date of Grant" means the day the Committee authorizes the grant of a CSO or such later date as may be specified by the committee as the date a particular grant will become effective.
(g) "Employee" means and includes the following persons: (i) executive officers, officers and directors (including advisory and other special directors) of the Company or an Affiliated Corporation; (ii) full-time and part-time employees of the Company or an Affiliated Corporation; (iii) natural persons engaged by the Company or an Affiliated Corporation as consultant, advisor or agent; and (iv) a lawyer, law firm, accountant or accounting firm, or other professional or professional firm engaged by the Company or an Affiliated Corporation.
(h) "Optionee" means an Employee to whom a CSO is granted.
(i) "Parent" means any corporation owning 50% or more of the total combined voting stock of all classes of the Company or of another corporation qualifying as a parent within this definition.
(j) "Subsidiary" means a corporation more than 50% of whose total combined capital stock of all classes held by the Company or by another corporation qualifying as a Subsidiary within this definition.
SIGNATURE PAGE
By signature below, the undersigned officers of the Company hereby certify that the foregoing is a true and correct copy of the 1997 Compensatory Stock Option Plan of the Company.
DATED: February 28, 1997
MNS EAGLE EQUITY GROUP III, INC.
X /s/ Stephen M. Siedow
(SEAL) ---------------------------------------
Stephen M. Siedow, President,
Chief Executive Officer and Treasurer
X /s/ John D. Brasher Jr.
-----------------------------------
John D. Brasher Jr., Secretary
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CERTIFICATION OF PLAN ADOPTION
I, the undersigned Secretary of this corporation, hereby certify that the foregoing 1997 Compensatory Stock Option Plan of this corporation was duly approved by the requisite number of holders of the issued and outstanding common stock of this corporation as of the below date.
Date of Approval: February 28, 1997
X /s/ John D. Brasher Jr.
(SEAL) -------------------------------------
John D. Brasher Jr., Secretary
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Exhibit 10.2
MNS EAGLE EQUITY GROUP III, INC.
1997 EMPLOYEE STOCK COMPENSATION PLAN
1. Purpose of the Plan.
This 1997 Employee Stock Compensation Plan ("Plan") is intended to further the growth and advance the best interests of MNS EAGLE EQUITY GROUP III, INC., a Nevada corporation ("Company"), and any Affiliated Corporation, by supporting and increasing the Company's ability to attract, retain and compensate persons of experience and ability and whose services are considered valuable, to encourage the sense of proprietorship in such persons, and to stimulate the active interest of such persons in the development and success of the Company and any Affiliate Corporation. This Plan provides for stock compensation through the award of the Company's Common Stock.
2. Definitions.
Whenever used in this Plan, except where the context might clearly indicate otherwise, the following terms shall have the meanings set forth in this section:
(a) "Act" means the U.S. Securities Act of 1933, as amended.
(b) "Affiliated Corporation" means any Parent or Subsidiary of the Company.
(c) "Award" or "grant" means any grant or sale of Common Stock made under this Plan.
(d) "Board of Directors" means the Board of Directors of the Company. The term "Committee" is defined in Section 4 of this Plan.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Common Stock" or "Common Shares" means the common stock, $.001 par value per share, of the Company, or in the event that the outstanding Common Shares are hereafter changed into or exchanged for different shares or securities of the Company, such other shares or securities.
(g) "Date of Grant" means the day the Committee authorizes the grant of Common Stock or such later date as may be specified by the Committee as the date a particular award will become effective.
(h) "Employee" means and includes the following persons: (i) executive officers, officers and directors (including advisory and other special directors) of the Company or an Affiliated Corporation; (ii) full-time and part-time employees of the Company or an Affiliated Corporation; (iii) natural persons engaged by the Company or an Affiliated Corporation as a consultant, advisor or agent; and (iv) a lawyer, law firm, accountant or accounting firm or other professional or professional firm engaged by the Company or an Affiliated Corporation.
(i) "Parent" means any corporation owning 50% or more of the total combined voting stock of all classes of the Company or of another corporation qualifying as a Parent within this definition.
(j) "Participant" means an Employee to whom an Award of Plan Shares has been made.
(k) "Plan Shares" means shares of Common Stock from time to time subject to this Plan.
(l) "Subsidiary" means a corporation more than 50% of whose total combined capital stock of all classes is held by the Company or by another corporation qualifying as a Subsidiary within this definition.
3. Effective Date of the Plan.
This Plan shall be effective as of February 28, 1997, the date of its adoption by the Board, and no ESO shall be granted pursuant to this Plan after its expiration. This Plan shall expire on February 28, 2007 except as to ESOs then outstanding, which shall remain in effect until they have expired or been exercised.
4. Administration of the Plan.
The ESC Compensation Committee of the Board of Directors ("Committee"), and in default of the appointment or continued existence of such Committee the Board of Directors, will be responsible for the administration of this Plan, and will have sole power to award Common Shares under this Plan. Subject to the express provisions of this Plan, the Committee shall have full authority and sole and absolute discretion to interpret this Plan, to prescribe, amend and rescind rules and regulations relating to it, and to make all other determinations which it believes to be necessary or advisable in administering this Plan. The determination of those eligible to receive an award of Plan Shares shall rest in the sole discretion of the Committee, subject to the provisions of this Plan. Awards of Plan Shares may be made as compensation for services rendered, directly or in lieu of other compensation payable, as a bonus in recognition of past service or performance or may be sold to an Employee as herein provided. The Committee may correct any defect, supply any omission or reconcile any inconsistency in this Plan in such manner and to such extent it shall deem necessary to carry it into effect. Any decision made, or action taken, by the Committee arising out of or in connection with the interpretation and administration of this Plan shall be final and conclusive.
5. Stock Subject to the Plan.
The maximum number of Plan Shares which may be awarded under this Plan is 1,000,000 shares.
6. Persons Eligible to Receive Awards.
Awards may be granted only to Employees (as herein defined).
7. Grants or Awards of Plan Shares.
Except as otherwise provided herein, the Committee shall have complete discretion to determine when and to which Employees Plan Shares are to be granted, and the number of Plan Shares to be awarded to each Employee. A grant to an Employee may be made for cash, property, services rendered or other form of payment constituting lawful consideration under applicable law; Plan Shares awarded other than for services rendered shall be sold at not less than the fair value thereof on the date of grant. No grant will be made if, in the judgment of the Committee, such a grant would constitute a public distribution with the meaning of the Act or the rules and regulations promulgated thereunder.
8. Delivery of Stock Certificates.
As promptly as practicable after authorizing an award of Plan Shares, the Company shall deliver to the person who is the recipient of the award, a certificate or certificates registered in that person's name, representing the number of Plan Shares that were granted. Unless the Plan Shares have been registered under the Act, each certificate evidencing Plan Shares shall bear a legend to indicate that such shares represented by the certificate were issued in a transaction which was not registered under the Act, and may only be sold or transferred in a transaction that is registered under the Act or is exempt from the registration requirements of the Act. In the absence of registration under the Act, any person awarded Plan Shares may be required to execute and deliver to the Company an investment letter, satisfactory in form and substance to the Company, prior to issuance and delivery of the shares. An award may be made under this Plan wherein the Plan Shares may be issued only after registration under the Act.
9. Assignability.
An award of Plan Shares may not be assigned. Plan Shares themselves may be assigned only after such shares have been awarded, issued and delivered, and only in accordance with law and any transfer restrictions imposed at the time of award.
10. Employment not Conferred.
Nothing in this Plan or in the award of Plan Shares shall confer upon any Employee the right to continue in the employ of the Company or Affiliated Corporation nor shall it interfere with or restrict in any way the lawful rights of the Company or any Affiliated Corporation to discharge any Employee at any time for any reason whatsoever, with or without cause.
11. Laws and Regulations.
The obligation of the Company to issue and deliver Plan Shares following an award under this Plan shall be subject to the condition that the Company be satisfied that the sale and delivery thereof will not violate the Act or any other applicable laws, rules or regulations.
12. Withholding of Taxes.
If subject to withholding tax, the Company or any Affiliated Corporation may require that the Employee concurrently pay to the Company the entire amount or a portion of any taxes which the Company or Affiliated Corporation is required to withhold by reason of granting Plan Shares, in such amount as the Company or Affiliated Corporation in its discretion may determine. In lieu of part or all of any such payment, the Employee may elect to have the Company or Affiliated Corporation withhold from the Plan Shares issued hereunder a sufficient number of shares to satisfy withholding obligations. If the Company or Affiliated Corporation becomes required to pay withholding taxes to any federal, state or other taxing authority as a result of the granting of Plan Shares, and the Employee fails to provide the Company or Affiliated Corporation with the funds with which to pay that withholding tax, the Company or Affiliated Corporation may withhold up to 50% of each payment of salary or bonus to the Employee (which will be in addition to any required or permitted withholding), until the Company or Affiliated Corporation has been reimbursed for the entire withholding tax it was required to pay in respect of the award of Plan Shares.
13. Reservation of Shares.
The stock subject to this Plan shall, at all times, consist of authorized
but unissued Common Shares, or previously issued shares of Common Stock
reacquired or held by the Company or an Affiliated Corporation equal to the
maximum number of shares the Company may be required to issue as stated in
Section 5 of this Plan, and such number of Common Shares hereby is reserved for
such purpose. The Committee may decrease the number of shares subject to this
Plan, but only the Board of Directors my increase such number, except as a
consequence of a stock split or other reorganization or recapitalization
affecting all Common Shares.
14. Amendment and Termination of the Plan.
The Committee may suspend or terminate this Plan at any time or from time to time, but no such action shall adversely affect the rights of a person granted an Award under this Plan prior to that date. Otherwise, this Plan shall terminate on the earlier of the terminal date stated in Section 3 of this Plan or the date when all Plan Shares have been issued. The Committee shall have absolute discretion to amend this Plan, subject only to those limitations expressly set forth herein; however, the Committee shall have no authority to extend the term of this Plan, to increase the number of Plan Shares subject to award under this Plan or to amend the definition of "Employee" to include executive officers or directors of the Company or any Affiliated Corporation.
15. Delivery of Plan.
A copy or synopsis (for which copy the prospectus will serve) or description of this Plan shall be delivered to every person to whom an award of Plan Shares is made. The Secretary of the Company may, but is not required to, also deliver a copy of the resolution or resolutions of the Committee authorizing the award.
16. Liability.
No member of the Board of Directors, the Committee or any other committee of directors, or officers, employees or agents of the Company or any Affiliated Corporation shall be personally liable for any action, omission or determination made in good faith in connection with this Plan.
17. Miscellaneous Provisions.
The place of administration of this Plan shall be in the State of Nevada (or subsequently, wherever the Company's principal executive offices are located), and the validity, construction, interpretation and effect of this Plan and of its rules, regulations and rights relating to it, shall be determined solely in accordance with the laws of the State of Nevada. Without amending this Plan, the Committee may issue Plan Shares to employees of the Company who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those specified in this Plan but consistent with the purpose of this Plan, as it deems necessary and desirable to create equitable opportunities given differences in tax laws in other countries. All expenses of administering this Plan and issuing Plan Shares shall be borne by the Company.
18. Reorganizations and Recapitalizations of the Company.
(a) The shares of Common Stock subject to this Plan are shares of the
Common Stock of the Company as currently constituted. If, and whenever, the
Company shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a Common Stock dividend, a stock split, combination
of shares (reverse stock split) or recapitalization or other increase or
reduction of the number of shares of the Common Stock outstanding without
receiving compensation therefor in money, services or property, then the number
of shares of Common Stock subject to this Plan shall (i) in the event of an
increase in the number of outstanding shares, be proportionately increased; and
(ii) in the event of a reduction in the number of outstanding shares, be
proportionately reduced.
(b) Except as expressly provided above, the Company's issuance of shares of Common Stock of any class, or securities convertible into shares of Common Stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into or exchangeable for shares of Common Stock or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Common Stock subject to this Plan.
SIGNATURE PAGE
By signature below, the undersigned officers of the Company hereby certify that the foregoing is a true and correct copy of the 1997 Employee Stock Compensation Plan of the Company.
DATED: February 28, 1997
MNS EAGLE EQUITY GROUP III, INC.
X /s/ Stephen M. Siedow
(SEAL) ----------------------------------------
Stephen M. Siedow, President
X /s/ John D. Brasher Jr.
-----------------------------------
John D. Brasher Jr., Secretary
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CERTIFICATION OF PLAN ADOPTION
I, the undersigned Secretary of this corporation, hereby certify that the foregoing 1997 Employee Stock Compensation Plan of this corporation was duly approved by the requisite number of holders of the issued and outstanding, common stock of this corporation as of the below date.
Date of Approval: February 28, 1997
X /s/ John D. Brasher Jr.
(SEAL) -----------------------------------
John D. Brasher Jr., Secretary
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