Employment Agreement - Coyote Sports Inc. and Mel Stonebraker
EMPLOYMENT AGREEMENT
This Agreement is effective the 1st day of June, 1997 by and between
COYOTE SPORTS, INC., a Nevada corporation with its principal offices located at
2291 Arapahoe Avenue, Boulder, Colorado 80302 (hereinafter the "Company") and
MEL STONEBRAKER residing at 2231 Nicholl, Boulder, CO 80304 (hereinafter the
"Officer").
The Company designs, engineers, manufactures, markets and distributes brand
name sports and recreational products worldwide (the "Business"). The Company
desires to secure and retain the services of Officer and such services are
considered by the Company to be valuable with regard to the Business. The
Company, through its Board of Directors, agrees to employ the Officer in the
offices of President and Chief Executive Officer of the Company for the Term,
and Officer agrees to accept such employment and office upon the terms and
conditions set forth herein.
1. Term. Subject to the provisions for renewal and termination as hereinafter
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provided, the term of this Agreement shall commence on June 1, 1997 and
terminate on May 31, 2000. This Agreement will be renewed automatically,
upon the same terms and conditions, for successive periods of two years
each, until either party at least sixty days prior to the expiration of the
original term or any extended term, shall give written notice to the other
of its intention not to renew such employment. Officer shall remain an
employee during the sixty day notice period. Any election not to renew or to
terminate by the Company shall be effected by a duly adopted resolution of
the Company's Board of Directors. Unless otherwise stated, any notice of
nonrenewal shall be treated as a termination without cause. The obligations
of the Officer under Sections 9 and 10 shall survive termination or
expiration of this Agreement. The obligations of the Company under the
Agreement that by their terms are to be paid or to continue after
termination of the Agreement, shall also survive such termination or
expiration.
2. Duties. The Company agrees to employ the Officer as President and Chief
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Executive Officer of the Company and agrees to elect the Officer as a
member of the Board of Directors as of the date of this Agreement and for
so long as he is so employed. The responsibilities of the Officer shall be
as set forth in the Company's Bylaws attached hereto as Exhibit A, as
otherwise directed by the Company's Board of Directors and as more
specifically set forth in Section 3 of this Agreement. The Officer shall
report to the Board of Directors and all other officers of the Company
shall report to him or as he shall direct. The Officer shall be responsible
for the overall revenue and profit of the Company; establishing short-term
and long-range objectives, plans and policies subject to the approval of
the Board of Directors. He shall be responsible for representing the
organization with major customers, the financial community, and the public.
If the overall revenue and profit of the Company is not satisfactory, as
determined by the Board of Directors, in no event shall this occurrence
give rise to justification for termination of the Officer for cause.
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3. Outside Commitments. The Officer shall not be constrained from
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continuation of outside business commitments so long as such commitments do
not interfere or conflict with the performance of his duties as President
and Chief Executive Officer of the Company. It is recognized that the
Officer currently serves as a member of the Board of Directors of certain
subsidiaries of Coyote Sports, Inc. which are not deemed to be outside
commitments. Any outside business activities which involve remuneration to
the Officer, shall require the prior approval of the Board of Directors.
Such approval shall not be unreasonably withheld so long as the outside
commitment does not conflict with the Officer's responsibilities to the
Company.
4. Compensation. For all services rendered by the Officer under this
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Agreement, the Company shall pay to the Officer base cash compensation of
$10,416.67 per month for the first three months of the contract and $12,500
per month for the next nine (9) months. Beyond the first twelve (12) months,
compensation is subject to such increases as may be granted from time to
time by the Board of Directors, but in no event shall such increase be less
than the average percentage increase granted to the top ten salaried
employees of the Company, unless mutually agreed upon by Officer and the
Company. The Officer shall be entitled to a bonus scheme based upon meeting
agreed upon objectives determined by the Board of Directors. Such
compensation shall be payable bimonthly in equal installments. The Company
will provide life insurance of $800,000 payable to a beneficiary of the
Officer's choice, provided that Officer passes the physical examination
required for said insurance and the annual premium cost for said insurance
is less than $3,000. The Officer will be eligible for participation,
according to the eligibility requirements of the plans, for participation in
all other employee benefit programs including, but not limited to, medical,
dental, workers compensation and disability insurance, as well as any 401(k)
plan and existing or future pension or other employee benefits. Any
additional benefits desired by the Officer may be, at the Officer's
discretion, deducted from the base compensation in lieu of payment by the
Officer thereof.
Stock Options. At the closing of the Company's initial public offering, the
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Officer will be granted Incentive Stock Options to purchase 45,000 shares of
the Company's Common Stock at the public offering price of the Common Stock.
As long as the Officer is employed by the Company, the options shall vest in
three equal annual increments commencing one year from the date of grant if
the Company achieves 75% of its targeted EBITDA (earnings before income,
taxes, depreciation and amortization) plan as established by the Board of
Directors. The options shall expire seven years from the date of initial
grant.
Dilution. If the Board of Directors sells additional shares of Common
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Stock beyond those issued and outstanding as of December 31, 1997,
other than shares issued pursuant to the exercise of options granted
under the Company's 1997 Stock Option Plan, the Officer shall have the
right, at his sole discretion, to purchase his pro rata share of the
newly issued shares at the price as the newly offered shares. The
intent of this provision is to allow the Officer to maintain
<PAGE>
ownership, or an option position, on a minimum percentage of the
Company's common stock.
Bonus. The Officer shall be paid a one-time bonus of $150,000, said bonus
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to be paid at the Board's discretion.
5. Expenses. The Officer shall be entitled to reimbursement for all reasonable
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expenses including travel, entertainment and similar items which may be
incurred in connection with performance of his duties. Expenses incurred by
the Officer pursuant to this section will be reimbursed by the Company upon
presentation by the Officer from time to time of an itemized account of
such expenditures in a form reasonably acceptable to the Company's
President or controller. The Board of Directors has the right to review
these expenses at any time.
6. Working Facilities. The Officer shall be furnished with all such facilities
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and services suitable to his position and adequate for the performance of
his duties at the Company's executive offices in Boulder, Colorado. The
Officer's principal business activities shall be at such office or other
location within 25 miles of Boulder, Colorado.
7. Vacation. The Officer shall be entitled each year to a vacation of four (4)
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weeks (20 days) per year, during which time his compensation will be paid
in full. Vacation shall accrue at a rate of 6.6 hours per payroll from the
date of hire. Unused vacation may carry over for one additional year, but
in no case shall the Officer have vacation accrued in excess of eight
weeks.
8. Termination.
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a) The Company may terminate this Agreement for cause at any time on 30
days written notice to the other party thereof. In any termination for
cause by the Company, "cause" shall mean: (i) gross misconduct, such
as, but not limited to dishonesty, theft or embezzlement with regard to
material property of the Company; (ii) excessive unauthorized
absenteeism, after written notification from the Board of Directors of
such absenteeism, and the Officer's failure to cure the problem; (iii)
any of the following acts which have a material, negative impact on the
financial condition of the Company: (a) actual fraud or other material
acts of dishonesty in conducting the Company's business or in the
fulfillment by the Officer or his assigned responsibilities; (b) the
destruction of any material amount of the Company's property willfully
or through the Officer's gross neglect; (c) the unauthorized willful
disclosure of any Proprietary Information of the Company to any person,
business or entity in violation of this Agreement or (d) a violation of
internal controls or procedures. If the Officer is terminated for cause
as defined in this section, all benefits and entitlements provided
under this Agreement, including but not limited to, the vesting of
options and payment of compensation, shall terminate as of the date of
notification of termination for cause.
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b) If the Officer voluntarily terminates before May 31, 2000, the Officer
will be required to reimburse the Company the amount of $75,000 as
follows: $75,000 if termination prior to May 31, 1998; $50,000 if
termination occurs between June 1,1998 and May 31, 1999; and $25,000 if
termination occurs between June 1, 1999 and May 31, 2000. If the
Officer terminates this Agreement without cause at any time after June
1, 1997, he shall provide 30 days notice to the Company and shall be
entitled to accrued salary, benefits through the notice period and
optional COBRA coverage as authorized by current law but he shall in no
event be entitled to severance pay or bonus compensation for the period
through the date of termination.
c) In the event of a change in control of the Company, regardless of
whether such control has received the endorsement or recommendation of
the Board of Directors of the Company, the Officer shall be paid
compensation.
d) If the Company terminates the Officer without cause, the Officer shall
receive 18 months salary if such termination occurs prior to December
1, 1998. If such termination occurs subsequent to December 1, 1998, the
Officer shall receive no less than 12 months salary. Stock options to
purchase 45,000 shares will continue to vest during the 18 or 12 month
period as defined above however, after three months, any options not
exercised will be non-qualified options. The Officer shall have the
option of selecting regular biweekly payments or a net present value
lump sum payment discounted by the Prime Rate as published in the Wall
Street Journal within 30 days of the notice of termination without
cause.
9. Noncompetition Agreement. Officer acknowledges that the Company has trade
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secrets and confidential information that, as President and Chief Executive
Officer, he will have access to all such trade secrets and confidential
information. Therefore, in consideration for the severance benefits set
forth above, the Officer agrees that for a period of the greater of (i) nine
months subsequent to the Termination Date or (ii) the severance pay period
provided for in Section 8(d), the Officer will not, directly or indirectly:
a) Call upon any person or entity which was a customer of the Company
immediately prior to the Termination Date for the purpose of diverting,
taking away business of, or selling products or services competitive
with significant products or services provided by the Company on the
Termination Date.
b) Alone or in any capacity solicit or in any manner to solicit or induce
any persons or persons employed by the Company within one year prior to
the Termination Date to leave such employment.
c) Within the United States of America, either as an employee, employer,
consultant, agent, principal, partner, more that 5% shareholders,
corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that
designs, engineers, manufactures, markets or distributes sports and
<PAGE>
recreational products, or that is in competition in any significant
manner with any Material Business conducted by the Company subsequent to
the date of this Agreement and in which the Company is involved on the
Termination Date. Material Business shall be defined as that business
which comprises in excess of 20% of the Company's revenue for the prior
12-month period.
10. Nondisclosure of Proprietary Information. In view of the fact that
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Officer's employment by the Company will bring him into contact with
certain confidential matters of the Company, its customers and suppliers,
including, without limitation, matters of a technical nature (such as
information about costs, profits, markets, price lists, sales, data files,
mailing lists and lists of customers) and any other information of a
similar nature to the extent not available to the public (the "Confidential
Matters"), Officer agrees not to disclose, either during his employment or
for a period of three years thereafter, any Confidential Matters of the
Company, whether or not developed, to any person except with the Company's
prior written consent and then only after such person has signed an
agreement similar to this Agreement, or an agreement approved by the
Company prior to such disclosure. In the event that the Board of Directors
determines that the Officer possesses a significant Confidential Matter in
the nature of a trade secret or other proprietary information that will not
be in the public domain at the end of the three year period, upon written
notification from the Board of Directors prior to the end of the three year
period, the Officer agrees to keep that matter confidential indefinitely.
In the event Officer has some question as to whether or not certain
information is covered by this paragraph, Officer shall treat the
information as within this paragraph until told otherwise by the Company,
in writing. Officer further agrees to deliver to the Company, on the date
of termination of his employment, for whatever reason, all memoranda,
notes, records, reports, manuals, drawings, sketches, blueprints,
bulletins, writings, proposals, notebooks, manuals and other documents
containing confidential information of the Company, including all copies or
summaries thereof, which Officer may possess or have in his control.
It is agreed that Officer's services to the Company and his knowledge of
the Company's activities are unique in that any breach or threatened breach
by Officer of this Section cannot be remedied solely by damages.
Accordingly, the breach of, or threatened breach by, Officer of the
provisions of this Section shall allow the Company to seek injunctive
relief restraining the Officer and any business, firm, partnership, or
corporation from participating in such breach or anticipated breach, or
engaging in any activity which shall constitute a breach of the provisions
of this Section. The Company shall also have the right to bring an action
to obtain monetary damages to which it may be entitled from Officer or any
party who is involved in the use or dissemination of such confidential
information.
11. Notices. All notices and other communications hereunder shall be in
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writing and shall be deemed to have been duly given or delivered if (i)
delivered personally; (ii) mailed by certified mail, return receipt
requested, with property postage prepaid; or (iii) delivered by recognized
courier contracting for same day or next day delivery with signed receipt
<PAGE>
acknowledgment to the Company or the Officer.
If to the Company: Compensation Committee
Board of Directors
Coyote Sports, Inc.
2291 Arapahoe Avenue
Boulder, CO 80302
With a copy to: Laurie P. Glasscock
Chrisman, Bynum & Johnson, P.C.
1900 Fifteenth Street
Boulder, CO 80302
If to the Officer: Mel Stonebraker
2231 Nicholl
Boulder, CO 80304
or at such other address as either party may specify from time to time in
writing to the other.
12. Assignment of Inventions. The Officer agrees to assign patent rights
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developed during the term of this Agreement to the Company. Should the
Company, by agreement of the Board of Directors, waive their right to
assignment of any given patent, the Officer will retain ownership of said
intellectual property.
13. Arbitration. Except as provided below, any and all disputes arising under
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or related to this Agreement which cannot be resolved through negotiations
between the parties shall be submitted to binding arbitration. If the
parties fail to reach a settlement of their dispute within fifteen (15)
days after the earliest date upon which one of the parties notified the
other(s) of its desire to attempt to resolve the dispute, then the dispute
shall be promptly submitted to arbitration by a single arbitrator through
the Judicial Arbiter Group ("JAG"), any successor of the JAG, or any
similar arbitration provider who can provide a former judge to conduct such
arbitration if JAG is no longer in existence. The arbiter shall be selected
by JAG on the basis, if possible, of his or her expertise in the subject
matter(s) of the dispute. The decision of the arbitrator shall be final,
nonappealable and binding upon the parties, and it may be entered in any
court of competent jurisdiction. The arbitration shall take place in
Boulder, Colorado. The arbitrator shall be bound by the laws of the State
of Colorado applicable to the issues involved in the arbitration and all
Colorado rules relating to the admissibility of evidence, including,
without limitation, all relevant privileges and the attorney work product
doctrine. All discovery shall be completed in accordance with the time
limitations prescribed in the Colorado rules of civil procedure, unless
otherwise agreed by the parties or ordered by the arbitrator on the basis
of strict necessity adequately demonstrated by the party requesting an
extension of time. The arbitrator shall have the power to grant equitable
relief where applicable under Colorado law, and shall be entitled to make
an award of punitive damages when applicable under Colorado law. The
arbitrator shall
<PAGE>
issue a written opinion setting forth his or her decision and the reasons
therefor within thirty (30) days after the arbitration proceeding is
concluded. The obligation of the parties to submit any dispute arising
under or related to this Agreement to arbitration as provided in this
Section shall survive the expiration or earlier termination of this
Agreement. Notwithstanding the foregoing, either party may seek and obtain
an injunction or other appropriate relief from a court to preserve or
protect trademarks, trade names, copyrights, patents, trade secrets or
other intellectual property or confidential information or to preserve the
status quo with respect to any matter pending conclusion of the arbitration
proceeding, but no such application to a court shall in any way be
permitted to stay or otherwise impede the progress of the arbitration
proceeding.
In the event of any arbitration or litigation being filed or instituted
between the parties concerning this Agreement, the prevailing party will be
entitled to receive from the other party or parties its attorneys' fees,
witness fees, costs and expenses, court costs and other reasonable
expenses, whether or not such controversy, claim or action is prosecuted to
judgment or other form of relief.
14. General Provisions. This Agreement shall be governed by and construed
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under the laws of the state of Colorado, giving effect to its conflict of
law principles. The terms of this Agreement shall be binding upon and inure
to the benefit of the Company and its successors and assigns. Neither party
may assign his or its obligations under this Agreement to any other party.
15. Severability. If any provision of this Agreement is held to be invalid or
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unenforceable by any court of competent jurisdiction, such holdings shall
not affect the enforceability of any other provision of this Agreement, and
all other provisions shall continue in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
The Officer: The Company:
COYOTE SPORTS, INC.
BY:
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Mel Stonebraker James M. Probst, Chief Operating Officer
<PAGE>
Exhibit A
AMENDED BY-LAWS
OF
COYOTE SPORTS, INC.
ARTICLE I
OFFICES
Section 1.1 PRINCIPAL OFFICE.
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The principal office of the corporation in the State of Nevada shall be
located in the City of Reno, County of Washoe. The corporation may have such
other offices, either within or without the State of Nevada, as the Board of
Directors may designate or as the business of the corporation may require from
time to time.
Section 1.2 REGISTERED OFFICE.
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The registered office of the corporation, required by the Nevada Corporation
Code to be maintained in the State of Nevada, may be, but need not be, identical
with the principal office in the State of Nevada, and the address of the
registered office may be changed from time to time by the Board of Directors.
ARTICLE II
SHAREHOLDERS
Section 2.1 ANNUAL MEETING.
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The annual meeting of the shareholders shall be held at such time on such
day as shall be fixed by the Board of Directors, commencing with the year 1995,
for the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual
meeting shall be a legal holiday, such meeting shall be held on the next
succeeding business day. If the election of directors shall not be held on the
day designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as may be
convenient.
Section 2.2 SPECIAL MEETINGS.
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Special meetings of the shareholders, for any purpose or purposes, unless
otherwise proscribed by statute, may be called by the Chief Executive Officer or
by the Board of Directors,
<PAGE>
and shall be called by the Chief Executive Officer at the request of the holders
of not less than one-tenth of all outstanding shares of the corporation entitled
to vote at the meeting.
Section 2.3 PLACE OF MEETINGS.
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The Board of Directors may designate any place, either within or without the
State of Nevada, as the place of meeting for any annual meeting or for any
special meeting called by the Board of Directors. A waiver of notice signed by
all shareholders entitled to vote at a meeting may designate any place, either
within or without the State of Nevada the place for the holding of such meeting.
If no designation is made, or if a special meeting be otherwise called, the
place of meeting shall be the principal office of the corporation in the State
of Colorado.
Section 2.4 NOTICE OF MEETING.
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Written notice stating the place, day and hour of the meeting of
shareholders and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall, unless otherwise prescribed by statute, be
delivered not less than ten nor more than fifty days before the date of the
meeting, either personally or by mail, by or at the direction of the President,
or the Secretary, or the officer or other persons calling the meeting, to each
shareholder of record entitled to vote at such meetings provided, however, that
if the authorized shares of the corporation are to be increased, at least thirty
days notice shall be given, and if sale of all or substantially all assets are
to be voted upon, at least twenty days notice shall be given. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.
Section 2.5 MEETING OF ALL SHAREHOLDERS.
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If all of the shareholders shall meet at any time and place, either within
or without the State of Nevada, and consent to the holding of a meeting at such
time and place, such meeting shall be valid without call or notice, and at such
meeting any corporate action may be taken.
Section 2.6 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
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For the purpose of determining shareholders entitled to notice of or to vote
at any meeting of shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other purpose, the Board of Directors of the corporation
may provide that the share transfer books shall be closed for a stated period
but not to exceed, in any case, sixty days. If the share transfer books shall
be closed for the purpose of determining shareholders entitled to notice of or
to vote at a meeting of shareholders, such books shall be closed for at least
ten days immediately preceding such meeting. In lieu of closing the share
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more
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<PAGE>
than fifty days and, in case of a meeting of shareholders, not less than ten
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If the share transfer books are
not closed and no record date is fixed for the determination of shareholders, or
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders entitled to vote at any
meeting of shareholders. When a determination of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
Section 2.7 VOTING RECORD.
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The officer or agent having charge of the stock transfer books for shares of
the corporation shall make, at least ten days before such meeting of
shareholders, a complete record of the shareholders entitled to vote at each
meeting of shareholders or any adjournment thereof, arranged in alphabetical
order, with the address of and the number of shares held by each. The record,
for a period of ten days prior to such meeting, shall be kept on file at the
principal office of the corporation, whether within or without the State of
Nevada, and shall be subject to inspection by any shareholder for any purpose
germane to the meeting at any time during normal business hours. Such record
shall be produced and kept open at the time and place of the meeting and shall
be subject to the inspection of any shareholder during the whole time of the
meeting for the purposes thereof.
The original stock transfer books shall be the prima facie evidence as to
who are the shareholders entitled to examine the record or transfer books or to
vote at any meeting of the shareholders.
Section 2.8 QUORUM.
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One-third of the outstanding shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, except as otherwise provided by the Nevada Corporation Code and
the Articles of Incorporation. In the absence of a quorum at any such meeting,
a majority of the shares so represented may adjourn the meeting from time to
time for a period not to exceed sixty days without further notice. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough shareholders to leave less than a quorum.
Section 2.9 MANNER OF ACTING.
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If a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on the subject matter shall be
the act of the shareholders, unless the
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<PAGE>
vote of a greater proportion or number or voting by classes is otherwise
required by statute or by the Articles of Incorporation or these By-Laws.
Section 2.10 PROXIES.
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At all meetings of shareholders a shareholder may vote in person or by proxy
executed in writing by the shareholder or by his duly authorized attorney-in-
fact. Such proxy shall be filed with the Secretary of the corporation before or
at the time of the meeting. No proxy shall be valid after eleven months from
the date of its execution, unless otherwise provided in the proxy.
Section 2.11 VOTING OF SHARES.
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Unless otherwise provided by these By-Laws or the Articles of Incorporation,
each outstanding share entitled to vote shall be entitled to one vote upon each
matter submitted to a vote at a meeting of shareholders, and each fractional
share shall be entitled to a corresponding fractional vote on each such matter.
Section 2.12 VOTING OF SHARES BY CERTAIN SHAREHOLDERS.
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Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the By-Laws of such corporation may prescribe, or, in
the absence of such provision, as the Board of Directors of such other
corporation may determine.
Shares standing in the name of a deceased person, a minor ward or an
incompetent person, may be voted by his administrator, executor, court appointed
guardian or conservator, either in person or by proxy without a transfer of such
shares into the name of such administrator, executor, court appointed guardian
or conservator. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority so to do be contained in
an appropriate order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such shares
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither shares of its own stock belonging to this corporation, nor shares of
its own stock held by it in a fiduciary capacity, nor shares of its own stock
held by another corporation, if the majority of shares entitled to vote for the
election of directors of such corporation is held by this
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<PAGE>
corporation may be voted, directly or indirectly, at any meeting and shall not
be counted in determining the total number of outstanding shares at any given
time.
Redeemable shares which have been called for redemption shall not be
entitled to vote on any matter and shall not be deemed outstanding shares on and
after the date on which written notice of redemption has been mailed to
shareholders and a sum sufficient to redeem such shares has been deposited and
authority to pay the redemption price to the holders of the shares upon
surrender of certificates therefor.
Section 2.13 INFORMAL ACTION BY SHAREHOLDERS.
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Any action required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by at least a majority of the
shareholders entitled to vote with respect to the subject matter thereof.
Facsimilie or telefax signatures shall have the same effect as original
signatures on such consents in lieu of a meeting.
Section 2.14 NO CUMULATIVE VOTING.
---------------------------------
No shareholder shall be permitted to cumulate his votes by giving one
candidate as many votes as the number of such directors multiplied by the number
of his shares shall equal, or by distributing such votes on the same principal
among any number of candidates.
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 GENERAL POWERS.
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The business and affairs of the corporation shall be managed by its Board of
Directors.
Section 3.2 PERFORMANCE OF DUTIES.
---------------------------------
A director of the corporation shall perform his duties as a director,
including his duties as a member of any committee of the board upon which he may
serve, in good faith, in a manner he reasonably believes to be in the best
interests of the corporation, and with such care as an ordinarily prudent person
in a like position would use under similar circumstances. In performing his
duties, a director shall be entitled to rely on information, opinions, reports,
or statements, including financial statements and other financial data, in each
case prepared or presented by persons and groups listed in paragraphs (a), (b)
and (c) of this Section 3.2; but he shall not be considered to be acting in good
faith if he has knowledge concerning the matter in question that would cause
such reliance to be unwarranted. A person who so performs his duties shall not
have any liability by reason of being or having been a director of the
corporation. Those persons and
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<PAGE>
groups on whose information, opinions, reports, and statements a director is
entitled to rely upon are:
(a) One or more officers or employees of the corporation whom the director
reasonably believes to be reliable and competent.
(b) Counsel, public accountants, or other persons as to matters which the
director reasonably believes to be within such persons' professional or expert
competence; or
(c) A committee of the board upon which he does not serve, duly designated
in accordance with the provisions of the Articles of Incorporation or the By-
Laws, as to matters within its designated authority, which committee the
director reasonably believes to merit confidence.
Section 3.3 NUMBER, TENURE AND QUALIFICATION.
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The number of directors of the corporation shall be fixed from time to time
by resolution of the Board of Directors, but in no instance shall there be less
than one director or that number otherwise required by law. Each director shall
hold office until the next annual meeting of shareholders or until his successor
shall have been elected and qualified. Directors need not be residents of the
State of Nevada or shareholders of the corporation.
Section 3.4 REGULAR MEETINGS.
----------------------------
A regular meeting of the Board of Directors shall be held without other
notice than this By-Law immediately after, and at the same place as, the annual
meeting of shareholders. The Chairman of the Board of Directors or the
President or Secretary on the written request of two directors may provide, by
resolution, the time and place, either within or without the State of Nevada, as
the place for holding any special meeting of the Board of Directors called by
them.
Section 3.5 SPECIAL MEETING.
---------------------------
Special meetings of the Board of Directors may be called by or at the
request of the Chairman or any two directors. The person or persons authorized
to call special meetings of the Board of Directors may fix any place, either
within or without the State of Nevada, as the place for holding any special
meeting of the Board of Directors called by them.
Section 3.6 NOTICE. Written notice of any special meeting of directors
------------------
shall be given as follows:
By telefax to each director at his business address at least three days
prior to the meeting; or
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By personal delivery or telegram at least three days prior to the meeting to
the business address of each director, or, in the event such notice is given on
a Saturday, Sunday or holiday, to the residence address of each director. If
notice be given by telegram, such notice shall be deemed to be delivered when
the telefax is received by the receiving directors telefax machine or the
telegram is delivered to the telegraph company. Any director may waive notice
of any meeting. The attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted, nor the purpose of, any regular or special meeting of the Board of
Directors need be specified in the notice or waiver of notice of such meeting.
Section 3.7 QUORUM.
------------------
A majority of the number of directors fixed by or pursuant to Section 3.3 of
this Article III shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors, but if less than such majority is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice.
Section 3.8 MANNER OF ACTING.
----------------------------
Except as otherwise required by law or by the Articles of Incorporation, the
act of the majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
Section 3.9 INFORMAL ACTION BY DIRECTORS.
----------------------------------------
Any action required or permitted to be taken by the Board of Directors or by
a committee thereof at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
directors or all of the committee members entitled to vote with respect to the
subject matter thereof. Facsimilie or telefax signatures shall have the same
effect as original signatures on such consents in lieu of a meeting.
Section 3.10 PARTICIPATION BY ELECTRONIC MEANS.
----------------------------------------------
Any members of the Board of Directors or any committee designated by such
Board may participate in a meeting of the Board of Directors or committee by
means of telephone conference or similar communications equipment by which all
persons participating in the meeting can hear each other at the same time. Such
participation shall constitute presence at the meeting.
Section 3.11 VACANCIES.
----------------------
Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the Board of Directors. A
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director elected to fill a vacancy shall be elected for the unexpired term of
his predecessor in office. Any directorship to be filled by reason of any
increase in the number of directors may be filled by election by the Board of
Directors for a term of office continuing only until the next election of
directors by the shareholders.
Section 3.12 RESIGNATION.
------------------------
Any director of the corporation may resign at any time by giving written
notice to the president or the secretary of the corporation. The resignation of
any director shall take effect upon receipt of notice thereof or at such later
time as shall be specified in such notice; and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective. When one or more directors shall resign from the board, effective at
a future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereof to take effect when such resignation or resignations shall become
effective.
Section 3.13 REMOVAL.
--------------------
Any director or directors of the corporation may be removed at any time,
with or without cause, in the manner provided in the Nevada Corporation Code.
Section 3.14 COMMITTEES.
-----------------------
By resolution adopted by a majority of the Board of Directors, the directors
may designate two or more directors to constitute a committee, any of which
shall have such authority in the management of the corporation as the Board of
Directors shall designate and as shall not be proscribed by the Nevada
Corporation Code.
Section 3.15 COMPENSATION.
-------------------------
By resolution of the Board of Directors and irrespective of any personal
interest of any of the members, each director may be paid his expenses, if any,
of attendance at each meeting of the Board of Directors, and each non-employee
director may be paid a stated salary as director or a fixed sum for attendance
at each meeting of the Board of Directors or such other compensation, in stock
or options as such Board of Directors shall determine. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor.
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Section 3.16 PRESUMPTION OF ASSENT.
----------------------------------
A director of the corporation who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who votes in favor of such
action.
ARTICLE IV
OFFICERS
Section 4.1 NUMBER.
------------------
The officers of the corporation shall be a President, a Secretary, and a
Treasurer, each of whom shall be elected by the Board of Directors. Such other
officers, including one or more Vice Presidents, assistant officers, agents, and
employees as may be deemed necessary may be elected or appointed by the Board of
Directors. Any two or more offices may be held by the same person, except the
offices of President and Secretary. The officers of the corporation shall be
natural persons, eighteen years of age of older.
Section 4.2 ELECTION AND TERM OF OFFICE.
---------------------------------------
The principal officers of the corporation to be elected by the Board of
Directors shall be elected annually by the Board of Directors at the first
meeting of the Board of Directors held after the annual meeting of the
shareholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as practicable. Each officer
shall hold office until his successor shall have been duly elected and shall
have qualified or until his death or until he shall resign or shall have been
removed in the manner hereinafter provided.
Section 4.3 REMOVAL.
-------------------
Any officer or agent may be removed by the Board of Directors whenever in
its judgment the best interests of the corporation will be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of any officer or agent shall not of
itself create contract rights.
Section 4.4 VACANCIES.
---------------------
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the Board of Directors for the
unexpired portion of the term.
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Section 4.5 PRESIDENT.
---------------------
The President shall be the chief executive officer of the Board of Directors
and, subject to the control of the Board of Directors, shall in general
supervise and control all of the business and affairs of the corporation. He
shall, when present, and in the absence of a Chairman of the Board, preside at
all meetings of the shareholders and of the Board of Directors. He may sign,
with the Secretary or any other proper officer of the corporation thereunto
authorized by the Board of Directors, certificates for shares of the corporation
and deeds, mortgages, bonds, contracts, or other instruments which the Board of
Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these By-Laws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed; and in general shall perform
all duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
Section 4.6 THE VICE PRESIDENT.
------------------------------
If elected or appointed by the Board of Directors, the Vice President (or in
the event there be more than one vice president, the vice presidents in the
order designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall, in the absence of the
President or in the event of his death, inability or refusal to act, perform all
duties of the President, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the President. Any Vice President may
sign, with the Secretary or an Assistant Secretary, certificates for shares of
the corporation; and shall perform such other duties as from time to time may be
assigned to him by the President or by the Board of Directors.
Section 4.7 THE SECRETARY.
-------------------------
The Secretary shall: (a) keep minutes of the proceedings of the shareholders
and of the Board of Directors in one or more minute books provided for that
purpose; (b) see that all notices are duly given in accordance with the
provisions of these By-Laws or as required by law; (c) be custodian of the
corporate records and of the seal of the corporation and see that the seal of
the corporation is affixed to all documents the execution of which on behalf of
the corporation under its seal is duly authorized; (d) keep a register of the
post office address of each shareholder which shall be furnished to the
Secretary by such shareholder; (e) sign with the President, or a Vice President,
certificates for shares of the corporation, the issuance of which shall have
been authorized by resolution of the Board of Directors; (f) have general charge
of the stock transfer books of the corporation; and (g) in general perform all
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to him by the President or by the Board of Directors.
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Section 4.8 THE TREASURER.
-------------------------
The Treasurer shall: (a) have charge and custody of and be responsible for
all funds and securities of the corporation; (b) receive and give receipts for
moneys due and payable to the corporation from any source whatsoever, and
deposit all such moneys in the name of the corporation in such banks, trust
companies or other depositories as shall be selected in accordance with the
provisions of Article V of these By-laws; and (c) in general perform all of the
duties incident to the office of Treasurer and such other duties as from time to
time may be assigned to him by the President or by the Board of Directors.
Section 4.9 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.
----------------------------------------------------------
The Assistant Secretaries, when authorized by the Board of Directors, may
sign with the President or a Vice President certificates for shares of the
corporation the issuance of which shall have been authorized by a resolution of
the Board of Directors. The Assistant Secretaries and Assistant Treasurers, in
general, shall perform such duties as shall be assigned to them by the Secretary
or the Treasurer, respectively, or by the President or the Board of Directors.
Section 4.10 BONDS.
------------------
If the Board of Directors by resolution shall so require, any officer or
agent of the corporation shall give bond to the corporation in such amount and
with such surety as the Board of Directors may deem sufficient, conditioned upon
the faithful performance of their respective duties and offices.
Section 4.11 SALARIES.
---------------------
The salaries of the officers shall be fixed from time to time by the Board
of Directors and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 5.1 CONTRACTS.
---------------------
The Board of Directors may authorize any officer or officers, agent or
agents, to enter into any contract or execute and deliver any instrument in the
name of and on behalf of the corporation, and such authority may be general or
confined to specific instances.
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Section 5.2 LOANS.
-----------------
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the Board of Directors. Such authority may be general or confined to specific
instances.
Section 5.3 CHECKS, DRAFTS, ETC.
-------------------------------
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation and in such
manner as shall from time to time be determined by resolution of the Board of
Directors.
Section 5.4 DEPOSITS.
--------------------
All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies or
other depositories as the Board of Directors may select.
ARTICLE VI
SHARES, CERTIFICATES FOR SHARES AND TRANSFER OF SHARES
Section 6.1 REGULATION. The Board of Directors may make such rules and
----------------------
regulations as it may deem appropriate concerning the issuance, transfer and
registration of certificates for shares of the corporation, including the
appointment of transfer agents and registrars.
Section 6.2 CERTIFICATES FOR SHARES.
-----------------------------------
Certificates representing shares of the corporation shall be respectively
numbered serially for each class of shares, or series thereof, as they are
issued, shall be impressed with the corporate seal or a facsimile thereof, and
shall be signed by the President or a Vice-President and by the Treasurer or an
Assistant Treasurer or by the Secretary or an Assistant Secretary; provided that
such signatures may be facsimile if the certificate is countersigned by a
transfer agent, or registered by a registrar other than the corporation itself
or its employee. Each certificate shall state the name of the corporation, the
fact that the corporation is organized or incorporated under the laws of the
State of Nevada, the name of the person to whom issued, the date of issue, the
class (or series of any class), the number of shares represented thereby and the
par value of the shares represented thereby or a statement that such shares are
without par value. A statement of the designations, preferences,
qualifications, limitations, restrictions and special or relative rights of the
shares of each class shall be set forth in full or summarized on the face or
back of the certificates which the corporation shall issue, or in lieu thereof,
the certificate may set forth that
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such a statement or summary will be furnished to any shareholder upon request
without charge. Each certificate shall be otherwise in such form as may be
prescribed by the Board of Directors and as shall conform to the rules of any
stock exchange on which the shares may be listed.
The corporation shall not issue certificates representing fractional shares
and shall not be obligated to make any transfers creating a fractional interest
in a share of stock. The corporation may, but shall not be obligated to, issue
scrip in lieu of any fractional shares, such scrip to have terms and conditions
specified by the Board of Directors.
Section 6.3 CANCELLATION OF CERTIFICATES.
----------------------------------------
All certificates surrendered to the corporation for transfer shall be
cancelled and no new certificates shall be issued in lieu thereof until the
former certificates for a like number of shares shall have been surrendered and
cancelled, except as herein provided with respect to lost, stolen or destroyed
certificates.
Section 6.4 LOST, STOLEN OR DESTROYED CERTIFICATES.
--------------------------------------------------
Any shareholder claiming that his certificate for shares is lost, stolen or
destroyed may make an affidavit or affirmation of that fact and lodge the same
with the Secretary of the corporation, accompanied by a signed application for a
new certificate. Thereupon, and upon the giving of a satisfactory bond of
indemnity to the corporation not exceeding an amount double the value of the
shares as represented by such certificate (the necessity for such bond and the
amount required to be determined by the President and Treasurer of the
corporation), a new certificate may be issued of the same tenor and representing
the same number, class and series of shares as were represented by the
certificate alleged to be lost, stolen or destroyed.
Section 6.3 TRANSFER OF SHARES.
------------------------------
Subject to the terms of any shareholder agreement relating to the transfer
of shares or other transfer restrictions contained in the Articles of
Incorporation or authorized therein, shares of the corporation shall be
transferable on the books of the corporation by the holder thereof in person or
by his duly authorized attorney, upon the surrender and cancellation of a
certificate or certificates for a like number of shares. Upon presentation and
surrender of a certificate for shares property endorsed and payment of all taxes
therefor, the transferee shall be entitled to a new certificate or certificates
in lieu thereof. As against the corporation, a transfer of shares can be made
only on the books of the corporation and in the manner hereinabove provided, and
the corporation shall be entitled to treat the holder of record of any share as
the owner thereof and shall not be bound to recognize any equitable or other
claim to or interest in such share on the part of any other person, whether or
not it shall have express or other notice thereof, save as expressly provided by
the statutes of the State of Nevada.
ARTICLE VII
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FISCAL YEAR
The fiscal year of the corporation shall be as designated from time to time
by the Board of Directors.
ARTICLE VIII
DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and its Articles of Incorporation.
ARTICLE IX
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation
and the state of incorporation and the words "CORPORATE SEAL".
ARTICLE X
AMENDMENTS
These By-Laws may be altered, amended or repealed and new By-Laws may be
adopted by a majority of the directors present at any meeting of the Board of
Directors of the corporation at which a quorum is present.
ARTICLE XII
EXECUTIVE COMMITTEE
Section 12.1 APPOINTMENT.
------------------------
The Board of Directors by resolution adopted by a majority of the full
Board, may designate two or more of its members to constitute an Executive
Committee. The designation of such Committee and the delegation thereto of
authority shall not operate to relieve the Board of Directors, or any member
thereof, of any responsibility imposed by law.
Section 12.2 AUTHORITY.
----------------------
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The Executive Committee, when the Board of Directors is not in session,
shall have and may exercise all of the authority of the Board of Directors
except to the extent, if any, that such authority shall be limited by the
resolution appointing the Executive Committee and except also that the Executive
Committee shall not have the authority of the Board of Directors in reference to
amending the Articles of Incorporation, adopting a plan of merger or
consolidation, recommending to the shareholders the sale, lease or other
disposition of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or a
revocation thereof, or amending the By-Laws of the corporation.
Section 12.3 TENURE AND QUALIFICATIONS.
--------------------------------------
Each member of the Executive Committee shall hold office until the next
regular annual meeting of the Board of Directors following his designation and
until his successor is designated as a member of the Executive Committee and is
elected and qualified.
Section 12.4 MEETINGS.
---------------------
Regular meetings of the Executive Committee may be held without notice at
such time and places as the Executive committee may fix from time to time by
resolution. Special meetings of the Executive Committee may be called by any
member thereof upon not less than one day's notice stating the place, date and
hour of the meeting, which notice may be written or oral, and if mailed, shall
be deemed to be delivered when deposited in the United States mail addressed to
the member of the Executive Committee at his business address. Any member of
the Executive may waive notice given to any member thereof who attends in per-
son. The notice of a meeting of the Executive Committee need not state the
business proposed to be transacted at the meeting.
Section 12.5 QUORUM.
-------------------
A majority of the members of the Executive Committee shall constitute a
quorum for the transaction of business at any meeting thereof, and action of the
Executive Committee must be authorized by the affirmative vote of a majority of
the members present at a meeting at which a quorum is present.
Section 12.6 INFORMAL ACTION BY EXECUTIVE COMMITTEE.
---------------------------------------------------
Any action required or permitted to be taken by the Executive Committee at a
meeting may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the directors entitled to vote
with respect to the subject matter thereof. Facsimilie or telefax signatures
shall have the same effect as original signatures on such consents in lieu of a
meeting.
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Section 12.7 VACANCIES.
----------------------
Any vacancy in the Executive Committee may be filled by a resolution adopted
by a majority of the full Board of Directors.
Section 12.8 RESIGNATIONS AND REMOVAL.
-------------------------------------
Any member of the Executive Committee may be removed at any time with or
without cause by resolution adopted by a majority of the full Board of
Directors. Any member of the Executive Committee may resign from the Executive
Committee at any time by giving written notice to the President or Secretary of
the corporation, and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 12.9 PROCEDURE.
----------------------
The Executive Committee shall elect a presiding officer from its members and
may fix its own rules of procedure which shall not be inconsistent with these
By-Laws. It shall keep regular minutes of its proceedings and report the same
to the Board of Directors for its information at the meeting thereof held next
after the proceedings shall have been taken.
ARTICLE XIII
EMERGENCY BY-LAWS
The Emergency By-Laws provided in this Article XIII shall be operative
during an emergency in the conduct of the business of the corporation resulting
from an attack on the United States or any nuclear or atomic disaster,
notwithstanding any different provision in the preceding articles of the By-Laws
or in the Articles of Incorporation of the corporation or in the Nevada
Corporation Code. To the extent not inconsistent with the provisions of this
Article, the By-Laws provided in the preceding articles shall remain in effect
during such emergency and upon its termination the Emergency By-Laws shall cease
to be operative.
During such an emergency:
(a) A meeting of the Board of Directors may be called by any officer or
director of the corporation. Notice of the time and place of the meeting shall
be given by the person calling the meeting to such of the directors as it may be
feasible to reach by any available means of communication. Such notice shall be
given at such time in advance of the meeting as circumstances permit in the
judgment of the person calling the meeting.
(b) At any such meeting of the Board of Directors, a quorum shall consist
of the number of directors in attendance at such meeting.
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(c) The Board of Directors, either before or during any such emergency,
may, effective in the emergency, change the principal office or designate
several alternative principal offices or regional offices, or authorize the
officer's so to do.
(d) The Board of Directors, either before or during any Such emergency, may
provide, and from time to time modify, lines of succession in the event that
during such an emergency any or all officers or agents of the corporation shall
for any reason be rendered incapable of discharging their duties.
(e) No officer, director or employee acting in accordance with these
Emergency ByLaws shall be liable except for willful misconduct.
(f) These Emergency By-Laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, but no such
repeal or change shall modify the provisions of the next preceding paragraph
with regard to action taken prior to the time of such repeal or change. Any
amendment of these Emergency By-Laws may make any further or different provision
that may be practical and necessary for the circumstances of the emergency.
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