AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 2001
REGISTRATION NO. (to be assigned)
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TEMPORARY FINANCIAL SERVICES, INC.
(Name of small business issuer in its charter)
WASHINGTON 7360 91-2084501 (State or jurisdiction of (Primary Standard Industrial (IRS Employer incorporation or organization) Classification Code Number) Id. No.) |
422 W. RIVERSIDE, SUITE 1313, SPOKANE, WA 99201
(Address of principal place of business or intended principal place of business)
GREGORY B. LIPSKER
601 W. MAIN AVE. SPOKANE, WA 99201
(509) 455-9077 (TELEPHONE) (509) 624-6441 (FACSIMILE)
(Name, address and telephone number of agent for service)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If this Form is filed to register additional securities for an
Offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
PROSPECTUS
TEMPORARY FINANCIAL SERVICES, INC.
(A Washington Corporation)
$4,000,000
800,000 SHARES
PRICE: $5.00 PER SHARE
This is an initial public offering ("Offering") of up to 800,000 Shares of Temporary Financial Services, Inc. Common Stock ("Shares"). The Shares offered pursuant to the terms of this Prospectus are for the purpose of providing working capital for Temporary Financial Services, Inc. Before this Offering, there has been no public market for any of our Shares. Upon completion of this Offering, we intend to make application to have our stock quoted on the NASDAQ supervised OTC Bulletin Board.
We are bearing all costs incurred in the registration of these Shares. We have not retained an underwriter or broker/dealer to assist in the sale of the Shares. All Shares sold will be offered by our Officers and Directors or certain sales agents on our behalf.
The Shares offered hereby are highly speculative and involve a high degree of risk to public investors and should be purchased only by persons who can afford to lose their entire investment (See "Risk Factors"). The Offering price bears no relationship to our earnings or book value or any other established criteria of value.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES AGENCY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, NOR HAS ANY SUCH REGULATORY BODY REVIEWED THIS PROSPECTUS FOR ACCURACY OR COMPLETENESS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Shares Offering Proceeds to Offered Price Company (1, 2, 3) --------- -------- ----------------- Minimum 200,000 $ 5.00 $ 900,000 Maximum 800,000 $ 5.00 $ 3,600,000 |
1 The Shares are being offered on a "best efforts" basis by our officers and directors and may be offered by certain agents on our behalf. Officers and directors will receive no commission, directly or indirectly, for the sale of any Shares. We will pay agents a maximum 10% commission on the gross proceeds from the sale of the Shares. The amounts set forth above and in the table "Use of Proceeds" assumes all Shares are sold by sales agents.
2 Other expenses and costs of this Offering have not been deducted to determine our net proceeds. These fees, including unaccountable sales agents expense allowance, attorney's fees, accounting fees, filing fees, and printing and distribution costs are estimated at $49,000.
April XXX, 2001
3 All the proceeds from the sale of Shares will be placed in an Impound Account until the minimum sum of $1,000,000 has been received. If we receive less than $1,000,000 by the close of business on June 30, 2001 (which period may be extended in our sole discretion, until no later than September 30, 2001) all proceeds will be refunded to purchasers without interest and without deduction for offering expenses.
No sales agent or other person is authorized to give any information or make any representation in connection with this Offering other than as contained in this Prospectus.
You should rely only on the information contained in this Prospectus. The information in this Prospectus may be accurate only as of the date of this Prospectus, regardless of the time of delivery of this Prospectus or of any sale of our Shares
This Prospectus does not constitute an offer to sell or the solicitation of an offer to purchase in any state where the offer and sale of our Shares is not permitted.
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TABLE OF CONTENTS
PROSPECTUS SUMMARY 5 RISK FACTORS 7 DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS 10 BUSINESS 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 13 USE OF PROCEEDS 14 DESCRIPTION OF SECURITIES 14 DILUTION 15 MARKET PRICE OF COMMON EQUITY 16 MANAGEMENT 16 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 17 CERTAIN TRANSACTIONS 18 PLAN OF DISTRIBUTION 18 SHARES ELIGIBLE FOR FUTURE SALE 20 STATEMENT AS TO INDEMNIFICATION 21 LEGAL MATTERS 21 EXPERTS 21 WHERE YOU CAN FIND ADDITIONAL INFORMATION 21 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 22 |
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this Prospectus. The following is not complete and does not contain all of the information that investors should consider before investing in our Shares. Investors should read the entire Prospectus carefully, including the Financial Statements that are part of this Prospectus. This Offering involves certain important considerations to prospective investors set forth in "Risk Factors."
BUSINESS OF THE ISSUER
Temporary Financial Services, Inc. is a start-up company intending to engage in various aspects of the temporary staffing industry. Initially, a principal focus of the business will be directed to account receivable financing for certain qualified temporary staffing businesses. Our objective is to become the primary lender for the accounts receivable of small temporary service businesses whose owner/operators have had experience in the industries which they service.
We will rely on management's business contacts to locate and help establish new temporary staffing businesses which meet the experience and operational standards which management will set.
Through our wholly-owned subsidiary, Temps Unlimited, Incorporated, we may also invest in and/or participate in the operation of temporary staffing and other businesses. Initially, we will focus on providing limited services to experienced temporary staffing entrepreneurs in the start-up of the entrepreneurs' operations. The services may include providing capital, software, rental and leaseback of facilities, and professional services and expertise. During the first year of operations, we intend to limit our involvement in entrepreneurs' operations to minority interests (less than 20%).
We may also engage in other business opportunities that arise from time-to-time.
OFFERING TERMS
We are offering a minimum of 200,000 and a maximum of 800,000 Shares at a price of $5.00 per Share. The Shares are offered for cash only. We reserve the right to accept or reject subscriptions in whole or in part.
CAPITAL STOCK OUTSTANDING
Class March 31, 2000 Minimum Maximum ----- ---------------- ------- ---------- Common Shares 350,000 550,000 1,150,000 |
IMPOUND OF FUNDS
All funds received from the sale of Shares will be held in impound with Sterling
Savings Bank, Spokane, Washington, until the minimum Offering amount of
$1,000,000 has been deposited and collected. If less than $1,000,000 is
received from the sale of Shares by the close of business on June 30, 2001,
(which period may be extended until September 30, 2001 in our sole discretion)
the Offering will be terminated and all proceeds will be promptly refunded to
purchasers by the impound agent without any discount for Offering expenses.
USE OF PROCEEDS
The following table sets forth information concerning the estimated use of proceeds from the Offering. The exact allocation of net proceeds may be adjusted in our sole discretion as good business judgment dictates.
Minimum Raised Maximum Raised --------------- --------------- Sales Agent Commissions 100,000 400,000 Sales Agent Unaccountable Expenses 10,000 40,000 Offering Costs 9,000 9,000 Professional Fees 8,000 8,000 Travel 3,000 3,000 Receivable Financing/ Investment Opportunities 770,000 3,140,000 Working Capital 100,000 400,000 --------------- --------------- Total $ 1,000,000 $ 4,000,000 =============== =============== |
RISK FACTORS
Investing in the company involves a high degree of risk and should only be considered by individuals who have no need for liquidity and can afford a complete loss of all monies they invest. (SEE "RISK FACTORS")
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RISK FACTORS
AN INVESTMENT IN OUR SECURITIES INVOLVES SUBSTANTIAL RISKS. PROSPECTIVE PURCHASERS SHOULD CONSIDER THE FOLLOWING SIGNIFICANT FACTORS IN CONNECTION WITH OTHER INFORMATION CONTAINED IN THIS PROSPECTUS BEFORE MAKING A DECISION TO PURCHASE THE SECURITIES OFFERED.
GENERAL RISKS
1. DEPENDENCE ON KEY PERSONNEL
Our success depends to a great extent upon the continued service of the President and other members of executive Management. Mr. Coghlan and Mr. Enget are the only members of management with experience in the temporary labor industry. The loss of either Mr. Coghlan's or Mr. Enget's services could have a significant negative impact on our ability to achieve our business goals. Our success may also be dependent upon our ability to locate and hire qualified staff.
2. ECONOMIC FLUCTUATIONS
The general level of economic activity, interest rates and unemployment and energy concerns in the U.S. and specifically within certain industries may significantly affect demand for our services.
3. NO CERTAINTY OF RETURN ON INVESTMENT
No assurance can be given that purchasers of the Shares will realize a return on their investment. As a result of the uncertainty and risks associated with our operations, investors may lose their entire investments.
4. PURCHASES BY MANAGEMENT
Shares may be purchased by Management, their affiliates, or by other persons who may receive fees or other compensation or gain dependent upon the success of this Offering. Such purchases will be counted in determining whether the required minimum level of purchases has been met. Investors, therefore, should not consider that the sale of enough Shares to reach the specified minimum indicates that such sales have been made to investors who have no financial or other interest in the Offering, or who otherwise are exercising independent investment discretion.
The sale of the specified minimum, while necessary to the business operations, is not designed as a protection to investors or to indicate that other unaffiliated investors share their investment decision. Because purchases by the Management, its affiliates, and other persons who may receive fees or other compensation or gain dependent upon the success of the Offering may be substantial, no individual investor should place any reliance on the sale of the specified minimum as an indication of the merits of this Offering. Each investor must make his own investment decision as to the merits of this Offering.
5. DILUTION
Purchasers of Shares will experience immediate and substantial dilution in the net tangible book value of their investment.
6. LACK OF LIQUIDITY
There is presently no market for the Shares. There can be no assurance that an actively traded market will exist after completion of this Offering.
RISKS ASSOCIATED WITH THE TEMPORARY STAFFING INDUSTRY
7. COMPETITION
The temporary services industry is highly fragmented and highly competitive, with limited barriers to entry. Several very large full-service and specialized temporary labor companies, as well as small local operations compete for business in the temporary staffing industry. Competition in some markets is intense, particularly for provision of light industrial personnel, and price pressure from both competitors and customers is increasing. Most of the competition is better financed and has greater access to capital. We may invest in or provide financing to entrepreneurs hoping to establish temporary staffing businesses, and the competition and pricing pressures in the temporary staffing industry will directly impact those entrepreneurs. If the entrepreneurs' businesses suffer as a result of competition and pricing pressure, our business is likely to suffer as well.
8. LACK OF CONTROL
We will generally not hold a controlling interest in the entrepreneurs' businesses and may be unable to impact how the entrepreneurs do business. As a result, our success will depend on the capabilities and success of the entrepreneurs.
9. GOVERNMENT REGULATIONS, INCREASED EMPLOYEE COSTS AND WORKERS' COMPENSATION
Temporary staffing businesses are required to comply with all applicable federal and state laws and regulations relating to employment, including occupational safety and health provisions, wage and hour requirements, including payment of state and federal minimum wages, and workers' compensation and unemployment insurance. Costs and expenses related to these requirements are significant and may increase as a result of, among other things, changes in federal or state laws or regulations requiring employers to provide specified benefits to employees (such as medical insurance), or increases in the minimum wage or the level of existing benefits, increased levels of unemployment, or the lengthening of periods for which unemployment benefits are available. Furthermore, workers' compensation expenses and the related liability accruals are based on actual claims experience in each respective state. To the extent that these costs negatively impact businesses that we have invested, our business may also be negatively impacted.
10. EFFECT OF ECONOMIC FLUCTUATIONS
Demand for temporary labor may be significantly affected by the general level of economic activity and unemployment in the United States and specifically within the construction and light industrial trades. As economic activity increases, temporary employees are often added to the work force before permanent employees are hired. As economic activity slows, many companies reduce their use of temporary employees before laying off permanent employees. In addition, temporary staffing businesses may experience heightened levels of competitive pricing pressure during such periods of economic downturn. World-wide economic conditions and U.S. trade policies also impact demand for the temporary staffing services. No assurances can be given that we will benefit from increases in general economic activity in the U.S. A slow-down in general economic activity within the construction and light industrial trades could have a material adverse effect on the businesses we may invest in and this could have an adverse affect on our financial condition and results of operations.
11. INDUSTRY RISKS
Temporary staffing companies employ and place people in workplaces of their customers. Attendant risks of the industry include possible claims of discrimination and harassment, employment of illegal aliens, violations of occupational, health and safety, or wage and hour laws and regulations, errors and omissions of its temporary employees, misappropriation of funds or property, other criminal activity or torts and other similar claims. Temporary staffing companies also are affected by fluctuations and interruptions in the business of their customers, which could have a material adverse effect on their business, financial condition and results of operations. The temporary staffing industry may be adversely affected if Congress or state legislatures mandate specified benefits for temporary employees or otherwise impose costs and expenses on employers that increase the cost or lessen the attraction of using temporary workers. If the temporary staffing businesses, that we invest in, are affected by these industry risks, our business may also be affected.
12. LIABILITY FOR ACTS OF TEMPORARY WORKERS
If we acquire controlling interests in temporary staffing businesses, we may be held responsible for the actions at the jobsite of workers not under our direct control. Although we do not expect to experience significant claims or losses due to these issues, there can be no assurance that we will not experience such claims or losses in the future or that our insurance, if any, will provide coverage or be sufficient in amount or scope to cover any such liability. We will seek to reduce any liability for the acts or omissions of temporary workers by taking only minority interests in temporary staffing businesses controlled by experienced entrepreneurs. As a contractual condition of doing business with a temporary staffing business, we may also require that the temporary staffing customers be responsible for all actions or omissions of the temporary workers. There can be no assurance that the terms of the contracts will be enforceable or that, if enforceable, they will be sufficient to preclude liability as a result of the actions of the temporary personnel or that insurance coverage will be available or adequate in amount to cover such liability. If we are found liable for the actions or omissions of temporary workers and adequate insurance coverage is not available, our business, financial condition and results of operations could be materially and aversely affected.
13. ADEQUACY OF WORKERS' COMPENSATION ARRANGEMENTS
Temporary labor companies are required to maintain workers' compensation insurance, as required by state laws. They are required to pay premiums or contributions based on the applicable business classification, and actual workers' compensation claims experience over time. In those states where private insurance is not allowed, companies purchase insurance through state workers' compensation funds. In all other states, companies obtain coverage through an insurance company licensed to do business in those states. If workers' compensation provisions negatively impact a temporary staffing business with which we are doing business, we may also be negatively affected.
14. BAD DEBTS
We will have a limited number of temporary staffing businesses with which we will do business. The failure of a temporary staffing business, that we have loaned money to, to make timely repayment of the loans we make for accounts receivable financing or other purposes, or the business failure of a temporary staffing business that we have invested in could have a serious negative impact on our ability to sustain profitable operations.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on our behalf . We and our representatives may, from time to time, make written or oral statements that are "forward-looking," including statements contained in this Prospectus and other filings with the Securities and Exchange Commission and in reports to our stockholders. These forward-looking statements are not historical facts, but rather are based on our current expectations, estimates, and projections about our industry, our beliefs and assumptions. Words including "may," "could," "would," "will," "anticipates," "expects," "intends," "plans," "projects," "beliefs," "seeks," "estimates," and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. These risks and uncertainties are described in "Risk Factors" and elsewhere in this Prospectus. We caution you not to place undue reliance on these forward-looking statements, which reflect our management's view only as of the date of this Prospectus. We are not obligated to update these statements or publicly release the result of any revisions to them to reflect events or circumstances after the date of this Prospectus or to reflect the occurrence of unanticipated events.
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BUSINESS
HISTORY
Temporary Financial Services, Inc. was incorporated under the laws of the State of Washington in October, 2000. We were formed to engage in the business of financing accounts receivable for businesses providing temporary labor services. We may also engage in such other activities associated with the temporary staffing or other businesses as Management deems appropriate. Our objective is to become the primary lender for the accounts receivable of small temporary service businesses whose owner/operators have experience in the industries which they service. We will rely on Management's business contacts to locate new customers which meet the experience and operational standards which our Management will set.
Our wholly owned subsidiary, Temps Unlimited, Incorporated, was incorporated under the laws of the State of Washington primarily to acquire temporary labor businesses or acquire interests in such businesses. Ownership in such businesses may represent minority or majority control of an individual business. The businesses to be acquired or started will not be restricted to the temporary labor industry.
INDUSTRY OVERVIEW
The global staffing services industry has experienced significant growth in response to the changing work environment worldwide. According to published industry sources, the total staffing services market had revenues of approximately $154.4 billion in 1999 (the latest available data). The staffing industry is evolving from employers' traditional use of staffing services to manage personnel costs and meet fluctuating staffing requirements to the reduction of administrative overhead by outsourcing human resources operations that are not part of an employer's core business competencies. In addition to the economic conditions driving staffing industry growth, we believe that changing demographics of the workforces of developed economies and evolving attitudes concerning work patterns also contribute to growth in the staffing industry. These trends have accelerated with the pace of technological change and greater global competitive pressures.
The U.S. remains the largest and most developed staffing services market in the world, representing approximately $76.9 billion or 49.8% of the total staffing market in 1999. Since 1994, the U.S. staffing market grew at an annual rate of 13.2%. According to the Staffing Industry Report, U.S. staffing industry revenue, including flexible staffing, managed staffing, outsourcing, search/recruitment and outplacement, grew to an estimated $103.2 billion in 2000. In addition, the American Staffing Association has estimated that more than 90% of all U.S. businesses utilize staffing services.
Historically, the demand for temporary workers has been driven primarily by the need to satisfy peak production requirements and to temporarily replace full-time employees absent due to illness, vacation or abrupt termination. More recently, competitive pressures have forced businesses to focus on reducing costs, including converting fixed, permanent labor costs to variable or flexible costs. The use of temporary workers typically shifts employment costs and risks, such as workers' compensation and unemployment insurance and the possible adverse effects of changing employment regulations, to temporary staffing companies, which can allocate those costs and risks over a larger pool of employees and customers. In addition, through the use of temporary employees, businesses avoid the inconvenience and expense of hiring and firing regular employees.
BUSINESS OF THE ISSUER
The temporary staffing industry has grown rapidly in the last decade. The growth has been primarily through the opening of dispatch offices in all major cities of the United States. These offices have been staffed with individuals assuming managerial responsibilities for the individual locations and for the most part have been individuals with entrepreneurial ideals and capabilities.
Many of these individuals are now seeking to own and operate their own offices; but lack the financing needed for accounts receivable and in some instances, organizational capital.
The Management of Temporary Financial Services, Inc., because of their past experience in the staffing industry, know of many individuals, or groups of individuals, currently seeking to start up their own businesses that are in need of financing capital.
Temporary Financial Services, Inc. is a start-up company organized primarily to provide accounts receivable financing for entrepreneurs in the temporary staffing industry.
Temps Unlimited, Incorporated, a wholly owned subsidiary of Temporary Financial Services, Inc., was primarily organized to provide services necessary for temporary staffing business entrepreneurs to establish their own individual businesses. These services could include partial or all of the initial capital, acquisition and lease back of rental facilitate, software, and professional services to the entrepreneurs.
It is the intention, for the first year of operations, for Temporary Financial Services, Inc. and it's wholly owned subsidiary, Temps Unlimited, Incorporated to remain independent of the management of the temporary staffing business entrepreneur's operations and restrict ownership to less than twenty percent of any entrepreneurs' entities.
The Company may also engage in other businesses unrelated to the temporary staffing industry. Management retains discretion to evaluate and act on such other business opportunities as they arise.
GOVERNMENTAL REGULATION
Temporary staffing firms are generally subject to one or more of the following
types of government regulations:
(i) regulation of the employer/employee relationship between a firm and its
flexible staff,
(ii) registration, licensing, record keeping and reporting requirements and
(iii) substantive limitations on its operations.
Temporary staffing firms are the legal employers of their temporary workers. To the extent that the Company invest in controlling interests of temporary staffing businesses, we may be governed by laws regulating the employer/employee relationship, such as tax withholding or reporting, social security or retirement, anti-discrimination and workers' compensation.
EMPLOYEES
We anticipate that there will be one paid full-time employee of the parent company during the next 12 months.
FACILITIES
We do not currently have our own office or facilities. We operate from the business office of our President, John Coghlan. We will pay Mr. Coghlan $200 per month for the use of the office space and access to the office equipment.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PLAN OF OPERATION
Because the temporary services industry is highly fragmented and highly competitive, with limited barriers to entry, there are many small local operations in the staffing industry. It is our intention to identify these small local operations and to become the primary lender for the accounts receivable financing of small temporary service businesses. We will rely on Management's business contacts to locate new customers which meet the experience and operational standards which our Management will set. In addition, we may provide account receivable financing for other small businesses not necessarily related to the temporary service industry.
It is also our intention to participate in the start-up of several temporary employment dispatch locations through joint investment arrangements with experienced operators in the unskilled and semi-skilled labor industry segment as well as temporary employment dispatch in certain skilled areas. The investments will likely take the form of an interest in a limited liability company or other entity in which we (through our wholly owned subsidiary, Temps Unlimited, Incorporated) would invest together with the operator/entrepreneur of the temporary dispatch location and other investors. We have currently participated in the formation limited liability companies in Washington State and the establishment of operations in Minnesota and Nebraska for the purpose of acquiring an interest in temporary dispatch locations. We are currently in negotiations with several experienced operators regarding investment in start-up temporary dispatch locations. It is our intention to fund a minimum of five locations during the next twelve months.
After completion of this Offering, we do not anticipate that we will require additional cash within the next twelve months.
We intend that we will have one full time employee during the next twelve months. Additional employees will be hired in order to meet the needs of the business operations as we grow.
USE OF PROCEEDS
The following table sets forth information concerning the estimated use of proceeds from the Offering. The exact allocation of net proceeds may be adjusted in our sole discretion as good business judgment dictates.
Minimum Raised Maximum Raised -------------- -------------- Sales Agent Commissions* 100,000 400,000 Sales Agent Unaccountable Expenses* 10,000 40,000 Offering Costs 9,000 9,000 Professional Fees 8,000 8,000 Travel 3,000 3,000 Receivable Financing/ Investment Opportunities 770,000 3,140,000 Working Capital 100,000 400,000 ------------- -------------- Total $ 1,000,000 $ 4,000,000 ============= ============== |
* Assumes no Shares are sold by Officers and Directors.
DESCRIPTION OF SECURITIES
COMMON STOCK
We are authorized to issue One Hundred Million (100,000,000) Shares of $0.001 par value Common Stock. There are presently 350,000 Shares issued and outstanding held by 16 shareholders of record. There are no outstanding options or rights to acquire our Shares.
All Shares of Common Stock are equal to each other with respect to voting, liquidation, dividend and other rights. Owners of Shares of Common Stock are entitled to one vote for each Share of Common Stock owned at any Shareholders' meeting. Holders of Shares of Common Stock are entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available therefore; and upon liquidation, are entitled to participate pro rata in a distribution of assets available for such a distribution to Shareholders. There are no conversion, preemptive, or other subscription rights or privileges with respect to any Shares. Our Common Stock does not have cumulative voting rights which means that the holders of more than fifty percent (50%) of the Shares voting in an election of directors may elect all of the directors if they choose to do so. In such event, the holders of the remaining Shares aggregating less than fifty percent (50%) would not be able to elect any directors.
PREFERRED STOCK
We are authorized to issue Five Million (5,000,000) Shares of Preferred Stock. There are currently no outstanding Shares of Preferred Stock. The Preferred Stock is entitled to preference over the Common Stock with respect to the distribution of our assets in the event of liquidation, dissolution, or winding-up of our business, whether voluntarily or involuntarily, or in the event of any other distribution of our assets among our shareholders for the purpose of winding-up our affairs. The authorized, but unissued Shares of Preferred Stock, may be divided into and issued in designated series from time to time by one or more resolutions adopted by the Board of Directors. The Directors, in their sole discretion, shall have the power to determine the relative powers, preferences, and rights of each series of Preferred Stock.
DIVIDENDS
We have never paid dividends and propose for the foreseeable future to utilize all available funds for the development of our business. Accordingly, we have no plans to pay dividends, even if funds are available, as to which there is no assurance.
TRANSFER AGENT
We have retained the services of Atlas Stock Transfer Corporation as our Transfer Agent and Registrar. Atlas Stock Transfer is located at 5899 South State Street, Salt Lake City, Utah 84107.
DILUTION
Prior to this Offering, we sold 150,000 Shares of Common Stock at a price of $1.00 per Share and an additional 200,000 Shares of Common Stock at a price of $3.00 per Share. As of December 31, 2000, our net tangible book value was $675,977, or approximately $1.93 per Share of Common Stock. Net tangible book value per Share represents the amount of our total tangible assets less total liabilities divided by the number of Shares of Common Stock. This figure takes into account the issuance of 40,000 Shares subsequent to December 31, 2000 for stock subscriptions payable at that date.
After giving effect to the sale of the 800,000 maximum (200,000 minimum) Shares offered hereby and after deducting the sales agent's commission and estimated offering expenses, net tangible book value at December 31, 2000, would be $4,226,977 maximum ($1,556,977 minimum), or approximately $3.67 maximum ($2.83 minimum) per Share of our Common Stock. This represents an immediate increase in net tangible book value of $1.74 maximum ($0.90 minimum) per Share of Common Stock to our existing stockholders and an immediate dilution in net tangible book value of $1.33 (26.6%) maximum ($2.17 (42.4%) minimum) per Share of Common Stock The following table illustrates this per Share dilution for both the minimum and maximum offering amounts:
Minimum Maximum ------- ------- Initial public Offering price $ 5.00 $ 5.00 Net tangible book value per Share prior to the ffering $ 1.93 $ 1.93 Increase in net tangible book value per Share attributable to this Offering $ 0.90 $ 1.74 Net tangible book value per Share after the Offering $ 2.83 $ 3.67 Dilution in Value Per Share to Investors in this Offering $ 2.17 $ 1.33 Dilution of net tangible book value per Share to new investors 42.4% 26.6% |
MARKET PRICE OF COMMON EQUITY
The is no market for our Shares and there can be no assurance that a market will develop after completion of this Offering.
MANAGEMENT
The following sets forth information concerning our Management and key personnel:
John R. Coghlan, age 58, President and Director. Mr. Coghlan graduated from the University of Montana with a degree in Business Administration. Mr. Coghlan was a founder of Labor Ready, Inc., a New York Stock Exchange traded company. Mr. Coghlan served as the Chief Financial Officer and as a Director of Labor Ready, Inc. from 1987 through 1996, when he retired. Since his retirement, Mr. Coghlan has worked in private investments. Mr. Coghlan is a Certified Public Accountant.
Brad E. Herr, age 47, Secretary and Director. Mr. Herr is graduated from the University of Montana with a Bachelor of Science Degree in Business Accounting and a Juris Doctorate. From 1993 through 1996, Mr. Herr practiced law in the firm of Brad E. Herr, P.S. Since June 1996, Mr. Herr has been employed by AC Data Systems, Post Falls, Idaho. From 1996 through 1998, Mr. Herr held the position of Director of Finance. Since 1998, Mr. Herr has held the position of Vice-President of Business Development. Mr. Herr is licensed to practice law in the states of Washington and Montana. Mr. Herr also maintains inactive status as a Certified Public Accountant in the State of Montana.
Dwight Enget, age 50, Director. Mr. Enget is graduated from Minot State University with a degree in Business Administration. Mr. Enget was employed by Labor Ready, Inc from 1989 to 1997. Mr. Enget began his career with Labor Ready as a branch manager and held the position of Director of Operations for the Western District upon his retirement. Since 1997, Mr. Enget has been retired.
Kristie L. Jesmore, age 49, Treasurer. Since 1987, Ms. Jesmore has been self-employed providing accounting and administrative services for small businesses. Currently, the Coghlan Family Corporation employs Ms. Jesmore.
COMPENSATION
Our officers receive no cash compensation for services rendered. Our directors receive no annual compensation or attendance fees for serving in such capacity.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth information regarding the number and percentage of our Shares of Common Stock held by each director, each of the named executive officers and directors and officers as a group. The table also sets forth the ownership of any non-management person known to us to be the beneficial owner of more than five percent of any class of our voting Shares.
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information concerning parties, excluding
Management, who are known by us to directly own more than 5% of any class of our
voting Shares on March 1, 2001:
Percent of Class Name Number of Shares at 3-01-01 Minimum Maximum ---------------------- ----------------- ---------- ------- ------- Welstad Family LLC 24,500 7.0% 4.5% 2.1% 1016 S. 28th St. Tacoma, WA 98409 Terry Dunne 25,000 7.1 4.5 2.2 601 W. Main Ave. Spokane, WA 99201 Bill Newton 20,000 5.7 3.6 1.7 5300 North Prince Pl. Jackson Hole, WY 83001 Jerry Smith 20,000 5.7 3.6 1.7 8040 E. Morgan Trail. Scottsdale, AZ 85258 Norm Schroth 20,000 5.7 3.6 1.7 Box 841 Hermiston, OR 97838 |
(b) SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information concerning the ownership of each class of our equity securities by all directors and all directors and officers as a group on March 1, 2001:
Percent of Class Name Number of Shares at 3-01-01 Minimum Maximum* ---------------------- ----------------- ---------- ------- ------- John R. Coghlan** 80,500 23.0 14.6 7.0 Brad E. Herr 30,000 8.6 5.5 2.6 Kristie L. Jesmore 25,000 7.1 4.5 2.2 Dwight Enget 45,000 12.9 8.2 3.9 |
All Officers and Directors
as a group (4 individuals) 180,500 51.6 32.8 15.7
* Does not take into account the possible purchase of Shares of this
Offering by the individuals listed.
** Includes 10,000 Shares owned by Coughlan LLC and 20,000 Shares owned by
Coughlan Corp.
CERTAIN TRANSACTIONS
Except as set forth in this Prospectus, we have not had any transactions nor are there any proposed transactions with any Director, Executive Officer or shareholder.
PLAN OF DISTRIBUTION
DESCRIPTION OF OFFERING
We are seeking to raise up to $4,000,000 from an Offering of a minimum of 200,000 Shares and a maximum of 800,000 Shares at a price of $5.00 per Share. The Shares are being offered on a "best efforts" basis by officers and directors and may be offered by certain agents on our behalf. Officers and directors will receive no commission, directly or indirectly, for the sale of any Shares. We will pay agents a commission of the gross proceeds from the sale of the Shares. The amounts set forth in the table "Use of Proceeds" assumes all Shares are sold by sales agents.
We reserve the absolute right to accept or reject subscriptions in whole or in part at any time and for any reason. All funds will be placed in an impound account until a minimum of 200,000 Shares ($1,000,000) have been sold.
METHOD OF SUBSCRIPTION
In order to subscribe for Shares, a prospective Investor will be required to:
1. Complete a copy of the Subscription Agreement, indicating the Shares to be purchased.
2. Submit a check made payable to "Temporary Financial Services, Inc., Escrow Account" in full payment for the Shares purchased.
We have the unconditional right to accept or reject any subscription. If we reject a subscription, the purchase price will be returned promptly, without interest.
(The balance of this page has been intentionally left blank)
SUBSCRIPTION PROCEDURES AND PAYMENTS
Purchases must be made entirely in cash. Persons intending to subscribe should complete and execute the Subscription Agreement. The completed documents, together with a check made payable to "Temporary Financial Services, Inc., Escrow Account" should be delivered to:
Temporary Financial Services, Inc. P.O. Box 21700 Spokane, Washington 99201
The Subscription Agreement contains certain representations and warranties which an investor will be required to make relating, among other things, to the investor's eligibility to acquire the Securities based upon his state of domicile
IMPOUND AGREEMENT
All funds received from the sale of Shares will be held in impound with Sterling Savings Bank, Spokane, Washington, until the minimum offering amount of $1,000,000 has been deposited and collected. At that time, the impound agent will distribute the funds to us. If less than $1,000,000 is received from the sale of Shares by the close of business on June 30, 2001, (which period may be extended until September 30, 2001 in our sole discretion), the Offering will be terminated and all proceeds will be promptly refunded to purchasers by the impound agent without any discount for Offering expenses. Any interest earned in excess of the impound expenses will be utilized to pay costs associated with the Offering. The foregoing impound agent is performing a limited function as depository of the funds raised in this Offering, and such fact should not be construed to mean that such agent has in any way passed upon the merits or qualifications of this Offering or has given its approval of or to any person, security or transaction referred to herein.
CLOSING
We expect to hold an initial closing of this Offering at any time after subscriptions for the minimum amount have been accepted and funds have cleared. The final closing is expected to occur on or before September 30, 2001, but may be extended in our sole discretion. Interim closings may occur between the initial closing and the final closing. We are under no obligation to continue the Offering until the maximum Offering amount is sold, and may, in our discretion, effect the final closing at any time if and after the minimum Offering amount has been achieved, or terminate the Offering prior to any closing.
TERMINATION
The Offering will continue until such time as one of the following occurs:
- June 30, 2001, if the minimum of $1,000,000 is not reached (subject to
extension);
- The maximum of $4,000,000 is raised; or
- We elect to terminate the Offering.
In the event that $1,000,000 has not been deposited into the Escrow Account by the close of business June 30, 2001, (which period may be extended until September 30, 2001, in our sole discretion) the investors' funds will be returned in full, without deduction for Offering expenses. Any interest accrued in excess of the impound account expenses will be utilized to pay Offering expenses.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this Offering, there has been no public market for any of our Shares and there can be no assurance that a significant public market for any of our Shares will be developed or sustained after this offering. Sales of substantial amounts of our Common Stock in the public market after this Offering, or the possibility of those sales occurring could adversely affect the prevailing market price for our Shares and our ability to raise equity capital in the future.
Upon completion of this Offering, there will be 1,150,000 Shares of our Common Stock outstanding, assuming the maximum Offering is sold . The 800,000 Shares of Common Stock being offered by this Prospectus will be freely tradable without restriction under the Securities Act, unless purchased by an affiliate of ours, as that term is defined under the rules and regulations of the Securities Act, which will be subject to the resale limitations of Rule 144 under the Securities Act.
The remaining 350,000 Shares are considered "restricted securities" as defined in Rule 144. These Shares were issued in private transactions and have not been registered under the Securities Act and, therefore, may not be sold unless registered under the Securities Act or sold pursuant to an exemption from registration, such as the exemption provided by Rule 144.
In general, under Rule 144, beginning 90 days after the completion of this Offering, a person, or persons whose Shares are aggregated, who has beneficially owned restricted Shares for at least one year, including the holding period of any prior owner who is not an affiliate of ours, would be entitled to sell within any three-month period, a number of Shares that does not exceed the greater of:
- one percent, or approximately 85,000 Shares following this Offering, of the number of Shares of our Common Stock then outstanding; or
- the average weekly trading volume of our Common Stock during the four calendar weeks preceding the sale.
Sales under Rule 144 are also subject to manner of sale provisions, notice requirements and to the availability of current public information about us.
Under Rule 144(k), a person who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale, and who has beneficially owned the Shares for at least two years, including the holding period of any prior owner who is not an affiliate of ours, would be entitled to sell those Shares under Rule 144(k) without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.
STATEMENT AS TO INDEMNIFICATION
Our Articles of Incorporation and Bylaws authorize us to indemnify our Officers, Directors and Agents for all costs and expenses incurred in defense of any suit in which they may be named as defendants arising from any action on behalf of or related to the company.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our Managers, or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable.
LEGAL MATTERS
Legal matters in connection with our Shares to be issued in connection with the Offering will be passed upon by the law firm of Workland & Witherspoon PLLC, Spokane, Washington, as our legal counsel.
We are not a party to any legal proceedings, nor have any judgments been taken, nor have any actions or suits been filed or threatened against us or our Executive Officers or Directors in their capacities as such, nor are the Executive Officers or Directors aware of any such claims which could give rise to such litigation.
EXPERTS
Our financial statements as of December 31, 2000 and for the period from inception (October 4, 2000) through December 31, 2000 included in this Prospectus have been so included in reliance on the report of LeMaster & Daniels PLLC, Certified Public Accountants, given on the authority of such firm as experts in auditing and accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION ABOUT US
We have filed with the Securities and Exchange Commission a registration statement on Form SB-2 under the Securities Act with respect to the Shares offered by this Prospectus. This Prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to us and the Shares offered by this Prospectus, reference is made to the registration statement and the exhibits and schedules thereto. Statements contained in this Prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement are not necessarily complete and are qualified in their entirety by reference to the exhibits for a complete statement of their terms and conditions. The registration statement, including all amendments, exhibits and schedules thereto, may be inspected without charge at the offices of the Securities and Exchange Commission at Judiciary Plaza, 450 Fifth Street NW, Washington, D.C. 20549. Copies of this material may be obtained at prescribed rates from the Public Reference Section of the Commission at 450 Fifth Street NW, Washington, DC. 20549. The Securities and Exchange Commission also maintains a Web site (http://www.sec.gov) through which the registration statement and other information can be retrieved.
Upon effectiveness of the registration statement, we will be subject to the reporting and other requirements of the Securities Exchange Act of 1934 and intend to furnish our stockholders annual reports containing financial statements audited by our independent accountants and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of each fiscal year.
TEMPORARY FINANCIAL SERVICES, INC.
AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS' REPORT
DECEMBER 31, 2000
TEMPORARY FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
Page INDEPENDENT AUDITORS' REPORT 2 CONSOLIDATED FINANCIAL STATEMENTS: Consolidated balance sheet 3 Consolidated statement of income 4 Consolidated statement of stockholders' equity 5 Consolidated statement of cash flows 6 Notes to consolidated financial statements 7-9 |
INDEPENDENT AUDITORS' REPORT
Board of Directors
Temporary Financial Services, Inc. and Subsidiary
Spokane, Washington
We have audited the accompanying consolidated balance sheet of Temporary Financial Services, Inc. and Subsidiary (a development stage company) as of December 31, 2000, and the related consolidated statements of income, stockholders' equity, and cash flows for the period from October 4, 2000 (inception) through December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Temporary Financial Services, Inc. and Subsidiary as of December 31, 2000, and the results of their operations and their cash flows for the period from October 4, 2000 (inception) through December 31, 2000, in conformity with generally accepted accounting principles.
/s/ LeMaster & Daniels, PLLC LeMASTER & DANIELS PLLC Certified Public Accountants Spokane, Washington February 15, 2001 |
TEMPORARY FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
ASSETS
CURRENT ASSETS:
Cash $ 546,334 Stock subscription and interest receivable 120,800 Prepaid expenses 8,943 ------------ $ 676,077 ============ |
LIABILITIES AND STOCKHOLDERSEQUITY
LIABILITIES
Accounts payable $ 100 STOCKHOLDERSEQUITY: Common stock -- 100,000,000 shares, $.001 par value, authorized; 310,000 shares issued and outstanding 310 Preferred stock -- 5,000,000 shares, $.001 par value, authorized; none issued - Additional paid-in capital 629,690 Common stock subscribed 120,000 Notes receivable for stock purchase (75,000) Earnings accumulated in the development stage 977 ------------ Total stockholders' equity 675,977 ------------ $ 676,077 ============ |
See accompanying notes to consolidated financial statements.
TEMPORARY FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF INCOME
REVENUE:
Interest income $ 1,543 EXPENSES 566 ----------------- NET INCOME $ 977 ================= BASIC EARNINGS PER SHARE $ - ================= |
See accompanying notes to consolidated financial statements.
TEMPORARY FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM OCTOBER 4, 2000 (INCEPTION)
THROUGH DECEMBER 31, 2000
Notes Earnings Receivable Accumulated Common Additional Common for in the Stock Paid-in Stock Stock Development Issued Capital Subscribed Purchase Stage Total --------- ---------- ---------- ---------- ----------- --------- BALANCES, OCTOBER 4, 2000 (INCEPTION) - $ - $ - $ - $ - $ - ADD (DEDUCT): 100,000 common shares issued to officers and consultant at $1 per share for: Cash 25 24,975 - - - 25,000 Notes receivable 75 74,925 - (75,000) - - Common stock issued for cash: 50,000 shares at $1 per share 50 49,950 - - - 50,000 160,000 shares at $3 per share 160 479,840 - - - 480,000 40,000 common shares subscribed at $3 per share - - 120,000 - - 120,000 Net income for the period - - - - 977 977 --------- ---------- ---------- ---------- ----------- --------- BALANCES, DECEMBER 31, 2000 $ 310 $ 629,690 $ 120,000 $ (75,000) $ 977 $ 675,977 ========= ========== ========== ========== =========== ========= |
See accompanying notes to consolidated financial statements.
TEMPORARY FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 977 Adjustments to reconcile net income to net cash used in operating activities: Increase in interest receivable (800) Increase in prepaid expenses (8,943) Increase in accounts payable 100 ----------------- Total adjustments (9,643) ----------------- Net cash used in operating activities (8,666) CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock for cash 555,000 ----------------- NET INCREASE IN CASH 546,334 CASH, BEGINNING OF PERIOD - ----------------- CASH, END OF PERIOD $ 546,334 ================= |
NONCASH FINANCING ACTIVITIES:
The Company issued 75,000 common shares in exchange for notes receivable of $75,000.
Common stock subscribed (40,000 shares) totalled $120,000 at December 31, 2000.
See accompanying notes to consolidated financial statements.
TEMPORARY FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization:
The accompanying financial statements are those of Temporary Financial Services, Inc., incorporated in Washington State on October 4, 2000, and its wholly-owned subsidiary, Temps Unlimited, Incorporated, which was incorporated in Washington State on October 31, 2000 (collectively referred to herein as the Company). Both companies have established their fiscal year end to be December 31.
The Company had no significant operations from inception to December 31, 2000.
Accordingly, it is considered to be a development stage company. To date the
Company's activities have primarily involved raising of private capital,
development of plans for the Company's operations, and preparation for a
proposed initial public stock offering. The Company expects to evolve from the
development stage to the operating stage in 2001. The Company's operations, once
commenced, are expected to be primarily in (but not limited to) two segments:
financing for the temporary employment services industry and minority or
majority ownership of temporary staffing businesses.
Summary of Significant Accounting Policies:
Principles of consolidation - The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All material intercompany accounts and transactions are eliminated in consolidation.
Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Cash - Cash consists of demand deposits, including interest-bearing accounts, held in two local banks. Uninsured deposits totaled approximately $416,000 at December 31, 2000. At such date the Company had no cash equivalents.
Deferred stock offering costs - Legal fees incurred in connection with the Company's proposed public stock offering have been deferred and are presented as prepaid expenses. Such costs, together with any additional costs to be incurred in connection with the offering, will be deducted from the offering proceeds and will reduce additional paid-in capital. If the offering is unsuccessful, offering costs will be charged to expense.
Stock subscriptions receivable - Such amounts are classified as current assets, as full payment was received on January 2, 2001.
TEMPORARY FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (cont.)
Notes receivable for stock purchase - Notes receivable from officers/directors and a consultant in connection with the sale and issuance of common stock are reported as a reduction to stockholders' equity until payment is received. See note 3.
Income tax - The Company expects to file a consolidated federal income tax return with its subsidiary. Deferred taxes are provided, when material, on a liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. There were no material temporary differences for the period presented, so deferred taxes have not been recorded in the accompanying financial statements. In addition, immaterial current income tax payable at December 31, 2000, has not been accrued.
Earnings per share - Earnings per common share has been computed on the basis of the weighted-average number of common shares outstanding during the period presented.
NOTE 2 - RELATED-PARTY TRANSACTIONS:
An officer/stockholder provided office space and administrative support at no cost to the Company through December 31, 2000. Nominal amounts ascribed to such items were not material to the Company and have not been recorded in the accompanying financial statements.
Interest income of $800 relating to notes receivable from stock purchases by officers/directors and a consultant was accrued through December 31, 2000.
NOTE 3 - CAPITAL STOCK:
Shares Issued to Officers/Directors and Consultant:
Upon incorporation, the Company entered into stock subscription agreements with three officers/directors and a consultant for a total of 100,000 common shares. Each of the four agreements provided for the sale and issuance of 25,000 shares at $1 per share. The agreements call for initial payment of $6,250 in cash and a $18,750 note receivable from each of the individuals. The notes receivable, totaling $75,000 at December 31, 2000, are unsecured and bear interest at 6.3%. They are due in equal annual principal payments plus interest over a three-year period ending in October 2003. The notes receivable are reflected as a reduction of stockholders' equity, in the accompanying financial statements until collected.
Private Placements:
Through December 31, 2000, the Company completed two series of unregistered private placements of common stock. A total of 250,000 shares were subscribed and, for all but 40,000 shares, payment had been received in full by December 31, 2000. Subscriptions receivable for the remaining 40,000 shares ($120,000) were collected on January 2, 2001. The gross proceeds, including the subscriptions subsequently collected, for the two private placements totaled $650,000.
TEMPORARY FINANCIAL SERVICES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - CAPITAL STOCK: (cont.)
Preferred Stock:
Shares of the Company's authorized but unissued preferred stock, if issued, are entitled preference over common shares in distribution of assets upon the Company's liquidation or dissolution. Preferred shares have no stated dividend rate.
In 2001 the Company intends to complete an initial public offering of 200,000 to 800,000 shares of its common stock and expects to file a registration statement with the Securities and Exchange Commission in connection with the offering.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Officers and Directors
We are authorized by our Articles of Incorporation and Bylaws by to indemnify, agree to indemnify or obligate our company to advance or reimburse expenses incurred by our Directors, Officers, employees or agents in any Proceeding (as defined in the Washington Business Corporation Act) to the full extent of the laws of the State of Washington as may now or hereafter exist.
Section 23B.08.510 of the Business Corporation Act sets out the corporation's basic authority to indemnify. The section is structured to first define generally what the corporation may indemnify and then specify exceptions for which the corporation is not permitted to indemnify.
A corporation may indemnify an individual who has been made a party to a proceeding because the individual is or was a director, against liability incurred in the proceeding if:
(a) The individual acted in good faith; and
(b) The individual reasonably believed:
(i) In the case of conduct in the individual's official capacity
with the corporation, that the individual's conduct was in its best interests; and (ii) In all other cases, that the individual's conduct was at least not opposed to its best interests; and (c) In the case of any criminal proceeding, the individual had no reasonable cause to believe the individual's conduct was unlawful. |
Section 23B.08.510 defines the "outer limits" for which indemnification (other than as authorized by shareholder action) is permitted. If a director's conduct falls outside these limits, the director, however, is still potentially eligible for court-ordered indemnification under other provisions. Conduct falling within these broad guidelines is permissive; it does not entitle directors to indemnification. There is a much more limited area of mandatory indemnification. We have, however, however, through bylaw provisions, obligated themselves to indemnify directors to the maximum extent permitted by law.
The general standards for indemnification are closely related to the basic statutory provision defining the general standards of director conduct. The indemnity standards, however, are lower. Section 23B.08.300 (general standards of conduct) includes a requirement that directors exercise the "care an ordinarily prudent person in a like position would exercise." This standard is not contained in the standard for indemnification, which only requires that directors act" in good faith" and that they "reasonably believe" that their actions are either in the corporation's best interests or at least not opposed to those best interests. It is possible that a director who falls below the standard of conduct prescribed by the Business Corporation Act may meet the standard for indemnification under Section 23B.08.510. Further, with respect to the reverse, the courts have stated that it is clear that a director who has met thestandards of conduct would be eligible in virtually every case to be indemnified under Section 23B.08.510.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by any one of our directors, officers or controlling persons in the successful defense of any action, suit or proceeding) is asserted against us by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Item 25. Other Expenses of Issuance and Distribution
The estimated expenses payable in connection with the registration of the Shares is as follows:
SEC Registration $ 1,000 Accounting Fees and Expenses 12,000 Transfer Agent Fees 3,500 Legal Fees and Expenses 25,000 Blue Sky Fees and Expenses 5,000 Misc. 2,500 ---------- Total $ 49,000 Item 26. Recent Sales of Unregistered Securities |
In October 2000, we offered and sold a total of 50,000 Shares at a of $1.00 per Share to sixr individuals, four of whom were officers and directors and two of whom were consultants. Each of these purchasers was an accredited investor. The Shares were issued pursuant to a Section 4(2) exemption from registration under the Act.
Between November 2000 and January 2001 we offered and sold 200,000 shares at a price of $3.00 per Share to 14 purchasers. Four of the purchasers were Officers or Directors (and their IRA accounts). Each purchaser was an accredited investor and each investor was deemed to be sophisticated based on their prior investment experience and their knowledge of the temporary labor industry. The Shares were issued pursuant to a Section 4(2) exemption from registration under the Act and to Rule 506 of Regulation D.
Each of the certificates issued in connection with the above offerings contained restrictive language on its face and each certificate had a restrictive legend in substantially the following form:
The Securities represented by this certificate have not been registered under the Securities Act of 1933 (the "Act") and may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act or pursuant to an exemption from registration under the Act, the availability of which is to be established by opinion of counsel satisfactory to the Company to the effect that in the opinion of such counsel such registration in not required
None of the Shares were offered by means of advertising or general solicitation. No commissions were paid directly or indirectly to any person in connection with the offer or sale of any of the Shares.
Item 27. Exhibits* (3) (i) Articles of Incorporation Page (ii) Bylaws Page (10) Fund Impound agreement ** (21) Subsidiaries of the registrant Page (23) Consent of experts and counsel Page |
* Omitted exhibits not applicable ** To be filed by amendment
Item 28. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described above in Item 24, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the Securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, as amended, we have duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Spokane, State of Washington, on the 27th day of April, 2001.
TEMPORARY FINANCIAL SERVICES, INC.
By: /s/ JOHN COGHLAN President and Chief Executive Officer We, the undersigned directors and officers of Temporary Financial Services, Inc., do hereby constitute and appoint John Coghlan and Brad Herr, or either of them , our true and lawful attorney-in-fact and agent, with full power to sign for us or any of us in our names and in any and all capacities, any and all amendments (including post-effective amendments) to this Registration Statement, or any related registration statement that is to be effective upon filing pursuant to Rule 462 (b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto and other documents required in connection therewith, and with full power to do any and all acts and things in our names and in any and all capacities, which such attorney-in-fact and agent may deem necessary or advisable to enable Temporary Financial Services, Inc. to comply with the Securities Act of 1933, as amended, and any rules, regulations, and requirements of the Securities and Exchange Commission, in connection with this Registration Statement; and we hereby do ratify and confirm all that the such attorney-in-fact and agent shall do or cause to be done by virtue hereof. |
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE CAPACITY /s/ JOHN COGHLAN President, Chief Executive Officer /s/ BRAD HERR Secretary /s/ KRISTIE JESMORE Treasurer |
Item 27. Exhibits* (3) (i) Articles of Incorporation Page (ii) Bylaws Page (10) Fund Impound agreement ** (21) Subsidiaries of the registrant Page (23) Consent of experts and counsel Page |
* Omitted exhibits not applicable ** To be filed by amendment
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
TEMPORARY FINANCIAL SERVICES, INC.
The undersigned hereby executes the following Articles of Incorporation for the purpose of forming a corporation under the provisions of the Washington Business Corporation Act (Revised Code of Washington 23B).
ARTICLE I
Name
The name of the corporation is TEMPORARY FINANCIAL SERVICES, INC.
ARTICLE II
Purpose
The purpose of this corporation shall be to transact any and all lawful business for which corporations may be incorporated under the Washington Business Corporation Act, in general, to have and exercise all the powers conferred by the laws of Washington upon corporations formed under the Washington Business Corporation Act and to do any and all things hereinbefore set forth to the same extent as natural persons might or could do.
ARTICLE III
Duration
This corporation shall be of perpetual duration.
ARTICLE IV
Authorized Capital Stock
The authorized capital stock of the corporation shall consist of two classes of stock, designated as Common Stock and Preferred Stock.
The total number of shares of Common Stock that the corporation will have authority to issue is One Hundred Million (100,000,000). The shares shall have a par value of $0.001 per share. All of the Common Stock authorized herein shall have equal voting rights and powers without restrictions in preference.
The total number of shares of Preferred Stock that the corporation will have authority to issue is Five Million (5,000,000). The Preferred Stock shall have a stated value of $.001 per share. The authorized but unissued shares of Preferred Stock may be divided into and issued in designated series from time to time by one or more resolutions adopted by the Board of Directors. The Directors in their sole discretion shall have the power to determine the relative powers, preferences, and rights of each series of Preferred Stock.
ARTICLE V
Preemptive Rights
Shareholders of this corporation will have no preemptive rights to acquire additional shares issued by the corporation, or any securities convertible into, or carrying or evidencing any rights or option to purchase, any such shares.
ARTICLE VI
Voting
The holders of any of the corporation's capital stock shall possess voting power for the election of directors and for all other purposes, subject to such limitations as may be imposed by law and by any provision of the Articles of Incorporation in the exercise of their voting power. Cumulative voting for the election of directors is hereby expressly prohibited. The holders of Common Stock shall be entitled to one vote for each share held. All of the Common Stock authorized herein shall have equal voting rights and powers without restrictions in preference.
ARTICLE VII
Board of Directors
The initial Board of Directors of this corporation shall consist of one (1) director. The number of directors constituting the Board of Directors of this corporation may be increased or decreased from time to time in the manner specified in the Bylaws of this corporation; provided, however, that the number shall not be less than one (1) or more than seven (7). In case of a vacancy in the Board of Directors because of a director's resignation, removal or other departure from the board, or because of an increase in the number of directors, the remaining directors, by majority vote, may elect a successor to hold office for the unexpired term of the director whose position is vacant, and until the election and qualification of a successor.
ARTICLE VIII
Director Liability
A director of the corporation shall not be personally liable to the corporation or its shareholders for monetary damages for conduct as a director, except for liability of the director for (i) acts or omissions that involve intentional misconduct or a knowing violation of law by the director; (ii) conduct which violates RCW 23B.08.310 of the Washington Business Corporation Act, pertaining to unpermitted distributions to shareholders or loans to directors; or (iii) any transaction from which the director will personally receive a benefit in money, property, or services to which the director is not legally entitled. If the Washington Business Corporation Act is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated or limited to the fullest extent permitted by the Washington Business Corporation Act, as so amended. Any repeal or modification of the foregoing paragraph by the shareholders of the corporation shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification.
ARTICLE IX
Indemnification
The corporation is authorized to indemnify, agree to indemnify or obligate itself to advance or reimburse expenses incurred by its Directors, Officers, employees or agents in any Proceeding (as defined in the Washington Business Corporation Act) to the full extent of the laws of the State of Washington as may now or hereafter exist.
ARTICLE X
Bylaws
Subject to the power of shareholders to amend or repeal, the Board of Directors of this corporation shall have the power to enact and amend such Bylaws defining the powers and duties of the officers of the corporation and providing for such other matters in relation to its affairs as they may deem necessary and convenient, provided the same are not out of harmony with the laws of the State of Washington or these Articles of Incorporation.
ARTICLE XI
Action by Majority Consent of Shareholders
Any action required or permitted to be taken at a shareholders' meeting may be
taken without a meeting or vote if either:
(i) the action (a "Unanimous Consent") is taken by all the shareholders
entitled to vote on the action; or
(ii) so long as this corporation is not a public company, the action (a
"Majority Consent") is taken by the shareholders holding of record, or
otherwise entitled to vote, in the aggregate not less than the
minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all of the shares entitled to vote
on the action were present and voted.
To the extent that prior notice is required by law, any advance notice required by statute to be given to nonconsenting shareholders shall be made at least one business day prior to the effectiveness of the action, or such longer period as required by law. The form of this notice shall be sufficient to appraise the nonconsenting shareholder of the nature of the action to be effected, in a manner approved by the directors of this corporation or by the committee or officers to whom the board has delegated that responsibility.
ARTICLE XII
Amendments
The corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation in the manner now or hereafter prescribed by statute, and all rights conferred on the shareholders herein are granted subject to this reservation.
ARTICLE XII
Shareholder Approval
The affirmative vote of a majority of all of the votes entitled to be cast on the matter shall be sufficient, valid, and effective, after due consideration and reconsideration of such action by the Board of Directors, as required by law, to approve and authorize the following acts of the corporation:
a. an amendment to these Articles of Incorporation;
b. the merger of this corporation into another corporation or the merger of one or more other corporations into this corporation;
c. the acquisition by another corporation of all of the outstanding shares of one or more classes or series of this corporation; or
d. the sale, lease, exchange, or other disposition by this corporation of all, or substantially all, of its property other than in the usual and regular course of business.
ARTICLE XIII
Initial Director
The initial Board of Directors of this corporation consists of one (1) director. The names and addresses of such director is as follows:
Name Address ---- ------- Gregory B. Lipsker 601 W. Main Ave., Suite 714 Spokane, WA 99201-0677 ARTICLE XIV Incorporator |
The name and address of the incorporator is as follows:
Name Address ---- ------- Gregory B. Lipsker 601 W. Main Avenue, Suite 714 Spokane, WA 99201-0677 ARTICLE XV Registered Agent |
The name of the registered agent of this corporation is Gregory B. Lipsker.
ARTICLE XVI
Registered Office
The post office address of the registered office of this corporation is 601 West Main Avenue, Suite 714, Spokane, Washington 99201-0677.
Dated this 9th day of October, 2000.
/s/ Gregory B. Lipsker, Incorporator |
CONSENT TO SERVE AS REGISTERED AGENT
I, GREGORY B. LIPSKER, hereby consent to serve as Registered Agent in the State of Washington, for the following corporation: Temporary Financial Services, Inc. I understand that as agent for the corporation it will be my responsibility to receive service of process in the name of the corporation; to forward all mail to the corporation; and to immediately notify the office of the Secretary of State in the event of my resignation, or of any changes in the registered office address of the corporation for which I am agent.
DATED: October 9, 2000
GREGORY B. LIPSKER
601 West Main Avenue, Suite 714
Spokane, Washington 99201-0677
Exhibit 3.2
BYLAWS
OF
TEMPORARY FINANCIAL SERVICES, INC.
AS ADOPTED BY THE BOARD OF DIRECTORS
OCTOBER 12, 2000
BYLAWS OF
TEMPORARY FINANCIAL SERVICES, INC.
CONTENTS
ARTICLE I Corporate Offices 1 ARTICLE II Stock 1 2.1 Issuance of Shares 1 (a) Authorized Shares 1 (b) Board Authorization for Issuance 1 (c) Shares Subject to Restrictions 1 (d) When Fully Paid 1 (e) Re-acquisition 1 2.2 Fractional Shares or Scrip 1 (a) Issuance 1 (b) Scrip 2 (c) Rights of Holders 2 (d) Conditions on Issuance 2 2.3 Issuance of Rights or Options to Purchase Shares 2 2.4 Preemptive Rights 2 2.5 Certificates of Stock 2 2.6 Lost or Destroyed Certificates 3 2.7 Stock Records 3 2.8 Record Owners 3 2.9 Stock Transfers 4 (a) Method of Transfer 4 (b) Surrender of Old Certificate to Secretary 4 (c) Recording Transfers 4 2.10 Restrictions on Transfer 4 ARTICLE III SHAREHOLDERS 4 3.1 Annual Meeting 4 3.2 Special Meetings 5 3.3 Adjourned Meetings 5 3.4 Meeting Place 5 3.5 Chairman of the Meeting 5 3.6 Notice of Shareholders' Meetings 5 (a) Annual Meetings 5 (b) Special Meetings 6 (c) Meetings Concerning Extraordinary Acts 6 (d) Adjourned Meetings 6 3.7 Waiver of Notice 6 (a) Written Waiver 6 (b) Waiver by Attendance 6 (c) Waiver of Objection to Particular Matter 7 3.8 Quorum 7 (a) Action if Quorum Present 7 (b) Share Represented for Entire Meeting 7 3.9 Attendance by Communications Equipment 7 3.10 Voting 7 (a) General Rule 7 (b) Voting on Extraordinary Acts 7 (c) Election of Directors 7 (d) Amendments to Quorum Rules 7 |
3.11 Proxies 8 (a) Voting by Proxy 8 (b) Proxy Appointment 8 (c) Term of Appointment 8 (d) Death or Incapacity of Shareholder 8 (e) Corporation's Power to Accept Proxy's Actions 8 3.12 Corporation's Acceptance of Votes 8 (a) Acceptance of Vote 8 (b) Vote Not by Shareholder 8 (c) Rejection of Vote 9 3.13 Shareholders' List for Meeting 9 (a) Shareholders' List 9 (b) List Available for Inspection 9 (c) List at Meeting 9 (d) Right to Copy 9 3.14 Fixing the Record Date 9 (a) Date for Meetings 9 (b) Date for Adjourned Meetings 10 (c) Date for Dividends and Distributions 10 (d) Date for Action without Meeting 10 3.15 Action by Shareholders without a Meeting 10 (a) Action Agreed to by All Shareholders 10 (b) Record Date 10 (c) Withdrawal of Consent 10 (d) Effective Date of Action 11 (e) Action by Consent 11 3.16 Ratification 11 ARTICLE IV Board of Directors 11 4.1 Management Responsibility 11 4.2 Committees 11 (a) Creation 11 (b) Approval of Committees 11 (c) Rules Governing Committees 11 (d) Powers of Committees 11 (e) Limitations on Committee Action 11 (f) Minutes 12 (g) No Relief from Responsibility 12 4.3 Duties of Directors 12 (a) Due Care and Loyalty 12 (b) Right to Rely on Experts 12 (c) Failure to Act in Good Faith 13 4.4 Number and Qualification of Directors 13 4.5 Election of Directors 13 (a) Initial Directors; Annual Election 13 (b) Cumulative Voting 13 (c) Election 13 4.6 Term of Office 13 4.7 Vacancy on Board of Directors 13 4.8 Resignation 13 4.9 Removal 14 (a) Special Meeting 14 (b) Voting 14 4.10 Meetings 14 (a) Annual Meeting 14 (b) Regular Meetings 14 (c) Special Meetings 14 (d) Adjourned Meetings 14 4.11 Quorum and Voting of Directors 14 (a) Majority Constitutes a Quorum 14 (b) Action in Absence of a Quorum 14 (c) Dissent by Directors 15 |
4.12 Attendance by Communications Equipment 15 4.13 Action by Directors without a Meeting 15 4.14 Notice of Meeting 15 (a) Regular Meetings 15 (b) Special Meetings 15 (c) Waiver of Notice 16 4.15 Chairman of the Meeting 16 4.16 Compensation 16 4.17 Liability for Unlawful Distributions 16 (a) Director's Liability 16 (b) Right to Contribution 16 ARTICLE V Conflicting Interest Transactions 16 5.1 Definitions 16 5.2 Directors' Action 18 (a) Majority Vote 18 (b) Director's Disclosure 18 (c) Quorum 18 5.3 Shareholders' Action 18 (a) Majority Vote 18 (b) Quorum 19 (c) Director's Disclosure 19 ARTICLE VI Indemnification 19 6.1 Indemnification Definitions 19 6.2 Indemnification 20 (a) Right to Indemnity 20 (b) Conduct Concerning Employee Benefit Plans 20 (c) Legal Proceedings 20 (d) Limits on Indemnity 21 (e) Coverage of Reasonable Expenses 21 6.3 Advance for Expenses 21 (a) Advances 21 (b) Director's Undertaking 21 6.4 Determination and Authorization of Indemnification 21 (a) Determination of Proper Conduct 21 (b) Board Determination 22 (c) Authorization of Indemnification 22 6.5 Shareholder Authorized Indemnification and Advancement of Expenses 22 6.6 Indemnification of Officers, Employees, and Agents 23 6.7 Insurance 23 6.8 Report to Shareholders 23 ARTICLE VII Officers 23 7.1 Officers and Their Duties 23 (a) Chairman of the Board 23 (b) President 23 (c) Vice Presidents 24 (d) Secretary 24 (e) Treasurer 25 (f) Additional Duties; Other Officers and Agents 25 (g) Authority to Enter Contracts and to Issue Checks and Drafts 25 7.2 Qualifications 25 7.3 Standards of Conduct for Officers 26 (a) Due Care and Loyalty 26 (b) Right to Rely on Experts 26 (c) Failure to Act in Good Faith 26 7.4 Bonds 26 7.5 Delegation 26 7.6 Election and Term of Office 26 |
7.7 Vacancies 27 7.8 Resignation 27 7.9 Removal 27 7.10 Compensation 27 ARTICLE VIII Dividends and Distributions 27 8.1 Distributions 27 8.2 Measure of Effect of Distribution 27 8.3 Share Dividends 28 (a) Issuance to All Shareholders 28 (b) Issuance to Class of Shareholders 28 8.4 Closure of the Stock Transfer Books 29 8.5 Reserves 29 ARTICLE IX Notices 29 9.1 Method of Notice 29 (a) General 29 (b) Methods of Communication 29 (c) Effective Date of Notice to Shareholder 29 (d) Notice to the Corporation 29 (e) Effective Date of Notice to Other Parties 29 9.2 Oral Notice 30 9.3 Waiver of Notice 30 ARTICLE X Corporate Records 30 10.1 Maintenance of Corporate Records 30 10.2 Shareholder's Right to Inspect and Copy Records 30 (a) Inspection of Corporate Records 31 (b) Inspection of Accounting and Shareholders' Records 31 10.3 Scope of Inspection Right 31 (a) Shareholder's Agent 31 (b) Copies 31 (c) Charge for Copying 31 (d) Record of Shareholders 31 10.4 Annual Report 31 ARTICLE XI Financial Matters 32 11.1 Books and Records of Account 32 11.2 Balance Sheet and Income Statement 32 (a) Annual Balance Sheet and Income Statement 32 (b) Copies to Shareholders 32 11.3 Deposits 32 11.4 Loans 32 11.5 Fiscal Year 32 ARTICLE XII Amendment of Articles and Bylaws 33 12.1 Amendment of Articles 33 (a) By the Board 33 (b) By the Board and Shareholders 33 12.2 Amendment of Bylaws by the Shareholders 33 12.3 Amendment of Bylaws by the Board 33 |
ARTICLE XIII Corporate Seal 34
ARTICLE XIV Miscellany 34 14.1 Inspector of Elections 34 14.2 Duties of Inspector of Elections 34 14.3 Rules of Order 34 (a) Robert's Rules Govern 35 (b) Chairman of Meeting 35 (c) Adjournment Due to Disorder 35 (d) Removal of Persons Not Shareholders 35 (e) Matters the Proper Subject of Action 35 14.4 Number and Gender 35 14.5 Severability 35 |
ARTICLE XV Authentication 36
BYLAWS OF
TEMPORARY FINANCIAL SERVICES, INC.
ARTICLE I
Corporate Offices
The corporation shall maintain a registered office in the State of Washington. The Board may establish other offices in or outside the State of Washington.
ARTICLE II
Stock
2.1 Issuance of Shares.
(a) Authorized Shares. The corporation may issue the number of shares of each class or series authorized by the Articles. Shares that are issued are outstanding shares until they are reacquired, redeemed, converted, or cancelled.
(b) Board Authorization for Issuance. The Board must authorize any issuance of shares. The Board may issue shares in exchange for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed, or other securities of the corporation. The Board's authorization must state the maximum number of shares of each class or series that may be issued and the price for each share.
(c) Sales Subject to Restrictions. The corporation may issue shares which are subject to restrictions on their transfer, as provided in Section 2.10.
(d) When Fully Paid. When the corporation has received the consideration in exchange for which the Board has authorized the issuance of shares, the shares issued will be fully paid and nonassessable.
(e) Re-Acquisition. The corporation may acquire its own shares. Shares so acquired shall constitute authorized but unissued shares.
2.2 Fractional Shares or Scrip.
(a) Issuance. The corporation may:
(1) Issue fractions of a share or pay in money the value of fractions of a share;
(2) Arrange for disposition of fractional shares by the shareholders;
(3) Issue scrip entitling the holder to receive a full share upon surrendering enough scrip to equal a full share.
(b) Scrip. Each certificate representing scrip must be conspicuously labeled "scrip," and must state on its face:
(1) The name of this corporation;
(2) That this corporation is organized under the laws of the
State of Washington;
(3) The name of the person to whom it is issued; and
(4) The fractional portion and class of shares and the
designation of the series, if any, the certificate represents.
(c) Rights of Holders. The holder of a fractional share is entitled to exercise the rights of a shareholder, including the right to vote, to receive dividends, and to participate in the assets of the corporation upon liquidation. The holder of scrip is not entitled to any of these rights unless the scrip so provides.
(d) Conditions on Issuance. The Board may authorize the issuance of scrip subject to any condition considered desirable, including:
(1) That the scrip will become void if not exchanged for full shares before a specified date; and
(2) That the shares for which the scrip is exchangeable may be sold and the proceeds paid to the scripholders.
2.3 Issuance of Rights or Options to Purchase Shares. The corporation may issue rights, options, or warrants for the purchase of shares of the corporation. The Board shall determine the terms upon which the rights, options, or warrants are issued, their form and content, and the consideration for which the shares are to be issued upon exercise of any such right, option, or warrant.
2.4 Preemptive Rights. Shareholders of this corporation will have no preemptive rights to acquire additional shares issued by the corporation, or any securities convertible into, or carrying or evidencing any rights or option to purchase, any such shares.
2.5 Certificates of Stock. The Secretary shall issue stock certificates evidencing ownership of shares in the corporation. Stock certificates shall be issued in their proper numerical order. Each shareholder shall be entitled to a certificate which has been signed either manually or in facsimile by the President or a Vice President, which has been attested to by the Secretary or an Assistant Secretary, and which has been sealed with the corporate seal. The Secretary may issue a certificate bearing the signature of an individual who no longer holds that office. Such a certificate shall have the same effect as it would if the person still held office on the date of issue. Every stock certificate shall state:
(a) The name of the corporation;
(b) That the corporation is incorporated in Washington;
(c) The name of the person to whom the shares represented by the
certificate are issued;
(d) The number, class, and designation of the series, if any, of the
shares represented by the certificate;
(e) If there is more than one class, a statement that the corporation
will furnish to any shareholder, upon request and without charge, a full written
statement of the designations, preferences, limitations, and relative rights of
the shares of each class authorized by the corporation, and the variations in
rights, preferences, and limitations determined for each series; and
(f) Either a complete description or a reference to the existence and general nature of any restrictions on the ownership or transfer of the shares which the certificate represents.
2.6 Lost or Destroyed Certificates. The Secretary may issue a replacement certificate in place of a lost, mutilated, or destroyed certificate, upon proof that the certificate was lost, mutilated, or destroyed, if the holder of the certificate gives a satisfactory bond of indemnity to the corporation. The Secretary may issue a replacement certificate without requiring any bond when the Board determines it is proper to do so.
2.7 Stock Records. The Secretary shall keep the stock transfer books at the registered office or principal place of business of the corporation, or at the office of the corporation's transfer agent or registrar. The Secretary, or the transfer agent or registrar, shall enter on the stock transfer books the name and address of each shareholder, together with the class, number of shares, and date on which the shares were issued or transferred to the shareholder. Each shareholder shall keep the shareholder's current address on file with the Secretary.
2.8 Record Owners. The corporation shall treat a shareholder of record as the owner of the shares for all purposes. The corporation shall not be bound to recognize any claim to or interest in any share on the part of any other person, whether or not it has notice of such a claim or interest, until that person's name has been entered on the transfer books as the shareholder of record.
2.9 Stock Transfers.
(a) Method of Transfer. Subject to any restrictions placed on the transfer of shares at or prior to the time such shares are issued, shareholders may transfer their shares by delivering the certificates to the transferee, accompanied by:
(1) An assignment in writing on the back of the certificate, or an assignment separate from certificate, or a written power of attorney to sell, assign, and transfer the shares which is signed by the record holder of the certificate; and
(2) Any additional documents, instruments, or other evidences necessary to satisfy the requirements of any transfer restrictions applicable to the shares by law or by contract.
(b) Surrender of Old Certificate to Secretary. Upon receipt of a transferred certificate, a transferee shall surrender the certificate, along with evidence that the certificate was transferred to the transferee, to the Secretary, so that the Secretary may record the transfer on the stock transfer books and issue a new certificate to the transferee.
(c) Recording Transfers. Except as otherwise specifically provided in these Bylaws, the Secretary shall not record any shares of stock as having been transferred on the books of the corporation until the outstanding certificates for those shares have been surrendered to the corporation. The Secretary shall cancel all certificates surrendered to the corporation for transfer. The Secretary shall issue no new certificate until the former certificate representing those shares has been surrendered and cancelled, except as provided in Section 2.6.
2.10 Restrictions on Transfer. The Board may restrict the transfer of the corporation's shares as permitted by law. The existence of any such restriction shall be noted conspicuously on the front or back of the certificate. No such restriction will affect shares issued before the restriction was adopted, unless the holders of the shares are parties to the restriction agreement or voted in favor of the restriction.
ARTICLE III
Shareholders
3.1 Annual Meeting. The corporation shall hold a meeting of the shareholders annually on a date and at a time and place set by the Board. The order of business at the annual meeting of shareholders shall be as follows:
(a) Calling the meeting to order;
(b) Proof of notice of meeting, or filing of waivers of notice;
(c) Reading of minutes of the last annual meeting;
(d) Reports from officers;
(e) Reports from committees;
(f) Election of directors; and
(g) Other business.
3.2 Special Meetings.
The corporation shall hold a special meeting of the shareholders:
(a) On call of the Board, the Chairman, or the President; or
(b) If the holders of at least ten percent (10%) of all the votes
entitled to be cast on any issue proposed to be considered at the meeting, sign,
date, and deliver to the Secretary one or more written demands for a special
meeting which describe the purposes for the meeting.
Only issues identified in the notice of a special meeting may be conducted at that meeting. The Secretary shall issue notice of any special meeting as provided in Paragraph 3.6(b).
3.3 Adjourned Meetings. The chairman of the meeting may adjourn a shareholders' meeting at any time a quorum, as that term is defined in Section 3.8, is not present. With the consent of the holders of a majority of the shares represented in person or by proxy, and entitled to vote at a shareholders' meeting, the chairman of the meeting may adjourn the meeting for any reason to a time and place determined by the chairman of the meeting. The chairman of the meeting may adjourn a meeting at which directors are to be elected only from day to day until the directors are elected. The shareholders may conduct any business at an adjourned meeting which they might have conducted at the original meeting.
3.4 Meeting Place. Shareholders' meetings may be held either at the corporation's registered Washington office or at any other place designated by the Board and identified in, the notice of the meeting.
3.5 Chairman of the Meeting. The Chairman shall serve as chairman of all shareholders' meetings. In the absence of the Chairman, the President or any other person appointed by the Board shall serve as chairman of a shareholders' meeting.
3.6 Notice of Shareholders' Meetings.
(a) Annual Meetings. The corporation shall notify the shareholders of
each annual shareholders' meeting. The corporation shall deliver notice, as
provided in Section 9.1, at least ten (10), but not more than sixty (60), days
before the meeting date. Notice of an annual meeting need not include a
description of the purposes of the meeting, except as provided under Paragraph
(c) below. The corporation must deliver notice to all shareholders entitled to
vote at the annual meeting, and must notify certain other shareholders of an
annual meeting as provided in Paragraph (c) below.
(b) Special Meetings. The corporation shall notify the shareholders
entitled to vote on the actions to be considered at any special meeting called
pursuant to Section 3.2. The corporation need not notify all shareholders unless
required to do so as provided in Paragraph (c) below. The notice must include a
description of the purposes for which the meeting was called, and be accompanied
by other materials described in Paragraph (c) below. The corporation must
deliver the notice at least ten (10), but not more than sixty (60), days before
the meeting date. If the corporation fails to issue the notice within ten (10)
days after shareholders holding ten percent (10%) or more of the outstanding
shares entitled to vote on a particular issue have delivered to the Secretary
written demand for a special meeting to consider that issue in accordance with
Paragraph 3.2(b), the shareholders requesting the meeting may issue the notice
on behalf and at the expense of the corporation.
(c) Meetings Concerning Extraordinary Acts. If a purpose of a
shareholders' meeting is to consider action on an amendment to the Articles, a
planned merger or share exchange, a proposed sale, lease, or other disposition
of all or substantially all of the property of the corporation other than in the
regular course of business, or the dissolution of the corporation, the
corporation shall notify all shareholders, whether or not entitled to vote, at
least twenty (20), but not more than sixty (60), days before the date of the
meeting. The notice must describe the proposed action with reasonable clarity
and must contain or be accompanied by a copy of the proposed Amendment, the plan
of merger or exchange, or the agreement of sale or lease, as applicable.
(d) Adjourned Meetings. In general, the corporation need not provide
notice to the shareholders of an adjourned meeting if the time, date, and place
for reconvening the meeting is announced before the meeting is adjourned.
However, if the chairman of a meeting adjourns a meeting for more than one
hundred twenty (120) days from the date of the original meeting, the Secretary
shall fix a new record date for the adjourned meeting and shall issue a new
notice of the adjourned meeting to each shareholder of record entitled to notice
of or to vote at the adjourned meeting.
3.7 Waiver of Notice.
(a) Written Waiver. A shareholder may waive any notice before or after
the date and time of the meeting that is the subject of the notice. Except as
provided by Paragraphs (b) and (c), the waiver must be in writing, signed by the
shareholder entitled to the notice, and delivered to the corporation for
inclusion in the minutes or filing with the corporate records.
(b) Waiver by Attendance. A shareholder's attendance at a meeting
waives objection to lack of notice or defective notice of the meeting, unless
the shareholder at the beginning of the meeting objects to holding the meeting
or transacting business at the meeting.
(c) Waiver of Objection to Particular Matter. A shareholder waives
objection to consideration of a particular matter at a meeting that is not
within the purposes described in the meeting notice, unless the shareholder
objects to considering the matter when it is presented.
3.8 Quorum.
(a) Action if Quorum Present. Shares entitled to vote as a separate
voting group may take action on a matter at a meeting only if a quorum of those
shares is present. In general, a majority of the votes entitled to be cast on
the matter by the voting group constitutes a quorum of that voting group for
that matter.
(b) Share Represented for Entire Meeting. Once a share is represented
for any purpose at a meeting other than solely to object to holding the meeting
or to transacting business at the meeting, the share is deemed present for
purposes of establishing a quorum for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is set for the adjourned
meeting in accordance with Paragraph 3.14(b).
3.9 Attendance by Communications Equipment. Shareholders may participate in a shareholders' meeting by any means of communication which enables all persons participating in the meeting to hear each other simultaneously during the meeting. A shareholder who participates by means of communications equipment is deemed to be present in person at the meeting.
3.10 Voting.
(a) General Rule. In general, if a quorum is present, a matter may be
approved by a voting group if the votes cast within the voting group favoring
the action exceed the votes cast within the voting group opposing the action.
(b) Voting on Extraordinary Acts. The holders of more than two-thirds
(2/3) of all shares entitled to vote on an amendment to the Articles, a plan of
merger or share exchange, a sale of assets other than in the regular course of
business, or a proposal to dissolve the corporation must vote in favor of the
proposed action for the corporation to take the action.
(c) Election of Directors. Directors shall be elected in accordance
with the provisions of Section 4.5.
(d) Amendments to Quorum Rules. An amendment to the Articles adding,
changing, or deleting either:
(1) A quorum for a voting group greater or lesser than specified in Paragraph 3.8(a); or (2) A voting requirement for a voting group greater than |
specified in Paragraph (a) above must meet the same quorum requirement and be adopted by the same vote and voting groups required to take action under the quorum and voting requirements then in effect.
3.11 Proxies.
(a) Voting by Proxy. A shareholder may vote the shareholder's shares
in person or by proxy.
(b) Proxy Appointment. A shareholder may appoint a proxy to vote or
otherwise act for the shareholder by signing an appointment form, either
personally or by the shareholder's agent.
(c) Term of Appointment. An appointment of a proxy is effective when
received by the Secretary. An appointment is valid for eleven (11) months unless
it is revoked earlier or the appointment form expressly provides for a longer
period.
(d) Death or Incapacity of Shareholder. The death or incapacity of the
shareholder appointing a proxy does not affect the right of the corporation to
accept the proxy's authority, unless the Secretary is given notice of the death
or incapacity before the proxy exercises the proxy's authority under the
appointment.
(e) Corporation's Power to Accept Proxy's Actions. The corporation is
entitled to accept a proxy's vote or other action as that of the shareholder,
subject to the provisions of Section 3.12 and to any express limitation on the
proxy's authority appearing on the face of the appointment form.
3.12 Corporation's Acceptance of Votes.
(a) Acceptance of Vote. If the name signed on a vote, consent, waiver,
or proxy appointment corresponds to the name of a shareholder, the corporation
may accept the vote, consent, waiver, or proxy appointment as the shareholder's
act.
(b) Vote Not by Shareholder. If the name signed on a vote, consent,
waiver, or proxy appointment does not correspond to the name of its shareholder,
the corporation may accept the vote, consent, waiver, or proxy appointment as
the shareholder's act if:
(1) The shareholder is an entity and the name signed purports to be that of an officer, partner, or agent of the entity;
(2) The name signed purports to be that of an administrator,
executor, guardian, or conservator representing the shareholder and evidence of
fiduciary status acceptable to the corporation has been presented with respect
to the vote, consent, waiver, or proxy appointment;
(3) The name signed purports to be that of a receiver or trustee
in bankruptcy of the shareholder, and evidence of this status acceptable to the
corporation has been presented with respect to the vote, consent, waiver, or
proxy appointment;
(4) The name signed purports to be that of a pledgee, beneficial
owner, or attorney-in-fact of the shareholder and evidence acceptable to the
corporation of the signatory's authority to sign for the shareholder has been
presented with respect to the vote, consent, waiver, or proxy appointment; or
(5) Two or more persons are the shareholder as co-tenants or
fiduciaries, the name signed purports to be the name of at least one of the
co-owners, and the person signing appears to be acting on behalf of all the
co-owners.
(c) Rejection of Vote. The corporation may reject a vote, consent, waiver, or proxy appointment if the Secretary has reasonable basis for doubt about the validity of the signature or about the signatory's authority to sign for the shareholder.
3.13 Shareholders' List for Meeting.
(a) Shareholders' List. After the corporation fixes a record date for
a meeting, the Secretary shall prepare an alphabetical list of the names of all
shareholders as of the record date who are entitled to notice of a shareholders'
meeting. The list must be arranged by voting group (and within each voting group
by class or series of shares), show the most recent address on file of each
shareholder, and identify the number of shares held by each shareholder.
(b) List Available for Inspection. The Secretary shall make the
shareholders' list available for inspection by any shareholder, beginning ten
(10) days prior to the meeting and continuing through the meeting. The list will
be available at the corporation's principal office or at a place (identified in
the meeting notice) in the city where the meeting will be held. A shareholder,
or the shareholder's agent, may inspect the list during regular business hours
and at the shareholder's expense during the period it is available for
inspection.
(c) List at Meeting. The Secretary shall make the shareholders' list
available at the meeting. Any shareholder or shareholder's agent may inspect the
list at any time during the meeting or any adjourned meeting.
(d) Right to Copy. A shareholder may copy the list as provided in
Sections 10.2 and 10.3.
3.14 Fixing the Record Date.
(a) Date for Meetings. The Board shall fix a record date in order to
determine which shareholders are entitled to notice of a shareholders' meeting
or to vote at the meeting. If the Board fails to fix a record date for a
meeting, then the day before the first notice of the meeting is delivered to the
shareholders shall be the record date. If the Secretary does not issue notice of
a meeting because all shareholders entitled to notice have waived notice, then
the record date shall be the date on which the Secretary received the last
waiver of notice.
(b) Date for Adjourned Meetings. Once the Secretary has determined
which shareholders are entitled to notice of or to vote at a shareholders'
meeting, the determination is effective for any adjournment of the meeting
unless the Board fixes a new record date. The Board must fix a new record date
if the meeting is adjourned for more than one hundred twenty (120) days after
the date fixed for the original meeting.
(c) Date for Dividends and Distributions. If the Board fails to fix a
record date for determining which shareholders are entitled to receive a share
dividend or a distribution which does not involve a purchase, redemption, or
other acquisition of the corporation's shares, the record date shall be the date
the Board authorizes that dividend or distribution.
(d) Date for Action without Meeting. The record date for determining
which shareholders may vote to take action without a meeting is the date the
first shareholder signs the consent describing the action to be taken.
3.15 Action by Shareholders without a Meeting.
(a) Action Agreed to by All Shareholders. Any action required or permitted to be taken at a shareholders' meeting may be taken without a meeting or vote if either:
(1) the action (a "Unanimous Consent") is taken by all the shareholders
entitled to vote on the action; or
(2) so long as this corporation is not a public company, the action is taken by
the shareholders holding of record, or otherwise entitled to vote, in the
aggregate not less than the niminum number of votes that would be necessary to
authorize or take such action at a meeting at which all of the shares entitled
to vote on the action were present and voted (a "Majority Consent").
To the extent that prior notice is required by law, any advance notice
required by statute to be given to nonconsenting shareholders shall be made at
least one business day prior to the effectiveness of the action, or such longer
period as required by law. The form of this notice shall be sufficient to
appraise the nonconsenting shareholder of the nature of the action to be
effected, in a manner approved by the directors of this corporation or by the
committee or officers to whom the board has delegated that responsibility. The
consents must be delivered to the corporation for inclusion in the minutes or
filing with the corporate records.
(b) Record Date. The record date for determining shareholders entitled
to take action without a meeting shall be as specified in Section 3.14.
(c) Withdrawal of Consent. A shareholder may withdraw consent only by
delivering a written notice of withdrawal to the Secretary prior to the time
that all consents are in possession of the corporation.
(d) Effective Date of Action. Action taken by the shareholders without
a meeting shall be effective when all consents are in possession of the
corporation, unless the consents specify a later effective date.
(e) Action by Consent. An action taken by consent has the effect of a
meeting vote and may be described as such in any document.
3.16 Ratification. Any action taken by the corporation, the directors, or the officers which is subsequently authorized, approved, or ratified by vote of the number of shares that would have been sufficient to approve the action in the first instance, shall be valid and binding as though ratified by every shareholder of the corporation.
ARTICLE IV
Board of Directors
4.1 Management Responsibility. The corporation shall have a Board of Directors, which shall be responsible for the exercise of all corporate powers. The Board shall manage the business, affairs, and property of the corporation.
4.2 Committees.
(a) Creation. The Board may create one or more Committees of
directors. Each Committee must have two or more members.
(b) Approval of Committees. The number of directors required to take
action under Section 4.11 must approve the creation of a Committee.
(c) Rules Governing Committees. The rules governing meetings, action
without meetings, notice and waiver of notice, and quorum and voting
requirements of the Board, under Sections 4.10 through 4.15, apply to
Committees.
(d) Powers of Committees. Subject to the limitations stated in
Paragraph (e) below, the Board shall specify the extent to which each Committee
may exercise the authority of the Board.
(e) Limitations on Committee Action. A Committee may not:
(1) Authorize or approve a distribution except according to a
general formula or method prescribed by the Board;
(2) Approve or propose to shareholders action which must be
approved by the shareholders;
(3) Fill vacancies on the Board or on any Committee;
(4) Amend the Articles;
(5) Adopt, amend, or repeal these Bylaws;
(6) Approve a plan of merger not requiring shareholder approval;
or
(7) Authorize or approve the issuance or sale of shares or
contract for the sale of shares, or determine the designation and relative
rights, preferences, and limitations of a class or series of shares.
(f) Minutes. All Committees shall keep regular minutes of their
meetings, which shall be included in the corporate minute books at the
registered office of the corporation.
(g) No Relief from Responsibility. Neither the Board nor any director
may be relieved of any responsibility imposed by law, the Articles, or these
Bylaws by designating a Committee and delegating the Board's or the director's
responsibilities to the Committee.
4.3 Duties of Directors.
(a) Due Care and Loyalty. Each person, who is a director, shall
perform the duties of a director, including any duties the director may have as
a member of any Committee:
(1) In good faith;
(2) In a manner the director reasonably believes to be in the
best interests of the corporation; and
(3) With the care an ordinarily prudent person in a like position
would use under similar circumstances.
(b) Right to Rely on Experts. In performing corporate duties, a
director may rely on information, opinions, reports, or statements, including
financial statements or other financial data prepared or presented by:
(1) One or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the matters
presented;
(2) Legal counsel, public accountants, or other persons
concerning matters which the director reasonably believes to be within their
professional or expert competence; or
(3) A Committee, the deliberations of which the director
reasonably believes merits confidence, concerning matters within the Committee's
designated authority.
(c) Failure to Act in Good Faith. A director fails to act in good
faith if the director relies on information provided by the above persons even
though the director has knowledge concerning a particular matter that would make
reliance on the information unwarranted.
4.4 Number and Qualification of Directors. The Board shall consist of no fewer than one (1) and no more than seven (7) directors. The corporation shall have one (1) director until that number is changed in accordance with these Bylaws. If the shareholders elect a greater or lesser number of directors than is specified in this section, then election of that number shall automatically amend these Bylaws to increase the number of directors to the number elected. No director need be a shareholder of the corporation. The Board or the Shareholders may fix the number of directors and may, at any time, increase the size of the Board to the maximum allowed by these Bylaws.
4.5 Election of Directors.
(a) Initial Directors; Annual Elections. The terms of the initial
directors will expire at the first annual meeting of shareholders. The
shareholders shall elect successor directors at the first annual meeting of
shareholders, and at each annual meeting thereafter.
(b) Cumulative Voting. Cumulative voting for the election of directors
is prohibited.
(c) Election. In any election of directors, the candidates elected are
those who receive a majority of votes cast by the shares entitled to vote in the
election, up to the number of directors to be elected.
4.6 Term of Office. Each director shall hold office for a one-year term until the next succeeding annual meeting, and thereafter until the director's successor is elected and qualified. If a director dies, resigns, or is removed, the director's replacement shall serve throughout the remaining portion of the director's term, and thereafter until the director's successor is elected and qualified.
4.7 Vacancy on Board of Directors. In case of a vacancy in the Board of Directors because of a director's resignation, removal or other departure from the board, or because of an increase in the number of directors, the remaining directors, by majority vote, may elect a successor to hold office for the unexpired term of the director whose position is vacant, and until the election and qualification of a successor.
4.8 Resignation. A director may resign at any time by delivering written notice to the Chairman, the President, the Secretary, or each member of the Board. A resignation shall take effect when notice is delivered, unless the notice specifies a later effective date. The corporation need not accept a resignation for the resignation to be effective. A resignation shall not affect the rights of the corporation under any contract with the resigning director.
4.9 Removal.
(a) Special Meeting. The shareholders may remove one or more
directors, with or without cause, only at a special meeting of shareholders
called expressly for that purpose. The notice of the meeting must state that the
purpose of the meeting is to remove one or more directors.
(b) Voting. The shareholders may remove a director by affirmative vote
of the holders of a majority of the shares entitled to vote on the election of
that director. A director may not be removed if votes sufficient to elect the
director are voted against the director's removal.
4.10 Meetings.
(a) Annual Meeting. The first meeting of each newly elected Board
shall be known as the annual Board meeting. The Board shall hold the annual
Board meeting, without notice, immediately after the annual shareholders'
meeting or after any special shareholders' meeting at which new directors are
elected. The Board shall hold the annual Board meeting at the same place as the
annual shareholders' meeting unless the Board specifies another place by
resolution.
(b) Regular Meetings. The Board may hold regular meetings at a place
and on a day and hour fixed by resolution of the Board.
(c) Special Meetings. The Chairman or any two directors may call a
special meeting of the Board. The Board shall hold the special meeting at the
place and on the day and hour specified by the persons calling the meeting.
(d) Adjourned Meetings. A majority of the directors present may vote
to adjourn any meeting to another time and place even if the number of directors
present or voting does not constitute a quorum. If the meeting is adjourned for
more than forty-eight (48) hours, the Secretary shall give notice of the time
and place of the adjourned meeting to the directors who were not present at the
time the meeting was adjourned.
4.11 Quorum and Voting of Directors.
(a) Majority Constitutes a Quorum. A majority of the directors shall
constitute a quorum for the transaction of business at a meeting, except as
provided in Section 4.7 and in Paragraph (b) below. The appropriate percentage
of the directors present at a meeting at which a quorum is present may take any
actions which the directors are authorized to take on behalf of the corporation.
(b) Action in Absence of a Quorum. The Board may continue to transact
business at a meeting at which a quorum was initially present. In order to take
any action at a meeting at which a quorum is no longer present, the action must
be approved by a sufficient percentage of the number of directors required to
establish a quorum.
(c) Dissent by Directors. A director may abstain or dissent from any
action taken. However, a director may not dissent or abstain if the director
voted in favor of the action taken. A director who is present at a meeting when
action is taken is deemed to have assented to the action taken unless:
(1) The director objects at the beginning of the meeting to
holding the meeting or to transacting business at the meeting;
(2) The director's dissent or abstention from the action taken is
entered in the minutes of the meeting; or
(3) The director delivers written notice of the director's
dissent or abstention to the chairman of the meeting before the Board adjourns
the meeting or to the corporation within a reasonable time after the Board
adjourns the meeting.
4.12 Attendance by Communications Equipment. The directors may participate in a meeting by means of any communications equipment which enables all persons participating in the meeting to hear each other simultaneously during the meeting. A director who participates by means of communications equipment is deemed to be present in person at the meeting.
4.13 Action by Directors without a Meeting. The Board may take any lawful action without a meeting if each director delivers a signed consent to the corporation which describes the action to be taken. An action approved by consent shall have the same effect as an action approved by unanimous vote at a meeting duly held upon proper notice, and may be described as such in any document. All consents shall be inserted into the minute books as if they were the minutes of a Board meeting. An action taken by consent by the Board shall be effective when the last director signs the consent, unless the consent specifies a later effective date.
4.14 Notice of Meeting.
(a) Regular Meetings. The Secretary may, but need not, issue notice
pursuant to Article IX of any regular Board meeting if the time and place of the
regular meeting has been fixed by resolution of the Board and a copy of the
resolution has been mailed or delivered to each director at least two (2) days
preceding the day of the first meeting held under that schedule.
(b) Special Meetings. The Secretary, or the person calling a special
Board meeting, shall issue notice pursuant to Article IX of the date, time, and
place of the meeting at least two (2) days preceding the day on which the
meeting is to be held. Any Board meeting shall be properly called if each
director either has received valid notice of the meeting, is present without
objecting, or waives notice of the meeting pursuant to Paragraph (c) below. The
notice of any regular or special meeting of the Board need not specify the
purpose of the meeting or the actions proposed for the meeting unless these
Bylaws so require.
(c) Waiver of Notice. A director may waive notice before or after the
date and time stated in the notice. A waiver shall be equivalent to receipt of
notice. A director may waive notice by submitting a written waiver, signed by
the director entitled to the notice, to the corporation for inclusion in the
minutes or filing with the corporate records. A director may also, by attending
or participating in a meeting, waive any required notice of the meeting unless
the director, at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or assent
to action taken at the meeting.
4.15 Chairman of the Meeting. The Chairman shall serve as the chairman of the meeting of all Board meetings. In the absence of the Chairman, the President or any other person appointed by the Board shall serve as the chairman of the meeting of a Board meeting.
4.16 Compensation. The Board shall fix the amount or salary to be paid to each director for service as a director or for attendance at each meeting of the Board. Salary or payment for service as a director shall not preclude a director from serving the corporation in any other capacity or from receiving compensation for service in that other capacity.
4.17 Liability for Unlawful Distributions.
(a) Director's Liability. A director who votes for or assents to an
unlawful distribution made in violation of Section 8.1 is personally liable to
the corporation for the amount of the distribution that exceeds what could have
been distributed without violating Section 8.1, if the director fails to perform
the director's duties in compliance with Section 4.3.
(b) Right to Contribution. A director held liable for an unlawful
distribution is entitled to contribution:
(1) From every other director who could be held liable for the
unlawful distribution; and
(2) From each shareholder for the amount the shareholder accepted
knowing the distribution was unlawful.
ARTICLE V
Conflicting Interest Transactions
5.1 Definitions. For purposes of this Article:
(a) "Conflicting interest" means the interest a director has respecting a transaction effected or proposed to be effected by the corporation or any other entity in which the corporation has a controlling interest if:
(1) The director knows at the time the corporation takes action
that the director or a related person is a party to the transaction or has a
significant beneficial financial interest in or so closely linked to the
transaction that a reasonable person would expect the interest to influence the
director's judgment, if the director were called upon to vote on the
transaction; or
(2) The transaction is brought before the Board for action, and
the director knows at the time the Board reviews the transaction that any of the
following persons is either a party to the transaction or has a significant
beneficial financial interest in or so closely linked to the transaction that a
reasonable person would expect the interest to influence the director's judgment
if the director were called upon to vote on the transaction:
(A) An entity of which the director is a director, general
partner, agent, or employee;
(B) An entity that controls, is controlled by, or is under
common control with one or more of the entities specified in (A); or
(C) An individual who is a general partner, principal, or
employer of the director.
(b) "Director's conflicting interest transaction" means a transaction
effected or proposed to be effected by the corporation or any other entity in
which the corporation has a controlling interest respecting which a director of
the corporation has a conflicting interest.
(c) "Qualified director" means any director who does not have either:
(1) A conflicting interest respecting the transaction; or
(2) A familial, financial, professional, or employment
relationship with a second director who does have a conflicting interest
respecting the transaction, which relationship would, in the circumstances,
reasonably be expected to exert an influence on the first director's judgment
when voting on the transaction.
(d) "Qualified shares" means any shares entitled to vote with respect
to the director's conflicting interest transaction except shares that, to the
knowledge, before the vote, of the Secretary, are beneficially owned, or the
voting of which is controlled, by a director who has a conflicting interest
respecting the transaction or by a related person of the director, or both.
(e) "Related person" of a director means:
(1) A child, grandchild, sibling, parent, or spouse of, or an
individual occupying the same household as, the director, or a trust or estate
of which any of the above individuals is a substantial beneficiary; or
(2) A trust, estate, incompetent, conservatee, or minor of which
the director is a fiduciary.
(f) "Required disclosure" means disclosure by the director who has a
conflicting interest of:
(1) The existence and nature of the director's conflicting
interest; and
(2) All facts known to the director respecting the subject matter
of the transaction that an ordinarily prudent person would reasonably believe to
be material to a judgment about whether or not to proceed with the transaction.
5.2 Directors' Action.
(a) Majority Vote. Director's action respecting a director's
conflicting interest transaction is effective, if the transaction received the
affirmative vote of a majority of (but no fewer than two) qualified directors
who voted on the transaction after either required disclosure to them or
compliance with Paragraph (b) below.
(b) Director's Disclosure. If a director has a conflicting interest
respecting a transaction, but neither the director nor a related person of the
director is a party to the transaction, and if the director has a duty under law
or professional canon, or a duty of confidentiality to another person, which
would prevent that director from making the disclosure described in Paragraph
5.1(f), then disclosure is sufficient if the director:
(1) Discloses to the directors voting on the transaction the
existence and nature of the director's conflicting interest and informs them of
the character and limitations imposed by that duty before their vote on the
transaction; and
(2) Plays no part, directly or indirectly in their deliberations
or vote.
(c) Quorum. A majority (but no fewer than two) of the qualified
directors constitutes a quorum for purposes of action that comply with this
Article. Directors' action that otherwise complies with this Article is not
affected by the presence or vote of a director who is not a qualified director.
5.3 Shareholders' Action.
(a) Majority Vote. Shareholders' action respecting a director's
conflicting interest transaction is effective if a majority of the votes
entitled to be cast by the holders of all qualified shares were cast in favor of
the transaction after:
(1) Notice to shareholders describing the director's conflicting
interest;
(2) Provision of the information referred to in Paragraph (c)
below; and
(3) Required disclosure to the shareholders who voted on the
transaction.
(b) Quorum. A majority of the votes entitled to be cast by the holders
of all qualified shares constitutes a quorum for purposes of action that
complies with this section. Subject to the provisions of Paragraph (c),
shareholders' action that otherwise complies with this section is not affected
by the presence or voting of shares that are not qualified shares.
(c) Director's Disclosure. A director, who has a conflicting interest
respecting the transaction shall, before the shareholders' vote, inform the
Secretary of the number, and the identity of persons holding or controlling the
vote of all shares that the director knows are beneficially owned or the voting
of which is controlled by the director or by a related person of the director.
ARTICLE VI
Indemnification
6.1 Indemnification Definitions. For purposes of this Article:
(a) "Corporation" includes any domestic or foreign predecessor entity
of a corporation in a merger or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
(b) "Director" means an individual who is or was a director of the
corporation or an individual who, while a director of the corporation, is or was
serving at the corporation's request as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise. A director is
considered to be serving an employee benefit plan at the corporation's request
if the director's duties to the corporation also impose duties on, or otherwise
involve services by, the director to the plan or to participants in or
beneficiaries of the plan. "Director" includes, unless the context requires
otherwise, the estate or personal representative of a director.
(c) "Expenses" include counsel fees.
(d) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan), or reasonable expenses incurred with respect to a proceeding.
(e) "Official capacity" means:
(1) When used with respect to a director, the office of director
in the corporation; and
(2) When used with respect to an individual other than a
director, as contemplated in Section 6.6, the office in the corporation held by
the officer or the employment or agency relationship undertaken by the employee
or agent on behalf of the corporation. "Official
capacity" does not include service for any other foreign or domestic corporation
or any partnership, joint venture, trust, employee benefit plan, or other
enterprise.
(f) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(g) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
and whether formal or informal.
6.2 Indemnification.
(a) Right to Indemnity. Except as provided in Paragraph (d), the corporation shall indemnity an individual made a party to a proceeding because the individual is or was a director against liability incurred in the proceeding if:
(1) The individual acted in good faith; and
(2) The individual reasonably believed:
(A) In the case of conduct in the individual's official
capacity with the corporation, that the individual's conduct was in its best
interests; and
(B) In all other cases, that the individual's conduct was at
least not opposed to its best interests; and
(3) In the case of any criminal proceeding, the individual had no
reasonable cause to believe the individual's conduct was unlawful.
(b) Conduct Concerning Employee Benefit Plans. A director's conduct
with respect to an employee benefit plan for a purpose the director reasonably
believed to be in the interests of the participants in and beneficiaries of the
plan is conduct that satisfies the requirement of subparagraph (a)(2)(B).
(c) Legal Proceedings. The termination of a proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contenders or its
equivalent is not, of itself, determinative that the director did not meet the
standard of conduct described in this section.
(d) Limits on Indemnity. The corporation shall not indemnity a
director under this section:
(1) In connection with a proceeding by or in the right of the
corporation in which the director is adjudged liable to the corporation; or
(2) In connection with any other proceeding charging improper
personal benefit to the director, whether or not involving action in the
director's official capacity, in which the director was adjudged liable on the
basis that personal benefit was improperly received by the director.
(e) Coverage of Reasonable Expenses. Indemnification provided under
this section in connection with a proceeding by, or in the right of the
corporation, is limited to reasonable expenses incurred in connection with the
proceeding.
6.3 Advances for Expenses.
(a) Advances. The corporation shall pay for or reimburse the
reasonable expenses incurred by a director who is a party to a proceeding in
advance of final disposition of the proceeding if:
(1) The director furnishes the corporation a written affirmation
of the director's good faith belief that the director has met the standard of
conduct described in Section 4.3; and
(2) The director furnishes the corporation a written undertaking,
executed personally, or on the director's behalf, to repay the advance if it is
ultimately determined that the director did not meet the standard of conduct.
(b) Director's Undertaking. The undertaking required by subparagraph
(a)(2) must be an unlimited general obligation of the director, but need not be
secured and may be accepted without reference to financial ability to make
repayment if the Board determines that the risk the advance will not be repaid
is reasonable under the circumstances. The provisions of Section 5.2 will apply
in making any such determination.
6.4 Determination and Authorization of Indemnification.
(a) Determination of Proper Conduct. The corporation shall not
indemnity a director under Section 6.2 unless authorized in the specific case
after a determination has been made that indemnification of the director is
permissible in the circumstances because the director has met the standard of
conduct set forth in Section 6.2.
(b) Board Determination. The determination shall be made:
(1) By the Board by majority vote of a quorum consisting of
directors not at the time parties to the proceeding;
(2) If a quorum cannot be obtained under subparagraph (1), by
majority vote of a Committee duly designated by the Board (in which designation
directors who are parties may participate), consisting solely of two or more
directors not at the time parties to the proceeding;
(3) By special legal counsel:
(A) Selected by the Board or its Committee in the manner
prescribed in subparagraph (1) or (2); or
(B) If a quorum of the Board cannot be obtained under
Subparagraph (1) and a Committee cannot be designated under Subparagraph (2),
selected by majority vote of the full Board (in which selection directors who
are parties may participate); or
(4) By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the proceeding may not be
voted on the determination.
(c) Authorization of Indemnification. Authorization of indemnification
and evaluation as to reasonableness of expenses shall be made in the same manner
as the determination that indemnification is permissible, except that if the
determination is made by special legal counsel, authorization of indemnification
and evaluation as to reasonableness of expenses shall be made by those entitled
under subparagraph (b)(3) to select counsel.
6.5 Shareholder Authorized Indemnification and Advancement of Expenses. If
authorized by the Articles of Incorporation, any Bylaw adopted or ratified by
the shareholders, or any resolution adopted or ratified, before or after the
event, by the shareholders, the corporation shall have power to make or agree to
indemnity a director made a party to a proceeding, or obligate itself to advance
or reimburse expenses incurred in a proceeding, without regard to the
limitations in Sections 6.2, 6.3 and 6.4; provided that no such indemnity shall
indemnity any director from or on account of.
(a) Acts or omissions of the director finally adjudged to be
intentional misconduct or a knowing violation of law;
(b) Conduct of the director finally adjudged to be in violation of
Section 4.17; or
(c) Any transaction with respect to which it is finally adjudged that
such director personally received a benefit in money, property, or services to
which the director was not legally entitled.
6.6 Indemnification of Officers, Employees, and Agents. The corporation shall indemnity and advance expenses under Sections 6.2 through 6.5 to an officer, employee, or agent of the corporation who is not a director to the same extent as to a director.
6.7 Insurance. The corporation may purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee, or agent of the corporation, or who, while a director, officer, employee, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise, against liability asserted against or incurred by the individual in that capacity or arising from the individual's status as a director, officer, employee, or agent, whether or not the corporation would have power to indemnity the individual against the same liability under Section 6.2.
6.8 Report to Shareholders. If the corporation indemnifies or advances expenses to a director under Section 6.2, 6.3, or 6.5 in connection with a proceeding by or in the right of the corporation, the corporation shall report the indemnification or advance in writing to the shareholders, with or before, the notice of the next shareholders' meeting.
ARTICLE VII
Officers
7.1 Officers and Their Duties. The following officers shall be elected annually and shall have the duties enumerated below:
(a) Chairman of the Board. The Chairman shall be a director and shall
perform the duties assigned to the Chairman by the Board. The Chairman shall
preside at all meetings of the shareholders and at all meetings of the Board.
The Chairman may sign deeds, mortgages, bonds, contracts, or other instruments,
unless these powers have been expressly delegated by the Board to some other
officer or agent of the corporation or are otherwise required by law to be
signed or executed by some other officer or in some other manner. If the
President dies or becomes unable to act, the Chairman shall perform the duties
of the President, except as may be limited by resolution of the Board.
(b) President.
(1) The President shall be the chief executive officer of the
corporation unless some other officer is so designated by the Board. The
President shall supervise and control the assets, business, and affairs of the
corporation. If no Chairman has been elected, the President shall be a director.
The President may sign certificates for shares of the corporation, deeds,
mortgages, bonds, contracts, or other instruments, unless these powers have been
expressly delegated by the Board to some other officer or agent of the
corporation. The President shall vote shares in other corporations which are
owned by the corporation, unless the Board prescribes
otherwise. The President shall perform all duties incident to the office of
president and any other duties which the Board may prescribe.
(2) The President may appoint one or more Assistant Secretaries
and Assistant Treasurers, as the President deems necessary.
(c) Vice Presidents. The Board may designate one or more Vice
Presidents or other officers and assistant officers as the Board determines is
necessary or advisable, or the Board may delegate that power to the President.
The Vice Presidents shall have the powers and perform the duties accorded to
them by the Board, the Articles, the Bylaws, or delegated to them by the
Chairman or the President. If no Chairman has been elected, in the absence or
disability of the President, the Vice President, designated by the Board, shall
perform the duties of the President. When so acting, the designated Vice
President shall have all the powers of, and be subject to the same restrictions
as is the President. However, a Vice President may not preside as the chairman
of a Board meeting unless that Vice President is also a director.
(d) Secretary.
(1) The Secretary shall:
(A) Prepare the minutes of meetings of the directors and of
the shareholders, keep the minutes in one or more books provided for that
purpose, and be responsible for authenticating the records of the corporation;
(B) Ensure that all notices are given in accordance with the
provisions of Sections 3.6, 4.14 and Article IX of these Bylaws and as required
by law;
(C) Serve as custodian of the corporate records and the
corporate seal, and ensure that the seal is affixed to all documents requiring
the corporation's seal, provided that the document has been duly authorized for
execution;
(D) Keep a register of the address of each shareholder,
director, and officer;
(E) Sign certificates representing the authorized shares of
the corporation;
(F) Maintain the stock transfer books of the corporation
pursuant to the provisions of Section 2.7;
(G) Appoint a registrar or transfer agent to oversee the
stock transfer books;
(H) When required by law or resolution of the Board, sign
the corporation's deeds, mortgages, bonds, contracts, or other instruments; and
(I) Perform all other duties incident to the office of
Secretary or assigned by the President or the Board.
(2) In the absence of the Secretary, an Assistant Secretary may
perform the duties of the Secretary.
(e) Treasurer.
(1) The Treasurer shall:
(A) Take custody of and account for all funds and securities
held by the corporation;
(B) Receive and give receipts for sums due to the
corporation, and deposit those sums in the name of the corporation in banks,
trust companies, or other depositories which the Board may select in accordance
with the provisions of these Bylaws; and
(C) Perform all other duties incident to the office of
treasurer or assigned to the Treasurer by the President or the Board.
(2) In the absence of the Treasurer, an Assistant Treasurer may
perform the duties of the Treasurer.
(f) Additional Duties; Other Officers and Agents. The Board may assign
any officer any additional title that the Board deems appropriate. The Board may
delegate to any officer or agent the power to appoint assistant officers or
agents and to prescribe the terms of office, authorities, and duties of such
assistant officers or agents.
(g) Authority to Enter Contracts and to Issue Checks and Drafts. The
Board may authorize any officer or agent of the corporation to enter into
contracts or to execute and deliver instruments in the name of and on behalf of
the corporation. The Board may grant either general or limited authority to its
officers and agents to make contracts or execute instruments. The Board shall
authorize certain officers or agents of the corporation to sign the
corporation's checks, drafts, or other orders for the payment of money, notes,
or other evidences of indebtedness issued in the name of the corporation.
7.2 Qualifications. None of the officers is required to be a director, except as specified in Section 7.1. The same person may hold two or more corporate offices, except that one person may not hold the offices of President and Secretary at the same time.
7.3 Standards of Conduct for Officers.
(a) Due Care and Loyalty. An officer with discretionary authority shall discharge the officer's duties under that authority:
(1) In good faith;
(2) With the care an ordinarily prudent person in a like position
would exercise under similar circumstances; and
(3) In a manner the officer reasonably believes to be in the best
interests of the corporation.
(b) Right to Rely on Experts. In performing the officer's duties, the
officer may rely on information, opinions, reports, or statements, including
financial statements and other financial data prepared or presented by:
(1) One or more officers or employees of the corporation whom the
officer reasonably believes to be reliable and competent in the matters
presented; or
(2) Legal counsel, public accountants, or other persons
concerning matters the officer reasonably believes to be within their
professional or expert competence.
(c) Failure to Act in Good Faith. An officer fails to act in good
faith if the officer relies on information provided by the above persons, even
though the officer has knowledge that makes reliance on the information
unwarranted.
7.4 Bonds. The Board may require any officer to post a bond to ensure that
the officer faithfully performs the duties of the office, and that in case of
the death, resignation, retirement or removal of the officer, the officer
returns all books, papers, vouchers, money and other property in the officer's
possession or under the officer's control which belongs to the corporation. The
bond shall be in the amount and with any sureties required by the Board.
7.5 Delegation. The Board may delegate the powers and duties of an officer
who is absent or unable to act to any officer, director, or other person.
7.6 Election and Term of Office. The Board shall elect the officers at the
annual Board meeting. If the Board fails to elect the officers at that meeting,
it shall convene a meeting to elect the officers as soon thereafter as possible.
Each officer shall hold office for a one-year term until the next succeeding
annual Board meeting, or until the officer's successor is elected and qualified,
unless the officer dies, resigns, or is removed.
7.7 Vacancies. The Board may fill a vacancy in any office created because of the death, resignation, removal, or disqualification of an officer, because of the creation of a new office, or for any other cause.
7.8 Resignation. An officer may resign at any time by delivering written notice to the Chairman, the President, any Vice President, the Secretary, or to each member of the Board. An officer's resignation shall take effect at the time specified in the notice or, if the time is not specified, when the notice is delivered. The corporation need not accept a resignation for the resignation to be effective. A resignation shall not affect the rights of the corporation under any contract with the resigning officer.
7.9 Removal. The Board may remove an officer or agent of the corporation, with or without cause, if the Board finds that the best interests of the corporation would be served by removing that officer or agent. The corporation's action to remove the officer or agent shall not affect the officer's contract rights against the corporation. Any officer or assistant officer, if appointed by another officer, may be removed by any officer authorized to appoint officers or assistant officers.
7.10 Compensation. The Board shall set the compensation for the officers and the other agents and employees of the corporation. The Board may delegate the authority to set the compensation of the officers, agents, and employees to the President. No officer may be prevented from receiving compensation as an officer solely because the officer is also a director of the corporation.
ARTICLE VIII
Dividends and Distributions
8.1 Distributions. The Board may authorize and the corporation may make
distributions of cash or other property in the form of a dividend or the
purchase, redemption, or other acquisition of the corporation's shares, unless
after making the distribution:
(a) The corporation would be unable to pay its debts as they become
due in the usual course of business; or
(b) The corporation's total assets would be less than the sum of its
total liabilities plus the amount needed, if the corporation were dissolved at
the time of distribution, to satisfy the preferential rights of shareholders
whose preferential rights are superior to the shareholders who receive the
distribution.
8.2 Measure of Effect of Distribution. For purposes of determining whether
a distribution may be authorized by the Board of Directors and paid by the
corporation under Section 8.1, the effect of distribution shall be measured as
follows:
(a) In the case of a distribution of indebtedness which requires the
corporation to make principal and interest payments only if those payments would
qualify as an allowable distribution under Section 8.1, each payment of
principal and interest must qualify as a separate distribution, the effect of
which shall be measured on the date the payment is actually made.
(b) In the case of a distribution made through the purchase,
redemption, or other acquisition of the corporation's shares, the effect of the
distribution shall be measured as of the earlier of:
(1) The date on which any money or other property is transferred
to the shareholders;
(2) The date on which any debt is incurred by the corporation; or
(3) The date on which the shareholder ceases to be a shareholder
with respect to the acquired shares.
(c) In the case of a distribution of indebtedness, other than that
described in Paragraph (a) above, the effect of the distribution shall be
measured as of the date the indebtedness is distributed.
(d) In any other case, the effect of the distribution shall be
measured either:
(1) As of the date on which the distribution is authorized, if
the corporation paid the distribution within one hundred twenty (120) days after
the date of authorization; or
(2) As of the date of payment, if such date occurs more than one
hundred twenty (120) days after the date of authorization.
8.3 Share Dividends.
(a) Issuance to All Shareholders. The corporation may issue a share
dividend by issuing shares pro rata and without consideration to all
shareholders or to the shareholders of one or more classes or series.
(b) Issuance to Class of Shareholders. Shares of one class or series
may not be issued as a share dividend in respect of shares of another class or
series unless:
(1) The Articles so authorize;
(2) A majority of the votes entitled to be cast by the class or
series to be issued approve the issue; or
(3) There are no outstanding shares of the class or series to be
issued.
8.4 Closure of the Stock Transfer Books. The Board may close the stock transfer books for a period of not more than seventy (70) days for the purpose of making a distribution.
8.5 Reserves. The corporation may, before making any distribution, set aside certain amounts to serve as a reserve fund to meet contingencies, or for any other purpose. Any funds not distributed by the corporation at the end of any fiscal year shall be deemed to have been thus set aside as a reserve until the Board otherwise disposes of the funds.
ARTICLE IX
Notices
9.1 Method of Notice.
(a) General. In general, notices called for under these Bylaws shall
be given in writing.
(b) Methods of Communication. Notice may be communicated in person; by
telephone, telegraph, teletype, or other form of wire or wireless communication;
or by mail or private carrier. If these forms of personal notice are
impracticable, notice may be communicated by a newspaper of general circulation
in the area where published; or by radio, television, or other form of public
broadcast communication.
(c) Effective Date of Notice to Shareholder. Written notice to a
shareholder, if in a comprehensible form, is effective when mailed, if mailed
with first-class postage prepaid and correctly addressed to the shareholder's
address shown in the corporation's current record of shareholders. The Secretary
may send notices to a shareholder by delivering or mailing the notice to
the shareholder's most recent address on file. Any notice sent to that address
shall be deemed sufficient if the shareholder fails to furnish a current address
to the Secretary.
(d) Notice to the Corporation. Written notice to the corporation may
be addressed to its registered agent at its registered office or to the
corporation at the address of its principal office as shown in the most recent
annual report.
(e) Effective Date of Notice to Other Parties. Except as provided
above, written notice to other parties shall be effective at the earliest of:
(1) The time of receipt;
(2) The date shown on the return receipt if sent by registered
mail; or
(3) Five (5) days after the notice was deposited in the U. S.
first class mail, postage prepaid.
9.2 Oral Notice. The persons convening any meeting of the Board or a Committee may give oral notice of the meeting, which may be communicated in person or by telephone, wire, or wireless communication. Oral notice is effective when communicated if the notice is communicated in a comprehensible manner. Oral notice may be communicated either to the director or to a person who the person giving the notice has reason to believe will promptly communicate the notice to the director.
9.3 Waiver of Notice. A shareholder or director may waive notice of any meeting by submitting a written signed waiver of notice either before or after the time for holding the meeting, or by attending the meeting in person or by proxy without objecting to a lack of notice.
ARTICLE X
Corporate Records
10.1 Maintenance of Corporate Records. The corporation shall keep the corporation's minute books and all other official records of all meetings at its registered office or principal place of business. The corporation shall keep all minutes and records in written form, or in a form which may be easily converted to written form. The corporation shall maintain in its records the following items:
(a) The Articles or restated Articles and all amendments to the
Articles;
(b) The current Bylaws or restated Bylaws and all amendments to the
Bylaws;
(c) The minutes of all shareholders', Board and Committee meetings and
records of all actions taken by the shareholders, the Board, or a Committee
without a meeting;
(d) All financial statements for the past three (3) years;
(e) All written communications made to the shareholders within the
last three (3) years;
(f) A register of names and business addresses of each shareholder,
director and officer;
(g) The last three (3) annual reports; and
(h) The stock transfer books of the corporation, as described in
Section 2.7.
10.2 Shareholder's Right to Inspect and Copy Records.
(a) Inspection of Corporate Records. A shareholder may inspect and
copy, during regular business hours at the corporation's principal office, any
of the records of the corporation described in Section 10.1 if the shareholder
gives the corporation written notice of the shareholder's demand at least (5)
five business days before the date on which the shareholder wishes to inspect
and copy the records.
(b) Inspection of Accounting and Shareholders' Records. A shareholder
may also inspect and copy the accounting records of the corporation and the
record of shareholders during regular business hours at a reasonable location
specified by the corporation, if the shareholder gives
the corporation written notice of the shareholder's demand at least five (5)
business days before the date on which the shareholder wishes to inspect and
copy the records and:
(1) The shareholder's demand is made in good faith and for a
proper purpose;
(2) The shareholder describes with reasonable particularity the
shareholder's purpose and the records the shareholder desires to inspect; and
(3) The records are directly connected with the shareholder's
purpose.
10.3 Scope of Inspection Right.
(a) Shareholder's Agent. A shareholder's agent or attorney has the
same inspection and copying rights as the shareholder.
(b) Copies. A shareholder may obtain copies of the corporation's
records made by photographic, xerographic, or other reasonable means, including
copies in electronic or other nonwritten form if the shareholder so requests.
(c) Charge for Copying. The corporation may charge the shareholder for
the reasonable costs of labor and materials used to produce copies of any
records provided to the shareholder. The charges may not exceed the estimated
cost of producing or reproducing the records.
(d) Record of Shareholders. The corporation may comply with a
shareholder's demand to inspect the record of shareholders by providing the
shareholder with a list of shareholders that was compiled no earlier than the
date of the shareholder's demand.
10.4 Annual Report. The corporation shall prepare and file an annual report
on the required form with the Secretary of State of Washington. The corporation
shall ensure that the information in the annual report is current as of the date
the corporation executes the annual report.
ARTICLE XI
Financial Matters
11.1 Books and Records of Account. The corporation shall maintain correct and complete books, financial statements, and records of account. The corporation shall keep its books and records of account and prepare its financial statements in accordance with generally accepted accounting principles, which shall be applied on a consistent basis from period to period. The books, records of account, and financial statements shall be in written form or in any other form capable of being converted into written form within a reasonable time.
11.2 Balance Sheet and Income Statement.
(a) Annual Balance Sheet and Income Statement. The corporation shall
prepare annually (1) a balance statement showing in reasonable detail the
financial condition of the corporation as of the close of its fiscal year and
(2) an income statement showing the results of the corporation's operations
during its fiscal year. The corporation shall prepare these statements not later
than four (4) months after the close of each fiscal year, and in any case before
the annual shareholders' meeting. These statements shall be prepared in
accordance with generally accepted accounting principles which shall be applied
on a consistent basis from period to period. The President, or the person who
prepared the financial statements, shall prepare a certificate to accompany the
annual financial reports attesting to the fact that the preparer used generally
accepted accounting principles in preparing the financial statements, and
describing any respects in which the statements were prepared on a basis of
accounting which was not consistent with statements prepared for the preceding
year.
(b) Copies to Shareholders. The corporation shall mail promptly, upon
written request, a copy of the most recent balance sheet and income statement to
any shareholder. The corporation shall also furnish, upon written request, a
statement of the sources and applications of the corporation's funds and a
statement of any changes in the shareholders' equity for the most recent fiscal
year, if such statements have been prepared for other purposes.
11.3 Deposits. The officers shall cause all funds of the corporation not otherwise employed to be deposited to the credit of the corporation in such banks, trust companies, or other depositories as the Treasurer may select.
11.4 Loans. The corporation may not borrow money or issue evidences of indebtedness unless the Board authorizes the action. The corporation shall make no loans which are secured by its own shares, except for indebtedness representing the unpaid purchase price of the corporation's shares.
11.5 Fiscal Year. The corporation shall use a calendar year fiscal year unless the Board expressly determines otherwise.
ARTICLE XII
Amendment of Articles and Bylaws
12.1 Amendment of Articles.
(a) By the Board. The Board may, by majority vote and without
shareholder action, amend the Articles:
(1) To delete the names and addresses of the initial directors,
the initial registered agent, and the registered office of the corporation;
(2) To change the corporate name;
(3) To change the number of authorized shares to effectuate a
stock split or stock dividend to be paid in the corporation's shares if, at the
time of the amendment, the corporation has only one class of shares outstanding;
or
(4) To make any other changes expressly permitted by law to be
made without shareholder action.
(b) By the Board and Shareholders. The Board may submit to the
shareholders for approval one or more proposed amendments to the Articles.
Following notice to all shareholders of a shareholders' meeting in accordance
with the provisions of Paragraph 3.6(c) and Article IX, the shareholders may
adopt the proposed amendment if a majority of the votes in each voting group
entitled to vote on each amendment approve. In the alternative, action may be
taken by shareholders without a meeting in accordance with the provisions of
Paragraph 3.15.
12.2 Amendment of Bylaws by the Shareholders. The shareholders may amend, alter, or repeal the Bylaws at any meeting of the shareholders, or by unanimous written consent. The shareholders may amend the Bylaws at a special shareholders' meeting only if a copy of the proposed amendments accompanies the notice of the meeting.
12.3 Amendment of Bylaws by the Board. The Board may amend, alter, or repeal the Bylaws by vote of a majority of the Board at any meeting of the Board, or by unanimous written consent of the Board. The Bylaws may be amended at a special meeting of the Board only if notice of the proposed amendment was contained in the notice of the meeting. The shareholders may repeal, by majority vote, any amendment to or alteration of the Bylaws adopted by the Board.
ARTICLE XIII
Corporate Seal
The Board of Directors may adopt a corporate seal in a form and with an inscription to be determined by the Board. The seal shall be in the form of a circle and shall contain the name of the corporation and the year of incorporation. The application of, or failure to apply the seal to any document or instrument, shall not affect the validity of the document or instrument.
ARTICLE XIV
Miscellany
14.1 Inspector of Elections. Before any annual meeting of shareholders, the Board may appoint an inspector of elections. If the Board does not appoint an inspector of elections, then the chairman of the meeting may appoint an inspector of elections to act at the meeting. If the person appointed as inspector of elections fails to act, the chairman of the meeting may appoint a person to act in the place of the appointed inspector of elections. The chairman of the meeting hall appoint an inspector of elections if requested to do so by any shareholder or shareholder's proxy.
14.2 Duties of Inspector of Elections. The inspector of elections shall:
(a) Determine the number of shares outstanding and the voting power of
each, the number of shares represented at the meeting, whether a quorum is
present, and, with the advice of legal counsel to the corporation, the
authenticity, validity, and effect of proxies;
(b) Receive votes, ballots, or consents;
(c) Hear and determine all challenges and questions in any way arising
in connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine the result of any vote; and
(f) Do any other acts that may be necessary to conduct the election or
vote with fairness to all shareholders.
14.3 Rules of Order.
(a) Robert's Rules Govern. The rules contained in the most recent
edition of Robert's Rules of Order, Revised, shall govern all meetings of
shareholders and directors where those rules do not conflict with the Articles
or the Bylaws.
(b) Chairman of Meeting. The chairman of the meeting shall have
absolute authority over matters of procedure. There shall be no appeal from a
procedural ruling by the chairman of the meeting. The chairman of the meeting
may dispense with the rules of parliamentary procedure for any meeting or any
part of a meeting. The chairman shall clearly state the rules under which any
meeting or part of a meeting will be conducted.
(c) Adjournment Due to Disorder. If disorder should arise which
prevents continuation of the legitimate business of any meeting, the chairman of
the meeting may adjourn the meeting. Any meeting so adjourned may be reconvened
in accordance with Sections 3.3 and 4. 10 of these Bylaws.
(d) Removal of Persons Not Shareholders. The chairman may require
anyone who is not a bona fide shareholder of record or the proxy of a
shareholder of record to leave any shareholders' meeting.
(e) Matters the Proper Subject of Action. The shareholders may
consider and vote on a resolution or motion at a shareholders' meeting only if:
(1) The resolution or motion was proposed by a shareholder or the
duly authorized proxy of a shareholder; and
(2) The resolution or motion was seconded by an individual who is
a shareholder or the duly authorized proxy of a shareholder other than the
person who proposed the resolution or motion.
14.4 Number and Gender. When required by the context:
(a) The word "it" will include the plural and the word "its" will
include the singular;
(b) The masculine will include the feminine gender and the neuter, and
vice versa; and
(c) The word "person" will include corporation, firm, partnership or
any other form of association.
14.5 Severability. If any provision of these Bylaws or any application of
any provision is found to be unenforceable, the remainder of the Bylaws shall be
unaffected. If the provision is found to be unenforceable when applied to
particular persons or circumstances, the application of the provision to other
persons or circumstances shall be unaffected.
ARTICLE XV
Authentication
The foregoing Bylaws were read, approved, and duly adopted by the Board on the 12th day of October, 2000. The President and Secretary were empowered to authenticate these Bylaws by their signatures below.
/s/ John Coghlan, President ATTEST: /s/ Bred Herr, Secretary |
Exhibit 21
SUBSIDIARIES OF TEMPORARY FINANCIAL SERVICES, INC.
The Company has one wholly owned subsidiary, Temps Unlimited, Inc., and Temps Unlimited, Inc. has two wholly owned Limited Liability Companies, Temps Unlimited of Minnisota, LLC and Temps Unlimited of Nebraska, LLC.
Exhibit 23
Consent of Independent Accountants
Board of Directors
Temporary Financial Services, Inc. and Subsidiary
We hereby consent to the use in this Registration Statement on Form SB-2 of our report, dated February 15, 2001, relating to the consolidated financial statements of Temporary Financial Services, Inc. and Subsidiary. We also consent to the reference to our Firm under the captions "Experts" in the Prospectus.
/s/ LeMASTER & DANIELS PLLC Certified Public Accountants Spokane, Washington April 23, 2001 |