UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
The Engraving Masters, Inc.
(Name of Small Business Issuer in its charter)
Nevada
20-5543728
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
3717 W. Woodside
Spokane, WA
99208
(Address of principal executive offices)
(Zip Code)
Issuer’s telephone number:
(509) 599-2728
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered
Name of each exchange on which each class is to be registered
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
TABLE OF CONTENTS
2
Business Development and Summary
The Engraving Masters, Inc. was organized by the filing of articles of incorporation with the Secretary of State of the State of Nevada on September 11, 2006. We are authorized to issue up to 200,000,000 shares of no par value common stock. To date, we have issued an aggregate of 7,630,000 shares of our common stock to 26 shareholders of record. We have had limited operations and are considered a development stage company. Since our inception through September 30, 2007, we did not generate any revenues and incurred a net loss of $6,232. Since our formation, our operations have been devoted primarily to startup and development activities.
In January 2007, we entered into a Procurement Agreement with The Engravers, Inc., an engraving company founded in 1982 in Spokane, Washington, which is owned and operated by the family of our officers and directors. This Agreement provides us with access to the inventory, engraving equipment and facilities and expertise of The Engravers. We will not maintain any inventory. All items that will be listed on our proposed website will be acquired from the inventory of The Engravers, and are expected to be available on a just-in-time basis. When we receive an order, an order for the merchandise and engraving services will be placed concurrently with The Engravers, who will fulfill the order with their saleable inventory and engraved by their engraving equipment and personnel. We will not hire any engraving employees and will not own any capital equipment. Pursuant to the Procurement Agreement, all products purchased from The Engravers will be acquired at the wholesale cost of the item, calculated as the cost of the inventory, engraving costs, freight in and freight out.
We have never been party to any bankruptcy, receivership or similar proceeding, nor have we undergone any material reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business.
Business of Issuer
Principal Products and Principal Markets
We are an online retailer of engraved products and awards, consisting of trophies, plaques, medals, statuettes and other recognition awards capable of being engraved with various congratulatory or personal phrases, for the purpose of recognizing achievements in sports, academics or other celebrations. We have reserved the domain www.TheEngravingMasters.com, which will serve as our base of operations and the sole method through which sales will be initiated and realized. Currently, the site is in development and has not been published. Once the website is enabled as a sales channel, it will be expected to serve as our sole method of generating sales. Resultantly, until the website is published, we will be unable to begin to generate revenues.
Our management believes that the best method for us to compete with online companies is to access the inventory and facilities of an established brick and mortar partner. Resultantly, we have entered into a Procurement Agreement with The Engravers, a related-party engraving company founded in 1982 and serving the Spokane, Washington region, whereby we will not incur the significant inventory and overhead investments that many of our competitors do. We will not carry any inventory of our own, nor will we own any engraving equipment or supplies.
Once we establish our website, customers will be able to view a selection of products available for sale. Customers will also be able to consider engraving options, such as font styles and sizes. Upon receiving an order online, we will confirm the accuracy of the order with the customer, then notify The Engravers of the items to be removed from The Engravers’ inventory and the engraving work to be done. We will maintain no inventory and will outsource all engraving work to The Engravers. We will rely solely upon The Engravers for all inventory and engraving services; thus we will maintain no inventory and will not own any engraving machinery or equipment.
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Distribution Methods of the Products
We expect to use general parcel and postal services as our distribution methods to fulfill customer orders. Such services include, without limitation, United Parcel Service, DHL, Federal Express and the United States Postal Service.
Industry background and competition
The market for engraving services and recognition awards in the United States is highly competitive and severely fragmented. Our management believes there are moderate barriers to entry, including relatively high start-up costs for engraving equipment and inventory. In the Spokane, Washington area, there are approximately three engraving companies, including The Engraver, with which we have a Procurement Agreement, listed in the Yellow Pages, all of which have only a local or regional presence. To our knowledge, Things Remembered is the largest engraving company with a nationally recognized brand and physical presence. There are also a number of regional engraving companies supplementing their business via the Internet. A simple web search retrieves approximately 854,000 references for the phrase “engraving companies.”
Our management believes that most of our competitors are larger and have greater financial, technical, marketing and other resources, significantly greater name recognition and more traffic to their web sites. Competition depends to a large extent on clients' perception of the quality of the award products and engraving services we provide in comparison to those of our competitors. To the extent we lose clients to our competitors because of dissatisfaction with our products and services, or if our reputation is adversely impacted for any other reason, our ability to attract customers, and there for our ability to generate revenues, will be reduced.
Principal suppliers
We will not directly procure any raw materials, nor will we produce or engrave any of the products we intend to sell. In accordance with our Procurement Agreement, all orders we receive will be fulfilled by The Engravers from start to finish. We will not maintain any inventory and we will not perform any engraving services. As a result, The Engravers are our sole method of completing customer orders. We have no alternate supply sources. Our business would be seriously harmed if our relationship with The Engravers were terminated or if we were unable to obtain sufficient quantities of merchandise on acceptable terms from The Engravers. Additionally, we may be unable to establish alternative sources of supply to ensure delivery of merchandise in a timely and efficient manner or on terms acceptable to us. If we cannot obtain and stock our products at acceptable prices and on a timely basis, we may lose potential sales.
Need for any government approval of principal products or services
We are not aware of any need for us to obtain government approval for the products we plan to sell.
Employees
We presently have no employees. Instead, we presently rely on the efforts of David Uddman and Jolene Uddman, our executive officers. We believe that our operations are currently on a small scale that is manageable by these individuals on a part-time basis.
Reports to Security Holders
(1)
We will furnish shareholders with annual financial reports certified by our independent registered public accountants.
(2)
We intend to become a reporting issuer with the Securities and Exchange Commission. We will file annual reports on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended as required to maintain the fully reporting status.
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(3)
You may read and copy any materials The Engraving Masters will file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site (http://www.sec.gov).
Management’s Discussion and Analysis or Plan of Operation
Management’s Discussion
We were incorporated in the State of Nevada on September 11, 2006. We are a startup company with limited operations and no contract employees. In our initial operating period from inception to September 30, 2007, we did not generate any revenues, while incurring a cumulative net loss of $6,232 for the period. The cumulative net loss was attributable to general and administrative expenses related to the costs of start-up operations and depreciation expense.
Since our inception, our efforts have focused primarily on the development and implementation of our business plan, which include the following activities:
1.
Formation of the company and obtaining start-up capital;
2.
Obtaining capital through sales of our common stock;
3.
Developing our corporate hierarchy, including naming directors to our board, appointing our executive officers and setting forth a business plan;
4.
Entering a Procurement Agreement with a supplier; and
5.
Reserving a domain name at http://www.theengravingmasters.com.
We are an early stage company with limited operations. In our initial operating period from inception to September 30, 2007, we generated no revenues, while incurring $6,232 in expenses incurred in pursuit of our business objectives. This resulted in a cumulative net loss of $6,232 for the period, which was attributable to general and administrative expenses related to the costs of start-up operations. Our start-up costs from inception to September 30, 2007 include the following:
Account
Amount
General and administrative:
(office supplies, utilities, bank
service fees, office expenses, etc.)
$ 5,182
Accounting fees
$ 1,050
No development related expenses have been or will be paid to our affiliates.
Our independent auditors have expressed substantial doubt about our ability to continue as a going concern in the independent auditors’ report to the financial statements included in this registration statement. If our business fails, our investors may face a complete loss of their investment.
At the time of incorporation, we had limited to no operations and no funds with which to finance our operations. In consideration of this dilemma, our former sole officer and director sought investment from third-parties. As a result, since our incorporation, we have raised capital through private sales of our common equity, as follows:
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1.
On October 5, 2006, we issued 6,000,000 shares of our common stock to David Uddman, an officer and director, in exchange for cash in the amount of $10,000.
2.
In October 2007, we sold an aggregate of 1,630,000 shares of our common stock in an offering made under Regulation D, Rule 504 to 25 individuals, for cash in the amount of $32,600. Prior to, and up to the time of this offering, our operations were minimal and limited to forming our corporate identity, obtaining seed capital through sales of our equity, establishing our corporate hierarchy and began pursuit of our primary business plan.
Generating sales in the next six to 12 months is important to support our business. Unfortunately, we cannot guarantee that we will generate such growth. As of September 30, 2007, we had $3,993 of cash on hand, which we believe is not sufficient to continue our operations for the next at least 12 months. Subsequent to that date, we completed an offering of our common stock, whereby we raised gross proceeds of $32,600. Our management believes these funds are sufficient to implement our planned strategies and establish a base of operations over the next 12 months. However, if our expenses are greater than anticipated and we do not generate sufficient cash flow to support our operations over the next nine to 12 months, we may need to raise further capital by issuing capital stock or debt securities in exchange for cash in order to continue as a going concern. There are no formal or informal agreements to attain such financing. We can not assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms. Without realization of additional capital, it would be unlikely for us to continue as a going concern.
Our sole officer and director does not expect to incur research and development costs.
We do not have any off-balance sheet arrangements.
We currently do not own any significant plant or equipment that we would seek to sell in the near future.
We do not anticipate the need to hire additional full- or part- time employees over the next 12 months, as the services provided by our officers and directors appears sufficient at this time. We believe that our operations are currently on a small scale that is manageable by these two individuals.
We have not paid for expenses on behalf of any of our directors. Additionally, we believe that this fact shall not materially change.
Plan of Operation
As of September 30, 2007, we had only $3,993 of cash on hand. In an effort to obtain additional working capital, in October 2007, we completed an offering of our equity securities, whereby we sold an aggregate of 1,630,000 shares of our common equity for total gross cash proceeds of $32,600. We believe that these funds will be sufficient to satisfy our start-up and operating requirements for the next 12 months. The table below sets forth the anticipated use of funds for the elements of our business plan that constitute top priorities and the amount expended as of September 30, 2007:
|
Amount |
Amount |
Estimated |
|
|
Allocated |
Expended |
Completion |
|
|
Accounting fees |
$8,000 |
$ 0 |
Quarterly |
|
Advertising and marketing |
$6,000 |
$ 0 |
May 2008 |
|
Legal and professional fees |
$3,000 |
$ 0 |
Use as needed |
|
Office equipment |
$4,000 |
$ 0 |
Use as needed |
|
Office supplies |
$1,500 |
$ 0 |
Ongoing |
|
Website development and maintenance |
$4,000 |
$ 0 |
February 2008 |
|
Working capital |
$6,100 |
$ 0 |
Ongoing |
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As of the date of this registration statement we are a development stage company with no revenues and a limited operational history. Our business goal is to become an online retailer of personalized engraving services. We have not yet published our web page, and therefore do not have any revenue generating capabilities at this time. Our management has identified two key operational objectives as critical success factors in order for us to continue as a realize revenues in an effort to become a going concern:
1.
Establish our Internet presence: We intend to operate solely as an online company. All sales are expected to be realized through our proposed web site. Without an Internet presence, we will be unable to generate any revenues. Therefore, we believe that developing a website is imperative in executing our proposed business. We have reserved the domain name www.TheEngravingMasters.com. The site is not currently operations and we are working to develop content for the web site. We have budgeted approximately $4,000 toward establishing a working version of our website during the first quarter of 2008. Our management expects to refine and improve the site as our capital permits and our operations warrant.
2.
Develop and implement an Internet marketing strategy: Within three months after publishing out Internet site, our management plans to develop and implement a promotional strategy to generate awareness of our brand and proposed products, as well as drive traffic to our proposed web site. Our current plan is to utilize search engine placement and keyword submission optimization services to increase the visibility of our website. Our management estimates our budget for these advertising methods is approximately $500 per month, over the twelve months following implementation. However, we continuously assess new marketing strategies; thus, we cannot predict whether the actual marketing and advertising efforts we implement will remain in its current form or not. To date, we have not developed or implemented any marketing strategy.
In addition, we expect to incur approximately $11,000 in accounting, legal and professional expenses related to being a public reporting company over the next 12 months. Although our officers and directors have no specific experience managing a public company, we believe these funds will be sufficient to maintain our status as a reporting company with the SEC. Our officers and directors recognize that we are required to continuously file reports with the SEC and any exchange we may be listed on, and understand the resultant increased costs of being a public reporting company.
We cannot predict the stability of current or projected overhead or that we will generate sufficient revenues to maintain our operations without the need for additional capital. If we do not generate sufficient cash flow to support our operations over the next 12 months, or if our overhead increases substantially, we may need to raise additional capital by issuing capital stock in exchange for cash in order to continue as a going concern. There are no formal or informal agreements to attain such financing. We can not assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms. Without realization of additional capital, it would be unlikely for us to continue as a going concern.
As of the date of the registration statement, we have no plans to perform any product research and development in the near term. There are no expected purchases of plant or significant equipment. Also, there are no plans to hire additional personnel in the near term.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
We use office space at 3717 W. Woodside, Spokane, Washington 99208. Our officers, David and Jolene Uddman, provide the office space at no charge to us. We believe that this arrangement is suitable given that our current operations are primarily administrative.
We believe that we will not need to lease additional administrative offices for at least the next 12 months. There are currently no proposed programs for the renovation, improvement or development of the facilities we currently use.
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Security Ownership of Certain Beneficial Owners and Management
Security ownership of certain beneficial owners and management
The following table sets forth certain information as of the date of this registration statement with respect to the beneficial ownership of our common stock by any person (including any "group") who is known to us to be the beneficial owner of more than five percent of any class of our voting securities:
|
Title Of
|
Name, Title and Address of Beneficial Owner of Shares (1) |
Amount of
|
Percent of
|
|
Common |
David Uddman, President and Director |
6,000,000 |
78.64% |
|
All Directors and Officers as a group (1 person) |
6,000,000 |
78.64% |
Notes:
(1) The address of each executive officer and director is c/o The Engraving Masters, Inc., 3717 W. Woodside, Spokane, WA 99208.
(2) As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or share investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of a security).
Directors and Executive Officers, Promoters and Control Persons
The following sets forth certain information with respect to executive officers, directors, key employees and advisors of The Engraving Masters, Inc. as of the date of this Registration statement:
|
Name |
Position |
Period of Service (1) |
|
David A. Uddman (2) |
President and Director |
September 2007 - 2008 |
|
Jolene M. Uddman (2) |
Secretary, Treasurer and Director |
September 2007 - 2008 |
Notes:
(1) Our directors will hold office until the next annual meeting of the stockholders, which shall be held in September of 2008, and until successors have been elected and qualified. Our officers were appointed by our directors and will hold office until he or she resigns or is removed from office.
(2) Both Mr. Uddman and Mrs. Uddman have obligations to entities other than The Engraving Masters, Inc. We plan to rely exclusively on the services of both Mr. and Mrs. Uddman to set up our business operations. Mr. and Mrs. Uddman currently work for us on a part-time basis and expect to devote approximately 10-20 hours per week to our business. Both Mr. and Mrs. Uddman are prepared to dedicate additional time to our operations, as needed. There are no other full- or part-time employees.
David A. Uddman, President, Chief Executive Officer and Director: David Uddman has been a laser, computer, and pantograph engraver for approximately 25 years. He specializes in corporate awards and plaques, as well as nametags and trophies and is proficient in working with many varied engraving mediums. Mr. Uddman is also proficient in many engraving software programs, including E-Machine and Coral Draw. From 1982 to the present, Mr. Uddman has been employed as an engraving specialist at his family’s business, The Engraver, Inc.
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Jolene M. Uddman, Secretary, Treasurer and Director: From 2003 to the present, Jolene Uddman was employed by the Make-A-Wish Foundation, providing office support and managing volunteer files. Mrs. Uddman has also been employed by the family engraving business, The Engraver, Inc., where she was the office manger. Her responsibilities included maintaining accounts payable and receivable, preparing weekly payroll and monthly payroll taxes, managing customer accounts, and assisting with customer orders. From 1985 to 1988, Mrs. Uddman attended Spokane Community College in Spokane, Washington in pursuit of an Associates Degree as an Executive Secretary. From 1988 to 1989, she attended Trend College in Spokane, Washington, where she studied Computerized Information Processing.
Family Relationships
David Uddman and Jolene Uddman are married.
Executive Compensation
|
Summary Compensation Table |
||||||||
|
Annual Compensation |
Long-Term Compensation |
|||||||
|
Name and
|
Year |
Salary
|
Bonus
|
Other
|
Restricted
|
Securities
|
LTIP
|
All
|
|
David Uddman |
2007 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
President |
2006 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
Jolene Uddma |
2007 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
|
Secretary, Treasurer |
2006 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
Directors’ Compensation
We have no formal or informal arrangements or agreements to compensate our directors for services they provide as directors of our company.
Employment Contracts and Officers’ Compensation
Since our incorporation on September 11, 2006, no compensation has been paid to our officers. We do not have employment agreements with any of our officers, directors of employees. Any future compensation to be paid to these individuals will be determined by the Board of Directors, and employment agreements will be executed. We do not currently have plans to pay any compensation to our officers or directors until such time as our cash flow is positive.
Stock Option Plan and Other Long-term Incentive Plan
We currently do not have existing or proposed option/SAR grants.
Certain Relationships and Related Transactions
On October 5, 2006, we issued 6,000,000 shares of our $0.001 par value common stock as founders’ shares to David Uddman, our President and a director, in exchange for cash in the amount of $10,000.
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We use office space at 3717 W. Woodside, Spokane, Washington 99208. Mr. and Mrs. Uddman, our directors and officers, are providing the office space at no charge to us. We believe that this arrangement is suitable given that our current operations are primarily administrative.
On January 12, 2007, we entered into a Procurement Agreement with The Engravers, Inc., an engraving company in Spokane, Washington owned and operated by the family of our officers and directors. Through the Agreement, we will have access to the inventory and engraving equipment owned by The Engravers. In accordance with the Agreement, all items and services sold via our proposed website will be acquired and provided by The Engravers. We will not hire any engraving employees and will not own any capital equipment. Pursuant to the Procurement Agreement, all products purchased from The Engravers will be acquired at the wholesale cost of the item, calculated as the cost of the inventory, engraving costs, freight in and freight out.
Our authorized capital stock consists of 200,000,000 shares of common stock, par value $0.001 per share. As of September 30, 2007, we had 7,630,000 shares of common stock outstanding. The following summary discusses all of the material terms of the provisions of our common stock as set forth in our "Articles of Incorporation" and bylaws.
Common Stock
As a holder of our common stock:
1.
You have equal rights to dividends from funds legally available, ratably, when as and if declared by our Board of Directors;
2.
You are entitled to share, ratably, in all of our assets available for distribution upon liquidation, dissolution, or winding up of our business affairs;
3.
You do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions applicable;
4.
You are entitled to 1 vote per share of common stock you own, on all matters that stockholders may vote, and at all meetings of shareholders; and
5.
Additionally, there is no cumulative voting for the election of directors.
Anti-Takeover Provisions
Our charter and by-laws allow us to authorize the creation and issuance of preferred or common stock with designations and rights that our Board of Directors may determine at their discretion to create voting impediments or to frustrate persons seeking to effect a merger or to otherwise gain control of our company.
Additionally, the anti-takeover provisions of Sections 78.411 through 78.445 of the Nevada Revised Statutes apply to The Engraving Masters. The Nevada law prohibits us from merging with or selling our company or more than 5% of our assets or stock to any shareholder who owns or owned more than 10% of any stock or any entity related to a 10% shareholder for three years after the date on which the shareholder acquired our shares, unless the transaction is approved by our Board of Directors. The provisions also prohibit us from completing any of the transactions described in the preceding sentence with a 10% shareholder who has held the shares more than three years and its related entities unless the transaction is approved by our Board of Directors or a majority of our shares, other than shares owned by that 10% shareholder or any related entity. These provisions could delay, defer or prevent a change in control of our company. Our articles and by-laws do not contain similar provisions.
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Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
Market Information
There is no established public trading market for our securities and a regular trading market may not develop, or if developed, may not be sustained. A shareholder in all likelihood, therefore, will not be able to resell his or her securities should he or she desire to do so when eligible for public resale. Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops. We have no plans, proposals, arrangements or understandings with any person with regard to the development of a trading market in any of our securities.
Shares Available Under Rule 144
There are currently 6,000,000 shares of common stock that are considered restricted securities under Rule 144 of the Securities Act of 1933. All 6,000,000 shares are held by David Uddman, an affiliates, as that term is defined in Rule 144(a)(1). In general, under Rule 144 as amended, a person who has beneficially owned and held “restricted” securities for at least one year, including “affiliates,” may sell publicly without registration under the Securities Act, within any three-month period, assuming compliance with other provisions of the Rule, a number of shares that do not exceed the greater of (i) one percent of the common stock then outstanding or, (ii) the average weekly trading volume in the common stock during the four calendar weeks preceding such sale. A person who is not deemed an “affiliate” of our Company and who has beneficially owned shares for at least two years would be entitled to unlimited resale of such restricted securities under Rule 144 without regard to the volume and other limitations described above.
At the present time, the resale or transfer of the restricted shares of Common Stock are permissible in limited quantities pursuant to Rule 144(e)(1) with notification compliant with Rule 144(h).
Our sole officer and director, possessing approximately 79% of our voting common stock, controls significantly all of our activities and thus, may affect the determination of whether dividends are paid on to our stockholders.
Holders
As of the date of this prospectus, we have 7,630,000 shares of $0.001 par value common stock issued and outstanding held by 26 shareholders of record. Our transfer agent is Holladay Stock Transfer, Inc., 2939 North 67 th Place, Scottsdale, AZ 85251, phone (480) 481-3940.
Dividends
We have never declared or paid any cash dividends on our common stock. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on its common stock. Any future determination to pay dividends will be at the discretion of our sole director and will be dependent upon then existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects, and other factors that the board of directors considers relevant.
Securities authorized for issuance under equity compensation plans
As of the date of this registration statement, there are no securities authorized for issuance by us under equity compensation plans.
No director, officer, significant employee, or consultant of The Engraving Masters has been convicted in a criminal proceeding, exclusive of traffic violations.
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No director, officer, significant employee, or consultant of The Engraving Masters has been permanently or temporarily enjoined, barred, suspended, or otherwise limited from involvement in any type of business, securities or banking activities.
No director, officer, significant employee, or consultant of The Engraving Masters has been convicted of violating a federal or state securities or commodities law.
We are not a party to any pending legal proceedings.
Changes in and Disagreements with Accountants
There have been no changes in or disagreements with The Engraving Masters’ accountants.
Recent Sales of Unregistered Securities
Sales conducted under an exemption from registration provided under Section 4(2)
On October 5, 2006, we issued 6,000,000 shares of our common stock to David Uddman, an officer and director, as founders’ shares in exchange for cash in the amount of $10,000. We believe that this transaction is exempt from the registration provisions of Section 5 of the Securities Act as such exemption is provided under Section 4(2) because:
1.
This issuances did not involve underwriters, underwriting discounts or commissions;
2.
Restrictive legends were placed on all certificates issued;
3.
The distribution did not involve general solicitation or advertising; and
The distributions were made only to insiders, accredited investors or investors who were sophisticated enough to evaluate the risks of the investment. Mr. Uddman was given access to all information about our business and the opportunity to ask questions and receive answers about our business prior to making any investment decision.
On the basis of the above facts we claim that the issuances of a total of 6,000,000 shares of its Common Stock in October 2006 qualified for the exemption from registration contained in Section 4(2) of the Securities Act of 1933.
Sales conducted under Regulation D
In October 2007, we completed an offering of shares common stock in accordance with Regulation D, Rule 504 of the Securities Act, registered by qualification in the State of Nevada, whereby we sold 1,630,000 shares of common stock, par value, at a price of $0.05 per share to 25 non-affiliated investors. All investors were, at the time of purchase, residents of the State of Nevada.
This offering was made in reliance upon an exemption from the registration provisions of the Securities Act of 1933, as amended, in accordance with Regulation D, Rule 504 of the Act. In addition, this offering was underwritten on a best efforts basis. In regards to the offering closed in October 2007, listed below are the factual circumstances which support the availability of Rule 504:
1.
At the time of the offering, we were not subject to the reporting requirements of section 13 or section 15(d) of the Exchange Act. Further, we are not now, nor were we at the time of the offering, considered to be an investment company. Finally, since inception, we have pursued a specific business plan, and continue to do so.
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2.
We were issued a permit to sell securities by the State of Nevada, pursuant to our application for registration by qualification of offering of our common stock in that state. The application for registration by qualification was filed pursuant to the provisions of NRS 90.490, which requires the public filing and delivery to investors of a substantive disclosure document before sale. In October 2007, we completed an offering of shares of common stock pursuant to Regulation D, Rule 504 of the Securities Act of 1933, as amended, and the registration by qualification of said offering in the State of Nevada, whereby we sold 1,630,000 shares of our common stock to a total of 25 shareholders. One of these purchasers is our sole officer and director, although at the time of purchase, he was not. The entire offering was conducted exclusively in the State of Nevada, pursuant to the permit issued by the State of Nevada.
3.
The aggregate offering price for the offering closed in October 2007 was $32,600, all of which was collected from the offering.
Indemnification of Directors and Officers
Pursuant to the provisions of NRS 78.751, we shall indemnify our directors, officers and employees as follows: Every director, officer, or employee of The Engraving Masters shall be indemnified by us against all expenses and liabilities, including counsel fees, reasonably incurred by or imposed upon him/her in connection with any proceeding to which he/she may be made a party, or in which he/she may become involved, by reason of being or having been a director, officer, employee or agent of The Engraving Masters or is or was serving at the request of The Engraving Masters as a director, officer, employee or agent of The Engraving Masters, partnership, joint venture, trust or enterprise, or any settlement thereof, whether or not he/she is a director, officer, employee or agent at the time such expenses are incurred, except in such cases wherein the director, officer, employee or agent is adjudged guilty of willful misfeasance or malfeasance in the performance of his/her duties; provided that in the event of a settlement the indemnification herein shall apply only when the Board of Directors approves such settlement and reimbursement as being for the best interests of The Engraving Masters. The Engraving Masters shall provide to any person who is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of The Engraving Masters as a director, officer, employee or agent of the corporation, partnership, joint venture, trust or enterprise, the indemnity against expenses of a suit, litigation or other proceedings which is specifically permissible under applicable law.
The Articles of Incorporation of the Company provide for every person who was or is a party to, or is threatened to be made a party to, or is involved in any such action, suit or proceeding, whether civil, criminal, administrative or investigative, by the reason of the fact that he or she, or a person with whom he or she is a legal representative, is or was a director of the corporation, or who is serving at the request of the corporation as a director or officer of another corporation, or is a representative in a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the laws of the State of Nevada from time to time against all expenses, liability and loss (including attorneys’ fees, judgments, fines, and amounts paid or to be paid in a settlement) reasonably incurred or suffered by him or her in connection therewith. Such right of indemnification shall not be exclusive of any other right of such directors, officers or representatives may have or hereafter acquire, and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of stockholders, provision of law, or otherwise, as well as their rights under this article.
The Bylaws of the Company provide for indemnification of its directors, officers and employees against all expenses and liabilities as a result of any suit, litigation or other proceedings for damages. We have further 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 is asserted by an affiliate or our company in connection with the securities being registered, we will submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
13
The Engraving Masters, Inc.
(A Development Stage Company)
Condensed Balance Sheet
as of
September 30, 2007
and
Condensed Statements of Operations
and
Cash Flows
for the three and nine months ended
September 30, 2007 and 2006
and
for the Period
September 11, 2006 (Date of Inception)
through
September 30, 2007
14
The Engraving Masters, Inc.
(a Development Stage Company)
Condensed Balance Sheet
|
September 30, |
|
|
2007 |
|
|
Assets |
|
|
Current assets: |
|
|
Cash |
$3,993 |
|
Loan to related party |
50 |
|
Total current assets |
4,043 |
|
$4,043 |
|
|
Liabilities and Stockholders' Equity |
|
|
Stockholders' equity: |
|
|
Common stock, $0.001 par value, 200,000,000 shares |
|
|
authorized, 6,000,000 shares issued and |
6,000 |
|
Additional paid-in capital |
4,275 |
|
(Deficit) accumulated during development stage |
(6,232) |
|
4,043 |
|
|
$4,043 |
The accompanying notes are an integral part of these financial statements.
FS1
15
The Engraving Masters, Inc.
(a Development Stage Company)
Condensed Statements of Operations
|
Three Months Ended |
Nine Months Ended |
September 11, 2006 |
|||
|
September 30, |
September 30, |
(Inception) to |
|||
|
2007 |
2006 |
2007 |
2006 |
September 30, 2007 |
|
|
Revenue |
$- |
$- |
$- |
$- |
$- |
|
Expenses: |
|||||
|
General and administrative expenses |
347 |
206 |
2,770 |
206 |
6,232 |
|
Total expenses |
347 |
206 |
2,770 |
206 |
6,232 |
|
(Loss) from continuing operations before income taxes |
(347) |
(206) |
(2,770) |
(206) |
(6,232) |
|
Provision for income taxes |
- |
- |
- |
- |
- |
|
Net (loss) |
$(347) |
$(206) |
$(2,770) |
$(206) |
$(6,232) |
|
Weighted average number of |
|||||
|
common shares outstanding - basic and fully diluted |
6,000,000 |
- |
6,000,000 |
- |
|
|
Net (loss) per share - basic and fully diluted |
$(0.00) |
$(0.00) |
$(0.00) |
$(0.00) |
|
The accompanying notes are an integral part of these financial statements.
FS2
16
The Engraving Masters, Inc.
(a Development Stage Company)
Condensed Statements of Cash Flows
|
For the nine months ended |
September 11, 2006 |
||
|
September 30, |
(inception) to |
||
|
2007 |
2006 |
2007 |
|
|
Cash flows from operating activities |
|||
|
Net (loss) |
$ (2,770) |
$ (206) |
$ (6,232) |
|
Changes in operating assets and liabilities: |
|||
|
Increase in accounts payable |
- |
31 |
- |
|
(Increase) in loans to related party |
(50) |
- |
(50) |
|
Net cash (used) by operating activities |
(2,820) |
(175) |
(6,282) |
|
Cash flows from financing activities |
|||
|
Donated capital |
- |
275 |
275 |
|
Issuances of common stock |
- |
- |
10,000 |
|
Net cash provided by financing activities |
- |
275 |
10,275 |
|
Net increase in cash |
(2,820) |
100 |
3,993 |
|
Cash - beginning |
6,813 |
- |
- |
|
Cash - ending |
$ 3,993 |
$ 100 |
$ 3,993 |
|
Supplemental disclosures: |
|||
|
Interest paid |
$ - |
$ - |
$ - |
|
Income taxes paid |
$ - |
$ - |
$ - |
The accompanying notes are an integral part of these financial statements.
FS3
17
The Engraving Masters, Inc.
(a Development Stage Company)
Notes to Condensed Financial Statements
Note 1 - Basis of presentation
The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these consolidated interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2006 and notes thereto included in the Company's 10-SB registration statement. The Company follows the same accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual results.
Note 2 - History and organization of the company
The Company was organized September 11, 2006 (Date of Inception) under the laws of the State of Nevada, as The Engraving Masters, Inc. The Company is authorized to issue up to 200,000,000 shares of its common stock with a par value of $0.001 per share.
The business of the Company is to sell engraved awards and collectibles via the Internet. The Company has limited operations and in accordance with Statement of Financial Accounting Standards No. 7 (SFAS #7), “Accounting and Reporting by Development Stage Enterprises,” the Company is considered a development stage company.
Note 3 - Going concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company had a net loss of $6,232 and had no sales for the period from September 11, 2006 (inception) to September 30, 2007. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its new business opportunities. Management has plans to seek capital through a public offering of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty.
FS4
18
The Engraving Masters, Inc.
(a Development Stage Company)
Notes to Condensed Financial Statements
Note 4 - Stockholders’ equity
The Company is authorized to issue 200,000,000 shares of its $0.001 par value common stock.
On September 14, 2006, the sole officer and director of the Company paid for expenses on behalf of the Company in the amount of $175. The entire amount was donated, is not expected to be repaid and is considered to be additional paid-in capital.
On September 25, 2006, the sole officer and director of the Company donated cash in the amount of $100. The entire amount is considered to be additional paid-in capital.
On October 5, the Company issued 6,000,000 shares of its no par value common stock as founders’ shares to an officer and director in exchange for cash in the amount of $10,000.
As of September 30, 2007, there have been no other issuances of common stock.
Note 5 - Warrants and options
As of September 30, 2007, there were no warrants or options outstanding to acquire any additional shares of common stock.
Note 6 - Related party transactions
In September 2006, an officer, director and shareholder of the Company paid for incorporation expenses on behalf of the Company in the amount $175. The full amount has been donated and is not expected to be repaid and is thus categorized as additional paid-in capital.
Also in September 2006, an officer, director and shareholder of the Company donated cash in the amount of $100 to the Company. The full amount has been donated and is not expected to be repaid and is thus categorized as additional paid-in capital.
In September 2007, the Company loaned an officer, director and shareholder of the Company $50. This loan to a related party bears no interest and is due upon demand.
The Company does not lease or rent any property. Office services are provided without charge by an officer and director of the Company. Such costs are immaterial to the financial statements and, accordingly, have not been reflected therein. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.
FS5
19
|
Exhibit
|
Name and/or Identification of Exhibit |
|
3 |
Articles of Incorporation & By-Laws |
|
a. Articles of Incorporation of the Company filed September 11, 2006 |
|
|
b. By-Laws of the Company adopted September 14, 2006 |
|
|
10 |
Material Contracts |
|
a. Procurement Agreement |
20
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
|
THE ENGRAVING MASTERS, INC. |
|||
|
(Registrant) |
|||
|
Date: |
November 20, 2007 |
By: |
/s/ David Uddman |
|
(Signature) |
|||
|
David Uddman, President |
|||
|
(Name and Title) |
21
ARTICLES OF
INCORPORATION OF
THE ENGRAVING MASTERS, INC.
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, has this day voluntarily executed these Articles of Incorporation for the purpose of forming a corporation under the laws of the state of Nevada, and to that end, I do hereby certify:
ARTICLE 1
NAME
The complete name of this corporation shall be
THE ENGRAVING MASTERS, INC.
ARTICLE II
REGISTERED AGENT AND PRINCIPAL OFFICE
The registered agent and principal office the corporation, in the state of Nevada, shall be as follows:
The registered agent in charge thereof is
Savoy Financial Group, Inc
, located at
6767 W. Tropicana Ave., Suite 207,
in the City of
Las Vegas
,
Nevada, 89103,
County of
Clark.
ARTICLE III
DURATION
The duration of this corporation shall be perpetual.
ARTICLE IV
PURPOSES
The purpose for which this corporation is organized are as follows: To engage in any lawful act or activity for which a corporation may be organized under the general corporation laws of Nevada. Including but not limited to the following:
a)
Shall have such rights, privileges and powers as may be conferred upon corporations by any existing law.
b)
May at any time exercise such rights, privileges
and powers, when not inconsistent with the purposes and objects for which this corporation is organized.
c)
Shall have power to have succession by its corporate name for the period limited in its certificate or articles of incorporation, and when no period is limited, perpetually, or until dissolved and its affairs wound up according to law.
d)
Shall have power to sue and be sued in any court of law or equity.
e)
Shall have power to make contracts.
f)
Shall have power to hold, purchase and
convey real and
personal estate and to mortgage or lease any such: real and personal estate with its franchises. The power to hold real and personal estate shall include the power to take the same by devise or bequest in the State of Nevada, or in any other state, territory or country.
g)
Shall have power to appoint such officers and agents, as the affairs of the corporation shall require, and to allow them suitable compensation.
1
h)
Shall have power to make By-Laws not inconsistent with the constitution or laws of the United States, or of the State of Nevada, for the management, regulation and government of its affairs and property, the transfer of its stock, the transaction of its business, and the calling and holding of meetings of its stockholders.
i)
Shall have power to wind up and dissolve itself, or be wound up or dissolved.
j)
Shall have power to adopt and use a common seal or stamp, and alter the same at pleasure. The use of a seal or stamp by the corporation on any corporate documents is not necessary. The corporation may use a seal or stamp, if it desires, but such use or non-use shall not in any way affect the legality of the document.
k)
Shall have power to borrow money and contract debts when necessary for the transaction of its business, or for the exercise of its corporate rights, privileges or franchises, or for any other lawful purpose of its incorporation; to issue bonds, promissory notes, bills of exchange, debentures, and other obligations and evidences of indebtedness, payable at a specified time or times, or payable upon the happening of a specified event or events, whether secured by mortgage, pledge or otherwise, or unsecured, for money borrowed, or in payment for property purchased, or acquired, or for any other lawful object.
l)
Shall have power to guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of the shares of the capital stock of, or any bonds, securities or evidences of the indebtedness created by, any other corporation or corporations of the State of Nevada, or any other state or government, and, while owners of such stock, bonds, securities or evidences of indebtedness, to exercise all the rights, powers and privileges of ownership, including the right to vote, if any.
m)
Shall have power to purchase, hold, sell and transfer shares of its own capital stock, and use therefor its capital, capital surplus, surplus, or other property or fund.
n)
Shall have power to hold meetings and keep the books, documents and papers outside of the State of Nevada at such places as may be from time to time designated by the Bylaws or by resolution of the directors except as other wise required by the laws of Nevada. To conduct business, have one or more offices, and hold, purchase, mortgage and convey real and personal property in the State of Nevada, and in any of the several states, territories, possessions and dependencies of the United States, the District of Columbia, and any foreign countries.
o)
Shall have power to do all and everything necessary and proper for the accomplishments of the objects enumerated in its certificate or articles of incorporation, or any amendment thereof, or necessary or incidental to the protection and benefit of the corporation and, in general, to carry on any lawful business necessary or incidental to the attainment of the objects of the corporation, whether or not such business is similar in nature to the objects set forth in
the certificate or articles of incorporation of the corporation, or any amendment thereof.
p)
Shall have power to make donations for the public welfare or for charitable, scientific or educational purposes.
q)
Shall have power to enter into partnerships, general or limited, or joint ventures, in connection with any lawful activities, as may be allowed by law.
2
ARTICLE V
SHARES
This corporation is authorized to issue two classes of capital stock to be designated;
a)
"Common Stock." The total number of shares of common stock which this Corporation is authorized to issue is One Hundred Million (100,000,000) shares of Common Stock having a par value of $0.001 each share. The holders of the Common Stock shall have one (1) vote per share on each matter submitted to a vote of shareholders. Each share shall be entitled to the same dividend and liquidation rights. The capital stock of this corporation, after the amount of the subscription price has been paid in, shall never be assessable, or assessed to pay debts of this corporation.
b)
"Preferred Stock." The total number of shares of preferred stock which this Corporation is authorized to issue is One Hundred Million (100,000,000) shares of Preferred Stock having a par value of $0.001 each share. The Preferrred Stock, or any series thereof, shall have such designations, preferences and relative, participating optional or other special rights and qualifications, limitations or restrictions thereof as shall be expressed in the resolution or resolutions providing for the issue of such stock adopted by the board of directors amd may be dependent upon facts ascertainable outside such resolution or resolutions of the board of directors, provided that the manner in which such facts shall operate upon such designations, preferences, rights and qualifications; limitations or restrictions of such class or series of stock is clearly and expressly set forth in the resolution or resolutions providing for the issuance of such stock by the board of directors.
ARTICLE VI
PREEMPTIVE RIGHTS
No preemptive rights, as that term is defined under NRS 78.265, shall exist with respect to shares of stock or securities convertible into shares of stock of this corporation.
ARTICLE VII
CUMULATIVE VOTING
The shareholders of this corporation shall not be entitled to cumulative voting at the election of any directors.
ARTICLE VIII
DIRECTORS
The members of the governing board of this Corporation shall be styled directors and the number thereof at the inception, of this Corporation, shall be one (1). The director(s) need not be shareholders of this Corporation, nor residents of the State of Nevada. The number of directors may from time to time be increased or decreased in such manner as shall be provided for by the bylaws of the Corporation. The name and post office address of the person who is to serve as the initial director until the first annual meeting of the shareholders of the corporation, or until her successors are duly elected and qualified is as follows:
3
Name
Address
David Alan Uddman
3717 W. Woodside
Spokane, WA 99208
ARTICLE IX
CONTRACTS IN WHICH DIRECTORS HAVE AN INTEREST
Any contract or other transaction between this corporation and one or more of its directors, or between this corporation and any corporation, firm, association, or other entity, of which one or more of this corporation's directors are shareholders, members, directors, officers or employees or in which they are interested, shall be valid for all purposes, notwithstanding the presence of such director or directors at the meeting of the Board of Directors which acts upon or in reference to such contract or transaction and notwithstanding the participation of such director or directors in such actions, by voting or otherwise, even though the presence or vote, or both, of such director or directors might have been necessary to obligate this corporation upon such contract or transaction; provided, that the fact of such interest shall be disclosed to or known by the directors acting on such, contract or transaction.
ARTICLE X
INDEMNIFICATION
1.
A director of this 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 (i) for acts or omissions that involve intentional misconduct by the director or a knowing violation of law by the director, (ii) for conduct violating the Nevada Revised Statutes, or (iii) for 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 Nevada Revised Statutes are amended in the future to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of this corporation shall be eliminated or limited to the full extent permitted by the Nevada Revised Statutes, as so amended, without any requirement of further action by the shareholders.
2.
The corporation shall indemnify any individual made a party to a proceeding because that individual is or was a director of the corporation and shall advance or reimburse the reasonable expenses incurred by the individual in advance of final disposition of the proceeding, without regard to the limitations in Nevada Revised Statute 78.7502, or any other limitation which may hereafter be enacted, to the extent such limitation may be disregarded if authorized by the Articles of Incorporation, to the full extent and under all circumstances permitted by applicable law.
3.
Any repeal or modification of this Article by the shareholders of this corporation shall not adversely affect any right or any individual who is or was a director of the corporation which existed at the time of such repeal or modification.
ARTICLE XI
RIGHT TO AMEND ARTICLES OF INCORPORATION
This corporation reserves the right to amend or repeal any of the provisions contained in its Articles of Incorporation in any manner now or hereafter permitted by law, and the rights of the shareholders of this corporation are granted subject to this reservation.
4
The Board of Directors shall have the power to adopt, amend, or repeal the bylaws of this corporation, subject to the power of the shareholders to amend or repeal such bylaws. The shareholders shall also have the power to adopt, amend or repeal the bylaws of this corporation.
ARTICLE XIII
INCORPORATOR
The name and address of the incorporator signing these articles of incorporation was as follows:
|
Name |
Address |
|
David Alan Uddman |
3717 W. Woodside
|
IN WITNESS WHEREOF, I the undersigned being the sole incorporator hereinbefore named for the purpose of forming a Corporation pursuant to the General Corporation law of the State of Nevada, do make and file these Articles of Incorporation, hereby certifying that the facts herein stated are true, and I have accordingly hereunto set my hand this 5th day of September, 2006.
/s/ David A. Uddman
David Alan Uddman
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT
BY RESIDENT AGENT
I, Savoy Financial Group, Inc. hereby accept appointment as Resident Agent of THE ENGRAVING MASTERS, INC. the previously named Corporation. Paul W. Andre, President, Savoy Financial Group, Inc. hereby signs on behalf of Savoy Financial Group, Inc.
/s/ Paul Andre President September 5, 2006
Signature Title Date
On behalf of SAVOY FINANCIAL GROUP, INC.
5
BY-LAWS OF
THE ENGRAVING MASTERS, INC.
ARTICLE I
OFFICES
Section 1.
PRINCIPAL OFFICE.
The principal office for the transaction of business of the corporation shall be fixed or may be changed by approval of a majority of the authorized Directors, and additional offices may be established and maintained at such other place or places as the Board of Directors may from time to time designate.
Section 2.
OTHER OFFICES.
Branch or subordinate offices may at any time be established by the Board of Directors at any place or places where the corporation is qualified to do business.
ARTICLE II
DIRECTORS - MANAGEMENT
Section 1.
RESPONSIBILITY OF BOARD OF DIRECTORS.
Subject to the provisions of applicable law and to any limitations in the Articles of Incorporation of the corporation relating to action required to be approved by the Shareholders, or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors. The Board may delegate the management of the day-to-day operation of the business of the corporation to an executive committee or others, provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board.
Section 2.
STANDARD OF CARE.
Each Director shall perform the duties of a Director, including the duties as a member of any committee of the Board upon which the Director may serve, in good faith, in a manner such Director believes to be in the best interests of the corporation, and with such care, including reasonable inquiry, as an ordinary prudent person in a like position would use under similar circumstances.
Section 3.
NUMBER AND QUALIFICATION OF DIRECTORS.
The authorized number of Directors shall be one (1) until changed by a duly adopted amendment to the Articles of Incorporation or by an amendment to this by-law adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote.
Section 4.
ELECTION AND TERM OF OFFICE OF DIRECTORS.
Directors shall be elected at each annual meeting of the Shareholders to hold office until the next annual meeting. Each Director, including a Director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified.
1
Section 5.
VACANCIES.
Vacancies in the Board of Directors may be filled by a majority of the remaining Directors, though less than a quorum, or by a sole remaining Director, except that a vacancy created by the removal of a Director by the vote or written consent of the Shareholders or by court order may be filled only by the vote of a majority of the shares entitled to vote represented at a duly held meeting at which a quorum is present, or by the written consent of holders of a majority of the outstanding shares entitled to vote. Each Director so elected shall hold office until the next annual meeting of the Shareholders and until a successor has been elected and qualified. A vacancy or vacancies in the Board of Directors shall be deemed to exist in the event of the death, resignation, or removal of any Director, or if the Board of Directors by resolution declares vacant the office of a Director who has been declared of unsound mind by an order of court or convicted of a felony, or if the authorized number of Directors is increased, or if the Shareholders fail, at any meeting of Shareholders at which any Director or Directors are elected, to elect the number of Directors to be voted for at that meeting. The Shareholders may elect a Director or Directors at any time to fill any vacancy or vacancies not filled by the Directors, but any such election by written consent shall require the consent of a majority of the outstanding shares entitled to vote. Any Director may resign effective on giving written notice to the Chairman of the Board, the President, the Secretary, or the Board of Directors, unless the notice specifies a later time for that resignation to become effective. If the resignation of a Director is effective at a future time, the Board of Directors may elect a successor to take office when the resignation becomes effective. No reduction of the authorized number of Directors shall have the effect of removing any Director before that Directors’ term of office expires.
Section 6.
REMOVAL OF DIRECTORS.
Subject to applicable law, the entire Board of Directors or any individual Director may be removed from office. In such case, the remaining Board members may elect a successor Director to fill such vacancy for the remaining unexpired term of the Director so removed.
Section 7.
NOTICE, PLACE AND MANNER OF MEETINGS.
Meetings of the Board of Directors may be called by the Chairman of the Board, or the President, or any Vice President, or the Secretary, or any two (2) Directors, or by one (1) Director if only one is provided, and shall be held at the principal executive office of the corporation, unless some other place is designated in the notice of the meeting. Members of the Board may participate in a meeting through use of a conference telephone or similar communications equipment so long as all members participating in such a meeting can hear one another. Accurate minutes of any meeting of the Board or any committee thereof, shall be maintained by the Secretary or other Officer designated for that purpose.
Section 8.
ORGANIZATIONAL MEETINGS.
The organizational meetings of the Board of Directors shall be held immediately following the adjournment of the Annual Meetings of the Shareholders.
Section 9.
OTHER REGULAR MEETINGS.
Regular meetings of the Board of Directors shall be held at the corporate offices, or such other place as may be designated by the Board of Directors, as follows: Time of Regular Meeting: 9:00 A.M. Date of Regular Meeting: Last Friday of every month If said day shall fall upon a holiday, such meetings shall be held on the next succeeding business day thereafter. No notice need be given of such regular meetings.
2
Section 10.
SPECIAL MEETINGS - NOTICES - WAIVERS.
Special meetings of the Board may be called at any time by the President or, if he or she is absent or unable or refuses to act, by any Vice President or the Secretary or by any two (2) Directors, or by one (1) Director if only one is provided. At least forty-eight (48) hours notice of the time and place of special meetings shall be delivered personally to the Directors or personally communicated to them by a corporate Officer by telephone or telegraph. If the notice is sent to a Director by letter, it shall be addressed to him or her at his or her address as it is shown upon the records of the corporation, or if it is not so shown on such records or if not readily ascertainable, at the place in which the meetings of the Directors are regularly held. In case such notice is mailed, it shall be deposited in the United States mail, postage prepaid, in the place in which the principal executive officer of the corporation is located at least four (4) days prior to the time of the holding of the meeting. Such mailing, telegraphing, telephoning or delivery as above provided shall be due, legal and personal notice to such Director. When all of the Directors are present at any Directors’ meeting, however, called or noticed, and either (i) sign a written consent thereto on the records of such meeting, or, (ii) if a majority of the Directors is present and if those not present sign 3. 4 a waiver of notice of such meeting or a consent to holding the meeting or an approval of the minute thereof, whether prior to or after the holding of such meeting, which said waiver, consent or approval shall be filed with the Secretary of the corporation, or, (iii) if a Director attends a meeting without notice but without protesting, prior thereto or at its commencement, the lack of notice, then the transactions thereof are as valid as if had at a meeting regularly called and noticed.
Section 11.
DIRECTORS’ ACTION BY UNANIMOUS WRITTEN CONSENT.
Any action required or permitted to be taken by the Board of Directors may be taken without a meeting and with the same force and effect as if taken by a unanimous vote of Directors, if authorized by a writing signed individually or collectively by all members of the Board. Such consent shall be filed with the regular minutes of the Board.
Section 12.
QUORUM.
A majority of the number of Directors as fixed by the Articles of Incorporation or By-Laws shall be necessary to constitute a quorum for the transaction of business, and the action of a majority of the Directors present at any meeting at which there is a quorum, when duly assembled, is valid as a corporate act; provided that a minority of the Directors, in the absence of a quorum, may adjourn from time to time, but may not transact any business. A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of Directors, if any action taken is approved by a majority of the required quorum for such meeting.
Section 13.
NOTICE OF ADJOURNMENT.
Notice of the time and place of holding an adjourned meeting need not be given to absent Directors if the time and place be fixed at the meeting adjourned and held within twenty-four (24) hours, but if adjourned more than twenty-four (24) hours, notice shall be given to all Directors not present at the time of the adjournment.
Section 14.
COMPENSATION OF DIRECTORS.
Directors, as such, shall not receive any stated salary for their services, but by resolution of the Board a fixed sum and expense of attendance, if any, may be allowed for attendance at each regular and special meeting of the Board; provided that nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity and receiving compensation therefor.
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Section 15.
COMMITTEES.
Committees of the Board may be appointed by resolution passed by a majority of the whole Board. Committees shall be composed of two (2) or more members of the Board and shall have such powers of the Board as may be expressly delegated to it by resolution of the Board of Directors, except those powers expressly made non-delegable by applicable law.
Section 16.
ADVISORY DIRECTORS.
The Board of Directors from time to time may elect one or more persons to be Advisory Directors who shall not by such appointment be members of the Board of Directors. Advisory Directors shall be available from time to 4. 5 time to perform special assignments specified by the President, to attend meetings of the Board of Directors upon invitation and to furnish consultation to the Board. The period during which the title shall be held may be prescribed by the Board of Directors. If no period is prescribed, the title shall be held at the pleasure of the Board.
Section 17.
RESIGNATIONS.
Any Director may resign effective upon giving written notice to the Chairman of the Board, the President, the Secretary or the Board of Directors of the Corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective.
ARTICLE III OFFICERS
Section 1.
OFFICERS.
The Officers of the corporation shall be a President, a Secretary, and a Chief Financial Officer. The corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries, or one or more Assistant Treasurers, and such other Officers as may be appointed in accordance with the provisions of Section 3 of this Article. Any number of offices may be held by the same person.
Section 2.
ELECTION.
The Officers of the corporation, except such Officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article, shall be chosen annually by the Board of Directors, and each shall hold office until he or she shall resign or shall be removed or otherwise disqualified to serve or a successor shall be elected and qualified.
Section 3.
SUBORDINATE OFFICERS, ETC.
The Board of Directors may appoint such other Officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided by the By-Laws or as the Board of Directors may from time to time determine.
Section 4.
REMOVAL AND RESIGNATION OF OFFICERS.
Subject to the rights, if any, of any Officer under any contract of employment, any Officer may be removed, either with or without cause, by the Board of Directors, at any regular or special meeting of the Board, or except in case of an Officer chosen by the Board of Directors by any Officer upon whom such power of removal may be conferred by the Board of Directors. Any Officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that 5. 6 notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the Officer is a party.
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Section 5.
VACANCIES.
A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filed in the manner prescribed in the By-Laws for regular appointment to that office.
Section 6.
CHAIRMAN OF THE BOARD.
The Chairman of the Board, if such an officer be elected, shall, if present, preside at meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned by the Board of Directors or prescribed by the By-Laws. If there is no President, the Chairman of the Board shall in addition be the Chief Executive Officer of the corporation and shall have the powers and duties prescribed in Section 7 of this Article.
Section 7.
PRESIDENT/CHIEF EXECUTIVE OFFICER.
Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an Officer, the President shall be the Chief Executive Officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and Officers of the corporation. He or she shall preside at all meetings of the Shareholders and in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board of Directors. The President shall be ex officio a member of all the standing committees, including the Executive Committee, if any, and shall have the general powers and duties of management usually vested in the office of President of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or the By-Laws.
Section 8.
VICE PRESIDENT.
In the absence or disability of the President, the Vice Presidents, if any, in order of their rank as fixed by the Board of Directors, or if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to, all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the By-Laws.
Section 9.
SECRETARY.
The Secretary shall keep, or cause to be kept, a book of minutes at the principal office or such other place as the Board of Directors may order, of all meetings of Directors and Shareholders, with the time and place of holding, whether regular or special, and if special, how authorized, the notice thereof given, the names of those present at Directors’ meetings, the number of shares present or represented at Shareholders’ meetings and the proceedings thereof. 6. 7 The Secretary shall keep, or cause to be kept, at the principal office or at the office of the corporation’s transfer agent, a share register, or duplicate share register showing the names of the Shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given, notice of all the meetings of the Shareholders and of the Board of Directors required by the By-Laws or by law to be given. He or she shall keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the By-Laws.
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Section 10.
CHIEF FINANCIAL OFFICER.
The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained in accordance with generally accepted accounting principles, adequate and correct accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, earnings (or surplus) and shares. The books of accounts shall at all reasonable times be open to inspection by any Director. This Officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the Board of Directors. He or she shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the President and Directors, whenever they request it, an account of all of his or her transactions and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or the By-Laws.
ARTICLE IV SHAREHOLDERS’ MEETINGS
Section 1.
PLACE OF MEETINGS.
All meetings of the Shareholders shall be held at the principal executive office of the corporation unless some other appropriate and convenient location be designated for that purpose from time to time by the Board of Directors.
Section 2.
ANNUAL MEETINGS.
The annual meetings of the Shareholders shall be held, each year, at the time and on the day following: Time of Meeting: 10:00 A.M. Date of Meeting: September 11. If this day shall be a legal holiday, then the meeting shall be held on the next succeeding business day, at the same hour. At the annual meeting, the Shareholders shall elect a Board of Directors, consider reports of the affairs of the corporation and transact such other business as may be properly brought before the meeting.
Section 3.
SPECIAL MEETINGS.
Special meetings of the Shareholders may be called at any time by the Board of Directors, the Chairman of the Board, the President, a Vice President, the Secretary, or by one or more Shareholders holding not less than one-tenth (1/10) of the voting power of the corporation. Except as next provided, notice shall be given as for the annual meeting. Upon receipt of a written request addressed to the Chairman, President, Vice President, or Secretary, mailed or delivered personally to such Officer by any person (other than the Board) entitled to call a special meeting of Shareholders, such Officer shall cause notice to be given, to the Shareholders entitled to vote, that a meeting will be held at a time requested by the person or persons calling the meeting, not less than thirty-five (35) nor more than sixty (60) days after the receipt of such request. If such notice is not given within twenty (20) days after receipt of such request, the persons calling the meeting may give notice thereof in the same manner provided by these By-Laws.
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Section 4.
NOTICE OF MEETINGS - REPORTS.
Notice of meetings, annual or special, shall be given in writing not less than ten (10) nor more than sixty (60) days before the date of the meeting to Shareholders entitled to vote thereat. Such notice shall be given by the Secretary or the Assistant Secretary, or if there be no such Officer, or in the case of his or her neglect or refusal, by any Director or Shareholder. Such notices or any reports shall be given personally or by mail and shall be sent to the Shareholder’s address appearing on the books of the corporation, or supplied by him or her to the corporation for the purpose of the notice. Notice of any meeting of Shareholders shall specify the place, the day and the hour of meeting, and (1) in case of a special meeting, the general nature of the business to be transacted and no other business may be transacted, or (2) in the case of an annual meeting, those matters which Board at date of mailing, intends to present for action by the Shareholders. At any meetings where Directors are to be elected notice shall include the names of the nominees, if any, intended at date of notice to be presented by management for election. If a Shareholder supplies no address, notice shall be deemed to have been given if mailed to the place where the principal executive office of the corporation is situated, or published at least once in some newspaper of general circulation in the County of said principal office. Notice shall be deemed given at the time it is delivered personally or deposited in the mail or sent by other means of 8. 9 written communication. The Officer giving such notice or report shall prepare and file an affidavit or declaration thereof. When a meeting is adjourned for forty-five (45) days or more, notice of the adjourned meeting shall be given as in case of an original meeting. Save, as aforesaid, it shall not be necessary to give any notice of adjournment or of the business to be transacted at an adjourned meeting other than by announcement at the meeting at which said adjournment is taken.
Section 5.
WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS.
The transactions of any meeting of Shareholders, however called and notice, shall be valid as through had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the Shareholders entitled to vote, not present in person or by proxy, sign a written waiver of notice, or a consent to the holding of such meeting or an approval shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance shall constitute a waiver of notice, unless objection shall be made as provided in applicable law.
Section 6.
SHAREHOLDERS ACTING WITHOUT A MEETING - DIRECTORS.
Any action which may be taken at a meeting of the Shareholders, may be taken without a meeting or notice of meeting if authorized by a writing signed by all of the Shareholders entitled to vote at a meeting for such purpose, and filed with the Secretary of the corporation, provided, further, that while ordinarily Directors can be elected by unanimous written consent, if the Directors fail to fill a vacancy, then a Director to fill that vacancy may be elected by the written consent of persons holding a majority of shares entitled to vote for the election of Directors.
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Section 7.
OTHER ACTIONS WITHOUT A MEETING.
Unless otherwise provided for under applicable law or the Articles of Incorporation, any action which may be taken at any annual or special meeting of Shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize to take such action at a meeting at which all shares entitled to vote thereon were present and voted. Unless the consents of all Shareholders entitled to vote have been solicited in writing, (1) Notice of any Shareholder approval without a meeting by less than unanimous written consent shall be given at least ten (10) days before the consummation of the action authorized by such approval, and 9. 10 (2) Prompt notice shall be given of the taking of any other corporate action approved by Shareholders without a meeting be less than unanimous written consent, to each of those Shareholders entitled to vote who have not consented in writing. Any Shareholder giving a written consent, or the Share-holder’s proxyholders, or a transferee of the shares of a personal representative of the Shareholder or their respective proxyholders, may revoke the consent by a writing received by the corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary of the corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the Secretary of the corporation.
Section 8.
QUORUM.
The holder of a majority of the shares entitled to vote thereat, present in person, or represented by proxy, shall constitute a quorum at all meetings of the Shareholders for the transaction of business except as otherwise provided by law, by the Articles of Incorporation, or by these By-Laws. If, however, such majority shall not be present or represented at any meeting of the Shareholders, the shareholders entitled to vote thereat, present in person, or by proxy, shall have the power to adjourn the meeting from time to time, until the requisite amount of voting shares shall be present. At such adjourned meeting at which the requisite amount of voting shares shall be represented, any business may be transacted which might have been transacted at a meeting as originally notified. If a quorum be initially present, the Shareholders may continue to transact business until adjournment, notwithstanding the withdrawal of enough Shareholders to leave less than a quorum, if any action taken is approved by a majority of the Shareholders required to initially constitute a quorum.
Section 9.
VOTING.
Only persons in whose names shares entitled to vote stand on the stock records of the corporation on the day of any meeting of Shareholders, unless some other day be fixed by the Board of Directors for the determination of Shareholders of record, and then on such other day, shall be entitled to vote at such meeting. Provided the candidate’s name has been placed in nomination prior to the voting and one or more Shareholders has given notice at the meeting prior to the voting of the Shareholder’s intent to cumulate the Shareholder’s votes, every Shareholder entitled to vote at any election for Directors of any corporation for profit may cumulate their votes and give one candidate a number of votes equal to the number of Directors to be elected multiplied by the number of votes to which his or her shares are entitled to, or distribute his or her votes on the same principle among as many candidates as he or she thinks fit. The candidates receiving the highest number of votes up to the number of Directors to be elected are elected. The Board of Directors may fix a time in the future not exceeding thirty (30) days preceding the date of any meeting of Shareholders or the date fixed for the payment of any dividend or distribution, or for the allotment of rights, or when any change or conversion or exchange of shares shall go into effect, as a record date for the determination of the Shareholders entitled to notice of and to vote at any such meeting, or entitled to receive any such dividend or distribution, or any allotment of rights or to exercise the rights in respect to any such change, conversion or exchange of shares. In such case only Shareholders of record on the date so fixed shall be entitled to notice of and to vote at such meeting, to receive such dividends, distribution or allotment of rights, or to exercise such rights, as the case may be notwithstanding any transfer of any share on the books of the corporation after any record date fixed as aforesaid. The Board of Directors may close the books of the corporation against transfers of shares during the whole or any part of such period.
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Section 10.
PROXIES.
Every Shareholder entitled to vote, or to execute consents, may do so, either in person or by written proxy, executed in accordance with the provisions of applicable law filed with the Secretary of the corporation.
Section 11.
ORGANIZATION.
The President, or in the absence of the President, any Vice President, shall call the meeting of the Shareholders to order, and shall act as Chairman of the meeting. In the absence of the President and all of the Vice Presidents, Shareholders shall appoint a Chairman for such meeting. The Secretary of the corporation shall act as Secretary of all meetings of the Shareholders, but in the absence of the Secretary at any meeting of the Shareholders, the presiding Officer may appoint any person to act as Secretary of the meeting.
Section 12.
INSPECTORS OF ELECTION.
In advance of any meeting of Shareholders, the Board of Directors may, if they so elect, appoint inspectors of election to act at such meeting or any adjournment thereof. If inspectors of election be not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairman of any such meeting may, and on the request of any Shareholder or his or her proxy shall, make such appointment at the meeting in which case the number of inspectors shall be either one (1) or three (3) as determined by a majority of the Shareholders represented at the meeting.
ARTICLE V CERTIFICATES AND TRANSFER OF SHARES
Section 1.
CERTIFICATES FOR SHARES.
Certificates for shares shall be of such form and device as the Board of Directors 11. 12 may designate and shall state the name of the record holder of the shares represented thereby; its number; date of issuance; the number of shares for which it is issued; a statement of the rights, privileges preferences and restriction, if any; a statement as to the redemption or conversion, if any; a statement of liens or restrictions upon transfer or voting, if any; if the shares be assessable or, if assessments are collectible by personal action, a plain statement of such facts. All certificates shall be signed in the name of the corporation by the Chairman of the Board or Vice Chairman of the Board or the President or Vice President and by the Chief Financial Officer or an Assistant Treasurer or the Secretary or any Assistant Secretary, certifying the number of shares and the class or series of shares owned by the Shareholder. Any or all of the signatures on the certificate may be facsimile. In case any Officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on a certificate shall have ceased to be that Officer, transfer agent, or registrar before that certificate is issued, it may be issued by the corporation with the same effect as if that person were an Officer, transfer agent, or registrar at the date of issuance.
Section 2.
TRANSFER ON THE BOOKS.
Upon surrender to the Secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.
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Section 3.
LOST OR DESTROYED CERTIFICATES.
Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit or affirmation of that fact and shall, if the Directors so require, give the corporation a bond of indemnity, in form and with one or more sureties satisfactory to the Board, in at least double the value of the stock represented by said certificate, whereupon a new certificate may be issued in the same tender and for the same number of shares as the one alleged to be lost or destroyed.
Section 4.
TRANSFER AGENTS AND REGISTRARS.
The Board of Directors may appoint one or more transfer agents or transfer clerks, and one or more registrars which shall be an incorporated bank or trust company, either domestic or foreign, who shall be appointed at such times and places as the requirements of the corporation may necessitate and the Board of Directors may designate.
Section 5.
CLOSING STOCK TRANSFER BOOKS - RECORD DATE.
In order that the corporation may determine the Shareholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect to any other lawful action, the Board may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days prior to the date of such meeting nor more than sixty (60) days prior to any other action. If no record date is fixed; the record date for determining Shareholders entitled to notice of or to vote at a meeting of Shareholders shall be at the close of business on the business day next preceding the day on which notice is given or if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. The record date for determining Shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board is necessary, shall be the day on which the first written consent is given. The record date for determining Shareholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto, or the sixtieth (60
th
) day prior to the date of such other action, whichever is later.
ARTICLE VI RECORDS - REPORTS - INSPECTION
Section 1.
RECORDS.
The corporation shall maintain, in accordance with generally accepted accounting principles, adequate and correct accounts, books and records of its business and properties. All of such books, records and accounts shall be kept at its principal executive office as fixed by the Board of Directors from time to time.
Section 2.
INSPECTION OF BOOKS AND RECORDS.
All books and records shall be open to inspection of the Directors and Shareholders from time to time and in the manner provided under applicable law.
Section 3.
CERTIFICATION AND INSPECTION OF BY-LAWS.
The original or a copy of these By-Laws, as amended or otherwise altered to date, certified by the Secretary, shall be kept at the corporation’s principal executive office and shall be open to inspection by the Shareholders at all reasonable times during office hours.
Section 4.
CHECK, DRAFTS, ETC.
All checks, drafts, or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as shall be determined from time to time by the Board of Directors. 13. 14
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Section 5.
CONTRACT, ETC.-HOW EXECUTED.
The Board of Directors, except as in the By-Laws otherwise provided, may authorize any Officer or Officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation. Such authority may be general or confined to specific instances. Unless so authorized by the Board of Directors, no Officer, agent or employee shall have any power or authority to bind the corporation by any contract or agreement, or to pledge its credit, or to render it liable for any purpose or to any amount except as may be provided under applicable law.
ARTICLE VII ANNUAL REPORTS
Section 1.
REPORT TO SHAREHOLDERS, DUE DATE.
The Board of Directors shall cause an annual report to be sent to the Shareholders not later than one hundred twenty (120) days after the close of the fiscal or calendar year adopted by the corporation. This report shall be sent at least fifteen (15) days before the annual meeting of Shareholders to be held during the next fiscal year and in the manner specified in Section 4 of the Article IV of these By-Laws for giving notice to Shareholders of the corporation. The annual report shall contain a balance sheet as of the end of the fiscal year and an income statement and statement of changes in financial position for the fiscal year, accompanied by any report of independent accountants or, if there is no such report, the certificate of an authorized officer of the corporation that the statements were prepared without audit from the books and records of the corporation. ARTICLE VIII AMENDMENTS TO BY-LAWS Section 1. AMENDMENT BY SHAREHOLDERS. New By-Laws may be adopted or these By-Laws may be amended or repealed by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that if the Articles of Incorporation of the corporation set forth the number of authorized Directors of the corporation, the authorized number of Directors may be changed only by an amendment of the Article of Incorporation.
Section 2.
POWERS OF DIRECTORS.
Subject to the right of the Shareholders to adopt, amend or repeal By-Laws, as provided in Section 1 of this Article VIII, and the limitations, if any, under law, the Board of Directors may adopt, amend or repeal any of these By-Laws other than a By-Law or amendment thereof changing the authorized number of Directors.
Section 3.
RECORD OF AMENDMENTS.
Whenever an amendment or new By-Law is adopted, it shall be copied in the book of By-Laws 14. 15 with the original By-Laws, in the appropriate place. If any By-Law is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or written assent was filed shall be stated in said book.
ARTICLE IX CORPORATE SEAL
Section 1.
SEAL.
The corporate seal shall be circular in form, and shall have inscribed thereon the name of the corporation, the date and State of incorporation.
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ARTICLE X MISCELLANEOUS
Section 1.
REPRESENTATION OF SHARES IN OTHER CORPORATIONS.
Shares of other corporations standing in the name of this corporation may be voted or represented and all incidents thereto may be exercised on behalf of the corporation by the Chairman of the Board, the President or any Vice President and the Secretary or an Assistant Secretary.
Section 2.
SUBSIDIARY CORPORATIONS.
Shares of this corporation owned by a subsidiary shall not be entitled to vote on any matter. A subsidiary for these purposes is defined as a corporation, the shares of which possessing more than 25% of the total combined voting power of all classes of shares entitled to vote, are owned directly or indirectly through one (1) or more subsidiaries.
Section 3.
INDEMNITY.
Subject to applicable law, the corporation may indemnify any Director, Officer, agent or employee as to those liabilities and on those terms and conditions as appropriate. In any event, the corporation shall have the right to purchase and maintain insurance on behalf of any such persons whether or not the corporation would have the power to indemnify such person against the liability insured against.
Section 4.
ACCOUNTING YEAR.
The accounting year of the corporation shall be fixed by resolution of the Board of Directors.
Approve and Adopted this 14th day of September, 2006.
/s/ Jolene Uddman
Jolene Michelle Uddman, SECRETARY
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of
THE ENGRAVING MASTERS, INC.
, and that the foregoing By-Laws, consisting of 10 pages, constitute the code of By-Laws of
THE ENGRAVING MASTERS, INC.
, as duly adopted at a regular meeting of the Board of Directors of the corporation held September 14, 2006.
/s/ Jolene Uddman
Jolene Michelle Uddman, SECRETARY
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PROCUREMENT AGREEMENT
This Procurement Agreement ("Agreement") is made effective as of the 1
st
day of November, 2006 (the "Effective Date") by and between
THE ENGRAVER, INC.
, a Washington corporation and its affiliates ("TEI"), and
THE ENGRAVING MASTERS, INC.
, a Nevada corporation ("EMI").
Recitals
A. EMI wishes to sell recognition awards such as trophies, medals, statuettes and plaques, as well as engraving services to consumers and to make related information available to consumers online via an e-commerce website to be operated by EMI.
B. EMI desires to establish a relationship with TEI to provide procurement services for EMI’s e-commerce site for the sale of recognition award products and engraving services to consumers, in accordance with the provisions and conditions contained in this Agreement.
C. TEI currently operates a physical retail location in Spokane, Washington, which sells similar goods and provides various similar services.
Now, Therefore, the parties agree as follows:
1. DEFINITIONS.
1.1 "TEI Facility" means the existing facility owned and operated by TEI.
1.2 "TEI Competitor" means any brand, company or entity competing directly or indirectly with TEI.
1.3 "TEI's Cost" means the transfer price for any Product which shall be calculated at the point of distribution by TEI based on TEI's cost to acquire and/or ship the Product.
1.4 "TEI Products" means any product then carried by TEI in its retail store and which TEI has the right to sell to EMI.
1.5 "EMI Unique Inventory" means any then-current TEI Products that TEI agrees to procure, stock, fulfill, distribute, or otherwise handle such items, intended for sale online by EMI that are (at EMI’S request) stocked in inventory by TEI for EMI. "EMI Unique Inventory" shall not include products purchased from or branded by TEI Competitors.
1.6 "Products" means TEI Products and EMI Unique Inventory.
1.7 "SKU" means a stock-keeping unit of any product.
1.8 "Website" means the e-commerce website operated by EMI at the EMI domain name.
2. EXCLUSIVITY.
2.1 TEI Activities. Nothing in this Agreement precludes TEI from providing procurement, distribution and fulfillment, customer support, and other services ("Enumerated Services") on an outsourced basis to third parties selling similar, competing products and services online. TEI also reserves the right to place online advertisements with third parties to promote its physical retail locations.
1
2.2 TEI: Exclusive Provider To EMI. TEI shall be the exclusive provider to EMI of the procurement and engraving services, set forth in this Agreement for TEI Products and EMI Unique Inventory during the term of this Agreement, subject to the following exceptions:
(a)
Drop-Ships. EMI may arrange for vendor-to-consumer drop ships of Products where appropriate;
(b)
Use of TEI Facility. EMI may ship Products to customers from the existing TEI Facility; and
(c)
Shipping of Outside Products. EMI may ship Outside Products to its customers using any non-TEI facility or method which EMI elects, in its sole discretion, to use.
3. PROCUREMENT. During the term of this Agreement, TEI will be EMI’S exclusive source of procurement services (except for Outside Products).
3.1 Procurement In General. TEI will purchase inventory specified by EMI, as may occur periodically. TEI may, in its sole discretion, allocate its products in its own inventory toward EMI requests. TEI is only obligated to purchase product in accordance with EMI’S requests, and EMI acknowledges that TEI may not always be able to obtain vendor purchase discounts, vendor purchase allowances, volume discounts or the like on behalf of EMI.
3.2 Procurement Of TEI Products. TEI will purchase inventory specified by EMI, as may occur periodically. TEI may, in its sole discretion, allocate its products in its own inventory toward EMI requests. TEI will use commercially reasonable efforts to consolidate its orders for TEI Products with EMI’S. Regardless of whether such orders are consolidated or not, to the extent that it is permitted to do so under its purchase agreements with individual vendors, TEI will obtain for EMI purchase terms which are at least as favorable as the most favorable terms that TEI receives from such vendors for its own purchases of TEI Products under similar purchase volumes and circumstances.
3.3 Procurement Of EMI Unique Inventory. Unless otherwise agreed by the parties, EMI must use TEI for procurement of any EMI Unique Inventory to be held in inventory by TEI for EMI. TEI will procure EMI Unique Inventory for sale by EMI in accordance with EMI’S request.
3.4 Procurement of Outside Products. TEI shall have no obligation to provide procurement services for Outside Products, and EMI shall be responsible for all aspects of Outside Products (e.g., ownership, procurement, shipping, etc.), except for certain customer support services relating thereto which may be provided by TEI hereunder upon prior request by EMI as set forth below.
4. SALES FORECASTING AND INVENTORY.
4.1 TEI Products and EMI Unique Inventory. EMI will use TEI to stock inventory of TEI Products and EMI Unique Inventory to be sold by EMI. TEI will stock such TEI Products, unless otherwise agreed by the parties. TEI reserves the right not to stock certain items based on factors such as logistics, safety, legal, or other commercially reasonable criteria.
4.2 Location of Inventory. TEI reserves the right to stock inventory for EMI at whichever TEI facilities as determined efficient, appropriate, cost-effective and logistically feasible by TEI in its reasonable discretion.
4.3 Title. Title to Products will remain with TEI until shipped, whether to the consumer or to other location such as EMI may designate. Title will transfer to EMI upon shipment and consignment to the common courier. TEI will not hold title to any Products, which EMI holds in inventory at, orders for, or ships from EMI’S offices or other such location as EMI may store its inventory.
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4.4 Discontinued Products. If TEI discontinues any TEI Product SKU, EMI may choose to continue such SKU as EMI Unique Inventory.
5. PAYMENT.
5.1 Products. TEI will invoice EMI for the products and services described herein and provided hereunder, upon transfer of the products to EMI or completion of the engraving services for TEI's Cost (calculated as the cost of inventory acquired, engraving costs incurred, freight in and freight out, in addition to the office space rental and related services fee specified in paragraph 5 of this Agreement), and EMI shall pay such invoice by wire transfer on or before the fifteenth day after receipt of such invoice.
5.2 Late Payment. EMI will pay interest on late payments at the rate of one and one-half percent (1.5%) per month or the highest interest rate allowed, whichever is lower.
6. SERVICE STANDARDS. The services provided by TEI under this Agreement will conform to the standards as may be set forth by TEI, from time to time.
7. WARRANTY.
7.1 Representations and Warranties. Each party represents and warrants that it has the authority to enter into this Agreement, and to perform all of its obligations hereunder. Each party further represents and warrants that it has the capacity to perform all of its obligations hereunder.
7.2 Disclaimer of Warranties. EXCEPT AS SET FORTH HEREIN, EACH PARTY EXPRESSLY DISCLAIMS ALL WARRANTIES OR CONDITIONS OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
8. CONFIDENTIAL INFORMATION.
8.1 Confidential Information. Each party (the "Disclosing Party") may from time to time during the term of this Agreement disclose to the other party (the "Receiving Party") certain information regarding the Disclosing Party's business, including technical, marketing, financial, employees, planning, and other confidential or proprietary information ("Confidential Information"). The Disclosing Party will mark all Confidential Information in tangible form as "confidential" or "proprietary" or with a similar legend. The Disclosing Party will identify all Confidential Information disclosed orally as confidential at the time of disclosure and provide a written summary of such Confidential Information to the Receiving Party within thirty (30) days after such oral disclosure. Regardless of whether so marked or identified, however, any information that the Receiving Party knew or should have known, under the circumstances, was considered confidential or proprietary by the Disclosing Party, will be considered Confidential Information of the Disclosing Party.
8.2 Protection of Confidential Information. The Receiving Party will not use any Confidential Information of the Disclosing Party for any purpose not expressly permitted by this Agreement, and will disclose the Confidential Information of the Disclosing Party only to those employees or contractors of the Receiving Party who have a need to know such Confidential Information for purposes of this Agreement and who are under a duty of confidentiality no less restrictive than the Receiving Party's duty hereunder. The Receiving Party will protect the Disclosing Party's Confidential Information from unauthorized use, access, or disclosure in the same manner as the Receiving Party protects its own confidential or proprietary information of a similar nature and with no less than reasonable care.
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8.3 Exceptions. The Receiving Party's obligations under Section 8.2 ("Protection of Confidential Information") with respect to any Confidential Information of the Disclosing Party will terminate if and when the Receiving Party can document that such information: (a) was already known to the Receiving Party at the time of disclosure by the Disclosing Party; (b) was disclosed to the Receiving Party by a third party who had the right to make such disclosure without any confidentiality restrictions; (c) is or through no fault of the Receiving Party has become, generally available to the public; or (d) is independently developed by the Receiving Party without access to, or use of, the Disclosing Party's Confidential Information. In addition, the Receiving Party will be allowed to disclose Confidential Information of the Disclosing Party to the extent that such disclosure is (i) approved in writing by the Disclosing Party, (ii) necessary for the Receiving Party to enforce its rights under this Agreement in connection with a legal proceeding; or (iii) required by law or by the order of a court or similar judicial or administrative body, provided that the Receiving Party notifies the Disclosing Party of such required disclosure promptly and in writing and cooperates with the Disclosing Party, at the Disclosing Party's reasonable request and expense, in any lawful action to contest or limit the scope of such required disclosure.
8.4 Return of Confidential Information. The Receiving Party will return to the Disclosing Party or destroy all Confidential Information of the Disclosing Party in the Receiving Party's possession or control promptly upon the written request of the Disclosing Party on the expiration or termination of this Agreement, whichever comes first. At the Disclosing Party's request, the Receiving Party will certify in writing that it has fully complied with its obligations under this Section.
8.5 Confidentiality of Agreement. Neither party will disclose any financial and/or costing or payment terms of the Agreement to anyone other than its attorneys, accountants and other professional advisors under a duty of confidentiality except (a) as required by law; (b) pursuant to a mutually agreeable press release; (c) in connection with a proposed merger, financing or sale of such party’s business, provided that any third party to whom the terms of this Agreement are to be disclosed signs a confidentiality agreement reasonably satisfactory to the other party to this Agreement.
9. LIMITATION OF LIABILITY; INDEMNITY.
9.1 Limitation of Liability. Neither party shall be liable to the other for any indirect, incidental, special or consequential damages, or for any loss of profits or loss of revenue, or failure to realize expected savings for any services performed by such party pursuant to this Agreement. Except for each party's obligations pursuant to Section 9.2 ("Indemnity"), each party's maximum liability for any damages whatsoever to the other party arising out of this Agreement shall be the amount paid or owed by EMI to TEI hereunder.
9.2 Indemnity.
(a)
By TEI. TEI agrees to defend, indemnify, and hold harmless EMI from and against any claims, suits, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) brought by third parties to the extent such claim results from or relates to (i) violation of any applicable law or regulation arising from a TEI Product; (ii) injury to or violation of, the rights of a third party, arising from a TEI Product; (iii) violation of any applicable law or regulation by TEI in the performance of its obligations hereunder; or (iv) injury to or violation of the rights of a third party by TEI in the performance of its obligations hereunder.
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(b)
By EMI. EMI agrees to defend, indemnify, and hold harmless TEI from and against any claims, suits, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) brought by third parties to the extent such claim results from or relates to (i) violation of any applicable law or regulation arising from an Outside Product (or any item which would be an Outside Product but for the fact that TEI agrees to procure, stock, fulfill, distribute, or otherwise handle such item; (ii) injury to or violation of, the rights of a third party, by an Outside Product (or any item which would be an Outside Product but for the fact that TEI agrees to procure, stock, fulfill, distribute, or otherwise handle such item; (iii) violation of any applicable law or regulation by EMI in the performance of its obligations hereunder; or (iv) injury to or violation of the rights of a third party by EMI in the performance of its obligations hereunder.
(c)
Mechanics. Each party's (the "Indemnifying Party") obligation to indemnify under this Section 9.2 is conditioned on the party seeking indemnity (the "Indemnified Party") (i) giving the Indemnifying Party written notice of the relevant claim, (ii) cooperating with the Indemnifying Party, at the Indemnifying Party's expense, in the defense of such claim, and (iii) giving the Indemnifying Party the right to control the defense and settlement of any such claim, except that the Indemnifying Party shall not enter into any settlement that affects the Indemnified Party's rights or interest without the Indemnified Party's prior written approval. The Indemnified Party shall have the right to participate in the defense at its expense.
10. DISPUTE RESOLUTION. TEI and EMI are implementing this Agreement in good faith. However, should either party believe that the other party is in breach of this Agreement, the parties shall attempt in good faith to resolve any dispute arising out of or relating thereto promptly by negotiations. All negotiations at all levels pursuant to this Section 11 are confidential and shall be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and state rules of evidence. Each party shall bear its own expenses in connection with such negotiations.
10.1 Notice And Cure. Except in the case of expedited arbitration under Section 10.2, either party (the "Non-Breaching Party") may give the other party (the "Breaching Party") written notice of any material breach. The Breaching Party shall then have thirty (30) days to cure the material breach. If the Breaching Party does not effect a cure to the Non-Breaching Party's satisfaction, the chief executive officers of the parties shall, within the following fifteen (15) days, confer in good faith for the purpose of satisfactorily resolving the material breach.
10.2 Arbitration.
(a)
In General. If a resolution satisfactory to the Non-Breaching Party is not achieved within the fifteen-day period set forth in Section 10.1, the parties agree promptly to submit the dispute to binding arbitration before an arbitrator selected from the Panel, such arbitration to be held in the city of the defending party's home offices under the then-existing rules for commercial disputes of the American Arbitration Association. Each party irrevocably submits to the jurisdiction and venue set forth in this Section 10.2(a).
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(b)
Expedited. The parties agree and acknowledge that certain disputes may require more immediate resolution than set forth in Section 10.2(a). If the Non-Breaching Party claims that the Breaching Party has breached any of terms of this agreement and that such breach substantially interferes with the Non-Breaching Party's ability to conduct its business, the Non-Breaching Party may give notice of expedited arbitration. Within fifteen (15) days of notice of expedited arbitration, executive representatives from each party shall meet and confer in good faith to resolve the dispute. If the parties remain unable to resolve the dispute, the parties will contact the first arbitrator on the Panel (or, if unavailable, successive arbitrators until one is available), which arbitrator shall conduct an expedited arbitration within the next twenty-one (21) days and shall render a binding opinion within three (3) business days after the conclusion of the expedited arbitration.
11. TERM AND TERMINATION.
11.1 Term. The initial term shall commence on the Effective Date of this Agreement, and shall expire on the first (1st) anniversary of the Effective Date of this Agreement (the "Term"), and shall thereafter automatically continue for an additional one year term unless either party provides notice of non-renewal at least ninety (90) days before the expiration of the then-current term (which may be the Term or a successor term). Following the Term, EMI may terminate this Agreement, without cause, with ninety (90) days' prior written notice to TEI. This Agreement may be terminated by either party at any time, with or without cause, with thirty (30) days’ written notice to the other party.
11.2 Termination for Breach.
(a)
By TEI. TEI shall have the right to terminate this Agreement in the event EMI materially breaches any term of this Agreement and fails to cure such breach in the course of the dispute resolution procedures set forth above at Section 12 ("Dispute Resolution").
(b)
By EMI. EMI may terminate this Agreement, or any portion hereof, only after an arbitrator first determines (i) that TEI is in material breach and such material breach substantially affects EMI’S ability to conduct its business, (ii) which aspects of the Agreement EMI may terminate, and (iii) which unamortized or committed costs, commitments, expenses, or other liabilities incurred in connection with TEI's provision of products and services to EMI hereunder shall be reimbursed by EMI to TEI.
11.3 Inventory Repurchase. Upon the expiration or termination of this Agreement for any reason, TEI shall submit to EMI within ten (10) days a summary of the number and type of Products on order or held in stock by TEI for EMI based on EMI’S sales forecasts, including EMI Unique Inventory and TEI Products, and EMI shall purchase all EMI Unique Product inventory from TEI at TEI's Cost, plus shipping and insurance at EMI’S expense, within ten (10) days following receipt of such notice.
12. GENERAL PROVISIONS.
12.1 Governing Law and Venue. This Agreement will be governed and construed in accordance with the laws of the State of Washington as such laws apply to contracts between Washington residents performed entirely within Washington without giving effect to principles of conflicts of laws.
12.2 Force Majeure. Any party's delay in the performance of any duties or obligations under this Agreement (except the payment of money owed) will not be considered a breach of this Agreement if such delay is caused by a labor dispute, shortage of materials, fire, earthquake, flood or any other event beyond the control of the party, provided that the party uses reasonable efforts, under the circumstances, (a) to notify the other party of the circumstances causing the delay and (b) to resume performance as soon as possible.
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12.3 Subcontracting. TEI may perform its obligations through the use of TEI-selected independent contractors; provided, however, that TEI shall not be relieved of its obligations under this Agreement by the use of such contractors.
12.4 Notices. Any notices given under this Agreement shall be in writing and shall be delivered to the addresses set forth below the signatures of the parties or at such other address as the party shall specify in writing. Notices shall be deemed effectively given: (a) upon five (5) days after being sent by certified or registered mail, postage prepaid, return receipt requested; (b) upon he next business day after being sent overnight by U.S. Express Mail or by a major U.S. express document courier; or (c) upon receipt of confirmation following transmission by a facsimile machine if sent on a business day during business hours (otherwise, deemed received six hours after the beginning of the next business day).
12.5 No Assignment. Except as permitted by Section 12.3 ("Subcontracting"), TEI may not assign its rights or delegate its duties without EMI’S prior written consent in EMI’S sole discretion. EMI may assign, transfer, delegate or grant all or any part of its rights pursuant to this Agreement to any person or entity. Any assignment or delegation in violation of this Section shall be void and of no effect. Subject to the prohibitions against assignment contained herein, this Agreement shall inure to the benefit of and shall be binding on the parties hereto and their respective successors and permitted assigns.
12.6 Severability; Waiver. If any provision of this Agreement is held to be invalid or unenforceable for any reason, the remaining provisions will continue in full force and effect without being impaired or invalidated in any way. The parties agree to replace any invalid provision with a valid provision which most closely approximates the intent and economic effect of the invalid provision. The waiver by any party of a breach of any provision of this Agreement will not operate or be interpreted as a waiver of any other or subsequent breach.
12.7 Headings. Headings used in this Agreement are for reference purposes only and in no way define, limit, construe or describe the scope, intent, or extent of the section or in any way affect this Agreement.
12.8 Independent Contractors; No Agency. The parties to this Agreement are independent contractors, and no agency, partnership, joint venture, or employee-employer is intended or created by this Agreement. Neither party is the agent of the other, and neither party shall have the power to obligate or bind the other party.
12.9 Entire Agreement. This Agreement, including the Exhibits attached hereto, sets forth the entire understanding and agreement between the parties regarding the subject matter of this Agreement, and supersedes any and all oral or written agreements or understandings between the parties as to that subject matter. It may be changed only by a writing signed by both parties. Neither party is relying upon any warranties, representations, assurances, or inducements not expressly set forth herein.
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n Witness Whereof
, each of the parties hereto have executed this Agreement as of the date first written above.
THE ENGRAVING MASTERS, INC. (“EMI”)
THE ENGRAVER, INC. (“TEI”)
Signed:
/s/ Jolene Uddman
Signed:
/s/ Donald E. Uddman
Name:
Jolene Uddman
Name:
Donald E. Uddman
Title:
Secretary/Treasurer
Title:
President
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