-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JxwLCR7XH8j2c07LGhmSG9S12yWcc3sqyy/pOHzzEMdLFm6CGBSCHNSYmcnS6vqn 9H92Lih0NUlyQVECoOP2Wg== 0001060830-00-000033.txt : 20000313 0001060830-00-000033.hdr.sgml : 20000313 ACCESSION NUMBER: 0001060830-00-000033 CONFORMED SUBMISSION TYPE: 8-K12G3 PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19991231 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000310 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STARFEST INC CENTRAL INDEX KEY: 0001005101 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 954442384 FILING VALUES: FORM TYPE: 8-K12G3 SEC ACT: SEC FILE NUMBER: 000-29913 FILM NUMBER: 565420 BUSINESS ADDRESS: STREET 1: 201 ROBERT S KERR AVE STREET 2: SUITE 1000 CITY: SCOTTSDALE STATE: AZ ZIP: 73102 BUSINESS PHONE: 4052352575 MAIL ADDRESS: STREET 1: 9494 E. REDFIELD RD STREET 2: SUITE 1136 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 8-K12G3 1 FORM 8-K123G FOR STARFEST, INC. U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 8-K123G CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): March 8, 2000 Starfest, Inc. (Exact name of registrant as specified in its charter) California O-27173 95-4442384 - -------------- ------------------------ ------------- (State of (Commission File Number) (IRS Employer Incorporation) I. D. Number) 9494 East Redfield Road, #1136 Scottsdale, AZ 85260 480-551-8280 ------------------------------------------------------- (Address and telephone number of registrant's principal executive offices and principal place of business) MAS Acquisition XX Corp. 1710 E. Division Street Evansville, IN 47711 ------------------------------------------------------ (Former name or address, if changed since last report) Item 1. Changes in Control of Registrant. (a) Pursuant to a Stock Purchase Agreement (the "Purchase Agreement) dated March 6, 2000 between MAS Capital, Inc., an Indiana corporation, the controlling shareholder of MAS Acquisition XX Corp. (MAS XX"), an Indiana corporation, and Starfest, Inc., a California corporation ("Starfest" or the "Company"), approximately 96.83 percent (8,250,000 shares) of the outstanding shares of common stock of MAS Acquisition XX Corp. were exchanged for $100,000 and 150,000 shares of common stock of Starfest in a transaction in which Starfest became the parent corporation of MAS XX. The Purchase Agreement was adopted by the unanimous consent of the Board of Directors of MAS XX on March 7, 2000. The Purchase Agreement was adopted by the unanimous consent of the Board of Directors of Starfest on March 7, 2000. No approval of the shareholders of Starfest or MAS XX is required under applicable state corporation law. Prior to the merger, MAS XX had 8,519,800 shares of common stock outstanding, of which 8,250,000 shares were exchanged for 100,000 shares of common stock of Starfest. By virtue of the exchange, Starfest acquired 96.83 percent of the issued and outstanding shares of common stock of MAS XX. Prior to the effectiveness of the Purchase Agreement, Starfest had an aggregate of 23 million shares of common stock, no par value, issued and outstanding. Upon effectiveness of the acquisition, Starfest had an aggregate of 23,150,000 shares of common stock outstanding. The officers of Starfest continue as officers of Starfest subsequent to the Purchase Agreement. See "Management" below. The officers, directors and by-laws of Starfest will continue without change. A copy of the Purchase Agreement is attached hereto as an exhibit. The foregoing description is modified by such reference. (b) The following table sets forth certain information regarding beneficial ownership of the common stock of Starfest as of March 7, 2000 by each individual who is known to Starfest, as of the date of this filing, to be the beneficial owner of more than five percent of Starfest's common stock, its only voting security. 2 Name and Address Amount and Of Beneficial Nature of Percent of Owner Beneficial Ownership(1) Class ---------------- ----------------------- ---------- Thomas J. Kenan 1,360,000 shares (2) 5.9% 212 N.W. 18th St. Oklahoma City, OK 73103 Gary Bryant 1,310,000 shares (3) 5.7% --------- (1) Unless otherwise indicated, Starfest believes that all persons named in the above table have the sole voting and investment power with respect to all shares of common stock beneficially owned by them. (2) 760,000 of these shares are held of record by the Marilyn C. Kenan Trust, of which trust Marilyn C. Kenan, the spouse of Thomas J. Kenan, is the trustee and beneficiary. Mr. Kenan disclaims any beneficial ownership of any of the shares held in the trust. (3) 570,000 of these shares are held of record by Suzanne Bryant, Mr. Bryant's spouse, and 370,000 are held of record by Newport Capital Corporation, a corporation under the control of Mr. Bryant. Mr. Bryant disavows any beneficial ownership of any of the shares held by Mrs. Bryant. The table below sets forth the ownership, as of the date of this filing, by all directors and nominees, and each of the named executed officers of Starfest, and directors and executive officers of Starfest as a group, of the common stock of Starfest, its only voting security. Name and Address of Amount and Nature of Percent of Owner Beneficial Ownership Class ---------------- -------------------- ---------- Michael Huemmer 760,000 shares 3.3% 9494 E. Redfield Road, #1136 Scottsdale, AZ 85260 3 Janet Alexander 100,000 shares 0.4% 120 E. Andreas Road, Suite C Palm Springs, CA 92262 Officers and Directors 860,000 shares 3.7% as a Group (2 persons) There are no agreements between or among any of the shareholders that would restrict the issuance of shares in a manner that would cause any change in control of Starfest. There are no voting trusts, pooling arrangements or similar agreements in the place between or among any of the shareholders, nor do the shareholders anticipate the implementation of such an agreement in the near future. A change in control could occur in the future, however, should the shareholders of Starfest and Concierge, Inc., a Nevada corporation, approve an agreement of merger entered into between Starfest and Concierge on January 26, 2000. The proposed merger will be submitted to the shareholders of each of Starfest and Concierge pursuant to a Form S-4 Prospectus-Proxy Statement to be filed with the Commission as soon as the necessary audited financial statements of Concierge are prepared. It is expected that these financial statements will be available within 60 days. Pursuant to the agreement of merger between Starfest and Concierge, o Starfest will be the surviving corporation, o The shareholders of Concierge will receive pro rata for their shares of common stock of Concierge, 86,000,000 shares of common stock of Starfest in the merger, and all shares of capital stock of Concierge will be cancelled, o The officers and directors of Concierge will become the officers and directors of Starfest, and o The name of Starfest will be changed to "Concierge Technologies, Inc." 4 Item 2. Acquisition or Disposition of Assets. (a) The consideration exchanged pursuant to the Purchase Agreement was negotiated between representatives of the shareholders of MAS XX and the management of Starfest. In evaluating Starfest as a candidate for the proposed acquisition, MAS XX used criteria such as the value of the assets of Starfest and of Concierge, Inc., Starfest's present stock price as set forth on the OTC Bulletin Board, Concierge's anticipated operations, and Starfest's and Concierge's business names and reputations. The shareholders of MAS XX determined that the consideration for the exchange was reasonable. (b) Starfest was incorporated under the laws of the State of California on August 18, 1993. It was originally named "Fanfest, Inc." On August 29, 1995 its name was changed to "Starfest, Inc." Description of Business and Properties. - -------------------------------------- Starfest's initial business was the production and promotion of theme events involving numerous artists and performers and designed to attract mass audiences of fans drawn by the theme. In 1994 and 1995 it produced "Fanfest," which was held at the Fairplex at the Los Angeles County Fairgrounds, and which won the Airplay International Award as the "Country Music Event of the Year." In 1995 the event won the Country Music Associations of America's award as the "Best Country Event of the Year." In 1996 the event was renamed "Starfest" and was again held in Los Angeles. The events all lost money. In 1997 the event was planned but was cancelled before being held. The company was essentially dormant in 1998 with its activities being limited to dealing with creditors and to attempting to raise capital for the resumption of business. In 1999 Starfest turned control of the company over to individuals involved in the adult Internet entertainment business. Under this new direction the company bought three websites found on the Internet through www.starfest.com with the front-page title of adultstars.com. Starfest also - ---------------- purchased and paid for twelve websites on the Internet, but the written transfer of the websites was never obtained, and the right to obtain the transfer of those websites have been sold and transferred to unrelated third parties. 5 Stockholders owning a majority of the outstanding stock of Starfest regained control of the management of the company and, on December 31, 1999, pursuant to the written consent of persons holding a majority of the outstanding shares of common stock of the company, Starfest sold all the assets of the company associated with the adult entertainment business for $10,000 and applied this and its other cash assets to the payment of outstanding liabilities. On January 18, 2000, Starfest and Concierge executed a letter of intent to submit to their stockholders a proposal to merge. An agreement of merger was executed on January 26, 2000. Starfest will be the surviving corporation of the merger, but the business and management of the merged companies will be that of Concierge. Pending approval of the merger, Starfest has no business or significant assets. Starfest's present management consists of two persons, Michael Huemmer, president, and Barbara Alexander, secretary. Course of Business for Starfest Should the Merger Not Occur. - ----------------------------------------------------------- Should the stockholders of the two companies not approve the merger, Starfest will seek another partner. Its sole "asset" is its status as a public company whose stock trades on the OTC Bulletin Board. Legal Proceedings. ----------------- Neither Starfest nor its property is a party to, or the subject of, pending legal proceedings. Market for Starfest's Common Stock and Related Stockholder Matters. ------------------------------------------------------------------ Starfest's Common Stock presently trades on the OTC Bulletin Board. The high and low bid and asked prices, as reported by the OTC Bulletin Board, are as follows for 1998 and 1999. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. 6 High Low ---- --- 1998: 1st Qtr. 0.02 0.005 2nd Qtr. 0.01 0.005 3rd Qtr. 0.03 0.005 4th Qtr. 0.021 0.01 1999: 1st Qtr. 0.1000 0.0050 2nd Qtr. 0.5938 0.0200 3rd Qtr. 0.2000 0.0600 4th Qtr. 0.1050 0.0450 Description of Concierge's Business - ----------------------------------- Overview - -------- Concierge was incorporated on September 20, 1996, in the State of Nevada. Its principal office is at 6033 W. Century Boulevard, Suite 1278, Los Angeles, California 90045. Its telephone number is (310) 645-1582. Concierge'S Plan of Operation ----------------------------- Concierge has developed a "unified messaging" product - the Personal Communications Attendent ("PCA(TM)). It proposes to market this product commencing in April 2000. Description of the PCA(TM) -------------------------- Concierge's PCA provides a means by which any user of Internet e-mail can have e-mail and fax messages spoken to him or her over any touch-tone telephone or wireless phone in the world. The PCA(TM) responds to the user's voice commands to read, verbalize and manage e-mail traffic stored on a personal computer. The PCA (TM) is "trained" to respond only to the voice commands and personal voice password of the individual user, thus guaranteeing that each user's personal messages cannot be accessed by anyone else. Responding to spoken instructions, the PCA (TM) can verbalize e-mail with fax and voice-mail capabilities over the phone and save or delete those messages as directed by the user. Even more exciting, the user, by voice command, over the telephone, can dictate e-mail messages to respond to the e-mail messages accessed by telephone. 7 The Market ---------- As of early 1999, there were estimated to be over 250 million e-mail users worldwide, a number which is growing rapidly. As to the domestic market, last year there were more than 40 million e-mail users in the U.S. churning out more than 150 million messages a day. By 2003 that could reach more than 200 million users, creating 7 billion messages a day. A substantial majority of this group are potential users of Concierge's current products and products planned for release. Distribution Methods -------------------- Concierge plans an aggressive, direct-mail and Internet-marketing campaign to introduce and promote the PCA (TM). Production Costs ---------------- The PCA (TM) will be manufactured and produced for Concierge by Xetel Corp. A service order fulfillment contract is being negotiated at this time with an unaffiliated third party corporation. Emerald Solutions, Inc. will provide project management, program design and program coding services to implement products designed by Concierge. The e-mail version will retail at $39.95. With a $19.95 upgrade, the pro version monitors and collects fax, voice mail and e-mail messages. There will be no monthly service fee. No device other than an ordinary telephone is needed to access the PCA(TM). The PCA (TM) also includes an auto pager that notifies the user by phone or pager when new e-mail is received. Considering directing product costs including royalties, Concierge projects a gross profit margin of approximately 80 to 90 percent of direct sales. Concierge is in the process of "nationalizing" the product to accommodate several foreign languages, including Japanese, Korean, German, Latin American Spanish, French and Brazilian Portuguese. Governmental Approval of Principal Products ------------------------------------------- No governmental approval is required in the U.S. for Concierge's products. 8 Government Regulations ---------------------- There are no governmental regulations in the U.S. that apply to Concierge's products. Properties. ---------- Concierge subleases approximately 150 square feet of office space at Suite 1278, 6033 W. Century Boulevard, Los Angeles, California 90045. The space is deemed adequate for the present time, but additional space will be needed commencing in April 2000. Concierge has not yet identified the additional space it will lease, but ample space is available in the vicinity of its present space and elsewhere in the Los Angeles area. Dependence on Major Customers and Suppliers ------------------------------------------- Concierge does not anticipate that it will be dependent on any major customers or suppliers. Seasonality ----------- There should be no seasonal aspect to Concierge's business other than increased sales anticipated in the fourth calendar quarter associated with the year-end holidays. Research and Development ------------------------ Concierge expended approximately $188,663 on research and development in 1998 and $50,431 in 1999. It anticipates that it will expend approximately $150,000 on research and development in 2000 and approximately $200,000 in 2001. Environmental Controls ---------------------- Concierge is subject to no environmental controls or restrictions that require the outlay of capital or the obtaining of a permit in order to engage in business operations. Your 2000 Computer Problem -------------------------- Concierge has determined that it does not face material costs, problems or uncertainties about the year 2000 computer problem. This problem affects many companies and organizations and stems from the fact that many existing computer programs use only two digits to identify a year in the date field and do not consider the impact of the year 2000. Concierge presently uses off-the-shelf and easily replaceable software programs and has determined that all software is year 2000 compliant. 9 Number of Employees. ------------------- On March 1, 2000 Concierge employed two persons full-time and two persons part-time. Venue of Sales. -------------- Concierge anticipates that some of its initial sales will be attributable to exports to English-speaking countries. Patents, Trademarks, Copyrights and Intellectual Property. --------------------------------------------------------- Concierge has trademarked its Personal Communications Attendant. It has no patents on the product; the underlying technology is the subject of patents, and Concierge is required to pay royalty of approximately $0.50 a PCA unit to each of two unaffiliated patent holders, Lexicus, a subsidiary of Motorola, and Fonix. Legal Proceedings. ----------------- Neither Concierge nor any of its property is a party to, or the subject of, any material pending legal proceedings other than ordinary, routine litigation incidental to its business. Financial Condition ------------------- As of March 8, 2000, Concierge had cash assets of approximately $500,000 acquired through the sale of its common stock in an offering exempt from registration pursuant to the provisions of the Commission's Regulation D, Rule 506. Liquidity --------- Concierge expects to improve its liquidity through anticipated sales of its PCA (TM) commencing in April 2000. Capital Resources ----------------- Should the need arise during the next twelve months for additional capital, Concierge believes that several of its existing shareholders will provide equity capital to meet this need. 10 PENNY STOCK REGULATIONS There is no way to predict a price range within which Starfest's common stock will trade after the proposed merger with Concierge. It presently trades on the OTC Bulletin Board at a price less than $5 a share and is subject to the rules governing "penny stocks." A "penny stock" is any stock that: sells for less than $5 a share. is not listed on an exchange or authorized for quotation on The Nasdaq Stock Market, and is not a stock of a "substantial issuer." Starfest is not now a "substantial issuer" and cannot become one until it has net tangible assets of at least $5 million, which it does not now have and will not have solely as a result of the proposed merger with Concierge. There are statutes and regulations of the Securities and Exchange Commission (the "Commission") that impose a strict regimen on brokers that recommend penny stocks. The Penny Stock Suitability Rule -------------------------------- Before a broker-dealer can recommend and sell a penny stock to a new customer who is not an institutional accredited investor, the broker-dealer must obtain from the customer information concerning the person's financial situation, investment experience and investment objectives. Then, the broker-dealer must "reasonably determine" (1) that transactions in penny stocks are suitable for the person and (2) that the person, or his advisor, is capable of evaluating the risks in penny stocks. After making this determination, the broker-dealer must furnish the customer with a written statement setting forth the basis for this suitability determination. The customer must sign and date a copy of the written statement and return it to the broker-dealer. Finally the broker-dealer must also obtain from the customer a written agreement to purchase the penny stock, identifying the stock and the number of shares to be purchased. 11 The above exercise delays a proposed transaction. It causes many broker-dealer firms to adopt a policy of not allowing their representatives to recommend penny stocks to their customers. The Penny stock Suitability Rule, described above, and the Penny Stock Disclosure Rule, described below, do not apply to the following: transactions not recommended by the broker-dealer, sales to institutional accredited investors, sales to "established customers" of the broker-dealer - persons who either have had an account with the broker-dealer for at least a year or who have effected three purchases of penny stocks with the broker-dealer on three different days involving three different issuers, and transactions in penny stocks by broker-dealers whose income from penny stock activities does not exceed five percent of their total income during certain defined periods. The Penny Stock Disclosure Rule ------------------------------- Another Commission rule - the Penny stock Disclosure Rule - requires a broker-dealer, who recommends the sale of a penny stock to a customer in a transaction not exempt from the suitability rule described above, to furnish the customer with a "risk disclosure document." This document includes a description of the penny stock market and how it functions, its inadequacies and shortcomings, and the risks associated with investments in the penny stock market. The broker-dealer must also disclose the stock's bid and ask price information and the dealer's and salesperson's compensation related to the proposed transaction. Finally, the customer must be furnished with a monthly statement including prescribed information relating to market and price information concerning the penny stocks held in the customer's account. Effects of the Rule ------------------- The above penny stock regulatory scheme is a response by the Congress and the Commission to known abuses in the telemarketing of low-priced securities 12 by "boiler shop" operators. The scheme imposes market impediments on the sale and trading of penny stocks. It has a limiting effect on a stockholder's ability to resell a penny stock. Starfest's merger shares likely will trade below $5 a share on the OTC Bulletin Board and be, for some time at least, shares of a "penny stock" subject to the trading market impediments described above. Directors and Executive Officers of Starfest - -------------------------------------------- The following persons are the current directors and officers of Starfest: Office Held Term Person Offices Since of Office - ------ ------- ----------- --------- Michael Huemmer,60 President and 1999 2000 Director Janet Alexander,66 Secretary and 1999 2000 Director Michael Huemmer. Mr. Huemmer has been employed by Starfest since April --------------- 1999. Prior to this employment he was the president of Ameripro Sports Marketing Company of Palm Desert, California from 1995 until his employment with Starfest. Janet Alexander. Ms. Alexander has served as Starfest's secretary since --------------- July 1999. Prior to this employment she was self-employed as a hypnotherapist in Wildomer, California from 1995 until June 1998 when she moved to Palm Springs, California. She was not employed from June 1998 until she became the secretary of Starfest in July 1999. There are no family relationships between the directors and officers. There are no significant employees of Starfest who are not described above. Executive Compensation ---------------------- During 1999 no executive officer of Starfest received cash compensation except Mr. Huemmer. He received an aggregate of $18,000 in cash compensation and 300,000 shares of common stock of Starfest for his services as president during 1999. In 2000 he was granted 760,000 shares of common stock of Starfest for his services as president during 2000. 13 In November 1999 Ms. Alexander was granted 100,000 shares of common stock of Starfest as compensation for her services as secretary and a director. Other than as stated above, no cash compensation, deferred compensation or long-term incentive plan awards were issued or granted to Starfest's management during the period ended December 31, 1999. Further, no member of Starfest's management has been granted any option or stock appreciation rights; accordingly, no tables relating to such items have been included within this Item. There are no employment contracts, compensatory plans or arrangements, including payments to be received from Starfest, with respect to any director or executive officer of Starfest which would in any way result in payments to any such person because of his or her resignation, retirement or other termination of employment with Starfest or its subsidiaries, any change in control or Starfest, or a change in the person's responsibilities following a change in control of Starfest. Long-Term Compensation - ---------------------- As of March 7, 2000, Starfest has no long-term compensation plans or employment agreements with any of its officers or directors. Potential De-Listing of Common Stock - ------------------------------------ Starfest may be de-listed from the OTC Bulletin Board. NASD Eligibility Rule 6530 issued on January 4, 1999, states that Issuers that do not make current filings pursuant to Sections 13 and 15(d) of the Securities Exchange Act of 1934 are ineligible for listing on the OTC Bulletin Board. Issuers who are not current with such filings are subject to de-listing according to a phase-in schedule depending on each issuer's trading symbol as reported on January 4, 1999. Our trading symbol on January 4, 1999 was SFST. Under the phase-in schedule, our common stock is subject to de-listing on April 5, 2000. On March 10, 2000 our common stock trading symbol will be changed to SFSTE if we are not current in filing reports by that date. 14 Item 3. Bankruptcy or Receivership. ----------------------------------- Not applicable. Item 4. Changes in Registrant's Certifying Accountant. ------------------------------------------------------ Not applicable. Item 5. Other Events. --------------------- Successor Issuer Election. - ------------------------- Upon execution of the Purchase Agreement and the subsequent delivery of $100,000 cash and 150,000 shares of common stock of Starfest on March 7, 2000, to MAS Capital Inc., pursuant to Rule 12g-3(a) of the General Rules and Regulations of the Securities and Exchange Commission, Starfest became the successor issuer to MAS Acquisition XX Corp. for reporting purposes under the Securities and Exchange Act of 1934 and elected to report under the Act effective March 7, 2000. Item 6. Resignations of Directors and Executive Officers. -------------------------------------------------------- Not applicable. Item 7. Financial Statements. ---------------------------- Starfest, Inc. Independent Auditors' Report..................................... 16 Balance Sheet as of December 31, 1999............................ 17 Statement of Operations for the years ended December 31, 1999 and December 31, 1998 ........................................ 18 Statement of Changes in Stockholders' Equity (Deficit) for the period from December 31, 1997 to December 31, 1999 ................... 19 Statements of Cash Flows for the years ended December 31, 1999 and December 31, 1998 .................. 20 Notes to Financial Statements 15 INDEPENDENT AUDITOR'S REPORT To the Shareholders and Board of Directors Starfest, Inc. I have audited the accompanying balance sheet of Starfest, Inc. as of December 31, 1999, and the related statements of operations, stockholders' equity (deficit) and cash flows for the year ended December 31, 1999 and the year ended December 31, 1998. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Starfest, Inc. as of December 31, 1999, and the results of its operations and its cash flows for the year ended December 31, 1999 and the year ended December 31, 1998, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring significant losses from operations that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Beverly Hills, California February 9, 2000 16 STARFEST, INC. BALANCE SHEET DECEMBER 31, 1999 ASSETS Cash $ 481 ----------- LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities Accounts payable $ 17,687 ----------- Total current liabilities 17,687 ----------- Stockholders' equity (deficit) Common stock: no par value, 65,000,000 shares authorized; 21,697,999 shares issued and outstanding 2,639,651 Retained earnings (deficit) (2,656,857) ----------- Total stockholders' equity (deficit) (17,206) ----------- $ 481 ===========
See accompanying notes to financial statements. 17 STARFEST, INC. STATEMENT OF OPERATIONS
For the Year Ended December 31, December 31, 1999 1998 ------------ ------------ Revenues $ - $ - ------------ ------------ General and Administrative Expenses 518,606 2,366 ------------ ------------ Operating (Loss) (518,606) (2,366) Provision for income taxes - - ------------ ------------ NET (LOSS) $ (518,606) $ (2,366) Net (Loss) per common share $ (.04) $ (.01) Weighted Average Shares Outstanding 15,893,441 8,301,323
See accompanying notes to financial statements. 18 STARFEST, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY/(DEFICIT)
Common Stock Retained Number of Amount Earnings Shares Total (Deficit) Total --------- ------ --------- ----- Balance, December 31, 1997 6,236,323 $1,598,072 $(2,135,885) $ (537,813) Net (loss) for year ended December 31, 1998 - - (2,366) (2,366) ---------- ---------- ----------- ---------- Balance, December 31, 1998 6,236,323 1,598,072 (2,138,251) (540,179) Shares issued for services 2,313,338 87,200 - 87,200 Shares issued for assets 2,950,000 118,000 - 118,000 Shares issued for debt extinguishment 6,165,005 646,379 - 646,379 Shares issued for cash 4,033,333 190,000 - 190,000 Net (loss) for year ended December 31, 1999 - - (518,606) (518,606) ---------- ---------- ----------- ---------- Balance, December 31, 1999 21,697,999 $2,639,651 $(2,656,857) $ (17,206)
See accompanying notes to financial statements. 19 STARFEST, INC. STATEMENTS OF CASH FLOWS
Year Ended December 31, 1999 1998 ---------- ---------- Net Cash From Operating Activities: Net (loss) $(518,606) $ (2,366) Adjustments to reconcile net loss to net cash used by operating activities: Shares issued for services 87,200 - Shares issued for assets 118,000 - Shares issued for debt extinguishment 646,379 - Changes in assets and liabilities: Accounts payable (413,692) 2,366 Other liabilities (108,800) - Net cash (used) by operating activities (189,519) - Investing Activities: Net cash provided (used) by Investing Activities x - - --------- ------- Cash flows from Financing Activities Common stock issued for cash 190,000 - --------- ------- Net cash provided by Financing Activities: 190,000 Increase in Cash 481 - Cash at beginning of period - - --------- ------- Cash at end of period $ 481 $ - Supplemental cash flow information: Cash paid during the period for: Interest $ - $ - Income taxes $ - $ - Non cash financing transactions: Shares for services $ 87,200 $ - Shares for debt extinguishment $ 646,379 $ - Shares for assets $ 118,000 $ -
See accompanying notes to financial statements. 20 STARFEST, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 NOTE 1 - Summary of Significant Accounting Policies Nature of Operations Starfest, Inc. (the "Company"), a California corporation, was incorporated on August 18, 1993 as Fanfest, Inc.. In August, 1995 the Company changed its name to Starfest, Inc.. During the year ended December 31, 1998, the Company was inactive, just having minimal administrative expenses. During the year ended December 31, 1999 the Company attempted to pursue operations in the online adult entertainment field. However, the Company was not successful in this pursuit. Cash equivalents Cash equivalents consist of funds invested in money market accounts and in investments with a maturity of three months or less when purchased. There were no cash equivalents at December 31, 1999. Loss per share The computation of loss per share of common stock is based on the weighted average number of shares outstanding during the periods presented. Fully diluted calculations are not presented since the Company only had losses for all periods presented (thus antidilutive). Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in financial statements and accompanying notes. Actual results could differ from those estimates. Issuance of Shares for Services Valuation of shares for services is based on the estimated fair market value of the services performed. Income taxes The Company records its income tax provision in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". (See Note 3). 21 STARFEST, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 NOTE 1 - Summary of Significant Accounting Policies(continued) Fair Value of Financial Instruments Pursuant to SFAS No. 107, Disclosures about Fair Value of Financial Instruments, the Company is required to estimate the fair value of all financial instruments included on its balance sheet at December 31, 1999. The Company considers the carrying value of such amounts in the consolidated financial statements to approximate their expected realization and interest rates, which approximate current market rates. During the periods presented and at December 31, 1999 the Company had no financial instruments. Comprehensive Income (Loss) In fiscal 1999, the Company adopted SFAS No. 130, Reporting Comprehensive Income. This statement establishes standards for the reporting of comprehensive income and its components in a financial statement that is displayed with the same prominence as other financial statements. The adoption of SFAS No. 130 required no additional disclosure for the Company and did not have any effect on the Company's financial position, as there was no difference between comprehensive loss and the net loss as reported. Segment Disclosures In Fiscal 1999, the Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information. This Statement establishes standards for the way companies report information regarding operating segments in annual financial statements. The adoption of SFAS No. 131 required no additional disclosure for the Company as the Company operated in one principal business segment. Reclassifications Certain items in prior period financial statements have been reclassified to conform with 1999 classifications. NOTE 2 - Basis of presentation and considerations related to continued existence (going concern) The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred a net loss of $518,606 for the year ended December 31, 1999. The Company incurred a net loss of $2,366 for the year ended December 31, 1998. 22 STARFEST, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 NOTE 2 - Basis of presentation and considerations related to continued existence (going concern) (continued) These factors, among others, raise substantial doubt as to the Company's ability to continue as a going concern. The Company's management intends to raise additional operating funds through equity and/or debt offerings. However, there can be no assurance management will be successful in this endeavor. NOTE 3 - Income Taxes The Company records its income tax provision in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" which requires the use of the liability method of accounting for deferred income taxes. Since the Company did not have taxable income during the periods presented, no provision for income taxes has been provided. At December 31, 1999, the Company did not have any significant tax net operating loss carryforwards (tax benefits resulting from losses for tax purposes have been fully reserved due to the uncertainty of a going concern). At December 31, 1999, the Company did not have any significant deferred tax liabilities or deferred tax assets. NOTE 4 - Subsequent Events On January 18, 2000 the Company issued 1,302,001 of its common shares, for January, 2000 services, to three shareholders. In January and February, 2000 the Company was in negotiations regarding possibly entering into a business combination with Concierge, Inc., a development stage software developer. Concierge, Inc. does not have significant assets or revenues. 23 Item 8. Change in Fiscal Year. ----------------------------- Starfest, as the successor issuer, has a fiscal year end of December 31, which fiscal year will continue for the successor issuer. Exhibits. -------- 2 Stock Purchase Agreement of March 6, 2000 between Starfest, Inc. and MAS Capital, Inc. 3.1 Certificate of Amendment of Articles of Incorporation of Starfest, Inc. and its earlier articles of incorporation. 3.2 Bylaws of Starfest, Inc. 10.1 Agreement of Merger between Starfest, Inc. and Concierge, Inc. 23 Consent of Jaak (Jack) Olesk, certified public accountant SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Starfest, Inc. By: /s/ Michael Huemmer March 8, 2000 -------------------------- Michael Huemmer, President, Chief Operating Officer, and Director 24 EX-2 2 STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT Agreement dated as of March 6, 2000 between Starfest, Inc., a California corporation ("SFST"), on the one hand, and MAS Capital Inc. ("MASC"). 1. THE ACQUISITION. 1.1 Purchase and Sale Subject to the Terms and Conditions of this Agreement. At the Closing to be held as provided in Section 2, MASC shall sell the MAS XX Shares (defined below) to SFST, free and clear of all Encumbrances other than restrictions imposed by Federal and State securities laws. SFSX shall pay SFSX Shares (defined below) to MASC, free and clear of all Encumbrances without any restrictions. 1.2 Purchase Price. SFST will pay $100,000 cash to MASC for 8,250,000 shares of MAS Acquisition XX Corp. ("MAS XX"), representing approximately 96.8% of the issued and outstanding common shares of MAS XX (the "MAS XX Shares"). In addition SFSX will pay 150,000 common shares of Starfest, Inc. ("SFSX Shares", OTC B/B symbol "SFSX") to MASC as consulting fee. 2. THE CLOSING. 2.1 Place and Time. The closing of the sale the MAS XX Shares (the "Closing") shall take place at the office of MAS Acquisition XX Corp., 1710 E. Division St., Evansville, IN 47711 no later than the close of business (Central time) on or before March 8, 2000 or at such other place, date and time as the parties may agree in writing. 2.2 Deliveries by MASC. At the Closing, the MASC shall deliver the following to SFST: 1. Certificates representing the MAS XX Shares, duly endorsed for transfer to SFST and accompanied by appropriate guaranteed stock powers; MASC shall deliver to SFST at the Closing, a certificate representing the MAS XX Shares registered in the name of SFST (without any legend or other reference to any Encumbrance other than appropriate federal securities law limitations). 2. The documents contemplated by Section 3. 3. All other documents, instruments and writings required by this Agreement to be delivered by MASC at the Closing and any other documents or records relating to MAS XX's business reasonably requested by SFST in connection with this Agreement. 2.3 Deliveries by SFST. At the Closing, SFST shall deliver the following to MASC: 1. $100,000 cash by wire transfer to the account of MASC contemplated by section 1. 2. Certificates representing the SFSX Shares, duly endorsed for transfer to MASC and accompanied by appropriate guaranteed stock powers; SFST shall deliver to MASC at the Closing, a certificate representing the SFSX Shares registered in the name of MASC (without any legend or other reference to any Encumbrance). 2. The documents contemplated by Section 4. 3. All other documents, instruments and writings required by this Agreement to be delivered by SFST at the Closing. 3. CONDITIONS TO SFST'S OBLIGATIONS. The obligations of SFST to effect the Closing shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by SFST: 3.1 No Injunction. There shall not be in effect any injunction, order or decree of a court of competent jurisdiction that prevents the consummation of the transactions contemplated by this Agreement, that prohibits SFST's acquisition of the MAS XX Shares or that will require any divestiture as a result of SFST's acquisition of the MAS XX Shares or that will require all or any part of the business of SFST to be held separate and no litigation or proceedings seeking the issuance of such an injunction, order or decree or seeking to impose substantial penalties on SFST or MAS XX if this Agreement is consummated shall be pending. 3.2 Representations, Warranties and Agreements. (a) The representations and warranties of MASC set forth in this Agreement shall be true and complete in all material respects as of the Closing Date as though made at such time, and (b) MASC shall have performed and complied in all material respects with the agreements contained in this Agreement required to be performed and complied with by it at or prior to the Closing. 3.3 Regulatory Approvals. All licenses, authorizations, consents, orders and regulatory approvals of Governmental Bodies necessary for the consummation of SFST's acquisition of the MAS XX Shares shall have been obtained and shall be in full force and effect. 3.4 Resignations of Director. Effective on the Closing Date, all of officers and directors shall have resigned as an officer, director and employee of MAS XX. 4. CONDITIONS TO MASC'S OBLIGATIONS. The obligations of MASC to effect the Closing shall be subject to the satisfaction at or prior to the Closing of the following conditions, any one or more of which may be waived by MASC: 4.1 No Injunction. There shall not be in effect any injunction, order or decree of a court of competent jurisdiction that prevents the consummation of the transactions contemplated by this Agreement, that prohibits SFST's acquisition of the MAS XX Shares or that will require any divestiture as a result of SFST's acquisition of the MAS XX Shares or that will require all or any part of the business of SFST or MAS XX to be held separate and no litigation or proceedings seeking the issuance of such an injunction, order or decree or seeking to impose substantial penalties on SFST or MAS XX if this Agreement is consummated shall be pending. 4.2 Representations, Warranties and Agreements. (a) The representations and warranties of SFST set forth in this Agreement shall be true and complete in all material respects as of the Closing Date as though made at such time, and (b) SFST shall have performed and complied in all material respects with the agreements contained in this Agreement required to be performed and complied with by it at or prior to the Closing. 4.3 Regulatory Approvals. All licenses, authorizations, consents, orders and regulatory approvals of Governmental Bodies necessary for the consummation of SFST's acquisition of the MAS XX Shares shall have been obtained and shall be in full force and effect. 5. REPRESENTATIONS AND WARRANTIES OF MASC. MASC represents and warrants to SFST that, to the knowledge of MASC, and except as set forth in an MAS XX Disclosure Letter: 5.1 Authorization. MASC is a corporation duly organized, validly existing and in good standing under the laws of the state of Indiana. This Agreement constitutes a valid and binding obligation of MASC, enforceable against it in accordance with its terms. 5.2 Capitalization. The authorized capital stock of MAS XX consists of 80,000,000 authorized shares of stock, par value $.001, and 20,000,000 preferred shares, par value $.001, of which 8,519,900 common shares are presently issued and outstanding. No shares have been registered under state or federal securities laws. As of the Closing Date there will not be outstanding any warrants, options or other agreements on the part of MAS XX obligating MAS XX to issue any additional shares of common or preferred stock or any of its securities of any kind. 5.3 Ownership of MAS XX Shares. The delivery of certificates to SFST provided in Section 2.2 will result in SFST's immediate acquisition of record and beneficial ownership of the MAS XX Shares, free and clear of all Encumbrances subject to applicable State and Federal securities laws. 5.4 Consents and Approvals of Governmental Authorities. Except with respect to applicable State and Federal securities laws, no consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body is required to be made or obtained by MAS XX or SFST or any of its Subsidiaries in connection with the execution, delivery and performance of this Agreement by MAS XX or the consummation of the sale of the MAS XX Shares to SFST. 5.5 Financial Statements. MAS XX has delivered to SFST the balance sheet of MAS XX as at June 30, 1998 and June 30, 1999, and statements of income and changes in financial position for the fiscal years then ended and the period from inception to the period then ended, together with the report thereon of MAS XX's independent accountant (the "MAS XX Financial Statements"). The MAS XX Financial Statements are accurate and complete in accordance with generally accepted accounting principles. The independent accountants for MAS XX will furnish any and all work papers required by SFST and will sign any and all consent required to be signed to include the financial statements of SFST in any subsequent filing by SFST. 5.6 Litigation. There is no action, suit, inquiry, proceeding or investigation by or before any court or Governmental Body pending or threatened in writing against or involving MAS XX which is likely to have a material adverse effect on the business or financial condition of MAS XX. 5.7 Absence of Certain Changes. Since the date of the MAS XX Financial Statements, MAS XX has not: 1. suffered the damage or destruction of any of its properties or assets (whether or not covered by insurance) which is materially adverse to the business or financial condition of MAS XX or made any disposition of any of its material properties or assets other than in the ordinary course of business; 2. made any change or amendment in its certificate of incorporation or by-laws, or other governing instruments; 3. issued or sold any Equity Securities or other securities, acquired, directly or indirectly, by redemption or otherwise, any such Equity Securities, reclassified, split-up or otherwise changed any such Equity Security, or granted or entered into any options, warrants, calls or commitments of any kind with respect thereto; 4. organized any new Subsidiary or acquired any Equity Securities of any Person or any equity or ownership interest in any business; 5. borrowed any funds or incurred, or assumed or become subject to, whether directly or by way of guarantee or otherwise, any obligation or liability with respect to any such indebtedness for borrowed money; 6. paid, discharged or satisfied any material claim, liability or obligation (absolute, accrued, contingent or otherwise), other than in the ordinary course of business; 7. prepaid any material obligation having a maturity of more than 90 days from the date such obligation was issued or incurred; 8. canceled any material debts or waived any material claims or rights, except in the ordinary course of business; 9. disposed of or permitted to lapse any rights to the use of any material patent or registered trademark or copyright or other intellectual property owned or used by it; 10. granted any general increase in the compensation of officers or employees (including any such increase pursuant to any employee benefit plan); 11. purchased or entered into any contract or commitment to purchase any material quantity of raw materials or supplies, or sold or entered into any contract or commitment to sell any material quantity of property or assets, except (i) normal contracts or commitments for the purchase of, and normal purchases of, raw materials or supplies, made in the ordinary course business, (ii) normal contracts or commitments for the sale of, and normal sales of, inventory in the ordinary course of business, and (iii) other contracts, commitments, purchases or sales in the ordinary course of business; 12. made any capital expenditures or additions to property, plant or equipment or acquired any other property or assets (other than raw materials and supplies) at a cost in excess of $100,000 in the aggregate; 13. written off or been required to write off any notes or accounts receivable in an aggregate amount in excess of $2,000; 14. written down or been required to write down any inventory in an aggregate amount in excess of $ 2,000; 15. entered into any collective bargaining or union contract or agreement; or 16. other than the ordinary course of business, incurred any liability required by generally accepted accounting principles to be reflected on a balance sheet and material to the business or financial condition of MAS XX. 5.8 No Material Adverse Change. Since the date of the MAS XX Financial Statements, there has not been any material adverse change in the business or financial condition of MAS XX. 5.9 Brokers or Finders. MASC has not employed any broker or finder or incurred any liability for any brokerage or finder's fees or commissions or similar payments in connection with the sale of the MAS XX Shares to SFST. 6. REPRESENTATIONS AND WARRANTIES OF SFST. SFST represents and warrants to MASC that, to the Knowledge of SFST (which limitation shall not apply to Section 6.3). Such representations and warranties shall survive the Closing for a period of two years. 6.1 Organization of SFST; Authorization. SFST is a corporation duly organized, validly existing and in good standing under the laws of California with full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action of SFST and this Agreement constitutes a valid and binding obligation of SFST; enforceable against it in accordance with its terms. 6.2 Capitalization. The authorized capital stock of SFST consists of 65,000,000 authorized shares of common stock, no par value of which 23,000,000 are presently issued and outstanding. 6.3 Ownership of SFSX Shares. The delivery of certificates to MASC provided in Section 2.2 will result MASC's immediate acquisition of record and beneficial ownership of the SFST Shares, free and clear of all Encumbrances. 6.2 No Conflict as to SFST and Subsidiaries. Neither the execution and delivery of this Agreement will (a) violate any provision of the certificate of incorporation or by-laws (or other governing instrument) of SFST or any of its Subsidiaries or (b) violate, or be in conflict with, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or excuse performance by any Person of any of its obligations under, or cause the acceleration of the maturity of any debt or obligation pursuant to, or result in the creation or imposition of any Encumbrance upon any property or assets of SFST or any of its Subsidiaries under, any material agreement or commitment to which SFST or any of its Subsidiaries is a party or by which any of their respective property or assets is bound, or to which any of the property or assets of SFST or any of its Subsidiaries is subject, or (c) violate any statute or law or any judgment, decree, order, regulation or rule of any court or other Governmental Body applicable to SFST or any of its Subsidiaries except, in the case of violations, conflicts, defaults, terminations, accelerations or Encumbrances described in clause (b) of this Section 6.4, for such matters which are not likely to have a material adverse effect on the business or financial condition of SFST and its Subsidiaries, taken as a whole. 6.4 Consents and Approvals of Governmental Authorities. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Body is required to be made or obtained by SFST or any of either of their Subsidiaries in connection with the execution, delivery and performance of this Agreement by SFST. 6.5 Other Consents. No consent of any Person is required to be obtained by MAS XX or SFST to the execution, delivery and performance of this Agreement including, but not limited to, consents from parties to leases or other agreements or commitments, except for any consent which the failure to obtain would not be likely to have a material adverse effect on the business and financial condition of MAS XX or SFST. 6.6 Financial Statements. After closing, SFST ackwledge and agrees that within 60 days from the effective date of this agreement, SFST shall have file on Form 8-K which includes two years of audited and unaudited consolidated financial statements of SFST. Such SFST Financial Statements and notes shall fairly present the financial condition and results of operations of SFST and its Subsidiaries as at the respective dates thereof and for the periods therein referred to, all in accordance with generally accepted United States accounting principles consistently applied throughout the periods involved, except as set forth in the notes thereto, and shall be utilizable in any SEC filing in compliance with Rule 310 of Regulation S-B promulgated under the Securities Act. 6.7 Brokers or Finders. SFST has not employed any broker or finder or incurred any liability for any brokerage or finder's fees or commissions or similar payments in connection with the purchase of the MAS XX Shares. 6.8 Purchase for Investment. SFST is purchasing the MAS XX Shares solely for its own account for the purpose of investment and not with a view to, or for sale in connection with, any distribution of any portion thereof in violation of any applicable securities law. 7. Access and Reporting; Filings With Governmental Authorities; Other Covenants. 7.1 Access Between the date of this Agreement and the Closing Date. Each of MASC and SFST shall (a) give to the other and its authorized representatives reasonable access to all plants, offices, warehouse and other facilities and properties of MAS XX or SFST, as the case may be, and to its books and records, (b) permit the other to make inspections thereof, and (c) cause its officers and its advisors to furnish the other with such financial and operating data and other information with respect to the business and properties of such party and its Subsidiaries and to discuss with such and its authorized representatives its affairs and those of its Subsidiaries, all as the other may from time to time reasonably request. 7.2 Regulatory Matters. MASC and SFST shall (a) file with applicable regulatory authorities any applications and related documents required to be filed by them in order to consummate the contemplated transaction and (b) cooperate with each other as they may reasonably request in connection with the foregoing. 8. CONDUCT OF MAS XX'S BUSINESS PRIOR TO THE CLOSING. MASC shall use its best efforts to ensure the following: 8.1 Operation in Ordinary Course. Between the date of this Agreement and the Closing Date, MAS XX shall cause conduct its businesses in all material respects in the ordinary course. 8.2 Business Organization. Between the date of this Agreement and the Closing Date, MAS XX shall (a) preserve substantially intact the business organization of MAS XX; and (b) preserve in all material respects the present business relationships and good will of MAS XX. 8.3 Corporate Organization. Between the date of this Agreement and the Closing Date, MAS XX shall not cause or permit any amendment of its certificate of incorporation or by-laws (or other governing instrument) and shall not: 1. issue, sell or otherwise dispose of any of its Equity Securities, or create, sell or otherwise dispose of any options, rights, conversion rights or other agreements or commitments of any kind relating to the issuance, sale or disposition of any of its Equity Securities; 2. create or suffer to be created any Encumbrance thereon, or create, sell or otherwise dispose of any options, rights, conversion rights or other agreements or commitments of any kind relating to the sale or disposition of any Equity Securities; 3. reclassify, split up or otherwise change any of its Equity Securities; be party to any merger, consolidation or other business combination; 4. sell, lease, license or otherwise dispose of any of its properties or assets (including, but not limited to rights with respect to patents and registered trademarks and copyrights or other proprietary rights), in an amount which is material to the business or financial condition of MAS XX except in the ordinary course of business; or 5. organize any new Subsidiary or acquire any Equity Securities of any Person or any equity or ownership interest in any business. 8.4 Other Restrictions. Between the date of this Agreement and the Closing Date, MAS XX shall not: 1. borrow any funds or otherwise become subject to, whether directly or by way of guarantee or otherwise, any indebtedness for borrowed money; 2. create any material Encumbrance on any of its material properties or assets; 3. increase in any manner the compensation of any director or officer or increase in any manner the compensation of any class of employees; 4. create or materially modify any material bonus, deferred compensation, pension, profit sharing, retirement, insurance, stock purchase, stock option, or other fringe benefit plan, arrangement or practice or any other employee benefit plan (as defined in section 3(3) of ERISA); 5. make any capital expenditure or acquire any property or assets; 6. enter into any agreement that materially restricts SFST, MAS XX or any of their Subsidiaries from carrying on business; 7. pay, discharge or satisfy any material claim, liability or obligation, absolute, accrued, contingent or otherwise, other than the payment, discharge or satisfaction in the ordinary course of business of liabilities or obligations reflected in the MAS XX Financial Statements or incurred in the ordinary course of business and consistent with past practice since the date of the MAS XX Financial Statements; or 8. cancel any material debts or waive any material claims or rights. 9. DEFINITIONS. As used in this Agreement, the following terms have the meanings specified or referred to in this Section 9. 9.1 "Business Day" = Any day that is not a Saturday or Sunday or a day on which banks located in the City of New York are authorized or required to be closed. 9.2 "Code" = The Internal Revenue Code of 1986, as amended. 9.3 "Encumbrances" = Any security interest, mortgage, lien, charge, adverse claim or restriction of any kind, including, but not limited to, any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership, other than a restriction on transfer arising under Federal or state securities laws. 9.4 "Equity Securities" = See Rule 3aB11B1 under the Securities Exchange Act of 1934. 9.5 "ERISA" = The Employee Retirement Income Security Act of 1974, as amended. 9.6 "Governmental Body" = Any domestic or foreign national, state or municipal or other local government or multi-national body (including, but not limited to, the European Economic Community), any subdivision, agency, commission or authority thereof. 9.7 "Knowledge" = Actual knowledge, after reasonable investigation. 9.8 "Person" = Any individual, corporation, partnership, joint venture, trust, association, unincorporated organization, other entity, or Governmental Body. 9.9 "Subsidiary" = With respect to any Person, any corporation of which securities having the power to elect a majority of that corporation's Board of Directors (other than securities having that power only upon the happening of a contingency that has not occurred) are held by such Person or one or more of its Subsidiaries. 10. TERMINATION. 10.1 Termination. This Agreement may be terminated before the Closing occurs only as follows: 1. By MASC at any time on or after March 8, 2000, if $100,000 cash is not received by MASC at MASC's account. 2. By SFST, by notice to MASC at any time, if one or more of the conditions specified in Section 3 is not satisfied at the time at which the Closing (as it may be deferred pursuant to Section 2.1) would otherwise occur or if satisfaction of such a condition is or becomes impossible. 3. By MASC, by notice to SFST at any time, if one or more of the conditions specified in Section 4 is not satisfied at the time at which the Closing (as it may be deferred pursuant to Section 2.1), would otherwise occur of if satisfaction of such a condition is or becomes impossible. 10.2 Effect of Termination. If this Agreement is terminated pursuant to Section 10.1, this Agreement shall terminate without any liability or further obligation of any party to another. 13. NOTICES. All notices, consents, assignments and other communications under this Agreement shall be in writing and shall be deemed to have been duly given when (a) delivered by hand, (b) sent by telex or facsimile (with receipt confirmed), provided that a copy is mailed by registered mail, return receipt requested, or (c) received by the delivery service (receipt requested), in each case to the appropriate addresses, telex numbers and facsimile numbers set forth below (or to such other addresses, telex numbers and facsimile numbers as a party may designate as to itself by notice to the other parties). (a) If to SFST: Starfest, Inc. 9494 E. Redfield Road, #1136 Scottsdale, AZ 85260 Facsimile No.: (480) 551-8285 Attn: Michael Huemmer, President (b) If to MASC: MAS Capital Inc. 1710 E. Division St. Evansville, IN 47711 Facsimile No.: (812) 479-7266 Attention: Aaron Tsai, President 14. MISCELLANEOUS. 14.2 Expenses. Each party shall bear its own expenses incident to the preparation, negotiation, execution and delivery of this Agreement and the performance of its obligations hereunder. 14.3 Captions. The captions in this Agreement are for convenience of reference only and shall not be given any effect in the interpretation of this agreement. 14.4 No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any waiver must be in writing. 14.5 Exclusive Agreement; Amendment. This Agreement supersedes all prior agreements among the parties with respect to its subject matter with respect thereto and cannot be changed or terminated orally. 14.6 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be considered an original, but all of which together shall constitute the same instrument. 14.7 Governing Law, Venue. This Agreement and (unless otherwise provided) all amendments hereof and waivers and consents hereunder shall be governed by the internal law of the State of Indiana, without regard to the conflicts of law principles thereof. Venue for any cause of action brought to enforce any part of this Agreement shall be in Indiana. 14.8 Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns, provided that neither party may assign its rights hereunder without the consent of the other, provided that, after the Closing, no consent of MAS XX or the MASC shall be needed in connection with any merger or consolidation of SFST with or into another entity. IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to be executed by their respective offi-cers, hereunto duly authorized, and entered into as of the date first above written. STARFEST, INC. a California corporation /s/Michael Huemmer - ------------------------------ By: Michael Huemmer, President MAS CAPITAL INC. /s/Aaron Tsai - ------------------------- By: Aaron Tsai, President EX-3.(I) 3 CERTIFICATE OF AMENDMENT OF ARTICLES OF INC. ENDORSED-FILED in the office of the SECRETARY OF STATE OF THE STATE OF CALIFORNIA FEB 26 1999 Bill Jones, Secretary of State CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF STARFEST, INC. Thomas J. Kenan certifies that: 1. He is the President and Secretary of Starfest, Inc., a California corporation. 2. ARTICLE IV is amended to read as follows: This corporation is authorized to issue only one class of shares of stock; and the total number of shares which this corporation is authorized to issue is 65 million. 3. The foregoing amendment to the Articles of Incorporation has been duly approved by the Board of Directors. 4. The foregoing amendment to the Articles of Incorporation was duly approved by the required vote of shareholders in accordance with section 902 of the California Corporations Code. The total number of outstanding shares entitled to vote with respect to the amendment was 4,000,000, the favorable majority of such shares is required to approve the amendment, and the number of such shares voting in favor of the amendment equaled or exceeded the required vote. I further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of my own knowledge. Dated: 2-25-99 /s/ Thomas J. Kenan Thomas J. Kenan, President /s/ Thomas J. Kenan Thomas J. Kenan, Secretary Exhibit 3.1 Page 1 of 7 pages ENDORSED-FILED in the office of the SECRETARY OF STATE OF THE STATE OF CALIFORNIA MAR 7 1996 Bill Jones, Secretary of State CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF STARFEST, INC. Bob Alexander and Barbara Contratto certify that: 1. They are the President and Secretary, respectively, of Starfest, Inc., a California Corporation. 2. ARTICLE IV is amended to read as follows: "This corporation is authorized to issue only one class of shares of stock; and the total number of shares which this corporation is authorized to issue is Four Million (4,000,000). Effective upon the filing of this Certificate of Amendment, each outstanding share is converted (split) into 829.57 shares, with fractional shares rounded up to the nearest full share." 3. The foregoing amendment to the Articles of Incorporation has been duly approved by the Board of Directors 4. The foregoing amendment to the Articles of Incorporation was duly approved by the required vote of shareholders in accordance with section 902 of the California Corporations Code. The total number of outstanding shares entitled to vote with respect to the amendment was 1860, the favorable majority of such shares is required to approve the amendment, and the number of such shares voting in favor of the amendment equaled or exceeded the required vote. We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge. Dated: 3-5-96 /s/ Bob Alexander Bob Alexander, President /s/ Barbara Contratto Barbara Contratto Secretary Exhibit 3.1 Page 2 of 7 pages ENDORSED-FILED in the office of the SECRETARY OF STATE OF THE STATE OF CALIFORNIA AUG 29 1995 Bill Jones, Secretary of State CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF FANFEST, INC. Bob Alexander and Herb Gronauer certify that: 1. They are the President and Secretary, respectively, of Fanfest, Inc., a California Corporation. 2. The following amendment to the articles of incorporation of the corporation has been duly approved by the board of directors of the corporation: "Article I is amended to read as follows: The name of the corporation is Starfest, Inc." 3. The amendment was duly approved by the required vote of shareholders in accordance with section 902 of the California Corporations Code. The total number of outstanding shares entitled to vote with respect to the amendment was 805, the favorable majority of such shares is required to approve the amendment, and the number of such shares voting in favor of the amendment equaled or exceeded the required vote. /s/ Bob Alexander Bob Alexander, President Dated: July 27, 1995 /s/ Herb Gronauer Herb Gronauer, Secretary Verification We declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge. Dated: July 27, 1995 /s/ Bob Alexander Bob Alexander, President /s/ Herb Gronauer Herb Gronauer, Secretary Exhibit 3.1 Page 3 of 7 pages ENDORSED-FILED in the office of the SECRETARY OF STATE OF THE STATE OF CALIFORNIA AUG 18 1994 Tony Miller Acting Secretary of State CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF FANFEST, INC. Bob Alexander and Herb Gronauer certify that: 1. They are the President and Secretary, respectively, of Fanfest, Inc., a California corporation. 2. ARTICLE IV is amended to read as follows: "This corporation is authorized to issue only one class of shares of stock; and the total number of shares which this corporation is authorized to issue is One Thousand Eight Hundred and Sixty (1,860). Effective upon the filing of this Certificate of Amendment, each outstanding share is converted into or reconstituted as one share of single class of common stock. 3. ARTICLE V is deleted in its entirety. 4. The foregoing amendment of Articles of Incorporation has been duly approved by the Board of Directors. 5. The foregoing amendment of Articles of Incorporation has been duly approved by the unanimous vote of the shareholders in accordance with section 902 of the California Corporations Code. We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge. Dated: 8-12-94 /s/ Bob Alexander Bob Alexander, President /s/ Herb Gronauer Herb Gronauer, Secretary Exhibit 3.1 Page 4 of 7 pages ENDORSED-FILED in the office of the SECRETARY OF STATE OF THE STATE OF CALIFORNIA NOV -3 1993 March Fong Fu Secretary of State CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION Bob Alexander and Herb Gronauer certify that: 1. They are the President and Secretary, respectively, of Fanfest, Inc., a California corporation. 2. ARTICLE IV is amended to read as follows: "This corporation is authorized to issue two classes of shares designated respectively "Class A Common Stock" and "Class B Common Stock." Nine Hundred and Thirty (930) shares of Class A Common Stock may be issued. Nine Hundred and Thirty (930) shares of Class B Common Stock may be issued. Effective upon the filing of this Certificate of Amendment, each outstanding share is converted into or reconstituted as one share of Class B Common Stock. The only distinction between the two classes shall regard the right of the holders of the respective classes of shares to elect directors of the corporation as specified in Article V, below." ARTICLE V is added to read as follows: "Except as stated below, the number of directors of this corporation shall be four (4). The holders of Class A Common Stock, voting as a class, shall be entitled to elect two directors of the corporation. The holders of Class B Common Stock, voting as a class, shall be entitled to elect two directors of the corporation. In the event that any holder of Class A Common Stock should acquire any share of Class B Common Stock, the number of directors of this corporation shall be increased to five (5). The holders of Class A Common Stock, voting as a class, shall then be entitled to elect three directors of the corporation. The holders of Class B Common Stock, voting as a class, shall then be entitled to elect two directors of the corporation. In the event that any holder of Class B Common Stock should acquire any share of Class A Common Stock, the number of directors of this corporation shall be increased to five (5). The holders of Class A Common Stock, voting as a class, shall then be entitled to elect two directors of the corporation. The holders of Class B Common Stock, voting as a class, shall then be entitled to elect three directors of the corporation." 3. The foregoing amendment of Articles of Incorporation has been duly approved by the Board of Directors. Exhibit 3.1 Page 5 of 7 pages 4. The foregoing amendment of Articles of Incorporation has been duly approved by the unanimous vote of the shareholders in accordance with section 902 of the California Corporations Code. We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge. Dated: 10-7-93 /s/ Bob Alexander Bob Alexander, President /s/ Herb Gronauer Herb Gronauer, Secretary Exhibit 3.1 Page 6 of 7 pages ENDORSED-FILED in the office of the SECRETARY OF STATE OF THE STATE OF CALIFORNIA AUG 18 1993 March Fong Fu Secretary of State ARTICLES OF INCORPORATION OF FANFEST, INC. I The name of this corporation is Fanfest, Inc. II The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. III The name and address in the State of California of this corporation's initial agent for service of process is: Bob Alexander 8899 Beverly Boulevard, Suite 500 Los Angeles, California 90048 IV This corporation is authorized to issue only one class of shares of stock; and the total number of shares which this corporation is authorized to issue is One thousand (1,000). Date: 8-17-93 /s/ Dale Thetford Dale Thetford, Incorporator Exhibit 3.1 Page 7 of 7 pages EX-3.(II) 4 BYLAWS BYLAWS OF FANFEST, INC. Name changed 11-3-93 A CALIFORNIA CORPORATION STARFEST, INC. ARTICLE I OFFICES Section 1. PRINCIPAL EXECUTIVE OR BUSINESS OFFICES. The board of directors shall fix the location of the principal executive office of the corporation at any place within or outside the State of California. If the principal executive office is located outside California and the corporation has one or more business offices in California, the board shall fix and designate a principal business office in California. Section 2. OTHER OFFICES. Branch or subordinate offices may be established at any time and at any place by the board of directors. ARTICLE II MEETINGS OF SHAREHOLDERS Section 1. PLACE OF MEETINGS. Meetings of shareholders shall be held at any place within or outside the State of California designated by the board of directors. In the absence of a designation by the board, shareholders' meetings shall be held at the corporation's principal executive office. Section 2. ANNUAL MEETING. The annual meeting of shareholders shall be held each year on a date and at a time designated by the board of directors. The date so designated shall be within five months after the end of the corporation's fiscal year, and within fifteen months after the last annual meeting. At each annual meeting, directors shall be elected and any other proper business w~hin the power of the shareholders may be transacted. Section 3. SPECIAL MEETING. A special meeting of the shareholders may be called at any time by the board of directors, by the chair of the board, by the president or vice president, or by one or more shareholders holdingshares that in the aggregate are entitled to cast ten percent or more of the votes at that meeting. If a special meeting is called by anyone other than the board of directors, the person or persons calling the meeting shall make a request in writing, delivered personally or sent by 1 registered mail or by telegraphic or other facsimile transmission, to the chair of the board or the president, vice president, or secretary, specifying the time and date of the meeting (which is not less than 35 nor more than 60 days after receipt of the request) and the general nature of the business proposed to be transacted. No business other than that stated in the notice shall be transacted at the meeting unless all shareholders sign written waivers of notice. Within 20 days after receipt, the officer receiving the request shall cause notice to be given to the shareholders entitled to vote, in accordance with Sections 4 and 5 of this Article II, stating that a meeting will be held at the time requested by the person(s) calling the meeting, and stating the general nature of the business proposed to be transacted. If notice is not given within 20 days after receipt of the request, the person or persons requesting the meeting may give the notice. Nothing contained in this paragraph shall be construed as limiting, fixing, or affecting the time when a meeting of shareholders called by action of the board may be held. Section 4. NOTICE OF SHAREHOLDERS' MEETINGS. All notices of meetings of shareholders shall be sent or otherwise given in accordance with Section 5 of this Article II not fewer than 10 nor more than 60 days before the date of the meeting. Shareholders entitled to notice shall be determined in accordance with Section 11 of this ArtiCle II. The notice shall specify the place, date, and hour of the meeting, and (i) in the case of a special meeting, the general nature of the business to be transacted, or (ii) in the case of the annual meeting, those matters that the board of directors, at the time of giving the directors are to be elected, the notice shall include the names of all nominees whom the board intends, at the time of the notice, to present for election. The notice shall also state the general nature of any proposed action to be taken at the meeting to approve any of the following matters: (i) A transaction in which a director has a financial interest, within the meaning of ss.310 of the California Corporations Code; (ii) An amendment of the articles of incorporation under ss.902 of that Code: (iii) A reorganization under ss.1201 of that Code; (iv) A voluntary dissolution under ss.1900 of that Code; or (v) A distribution in dissolution that requires approval of the outstanding shares under ss.2007 of that Code. 2 Section 5. MANNER OF GIVING NOTICE : AFFIDAVIT OF NOTICE. Notice of any shareholders' meeting shall be given either personally or by first-class mail, charges prepaid, addressed to the shareholder at the address appearing on the corporation's books or given by the shareholder to the corporation for purposes of notice. If no address appears on the corporation's books or has been given as specified above, notice shall be either (1) sent by first-class mail addressed to the shareholder at the corporation's principal executive office, or (2) published at least once in a newspaper of general circulation in the county where the corporation's principal executive office is located. Notice is deemed to have been given at the time when delivered personally or deposited in the mall or sent by other means of written communication. If any notice or report mailed to a shareholder at the address appearing on the corporation's books is returned marked to indicate that the United States Postal Service is unable to deliver the document to the shareholder at that address, all future notices or reports shall be deemed to have been duly given without further mailing if the corporation holds the document available for the shareholder on written demand at the corporation's principal executive office for a period of one year from the date the notice or report was given to all other shareholders. An affidavit of the mailing, or other authorized means of giving notice or delivering a document, of any notice of shareholders' meeting, report, or other document sent to shareholders, may be executed by the corporation's secretary, assistant secretary, or transfer agent, and, if executed, shall be filed and maintained in the minute book of the corporation. Section 6. QUORUM. The presence in person or by proxy of the holders of a majority of the shares entitled to vote at any meeting of the shareholders shall constitute a quorum for the transaction of business. The shareholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. Section 7. ADJOURNED MEETING; NOTICE. Any shareholders' meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of the majority of the shares represented at that meeting, either in person or by proxy, but in the absence of a quorum, no other business may be transacted at that meeting, except as provided in Section 6 of this Article II. 3 When any meeting of shareholders, either annual or special, is adjourned to another time or place, notice of the adjourned meeting need not be given if the time and place are announced at the meeting at which the adjournment is taken, unless a new record date for the adjourned meeting is fixed, or unless the adjournment is for more than 45 days from the date set for the original meeting, in which case the board of directors shall set a new record date. Notice of any such adjourned meeting, if required, shall be given to each shareholder of record entitled to vote at the adjourned meeting, in accordance with Sections 4 and 5 of this Article II. At any adjourned meeting, the corporation may transact any business that might have been transacted at the original meeting. Section 8. VOTING. The shareholders entitled to vote at any meeting of shareholders shall be determined in accordance with Section 11 of this Article II, subject to the provisions of sections 702 through 704 of the California Corporations Code relating to voting shares held by a fiduciary, in the name of a corporation, or in joint ownership. The shareholders' vote may be by voice vote or by ballot, provided, however, that any election for directors must be by ballot if demanded by any shareholder before the voting has begun. On any matter other than the election of directors, any shareholder may vote part of the shares the shareholder is to vote in favor of the proposal and refrain from voting the remaining shares or vote them against the proposal, but, if the shareholder fails to specify the number of shares that the shareholder is voting affirmatively, it will be conclusively presumed that the shareholder's approving vote is with respect to all shares that the shareholder is entitled to vote. If a quorum is present (or if a quorum has been present earlier at the meeting but some shareholders have withdrawn), the affirmative vote of a majority of the shares represented and voting, provided such shares voting affirmatively also constitute a majority of the number of shares required for a quorum, shall be the act of the shareholders unless the vote of a greater number or voting by classes is required by law or by the articles of incorporation. At a shareholders' meeting at which directors are to be elected, no shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a number of votes greater than the number of votes which that shareholder normally would be entitled to cast), unless the candidates' names have been placed in nomination before commencement of the voting and a shareholder has given notice at the meeting, before the voting has begun, of the shareholder's intention to cumulate votes. If any shareholder has given such a notice, then all shareholders entitled to vote may cumulate their votes for candidates in nomination, and may give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which that shareholder's shares are normally entitled, or 4 distribute the shareholder's votes on the same principle among any or all of the candidates, as the shareholder thinks fit. The candidates receiving the highest number of votes, up to the number of directors to be elected, shall be elected. Section 9. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The transactions of any meeting of shareholders, either annual or special, however called and noticed and wherever held, shall be as valid as though they were had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if each person entitled to vote who was not present in person or by proxy, either before or after the meeting, signs a written waiver of notice or a consent to holding the meeting or an approval of the minutes of the meeting. The waiver of notice or consent need not specify either the business to be transacted or the purpose of any annual or special meeting of the shareholders, except that if action is taken or proposed to be taken for approval of any of those matters specified in section 601(f) of the California Corporations Code, i.e., (i) A transaction in which a director has a financial interest, within the meaning of ss.310 of the California Corporations Code; (ii) An amendment of the articles of incorporation under ss.902 of that Code; (iii) A reorganization under ss.1201 of that Code; (iv) A voluntary dissolution under ss.1900 of that Code; or (v) A distribution in dissolution that requires approval of the outstanding shares under ss.2007 of that Code; the waiver of notice or consent is required to state the general nature of the action or proposed action. All waivers, consents, and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. A shareholder's attendance at a meeting also constitutes a waiver of noticeof that meeting, unless the shareholder at the beginning of the meeting objects to the transaction of any business on the ground that the meeting was not lawfully called or convened. In addition, attendance at a meeting does not constitute a waiver of any right to object to consideration of matters required by law to be included in the notice of the meeting which were not so included, if that objection is expressly made at the meeting. Section 10. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any action that could be taken at an 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, is signed by the holders of outstanding shares having not less than the minimum number oi~ votes that would be necessary to authorize or take that action at a meeting at which all shares entitled to vote on that action were present and voted. 4 Directors may be elected by written consent of the shareholders without a meeting only if the written consents of all outstanding shares entitled to vote are obtained, except that vacancies on the board (other than vacancies created by removal) not filled by the board may be filled by the written consent of the holders of a majority of the outstanding shares entitled to vote. All consents shall be filed with the secretary of the corporation and shall be maintained in the corporate records. Any shareholder or other authorized person who has given a written consent may revoke it by a writing received by the secretary of the corporation before written consents of the number of shares required to authorize the proposed action have been filed with the secretary. Unless the consents of all shareholders entitled to vote have been solicited in writing, prompt notice shall be given of any corporate action approved by shareholders without a meeting by less than unanimous consent, to those shareholders entitled to vote who have not consented in writing. As to approvals required by California Corporations Code section 310 (transactions in which a director has a financial interest), section 317 (indemnification of corporate agents), section 1201 (corporate reorganization), or section 2007 (certain distributions on dissolution), notice of the approval shall be given at least ten days before the consummation of any action authorized by the approval. Notice shall be given in the manner specified in Section 5 of this Article II. Section 11. RECORD DATE FOR SHAREHOLDER NOTICE OF MEETING, VOTING, AND GIVING CONSENT. (a) For purposes of determining the shareholders entitled to receive notice of and vote at a shareholders' meeting or give written consent to corporate action without a meeting, the board may fix in advance a record date that is not more than 60 nor less than 10 days before the date of a shareholders' meeting, or not more than 60 days before any other action. (b) If no record date is fixed: (i) The record date for determining shareholders entitled to receive notice of and vote at a shareholders' meeting shall be the business day next preceding the day on which notice is given, or if notice is waived as provided in Section 9 of this Article II the business day next preceding the day on which the meeting is held. (ii) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, if no prior action has been taken by the board, shall be 6 the day on which the first written consent is given. (iii) The record date for determining shareholders for any other purpose shall be as set forth in Section 1 of Article VIII of these bylaws. (c) A determination of shareholders of record entitled to receive notice of and vote at a shareholders' meeting shall apply to any adjournment of the meeting unless the board fixes a new record date for the adjourned meeting. However, the board shall fix a new record date if the adjournment is to a date more than 45 days after the date set for the original meeting. (d) Only shareholders of record on the corporation's books at the close of business on the record date shall be entitled to any of the notice and voting rights listed in subsection (a) of this section, notwithstanding any transfer of shares on the corporation's books after the record date, except as otherwise required by law. Section 12. PROXIES. Every person entitled to vote for directors or on any other matter shall have the right to do so either in person or by one or more agents authorized by a written proxy signed by the person and filed with the secretary of the corporation. A proxy shall be deemed signed if the shareholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission, or otherwise) by the shareholder or the shareholder's attorney in fact. A validly executed proxy that does not state that it is irrevocable shall oo~&nme ~n ~m~A ~O~Qe mn4 m~(pound)e~ unAe!l (~) ~oked by ~he person executing it, before the vote pursuant to that proxy, by a writing delivered to the corporation stating that the proxy J s revoked, or by attendance at the meeting and voting in person by the person executing the proxy or by a subsequent proxy executed by the same person and presented at the meeting; or (ii) written notice of the death or incapacity of the maker of that proxy is received by the corporation before the vote pursuant to which that proxy is counted; provided, however, that no proxy shall be valid after the expiration of 11 months from the date of the proxy, unless otherwise provided in the proxy. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of sections 705(e) and ?05(f) of the Corporations Code of California. Section 13. INSPECTORS OF ELECTION. In advance of any meeting of shareholders the board may appoint inspectors of election to act at the meeting and any adjournment thereof. If inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, the chair of any meeting of shareholders may, and on the request of any shareholder or a shareholder's proxy shall, appoint inspectors of election (or persons to replace those who so fail or refuse) at 7 the meeting. The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more shareholders or proxies, the majority of shares represented in person or by proxy shall determine whether one or three inspectors are to be appointed. These inspectors shall: (a) determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies; (b) receive votes, ballots, or consents; (c) hear and determine all challenges and questions in any way arising in connection with the right to vote; (d) count and tabulate all votes or consents; (e) determine when the polls shall close; (f) determine the result; and (g) do any other acts that may be proper to conduct the election or vote with fairness to all shareholders. ARTICLE III DIRECTORS Section 1. POWERS. Subject to the provisions of the California General Corporation Law and any limitations in the articles of incorporation and these bylaws 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. Without prejudice to these general powers, and subject to the same limitations, the board of directors shall have the power to: (a) Select and remove all officers, agents, and employees of the corporation; prescribe any powers and duties for them that are consistent with law, with the articles of incorporation, and with these bylaws; fix their compensation; and require from them security for faithful service. (b) Change the principal executive office or the principal business office in the State of California from one location to another; cause the corporation to be qualified to do business in any other state, territory, dependency, or country and conduct business within or outside the State of California; and designate any place within or outside the State of California for holding any shareholders' meeting or meetings, including annual meetings. (c) Adopt, make, and use a corporate seal; prescribe the forms of certificates of stock; and alter the form of the seal and certificates. (d) Authorize the issuance of shares of stock of the corporation on any lawful terms, in consideration of money paid, 8 labor done, services actually rendered, debts or securities canceled, or tangible or intangible property actually received. (e) Borrow money and incur indebtedness on behalf of the corporation, and cause to be executed and delivered for the corporation's purposes, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations, and other evidences of debt and securities. Section 2. NUMBER OF DIRECTORS. Amended, until changed by amendment to this effective bylaw adopted by the vote or written consent of a majority of the 9-29-93 outstanding shares entitled to vote. However, an amendment that would reduce the authorized number of directors to a number fewer than five cannot be adopted if the votes cast against its adoption at a shareholders' meeting or the shares not consenting to an action by written consent are equal to more than one-sixth (16 2/3%) of the outstanding shares entitled to vote. Section 3. 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. No reduction of the authorized number of directors shall have the effect of removing any director before that director's term of office expires. Section 4. VACANCIES. A vacancy in the board of direectors shall be deemed to exist: (a) if a director dies, resigns or is removed by the shareholders or an appropriate court, provided in sections 303 or 304 of the California Corporations Code; (b) if the board of directors declares vacant the offside of a director whdas been convicted of a felony or declared of unsound mind by-an order of court; (c) if the authorized number of directors is in, eased; or (d) if, at, any shareholders' meeting at which one or more director are elected, the shareholders fail to elect the full authorized number of directors to be voted for at that meeting. Amended; effective 9-29-93 Any director may resign effective on giving written notice to the chair of the board, the president, the secretary, or the board of directors, unless the notice specifies a later effective date. If the resignation is effective at a future time, the board may elect a successor to take office when the resignation becomes effective. Except for a vacancy caused by the removal of a director, vacancies on the board may be filled by approval of the board or, if the number of directors then in office is less than a quorum, 9 by (1) the unanimous written consent of the directors then in office, (2) the affirmative vote of a majority of the directors then in office at a meeting held pursuant to notice or waivers of notice complying with section 307 of the Corporations Code, or (3) a sole remaining director. A vacancy on the board caused by the removal of a director may be filled only by the shareholders, except that a vacancy created when the board declares the office of a director vacant as provided in clause (b) of the first paragraph of this section of the bylaws may be filled by the board of directors. The shareholders may elect a directors at any time to fille a vacancy not filled by the board of directors. The term of office of a director elected to fill a vacancy shall run until the next annual meeting of the shareholders, and such a director shall hold office until a successor is elected and qualified. Section 5. PLACE OF MEETINGS; TELEPHONE MEETINGS. Regular meetings of the board of directors may be held at any place within or outside the State of California as designated from time to time by the board. In the absence of a designation, regular meetings shall be held at the principal executive office of the corporation. Special meetings of the board shall be held at any place within or outside the State of California designated in the notice of the meeting, or if the notice does not state a place, or if there is no notice, at the principal executive office of the corporation. Any meeting, regular or special, may be held by conference telephone or similar communication equipment, provided that all directors participating oan hear one another. Section 6. ANNUAL DIRECTORS' MEETING. Immediately after each annual shareholders' meeting, the board of directors shall hold a regular meeting at the same place, or at any other place that has been designated by the board of directors, to consider matters of organization, election of officers, and other business as desired. Notice of this meeting shall not be required unless some place other than the place of the annual shareholders' meeting has been designated. Section 7. OTHER REGULAR MEETINGS. Other regular meetings of the board of directors shall be held without call at times to be fixed by the board of directors from time to time. Such regular meetings may be held without notice; however, notice of the time and place of a regular meeting shall be given to any director not present when the meeting was scheduled. Section 8. SPECIAL MEETINGS. Special meetings of the board of directors may be called for any purpose or purposes at any time by the chair of the board, the president, any vice president, the secretary, or any two directors. 10 Special meetings shall be held on four days' notice by mail or forty-eight hours' notice delivered personally or by telephone or telegraph. Oral notice given personally or by telephone may be transmitted either to the director or to a person at the director's office who can reasonably be expected to communicate it promptly to the director. Written notice, if used, shall be addressed to each director at the address shown on the corporation's records. The notice need not specify the purpose of the meeting, nor need it specify the place if the meeting is to be held at the principal executive office of the corporation. Section 9. QUORUM. A majority of the authorized number of directors shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 11 of this Article III. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the board of directors, subject to the provisions of California Corporations Code section 310 (as to approval of contracts or transactions in which a director has a direct or indirect material financial interest); section 311 (as to appointment of committees), and section 317(e) (as to indemnification of directors). A meeting at which a quorum is initially present may continue to transact business, despite the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting. Section 10. WAIVER OF NOTICE. Notice of a meeting, if otherwise required, need not be given to any director who (i) either before or after the meeting signs a waiver of notice or a consent to holding the meeting without being given notice; (ii) signs an approval of the minutes of the meeting; or (iii) attends the meeting without protesting the lack of notice before or at the beginning of the meeting. Waivers of notice or consents need not specify the purpose of the meeting. All waivers, consents, and approvals of the minutes shall be filed with the corporate records Or made a part of the minutes of the meeting. Section 11. ADJOURNMENT TO ANOTHER TIME OR PLACE. Whether or not a quorum is present, a majority of the directors present may adjourn any meeting to another time or place. Section 12. NOTICE OF ADJOURNED MEETING. Notice of the time and place of resuming a meeting that has been adjourned need not be given unless the adjournment is for more than 24 hours, in which case notice shall be given, before the time set for resuming the adjourned meeting, to the directors who were not present at the time of the adjournment. Notice need not be given in any case to directors who were present at the time of adjournment. Section 13. ACTION WITHOUT A MEETING. Any action required or permitted to be taken by the board of directors may be taken 11 (g) Appointing other committees of the board or their members. Section 2. MEETINGS AND ACTION OF COMMITTEES. Meetings and action of committees shall be governed by, and held and taken in accordance with, bylaw provisions applicable to meetings and actions of the board of directors, wi~h such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members, except that (a) the time of regular meetings of committees may be determined either by resolution of the board of directors or by resolution of the committee; (b) special meetings of committees may also be called by resolution of the board of directors; and (c) notice of special meetings of committees shall also be given to all alternative members who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the governance of any committee not inconsistent with these bylaws. ARTICLE V OFFICERS Section 1. OFFICERS. The officers of the corporation shall be a president, a chief financial officer, and a secretary. The corporation may also have, at the discretion of the board of directors, a chair of the board, a chief executive officer (in addition to a president), a treasurer, one or more vice presidents, one or more assistant secretaries, one or more assistant treasurers, and such other officers as may be appointed in accordance with Section 3 of this Article V. Any number of offices may be held by the same person. Section 2. APPOINTMENT OF OFFICERS. The officers of the corporation, except for subordinate officers appointed in accordance with Section 3 of this Article V, shall be appointed annually by the board of directors, and shall serve at the pleasure of the board of directors. Section 3. SUBORDINATE OFFICERS. The board of directors may appoint, and may empower the president or vice president to appoint other officers as required by the business of the corporation, whose duties shall be as provided in the bylaws, or as determined from time to time by the board of directors or the president. Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Any officer chosen by the board of directors may be removed at any time, with or without cause or notice, by the board of directors. Subordinate officers appointed by persons other than the board under Section 3 of this Article V may be removed at any time, with or without cause or notice, by the board of directors or by the officer by whom appointed. Officers may be employed for a 13 specified term under a contract of employment if authorized by the board of directors; such officers may be removed from office at any time under this section, and shall have no claim against the corporation or individual officers or board members because of the removal except any right to monetary compensation to which the officer may be entitled under the contract of employment. Any officer may resign at any time by giving written notice to the corporation. Resignations shall take effect on the date of receipt of the notice, unless-a later time is specified in the notice. Unless otherwise specified in the notice, acceptance of the resignation is not necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation to monetary damages under any contract of employment to which the officer is a party. Section 5. VACANCIES IN OFFICES. A vacancy in any office resulting from an officer's death, resignation, removal, disqualification, or from any other cause shall be filled in the manner prescribed in these bylaws for regular election or appointment to that office. Section 6. CHAIR OF THE BOARD. The board of directors may elect a chair, who shall preside, if present, at board meetings and shall exercise and perform such other powers and duties as may be assigned from time to time by the board of directors. If there is no chief executive officer or in the absence of the chief executive officer, the chair of the board shall, in addition, be the chief executive officer of the corporation, and shall have the powers and duties as set forth in Section 7 of this Article V. Section 7. CHIEF EXECUTIVE OFFICER. The board of directors may elect a chief executive officer, who, in the absence of the president or if there is no president, shall act in the capacity of the president and shall have the powers and duties as set forth in Section 8 of this Article V. Upon the removal, death, incapacity, or resignation of the president, the chief executive officer shall become the president of the corporation and hold that office until a new president is elected by the board. Section 8. PRESIDENT. Except to the extent that the bylaws or the board of directors assign specific powers and duties to the chair of the board, the president shall be the corporation's general manager and, subject to the control of the board of directors, shall have general supervision, direction, and control over the corporation's business and its officers. The managerial powers and duties of the president shall include, but are not limited to, all the general powers and duties of management usually vested in the office of president of a corporation, and the president shall have other powers and duties as prescribed by the board of directors or the bylaws. The president shall preside 14 at all meetings of the shareholders and, in the absence of the chair of the board or if there is no chair of the board, shall also preside at meetings of the board of directors. If there is also a chief executive officer, in addition to the president, then, for the purpose of giving any reports or executing any documents requiring the signature of the "chief executive officer", such reports shall be made and such documents executed by either the president or the chief executive officer. Section 9. VICE PRESIDENTS. If desired, one or more vice presidents may be chosen by the board of directors in accordance with the provisions for appointing officers set forth in Section 2 of this Article V. In the absence or disability of the president, the chief executive officer and the chair of the board (or if there is no chief executive officer or chair of the board), the president's duties and responsibilities shall be carried out by the highest ranking available vice president if vice presidents are ranked or, if not, by a vice president designated by the board of directors. When so acting, a vice president shall have all the powers of and be subject to all the restrictions on the president. Vice presidents of the corporation shall have such other powers and perform such other duties as prescribed from time to time by the board of directors, the bylaws, or the president. Section 10. SECRETARY (a) Minutes. The secretary shall keep, or cause to be kept, minutes of all of the shareholders' meetings and of all other board meetings. If the secretary is unable to be present, the secretary or the presiding officer of the meeting shall designate another person to take the minutes of the meeting. The secretary shall keep, or cause to be kept, at the principal executive office or such other place as designated by the board of directors, a book of minutes of all meetings and actions of the shareholders, of the board of directors, and of committees of the board. The minutes of each meeting shall state the time and place the meeting was held; whether it was regular or special; if special, how it was called or authorized; the names of directors present at board or committee meetings; the number of shares present or represented at shareholders' meetings; an accurate account of the proceedings; and when it was adjourned. (b) Record of Shareholders. The secretary shall keep, or cause to be kept, at the principal executive office or at the office of the transfer agent or registrar, a record or duplicate record of shareholders. This 15 record shall show the names of all shareholders and their addresses, the number and classes of shares held by each, the number and date of share certificates issued to each shareholder, and the number and date of cancellation of any certificates surrendered for cancellation. (c) Notice of Meetings. The secretary shall give notice, or cause notice to be given, of all shareholders' meetings, board meetings, and meetings of committees of the board for which notice is required by statute or by the bylaws. If the secretary or other person authorized by the secretary to give notice fails to act, notice of any meeting may be given by any other officer of the corporation. (d) Other Duties. The secretary shall keep the seal of the corporation, if any, in safe custody. The secretary shall have such other powers and perform other duties as prescribed by the board of directors or by the bylaws. Section 11. CHIEF FINANCIAL OFFICER. The chief financial officer shall keep, or cause to be kept, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director. The chief financial officer shall (1) deposit corporate funds and other valuables in the corporation's name and to its credit with depositaries designated by the board of directors; (2) make disbursements of corporate funds as authorized by the board; (3) render a statement of the corporation's financial condition and an account of all transactions conducted as chief financial officer whenever requested by the president or the board of directors; and (4) have other powers and perform other duties as prescribed by the board of directors or the bylaws. Unless the board of directors has elected a separate treasurer, the chief financial officer shall be deemed to be the treasurer for purposes of giving any reports or executing any certificates or other documents. Section 12. LIMITATION ON AUTHORITY OF OFFICERS TO BIND THE CORPORATION. The authority of any officer to bind the corporation may be limited by resolution duly passed by the board, without amendment to these bylaws. 16 ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS Section 1. AGENTS, PROCEEDINGS, AND EXPENSES. For the purposes of this Article, "agent" means any person who is or was a director, officer, employee, or other agent of this corporation, or who is or was serving at the request of this corporation as a director, officer, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or who was a director, officer, employee, or agent of a foreign or domestic corporation that was a predecessor corporation of this corporation or of another enterprise at the request of such predecessor corporation; "proceeding" means any threatened, pending, or completed action or proceeding, whether civil, criminal, administrative, or investigative; and "expenses" includes, without limitation, attorney fees and any expenses of establishing a right to indemnification under Section 4 or Section 5(d) of this Article VI. Section 2. ACTIONS OTHER THAN BY THE CORPORATION. This corporation shall have the power to indemnify any person who was or is a party, or is threatened to be made a party, to any proceeding (other than an action by or in the right of this corporation to procure a judgment in its favor) by reason of the fact that such person is or was an agent of this corporation, against expenses, judgments, fines, settlements, and other mmounte actually and reasonably incurred in connection with such proceeding i~ tha~ person aa~ed ~n good ~ai~h and ~ a manne~ that the person reasonably believed to be in the best interests of this corporation and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of that person was unlawful. The termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner that the person reasonably believed to be in the best interests of this corporation or that the person had reasonable cause to believe that the person's conduct was not unlawful. Section 3. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. This corporation shall have the power to indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending, or completed action by or in the right of this corporation to procure a judgment in its favor by reason of the fact that such person is or was an agent of this corporation, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of that action, if such person acted in good faith, in a manner such person believed to be in the best interests of this corporation and its 17 shareholders. No indemnification shall be made under this Section 3 for the following: (a) With respect to any claim, issue, or matter as to which such person has been adjudged to beliable to this corporation in the performance of such person's duty to the corporation and its shareholders, unless and only to the extent that the court in which such proceeding is or was pending shall determine on application that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for expenses and then only to the extent that the court shall determine; (b) Amounts paid in settling or otherwise disposing of a pending action without court approval; or (c) Expenses incurred in defending a pending action that is settled or otherwise disposed of without court approval. Section 4. SUCCESSFUL DEFENSE BY AGENT. To the extent that an agent of this corporation has been successful on the merits in defense of any proceeding referred to in Section 2 or 3 of this Article VI, or in defense of any claim, issue, or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith. Section 5. REQUIRED APPROVAL. Except as provided in Section 4 of this Article VI, any indemnification under this Section shall be made by the corporation only if authorized in the specific case, after a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in Section 2 or 3 by one of the following: (a) A majority vote of a quorum consisting of directors who are not parties to such proceeding; (b) Independent legal counsel in a written opinion if a quorum of directors who are not parties to such a proceeding is not available; (c) (i) The affirmative vote of a majority of shares of this corporation entitled to vote represented at a duly held meeting at which a quorum is present; or (ii) the written consent of holders of a majority of the outstanding shares entitled to vote (for purposes of this subsection 5(c), the shares owned by the person to be indemnified shall not be considered outstanding or entitled to vote thereon); or, (d) The court in which the proceeding is or was 18 trustee, investment manager, or other fiduciary of an employee benefit plan in that person's capacity as such, even though that person may also be an agent of the corporation. The corporation shall have the power to indemnify, and to purchase and maintain insurance on behalf of any such trustee, investment manager, or other fiduciary of any benefit plan for any or all of the directors, officers, and employees of the corporation or any of its subsidiary or affiliated corporations. Section 11. SURVIVAL OF RIGHTS. The rights provided by this Article VI shall continue for a person who has ceased to be an agent and shall inure to the benefit of the heirs, executors, and administrators of such person. Section 12. EFFECT OF AMENDMENT. Any amendment, repeal, or modification of this Article VI shall not adversely affect an agent's right or protection existing at the time of such amendment, repeal, or modification. Section 13. SETTLEMENT OF CLAIMS. The corporation shall not be liable to indemnify any agent under this Article VI for (a) any amounts paid in settlement of any action or claim effected without the corporation's written consent, which consent shall not be unreasonably withheld or (b) any judicial award, if the corporation was not given a reasonable and timely opportunity to participate, at its expense, in the defense of such action. Section 14. SUBROGATION. In the event of payment under this Article VI, the corporation shall be subrogated to the extent of auoh.payment to sll of the rights of recovery of the agent, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents as may be necessary to enable the corporation effectively to bring suit to enforce such rights. Section 15. NO DUPLICATION OF PAYMENTS. The corporation shall not be liable under this Article VI to make any payment in connection with any claim made against the agent to the extent the agent has otherwise actually received payment, whether under a policy of insurance, agreement, vote, or otherwise, of the amounts otherwise indemnifiable under this Article. ARTICLE VII RECORDS AND REPORTS Section 1. MAINTENANCE OF SHAREHOLDER RECORD AND INSPECTION BY SHAREHOLDERS. The corporation shall keep at its principal executive office or at the office of its transfer agent or registrar, as determined by resolution of the board of directors, a record of the names and addresses of all shareholders and the number and class of shares held by each shareholder. 2O A shareholder or shareholders holding at least 5 percent in the aggregate of the outstanding voting shares of the corporation have the right to do either or both of the following: (a) Inspect and copy the record of shareholders' names and addresses and shareholdings during usual business hours, on five days' prior written demand on the corporation, or (b) Obtain from the corporation's transfer agent, on written demand and tender of the transfer agent's usual charges for this service, a list of the names and addresses of shareholders who are entitled to vote for the election of directors, and their shareholdings, as of the most recent record date for which a list has been compiled or as of a specified date later than the date of demand. This list shall be made available within five days after (i) the date of demand or (ii) the specified later date as of which the list is to be compiled. The record of shareholders shall also be open to inspection on the written demand of any shareholder or holder of a voting trust certificate, at any time during usual business hours, for a purpose reasonably related to the holder's interests as a shareholder or holder of a voting trust certificate. Any inspection and copying under this section may be made in person or by an agent or attorney of the shareholder or holder of a voting trust certificate making the demand. Section 2. MAINTENANCE AND INSPECTION OF BYLAWS. The corporation shall keep at its principal executive office, or if its principal executive office is not in the State of California, at its principal business office in this state, the original or a copy of the bylaws as amended to date, which shall be open to inspection by the shareholders at all reasonable times during office hours. If the principal executive office of the corporation is outside the State of California and the corporation has no principal business office in this state, the secretary shall, on the written request of any shareholder, furnish to that shareholder a copy of the bylaws as amended to date. Section 3. MAINTENANCE AND INSPECTION OF MINUTES AND ACCOUNTING RECORDS. The minutes of proceedings of the shareholders, board of directors, and committees of the board, and the accounting books and records, shall be kept at the principal executive office of the corporation, or at such other place or places as designated by the board of directors. The minutes shall be kept in written form, and the accounting books and records shall be kept either in written form or in a form capable of being converted into written form. The minutes and accounting books and records shall be open to inspection on the written demand of any shareholder or holder of a voting trust certificate at any reasonable time during usual business hours, for a purpose reasonably related to the holder's interests as a 21 shareholder or holder of a voting trust certificate. The inspection may be made in person or by an agent or attorney, and shall include the right to copy and make extracts. These rights of inspection shall extend to the records of each subsidiary of the corporation. Section 4. INSPECTION BY DIRECTORS. Every director shall have the absolute right at any reasonable time to inspect all books, records, and documents of every kind and the physical properties of the corporation and each of its subsidiary corporations. This inspection by a director may be made in person or by an agent or attorney and the right of inspection includes the right to copy and make extracts of documents. Section 5. ANNUAL REPORT TO SHAREHOLDERS. (a) Inasmuch as, and for as long as, there are fewer than 100 shareholders, the requirement of an annual report to shareholders referred to in section 1501 of the California Corporations Code is expressly waived. However, nothing in this provision shall be interpreted as prohibiting the board of directors from issuing annual or other periodic reports to the shareholders, as the board considers appropriate. (b) If at any time the number of shareholders shall exceed 100, subsection (a) shall be deemed repealed, and the following provisions shall be substituted: The board of directors shall cause an annual report to be sent to the shareholders not later than 120 days after the close of the fiscal year adopted by the corporation. This report shall be sent at least 15 days (if third-class mail is used, 35 days) before the annual meeting of shareholders to be held during the next fiscal year and in the manner specified for giving notice to shareholders in Section 5 of Article II of these bylaws. The annual report shall contain a balance sheet as of the end of the fiscal year and an income statement and a statement of changes in financial position for the fiscal year prepared in accordance with generally accepted accounting principles applied on a consistent basis and 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 corporation's books and records. Section 6. FINANCIAL STATEMENTS. The corporation shall keep a copy of each annual financial statement, quarterly or other periodic income statement, and accompanying balance sheets prepared by the corporation on file in the corporation's principal executive office for 12 months; these documents shall be exhibited at all reasonable times, or copies provided, to any 22 shareholder on demand. If no annual report for the last f~scal year has been sent to shareholders, on written request of ally shareholder made more than 120 days after the close of the fiscal year the corporation shall deliver or mail to the shareholder, within 30 days after receipt of the request, a balance sheet as of the end of that fiscal year and an incomestatement and statement of changes in financial position for that fiscal year. A shareholder or shareholders holding 5 percent or more of the outstanding shares of any class of stock of the corporation may requestin writing an income statement for the most recent three-month, six-month, or nine-month period (ending more than 30 days before the date of the request) of the current fiscal year, and a balance sheet of the corporation as of the end of that period. If suchdocuments are not already prepared, the chief financial officer shall cause'them to be prepared and shall deliver the documents personally or mail them to the requesting shareholders within 30 days after receipt of the request. A balance sheet, income statement, and statement of changes in financial position for the last fiscal year shall also be included, unless the corporation has sent the shareholders an annual report for the last fiscal year. Quarterly income statements and balance sheets referred to in this section shall be accompanied by the report, if any, of independent accountants engaged by thecorporation or the certificate of an authorized corporate officer stating that the financial statements were prepared without audit from the corporation's books and records. Section 7. ANNUAL STATEMENT OF GENERAL INFORMATION. (a) Every year, during the calendar month in which the original articles of incorporation were filed with the California Secretary of State, or during the preceding five calendar months, the corporation shall file a statement with the Secretary of State on the prescribed form, setting forth the authorized number of directors; the names and complete business or residence addresses of all incumbent directors; the names and complete business or residence addresses of the chief executive officer, the secretary, and the chief financial officer; the street address of the corporation's principal executive office or principal business office in this state; a statement of the general type of business constituting the principal business activity of the corporation; and a designation of the agent of the corporation for the purpose of service of process, all in compliance with section 1502 of the Corporations Code of California. (b) Notwithstanding the provisions of paragraph (a) of this 23 23 section, if there has been no change in the information in the corporation's last annual statement on file in the Secretary of State's office, the corporation may, in lieu of filing the annual statement described in paragraph (a) of this section, advise the Secretary of State, on the appropriate form, that no changes in the required information have occurred during the applicable period. ARTICLE VIII GENERAL CORPORATE MATTERS Section 1. RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. For purposes of determining the shareholders entitled to receive payment of dividends or other distributions or allotment of rights, or entitled to exercise any rights in respect of any other lawful action (other than voting at and receiving notice of shareholders' meetings and giving written consent of the shareholders without a meeting), the board of directors may fix in advance a record date, which shall be not more than 60 nor less than 10 days before the date of the dividend payment, distribution, allotment, or other action. If a record date is so fixed, only shareholders of record at the close of business on that date shall be entitled to receive the dividend, distribution, or allotment of rights, or to exercise the other rights, as the case may be, notwithstanding any transfer of shares on the corporation's books after the record date, except as otherwise provided by statute. If the board of directors does not so fix a record date in advance, the the record date shall be at the close of business on the later of (1) the day on which the board of directors adopts the applicable resolution or (2) the 60th day before the date of the dividend payment, distribution, allotment of rights, or other action. Section 2. AUTHORIZED SIGNATORIES FOR CHECKS. All checks, drafts, 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 authorized from time to time by resolution of the board of directors. Section 3. EXECUTING CORPORATE CONTRACTS AND INSTRUMENTS. Except as otherwise provided in the articles or in these bylaws, the board of directors by resolution may authorize any officer, officers, agent, or agents to enter into any contract or to execute any instrument in the name of and on behalf of the corporation. This authority may be general or it may be confined to one or more specific matters. No officer, agent, employee, or other person purporting to act on behalf of the corporation shall have any power or authority to bind the corporation in any way, to pledge the corporation's credit, or to render the corporation 24 liable for any purpose or in any amount, unless that person was acting with authority duly granted by the board of directors as provided in these bylaws, or unless an unauthorized act was later ratified by the corporation. Section 4. CERTIFICATES FOR SHARES. A certificate or certificates for shares of the capital stock of the corporation shall be issued to each shareholder when any of the shares are fully paid. In addition to certificates for fully paid shares, the board of directors may authorize the issuance of certificates for shares that are partly paid and subject to call for the remainder of the purchase price, provided that the certificates representing partly paid shares shall state the total amount of the consideration to be paid for the shares and the amount actually paid. All certificates shall Certify the number of shares and the class or series of shares represented by the certificate. All certificates shall be signed in the name of the corporation by (1) either the chair of the board of directors, the vice chair of the board of directors, the president, or any vice president, and (2) either the chief financial officer, any assistant treasurer, the secretary, or any assistant secretary. None of the signatures on the certificate may be facsimile. If any officer, transfer, agent, or registrar who has signed a certificate shall have ceased to be that officer, transfer agent, or registrar before that certificate is issued, the certificate 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 issue. Section 5. LOST CERTIFICATES. Except as provided in this Section 5, no new certificates for shares shall be issued to replace old certificates unless the old certificate is surrendered to the corporation for cancellation at the same time. If share certificates or certificates for any other security have been lost, stolen, or destroyed, the board of directors may authorize the issuance of replacement certificates on terms and conditions as required by the board, which may include a requirement that the owner give the corporation a bond (or other adequate security) sufficient to indemnify the corporation against any claim that may be made against it (including any expense or liability) on account of the alleged loss, theft, or destruction of the old certificate or the issuance of the replacement certificate. Section 6. SHARES OF OTHER CORPORATIONS: HOW VOTED. Shares of other corporations standing in the name of this corporation shall be voted by one of the following persons, listed in order of preference: (1) chair of the board, or person designated by the chair of the board; (2) president, or person designated by 25 the president; (3) first vice president, or person designated by the first vice president; (4) other person designated by the board of directors. The authority to vote shares granted by this section includes the authority to execute a proxy in the name of the corporation for purposes of voting the shares. Section 7. REIMBURSEMENT OF CORPORATION IF PAYMENT NOT TAX DEDUCTIBLE. If all or part of the compensation, including expenses, paid by the corporation to a director, officer, employee, or agent is finally determined not to be allowable to the corporation as a federal or state income tax deduction, the director, officer, employee, or agent to whom the payment was made shall repay to the corporation the amount disallowed. The board of directors shall enforce repayment of each such amount disallowed by the taxing authorities. Section 8. CONSTRUCTION AND DEFINITIONS. Unless the context requires otherwise, the general provisions, rules of construction, and definitions in sections 100 through 195 of the California Corporations Code shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term "person" includes both a corporation and a natural person. ARTICLE IX AMENDMENTS Section 1. AMENDMENT BY SHAREHOLDERS. New bylaws may be adopted or these bylaws 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 Articles of Incorporation. Section 2. AMENDMENT BY BOARD OF DIRECTORS. Subject to the right of the Shareholders to adopt, amend or repeal bylaws, as provided in Section 1 of this Article IX, and the limitations of sections 204 (a) (5) and 212, of the California Corporations Code, the Board of Directors may adopt, amend or repeal any of these bylaws other than a bylaw or amendment thereof changing the authorized number of Directors. Section 3. RECORD OF AMENDMENTS. Whenever an amendment or new bylaw is adopted, it shall be copied in the book of bylaws with the original bylaws, in the appropriate place. If any bylaw 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 26 stated in said book. 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 theret(degree) may be exercised on behalf of the corporation by the Chair 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 in section 189 (b) of the California Corporations Code. Section 3. ACCOUNTING YEAR. The accounting year of the Corporation shall be fixed by resolution of the Board of Directors. 27 CERTIFICATE OF ADOPTION OF BYLAWS THIS IS TO CERTIFY: That I am the duly elected, qualified and acting Secretary of the above named corporation and that the above and foregoing bylaws was submitted to the Shareholders at their first meeting and recorded in the minutes thereof, was ratified by the vote of Shareholders entitled to exercise the majority of the voting power of said corporation. WITNESS WHEREOF, I have hereunto set my hand this ____ day of ______________, _____ 28 EX-10 5 AGREEMENT OF MERGER AGREEMENT OF MERGER This Agreement of Merger (the "Agreement") is made and entered into as of January 26, 2000 by and among: STARFEST, Inc., a California corporation ("STARFEST"); and CONCIERGE, Inc., a Nevada corporation ("CONCIERGE"). RECITALS -------- WHEREAS, STARFEST's common stock, no par value per share (the "Common Stock"), is currently traded on the OTC Bulletin Board; and WHEREAS, STARFEST currently operates an Internet entertainment business; and WHEREAS, the parties hereto wish to reorganize STARFEST by merging CONCIERGE into STARFEST, with STARFEST being the surviving corporation of the merger; and WHEREAS, as part of the reorganization, STARFEST wishes to sell its Internet entertainment business to a third party in order that the sole business of STARFEST after the merger will be the business of CONCIERGE. NOW, THEREFORE, in consideration of the following representations, promises and undertakings, the parties hereto hereby agree as follows: 1. STARFEST merger with CONCIERGE. Promptly after the execution of -------------------------------- this Agreement, the officers and directors of each of STARFEST and CONCIERGE shall cause all corporate actions to occur, including without limitation the holding of any required special meeting of the shareholders of each of STARFEST and CONCIERGE, that are required to approve: (a) The merger of STARFEST with CONCIERGE, STARFEST to be the surviving corporation, with the stockholders of CONCIERGE receiving a total of 78 million shares of Common Stock of STARFEST in the merger and the stockholders of STARFEST retaining their presently issued 23 million shares of Common Stock of STARFEST; (b) The change of name of the post-merger company to "CONCIERGE TECHNOLOGIES, INC." (c) The change of management of the post-merger company to that of the directors and officers of CONCIERGE immediately before the effectiveness of the merger; (d) An increase in the authorized capital of the post-merger corporation to 190 million shares of Common Stock, $0.001 a share, and 10 million shares of Preferred Stock, par value $0.001 a share; (e) The authorization of the directors of the post-merger corporation to issue no more than 9 million shares of Common Stock (or common stock equivalents or derivatives) to raise the necessary capital to commence its business and to attract additional members of management; and 2. Representations by STARFEST. STARFEST represents as follows: --------------------------- 2.1 STARFEST is a corporation duly organized, validly existing and in good standing under the laws of the State of California and is authorized to transact its business and is in good standing in each state in which its ownership of assets or conduct of business requires such qualifications. 2.2 Subject to shareholder approval of the transactions contemplated by this Agreement, STARFEST has the right, power, legal capacity and authority to execute and deliver this Agreement and to perform its obligations under this Agreement and the documents, instruments and certificates to be executed and delivered by it pursuant to this Agreement. The execution and delivery of and performance of the obligations contained in this Agreement by STARFEST and all documents, instruments and certificates made or delivered by STARFEST pursuant to this Agreement, and the transactions contemplated hereby, have been or as of the Closing will be, duly authorized by all necessary action on the part of STARFEST. 2.3 Subject to shareholder approval of the transactions contemplated by this Agreement, the terms and provisions of this Agreement and all documents, instruments and certificates made or delivered from time to time by STARFEST hereunder and thereunder shall constitute valid and legally binding obligations of STARFEST, enforceable against STARFEST in accordance with the terms hereof and thereof. 2.4 The execution of this Agreement by STARFEST does not require any consent of, notice to or action by any person or governmental authority, other than as provided in Exhibit 2.4 hereto. The performance of this Agreement by STARFEST and the consummation by STARFEST of the transactions contemplated hereby will not require any consent of, notice to or action by any person or governmental authority, other than as provided in Exhibit 2.4 hereto. 2.5 The making and performance of this Agreement by STARFEST and the consummation of the transactions contemplated hereby will not result in a breach or violation by STARFEST of any of the terms or provisions of, or constitute a default under, its Articles of Incorporation, its Bylaws, any indenture, mortgage, deed of trust (constructive or other), loan agreement, lease, franchise, license or other agreement or instrument to which STARFEST is bound, any statute, or any judgment, decree, order, rule or regulation of any court or governmental agency or body applicable to STARFEST or any of the properties of STARFEST. 2.6 Attached hereto as Exhibit 2.6 are financial statements of STARFEST for the annual periods ended December 31, 1998 and December 31, 1999 and as of December 31, 1998 and as of December 31, 1999, which have been audited in accordance with GAAP. These financial statements present fairly the financial condition and results of operations of its business, in accordance with generally accepted accounting principles as of the dates thereof and the periods covered thereby. 2.7 As of the date hereof, the executive officers and directors of STARFEST are Michael Huemmer and Janet Alexander. 2.8 STARFEST has authorized capital of 65 million shares of Common Stock, no par value. Of these shares, 23 million are issued and outstanding. Except as described in Exhibit 2.8 hereto, there are no existing agreements, options, warrants, rights, calls or commitments of any kind providing for the issuance of any shares, or for the repurchase or redemption of shares, of STARFEST's capital stock, and there are no outstanding securities or other instruments convertible into or exchangeable for shares of such capital stock and no commitments to issue such securities or instruments. Each person that has such a right shall surrender it to Starfest for no consideration other than that of promoting the Closing of the transaction described in this Agreement. All of the outstanding shares of STARFEST common stock have been duly authorized and validly issued and are fully paid and nonassessable. None of the outstanding shares of STARFEST common stock were issued in violation of the Securities Act or any state securities laws. 2.9 Attached hereto as Exhibit 2.9 is a true and correct list of all known material liabilities of STARFEST, contingent or matured, as of December 31, 2000, which are not reflected on the balance sheet dated as of December 31, 1999 and which arose in the ordinary course of business. 2.10 There is no claim for personal injury, products liability, property or other damages, grievance, action, proceeding or governmental investigation pending or, to STARFEST's knowledge, threatened against STARFEST or affecting its assets or business, other than as listed on Exhibit 2.10 hereto. 2.11 STARFEST has filed, or will have filed prior to Closing, all income, franchise, real property, personal property, sales, employment and other tax returns required to be filed by any taxing authority and has paid or accrued all taxes required to be paid by it in respect to the periods covered by such returns, whether or not shown on such returns, and STARFEST has no liability for such taxes in excess of the amounts so paid. A true and complete copy of all federal income tax returns for the tax year ended December 31, 1998 as filed with the Internal Revenue Service has been delivered to CONCIERGE, together with all supporting schedules thereto. STARFEST is not delinquent in the payment of any tax, assessment or governmental charge, has not requested any extension of time within which to file any tax returns which have not since been filed, and no deficiencies for any tax, assessment or governmental charge have been claimed, proposed or assessed by any taxing authority. STARFEST's federal income tax return has not been audited. As used herein, the term "tax" includes all governmental taxes and related governmental charges imposed by the laws and regulations of any governmental jurisdiction. 2.12 STARFEST's business, properties, plant and offices do not exist or operate in violation of any federal, state or local code, law, regulation or ordinance regulating zoning, city planning, fire safety, environmental protection or similar matters. All permits, licenses, franchises, consents and other authorizations necessary for the conduct of STARFEST's business have been timely obtained and are currently in effect. STARFEST is not in violation of any term or provision of any such permit, license, franchise, consent or other authorization. 2.13 Except as described on Schedule 2.13, STARFEST is not a party as of the date hereof to any written or oral (i) bonus, pension, insurance or other plan providing employee benefits, (ii) contract, or series of related contracts with any one vendor or customer, for purchase, sale or exchange made in the ordinary course of business and in an amount in excess of $1,000, (iii) contract not made in the ordinary course of business, (iv) franchise, licensing or manufacturer's representative agreement, (v) contract with any shareholder of STARFEST or an affiliate of any shareholder of STARFEST within the meaning of the federal securities laws, or (vi) any contract for borrowed money either as borrower or lender. All agreements listed on Schedule 2.13, to the extent that the same give rights to STARFEST, are enforceable by STARFEST, and STARFEST has not received notice of any claim to the contrary. Complete and correct copies of all items listed in Schedule 2.13 have been delivered to CONCIERGE prior to the execution of this Agreement. Except as listed in Schedule 2.13, all parties other than STARFEST obligated under the agreements listed on Schedule 2.13 are in compliance in all material respects with the terms thereof and there has been no notice of default or termination with respect to any such agreement that has not been cured or waived in writing. 2.14 No employee pension benefit plan within the meaning of Section 3(a) of the Employment Retirement Income Security Act of 1994, as amended ("ERISA"), has been maintained or sponsored by STARFEST or exists to which STARFEST has contributed since its formation or is obligated to contribute for the benefit of its employees. Neither STARFEST nor any corporation or other entity affiliated with STARFEST contributes to, is obligated to contribute to, or has during the last five years contributed to or been obligated to contribute to, and none of STARFEST's employees are participants in, any multi-employer plan within the meaning of Section 4001(a) of ERISA. 2.15 Since its formation, STARFEST has not infringed any patents, trademarks, service marks or trade names registered to or used by it in its business, nor has STARFEST claimed any such infringement. 2.16 The Company is not a party to or bound by any collective bargaining agreement or any other agreement with a labor union. 2.17 All of the unrestricted outstanding shares were issued pursuant to the exemption from registration provided by Regulation D, Rule 504. No legend or other reference to any purported lien or encumbrance appears upon any certificate representing the unrestricted shares. 2.18 STARFEST has not made any material misstatement of fact or omitted to state any material fact necessary or desirable to make complete, accurate and not misleading every representation and warranty set forth herein. 3. Representations of CONCIERGE. CONCIERGE represents as follows: 3.1 CONCIERGE is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and is authorized to transact its business and is in good standing in each state in which its ownership of assets or conduct of business requires such qualifications. CONCIERGE is engaged in the business of designing, developing, manufacturing and marketing computer telephony technology devices. 3.2 The authorized capital stock of CONCIERGE consists of 10 million shares of common stock, $0.01 par value, of which 895,276 shares are issued and outstanding (the "CONCIERGE Shares. All of the CONCIERGE Shares have been duly authorized and are validly issued, fully paid and non-assessable. Except for the obligations set forth on Exhibit 3.2 attached hereto, there are no existing agreements, options, warrants, rights, calls or commitments of any kind to which CONCIERGE is a party or it is bound providing for the issuance of any shares, or for the repurchase or redemption of shares, of CONCIERGE's capital stock, and there are no outstanding securities or other instruments convertible into or exchangeable for shares of such capital stock and no commitments to issue such securities or instruments. None of the CONCIERGE Shares were issued in violation of the Securities Act or any state securities laws. 3.3 CONCIERGE has the right, power, legal capacity and authority to execute and deliver this Agreement and to perform its obligations under this Agreement, and the documents, instruments and certificates to be executed and delivered by CONCIERGE pursuant to this Agreement. The execution and delivery of and performance of the obligations contained in this Agreement by CONCIERGE and all documents, instruments and certificates made or delivered by CONCIERGE pursuant to this Agreement, and the transactions contemplated hereby, have been or as of the Closing Date will be duly authorized by all necessary action on the part of the CONCIERGE shareholders and CONCIERGE. 3.4 The terms and provisions of this Agreement and all documents, instruments and certificates made or delivered from time to time by CONCIERGE hereunder and thereunder constitute valid and legally binding obligations of CONCIERGE, enforceable against CONCIERGE in accordance with the terms hereof and thereof. 3.5 The execution and delivery of this Agreement by CONCIERGE do not require any consent of, notice to or action by any person or governmental authority, which consent, notice or action has not been made, given or otherwise accomplished, and satisfactory evidence thereof has been delivered to Starfest. The performance of this Agreement by CONCIERGE and the consummation by CONCIERGE of the transactions contemplated hereby will not require any consent of, notice to or action by any person or governmental authority. 3.6 The making and performance of this Agreement by CONCIERGE and the consummation of the transactions contemplated hereby will not result in a breach or violation by CONCIERGE of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust (constructive or other), loan agreement, lease, franchise, license or other agreement or instrument to which CONCIERGE is bound, any statute, or any judgment, decree, order, rule or regulation of any court or governmental agency or body applicable to CONCIERGE or any of the properties of CONCIERGE. 3.7 Attached hereto as Exhibit 3.7 are unaudited financial statements of CONCIERGE from its inception through December 31, 1999. These financial statements present fairly the financial condition and results of operations of its business, in accordance with generally accepted accounting principles, except for those adjustments that would be required for audited financial statements. 3.8 As of the date hereof, the executive officers and directors of CONCIERGE are Allen E. Kahn, James E. Kirk and G. Robert Knauss. 3.9 Attached as Exhibit 3.9 is a true and correct list of all material liabilities of CONCIERGE, contingent or matured, which are not reflected on the balance sheet dated as of December 31, 1999 and which arose in the ordinary course of business. 3.10 There is no claim for personal injury, products liability, property or other damages, grievance, action, proceeding or governmental investigation pending, or to CONCIERGE's knowledge, threatened against CONCIERGE or affecting its assets or business, other than as listed on Exhibit 3.10 hereto. 3.11 CONCIERGE has not made any material misstatement of fact or omitted to state any material fact necessary or desirable to make complete, accurate and not misleading every representation, warranty and agreement set forth herein. 3.12 CONCIERGE has filed, or will have filed prior to Closing, all income, franchise, real property, personal property, sales, employment and other tax returns required to be filed by any taxing authority and has paid or accrued all taxes required to be paid by it in respect to the periods covered by such returns, whether or not shown on such returns, and CONCIERGE has no liability for such taxes in excess of the amounts so paid. CONCIERGE is not delinquent in the payment of any tax, assessment or governmental charge, has not requested any extension of time within which to file any tax returns which have not since been filed, and no deficiencies for any tax, assessment or governmental charge have been claimed, proposed or assessed by any taxing authority. As used herein, the term "tax" includes all governmental taxes and related governmental charges imposed by the laws and regulations of any governmental jurisdiction. 3.13 CONCIERGE's business, properties, plant and offices do not exist or operate in violation of any federal, state or local code, law, regulation or ordinance regulating zoning, city planning, fire safety, environmental protection or similar matters. All permits, licenses, franchises, consents and other authorizations necessary for the conduct of CONCIERGE's business have been timely obtained and are currently in effect. CONCIERGE is not in violation of any term or provision of any such permit, license, franchise, consent or other authorization. 3.14 Except as described on Schedule 3.14, CONCIERGE is not a party as of the date hereof to any written or oral (i) bonus, pension, insurance or other plan providing employee benefits, (ii) contract, or series of related contracts with any one vendor or customer, for purchase, sale or exchange made in the ordinary course of business and in an amount in excess of $1,000, (iii) contract not made in the ordinary course of business, (iv) franchise, licensing or manufacturer's representative agreement, (v) contract with any shareholder of CONCIERGE or an affiliate of any shareholder of CONCIERGE within the meaning of the federal securities laws, or (vi) any contract for borrowed money either as borrower or lender. All agreements listed on Schedule 3.14, to the extent that the same give rights to CONCIERGE, are enforceable by CONCIERGE, and CONCIERGE has not received notice of any claim to the contrary. Complete and correct copies of all items listed in Schedule 3.14 have been delivered to Starfest prior to the execution of this Agreement. Except as listed in Schedule 3.14, all parties other than CONCIERGE obligated under the agreements listed on Schedule 3.14 are in compliance in all material respects with the terms thereof and there has been no notice of default or termination with respect to any such agreement that has not been cured or waived in writing. 3.15 No employee pension benefit plan within the meaning of Section 3(a) of the Employment Retirement Income Security Act of 1994, as amended ("ERISA"), has been maintained or sponsored by CONCIERGE or exists to which CONCIERGE has contributed since its formation or is obligated to contribute for the benefit of its employees. Neither CONCIERGE nor any corporation or other entity affiliated with CONCIERGE contributes to, is obligated to contribute to, or has during the last five years contributed to or been obligated to contribute to, and none of CONCIERGE's employees are participants in, any multi-employer plan within the meaning of Section 4001(a) of ERISA. 3.16 Since its formation, CONCIERGE has not infringed any patents, trademarks, service marks or trade names registered to or used by it in its business, nor has CONCIERGE claimed any such infringement. 3.17 CONCIERGE is not a party to or bound by any collective bargaining agreement or any other agreement with a labor union. 4. Confidentiality. From the Closing Date and for a period of five --------------- years thereafter, each of the partie hereto covenants that it will not use for the benefit of any of them or disclose to another any Confidential Information (as hereafter defined) except as such disclosure or use may be consented to in advance by the party which had supplied the information in a writing which specifically refers to this covenant. Confidential Information as used herein means information of commercial value to the supplying party and that is not normally made public by the supplying party, including but not limited to the whole or any part of any scientific or technical information, design, process, procedure, formula, or improvement, trade secret, data, invention, discovery, technique, marketing plan, strategy, forecast, customer or supplier lists, business plan or financial information. 5. Conditions Precedent to STARFEST's Obligations. ---------------------------------------------- 5.1 Conditions Precedent. The obligations of STARFEST to consummate the transactions contemplated herein are subject to the satisfaction (unless waived in writing), on or before the Closing Date, of the following conditions: (a) CONCIERGE shall have materially performed and complied with all covenants, conditions and obligations required by this Agreement to be performed or complied with by CONCIERGE on or before the Closing Date. (b) All representations and warranties of CONCIERGE contained in this Agreement, the Exhibits, and in any document, instrument or certificate that shall be delivered by CONCIERGE under this Agreement shall be materially true, correct and complete on and as though made on the Second Closing Date. (c) During the period from the date of this Agreement through and including the Closing Date: (i) there shall not have occurred any material adverse change affecting CONCIERGE; (ii) CONCIERGE shall not have sustained any loss or damage that materially affects its ability to conduct its business; (iii) the performance by CONCIERGE shall not have been rendered, by a change in circumstances or actions by third parties (including, without limitation, a change in any law or actions by a governmental authority), impossible, illegal, commercially impracticable or capable of accomplishment only on terms and conditions which require STARFEST to incur substantially greater costs or burdens than STARFEST reasonably anticipated on the date of this Agreement. (d) As of the Closing Date, no action or proceeding against any of the parties hereto shall be before any court or governmental agency seeking to restrain or prohibit or to obtain damages or other relief in connection with this Agreement or the transactions contemplated hereby and which, in the judgment of Starfest, makes the consummation of the transactions contemplated by this Agreement inadvisable. (e) CONCIERGE shall have tendered to STARFEST all documents, certificates, payments and other items required by this Agreement hereof to be delivered to STARFEST. (f) A majority of the STARFEST Shareholders shall have approved of the transactions contemplated by this Agreement. (g) CONCIERGE shall have received any consents necessary to perform their obligations under this Agreement. (h) STARFEST shall have received any and all permits, authorizations, approvals and orders under federal and state securities laws for the issuance of STARFEST's Common Stock, without the imposition of any conditions adverse to STARFEST. THE SALES OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN QUALIFIED WITH THE COMMISSIONERS OF CORPORATIONS OF THE STATES OF NEVADA OR CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFORE PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SUCH SECURITIES IS EXEMPT FROM QUALIFICATION UNDER THE LAWS OF THOSE STATES. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT. 6. Conditions Precedent to CONCIERGE's Obligations. ----------------------------------------------- The obligation of CONCIERGE to consummate the transactions contemplated herein are subject to the satisfaction (unless waived in writing), on or before the Closing Date, of the following conditions: (a) STARFEST shall have materially performed and complied with all covenants, conditions and obligations required by this Agreement to be performed or complied with by STARFEST on or before the Closing Date. (b) All representations and warranties of STARFEST contained in this Agreement, the Exhibits, and in any document, instrument or certificate that shall be delivered by STARFEST under this Agreement shall be materially true, correct and complete on and as though made on the Closing Date. (c) During the period from the date of this Agreement through and including the Closing Date: (i) there shall not have occurred any material adverse change affecting STARFEST; (ii) STARFEST shall not have sustained any loss or damage that materially affects its ability to conduct its business; (iii) the performance by STARFEST shall not have been rendered, by a change in circumstances or actions by third parties (including, without limitation, a change in any law or actions by a governmental authority), impossible, illegal, commercially impracticable or capable of accomplishment on terms and conditions which require CONCIERGE to incur substantially greater costs or burdens than CONCIERGE reasonably anticipated on the date of this Agreement. (d) As of the Closing Date, no action or proceeding against any of the parties hereto shall be before any court or governmental agency seeking to restrain or prohibit or to obtain damages or other relief in connection with this Agreement or the transactions contemplated hereby and which, in the judgment of CONCIERGE, makes the consummation of the transactions contemplated by this Agreement inadvisable. (e) STARFEST shall have tendered to CONCIERGE all documents, certificates, and other items required by this Agreement hereof to be delivered to CONCIERGE. (f) STARFEST shall have received any consents necessary to perform their obligations under this Agreement. 7. Closing. ------- 7.1 The closing of the transaction contemplated by this Agreement (the "Closing") shall take place at such time and at such place as the parties shall mutually agree no later than April 15, 2000 (the "Closing Date") unless such date is extended by written agreement of STARFEST and CONCIERGE and shall be effected in accordance with the following: (a) CONCIERGE shall deliver to STARFEST, and STARFEST shall deliver to CONCIERGE, good standing certificates from the secretary of state of any state where the ownership of its assets or the conduct of its business would require such qualification, attesting to the good standing of CONCIERGE or, as the case may be, STARFEST, in each such state. (b) There shall be delivered all other previously rendered documents, instruments and other writings required to be delivered by CONCIERGE to STARFEST or STARFEST to CONCIERGE, as the case may be, at or prior to the Closing pursuant to this Agreement or otherwise legally required or reasonably necessary in connection herewith. (c) STARFEST shall deliver to CONCIERGE the certificate of its corporate Secretary certifying that the necessary corporate action of STARFEST's directors and stockholders has taken place to approve the merger contemplated by this Agreement, and CONCIERGE shall deliver to STARFEST the certificate of its corporate Secretary certifying that the necessary corporate action of CONCIERGE's directors and stockholders has taken place to approve the merger contemplated by this Agreement. (d) STARFEST shall provide the documents needed to be filed with the Secretaries of State of Nevada and California to effect the merger, and the officers of each of STARFEST and CONCIERGE shall execute the documents and deliver them to such Secretaries of State for filing. (e) CONCIERGE shall deliver to STARFEST a list of its stockholders, certified by its Secretary, setting forth the number of shares of CONCIERGE common stock owned by each such stockholder and the number of shares each such stockholder is to receive in the merger. STARFEST shall send the list to its transfer agent and stock registrar with instructions to issue the 78 million shares to the CONCIERGE stockholders in accordance with the list. The certificates that will represent such 78 million shares of Common Stock of the post-merger company will not bear a legend restricting the transferability of the shares. 8. Termination. This Agreement may be terminated prior to the Closing by delivery of notice in writing to that effect as follows: 8.1 By CONCIERGE, if any one or more of the conditions to the obligations CONCIERGE to close has not been fulfilled as of the Closing Date; 8.2 By STARFEST, if any one or more of the conditions to its obligations to close have not been fulfilled as of the Closing Date. 8.3 At any time on or prior to the Closing Date by mutual written consent of the parties hereto. If this Agreement so terminates, it shall become null and void and have no further force or effect. 9. Survival and Indemnification. 9.1 The representations, warranties and covenants of the parties made in this Agreement shall survive the Closing for a period of two years after the Closing Date. Each party shall indemnify and hold harmless the other parties from and against any loss, liability, damage, cost or expense (including reasonable ttorneys' and accountants' fees) which shall arise out of or is connected with any breach of any representation or warranty made or covenant to be performed by the party or parties against whom indemnification is sought; provided, however, that no claims may be asserted against any party until and unless the aggregate of all claims against such party exceeds $10,000 and the maximum aggregate amount of the obligations of any individual party to provide indemnification under this Agreement shall not exceed $200,000. 9.2 Upon the assertion by a third party against one of the parties to this Agreement of a claim to which the indemnification provisions of this Section apply, the party against whom the claim has been asserted shall promptly notify the other party to this Agreement against whom a claim for indemnification is expected to be made of such claim (and such notice shall be a condition precedent to the liability of the parties or party so notified with respect to such claim). Any party so notified shall have the right, at its own expense and with counsel of its choice, to control the defense of any such claim and all actions and proceedings in connection therewith, provided that any party seeking indemnification shall have the right to participate in such defense with counsel of its choice at its own expense. No such claim shall be compromised or settled by any party to this Agreement without the prior written consent of the other party. Each other party shall cooperate in every reasonable way with the party assuming responsibility for the defense and disposition of such claim. 10. Post-Closing Covenants. CONCIERGE covenants that after the Closing: 10.1 The post-merger company will exert all reasonable effort and take all reasonable actions required to register its Common Stock with the SEC on SEC Form 10-SB and to maintain its status as a company whose Common Stock is quoted on the OTC Bulletin Board or shall change its status to a company whose Common Stock is listed on The Nasdaq Stock Market. 10.2 The post-merger company shall not reverse split its stock for a period of at least two years from the date hereof without the written consent of Gary Bryant of Indian Wells, California.. 10.3 For a period of one year, without the written consent of Michael Huemmer the post-merger company will not issue or reserve for issuance more than 9 million shares of its Common Stock for the purposes of attracting qualified management and officers and of obtaining sufficient capital to commence its business in a viable manner. 11. This Agreement shall be governed and construed in accordance with the laws of the State of Nevada without application of Nevada's conflicts of laws provision. 12. Execution in Counterparts. This Agreement and any of the --------------------------- documents described herein that are necessary for Closing may be executed in counterparts, each of which shall be deemed an original and together which shall constitute one and the same instrument. 13. Further Assurances. If, at any time before, on or after either ------------------- Closing Date, any further action by any of the parties to this Agreement is necessary or desirable to carry out the purposes of this Agreement, such party shall take all such necessary or desirable action or use such party's best efforts to cause such action to be taken. 14. Expenses. CONCIERGE shall bear all expenses incurred by it in -------- connection with the negotiation, preparation or execution of this Agreement, and STARFEST shall bear all expenses incurred by it in connection with the negotiation, preparation or execution of this Agreement. 15. Judicial Proceedings. Each party hereto consents to the exclusive -------------------- jurisdiction over it of the courts of the State of Nevada in the County of Hamilton and of the courts of the United States in the Southern District of Nevada and agrees that personal service of all process may be made by registered or certified mail pursuant to the provisions of Section 19. All actions arising out of or relating in any way to any of the provisions of this Agreement or the transactions contemplated hereby shall be brought or maintained only in one of such courts. The parties hereby irrevocably waive any objection that they may now have or hereafter acquire to the laying of venue of any such action or proceeding brought in such courts and any claim that any action or proceeding brought in any such court has been brought in an inconvenient forum. The parties further agree that a final judgment in any such action or proceeding brought in any such court, after all appeals or all rights of appeal have expired, shall be conclusive and binding upon them and may be enforced in any competent court located elsewhere. 16. Notices. Any notice or demand desired or required to be given ------- hereunder shall be in writing and deemed given when personally delivered, sent by overnight courier or deposited in the mail (postage prepaid, certified or registered, return receipt requested) and addressed as set forth below or to such other address as any party shall have previously designated by such a notice. Any notice delivered personally shall be deemed to be received on the date of personal delivery; any notice sent by overnight courier shall be deemed to be received upon confirmation one business day after the date sent; and any notice mailed shall be deemed to be received on the date stamped on the receipt. If to CONCIERGE Allen E. Kahn, Chief Executive Officer Concierge, Inc. 7547 West Manchester Ave., No. 325 Los Angeles, CA 90045 Copy to: James E. Kirk, Esq. 11927 Menaul, N.E. Albuquerque, NM 87112 If to STARFEST Michael Huemmer, President Starfest, Inc. 9494 E. Redfield Road, #1136 Scottsdale, AZ 85260 Copy to: Thomas J.Kenan Fuller, Tubb, Pomeroy & Stokes 201 Robert S. Kerr Ave., Suite 1000 Oklahoma City, OK 73102 17. Parties in Interest. All of the terms and provisions of this --------------------- Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, whether herein so expressed or not. 18. Severability. Any provision of this Agreement that is invalid or ------------ unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining provisions of this Agreement or affecting the validity or enforceability of any provision of this Agreement in any other jurisdiction. 19. Amendment. Except as otherwise provided herein, the parties hereto --------- may modify or supplement this Agreement at any time, but only in writing duly executed by each of the parties hereto. 20. Headings. The headings preceding the text of sections of this -------- Agreement are for convenience only and shall not be deemed a part hereof. 21. Entire Understanding. The terms set forth in this Agreement -------------------- including its Exhibits are intended by the parties as the final, complete and exclusive expression of the terms of their agreement and may not be contradicted, explained or supplemented by evidence of any prior agreement, any contemporaneous oral agreement or any consistent additional terms. The Exhibits attached to this Agreement are made a part of this Agreement. 22. Confidentiality. The parties hereto shall not make any public --------------- announcement regarding the transactions contemplated by this Agreement without the prior written consent of CONCIERGE and STARFEST, which consent shall not be unreasonably withheld, conditioned or delayed. The parties hereto will issue a press release regarding the transactions contemplated by this Agreement upon the execution of this Agreement. Each of the parties hereto shall keep strictly confidential any and all information furnished to it or its agents or representatives in the course of negotiations relating to this Agreement or any transactions contemplated by this Agreement, and such parties have instructed their representative officers, partners, employees and other representatives having access to such information of such obligation of confidentiality. . IN WITNESS WHEREOF, the parties hereto have entered into and signed this Agreement as of the date and year first above written. STARFEST, INC. CONCIERGE, INC. By: /s/ Michael Huemmer By: /s/ Allen E. Kahn Michael Huemmer, Allen E. Kahn, President President EX-23 6 CONSENT OF CERTIFIED PUBLIC ACCOUNTANT JAAK (JACK) OLESK Certified Public Accountant 270 North Canon Drive, Suite 203 Beverly Hills, CA 90210 (310-288-0693 INDEPENDENT AUDITOR'S CONSENT I consent to the use of my report dated February 9, 2000, with respect to the financial statements of Starfest, Inc. included in the March 8, 2000 Form 8-K Current Report of Starfest, Inc. /s/ Jaak Olesk -------------------- JAAK OLESK Beverly Hills, California March 9, 2000 -----END PRIVACY-ENHANCED MESSAGE-----