SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PRIME AIR, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 4583 Applied For
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Number) Identification No.)
incorporation or
organization)
8598 112 Street, Ft. Saskatchewn, Alberta, Canada T8L 3V8;
telephone: 403 998-3400
(Address and telephone number of registrant's principal executive offices)
Royle Smith, President, Prime Air, Inc.
8598 112 Street, Ft. Saskatchewn, Alberta, Canada T8L 3V8;
telephone: 403 998-3400
(Name, address and telephone number of agent for service)
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [__]
CALCULATION OF REGISTRATION FEE
Title of Each Proposed
Class of Proposed Maximum
Securities Amount Maximum Aggregate Amount of
to be to be Offering Offering Registration
Registered Registered Price Per Unit (1) Price (1) Fee
Shares of Common
Stock, $.001
par value 7,040,213 $.875 per Share $6,160,186 $1,867(1)
(1)Estimated solely for purpose of calculating the registration
fee pursuant to Rule 457. This amount is based upon the average of the bid and
asked prices ($.875) of the common stock of the Registrant as of May 8, 1997.
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
PRIME AIR, INC.
(Cross Reference Sheet Pursuant to Rule 404)
HEADING IN PROXY
ITEM NUMBER AND CAPTION STATEMENT/ PROSPECTUS
Item 1. Forepart of Registration Cover Page
Statement and Outside Front
Cover of Prospectus
Item 2. Inside Front and Outside Back Inside Front and Outside Back
Cover Pages of Prospectus Cover Pages
Item 3. Risk Factors, Ratio of Earnings to Prospectus Summary; Risk
Fixed Charges, and Other Information Factors
Item 4. Terms of Transaction Item One--Approval of
Agreement and Plan of Merger
Item 5. Pro Forma Financial Information Not Applicable
Item 6. Material Contracts with Company Item One--Approval of
Being Acquired Agreement and
Plan of Merger
Item 7. Additional Information Required For Not Applicable
Reoffering by Persons and Parties
Deemed to be Underwriters
Item 8. Interests of Named Experts and Counsel Not Applicable
Item 9. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act
Liabilities
Item 10. Information with Respect to S-3 Not Applicable
Registrants
Item 11. Incorporation of Certain Information Not Applicable
by Reference
Item 12. Information with Respect to S-2 or Not Applicable
S-3 Registrants
Item 13. Incorporation of Certain Information Not Applicable
by Reference
Item 14. Information with Respect to Registrants Item One--Approval of
Other than S-3 or S-2 Registrants Agreement and
Plan of Merger
Item 15. Information with Respect to
S-3 Companies Not Applicable
Item 16. Information with Respect to S-2 or S-3 Not Applicable
Companies
Item 17. Information with Respect to Companies Prime Air (Del)
Other than S-2 or S-3 Companies
Item 18. Information if Proxies, Consents or Introduction
Authorizations are to be Solicited
Item 19. Information if Proxies, Consents or Not Applicable
Authorizations are not to be Solicited
or in an Exchange Offer
PRIME AIR, INC.
(A Delaware Corporation)
8598 112 Street
Ft. Saskatchewan, Alberta, Canada T8L 3V8
NOTICE OF SPECIAL MEETING
OF STOCKHOLDERS
TO BE HELD
____________, 1997
To the Stockholders of Prime Air, Inc.:
A Special Meeting of Stockholders (the "Special Meeting") of Prime Air,
Inc., a Delaware corporation, ("Prime Air (Del)") will be held on ___________,
1997, at 10:00 A.M. (local time) at _________, Edmonton, Alberta, Canada, for
the following purposes:
1. To consider and vote upon a proposal to approve an Plan and Agreement
of Merger dated March 10, 1997, (the "Merger Agreement") between Prime
Air (Del) and Prime Air, Inc., a Nevada corporation, ("Prime Air
(NV)"), providing for the merger of Prime Air (Del) with and into
Prime Air (NV) (the "Merger"). If the Merger Agreement is approved
and the Merger becomes effective, each outstanding share of common
stock of Prime Air (Del) will be converted into one share of common
stock of Prime Air (NV).
2. To transact such other business as may properly come before the
meeting or any adjournment or adjournments or postponement or
postponements thereof.
Only holders of record of common stock at the close of business on ______,
1997 are entitled to notice of and to vote at the Special Meeting and any
adjournment or adjournments or postponement or postponements thereof. A list of
shareholders entitled to vote at the Special Meeting will be kept on file at the
offices of Prime Air (Del) at least ten days prior to the Special Meeting and
may be reviewed by any shareholder during regular business hours.
To assure that your vote will be included, please complete, date and sign
the enclosed proxy and return it promptly whether or not you plan to attend the
Special Meeting. Your proxy may be revoked in the manner described in the
accompanying Proxy Statement/Prospectus at any time before it has been voted at
the Special Meeting.
By Order of the Board of Directors
_________, 1997 By
Gregory Duffy, Secretary
PRIME AIR, INC.
(A Delaware Corporation)
8598 112 Street
Ft. Saskatchewan, Alberta, Canada T8L 3V8
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Royle Smith and Gregory as proxies, with
the power to appoint their substitutes, and hereby authorizes them to represent
and to vote, as designated below, all the shares of Common Stock of Prime Air,
Inc., a Delaware corporation, ("Prime Air (Del)") held of record by the
undersigned on ________, 1997, at the Special Meeting of Shareholders to be held
on ________, 1997, or any adjournment or postponement thereof.
I. 1. Proposal to approve an Plan and Agreement of Merger dated March 10,
1997, between Prime Air (Del) and Prime Air, Inc., a Nevada
corporation, ("Prime Air (NV)"), providing for the merger of Prime Air
(Del) with and into Prime Air (NV).
FOR AGAINST ABSTAIN
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
FOR AGAINST ABSTAIN
This proxy, when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Proposals 1 and 2. Please sign exactly as your name appears upon
the records of the Company. When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Dated: , 1997
Signature
Signature (if held jointly)
Please Print Name Please Print Name
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY TO PRIME AIR (DEL) AT
THE ADDRESS SET FORTH ON THIS PROXY.
PROXY STATEMENT/PROSPECTUS
DATED ______, 1997
PRIME AIR, INC.
(A Delaware Corporation)
Special Meeting of Stockholders
To be Held , 1997
7,040,213 Shares of Common Stock, Par Value $.001
This Proxy Statement is also a Prospectus with respect to shares of Common
Stock, par value $.001 per share of Prime Air, Inc., a Nevada corporation
("Prime Air (NV)") to be issued to shareholders of Prime Air, Inc., a Delaware
corporation ("Prime Air (Del)") upon conversion of their shares of Prime Air
(Del) into shares of Common Stock of Prime Air (NV) on the basis of one share of
Prime Air (NV) for each share of Prime Air (Del), pursuant to the Agreement and
Plan of Merger (the "Merger Agreement") described herein, attached as Appendix
"A." Prime Air (NV) has filed a Registration Statement with the U.S. Securities
and Exchange Commission covering 7,040,213 shares of Common Stock of Prime Air
(NV), which shares represent the maximum number of shares issuable upon
consummation of the merger called for by the Merger Agreement (the "Merger").
THIS OFFERING IS HIGHLY SPECULATIVE AND INVOLVES SPECIAL RISKS CONCERNING
THE COMPANY AND ITS BUSINESS. (SEE "RISK FACTORS.")
This Proxy Statement/Prospectus is first being sent to shareholders of
Prime Air (Del) on or about _____, 1997.
The address of both Prime Air (NV) and Prime Air (Del) is 8598 112 Street,
Ft. Saskatchewan, Alberta, Canada T8L 3V8; telephone (403) 998-3400.
No person has been authorized to give any information or make any
representation concerning Prime Air (NV), Prime Air (Del), the capital stock of
either company, or the Merger Agreement, other than as contained in this Proxy
Statement/Prospectus. This Proxy Statement/Prospectus does not constitute an
offer to sell any securities other than the registered securities to which it
relates or an offer to sell the securities covered by this Proxy
Statement/Prospectus in any jurisdiction where, or to any person to whom, it is
unlawful to make such an offer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Proxy Statement/Prospectus is _________, 1997.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a registration statement under the Securities Act of
1933, as amended, with respect to the shares of Common Stock of Prime Air (NV).
The Prospectus does not contain all the information set forth in the
registration statement and the exhibits and schedules thereto. For further
information with respect to Prime Air (NV) and the shares to be issued pursuant
hereto, reference is hereby made to the registration statement and the schedules
and exhibits filed as a part thereof. Statements contained in this Prospectus
as to the contents of any contract or any other document are not necessarily
complete and, in each instance, reference is made to the copy of such contract
or document filed as an exhibit to the registration statement, each statement
being qualified in all respects by such reference. The registration statement,
including exhibits thereto, may be inspected without charge at the Central
Regional Office, 1801 California Street, Suite 4800, Denver, Colorado 80202-
2648, and copies of all or any part thereof may be obtained from the
Commission's principal office in Washington, D.C. upon payment of the fees
prescribed by the Commission.
The Company is not a reporting company. However, the Company intends to
deliver an annual report to security-holders which will include audited
financial statements.
TABLE OF CONTENTS
Page
Introduction.................................................................1
Proxy Statement/Prospectus Summary...........................................2
Risk Factors.................................................................3
Security Ownership of Certain Beneficial Owners and Management...............4
Item One--Approval of Agreement and Plan of Merger...........................6
Prime Air (Del)..............................................................7
Legal Matters...............................................................22
Independent Public Accountants..............................................22
Experts.....................................................................22
Other Information...........................................................22
Index to Financial Statements...............................................23
Financial Statements
Appendix "A" Plan and Agreement of Merger
Appendix "B" Delaware Corporation Law, Section 262, Appraisal Rights
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to holders of Common
Stock, par value $.001 per share (the "Common Stock"), of Prime Air (NV), in
connection with the solicitation of proxies by the Board of Directors of Prime
Air (Del) for use at a Special Meeting of Stockholders of Prime Air (Del) (the
"Special Meeting") to be held at , Edmonton, Alberta, Canada, on
______, 1997, at 10:00 A.M. (local time), and at any adjournment or adjournments
or postponement or postponements thereof. This Proxy Statement/Prospectus, the
enclosed Notice and the enclosed form of Proxy are being first mailed to
stockholders of Prime Air (NV) on or about , 1997.
Voting at the Special Meeting
The Board of Directors of Prime Air (Del) has fixed the close of business
on ______, 1997, as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at the Special Meeting. As of
the Record Date, there were outstanding 7,040,213 shares of Common Stock..
Holders of record of Common Stock on the Record Date are entitled to cast one
vote per share, exercisable in person or by properly executed proxy, with
respect to each matter to be considered by them at the Special Meeting.
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Common Stock of Prime Air (Del) entitled
to vote is necessary to constitute a quorum at the Special Meeting.
The approval of at least a majority of the outstanding shares of Common
Stock of Prime Air (Del) will be required to approve the Merger, and the
approval of at least a majority of the shares of Common Stock voted at the
Special Meeting will be required to approve all other items set forth in the
Notice. The executive officers and directors (and their affiliates) of Prime
Air (Del) own approximately 13.85% of the outstanding shares of Prime Air (Del).
Prime Air (NV) has been informed that those executive officers and directors of
Prime Air (Del) presently intend to vote in favor of the Merger.
THE BOARD OF DIRECTORS OF PRIME AIR (DEL) RECOMMENDS THAT HOLDERS OF COMMON
STOCK VOTE FOR THE MATTERS TO BE VOTED UPON AT THE SPECIAL MEETING.
Proxies
All shares represented at the Special Meeting by properly executed proxies
received prior to or at the Special Meeting, unless such proxies previously have
been revoked, will be voted at the Special Meeting in accordance with the
instructions on the proxies. If no instructions are indicated, proxies will be
voted for each item set forth in the Proxy. If any other matters are properly
presented to the Special Meeting for action, the persons named in the enclosed
form or forms of proxy and acting thereunder will have discretion to vote on
such matters in accordance with their best judgment.
Any proxy given pursuant to this solicitation may be revoked by the persons
giving it before it is voted. Proxies may be revoked by filing with the
Secretary of Prime Air (Del) written notice of revocation bearing a later date
than the proxy, by duly executing a subsequent proxy relating to the same shares
and delivering it to the Secretary of Prime Air (Del), or by attending the
Special Meeting and voting in person. Any written notice revoking a proxy
should be sent to the offices of the Company.
Prime Air (Del) will bear the cost of preparing and mailing the proxy
material furnished to the shareholders in connection with the Special Meeting.
The return of proxies may be solicited by mail, personal interview, telephone or
telegraph by management of Prime Air (Del).
PROXY STATEMENT/PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the
detailed information and financial statements appearing elsewhere herein:
The Companies
Prime Air (Del) is the parent of a wholly owned subsidiary, Prime Air,
Inc., a company incorporated under the laws of the Provence of British Columbia,
Canada ("Prime Air (BC)"). Prime Air (BC) has entered into a lease and
operating agreement with the Village of Pemberton, British Columbia, Canada, to
plan, develop, construct, manage, and operate a terminal facility at the
Pemberton Airport. Prime Air (BC) has constructed the basic terminal building
and proposes to offer regular, scheduled air service to Pemberton Airport to
serve the nearby resort community of Whistler.
Prime Air (NV) was incorporated by Prime Air (Del) for the purpose of
changing the domicile of Prime Air (Del) to the State of Nevada. Prime Air (NV)
is a wholly owned subsidiary of Prime Air (Del) and has had no activities except
in relation to organization of such company and this Merger.
The address of both Prime Air (NV) and Prime Air (Del) is 8598 112 Street,
Ft. Saskatchewan, Alberta, Canada T8L 3V8. The telephone number for each is
(403) 998-3400.
Merger Agreement
The Merger Agreement provides for Prime Air (Del) and Prime Air (NV) to
merge (the "Merger"). Prime Air (NV) will be the surviving corporation and will
succeed to all of the assets, liabilities, rights, and obligations of Prime Air
(Del). The Merger Agreement contains certain conditions which must be fulfilled
or waived before the parties will be obligated to consummate the Merger,
including the approval of the Merger Agreement by the holders of a majority of
the shares of Common Stock of Prime Air (Del).
Upon the effectiveness of the Merger, each share of Common Stock of Prime
Air (Del) will be converted into one share of Common Stock of Prime Air (NV).
All outstanding warrants and options to buy the Common Stock of Prime Air (Del)
will be converted into warrants or options to purchase a like number of shares
of Common Stock of Prime Air (NV). Upon the effectiveness of the Merger former
shareholders of Prime Air (Del) will hold the same percentage of the outstanding
shares of Prime Air (NV).
The Merger will not result in any changes in the provisions of the Articles
of Incorporation of Prime Air (NV), and there will be no changes in the bylaws
of Prime Air (NV).
Management and Operations After the Merger
The current management of Prime Air (NV) is identical to the current
management of Prime Air (Del) and will not be affected by the Merger. The
business of Prime Air (Del), as conducted by its wholly owned subsidiary, Prime
Air (BC), will continue to be the business of Prime Air (NV) without any effect
of the Merger.
Federal Income Tax Consequences
The tax advisor to Prime Air (NV) has advised that, for U.S. federal income
tax purposes, the transactions contemplated by the Merger Agreement will
constitute tax-free reorganizations.
Rights of Dissenting Shareholders
The shareholders of Prime Air (Del) have the right to dissent from the
Merger and, subject to certain conditions provided for under Delaware law,
receive payment of the "fair value" of their Common Stock, exclusive of any
element of value arising from the accomplishment or expectation of the Merger.
On May 12, 1997, the last trading day prior to the public announcement of the
execution of the Merger Agreement, the closing sale price of the Common Stock of
Prime Air (Del) was $1.12 per share. Shareholders are advised that the amount
to be paid to dissenters, even after determination by a court, could be more or
less than $1.12 per share. The Merger Agreement conditions the obligation of
Prime Air (Del) to merge on there not being more than 352,010 shares of Common
Stock of Prime Air (Del) (approximately 5%) dissenting from the Merger.
Recent Prices of Common Stock
The Common Stock of Prime Air (Del) was traded on the NASDAQ Electronic
Bulletin Board until approximately July 23, 1996, at which time management of
the company requested the market makers in the stock to voluntarily suspend
trading in the stock until adequate information concerning the company could be
furnished to the public. Trading on the NASDAQ Electronic Bulletin Board was
recommenced on March 27, 1997, under the trading symbol "PMAR." On May 12, 1997,
the last trading day prior to the announcement of the approval by the Board of
Directors of the proposed Merger, the closing sale price per share of the Common
Stock of Prime Air (Del) was $1.12. On _______, 1997, the last trading day for
which quotations were available prior to the mailing of this Proxy
Statement/Prospectus, the closing price per share of Common Stock was $______.
Little or no trading has occurred since the date trading was reestablished
on March 27, 1997, and therefore believes that no established trading market
exists for the shares of Common Stock of Prime Air (Del).
Federal or State Regulatory Requirements
Except with regard to the statutory provisions concerning the merger of the
two entities, neither federal nor state requirements must be complied with, nor
must approval be obtained in connection with the proposed merger.
RISK FACTORS
In evaluating the Merger, Prime Air (Del) shareholders should consider the
following factors and should carefully review the information contained
elsewhere in this Proxy Statement/Prospectus:
1. Limited Capitalization. Prime Air (Del) has not generated
significant revenues from operations since its inception. (See
"Financial Statements.")
2. Limited Operating History. Prime Air (BC), the operating subsidiary
of Prime Air (Del) has no significant operating history and has yet to
produce a profit. There is no assurance that it will ever be
profitable. As a new enterprise, it is likely to be subject to risks
management has not anticipated. Prime Air (BC) has limited resources
and is dependent on funding from Prime Air (Del) to allow it to
conduct operations. However, Prime Air (Del) has no operations other
than raising capital through equity offerings of its common stock.
Therefore, unless Prime Air (Del) is able to continue to raise funds
through such equity financing, the resources of Prime Air (Del) may
not be sufficient for the needs of Prime Air (BC), and it may have
inadequate funds to finance such operations. (See "Prime Air (Del),"
"Management's Discussion and Analysis" and "Financial Statements.")
3. Start-up Business. Prime Air (BC) is in a start-up phase
(development stage) and has not engaged in any significant operations
to date. There is no certainty that Prime Air (BC) will be successful
in overcoming the risks of development in order to advance beyond the
start-up phase (development stage). (See "Prime Air (Del),"
"Management's Discussion and Analysis," and "Financial Statements.")
4. Competition. Prime Air (BC) proposes to engage in a market which is
highly competitive. The company will be competing with other forms of
transportation to the Whistler ski resort, such as bus and other
ground shuttle services, many of which services are owned by more
established companies having much greater financial resources,
experience, and personnel resources than Prime Air (BC). (See "Prime
Air (Del).")
5. Government Regulations. The air transportation industry in Canada
is heavily regulated. It will be necessary that Prime Air (BC), or
any company engaged by Prime Air (BC) to conduct the air
transportation operations, obtain and maintain all necessary licenses
and operating certificates. (See "Prime Air (Del).")
6. Limited Public Market for Stock. At present, no established market
exists for the Common Stock of Prime Air (Del). The Common Stock of
Prime Air (Del) is currently traded on the OTC Bulletin Board.
However, the number of shares traded is extremely limited. (See
"Market Information.")
7. Applicability of Penny Stock Risk Disclosure Requirements. The
Common Stock of Prime Air (Del) will likely be considered a "penny
stock" as that term is defined in rules promulgated under the
Securities Exchange Act of 1934, as amended. Under these rules,
broker-dealers participating in transactions in penny stocks must
first deliver a Schedule 15G risk disclosure document which describes
the risks associated with penny stocks, the broker-dealer's duties,
the customer's rights and remedies, and certain market and other
information, and make a suitability determination approving the
customer for penny stock transactions based on the customer's
financial situation, investment experience and objectives. Broker-
dealers must also disclose these restrictions in writing to the
customer and obtain specific written consent of the customer, and
provide monthly account statements to the customer. With all these
restrictions, the likely effect of the designation as a penny stock
will be to decrease the willingness of broker-dealers to make a market
for the stock, to decrease the liquidity of the stock, and to increase
the transaction cost of sales and purchases of penny stocks compared
to other securities.
8. Dividend Policy. Prime Air (Del) has never paid a cash dividend on
its Common Stock and does not anticipate paying cash dividends on its
Common Stock in the foreseeable future. (See "Dividend Policy.")
9. Market Overhang. Prime Air (Del) currently has 4,394,530 shares of
its Common Stock which have not been registered with the Securities
and Exchange Commission or any state securities agency and which are
currently restricted pursuant to Rule 144 promulgated by the
Securities and Exchange Commission under the Securities Act of 1933,
as amended. All of these shares are restricted from public resale for
a period of one year from the date of issuance. The sale of some or
all of the restricted shares of Common Stock after such two year
holding period could have a material negative impact upon the market
price of the Common Stock. Of the total restricted shares,
approximately 3,072,478 were believed to have satisfied the one-year
holding requirement and to be available for sale pursuant to said Rule
as of May 1, 1997. (See "Security Ownership of Certain Beneficial
Owners and Management" and "Description of Securities.")
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
As of May 10, 1997, management of Prime Air (Del) believes that the
following persons beneficially owned in excess of 5% of the Common Stock of the
company:
Name and Address of Amount and Nature Percent of
Title of Class Beneficial Owner of Beneficial Ownership Class
Common Stock Phillip Johnston 1,738,9101 24.7%
(Par Value $.001) PMB7 Hibiscus Square Pond St.
Grand Turk
Turks and Caicos Island, BWI
Patricia Jarvis 522,705 7.42%
P.O. Box 1056
Renton, WA 98057
The following table sets forth certain information with respect to the
ownership of the common stock of Prime Air (Del) by each director and by its
officers and directors as a group, as of the date of May 10, 1997:
1Of these shares, 1,118,910 are held directly of record by Confederation
Capital Corporation Ltd., and 620,000 are held directly of record by Dolphin
Trading Ltd.
Name of Nature of
Beneficial Position with Beneficial Amount and
Title of Class Owner Prime Air (Del) Ownership2 Percent of
Class
Common Blaine Haug Chairman Direct 588,560
Stock (Par 8.36%
Value $.001)
Royle Smith President Direct and
Indirect3 125,000
1.78%
John Eberhard Director Direct and
Indirect4 107,670
1.5%
Gregory Duffy Secretary/Treasurer Direct and
Indirect5 154,000
2.19%
Officers and Directors
as a Group (4 persons) 975,230
13.85%
2Unless otherwise indicated, this column reflects amounts as to which the
beneficial owner has sole voting power and sole investment power.
3The shares beneficially owned by Mr. Smith are held directly and of record
by Welcome Ford Sales Ltd., a company controlled by Mr. Smith.
4Of theses shares, 5,000 are beneficially owned directly and of record by
Mr. Eberhard's wife, and 88,000 are held in a brokerage account controlled by
Mr. Eberhard.
5Of the shares beneficially owned by Mr. Duffy, 10,000 are held directly
and of record by his wife.
ITEM ONE--APPROVAL OF
AGREEMENT AND PLAN OF MERGER
This section of the Proxy Statement/Prospectus describes certain aspects of
the Merger but does not purport to be complete and is qualified in its entirety
by reference to the Merger Agreement which is set forth as Appendix "A" attached
hereto and incorporated herein.
ALL SHAREHOLDERS ARE URGED TO READ THE MERGER AGREEMENT IN ITS ENTIRETY.
General Description
The Merger Agreement provides that on the effective date of the merger (the
"Effective Date"), Prime Air (Del) will be merged with and into Prime Air (NV).
Prime Air (NV) will be the surviving corporation. Prime Air (Del), which will
not survive the Merger, will be merged into Prime Air (NV) and all of Prime Air
(Del)'s assets, liabilities and property will become the assets, liabilities ,
and property of Prime Air (NV). The Articles of Incorporation of Prime Air (NV)
will be unchanged and there will be no change to its bylaws. Also, the Merger
Agreement provides that on the Effective Date, the current management of Prime
Air (NV), which consists of the same individuals as management of Prime Air
(Del), will remain the management of the surviving entity. (See "Differences in
Rights of Prime Air (Del) Shareholders as a Result of the Merger.")
Effective Date
The effective Date is the date when the Certificate of Merger has been
filed with the Delaware Secretary of State and with the Nevada Secretary of
State, which will occur promptly after approval of the Merger Agreement by
shareholders of both entities.
Conversion Ratio
On the Effective Date, each share of outstanding common stock of Prime Air
(Del) will be converted into one share of Prime Air (NV).
Conditions to the Merger
The Merger Agreement provides that the effectiveness of the Merger is
subject to the condition that shareholders of Prime Air (Del) owning not more
than 5% of total outstanding shares of common stock shall exercise their rights
as dissenting shareholders to the proposed merger. If shareholders owning in
excess of 5% shall exercise such dissenting rights, the proposes merger will be
abandoned and the Merger Agreement will not be filed either in the State of
Nevada or the State of Delaware.
Effect of the Merger
Consummation of the Merger and conversion of the Prime Air (Del) common
stock into shares of Prime Air (NV) common stock will result in the current
shareholders of Prime Air (Del) owning an equal number of shares and the same
percentage ownership of Prime Air (NV).
The Merger will not result in any changes to Prime Air (NV)'s Articles of
Incorporation or bylaws concerning the rights of holders of Prime Air (Del)
common stock. Outstanding options and warrants to purchase shares of Prime Air
(Del) common stock will also be converted upon the Effective Date of he Merger
into options or warrants to purchase Prime Air (NV) common stock. See "ITEM
ONE--APPROVAL OF AGREEMENT AND PLAN OF MERGER--Conversion of Options and
Warrants."
Shareholder Approval
The affirmative vote of the holders of a majority of the outstanding shares
of Prime Air (Del) common stock is required for approval and adoption of the
Merger Agreement. Prime Air (NV) is a wholly owned subsidiary of Prime Air
(Del) which has agreed to consent to the approval and adoption of the Merger
Agreement immediately upon such approval and adoption by the shareholders of
Prime Air (Del).
THE BOARDS OF DIRECTORS OF BOTH PRIME AIR (DEL) AND PRIME AIR (NV)
RECOMMEND A VOTE FOR THE APPROVAL OF THE MERGER AGREEMENT.
Basis and Reasons for the Merger; Recommendations
Management believes that the change of domicile to the State of Nevada will
be beneficial to the shareholders of the company and therefore recommends that
the shareholders vote in favor of the change of domicile.
Interests of Certain Persons in the Merger
Each of the officers and directors of Prime Air (Del) will also be an
officer and/or director of Prime Air (NV) following the Merger. Each of the
current shareholders of Prime Air (Del), unless such shareholder should dissent
from the Merger, will be a shareholder of Prime Air (NV) owning the same number
of shares of Prime Air (NV) as he, she, or it held in Prime Air (Del).
Conversion of Warrants and Options
On the Effective Date of the Merger, all warrants and options, if any,
under which Prime Air (Del) has agreed to issue Prime Air (Del) common stock
shall remain in force and effect as warrants or options to purchase Prime Air
(NV) common stock on the same terms and conditions. At May 1, 1997, there were
no outstanding options or warrants to purchase shares of Prime Air (Del). On
the Effective Date, any options will be converted into options to purchase a
like number of shares of Prime Air (NV) common stock at the same exercise prices
per share.
Prime Air (NV) has no outstanding options or warrants to purchase shares of
common stock of Prime Air (NV).
Management of Prime Air (NV)
The officers and directors of Prime Air (Del) are as follows:
Name Age Positions Director Since
Blaine Haug 49 Chairman 1994
Royle Smith 47 President --
John Eberhard 52 Director 1995
Gregory Duffy 38 Secretary/Treasurer --
The officers and directors of the subsidiary, Prime Air (BC), are as
follows:
Name Age Positions Director Since
Blaine Haug 49 President and Director 1989
Richard T. Shrieves 42 Secretary and Director 1992
Set forth below is the business experience and biographical information on
each of the executive officers and directors of Prime Air (Del) and Prime Air
(BC):
BLAINE HAUG has been employed as the general manager of Prime Air (Del)
since 1989. Mr. Haug currently holds an airline transport pilot license first
issued in 1978 by Canada.
ROYLE SMITH has been the president of Welcome Ford Sales Ltd., a Ford
dealership located in Edmonton, Alberta, Canada, since 1981.
JOHN EBERHARD has operated his own law practice in London, Ontario, Canada,
since 1973, and is a member of the Canadian Bar Association. He is also a
member of the Law Association of Upper Canada, Middlesex Law Association,
Association of Transportation Practitioners (U.S.A.), Lawyer-Pilot Bar
Association (U.S.A.-Canada). Mr. Eberhard graduated in 1966 with a bachelor of
arts degree and in 1969 with a law degree from the University of Western
Ontario.
GREGORY DUFFY has been employed as general manager of Welcome Ford Sales
Ltd. since 1991.
RICHARD T. SHRIEVES has practiced law since 1980.
There are no known arrangements or understandings between any of the
foregoing individuals and any other person pursuant to which he or she was
elected as a director.
No remuneration was paid to the incumbent directors by the Company during
1996, except for reimbursement of out-of-pocket expenses incurred by such
individuals on behalf of the Company.
There are no arrangements known to management the effect of which would
result in a change of control of Prime Air (Del), nor has such a change of
control occurred during 1996.
Indemnification
Nevada law expressly authorizes a Nevada corporation to indemnify its
directors, officers, employees, and agents against liabilities arising out of
such persons' conduct as directors, officers, employees, or agents if they acted
in good faith, in a manner they reasonably believed to be in or not opposed to
the best interests of the company, and, in the case of criminal proceedings, if
they had no reasonable cause to believe their conduct was unlawful. Generally,
indemnification for such persons is mandatory if such person was successful, on
the merits or otherwise, in the defense of any such proceeding, or in the
defense of any claim, issue, or matter in the proceeding. In addition, as
provided in the articles of incorporation, bylaws, or an agreement, the
corporation may pay for or reimburse the reasonable expenses incurred by such a
person who is a party to a proceeding in advance of final disposition if such
person furnishes to the corporation an undertaking to repay such expenses if it
is ultimately determined that he did not meet the requirements. In order to
provide indemnification, unless ordered by a court, the corporation must
determine that the person meets the requirements for indemnification. Such
determination must be made by a majority of disinterested directors; by
independent legal counsel; or by a majority of the shareholders.
Article VI of the Bylaws of Prime Air (NV) provides that the corporation
shall indemnify its directors, officers, agents and other persons to the full
extent permitted by the laws of the State of Nevada. Insofar as indemnification
for liabilities arising under the Securities Act of of 1933 (the "Act") may be
permitted to directors, officers, controlling persons of Prime Air (NV) pursuant
to the foregoing provisions, or otherwise, Prime Air (NV) has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable.
Executive Compensation
There has been no compensation awarded to, earned by, or paid to any of the
executive officers of the Prime Air (NV) during the year ended December 31,
1996. Prime Air (NV) has no written employment contract with any of its
officers.
The following table sets forth the aggregate executive compensation
earned by or paid to the named executive officers by any person for all services
rendered in all capacities to Prime Air (Del) for the fiscal years ended
December 31, 1994, 1995, and 1996:
Annual Long-Term
Name and Year Compensation Compensation All
Principal Other
Positions Compen
-
sation
Salary Bonus Other Awards Payout
Annual s
Compen-
sation
Restrict Option LTIP
ed Stock s/SARs Payout
Award(s) s
Blaine Haug, 1996 -- -- -- $62,5001 -- -- --
Chairman
1995 -- -- -- -- -- -- --
1994 -- -- -- -- -- -- --
Royle Smith, 1996 -- -- -- $173,438 -- -- --
President 2
1995 -- -- -- -- -- -- --
1994 -- -- -- -- -- -- --
1These shares were issued to Mr. Haug as remuneration for management fees
for 1996. For purposes of this table only, the valuation of the 200,000 shares
of restricted stock is based upon the market value of the stock which was
approximately $0.3125 on March 18, 1996, the date of the award. The value of
these shares is based solely upon the closing bid price of the shares on such
date. No dividends have been paid on these shares. Notwithstanding the
valuation of the shares for purposes of this table, the Board of Directors
valued the shares at a significant discount of the market value at the time of
award based upon the limited trading volume of market shares, the relatively
short operating history of the Company and the risks associated therewith, the
limited cash resources of the Company, and as an incentive to retain the
continued services of this party.
2Of these shares, 100,000 were issued to Mr. Smith on January 9, 1996, for
accepting the office of Executive Vice-President; 300,000 were issued to him on
January 9, 1996, for consulting fees regarding the completion of the Pemberton
Airport terminal facility; 200,000 were issued to him on March 18, 1996, as
remuneration for management fees for 1996; and 25,000 were issued to Welcome
Ford Sales Ltd., a company controlled by him, on March 29, 1996, for
administration fees rendered regarding the completion of the Pemberton Airport
Terminal Facility. The valuation of 100,000 and the 300,000 shares of the
restricted shares is based upon the market value of the stock which was
approximately $0.25 on January 9, 1996, the date of the award; the valuation of
200,000 shares of the restricted shares is based upon the market value of the
stock which was approximately $0.3125 on March 18, 1996, the date of the award;
and the valuation of 25,000 shares of the restricted shares is based upon the
market value of the stock which was approximately $0.4375 on March 29, 1996, the
date of the award. The aggregate value of these shares is based solely upon the
closing bid price of the shares on such dates. No dividends have been paid on
these shares. Notwithstanding the valuation of the shares for purposes of this
table, the Board of Directors valued the shares at a significant discount of the
market value at the time of award based upon the limited trading volume of
market shares, the relatively short operating history of the Company and the
risks associated therewith, the limited cash resources of the Company, and as an
incentive to retain the continued services of this party.
Mr. Haug has a written employment agreement with Prime Air (Del) to act as
assistant general manager of the company. The agreement provides that Prime Air
(Del) will pay him $100,000 US per annum, payable in cash or in common stock of
the company at a price of $0.50 per share for the year ended December 31, 1996,
and for future years at a price mutually agreed by the parties. The term of the
agreement is through December 31, 2000, renewable by mutual consent for
successive five year periods. The Merger Agreement provides that Prime Air (NV)
shall assume the obligations of such agreement.
Mr. Smith has a written employment agreement with Prime Air (Del) to act as
president of the company. The agreement provides that Prime Air (Del) will pay
him $100,000 US per annum, payable in cash or in common stock of the company at
a price of $0.50 per share for the year ended December 31, 1996, and for future
years at a price mutually agreed by the parties. The term of the agreement is
through December 31, 2000, renewable by mutual consent for successive five year
periods. The Merger Agreement provides that Prime Air (NV) shall assume the
obligations of such agreement.
Information with Respect to Prime Air (NV)
Prime Air (NV) was incorporated in the State of Nevada on November 10,
1996, solely for the purpose of changing the domicile of Prime Air (Del) from
the State of Delaware to the State of Nevada. Prime Air (NV) has conducted no
business operations and owns no property. All of the outstanding common stock
of Prime Air (NV) is owned by Prime Air (Del). The management of Prime Air (NV)
is identical to the management of Prime Air (Del).
Prime Air (NV) is not a party to any material pending legal proceedings or
government actions, including any material bankruptcy, receivership, or similar
proceedings. Management of the Prime Air (NV) does not believe that there are
any material proceedings to which any director, officer or affiliate of the
company, any owner of record of beneficially of more than five percent of the
common stock of Prime Air (NV), or any associate of any such director, officer,
affiliate of the company, or security holder is a party adverse to Prime Air
(NV) or has a material interest adverse to the company.
There currently exists no public trading market for the common stock of
Prime Air (NV). None of the currently outstanding shares of common stock is
subject to outstanding options or warrants to purchase, or securities
convertible into, common equity of Prime Air (NV). None of the outstanding
shares of common stock could presently be sold pursuant to Rule 144 promulgated
by the Securities and Exchange Commission, nor has Prime Air (NV) agreed to
register any such shares. Also, none of the outstanding shares of common stock
is being, or has been proposed to be, publicly offered by the company. Upon
completion of the Merger, all of the currently outstanding shares of common
stock of Prime Air (NV) will be canceled. There is currently only one
shareholder of Prime Air (NV), namely Prime Air (Del), which paid nominal
consideration for such shares.
No cash dividends have been declared or paid as yet on the common stock of
Prime Air (NV) and the Board of Directors of the company has not yet decided on
a dividend policy. Whether dividends will be paid will be determined by the
Board of Directors of Prime Air (NV) and will necessarily depend on the
company's earnings, financial condition, capital requirements and other factors.
The Board of Directors has no current plans to declare any dividends in the
foreseeable future.
Prime Air (NV) has authorized two classes of stock, namely 50,000,000
shares of common stock (par value $.001) and 5,000,000 preferred stock (par
value $.001). The holders of the common stock have equal ratable rights to
dividends from funds legally available therefor, when, as, and if declared by
the Board of Directors of the company and are entitled to share ratably in all
of the assets of the company available for distribution to holders of common
stock upon liquidation, dissolution, or winding up of the affairs of Prime Air
(NV). Holders of the common stock are entitled to one vote per share on all
matters on which shareholders may vote at all meetings of shareholders. There
are no conversion rights, subscription rights, preemptive rights, cumulative
voting rights, or redemptive rights with respect to the common stock.
Concerning the preferred stock, none of which shares is outstanding, the board
of directors has the authority, by resolution or resolutions, to divide the
preferred stock into series, to establish and fix the distinguishing designation
of each such series and the number of shares thereof (which number, by like
action of the board of directors from time to time thereafter, may be increased
except when otherwise provided by the board of directors in creating such
series, or may be decreased but not below the number of shares thereof then
outstanding) and, within the limitations of applicable law of the State of
Nevada, to fix and determine the relative rights and preferences of the shares
of each series so established prior to the issuance thereof.
Prime Air (NV) is acting as its own transfer agent. However, management
intends to engage the transfer agent currently used by Prime Air (Del), namely
Illinois Stock Transfer Company, 223 West Jackson Blvd., Suite 1210, Chicago, IL
60606.
Management and Operations After the Merger
The board of directors and officers of the surviving corporation after the
Merger will be comprised of the same individuals as currently comprise Prime Air
(Del). The principal business of the Prime Air (NV) will be the current
business of Prime Air (Del), which is conducted through Prime Air (BC).
Procedure for Converting Outstanding Shares
The conversion of the Prime Air (Del) common stock into Prime Air (NV)
common stock will occur automatically upon the Effective Date of the Merger.
Promptly thereafter, a transmittal letter will be furnished to the shareholders
of Prime Air (Del) by the transfer agent for Prime Air (Del), which transfer
agent will continue to act as the transfer agent for Prime Air (NV). The
transmittal letter will contain certain instructions with respect to the
surrender of Prime Air (Del) stock certificates for new Prime Air (NV) stock
certificates. Until the exchange is complete, each certificate which
represented outstanding shares of Prime Air (Del) before the Merger will be
deemed to evidence ownership of a like number of shares of common stock of Prime
Air (NV) as of the Effective Date. Stock certificates for Prime Air (Del)
should not be forwarded to the Prime Air (Del) or the transfer agent until after
receipt of a transmittal letter and should not be returned with the enclosed
proxy.
Differences in Rights of Prime Air (Del) Shareholders as a Result of the Merger
If the Merger is approved and becomes effective, the shareholders of Prime
Air (Del) will receive a like number of shares of common stock of Prime Air (NV)
in place of each share of common stock of Prime Air (Del). Prime Air (Del) is a
Delaware corporation and Prime Air (NV) is a Nevada corporation. Differences
between the corporation laws of he States of Delaware and Nevada, as well as
differences in the charter and bylaws of the two companies will result in
differences in the rights of Prime Air (Del) shareholders. The material
differences as set forth in the Delaware Corporation Law ("DCL") and the Nevada
Revised Statutes ("NRS") are as follows:
Shareholders' Meetings
Notice. Pursuant to Section 78.370 of the NRS, special or annual meetings
of the shareholders require that written notice must be provided to the
shareholders stating the purpose or purposes for which the meeting is called.
Section 222 of the DCL provides that only for special meetings must the purposes
or purposes of the meeting be stated in the notice.
Proxies. Section 78.355 of the NRS provides that no proxy shall be valid
after the expiration of six months, or, if coupled with an interest, for more
than seven years from the date of its execution. Section 215 of the DCL
provides that no proxy shall be valid after three years, unless the proxy
provides for a longer period.
Action Without a Meeting. Generally, under Section 78.320 of the NRS, any
action by a majority of the voting power of the corporation is sufficient to
take such action without a meeting. Under Section 228 of the DCL, any action
required to be taken at an annual or special meeting of the shareholders may be
taken by written consents of the shareholders if such consents set forth the
action to be taken and are signed by the holders of the outstanding stock having
not less than the minimum number of votes necessary to authorize or take such
action at a meeting.
Court-Ordered Meetings. Section 211 of the DCL provides that the Court of
Chancery may require the holding of an annual meeting of the shareholders if no
such meeting has been held within thirty days following the date designated
therefor or, if no date has been designated, if no such meeting has been held
within thirteen months after the last annual meeting. Section 78.345 of the NRS
provides that a majority of the voting power may demand that an annual meeting
be called if the corporation shall fail to hold an annual meeting within six
months after the time designated therefor.
Election and Removal of Directors
In both Delaware and Nevada, election of directors by the shareholders is
substantially similar. Cumulative voting is generally allowed in both states.
In both Delaware and Nevada the articles of incorporation or an amendment
thereto must specifically provide for cumulative voting. Also, shareholders of
Nevada corporations registered under the Securities Act of 1933 must give notice
to the corporation in advance that a shareholder wishes to cumulate votes (NRS
Section 78.360). Removal of directors in both states is also similar. In
Delaware shareholders may remove one or more directors by majority vote with or
without cause unless the articles of incorporation provide that directors may
only be removed for cause, or in the case of a corporation with cumulative
voting, if less than all the directors are removed, no director may be removed
without cause if the votes cast against his removal would be sufficient to elect
him (DCL Section 141). In Nevada, however, shareholders representing two-thirds
or more of the voting stock are generally required to remove a director from
office (NRS Section 78.335).
Shareholders' Rights to Inspect Financial Records
Delaware corporate law provides that every shareholder has a right to
inspect the corporation's stock ledger, a list of its stockholders, and its
other books and records during reasonable business hours upon written demand
under oath stating the purpose thereof (DCL Section 220). In Nevada,
shareholders of at least fifteen percent of the issued and outstanding shares
may inspect the financial records of the company upon providing five days'
written notice to the corporation (NRS Section 78.257).
Preemptive Rights
Under Nevada corporate law, except to the extent limited or denied by the
articles of incorporation, shareholders have certain preemptive rights to
purchase a corporation's unissued shares (NRS Section 78.265267). In Delaware,
shareholders do not have preemptive rights unless the articles of incorporation
specifically state such rights (DCL Section 102).
Dissenters' Rights
Both Delaware and Nevada provide certain dissenters' rights to protect
minority shareholders. In general, these dissenters' rights give shareholders
the right to receive fair compensation from the corporation for their shares in
the event that the corporation does certain acts with which the shareholders do
not agree. In Delaware shareholders generally have appraisal rights when the
corporation is involved in a merger or consolidation (DCL Section 262).
Likewise, in Nevada shareholders generally have dissenters' rights to receive
payment for the fair value of their shares when the corporation merges into or
consolidates with another corporation (NRS Section 78.505).
Differences in Rights of Prime Air (NV) Shareholders as a Result of the Merger
If the Merger is approved and becomes effective, the par value, rights and
privileges of the common stock issued upon the Merger will be identical in all
respects to the common stock currently outstanding. All currently issued and
outstanding shares of common stock of Prime Air (NV) are held by Prime Air (Del)
and, upon the Effective Date, will be canceled and returned to the authorized
and unissued shares of common stock of Prime Air (NV).
Accounting Treatment
The Merger is expected to qualify as a "pooling of interests" for
accounting and financial reporting purposes. Under such accounting treatment,
Prime Air (Del) shareholders will be deemed to have combined their existing
voting common stock interests with the voting common stock interests of the
shareholders of Prime Air (NV) common stock. Accordingly, the historical
accounting values of the assets of Prime Air (Del) and the liabilities and
shareholders' equity of each, as reported on their respective balance sheets,
will be consolidated and no goodwill, if any, will be recorded as a result of
the Merger. Under the pooling of interests method, Prime Air (Del)'s historical
financial statements will be restated to combine the assets, liabilities,
accumulated deficits and results of operations of both companies as reflected in
their respective historical financial statements, subject to appropriate
adjustment, if any, to conform the accounting principles of the two companies.
Resale of Prime Air (Del) Shares
The Shares of common stock of Prime Air (NV) issuable to the shareholders
of Prime Air (Del) in connection with the Merger will be freely transferable
except by shareholders who are deemed to be "affiliates" of Prime Air (NV) on
the Effective Date as such term is used in either Rule 144 or Rule 145 under the
Securities Act of 1933, as amended. All of the affiliates of Prime Air (Del)
will become affiliates of Prime Air (NV).
Federal Income Tax Consequences
The explanation set forth below provides general information as to the
anticipated federal income tax consequences to the shareholders of Prime Air
(Del) in the Merger. Kevin Orton, Certified Public Accountant, has delivered an
opinion to Prime Air (Del) affirming its federal income tax opinion contained
herein. Each shareholder of Prime Air (Del) should consult his own tax advisor
as to the specific tax consequences of the Merger, including application and
possible effect of foreign, state, and local tax laws.
The following is only a general discussion of the federal income tax
consequences of the Merger without regard to the facts and circumstances of any
particular shareholder's situation. Prime Air (Del) has been advised that the
federal income tax consequences of the Merger is consummated in accordance with
the terms of the Merger Agreement will be as follows: (i) no gain or loss will
be recognized by Prime Air (Del) shareholders upon the exchange of all of their
shares of Prime Air (Del) for shares of Prime Air (NV) common stock; (ii) the
holding period of Prime Air (Del) common stock received by each exchanging
shareholder who does not dissent will include the period during which that
shareholder held Prime Air (Del) common stock exchanged therefor, provided that
the Prime Air (Del) common stock was held by such shareholder as a capital asset
on the date of exchange; (iii) no gain or loss will be recognized in connection
with the receipt of a Prime Air (NV) stock option issued in connection with the
performance of services; (iv) subject to certain exceptions, gain or loss will
be recognized by Prime Air (Del) shareholders who exercise dissenters' appraisal
rights with respect to their Prime Air (Del) common stock.
Kevin Orton, Certified Public Accountant, has rendered an opinion to Prime
Air (Del) confirming the above tax consequences in reliance upon representations
of certain officers of Prime Air (Del). This opinion is for the sole use of
shareholders (including dissenting shareholders), option holders, and management
of Prime Air (Del) and may not be relied upon by any other individual or entity.
Rights of Prime Air (Del) Dissenting Shareholders
All of the Prime Air (Del) common stock held by shareholders who have
properly preserved and protected dissenters' appraisal rights pursuant to
Section 262 of the Delaware General Corporation Law will not be converted into
shares of Prime Air (NV) common stock and such holders will have their shares
appraised and purchased in accordance with those provisions.
An owner of Prime Air (Del) who objects to the terms of the Merger may seek
appraisal under Section 262 of the Delaware Corporation Law for a determination
of the fair value of his shares, by complying with the requirements of such
section. A copy of Section 262 is attached as Appendix "B" and is incorporated
herein by this reference. Failure to take any necessary steps will result in a
termination or waiver of the appraisal rights of the shareholders. The
following is a summary of the principal provisions of that Section and does not
purport to be a complete description and is qualified in its entirety, and
reference is hereby made to Section 262 of the Delaware General Corporation Law,
a copy of which is attached as Appendix "B."
(1) A shareholder electing to exercise appraisal rights must (a) deliver
to Prime Air (Del) before the taking of the vote on the Merger agreement a
written demand made by or on behalf of the person who is the holder of record of
the Prime Air (Del) shares for which appraisal is demanded, and (b) not vote in
favor of the adoption of the Merger Agreement. The demand should be delivered
to Prime Air (Del) at 8598 112 Street, Ft. Saskatchewan, Alberta, Canada T8L
3V8; attention: Secretary. A proxy or vote against adoption of the Merger
Agreement does not constitute such a demand for appraisal rights. A shareholder
electing to seek appraisal must do so by a separate written demand that
reasonably informs Prime Air (Del) of the identity of the shareholder of record
and of such shareholder's intention thereby to demand appraisal of his Prime Air
(Del) shares. Because a proxy left blank will, unless revoked, be voted FOR
adoption of the Merger Agreement, a shareholder electing to exercise appraisal
rights who votes by proxy must not leave the proxy blank but must vote against
adoption of the Merger Agreement or abstain from voting for or against adoption
of the Merger Agreement.
(2) Only the holder of record of Prime Air (Del) shares is entitled to
assert appraisal rights for the Prime Air (Del) shares registered in that
holder's name. The demand should be executed by or for the holder of record,
fully and correctly, as the holder's name appears on the holder's stock
certificates. If the Prime Air (Del) common stock is owned of record in a
fiduciary capacity, such as by a trustee, guardian, or custodian, execution of
the demand should be made in that capacity, and if the Prime Air (Del) common
stock is owned of record by more than one person, as in a joint tenancy or
tenancy in common, the demand must be executed by or for all owners. An
authorized agent, including one or two or more joint owners, may execute the
demand for appraisal for a holder of record; however, the agent must identify
the record owner or owners and expressly disclose the fact that, in executing
the demand, the agent is acting as agent for the record owner or owners.
A record holder, such as a broker, who holds Prime Air (Del) shares as
nominee for the beneficial owners may exercise a holder's right of appraisal
with respect to the Prime Air (Del) shares held for all or less than all of such
beneficial owners. In such case, the written demand should set forth the number
of Prime Air (Del) shares covered by it. Where no number of Prime Air (Del)
shares is expressly mentioned, the demand will be presumed to cover all Prime
Air (Del) Shares standing in the name of the record owner.
(3) Within 10 days after the Effective Date, Prime Air (Del) is required
to send notice as to the effectiveness of the Merger to each person who prior to
the Effective Date satisfied the foregoing conditions.
(4) Within 120 days after the Effective Date, Prime Air (Del) or any
shareholder who has satisfied the foregoing conditions may file a petition in
the Delaware Court of Chancery demanding a determination of the fair value of
the Prime Air (Del) shares. Shareholders seeking to exercise appraisal rights
should not assume that Prime Air (Del) will file a petition with respect to the
appraisal of the value of their shares or that Prime Air (Del) will initiate any
negotiations with respect to the "fair value" of such shares. Accordingly,
Prime Air (Del) shareholders should regard it as their obligation to initiate
all necessary action with respect to the perfection of their appraisal rights
within the time periods prescribed in Section 262.
(5) Within 120 days after the Effective Date, any shareholder who has
complied with the requirements for exercise of appraisal rights is entitled upon
written request to receive from Prime Air (Del) a statement setting froth the
aggregate number of Prime Air (Del) shares not voted in favor of the Merger and
with respect to which demands for appraisal have been made, and the aggregate
number of holders of such Prime Air (Del) shares. Prime Air (Del) is required
to mail such statement within 10 days after it receives a written request
therefor.
(6) If a petition for an appraisal is timely filed after a hearing on such
petition, the Delaware Court of Chancery will determine the shareholders
entitled to appraisal rights and will appraise the Prime Air (Del) shares owned
by such shareholders, determining their "fair value" exclusive of any element of
value arising from the accomplishment or expectation of the Merger and will
determine the amount of interest, if any, to be paid upon the value of the Prime
Air (Del) shares of the shareholders entitled thereto. Any such judicial
determination of the "fair value" of the Prime Air (Del) shares could be based
upon considerations other than or in addition to the price paid in the Merger
and the market value of the shares, including asset values, the investment value
and the Prime Air (Del) shares and any other valuation considerations generally
accepted in the investment community. The value so determined for Prime Air
(Del) shares could be more or less than the consideration paid pursuant to the
Merger. The Court may also order that all or a portion of the expenses incurred
by any stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorneys' fees and fees and expenses of experts
utilized in the appraisal proceeding, be charged pro rata against the value of
all the Prime Air (Del) shares entitled to appraisal.
(7) Any shareholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the Effective Date, be entitled to vote the Prime
Air (Del) shares subject to such demand for any purpose or be entitled to the
payment of dividends or to distributions on those Prime Air (Del) shares (other
than those payable or deemed to be payable to shareholders of record as of a
date prior to the Effective Date).
(8) A shareholder will fail to perfect, or will effectively lose, his
right to appraisal if no petition for appraisal is filed within 120 days after
the Effective Date, or if the shareholder delivers to Prime Air (Del) a written
withdrawal of such shareholder's demand for an appraisal and an acceptance of
the Merger, except that any such attempt to withdraw made more than 60 days
after the Effective Date requires the written approval of Prime Air (Del). In
the event of the failure to perfect appraisal rights or the valid withdrawal of
a demand for appraisal rights, a shareholder will be entitled to receive the
consideration otherwise payable pursuant to the Merger Agreement.
(9) In the event an appraisal proceeding is timely instituted, such
proceeding may not be dismissed as to any shareholder who has perfected his
right of appraisal without the approval of the Delaware Court of Chancery.
PRIME AIR (DEL)
General
Prime Air (Del) was incorporated in the State of Delaware on April 4, 1995.
Prime Air (Del) is the parent of a wholly owned subsidiary, Prime Air (BC), a
company originally incorporated under the laws of the Provence of British
Columbia, Canada, on March 10, 1989, under the name "High Mountain Airlines
Inc." for the purpose of establishing air service to serve the Whistler, British
Columbia, Canada, area. Prime Air (BC) has entered into a lease and operating
agreement with the Village of Pemberton, British Columbia, Canada, to plan,
develop, construct, manage, and operate a terminal facility at the Pemberton
Airport. Prime Air (BC) has constructed the basic terminal building and
proposes to facilitate regular, scheduled air service to Pemberton Airport to
serve the nearby resort community of Whistler.
Prime Air (Del) was originally incorporated pursuant to the laws of the
State of Utah on August 30,1993, under the name "Astro Enterprises, Inc." The
Utah corporation changed its name to "Prime Air, Inc." on June 28, 1994. In
June 1994 the Utah corporation entered into an agreement with Prime Air (BC) in
which the shareholders exchanged all of the outstanding shares of Prime Air (BC)
for a controlling number of shares of the Utah corporation, such that upon
completion of the exchange, the shareholders of Prime Air (BC) owned
approximately 90% of the outstanding shares of the Utah corporation and Prime
Air (BC) became a wholly owned subsidiary of the Utah corporation. Management
believes that the closing of such agreement was effected on June 28, 1994. In
connection with the exchange of shares, the Utah corporation effected a one-for-
one hundred reverse split of its outstanding shares effective June 28, 1994,
immediately prior to such closing.
On or about April 4, 1995, the Utah corporation effected a change of
domicile to the State of Delaware by incorporating Prime Air (Del), acquiring
all of the assets and liabilities of the Utah corporation, and issuing shares of
the Delaware corporation to the shareholders of the Utah corporation on a one-
for-one basis. The Utah corporation was voluntarily dissolved by the State of
Utah on May 18, 1995.
The original purpose of the Utah corporation, as set forth in its articles
of incorporation, was to acquire the assets and certain liabilities of another
Utah corporation previously dissolved by the State of Utah on June 1, 1993, and
also incorporated under the name "Astro Enterprises, Inc." Current management
of Prime Air (Del), none of whom were affiliated with the Utah corporation prior
to the share exchange in June 1994, believe that the former management of the
Utah corporation at the time of its incorporation issued approximately 120,000
shares of the company's common stock to the shareholders of the dissolved Utah
corporation of the same name thus creating approximately 170 shareholders of the
Utah corporation. Management does not believe that any other relationship
existed between the two entities or with former management of the dissolved Utah
corporation.
Legal Proceedings
In December 1994 the U.S. Securities and Exchange Commission filed a
complaint in the United States District Court for the District of Columbia (Case
Number 1:94CV02633) against Astro Enterprises, Inc. and certain persons
affiliated with such entity. The basis for such complaint was the dissemination
to the public from approximately March 1989 through May 1990, of false and
misleading information concerning the business of such entity. In 1995 Mr. Paul
Parshall, as the president, director, and authorized agent of Astro Enterprises,
Inc., executed a consent and settlement of the foregoing action. Management
does not believe such action in any way involved the Utah corporation which
subsequently changed its name to Prime Air, Inc. and is the predecessor to Prime
Air (Del), or that Mr. Parshall was authorized to execute such consent on behalf
of such entity. Management is unaware whether Mr. Parshall executed such
consent on behalf of the Utah corporation by the same name which was dissolved
in 1993.
In May 1996 Prime Air (Del) entered into a settlement agreement and
undertaking with the Alberta Securities Commission (file number 100164) in which
Prime Air (Del) agreed to be more diligent in complying with the requirements of
the Alberta Securities Act and the rules made thereunder. In addition, Prime
Air (Del) paid $2,000 to the commission toward the costs of the investigation
conducted by the Commission. In February 1996 Prime Air (Del) announced an
offering of its common shares in Alberta newspapers. Between February 1 and
March 1, 1996, Prime Air (Del) received $93,040 from fifteen investors in
Alberta. The investors received an offering document which did not conform with
the form of an offering memorandum required pursuant to the Alberta Securities
Act and the distribution to the investors did not qualify for an exemption under
such act. Upon being contacted by the staff of the securities commission, Prime
Air (Del) placed all investment monies in trust pending the disposition of the
matter. Thereafter Prime Air (Del) sent an offering memorandum in the required
form and an offer of rescission to all of the investors. After the return of
monies to investors who either did not qualify for an exemption or who elected
rescission, and the filing of a proper report with the securities commission, no
further action was taken by the securities commission.
Airport Lease and Operating Agreement
On October 29, 1993, Prime Air (BC) entered into a Lease and Operating
Agreement (the "Airport Agreement") with the Corporation of the Village of
Pemberton, British Columbia, Canada (hereinafter the "Village of Pemberton"), in
which Prime Air (BC) agreed to undertake the planning, development,
construction, management, and operation of a terminal facility at the Pemberton
Airport. In return the Village of Pemberton granted to Prime Air (BC) an
exclusive lease involving certain lands located at the Pemberton Airport to
enable Prime Air (BC) to undertake the planning, development, construction,
management, and operation of a terminal facility.
The Pemberton Airport is approximately 20 miles north of Whistler Resort on
Highway 99. Whistler Resort is a ski resort located at the base of Whistler
Mountain and Blackcomb Mountain approximately 75 miles north of Vancouver,
British Columbia, Canada. The resort has approximately 6,800 permanent
residents and attracts approximately 1,500,000 visitors annually. Currently
only ground transportation is available to the resort, except for private
flights into Pemberton Airport. The nearest airport facility to Whistler Resort
is Pemberton Airport. There is presently no regular air service into Pemberton
Airport.
The Airport Agreement provides that Prime Air (BC) must construct a
terminal facility on or before October 21, 1994, which date was extended to June
1, 1996, by the Council for the Village of Pemberton. Prior to such extended
date, Prime Air (BC) completed a 5,500 square foot terminal facility at the
Pemberton Airport. The initial term of the Airport Agreement, and the right of
Prime Air (BC) to operate the terminal facility, was two years with provisions
allowing Prime Air (BC) to extend such initial term for addition terms totalling
in the aggregate thirty years, provided that Prime Air (BC) shall continue to
fulfill its obligations under the Airport Agreement, including the payment of
rent in the amount of $100 per year for the first five years, and the payment of
$2,500 per year thereafter, plus 5% of the gross receipts derived from the
operation of the terminal facility. The Airport Agreement also grants to Prime
Air (BC) the option to lease and use certain other lands at the Pemberton
Airport for fixed base operations. The Airport Agreement may be terminated by
the Village of Pemberton in the event of a material default by Prime Air (BC) or
if Prime Air shall become bankrupt. The terminal facilities shall become the
property of the Village of Pemberton at the expiration of the Airport Agreement.
Air Service
Prime Air (BC) initially intends to establish scheduled and charter
passenger and cargo air service between Vancouver International Airport and
Pemberton Airport. Thereafter, Prime Air (BC) will seek to establish such
services between Pemberton Airport and other Canadian and United States
destinations. Prime Air (BC) has entered into a Memorandum of Agreement dated
January 5, 1995 (the "Voyageur Agreement"), with Voyageur Airways Limited, an
Ontario corporation ("Voyageur") to provide the initial service by supplying,
operating, and maintaining DeHavilland Dash-7 aircraft to provide scheduled and
charter passenger and cargo service, from Vancouver International Airport, and
thereafter from other Canadian and United States locations, to the Pemberton
Airport. The Voyager Agreement provides that Prime Air (BC) will operate the
terminal facility at Pemberton Airport and the scheduled and charter passenger
and cargo service, and will market the air services. Voyageur will provide the
certifications, authorizations, expertise, facilities, personnel, and resources
necessary to operate, maintain and service the aircraft. The parties intend to
negotiate and enter into a definitive agreement prior to commencing operations.
Government Regulation and Licensing
Any corporation conducting commercial air service operations in Canada must
possess a valid Operating Certificate and other licenses, permits,
accreditations and certificates that are issued and administered by Transport
Canada. Qualification for the required Operating Certificate requires that:
1. the operator (being the entity actually providing the air service
operations) must have at least one aircraft registered under its Operating
Certificate. This aircraft may either be owned directly or dry leased by
the operator;
2. the aircraft utilized by the operator must be approved and
certified in Canada;
3. in respect of a domestic Canadian air service, the operator must
satisfy the statutory Canadian ownership criteria which essentially
requires that 75% of the voting interest in the operator is controlled by
Canadian citizens or permanent residents of Canada:
4. the management of the operator must include a chief pilot who
holds appropriate Canadian certification;
5. all of the operator's pilots must meet proficiency standards and
hold sufficient ratings to operate the type of aircraft being utilized;
6. the operator must demonstrate and certify that it will be able to
carry out maintenance of its aircraft according to regulated standards.
Such maintenance can either be conducted directly by the operator or
subcontracted to a qualified maintenance facility; and
7. an operations manual must be prepared for the operator and
approved by Transport Canada.
Voyageur will conduct all in-flight operations as an independent contractor
to Prime Air (BC). Management of Prime Air (BC) believes that Voyageur meets
all of the criteria set forth above.
Marketing
Prime Air (BC) intends to hire two industry professionals to spearhead its
sales drive by making direct sales calls to key tour wholesalers and operators,
attending travel, ski, and golf shows, and calling on connector airlines and
hotel groups. Particular emphasis will be placed on targeting certain
geographic regions which traditionally provide the greatest number of visitors
to Whistler. Management believes also that a major part of the marketing
strategy will involve seeking a major international airline and negotiating
Whistler as a final destination in their ticketing and reservations. At present
Prime Air (BC) has entered into negotiations with such an airline, but no
definitive agreement has been entered into.
Competition
Prime Air (BC) will compete with other charter and airline companies based
in the Vancouver and Seattle area which currently service customers whose final
destination is Whistler Resort. To a limited degree the company will compete
with buses chartered or owned by tour operators. Most of these entities are
more established companies having much greater financial resources, experience,
and personnel resources than Prime Air (BC).
Management's Discussion and Analysis of Financial Condition
Prime Air (Del) is a development stage company and conducts all operations
through its wholly owned subsidiary, Prime Air (BC). Prime Air (Del) has had no
material revenues in the past. During the year ended December 31, 1996, the
only income received was bank interest of $2,329.
Prime Air (BC)'s sole fixed obligation is the payment of $CND100 per annum
to the Village of Pemberton under the terms of its Airport Lease and Operating
Agreement. At present the company also expects to pay an additional $50,000 in
the current year to cover legal fees, insurance, and property taxes, regardless
of the date of operations commencement.
The Company intends to begin flight operations in the fall of 1997 when it
is anticipated that flights will start between Vancouver and Pemberton. In the
interim, the company will be implementing its marketing plan as set forth
herein. (See "Prime Air (Del)--Marketing.")
Management anticipates the need to raise additional capital by way of
equity offerings to finance the commencement of operations.
Market Information
The Common Stock of Prime Air Delaware was traded in the over-the-counter
market on the OTC Electronic Bulletin Board through approximately July 23, 1996,
and from March 27, 1997 until present. There is currently no established public
trading market for the Common Stock. The table below sets forth for the periods
indicated the high and low bid quotations as reported by the OTC Bulletin Board.
These quotations reflect inter-dealer prices, without retail market-up, mark-
down, or commission and may not necessarily represent actual transactions.
Quarter High Low
Fiscal year ended
December 31, 1995 First $1.01 $0.25
Second $0.625 $0.375
Third $0.75 $0.3125
Fourth $0.625 $0.25
Fiscal year ended
December 31, 1996 First $0.50 $0.25
Second $0.9375 $0.4375
Third $0.75 $0.25
Fourth -- --
Fiscal year ending
December 31, 1997 First $0.25 $0.25
None of the shares of Common Stock is subject to outstanding options or
warrants to purchase, or securities convertible into, the Common Stock of Prime
Air (Del). As of May 1 , 1997, Prime Air (Del) had 4,394,530 shares of its
Common Stock, or approximately 62% of the total outstanding shares, which were
restricted as defined in Rule 144 promulgated by the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended. Of these shares,
approximately 3,072,478 were believed to have satisfied the one-year holding
requirement and to be available for sale pursuant to said Rule as of May 1,
1997. None of the shares of Common Stock is being, nor have any shares been
proposed to be, publicly offered by Prime Air (Del).
As of May 1, 1997, there were approximately 316 holders of record of the
Common Stock as reported to Prime Air (Del) by its transfer agent.
No cash dividends have been declared or paid as yet on the Common Stock and
the Board of Directors of Prime Air (Del) has not established a dividend policy.
Consulting Contract
Prime Air (Del) entered into a consulting contract (the "Consulting
Agreement") on June 10, 1996, with Siverthorn Investments, Ltd. (the
"Consultant") in which Prime Air (Del) agreed to retain the services of the
Consultant through June 1, 2000, unless earlier terminated as provided in the
Consulting Agreement. Pursuant to the terms of the Consulting Agreement, the
Consultant is required to be available for a minimum of 60 business days per
year to provide consulting and assistance as may be necessary to assist in
facilitating the full operations of Prime Air (Del)'s business. In return,
Prime Air (Del) has agreed to pay the Consultant $100 per hour for such
services. At the option of Prime Air (Del) 75% of the amount due may be paid to
the Consultant in the form of common stock of Prime Air (Del), based upon the
average of the last three months closing bid prices for the common shares. The
Consultant is controlled by Matthew Smith who is also the assistant secretary of
Prime Air (Del). The Merger Agreement provides that Prime Air (NV) shall assume
the obligations of such agreement.
LEGAL MATTERS
The due issuance of the shares of Prime Air (NV) to be issued in connection
with the Merger is being passed upon for Prime Air (NV) by Ronald N. Vance,
Attorney at Law, 57 West 200 South, Suite 310, Salt Lake City, Utah 84101,
counsel for Prime Air (NV).
INDEPENDENT PUBLIC ACCOUNTANTS
Rutherford & Company, Chartered Accountants, Richmond, British Columbia,
Canada, has been the independent public accounting firm of Prime Air (Del) since
the fiscal year 1995. Representatives of Rutherford & Company are not expected
to be present at the Special Meeting.
Orton & Company, Certified Public Accountants, Salt Lake City, Utah, has
been the independent public accounting firm of Prime Air (NV) since its
inception in 1996. Representatives of Orton & Company are not expected to be
present at the Special Meeting.
EXPERTS
The consolidated financial statements of Prime Air (Del) for the years
ended December 31, 1996 and 1995, have been examined by Rutherford & Company,
Chartered Accountants, as set forth in its report attached hereto. The
financial statements referred to above are incorporated herein by reference in
reliance upon such report and upon authority of such firm as experts in auditing
and accounting.
The financial statements of Prime Air (NV) for the year ended December 31,
1996, have been examined by Orton & Company, Certified Public Accountants, as
set forth in its report attached hereto. The financial statements referred to
above are incorporated herein by reference in reliance upon such report and upon
authority of such firm as experts in auditing and accounting.
OTHER INFORMATION
As of the date of this Proxy Statement/Prospectus, the Board of Directors
knows of no other matters to be presented for action at the Special Meeting. If
other matters are properly presented, the persons named in the proxy intend to
vote in accordance with their best judgment on such matters.
INDEX TO FINANCIAL STATEMENTS
Prime Air (Del)
Auditor's Report.........................................................
Consolidated Balance Sheets at December 31, 1996 and 1995................
Consolidated Statements of Loss and Deficit for the years ended December
31, 1996 and 1995.............................................................
Consolidated Statement of Cash Flow for the years ended December 31, 1996
and 1995......................................................................
Notes to Financial Statements............................................
Prime Air (NV)
Independent Auditor's Report.............................................
Balance Sheet at December 31, 1996.......................................
Statement of Operations for the year ended December 31, 1996.............
Statement of Stockholders' Equity from inception to December 31, 1996....
Statement of Cash Flows for the period ended December 31, 1996...........
Notes to Financial Statements............................................
Proforma Financial Statements
Proforma Consolidated Balance Sheets at December 31, 1996 and 1995.......
Proforma Consolidated Statements of Operations for the years ended December
31, 1996 and .............................................................1995
Consolidated Statement of Cash Flows for the years ended December 31, 1996
and 1995......................................................................
Notes to Proforma Consolidated Financial Statements......................
PRIME AIR INC.
(A Delaware Corporation)
Consolidated Financial Statements
December 31, 1996 and 1995
Auditors' Report
Balance Sheets
Statements of Loss and Deficit
Statements of Cash Flows
Notes to Financial Statements
RUTHERFORD & COMPANY
Chartered Accountants
BRUCE RUTHERFORD, C.A. 9511 BATES ROAD, RICHMOND, BC V7A 1F3
TEL (604) 272 5454 FAX (604) 272 5874
AUDITORS' REPORT
To the Shareholders of
Prime Air Inc. (A Delaware Corporation)
We have audited the consolidated balance sheets of Prime Air Inc. as at
December 31, 1996 and 1995 and the consolidated statements of loss and
deficit and cash flows for the years then ended. These financial statements are
the responsibility of thecompany's management. Our responsibility is to express
an opinion on those financial statements based on our audits.
We have conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform an audit
to obtain reasonable assurance 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 evaluating the overall financial
statement presentation.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the company as at December 31,
1996 and 1995 and the results of its operations and cash flows for the years
then ended in accordance with generally accepted accounting principles.
Richmond, Canada Rutherford & Company
March 14, 1997 Chartered Accountants
(PRIME AIR INC.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(all figures in US dollars)
December 31, 1996
(With comparative figures as of December 31, 1995)
<TABLE>
<CAPTION>
1996 1995
ASSETS
<S> <C>
Currents Assets
Cash and short-term deposits $ 101,314 $ 4,575
Share subscriptions receivable 7,333 7,284
Prepaid expenses and deposit 12,592 1,093
GST recoverable 51,208 17,012
172,447 29,964
Capital Assets
Air terminal construction costs 618,186 313,146
Furniture and equipment 2,022 1,224
620,208 314,370
$ 792,655 $344,334
LIABILITIES
Current liabilities
Accounts payable and accruals $ 103,383 $230,803
Notes and advances payable (Note 4) 16,400 10,926
Due to director (Note 5) 18,189 21,060
137,972 262,789
SHAREHOLDERS' EQUITY
Capital stock (Note 6) 1,239,114 482,351
Commitment to issue shares (Note 7) 54,791 -
Accumulated deficit during development stage (639,222) (400,806)
654,683 81,545
$ 792,655 $ 344,334
Approved on behalf of the board:
Director
Director
See Accompanying Notes
</TABLE>
PRIME AIR INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
(all figures in US dollars)
For the year ended December 31, 1996
(With comparative figures for the year ended December 31, 1995)
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31 December 31
1996 1995
<S> <C>
Direct Costs
Flight operations $ 114,720 $ -
Administrative and General
Audit and accounting 10,140 11,967
Advertising 9,017 77
Amortization 21,809 306
Automotive - 4,369
Consulting fees 7,156 (426)
Exchange on conversion of funds (5,581) (564)
Insurance 6,342 -
Interest and service charges 7,547 249
Legal 25,610 -
Management remuneration - 16,265
Office and general 5,728 11,319
Promotion and entertainment 2,702 7,649
Rent 2,399 4,095
Telephone and utilities 14,865 7,385
Transfer agent 7,149 4,080
Travel 11,172 4,495
(126,055) (71,266)
Interest income 2,359 -
Net loss for year (238,416) (71,266)
Accumulated deficit during development stage
Beginning of year (400,806) (329,540)
End of year $ (639,222) $ (400,806)
See Accompanying Notes
</TABLE>
PRIME AIR INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(all figures in US dollars)
For the year ended December 31, 1996
(With comparative figures for the year ended December 31, 1995)
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31 December 31
1996 1995
<S> <C>
NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES:
OPERATING
Net loss $ (238,416) $ (71,266)
Non-cash charge - amortization 21,809 306
(216,607) (70,960)
Change in non-cash working capital
balances relating to operations (173,164) 208,589
(389,771) 137,629
FINANCING
Notes and advances payables 5,474 7,279
Due to director (2,871) 21,060
Issue of capital stock 756,763 131,755
Commitment to issue shares 54,791 -
814,157 160,094
INVESTING
Acquisition of capital assets (327,647) (302,017)
NET CASH INFLOW (OUTFLOW) 96,739 (4,294)
CASH, BEGINNING OF YEAR 4,575 8,869
CASH, END OF YEAR $ 101,314 $ 4,575
</TABLE>
See Accompanying Notes
PRIME AIR INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. Incorporation and Principles of Consolidation
The company was incorporated under the laws of the State of Delaware, USA on
April 4, 1995 and acquired all of the assets, liabilities and shareholders of a
previous Utah Corporation of the same name. The Utah Corporation was
incorporated on August 30, 1993 as Astro Enterprises, Inc. On June 28, 1994,
pursuant to appropriate shareholder agreements, Astro Enterprises, Inc. acquired
all outstanding shares of Prime Air Inc. (a Canadian Corporation) in exchange
for shares of its capital stock on a .787796 to 1 basis, thereby providing the
shareholders of Prime Air inc. with 90% of the outstanding capital stock of
Astro Enterprises, Inc. Astro Enterprises, Inc. then changed its name to Prime
Air, Inc. Upon incorporation of the Delaware company, the Utah Corporation was
dissolved on May 15, 1995.
On November 10, 1996, Prime Air Inc (a Nevada corporation) was formed, the
purpose of which will be to change the domicile of the Company to the State of
Nevada. Prime Air Inc (Nevada) is a wholly-owned subsidiary of Prime Air Inc
(Delaware); however, to December 31, 1996 it has engaged in no activities except
in relation to the organization of that entity.
These consolidated financial statements include the accounts of the Company and
its wholly-owned operating subsidiary, Prime Air Inc. (the Canadian Corporation)
2. Nature of Operations/Going Concern Considerations
The Company is presently in its developmental stage and currently has minimal
sources of revenue to provide incoming cash flows to sustain future operations.
The company=s present activities relate to the construction and ultimate
exclusive operation of an international passenger and cargo air terminal
facility in the Village of Pemberton, British Columbia and the operation of
scheduled flight services between that facility and certain major centers in
Canada and the United States in conjunction with Voyageur Airways Limited.
Terminal building construction was substantially completed in May 1996. The
future successful operation of the company is dependent upon its ability to
obtain the financing required to complete the terminal construction and commence
operation thereof on an economically viable basis.
These consolidated financial statements have been prepared on a Agoing concern@
basis which assumes the Company will be able to realize its assets, obtain the
required financing and discharge its liabilities and commitments in the normal
course of business.
3. Significant Accounting Policies
Capital Assets
Air Terminal Construction Costs:Expenditures relating directly to the
construction of the air terminal facility and related engineering and
design have been recorded in the accounts of the Company at cost, net of
amortization thereof which is provided on a straight-line basis over the 30
year term of the property lease.
PRIME AIR INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
3. Significant Accounting Policies (continued)
Furniture and Equipment: Furniture and equipment are stated at cost,
net of amortization which is provided for at the rate of 20% per
annum on the declining balance basis.
Reporting Currency
All amounts in these consolidated financial statements are reported in U.S.
funds being converted from Canadian funds where applicable at the average
annual rate as posted by the Internal Revenue Service of the United States
as follows:
1996: $ 0.7334 U.S. / $ 1. CDN
1995: $ 0.7284 U.S. / $ 1. CDN
4. Notes and Advances Payable
The notes and advances payable are unsecured, non-interest bearing and are
without specific terms of repayment.
5. Related Party Transactions
During the year ended December 31, 1996, the Company paid no remuneration to any
director (period ended December 31, 1995: $16,265).
A director has advanced funds to the Company in the amount of $ 18,189 to
December 31, 1996. These advances are unsecured, non-interest bearing and are
without specific terms of repayment.
6. Capital Stock
Authorized:
25,000,000 common shares with a stated par value
of $ .001/share
3,000,000 preferred cumulative convertible shares
with a stated par value of $ .001/share
Common Shares Issued:
Number of Shares Consideration
To August 31, 1993
- for cash 300,000 $ 300
Prime Air Inc. share exchange
- June 28, 1994 2,700,000 350,296
During year ended December 31, 1995
- for cash 562,550 131,756
Balance at December 31, 1995 3,562,550 482,352
6. Capital Stock (continued)
Number of Shares Consideration
During year ended December 31, 1996
- for cash 1,510,558 755,279
- consulting and related services1,483,673 1,483
2,994,231 756,762
Balance, December 31, 1996 6,556,781 $ 1,239,114
The directors of the Company have authorized the issue of up to a further
500,000 common shares in the form of a director, officer and employee stock
options at a price to be determined. The granting of these options is subject to
the receipt of regulatory approval.
In July, 1996, management of the Company voluntarily halted trading of its
common shares based upon the conclusion that information concerning the history
of the Company provided by former management may not have been complete. The
Company is in the process of preparing a registration statement in connection
with the proposed change of domicile (referred to in Note 1) to register all of
the outstanding common shares of capital stock in the Company.
7. Commitment to Issue Shares
The major supplier of flight operations services to the Canadian subsidiary
corporation agreed to settle a portion of its outstanding account through the
receipt of free-trading common shares of capital stock of the company. The
amount settled of $54,791 represents 109,582 common shares issued at a deemed
price of $ 0.50/share and is reflected in the Balance Sheet of the Company at
December 31, 1996 as a _commitment to issue shares_. The shares were
subsequently issued in 1997.
8. Lease Commitment
The Canadian subsidiary corporation has entered into an Airport Lease and
Operating Agreement with The Corporation of The Village of Pemberton in British
Columbia whereby it has been granted an exclusive and irrevocable lease over the
lands and airport facilities associated with the Pemberton Airport. The term of
the Lease and Operating Agreement, including extension options relating thereto,
is for a total of 30 years with Terminal Rent payable as follows:
$100 per annum for the initial six (6) years; and thereafter
5% of gross receipts per annum derived from the operation of the
Terminal Facilities, excluding amounts received in connection with the
sale of airline tickets and other forms of transportation.
PRIME AIR, INC.
(a development stage company)
Financial Statements
December 31, 1996
C O N T E N T S
Independent Auditors' Report .............................................. 3
Balance Sheet.............................................................. 4
Statement of Operations ................................................... 5
Statement of Stockholders' Equity.......................................... 6
Statement of Cash Flows ................................................... 7
Notes to the Financial Statements ......................................... 8
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Prime Air, Inc.
We have audited the accompanying balance sheet of Prime Air, Inc.
(a Nevada Corporation) (a development stage company) as of December 31, 1996
and the related statement of operations, stockholders' equity and cash flows for
the period then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Prime Air, Inc. as
of December 31, 1996 and the results of its operations and its cash flows for
the period then ended in conformity with generally accepted accounting
principles.
Salt Lake City, Utah
April 23, 1997
Prime Air, Inc.
(a development stage company)
Balance Sheet
December 31, 1996
ASSETS
<TABLE>
<CAPTION>
<S> <C>
CURRENT ASSETS
Cash $ 10
Total Current Assets 10
OTHER ASSETS
Organizational costs (Note 1) 652
TOTAL ASSETS $ 662
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - related party (Note 2) $ 525
Accrued expenses 500
Total Current Liabilities 1,025
STOCKHOLDERS' EQUITY
Preferred stock, 5,000,000 shares
at $.001 par value; 0 shares outstanding -
Common stock, authorized 50,000,000 shares
at $.001 par value; 10 shares issued
and outstanding 1
Capital in excess of par value 9
Retained deficit (accumulated during
the development stage) (373)
Total Stockholders' Equity (363)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 662
</TABLE>
Prime Air, Inc.
(a development stage company)
Statement of Operations
For the Period Ended December 31, 1996
<TABLE>
<CAPTION>
<S> <C>
REVENUE
Total Revenue -
EXPENSES
General and Administrative Expense 373
Total Expenses 373
Net (loss) before provision
for taxes (373)
Provision for Taxes (Note 1) -
Net income (loss) $ (373)
Loss Per Share (Note 1) $ 37
Average shares outstanding 10
</TABLE>
Prime Air, Inc.
(a development stage company)
Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Capital in
Common Stock Excess of Retained
Shares Amount Par Value (Deficit)
<S> <C>
Balance, November 8, 1996 - $ - $ - $ -
Issuance of shares for cash
at $1 per share 10 1 9 -
(Net loss) for the year - - - (373)
Balance, June 30, 1996 10 1 9 (373)
</TABLE>
Prime Air, Inc.
(a development stage company)
Statement of Cash Flows
For the Period Ended December 31, 1996
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income (loss) $ (373)
Items not requiring cash flow:
Amortization 23
Increase in accrued expenses and
accounts payable 1,025
Net Cash (Used) by
Operating Activities 675
CASH FLOWS FROM
INVESTING ACTIVITIES -
Cash paid for:
Organization costs (675)
Net cash (used) by
Investing Activities (675)
CASH FLOWS FROM
FINANCING ACTIVITIES
Issuance of common stock 10
Net Cash provided by
Financing Activities $ 10
NET INCREASE (DECREASE) IN CASH $ 10
CASH AT BEGINNING OF PERIOD -
CASH AT END OF PERIOD $ 10
Supplemental Cash Flow Information
Cash paid for:
Interest $ -
Taxes -
$ -
</TABLE>
Prime Air, Inc.
(a development stage company)
Notes to the Consolidated Financial Statements
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated in the State of Nevada on November 8, 1996
as a wholly owned subsidiary of Prime Air, Inc. (Delaware). It is the
intention of management of Prime Air, Inc. (Delaware) to merge with Prime
Air, Inc. (Nevada) to effect a change of domicile to Nevada.
Loss Per Share
The computations of loss per share of common stock are based on the
weighted average number of shares outstanding at the date of the
financial statements.
Provision for Income Taxes
No federal income tax liabilities have been accrued due to recurring net
operating losses of the Company.
As of December 31, 1996, the Company has accumulated net operating losses
of approximately $350. These losses can be used to offset future
earnings but will expire beginning in the year 2011.
The estimated value of any future benefits from any net operating loss
carryforwards are not measurable due to the uncertainty of any future
operating profits.
Cash and Cash Equivalents
For the purposes of the statements of cash flows, cash and cash
equivalents are defined as demand deposits at banks and certificates of
deposits with maturities less than three months.
Organization Costs
Organization costs of the Company are being amortized over 60 months.
Total amortization costs for the period were $23.
Development Stage Company
The Company has yet to fully develop any material income from its stated
primary objective and it is classified as a development stage company.
All income, expenses, cash flows and stock transactions are reported
since inception (November 8, 1996).
NOTE 2 - RELATED PARTY TRANSACTIONS
During the year, the parent corporation has provided loans for operating
cash for the organization of the Company. Total loans made to the
Company during the year was $525. The loans are non-interest bearing and
payable on demand.
PRIME AIR, INC.
(a Development Stage Company)
Proforma Financial Statements
December 31, 1996
PRIME AIR, INC.
(A Development Stage Company)
PROFORMA CONSOLIDATED BALANCE SHEETS
(all figures in US dollars)
December 31, 1996
(with comparative figures as of December 31, 1995)
<TABLE>
<CAPTION>
ASSETS
1996 1995
<S> <C>
Current Assets
Cash and short-term deposits $ 101,324 $ 4,575
Share subscriptions receivable 7,333 7,284
Prepaid expenses and deposit 12,592 1,093
GST receivable
172,457 29,964
Capital assets
All terminal construction costs 618,186 313,146
Furniture and equipment
620,208 314,370
Other assets
Organizational expenses
$
LIABILITIES AND SHAREHOLDERS= EQUITY
Current Liabilities
Accounts payable and accruals $ 104,408 $ 230,803
Notes and advances payable (Note 4) 16,400 10,926
Due to director (Note 5) 18,189 21,060
138,997 $ 262,789
Stockholders= Equity
Preferred stock, 5,000,000 shares
authorized, $.001 par value authorized,
0 shares issued - -
Common stock, 50,000,000 shares
authorized, $.001 par value, 6,556,791 and
3,562,550 shares issued and outstanding 6,557 3,562
Additional paid in capital 1,232,567 4,878,789
Commitment to issue shares (Note 7) 54,791 -
Accumulated deficit during development stage (639,595) (400,806)
654,320 81,545
793,317 344,334
</TABLE>
PRIME AIR, INC.
(A Development Stage Company)
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(all figures in US dollars)
For the year ended December 31, 1996
(With comparative figures for the year ended December 31, 1995)
<TABLE>
<CAPTION>
1996 1995
<S> <C>
Direct Costs
Flight operations $ 114,720 $ -
Administrative and General
Audit and accounting 10,140 11,967
Advertising 9,017 77
Amortization 21,832 306
Automotive - 4,369
Consulting fees 7,506 (426)
Exchange on conversion of funds (5,581) (564)
Insurance 6,342 -
Interest and service charges 7,547 249
Legal 25,610 -
Management remuneration - 16,265
Office and general 5,728 11,319
Promotion and entertainment 2,702 7,649
Rent 2,399 4,095
Telephone and utilities 14,865 7,385
Transfer agent 7,149 4,080
Travel
(126,428) (71,266)
Interest income 2,359 -
Net loss for year $(238,789) $ (71,266)
Average outstanding shares 5,069,666 3,291,275
Net loss per common share (.05) (.02)
</TABLE>
PRIME AIR, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(all figures in US dollars)
For the year ended December 31, 1996
(With comparative figures for the year ended December 31, 1995)
<TABLE>
<CAPTION>
1996 1995
<S> <C>
NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES
OPERATING
Net loss $(238,789) $ (71,266)
Non-cash charge-amortization
(216,957) (70,960)
Change in non-cash working capital
balances relating to operations
FINANCING
Notes and advances payable 5,474 7,279
Due to director (2,871) 21,060
Issue of capital stock 756,773 131,755
Commitment to issue shares
INVESTING
Acquisition of capital assets and other assets (328,322) (302,017)
NET CASH INFLOW (OUTFLOW) 96,749 (4,294)
CASH, BEGINNING OF YEAR 4,575 8,869
CASH, END OF YEAR 101,324 4,575
</TABLE>
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
1. Proforma Financial Statements
The proforma financial statements of Prime Air, Inc. (Nevada) are presented
to show the results of a proposed merger between Prime Air, Inc. (Delaware)
and Prime Air, Inc. (Nevada). The proposed merger between the two
companies is presented in the A Plan and Agreement of Merger dated March
10, 1997. The merger documents call for a stock for stock exchange of
Prime Air, Inc. (Delaware) for Prime Air, Inc. (Nevada), the latter being
the surviving corporation.
The financial statements are presented as if 100% of the stock were
exchanged.
The financial statements are presented as if the companies were merged as
of December 31, 1996 with comparable figures for December 31, 1995.
2. Incorporation and Principles of Consolidation
Prime Air, Inc. (Delaware) was incorporated under the laws of the State of
Delaware, USA on April 4, 1995 and acquired all of the assets, liabilities
and shareholders of a previous Utah Corporation of the same name. The Utah
Corporation was Incorporated on August 30, 1993 as Astro Enterprises, Inc.
On June 28, 1994, pursuant to appropriate shareholder agreements, Astro
Enterprises, Inc. acquired all of the outstanding shares of Prime Air, Inc.
(a Canadian Corporation) in exchange for shares of its capital stock on a
.787796 to 1 basis, thereby providing the shareholders of Prime Air, Inc.
with 90% of the outstanding capital stock of Astro Enterprises, Inc. Astro
Enterprises, Inc. then changed its name to Prime Air, Inc. Upon
incorporation of the Delaware Company, the Utah Corporation was dissolved
on May 15, 1995.
On November 10, 1995, Prime Air, Inc. (a Nevada corporation) was formed,
the purpose of which will be to change the domicile of the Company to the
State of Nevada. Prime Air, Inc. (Nevada) is a wholly-owned subsidiary of
Prime Air, Inc. (Delaware); however, to December 31, 1996 it has engaged in
no activities except in relation to the organization of that entity.
These consolidated financial statements include the accounts of the Company
and its wholly-owned operating subsidiary, Prime Air, Inc. (the Canadian
Corporation).
3. Nature of Operations/Going Concern Considerations
The Company is presently in its developmental stage and currently has
minimal sources of revenue to provide incoming cash flows to sustain future
operations. The Company=s present activities relate to the construction
and ultimate exclusive operation of an international passenger and cargo
air terminal facility in the Village of Pemberton, British Columbia and the
operation of scheduled flight services between that facility and certain
major centers in Canada and the United States in conjunction with Voyageur
Airways Limited. Terminal building construction was substantially
completed in May 1996. The future successful operation of the Company is
dependent upon its ability to obtain the financing required to complete the
terminal construction and commence operation thereof on an economically
viable basis.
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
4. Significant Accounting Policies
Capital Assets
Air Terminal Construction Costs: Expenditures relating directly to
the construction of the air terminal facility and related engineering and
design have been recorded in the accounts of the Company at cost, net of
amortization thereof which is provided on a straight-line basis over the 30
year term of the property lease.
Furniture and Equipment: Furniture and equipment are stated at cost,
net of amortization which is provided at the rate of 20% per annum on the
declining balance basis.
Reporting Currency All amounts in these consolidated financial
statements are reported in U.S. funds being converted from Canadian funds
were applicable at the average annual rate as posted by the Internal
Revenue Service of the United States as follows:
1996: $0.7334 U.S./ $1. CDN
1995: $0.7284 U.S./ $1. CDN
5. Notes and Advances Payable
The notes and advances payable are unsecured, non-interest bearing and are
without specific terms of repayment.
6. Related Party Transactions
During the year ended December 31, 1996, the Company paid no remuneration
to any director (period ended December 31, 1995: $16,265).
A director has advanced funds to the Company in the amount of $18,169 to
December 31, 1996. These advances are unsecured, non-interest bearing and
are without specific terms of repayment.
7. Capital Stock
The directors of the Company have authorized the issue of up to 500,000
common shares in the form of a director, officer and employee stock options
at a price to be determined. The granting of these options is subject to
the receipt of regulatory approval.
In July 1996, management of the Company voluntarily halted trading of its
common shares based upon the conclusion that information concerning the
history of the Company provided by former management may not have been
complete. The Company is in the process of preparing a registration
statement in connection with the proposed change of domicile (referred to
in Note 1) to register all of the outstanding common shares of capital
stock of the Company.
PRIME AIR, INC.
(A Development Stage Company)
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
8. Commitment to Issue Shares
The major supplies of flight operations services to the Canadian subsidiary
corporation agreed to settle a portion of the outstanding account through
the receipt of free-trading common shares of capital stock of the Company.
The amount settled of $54,971 represents 109,582 common shares issued at a
deemed price of $0.50/share and is reflected in the Balance Sheet of the
Company at December 31, 1995 as a _commitment to issue shares_. The shares
were subsequently issued in 1997.
9. Lease Commitment
The Canadian subsidiary corporation has entered into an Airport Lease and
Operating Agreement with The Corporation of the Village of Pemberton in
British Columbia whereby it has been granted an exclusive and irrevocable
lease over the lands and airport facilities associated with the Pemberton
Airport. The term of the Lease and Operating Agreement, including
extension options relating thereto, is for a total of 30 years with
Terminal Rent payable as follows:
- $100 per annum for the initial six (6) years; and thereafter
- 5% of gross receipts per annum derived from the operation of
the Terminal Facilities, excluding amounts received in
connection with the sale of airline tickets and other forms of
transportation.
APPENDIX "A"
PLAN AND AGREEMENT OF MERGER
OF
PRIME AIR, INC.
(A Delaware Corporation)
INTO
PRIME AIR, INC.
(A Nevada Corporation)
Plan and Agreement of Merger (hereinafter called "Agreement of Merger")
dated this 10th day of March 1997, by and between Prime Air, Inc., a corporation
organized and existing under the laws of the State of Delaware (hereinafter
sometimes referred to as "Prime Air (Del)") and Prime Air, Inc., a corporation
organized and existing under the laws of the State of Nevada (hereinafter
sometimes referred to as "Prime Air (NV)"). These two parties are herein
sometimes referred to collectively as the "merging corporations," witnesseth:
WHEREAS, Prime Air (Del) wishes to merge into Prime Air (NV); and
WHEREAS, Section 251 of the Delaware General Corporation Law and Section
92A.190 of the Nevada Revised Statutes each authorizes the merger of Prime Air
(Del) and Prime Air (NV);
NOW, THEREFORE, the merging corporations have agreed, and do hereby agree,
each with the other in consideration of the premises and the mutual agreements,
provisions, covenants and grants herein contained and in accordance with the
laws of the States of Delaware and Nevada, that Prime Air (Del) and Prime Air
(NV) be merged into a single corporation and that Prime Air (NV) shall be the
continuing and surviving corporation and do hereby agree upon and prescribe that
the terms and conditions of the merger hereby agreed upon and the mode of
carrying the same into effect and the manner of converting the presently
outstanding shares of Prime Air (Del) into the shares of Prime Air (NV) are and
shall be hereinafter set forth:
Article I
Manner of Conversion of Shares; Assumption of Stock Options and Warrants
(a) The manner and basis of converting the shares of Prime Air (Del) into
shares of Prime Air (NV) are as follows: at the effective time of the merger,
each share of common stock of Prime Air (Del) shall thereupon be converted into
one share of Prime Air (NV). Each holder of outstanding common stock of Prime
Air (Del) upon surrender to Prime Air (NV) of one or more certificates for such
shares for cancellation shall be entitled to receive one or more certificates
for the number of shares of common stock of Prime Air (NV) represented by the
certificates of Prime Air (Del) so surrendered for cancellation by such holder.
Until so surrendered, each such certificate representing outstanding shares of
common stock of Prime Air (Del) shall represent the ownership of the appropriate
number of shares of Prime Air (NV) for all corporate and legal purposes.
(b) The obligations of Prime Air (Del) pursuant to warrants and options to
sell shares of common stock which are unexercised at the effective time will be
assumed by Prime Air (NV) and such warrants and options will thereafter be
exercisable for shares of common stock of Prime Air (NV) on the basis of the
conversion ratio set forth in subparagraph (a) above. Except for the
substitution of shares described above, all of the terms and provisions of such
assumed warrants and options shall remain unchanged.
Article II
Effective Time
The effective time of the merger shall be upon the latter of the filing of
the Agreement of Merger (or a certificate in lieu thereof) in accordance with
Section 251 of the Delaware General Corporation Law with the Secretary of State
of Delaware and the filing of the Agreement of Merger (or a certificate in lieu
thereof) in accordance with Section 92A.240 of the Nevada Revised Statutes with
the Secretary of State of Nevada. Prior to said date, this Agreement of Merger
shall (1) have been submitted to and approved by the board of directors of each
of the merging corporations; and (2) have been approved by the stockholders of
each of the merging corporations in accordance with law.
Article III
Effect of Merger
When the merger shall have been effected:
The merging corporations shall be a single corporation.
The separate existence of Prime Air (Del) shall cease.
Prime Air (NV) shall have all rights, privileges, immunities and powers and
shall be subject to all the duties and liabilities of a corporation organized
under Nevada law.
Prime Air (NV) shall thereupon and thereafter possess all the rights,
privileges, immunities and franchises of a public as well as of a private nature
of each of the merging corporations and all property, real, personal and mixed,
and all debts due on whatever account, including subscriptions to shares and all
other choses in action, and all and every other interest of and belonging to or
due to each of the merging corporations shall be taken and deemed to be
transferred to and vested in Prime Air (NV) without further act or deed, and the
title to any real estate or any interest therein vested in either of the merging
corporations shall not revert or be in any way impaired by reason of the merger.
Prime Air (NV) shall thenceforth be responsible and liable for all the
liabilities and obligations of each of the merging corporations and any claim
existing or action or proceeding pending by or against either of the merging
corporations may be prosecuted to judgment as if such merger had not taken
place, or Prime Air (NV) may be substituted in its place. Neither the rights of
creditors nor any liens upon the property of either of the merging corporations
shall be impaired by reason of the merger.
After the effective time of the merger, the earned surplus of Prime Air
(NV) shall equal the aggregate of the earned surpluses of the merging
corporations immediately prior to the effective time of the merger. The earned
surplus determined as above provided shall continue to be available for payment
of dividends by Prime Air (NV).
Except as amended herein, the certificate of incorporation of Prime Air
(NV) as in effect on the date of the merger provided for in this Agreement of
Merger, shall continue in full force and effect as the certificate of
incorporation of the corporation surviving this merger.
The bylaws of Prime Air (NV) as they shall exist on the effective date of
this Agreement of Merger shall be and remain the bylaws of the surviving
corporation until the same shall be altered, amended or repealed as therein
provided.
The directors and officers of Prime Air (NV) shall continue in office until
the next annual meeting of stockholders and until their successors shall have
been elected and qualified. Prime Air (NV) shall assume the existing employment
agreements of Prime Air (Del) with its officers at the effective date.
Article IV
Service of Process; Rights of Dissenting Shareholders
Prime Air (NV) hereby agrees that it may be served with process in the
State of Delaware in any proceeding for enforcement of any obligation of Prime
Air (Del), and in any proceeding for the enforcement of any obligation of Prime
Air (NV) arising from this merger, including any suit or other proceeding to
enforce the right of any stockholders as determined in appraisal proceedings
pursuant to the provisions of Section 262 of Title 8 of the Delaware General
Corporation Law. Prime Air (NV) irrevocably appoints the Delaware Secretary of
State as its agent to accept service of process in any such proceeding. The
address to which a copy of the process may be mailed is 8598 112 Street, Ft.
Saskatchewan, Alberta, Canada T8L 3V8. Prime Air (NV) will promptly pay to the
shareholders of Prime Air (Del) the amount, if any, to which they shall be
entitled under the provisions of Section 262 of Title 8 of the Delaware General
Corporation Law with respect to the rights of shareholders demanding appraisal
of the fair value of their shares.
Article V
Termination
(a) If, at any time prior to the effective date hereof, events or
circumstances occur which in the opinion of a majority of the board of directors
of either constituent corporation renders it inadvisable to consummate the
merger, this Agreement of Merger shall not become effective even though
previously adopted by the shareholders of the corporation as herein before
provided. The filing of the merger documents shall conclusively establish that
no action to terminate this plan has been taken by the board of directors of
either corporation.
(b) Prime Air (NV) shall have the right to terminate this Agreement of
Merger if shareholders of Prime Air (Del) owning in excess of five percent (5%)
of the outstanding shares of common stock of Prime Air (Del) shall exercise
their appraisal rights pursuant to the provisions of Section 262 of Title 8 of
the Delaware General Corporation Law. The filing of the merger documents by
Prime Air (NV) shall conclusively establish that no action to terminate this
plan has been taken by the board of directors of such entity.
Article VI
Amendment
The boards of directors of the constituent corporations may amend this
Agreement of Merger at any time prior to the filing of the Agreement of Merger
(or a certificate in lieu thereof) with the State of Delaware or the State of
Nevada, provided that an amendment made subsequent to the adoption of the
Agreement of Merger by the stockholders of any constituent corporation shall not
(1) alter or change the amount of any kind of shares, securities, cash, property
and/or rights to be received in exchange for or on conversion of all or any of
the shares of any class or series thereof of such constituent corporation,
except to correct manifest error as may be permitted by law; (2) alter or change
any term of the certificate of incorporation of the surviving corporation to be
effected by the merger; or (3) alter or change any of the other terms and
conditions of the Agreement of Merger if such alteration or change would
adversely affect the holders of any class or series thereof of such constituent
corporation.
IN WITNESS WHEREOF, Prime Air (NV) and Prime Air (Del) have caused this
Plan and Agreement of Merger to be signed by their respective presidents and
secretaries in accordance with the requirements of Section 92A.230 of the Nevada
Revised Statutes and Section 251 of the Delaware General Corporation Law, all as
of the day and year first above written.
Prime Air, Inc.
Attest:
(A Delaware Corporation)
/s/ Gregory Duffy
By/s/ Royle Smith
Gregory Duffy, Secretary
Royle Smith, President
Prime Air, Inc.
Attest: (A Nevada Corporation)
/s/ Gregory Duffy By/s/ Royle Smith
Gregory Duffy, Secretary Royle Smith, President
262. Appraisal Rights
(a) Any stockholder of a corporation of this State who holds shares of
common stock on the date of the making of a demand pursuant to the
provisions of subsection (d) of this section with respect to such shares,
who continuously holds such shares through the effective date of the merger
or consolidation, who has otherwise complied with the provisions of
subsection (d) of this Section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to 228 of
this Chapter shall be entitled to an appraisal by the Court of Chancery of
the fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this Section. As used in this Section, the word
_stockholder_ means a holder of record of stock in a stock corporation and
also a member of record of a non-stock corporation; the words _stock_ and
_share_ mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a non-stock corporation;
and the words _depository receipt_ mean a receipt or other instrument
issued by a depository representing an interest in one or more shares, or
fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation
to be effected pursuant to Sections 251, 252, 254, 257, 258, 263, 264 of
this Chapter;
(1) provided, however that no appraisal rights under this Section shall be
available for the shares of any class or series of stock which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system the National Association of Securities Dealers, Inc. or (ii) held of
record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) of Section 251 of this Chapter.
(2) Notwithstanding the provisions of subsection (b)(1) of this Section,
appraisal rights under this section shall be available for the shares of
any class or series of stock of a constituent corporation if the holders
thereof are required by the terms of an agreement of merger or
consolidation pursuant to Sections 251, 252, 254, 257, 257, 263 and 264 of
this Chapter to accept for such stock anything except (i) shares of stock
of the corporation surviving or resulting from such merger or
consolidation, or depository receipts at the effective date of the merger
or consolidation will be either listed on a national securities exchange or
designated as a market system security on an interdealer quotation system
by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders, (iii) cash in lieu of fractional shares or
fractional depository receipts described in the foregoing clauses (i) and
(ii); or (iv) any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares, or fractional depository receipts
described in the foregoing clauses (i), (ii) and (iii) of this subsection.
(3) In the event of the stock of a subsidiary Delaware corporation party to
a merger effected under Section 253 of this Chapter is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this Section shall be available for the shares of
any class or series of its stock as a result of an amendment to its
certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this Section,
including those set forth in subsections (d) and (e), shall apply as nearly
as practicable.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Nevada law expressly authorizes a Nevada corporation to indemnify its
directors, officers, employees, and agents against liabilities arising out of
such persons' conduct as directors, officers, employees, or agents if they acted
in good faith, in a manner they reasonably believed to be in or not opposed to
the best interests of the Company, and, in the case of criminal proceedings, if
they had no reasonable cause to believe their conduct was unlawful. Generally,
indemnification for such persons is mandatory if such person was successful, on
the merits or otherwise, in the defense of any such proceeding, or in the
defense of any claim, issue, or matter in the proceeding. In addition, as
provided in the articles of incorporation, bylaws, or an agreement, the
corporation may pay for or reimburse the reasonable expenses incurred by such a
person who is a party to a proceeding in advance of final disposition if such
person furnishes to the corporation an undertaking to repay such expenses if it
is ultimately determined that he did not meet the requirements. In order to
provide indemnification, unless ordered by a court, the corporation must
determine that the person meets the requirements for indemnification. Such
determination must be made by a majority of disinterested directors; by
independent legal counsel; or by a majority of the shareholders.
Article VI of the Company's Bylaws provides that the corporation shall
indemnify its directors, officers, agents and other persons to the full extent
permitted by the laws of the State of Nevada.
Item 21. Exhibits and Financial Statement Schedules
The exhibits set forth in the following index of exhibits are filed as a
part of this registration statement.
Exhibit No. Description of Exhibit Page
2.1 Plan and Agreement of Merger
3.1 Articles of Incorporation
3.2 Bylaws of the Company currently in effect
5.1 Opinion on Legality
8.1 Opinion on Tax Matters
10.1 Airport Lease and Operating Agreement, as
amended
10.2 Employment Agreement with Blaine Haug
10.3 Employment Agreement with Royle Smith
10.4 Consulting Agreement with Siverthorn
Investments, Ltd.
23.1 Consent of Independent Auditors
23.2 Consent of Counsel (contained in Exhibit 5
above).
Item 22. Undertakings
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small business
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(b) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Pemberton, British Columbia, Canada,
on the 13th day of May 1997.
PRIME AIR, INC.
By:
Royle Smith, President
By
Blaine Haug, Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
By: May 13, 1997
Blaine Haug, Director
By: May 13, 1997
John Eberhard, Director
By: May 13, 1997
Greg Duffy, Principal Financial and
Accounting Officer
PLAN AND AGREEMENT OF MERGER
OF
PRIME AIR, INC.
(A Delaware Corporation)
INTO
PRIME AIR, INC.
(A Nevada Corporation)
Plan and Agreement of Merger (hereinafter called "Agreement of Merger")
dated this 10th day of March 1997, by and between Prime Air, Inc., a corporation
organized and existing under the laws of the State of Delaware (hereinafter
sometimes referred to as "Prime Air (Del)") and Prime Air, Inc., a corporation
organized and existing under the laws of the State of Nevada (hereinafter
sometimes referred to as "Prime Air (NV)"). These two parties are herein
sometimes referred to collectively as the "merging corporations," witnesseth:
WHEREAS, Prime Air (Del) wishes to merge into Prime Air (NV); and
WHEREAS, Section 251 of the Delaware General Corporation Law and Section
92A.190 of the Nevada Revised Statutes each authorizes the merger of Prime Air
(Del) and Prime Air (NV);
NOW, THEREFORE, the merging corporations have agreed, and do hereby agree,
each with the other in consideration of the premises and the mutual agreements,
provisions, covenants and grants herein contained and in accordance with the
laws of the States of Delaware and Nevada, that Prime Air (Del) and Prime Air
(NV) be merged into a single corporation and that Prime Air (NV) shall be the
continuing and surviving corporation and do hereby agree upon and prescribe that
the terms and conditions of the merger hereby agreed upon and the mode of
carrying the same into effect and the manner of converting the presently
outstanding shares of Prime Air (Del) into the shares of Prime Air (NV) are and
shall be hereinafter set forth:
Article I
Manner of Conversion of Shares; Assumption of Stock Options and Warrants
(a) The manner and basis of converting the shares of Prime Air (Del) into
shares of Prime Air (NV) are as follows: at the effective time of the merger,
each share of common stock of Prime Air (Del) shall thereupon be converted into
one share of Prime Air (NV). Each holder of outstanding common stock of Prime
Air (Del) upon surrender to Prime Air (NV) of one or more certificates for such
shares for cancellation shall be entitled to receive one or more certificates
for the number of shares of common stock of Prime Air (NV) represented by the
certificates of Prime Air (Del) so surrendered for cancellation by such holder.
Until so surrendered, each such certificate representing outstanding shares of
common stock of Prime Air (Del) shall represent the ownership of the appropriate
number of shares of Prime Air (NV) for all corporate and legal purposes.
(b) The obligations of Prime Air (Del) pursuant to warrants and options to
sell shares of common stock which are unexercised at the effective time will be
assumed by Prime Air (NV) and such warrants and options will thereafter be
exercisable for shares of common stock of Prime Air (NV) on the basis of the
conversion ratio set forth in subparagraph (a) above. Except for the
substitution of shares described above, all of the terms and provisions of such
assumed warrants and options shall remain unchanged.
Article II
Effective Time
The effective time of the merger shall be upon the latter of the filing of
the Agreement of Merger (or a certificate in lieu thereof) in accordance with
Section 251 of the Delaware General Corporation Law with the Secretary of State
of Delaware and the filing of the Agreement of Merger (or a certificate in lieu
thereof) in accordance with Section 92A.240 of the Nevada Revised Statutes with
the Secretary of State of Nevada. Prior to said date, this Agreement of Merger
shall (1) have been submitted to and approved by the board of directors of each
of the merging corporations; and (2) have been approved by the stockholders of
each of the merging corporations in accordance with law.
Article III
Effect of Merger
When the merger shall have been effected:
The merging corporations shall be a single corporation.
The separate existence of Prime Air (Del) shall cease.
Prime Air (NV) shall have all rights, privileges, immunities and powers and
shall be subject to all the duties and liabilities of a corporation organized
under Nevada law.
Prime Air (NV) shall thereupon and thereafter possess all the rights,
privileges, immunities and franchises of a public as well as of a private nature
of each of the merging corporations and all property, real, personal and mixed,
and all debts due on whatever account, including subscriptions to shares and all
other choses in action, and all and every other interest of and belonging to or
due to each of the merging corporations shall be taken and deemed to be
transferred to and vested in Prime Air (NV) without further act or deed, and the
title to any real estate or any interest therein vested in either of the merging
corporations shall not revert or be in any way impaired by reason of the merger.
Prime Air (NV) shall thenceforth be responsible and liable for all the
liabilities and obligations of each of the merging corporations and any claim
existing or action or proceeding pending by or against either of the merging
corporations may be prosecuted to judgment as if such merger had not taken
place, or Prime Air (NV) may be substituted in its place. Neither the rights of
creditors nor any liens upon the property of either of the merging corporations
shall be impaired by reason of the merger.
After the effective time of the merger, the earned surplus of Prime Air
(NV) shall equal the aggregate of the earned surpluses of the merging
corporations immediately prior to the effective time of the merger. The earned
surplus determined as above provided shall continue to be available for payment
of dividends by Prime Air (NV).
Except as amended herein, the certificate of incorporation of Prime Air
(NV) as in effect on the date of the merger provided for in this Agreement of
Merger, shall continue in full force and effect as the certificate of
incorporation of the corporation surviving this merger.
The bylaws of Prime Air (NV) as they shall exist on the effective date of
this Agreement of Merger shall be and remain the bylaws of the surviving
corporation until the same shall be altered, amended or repealed as therein
provided.
The directors and officers of Prime Air (NV) shall continue in office until
the next annual meeting of stockholders and until their successors shall have
been elected and qualified. Prime Air (NV) shall assume the existing employment
agreements of Prime Air (Del) with its officers at the effective date.
Article IV
Service of Process; Rights of Dissenting Shareholders
Prime Air (NV) hereby agrees that it may be served with process in the
State of Delaware in any proceeding for enforcement of any obligation of Prime
Air (Del), and in any proceeding for the enforcement of any obligation of Prime
Air (NV) arising from this merger, including any suit or other proceeding to
enforce the right of any stockholders as determined in appraisal proceedings
pursuant to the provisions of Section 262 of Title 8 of the Delaware General
Corporation Law. Prime Air (NV) irrevocably appoints the Delaware Secretary of
State as its agent to accept service of process in any such proceeding. The
address to which a copy of the process may be mailed is 8598 112 Street, Ft.
Saskatchewan, Alberta, Canada T8L 3V8. Prime Air (NV) will promptly pay to the
shareholders of Prime Air (Del) the amount, if any, to which they shall be
entitled under the provisions of Section 262 of Title 8 of the Delaware General
Corporation Law with respect to the rights of shareholders demanding appraisal
of the fair value of their shares.
Article V
Termination
(a) If, at any time prior to the effective date hereof, events or
circumstances occur which in the opinion of a majority of the board of directors
of either constituent corporation renders it inadvisable to consummate the
merger, this Agreement of Merger shall not become effective even though
previously adopted by the shareholders of the corporation as herein before
provided. The filing of the merger documents shall conclusively establish that
no action to terminate this plan has been taken by the board of directors of
either corporation.
(b) Prime Air (NV) shall have the right to terminate this Agreement of
Merger if shareholders of Prime Air (Del) owning in excess of five percent (5%)
of the outstanding shares of common stock of Prime Air (Del) shall exercise
their appraisal rights pursuant to the provisions of Section 262 of Title 8 of
the Delaware General Corporation Law. The filing of the merger documents by
Prime Air (NV) shall conclusively establish that no action to terminate this
plan has been taken by the board of directors of such entity.
Article VI
Amendment
The boards of directors of the constituent corporations may amend this
Agreement of Merger at any time prior to the filing of the Agreement of Merger
(or a certificate in lieu thereof) with the State of Delaware or the State of
Nevada, provided that an amendment made subsequent to the adoption of the
Agreement of Merger by the stockholders of any constituent corporation shall not
(1) alter or change the amount of any kind of shares, securities, cash, property
and/or rights to be received in exchange for or on conversion of all or any of
the shares of any class or series thereof of such constituent corporation,
except to correct manifest error as may be permitted by law; (2) alter or change
any term of the certificate of incorporation of the surviving corporation to be
effected by the merger; or (3) alter or change any of the other terms and
conditions of the Agreement of Merger if such alteration or change would
adversely affect the holders of any class or series thereof of such constituent
corporation.
IN WITNESS WHEREOF, Prime Air (NV) and Prime Air (Del) have caused this
Plan and Agreement of Merger to be signed by their respective presidents and
secretaries in accordance with the requirements of Section 92A.230 of the Nevada
Revised Statutes and Section 251 of the Delaware General Corporation Law, all as
of the day and year first above written.
Prime Air, Inc.
Attest:
(A Delaware Corporation)
/s/ Gregory Duffy By/s/ Royle Smith
Gregory Duffy, Secretary Royle Smith, President
Prime Air, Inc.
Attest: (A Nevada Corporation)
/s/ Gregory Duffy By/s/ Royle Smith
Gregory Duffy, Secretary Royle Smith, President
ARTICLES OF INCORPORATION
OF
PRIME AIR, INC.
The undersigned, a natural person being more than eighteen years of age,
acting as incorporator of a corporation pursuant to the provisions of the
General Corporation Laws of the State of Nevada, does hereby adopt the following
Articles of Incorporation for such corporation:
Article I
Name
The name of the corporation is Prime Air, Inc.
Article II
Duration
The duration of the corporation is perpetual.
Article III
Purposes
The purpose for which this corporation is organized is to engage in the
establishment and operation of passenger and cargo terminals for commuter air
services, and to transact any lawful business, or to promote or conduct any
legitimate object or purpose, under and subject to the laws of the State of
Nevada.
Article IV
Capitalization
Section 1. The stock of the corporation is divided into two classes,
namely: common stock in the amount of fifty million (50,000,000) shares of the
par value of $.001 each and preferred stock in the amount of five million
(5,000,000) shares of the par value of $.001 each. The board of directors shall
have authority, by resolution or resolutions, to divide the preferred stock into
series, to establish and fix the distinguishing designation of each such series
and the number of shares thereof (which number, by like action of the board of
directors from time to time thereafter, may be increased except when otherwise
provided by the board of directors in creating such series, or may be decreased
but not below the number of shares thereof then outstanding) and, within the
limitations of applicable law of the State of Nevada or as otherwise set forth
in this article, to fix and determine the relative rights and preferences of the
shares of each series so established prior to the issuance thereof. There shall
be no cumulative voting by shareholders.
Section 2. The shareholders shall have no preemptive rights to acquire any
shares of this corporation.
Section 3. The stock of the corporation, after the amount of the
subscription price has been paid in, shall not be subject to assessment to pay
the debts of the corporation.
Article V
Registered Agent and Office
The street and mailing address of the initial registered office of the
corporation is 1 East First Street, Reno, Nevada 89501, and the name of the
registered agent of the corporation at that address is The Corporation Trust
Company of Nevada.
Article VI
Directors
The corporation shall be governed by a Board of Directors and shall have
not less than one (1) nor more than seven (7) directors as determined, from time
to time, by the Board of Directors. The original Board of Directors shall be
comprised of one (1) person. The name and address of the person who is to serve
as director until the first annual meeting of shareholders and until his
successor is elected and shall qualify is as follows:
Ronald N. Vance
57 West 200 South
Suite 310
Salt Lake City, UT 84101
Article VII
Limitation of Liability
No director or officer shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
person as a director or officer. Notwithstanding the foregoing sentence, a
director or officer shall be liable to the extent provided by applicable law,
(i) for acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or (ii) for the payment of distributions in violation
of NRS 78.300.
Article VIII
Incorporator
The name and address of the incorporator is:
Ronald N. Vance
57 West 200 South
Suite 310
Salt Lake City, UT 84101
Dated this 6th day of November 1996.
Ronald N. Vance
State of Utah )
) ss.
County of Salt Lake )
On the 6th day of November 1996, personally appeared before me, a Notary
Public, Ronald N. Vance who acknowledged that he had executed the foregoing
Articles of Incorporation of Prime Air, Inc.
Notary Public
PRIME AIR, INC.
BYLAWS
ARTICLE I--OFFICES
Section 1.1 Office
The principal office of the corporation within the State of Nevada shall be
located at such place as shall be designated by the Board of Directors.
Section 1.2 Other Offices
The corporation may also have such other offices, either within or without
the State of Nevada, as the Board of Directors may from time to time determine
or the business of the corporation may require.
ARTICLE II--STOCKHOLDERS
Section 2.1 Annual Meeting
An annual meeting of the stockholders, for the selection of directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at a location and at such
time each year as designated by the Board of Directors.
Section 2.2 Special Meetings
Special meetings of the stockholders, for any purpose or purposes
prescribed in the notice of the meeting, may be called by the Board of
Directors, the Chairman of the Board, the chief executive officer, or their
holders of not less than one-tenth of all the shares entitled to vote at the
meeting, and shall be held at such place, on such date, and at such time as they
or he shall fix.
Section 2.3 Notice of Meetings
Written notice of the place, date and time of all meetings of the
stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time by
the laws of the State of Nevada or the Articles of Incorporation).
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty days
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting, written notice of the place, date, and
time of the adjourned meeting shall be given in conformity herewith. At any
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 2.4 Quorum
At any meeting of the stockholders, the holders of a majority of all of the
shares of the stock entitled to vote at the meeting, present in person or by
proxy, shall constitute a quorum for all purposes, unless or except to the
extent that the presence of a larger number may be required by law.
If a quorum shall fail to attend any meeting, the chairman of the meeting
or the holders of a majority of the shares of the stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date
or time.
If a notice of any adjourned special meeting of stockholders is sent to all
stockholders entitled to vote thereat, stating that it will be held with those
present constituting a quorum, then except as otherwise required by law, those
present at such adjourned meeting shall constitute a quorum, and all matters
shall be determined by a majority of the votes cast at such meeting.
Section 2.5 Organization
The Chairman of the Board, or in his absence the president of the company,
shall call to order any meeting of the stockholders and act as chairman of the
meeting. In the absence of the Chairman or the president, such person as the
Board of Directors may have designated or, in the absence of such a person, the
next highest ranking officer of the corporation who is present shall call to
order any meeting of the stockholders and act as chairman of the meeting. In
the absence of the Secretary of the corporation, the secretary of the meeting
shall be such person as the chairman appoints.
Section 2.6 Conduct of Business
The chairman of any meeting of stockholders shall determine the order of
business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him in order.
Section 2.7 Proxies and Voting
At any meeting of the stockholders, every stockholder entitled to vote may
vote in person or by proxy authorized by an instrument in writing filed in
accordance with the procedure established for the meeting.
Each stockholder shall have one vote for every share of stock entitled to
vote which is registered in his name on the record date for the meeting, except
as otherwise provided herein or required by law.
All voting, except on the election of directors and where otherwise
required by law, may be by a voice vote; provided, however, that upon demand
therefor by a stockholder entitled to vote or his proxy, a stock vote shall be
taken. Every stock vote shall be taken by ballots, each of which shall state
the name of the stohe procedure established for the meeting. Every vote taken
by ballots shall be counted by an inspector or inspectors appointed by the
chairman of the meeting.
If a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on the subject matter shall be
the act of the stockholders, unless the vote of a greater number or voting by
class is required by law, the Articles of Incorporation, or these Bylaws.
Section 2.8 Stock List
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
name, shall be open to the examination of any such stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. This list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
Section 2.9 Participation in Meetings by Conference Telephone
Any action, except the election of directors, which may be taken by the
vote of the stockholders at a meeting, may be taken without a meeting if
authorized by the written consent of stockholders holding at least a majority of
the voting power; provided:
That if any greater proportion of voting power is required for such action
at a meeting, then such greater proportion of written consents shall be
required; and
That this general provision shall not supersede any specific provision for
action by written consent required by law.
ARTICLE III--BOARD OF DIRECTORS
Section 3.1 Number and Term of Office
The number of directors who shall constitute the whole board shall be such
number not less than one (1) nor more than seven (7) as the Board of directors
shall at the time have designated. Each director shall be selected for a term
of one year and until his successor is elected and qualified, except as
otherwise provided herein or required by law.
Whenever the authorized number of directors is increased between annual
meetings of the stockholders, a majority of the directors then in office shall
have the power to elect such new directors for the balance of a term and until
their successors are elected and qualified. Any decrease in the authorized
number of directors shall not become effective until the expiration of the term
of the directors then in office unless, at the time of such decrease, there
shall be vacancies on the board which are being eliminated by the decrease.
Section 3.2 Vacancies
If the office of any director becomes vacant by reason of death,
resignation, disqualification, removal or other cause, a majority of the
directors remaining in office, although less than a quorum, may elect a
successor for the unexpired term and until his successor is elected and
qualified.
Section 3.3 Regular Meetings
Regular meetings of the Board of Directors shall be held at such place or
places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all directors. A
notice of each regular meeting shall not be required.
Section 3.4 Special Meetings
Special meetings of the Board of Directors may be called by one-third of
the directors then in office, by the Chairman, or by the chief executive officer
and shall be held at such place, on such date and at such time as they or he
shall fix. Notice of the place, date and time of each such special meeting
shall be given by each director by whom it is not waived by mailing written
notice not less than three days before the meeting or by telegraphing the same
not less than eighteen hours before the meeting. Unless otherwise indicated in
the notice thereof, any and all business may be transacted at a special meeting.
Section 3.5 Quorum
At any meeting of the Board of Directors, a majority of the total number of
the whole board shall constitute a quorum for all purposes. If a quorum shall
fail to attend any meeting, a majority of those present may adjourn the meeting
to another place, date or time, without further notice or waiver thereof.
Section 3.6 Participation in Meetings by Conference Telephone
Members of the Board of Directors or of any committee thereof, may
participate in a meeting of such board or committee by means of conference
telephone or similar communications equipment that enables all persons
participating in the meting to hear each other. Such participation shall
constitute presence in person at such meeting.
Section 3.7 Conduct of Business
At any meeting of the Board of Directors, business shall be transacted in
such order and manner as the board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law. Action may be taken by
the Board of Directors without a meeting if all members thereof consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors.
Section 3.8 Powers
The Board of Directors may, except as otherwise required by law, exercise
all such powers and do all such acts and things as may be exercised or done by
the corporation, including, without limiting the generality of the foregoing,
the unqualified power:
To declare dividends from time to time in accordance with law;
To purchase or otherwise acquire any property, rights or privileges on such
terms as it shall determine;
To authorize the creation, making and issuance, in such form as it may
determine, of written obligations of every kind, negotiable or non-negotiable,
secured or unsecured, and to do all things necessary in connection therewith;
To remove any officer of the corporation with or without cause, and from
time to time to devolve the powers and duties of any officer upon any other
person for the time being;
To confer upon any officer of the corporation the power to appoint, remove
and suspend subordinate officers and agents;
To adopt from time to time such stock option, stock purchase, bonus or
other compensation plans for directors, officers and agents of the corporation
and its subsidiaries as it may determine;
To adopt from time to time such insurance, retirement and other benefit
plans for directors, officers and agents of the corporation and its subsidiaries
as it may determine; and
To adopt from time to time regulations, not inconsistent with these Bylaws,
for the management of the corporation's business and affairs.
Section 3.9 Compensation of Directors
Directors, as such, may receive, pursuant to resolution of the Board of
Directors, fixed fees and other compensation for their services as directors,
including, without limitation, their services as members of committees of the
directors.
Section 3.10 Loans
The corporation shall not lend money to or use its credit to assist its
officers, directors or other control persons without authorization in the
particular case by the stockholders, but may lend money to and use its credit to
assist any employee, excluding such officers, directors or other control persons
of the corporation or of a subsidiary, if such loan or assistance benefits the
corporation.
ARTICLE IV--COMMITTEES
Section 4.1 Committees of the Board of Directors
The Board of Directors, by a vote of a majority of the whole board, may
from time to time designate committees of the board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the board and shall, for those committees and any other provided for herein,
elect a director or directors to serve as the member or members, designating, if
it desires, other directors as alternative members who may replace any absent or
disqualified member at any meeting of the committee. Any committee so
designated may exercise the power and authority of the Board of Directors to
declare a dividend or to authorize the issuance of stock if the resolution which
designates the committee or a supplemental resolution of the Board of Directors
shall so provide. In the absence or disqualification of any member of any
committee and any alternate member in his place, the member or members of the
committee present at the meeting and not disqualified from voting, whether or
not he or they constitute a quorum, may by unanimous vote appoint another member
of the Board of Directors to act at the meeting in the place of the absent or
disqualified member.
Section 4.2 Conduct of Business
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; a majority of the members shall
constitute a quorum unless the committee shall consist of one or two members, in
which event one member shall constitute a quorum; and all matters shall be
determined by a majority vote of the members present. Action may be taken by
any committee without a meeting if all members thereof consent thereto in
writing, and the writing or writings are filed with the minutes of the
proceedings of such committee.
ARTICLE V--OFFICERS
Section 5.1 Generally
The corporation may have a chairman of the board, and shall have a
president, one or more vice-presidents, a secretary, a treasurer and such other
subordinate officers as may from time to time be appointed by the Board of
Directors. Officers, including the Chairman of the Board, if any, shall be
elected by the Board of Directors, which shall consider that subject at its
first meeting after every annual meeting of stockholders. Each officer shall
hold his office until his successor is elected and qualified or until his
earlier resignation or removal. Any number of offices may be held by the same
person, except that the offices of president and secretary shall not be held by
the same person.
Section 5.2 Chairman of the Board
The Chairman of the Board, if any, shall be an officer of the corporation
and, subject to the direction of the Board of Directors, shall perform such
executive, supervisory , and management functions and duties as may be assigned
to him from time to time by the Board of Directors. He shall, if present,
preside at all meetings of stockholders and of the Board of Directors.
Section 5.3 President
The president shall be the chief executive officer of the corporation.
Subject to the provisions of these Bylaws and to the direction of the Board of
Directors, he shall have the responsibility for the general management and
control of the affairs and business of the corporation and shall perform all
duties and have all powers which are commonly incident to the office of chief
executive or which are delegated to him by the Board of Directors. He shall
have power to sign all stock certificates, contracts and other instruments of
the corporation which are authorized. He shall have general supervision and
direction of all of the other officers and agents of the corporation.
Section 5.4 Vice-President
Each vice-president shall perform such duties as the Board of Directors
shall prescribe. In the absence or disability of the President, the vice-
president who has served in such capacity for the longest time shall perform the
duties and exercise the powers of the president.
Section 5.5 Treasurer
The treasurer shall have the custody of the monies and securities of the
corporation and shall keep regular books of account. He shall make such
disbursements of the funds of the corporation as are proper and shall render
from time to time an account of all such transactions and of the financial
condition of the corporation.
Section 5.6 Secretary
The secretary shall issue all authorized notices from, and shall keep
minutes of, all meetings of the stockholders and the Board of Directors. He
shall have charge of the corporate books.
Section 5.7 Delegation of Authority
The Board of Directors may, from time to time, delegate the powers or
duties of any officer to any other officers or agents, notwithstanding any
provision hereof.
Section 5.8 Removal
Any officer of the corporation may be removed at any time, with or without
cause, by the Board of Directors.
Section 5.9 Action with Respect to Securities of Other Corporation
Unless otherwise directed by the Board of Directors, the president shall
have power to vote and otherwise act on behalf of the corporation, in person or
by proxy, at any meeting of stockholders of or with respect to any action of
stockholders of any other corporation in which this corporation may hold
securities and otherwise to exercise any and all rights and powers which this
corporation may possess by reason of its ownership of securities in such other
corporation.
ARTICLE VI--INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS
Section 6.1 Generally
The corporation shall indemnify its officers, directors, and agents to the
fullest extent permitted under Nevada law.
Section 6.2 Expenses
To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 6.1 of this Article, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorney's fees) actually and reasonably incurred by him in
connection therewith. Expenses incurred in defending a civil or criminal
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding as authorized in the manner
provided in Section 6.3 of this Article upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount unless
it shall ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this Article.
Section 6.3 Determination by Board of Directors
Any indemnification under Section 6.1 of this Article (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in Nevada law.
Section 6.4 Not Exclusive of Other Rights
The indemnification provided by this Article shall not be deemed exclusive
of any other rights to which those indemnified may be entitled under any bylaw,
agreement, vote of shareholders or interested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 6.5 Insurance
The corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article.
The corporation's indemnity of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
reduced by any amounts such person may collect as indemnification (i) under any
policy of insurance purchased and maintained on his behalf by the corporation or
(ii) from such other corporation, partnership, joint venture, trust or other
enterprise.
Section 6.6 Violation of Law
Nothing contained in this Article, or elsewhere in these Bylaws, shall
operate to indemnify any director or officer if such indemnification is for any
reason contrary to law, either as a matter of public policy, or under the
provisions of the Federal Securities Act of 1933, the Securities Exchange Act of
1934, or any other applicable state or federal law.
Section 6.7 Coverage
For the purposes of this Article, references to "the corporation" include
all constituent corporations absorbed in a consolidation or merger as well as
the resulting or surviving corporation so that any person who is or was a
director, officer, employee or agent of such a constituent corporation or is or
was serving at the request of such a constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the provisions
of this Article with respect to the resulting or surviving corporation as he
would if he had served the resulting or surviving corporation in the same
capacity.
ARTICLE VII--STOCK
Section 7.1 Certificates of Stock
Each stockholder shall be entitled to a certificate signed by, or in the
name of the corporation by, the President or a Vice-president, and by the
Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer,
certifying the number of shares owned by him. Any of or all the signatures on
the certificate may be facsimile.
Section 7.2 Transfers of Stock
Transfers of stock shall be made only upon the transfer books of the
corporation kept at an office of the corporation or by transfer agents
designated to transfer shares of the stock of the corporation. Except where a
certificate is issued in accordance with Section 7.4 of Article VII of these
Bylaws, an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
Section 7.3 Record Date
The Board of Directors may fix a record date, which shall not be more than
sixty (60) nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for the other
action hereinafter described, as of which there shall be determined the
stockholders who are entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof; to express consent to corporate action
in writing without a meeting; to receive payment of any dividend or other
distribution or allotment of any rights; or to exercise any rights with respect
of any change, conversion or exchange of stock or with respect to any other
lawful action.
Section 7.4 Lost, Stolen or Destroyed Certificates
In the event of the loss, theft or destruction of any certificate of stock,
another may be issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.
Section 7.5 Regulations
The issue, transfer, conversion and registration of certificates of stock
shall be governed by such other regulations as the Board of Directors may
establish.
ARTICLE VIII--NOTICES
Section 8.1 Notices
Whenever notice is required to be given to any stockholder, director,
officer, or agent, such requirement shall not be construed to mean personal
notice. Such notice may in every instance be effectively given by depositing a
writing in a post office or letter box, in a postpaid, sealed wrapper, or by
dispatching a prepaid telegram, addressed to such stockholder, director,
officer, or agent at his or her address as the same appears on the books of the
corporation. The time when such notice is dispatched shall be the time of the
giving of the notice.
Section 8.2 Waivers
A written waiver of any notice, signed by a stockholder, director, officer
or agent, whether before or after the time of the event for which notice is
given, shall be deemed equivalent to the notice required to be given to such
stockholder, director, officer or agent. Neither the business nor the purpose
of any meeting need be specified in such a waiver.
ARTICLE IX--MISCELLANEOUS
Section 9.1 Facsimile Signatures
In addition to the provisions for the use of facsimile signatures elsewhere
specifically authorized in these Bylaws, facsimile signatures of any officer or
officers of the corporation may be used whenever and as authorized by the Board
of Directors of a committee thereof.
Section 9.2 Corporate Seal
The Board of Directors may provide a suitable seal, containing the name of
the corporation, which seal shall be in the charge of the secretary. If and
when so directed by the Board of Directors or a committee thereof, duplicates of
the seal may be kept and used by the treasurer or by the assistant secretary or
assistant treasurer.
Section 9.3 Reliance Upon Books, Reports and Records
Each director, each member of any committee designated by the Board of
Directors, and each officer of the corporation shall, in the performance of his
duties, be fully protected in relying in good faith upon the books of account or
other records of the corporation, including reports made to the corporation by
any of its officers, by an independent certified public accountant, or by an
appraiser selected with reasonable care.
Section 9.4 Fiscal Year
The fiscal year of the corporation shall be as fixed by the Board of
Directors.
Section 9.5 Time Periods
In applying any of these Bylaws which require that an act be done or not
done a specified number of days prior to an event or that an act be done during
a period of a specified number of days prior to an event, calendar days shall be
used, the day of the doing of the act shall be excluded and the day of the event
shall be included.
ARTICLE X--AMENDMENTS
Section 10.1 Amendments
These Bylaws may be amended or repealed by the Board of Directors at any
meeting or by the stockholders at any meeting.
CERTIFICATE OF SECRETARY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby certify that the undersigned is the
secretary of Prime Air, Inc., a corporation duly organized and existing under
and by virtue of the laws of the State of Nevada; that the above and foregoing
Bylaws of said corporation were duly and regularly adopted as such by the Board
of Directors by unanimous consent on the 15th day of November 1996; and that
the above and foregoing Bylaws are now in full force and effect.
Dated this 15th Day of November 1996
Gregory Duffy,
Secretary
May 22, 1997
Blaine Haug, President
Prime Air, Inc.
Re: Registration Statement on Form S-4
Dear Mr. Haug:
You have requested my opinion as to whether or not the securities to be
issued by Prime Air, Inc. (the "Company") in the above-referenced registration
statement will be legally issued and, when issued, will be fully paid and non-
assessable shares of the Company. In connection with this engagement I have
examined the form of the registration statement to be filed by the Company; the
Articles of Incorporation of the Company; the By-laws of the Company currently
in effect; and the minutes of the Company relating to the registration statement
and the issuance of the shares of common stock by the Company.
Based upon the above-referenced examination, I am of the opinion that the
shares of common stock to be issued by the Company and to be registered pursuant
to said registration statement will be legally issued and, when issued, will be
fully paid and non-assessable.
I hereby consent to being named in the registration statement as having
rendered the foregoing opinion and as having represented the Company in
connection with the registration statement.
Sincerely,
Ronald N. Vance
May 15, 1997
Prime Air, Inc. (Delaware)
8598 112 Street
Fort Saskatchewan, Alberta
Canada T8L 3V8
Gentlemen:
You have asked our firm to issue an opinion as to the tax effects of a proposed
merger between Prime Air, Inc. (Delaware) and Prime Air, Inc. (Nevada) as
described in the Plan and Agreement of Merger of Prime Air, Inc. (Delaware) and
Prime Air, Inc. (Nevada) (merger document).
In the merger document, the terms of the merger are stated that the Delaware
corporation shall merge with the Nevada corporation, the Nevada corporation
being the surviving entity. The exchange shall be one share of Delaware given
up for one share of Nevada to be issued; any rights of warrants or options shall
be assumed by the Nevada corporation; and dissenting shareholders of the
Delaware corporation have rights as to liquidation according to Delaware law.
The agreement can be terminated by the Nevada corporation if more than 5% of the
outstanding shares of the Delaware corporation objects to the merger.
The Nevada corporation shall assume all liabilities and assets of the Delaware
corporation as well as having the same officers and directors, bylaws, and other
corporate identities that the Delaware corporation had before its merger into
the Nevada corporation.
In Revenue Ruling 75-561, the Services ruled that a reorganized qualifies under
Section 368 (a)(1)(F) if (1) there is a complete identity of shareholders and
their proprietary interest in the transferor and acquiring corporations, (2) the
transferor and acquiring corporations are engaged in the same business or
integrated activity, and (3) the business enterprise of the two corporations
remains unchanged after the combination.
The merger agreement appears to address all the issues discussed and the merger
should qualify as a tax free reorganization. If any shareholders disagree with
the merger and requests a payout or distribution of their ownership interests,
as defined within the agreement, such distributions will not disrupt the tax
free status of the transaction.
Any distributions to minority shareholders will be a capital gain to the
recipient of the distribution.
Sincerely,
Kevin E. Orton
Orton & Company
Certified Public Accountants
THIS LEASE AND OPERATING AGREEMENT MADE AS OF THE 29TH,
DAY OF OCTOBER, 1993.
BETWEEN:
PRIME AIR INC., a British Columbia company with
its registered office at Suite 1724, 1055 Dunsmuir Street, Vancouver,
British Columbia, V7X 1C4
(hereinafter called "Prime Air")
AND
THE CORPORATION OF THE VILLAGE OF
PEMBERTON, a village incorporated under the Municipal Act, and having
a mailing address at The Village of Pemberton, P.O. Box 100,
Pemberton, British Columbia, VON 2LO
(hereinafter called 'Pemberton')
AIRPORT LEASE AND OPERATING AGREEMENT
RECITALS
A. Pemberton is the legal and beneficial owner of an estate in fee simple in
the Lands and is the owner of the Airport Facilities.
B. Prime Air is engaged in the planning, implementation and operation of the
Airline Business and in connection therewith has agreed, inter alia, to
undertake the planning, development, construction, management and operation of
the Terminal Facilities.
C. Pemberton has agreed, inter -alia, to grant Prime Air an exclusive and
irrevocable lease over certain portions of the Lands to enable Prime Air to
undertake the planning, development, construction, management and operation of
the Terminal Facilities and to grant Prime Air certain other rights in respect
of the FBO Lands and Airport Facilities on the terms and conditions set out in
this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the mutual
covenants and agreements herein contained, the Parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
SECTION
Defined Terms
In this Agreement, unless the subject matter or context otherwise requires, the
following terms shall have the following meanings:
(a) _Accounting Period" means the calendar year, except the first
Accounting Period which shall be the period from the Effective Date
until the next ensuing December 31st;
(b) _Accounting Principles" means generally accepted accounting
principles, consistently applied, as modified from time to time;
(c) _Act of Bankruptcy_ shall have occurred if
(i) the Term or any of the goods or chattels on the Lands are at
any time seized or taken in execution or attachment by any creditor
of Prime Air or under any bill of sale or chattel mortgage; or
(ii) if a writ of execution issues against the goods or chattels of
Prime Air; or
(iii) if Prime Air makes any assignment for the benefit of creditors;
or
(iv) if Prime Air becomes insolvent or bankrupt; or
(v) if proceedings are begun to windup Prime Air; or
(vi) if the Terminal Lands or Terminal Facilities or any part of them
become vacant and unoccupied for a period of 60 days or are used
by any other person or persons' or for any purpose other than
permitted in this Agreement without the written consent of
Pemberton;
(d) _affiliate_ with respect to Prime Air means a company which Controls,
is Controlled by, or is under common Control with Prime Air;
(e) _Agreement" _this Agreement_, _the Agreement_, "hereto", _hereof_,
_herein_, _hereby_, _hereunder", and similar expressions refer to
this Airport Lease and Operating Agreement, as amended from time to
time, and any indenture, agreement or instrument supplemental or
ancillary hereto or in implementation hereof and the expressions
"Article", _Section_, "Subsection", and _Paragraph" followed by a
number or letter mean and refer to the specified Article, Section,
Subsection or Paragraph of this Agreement;
(f) _Airline Business_ means the scheduled and chartered commuter and
cargo airline service which Prime Air is engaged in planning,
implementing-and operating and which it currently proposes will
provide scheduled and chartered airline service to the Airport from
Seattle, Washington, Portland, Oregon, Vancouver, British Columbia
and other locations;
(g) "Airport" means the Pemberton Airport located in Pemberton, British
Columbia as more particularly shown outlined in heavy black on the
site plan attached hereto as Schedule AA";
(h) _Airport Facilities_ means, collectively, the Runway, Parking Apron,
MLS, NDB, DME and all other buildings, structures, improvements and
equipment located on the Lands or owned by Pemberton and used in
connection with the operation of the Airport or the use thereof by
any type of aircraft;
(i) _Airport Maintenance Costs" has the meaning attributed thereto
in Section 6.5;
(j) _Business Day" means any day of any week except for Saturdays,
Sundays and Statutory Holidays in the Province of British Columbia;
(k) _Control" means the ownership, either directly or indirectly, of
shares having more than 50% of the votes entitled to be cast for the
election of the Directors of a company, other than shares having such
power only be reason of the happening of a contingency which has not
occurred as at the relevant time;
(l)
facilities used in connection therewith which are owned by Pemberton
and located at and about the Airport and which may be used by aircraft
in arriving and departing from the Airport;
(m) _Effective Date_ means the date first above written;
(n) _FBO Facilities_ means the fixed base operation hanger and related
facilities which Prime Air may elect to construct on the FBO Lands in
accordance with Article 7 for the purposes of undertaking aircraft
maintenance, accommodating itinerant aircraft parking and storing and
maintaining equipment, material and supplies used in connection with the
operation of the Airport;
(o) _FBO Lands_ means that portion of the Lands shown shaded in red on
the site plan attached as Schedule _S" hereto;
(p) "FBO Lease_ means the exclusive and irrevocable lease over the FBO
Lands, or portion thereof, granted by Pemberton to Prime Air pursuant to
the provisions of Sections 7-1 and 7.2;
(q) "FBO Option_ has the meaning attributed thereto in Section 7.1
(r) _Gross Receipts_ for an Accounting Period means the aggregate of all
revenues and income from all sources derived from the operation of the
Terminal Facilities before deducting any cost or expense, as determined on
a cash basis and otherwise in accordance with Accounting Principles,
including, without restriction, all rents, percentage rents, prepaid
rents, security deposits actually applied, license fees and revenues
from all Space Tenant Leases and the operation of all concessions, parking
facilities and other facilities contained within the Terminal Facilities.
Gross Receipts shall not, however, include any amounts received in
connection with the sale of airline tickets, cargo or freight
transportation, ground transportation, available insurance proceeds with
respect to the Terminal Facilities, receipts of a capital nature as
determined in accordance with Accounting Principles, proceeds of any
specific financing of the Terminal Facilities, amounts otherwise payable
as rent during rent-free periods or uncollected rents and, for greater
certainty, rents that vary within the term of a Space Tenant Lease
shall not be amortized over the term of that Space Tenant Lease;
(s) _Initiating Party" has the meaning attributed thereto in Section
1.81.
(t) "Lands" means the lands in Pemberton, British Columbia, legally
described as Lots 4674, 4769 and 766 Lillooet District and more
particularly shown on Schedule "C" hereto;
(u) _leases_ means, collectively, the Terminal Lease and the FBO Lease;
(v)
of its covenants, agreements or obligations under this Agreement,
other than any such breach or failure that in the context hereof is
minor,
immaterial, insubstantial and not reasonably likely to prejudice the
other Party in any material way;
(w)
facilities used in connection therewith which are owned by Pemberton
and located at-and about the Airport and which may be used by
aircraft in arriving and departing from the Airport;
(x) "NDB_ means Non-Directional Beacon equipment and facilities owned by
Pemberton and located at and about the Airport and which may be used
by aircraft in arriving and departing from the Airport;
(y) _Parking Apron_ means that portion of the Airport shown shaded in
green on the site plan attached hereto Schedule "D_ which is used for
the parking of aircraft and for the boarding and deboarding of
passengers, luggage and cargo therefrom;
(z) _Parties_ with respect to this agreement means Prime Air and
Pemberton and in each case their respective successors and permitted
assigns as parties hereto; and _party_ means either one of the
Parties;
(aa) _Person_ means an individual, a corporation, a government or any
department or agency thereof, trustee, any unincorporated
organization, and heirs, executors, administrators, successors and
office or other legal representatives of an individual; pronouns
and other words importing persons have a similarly extended meaning;
(ab) _Prime Rate" means the annual interest rate announced from time to
time by the Royal Bank of Canada as its prime rate of Canadian
dollar commercial loans made in Canada;
(ac) _Responding Party" has the meaning attributed thereto in Section 1.8;
(ad) _Runway_ means that portion of the Airport shown shaded in blue on
the site plan attached hereto as Schedule _D" which is used by
aircraft landing or departing from the Airport;
(ae) _Space Tenant Lease_ means each and every present and future lease,
agreement to lease, sublease and agreement to sub-lease of any part
of the Terminal Facilities and each and every present and future
license affording any Person a right other than an easement or a
right in the nature of an easement to use or occupy any part of the
Terminal Facilities or render services therein or therefrom and all
revisions, alterations, modifications., Amendments, changes
extensions, renewals, replacements or substitutions thereof or
therefor which may hereafter be effected or entered into;
(af) _Term" means the term of this Agreement as set out in Section 2.1;
(ag) "Terminal Facilities" means the airline terminal building and
associated facilities to be constructed on the Terminal Lands by
Prime Air as more particularly described in Schedule "E' attached
hereto;
(ah) _Terminal Lands_ means a portion of the Lands shown outlined in heavy
black on Schedule "F" hereto, which portion shall be large enough to
locate the Terminal Facilities thereon and shall be configured and
located as necessary to accommodate the Terminal Facilities;
(ai) _Terminal Lease_ means the exclusive and irrevocable lease of the
Terminal Lands granted by Pemberton to Prime Air pursuant to the
provisions of Section 4.1;
(aj) "Terminal Opening Date_ means the date on which the Terminal
Facilities have been substantially completed and opened to the public
for their intended use;
(ak) _Terminal Rent_ has the meaning attributed thereto in Section 6.1;
(al) _Transfer" and similar expressions including any transaction whereby
the interest of any Party in this Agreement or otherwise in the
Terminal Facilities or Lands or any relevant part thereof, may be
sold, granted, conveyed, assigned, exchanged, transferred, disposed
of, encumbered, pledged, charged, mortgaged, hypothecated, given,
devised, bequeathed or otherwise dealt with, voluntarily or
involuntarily by operation of law or otherwise, and includes an
assignment by specific or floating charge whereby the interests of
such Party is mortgaged or pledged as security for any indebtedness
or other obligation;
(am) _Unavoidable Delay" means a delay caused by fire, strike or other
casualty or contingency beyond the reasonable control of a Party who
is, by reason thereof, delayed in the performance of such Party's
covenants and obligations under this Agreement in circumstances where
it is not within the reasonable control of such Party to avoid such
delay (but does not include any insolvency, lack of funds or other
financial cause of delay).
1.2 Interpretation Not Affected by Headings. etc.
Grammatical variations of any terms defined in this Agreement shall have similar
meanings; words importing the singular number shall include the plural and vice
versa; words importing the masculine gender shall include the feminine and
neuter genders. The division of this Agreement into separate articles,
sections, subsections and paragraphs, the provision of e! Table of Contents and
the insertion of headings are for the convenience of reference only and shall
not affect the construction or interpretation of this Agreement.
1.3 Severability
If any covenant, obligation or agreement of this Agreement, or the application
thereof to any Person or circumstance, shall to any extent be invalid or
unenforceable, the remainder of this Agreement or the application of such
covenant, obligation or agreement to Persons or circumstances other than those
as to which it is held invalid or unenforceable, shall not be affected thereby
and each covenant, obligation and agreement of this Agreement shall be
separately valid and enforceable to the full extent permitted by law.
1.4 Governing Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with the laws of
British Columbia and Canada applicable therein and shall be treated in all
respects as a British Columbia contract. The Parties agree to submit to the
jurisdiction of the courts of the Province of British Columbia and to appoint
respective agents for receipt of service of process therein and to notify each
other of the identity thereof.
1.5 Parties
Any reference to a Party shall include, where the context allows, the servants,
employees, agents, contractors, invitees, concessionaires and licencees of such
Party and all others over whom the Party is at law responsible.
1.6 Time and unavoidable delay
Time shall be of the essence in the performance of the obligations of the
Parties under this Agreement. However, any act or thing to be done or performed
by a Party (except as otherwise provided herein) under this Agreement is subject
to Unavoidable Delay and the time for doing or the performance thereof shall be
extended for a period equal to such Unavoidable Delay or the period for which
such Unavoidable Delay operates to prevent the act or thing required to be done
or performed from being done or performed. The Party obligated to do or perform
such act or thing shall not be deemed to be in default until the expiration of
such time as so extended. Each Party shall promptly notify the other Party of
the occurrence of any Unavoidable Delay which might prevent or delay the doing
and performance of acts or things required to be done or performed by such
Party. The aforesaid provisions do not in any way effect the obligations to pay
moneys. If the expiry of any period provided for in this Agreement falls on a
day other than a Business Day, the period shall be extended to the next
following Business Day.
1.7 Disputes to be Arbitrated
Any dispute between the Parties of a material or significant nature which cannot
be resolved by the parties acting reasonably and in good faith and which touches
upon the validity, construction, meaning, performance or effect of this
Agreement or the rights and liabilities of the Parties or any matter arising out
of or connected with this Agreement shall be subject to arbitration pursuant to
the Commercial Arbitration Act (British Columbia) and as provided in Section 1.8
and the decision of the arbitrator or arbitration panel, as the case may be,
shall be final and binding as between the Parties and shall not be subject to
appeal.
1.8 Arbitration Provisions
(a) Arbitration proceedings shall be commenced by a Party desiring
arbitration (the 'Initiating Party") giving notice to the other Party
(the 'Responding Party') specifying the matter to be arbitrated and
requesting an arbitration thereof. In the event that the Initiating
Party and Responding Party are unable to agree upon a single
arbitrator or an arbitration procedure within five days after delivery
of such notice, the Initiating Party shall, by notice to the
Responding Party, designate an arbitrator. The Responding Party,
shall within five days thereafter, be entitled to appoint an
arbitrator by notice to the Initiating Party, and the two arbitrators
so appointed shall thereupon meet and select a third arbitrator
acceptable to both. In the event that a Responding Party fails to
appoint an arbitrator within such time limit and deliver notice
thereof to the Initiating Party then the Initiating Party shall be
entitled to appoint an arbitrator on behalf of the Responding Party
and such arbitrator shall thereby be appointed the agent of the
Responding Party for such purpose. In the event that the two
arbitrators so appointed are unable to agree upon a third arbitrator
within five days after the appointment of the arbitrator for the
Responding Party, then the Initiating Party shall be entitled to make
application to the Supreme Court of British Columbia pursuant to the
Commercial Arbitration Act (British Columbia).for the selection of a
third arbitrator, and the provisions of such act shall govern such
selection. Any arbitrator appointed pursuant to this Section 1.8 must
be a Person with expertise in the matter to be arbitrated.
(b) The single arbitrator selected by the Parties or the resultant
arbitration panel shall thereupon proceed to hear the submissions of
the Parties including, without limitation, any expert evidence
submitted by the Parties and shall render a decision within 60 days
after the appointment of the single or third arbitrator, as the case
may be. The decision of the single arbitrator or the majority of the
arbitration panel shall be deemed to be the decision of the
arbitration panel, as the case may be, shall be -final and binding
upon the Par-ties and shall not be subject to appeal. Any matter
determined by arbitration or judicial process shall be binding on any
subsequent arbitration carried out pursuant to this Section 1.8. The
single arbitrator or arbitration panel shall have the authority to
assess the cost of the arbitration panel against either or both of
the Parties, provided, however, that each Party shall bear its own
witness and counsel fees.
(c) If an arbitration decision is not made within the time herein
provided, then until it is so made and unless the other Party has
taken any of the actions referred to in this Subsection 1.8(c),
either Party, upon 30 days notice to the other Party and to the
arbitrators, may:
(i) cancel the appointment of the arbitrators previously made and
initiate new arbitration proceedings by written request and
appointment pursuant to Subsection 1.8(a); or
(ii) cancel such arbitration proceedings and proceed in the courts as
though this Section 1.8 did not exist.
1.9 Accounting Principles
Except for the calculation of Gross Receipts, which shall be done on a cash
basis and otherwise in accordance with Accounting Principles, all calculations
made or referred to in this Agreement shall be made in accordance with
Accounting Principles.
1.10 Currency
All transactions referred to in this Agreement shall be made in the lawful money
of Canada in immediately available funds. All references to payment in this
Agreement include a reference to payments by cash, cheque, wire or electronic
funds transfer and other methods of payment, made and used from time to time in
Canada.
1.11 Interest
All payments which are required or permitted to be made by one party to the
other party pursuant to this Agreement shall, unless this Agreement indicates
otherwise, bear interest in default on arrears at a rate equal to the Prime Rate
plus 2% per annum. Whenever such interest is to be calculated over a period of
one year, it shall be compounded semi-annually.
1.12 Schedules
The following schedules annexed hereto are incorporated by reference and deemed
to be a part hereof:
Schedule 'A' - Airport
Schedule 'B' - FBO Lands
Schedule 'C' - Lands
Schedule 'D' - Parking Apron and Runway
Schedule 'E' - Terminal Facilities
Schedule 'F' - Terminal Lands
ARTICLE 2
TERM OF AGREEMENT
2.1 Term of Agreement
This Agreement, the Terminal Lease and the rights herein granted shall commence
as of the Effective Date and subject to any extension by Prime Air pursuant to
Section 2.2 hereof, unless otherwise terminated in accordance with the
provisions hereinafter contained, shall continue in full force and effect for an
initial term ending on the second (2nd) anniversary of the Terminal Opening
Date.
2.2 Extension of Term
Provided this Agreement is then in force and Prime Air is not in Material
Default of any of the terms of this Agreement, Prime Air may extend the Term
for:
(a) three (3) years by delivering to Pemberton written notice of
extension of the Term not less than six (6) months prior to the
second anniversary of the Terminal Opening Date;
(b) a further five (5) years by delivering to Pemberton written notice of
extension of the Term not less than six (6) months prior to the fifth
(5th) anniversary of the Terminal Opening Date;
(c) a further ten (10) years by delivering to Pemberton written notice
of extension of the Term not less than six (6) months prior to the
tenth (1Oth) anniversary of the Terminal Opening Date; and
(d) a final ten (10) years by delivering to Pemberton written notice of
the extension of the Term not less than six (6) months prior to the
twentieth (20th) anniversary of the Terminal Opening Date.
ARTICLE 3
DEVELOPMENT OF TERMINAL FACILITIES
3.1 Development of Terminal Facilities Prime Air shall, with all reasonable
diligence, under-take' the planning, development, construction, equipping,
furnishing and fixturing of the Terminal Facilities and use its best efforts to
develop and complete the Terminal Facilities so they will be ready for their
intended use by October 31, 1994.
3.2 Design of Terminal Facilities
Prime Air shall construct the Terminal Facilities in accordance with plans and
specifications approved by Pemberton, acting reasonably. In constructing the
Terminal Facilities, Prime Air shall comply with all applicable federal and
provincial laws and regulations and with all municipal bylaws in effect on the
date hereof or thereafter passed by Pemberton in good faith. Prime Air shall
submit to Pemberton for its review and comment, all plans and working drawings
prepared with respect to the Terminal Facilities, as they become available to
Prime Air.
3.3 Approval of Plans by Pemberton
Prime Air shall submit all plans, specifications, drawings and standards with
respect to the design, 'construction, equipping, furnishing and fixturing of the
Terminal Facilities to Pemberton for approval, together with a written request
for approval thereof and where Pemberton in fact approves such plans,
specifications, drawings and standards, it shall endorse such approval thereon
by means of the signature of an authorized representative of Pemberton.
Pemberton agrees that it will respond to a request for approval of such plans,
specifications, drawings and standards in writing within ten (1 0) Business Days
of receipt of such request.
3.4 Departure from Approved Plans
Any changes or departures from the approved plans, specifications, drawings and
standards for the Terminal Facilities will be subject to the 'Prior written
approval of Pemberton, which approval shall be obtained as provided for in
Section 3.3 and which approval shall not be unreasonably withheld or delayed.
Prime Air shall cause to be completed the construction, equipping, furnishing
and fixturing of the Terminal Facilities in a good and workmanlike manner.
3.5 Inspection by Pemberton
Pemberton, through its representatives, may at any time and from time to time
inspect the development, construction, equipping, furnishing and fixturing of
the Terminal Facilities together with the material used and the methods employed
in doing so and if, in the opinion of Pemberton, the construction materials or
methods do not comply with previously approved plans, specifications or
standards, Prime Air will, upon receipt of notice from Pemberton to do so,
immediately take all necessary action to correct any such deficiency, defect or
omission.
3.6 Pemberton Not Liable
Pemberton's approval of the plans, specifications, standards, construction, work
and equipping with respect to the Terminal Facilities is required hereunder
solely for the protection of Pemberton and neither it nor its officers, servants
or agents shall be liable to Prime Air nor to any third party for the safety,
adequacy, soundness or sufficiency of any of the plans, specifications, work or
equipping by reason of the giving of such approval, nor shall the giving of such
approval constitute a waiver by Pemberton of any duty or liability owned by
Prime Air to Pemberton, its officers, servants or agents, by reason of this
Agreement or otherwise howsoever.
ARTICLE 4
TERMINAL LEASE
4.1 Demise
Subject to the terms and conditions set out herein, Pemberton hereby leases to
Prime Air, the Terminal Lands and all buildings, structures and improvements
from time to time placed or constructed thereon, for and during the Term (the
"Terminal Lease@).
4.2 Use of Terminal Lands
During the Term, Prime Air shall use the Terminal Lands solely for the purposes
of:
(a) planning, developing, constructing, equipping, furnishing, fixturing,
managing and operating the Terminal Facilities for the use and
enjoyment of Prime Air, its servants, agents, contractors, invitees
and guests, and for all members of the public using the Airline
Business;
(b) bringing onto the Terminal Lands all such improvements, machinery
and equipment as Prime Air may reasonably require for the purposes
of Subsection 4.2(a); and
(c) doing all such other things as may be necessary to complete the
development and construction of the Terminal Facilities and to
ensure the proper and efficient operation thereof.
4.3 Right of Access
In addition to the Terminal Lease, Pemberton hereby grants Prime Air, its
servants, agents, contractors, invitees and guests, an irrevocable licence to
enter, occupy and use such other areas on the Lands as Prime Air, its servants,
agents, contractors, invitees and guests, shall reasonably require for the
purposes of gaining unrestricted access to the Terminal Facilities and for
providing services and utilities thereto. For the purposes hereof, Pemberton
hereby acknowledges and agrees that it shall grant to Prime Air and execute in
registrable form all such easements, rights of way and licences as may be
necessary for the purposes of guaranteeing unrestricted access to the Terminal
Facilities, for providing services and utilities thereto and as otherwise
provided in Section 5.4.
4.4 Failure to Commence Construction of Terminal Facilities
Prime Air acknowledges and agrees that in the event it does not commence
construction of the Terminal Facilities on the Terminal Lands on or before June
1, 1994 for reasons other than an Unavoidable Delay, it shall within 30 days of
receipt of a writ-ten demand therefor from Pemberton either commence and
diligently proceed with the construction of the Terminal Facilities or return
the Terminal Lands to Pemberton whereupon the Terminal Lease shall immediately
terminate.
4.5 Covenants of Prime Air
Prime Air covenants with Pemberton:
(a) to ensure that Pemberton's use of the Lands, other than the Terminal
Lands shall not in any manner be impeded or interfered with and that
the Airport shall not in any manner be damaged by Prime Air's use of
the Terminal Lands or by any operations ' or activities carried on by
Prime Air pursuant to the rights and privileges granted hereunder;
(b) not to commit or suffer any willful or voluntary waste, spoil or
destruction on the Terminal Lands or adjoining Lands or do or suffer
to ,he done thereon anything that may interfere with Pemberton's use
and enjoyment of the Lands, other than the Terminal Lands, or that may
be done or become a nuisance or annoyance to the owners or occupiers
of adjoining lands;
(c) to keep the Terminal Lands and Terminal Facilities and all improvements
thereon in a safe, clean and sanitary condition reasonably satisfactory
to Pemberton, and on written notice from Pemberton, make safe, clean
and sanitary any portion of the Terminal Lands, Terminal Facilities or
improvements thereon that, in the reasonable pinion of Pemberton,
contravenes the provisions of this Subsection 4.5(c);
(d) not to keep, store or leave open on the Lands any refuse or rubbish of
any kind;
(e) to pay all accounts and expenses as they become due for labour
performed on, or materials supplied to the Terminal Lands;
(f) to promptly, at its own expense, discharge from the Lands any claims of
lien or other charge or encumbrance not authorized by Pemberton which
arise directly or indirectly from any activity, request, direction or
with the privity or consent or for the direct benefit of Prime Air, its
servants or agents;
(g) to advise Pemberton prior to initiating any construction or works on
the Terminal Lands and to permit Pemberton to post and maintain on the
Terminal Lands, during any construction or works, such notices as are
contemplated by Section 13 of the Builders Lien Act (British Columbia);
(h)
Agreement Prime Air shall:
(i)
and all anther lands used by Prime Air pursuant to the provisions
of Sections 4.5 or 5.4 to Pemberton;
(ii)leave the Terminal Lands and all other lands used by Prime Air
pursuant to the provisions of Sections 4.3 or 5.4 in a safe,
clean, tidy and sanitary condition reasonably satisfactory to
Pemberton; and
(iii)remove from the Terminal Lands and all other lands used by Prime
Air pursuant to the provisions of Sections 4.3 or 5.4 any
improvements or equipment which Prime Air may have placed thereon
and determines, in its discretion, to so remove;
(i)to permit Pemberton, its servants, agents and authorizd
representatives at all times to enter on and inspect the Terminal Lands
and all other lands used by Prime Air pursuant to the provisions of
Sections 4.3 or 5.4
(j) to pay and discharge, when due, all applicable real property taxes,
levies, charges and assessments now or hereafter assessed, levied or
charged which are assessed against the Terminal Lands as a result of Prime
Air's occupation and use thereof;
(k)
telephone and other utilities supplied to or used in connection with the
Terminal Facilities; and
(l) to observe and perform all terms and provisions of this Agreement and
not to do or suffer to be done anything contrary to any term or
provision hereof.
4.6 Prime Air to Indemnify
During the term of the Terminal Lease, Prime Air shall indemnify and save
harmless Pemberton from and against all losses, costs, damages, expenses, suits,
claims, demands, awards, judgments, actions and proceedings by whomsoever made,
brought or prosecuted in respect of death, injury or loss of property of
whatsoever nature against, suffered or incurred by Pemberton which would not
have occurred but for the granting of the Terminal Lease or the use of the
Terminal Lands by Prime Air, its servants, agents, contractors, invitees and
guests and all other lands used by Prime Air pursuant to the provisions of
Sections 4.3 or 5.4.
4.7 Liability Insurance
During the term of the Terminal Lease, Prime Air shall obtain and maintain
comprehensive liability insurance including but not limited to death and bodily
injury liability and extending to all bodily injury or property damage or loss
and providing coverage to include the activities and operations conducted on the
Terminal Lands by Prime Air, its servants, agents, contractors, invitees and
guests. Such policy shall be written with inclusive limits of not less than
$5,000,000 for each occurrence involving bodily injury, death or property
damage.
4.8 Building and Contents Insurance
In addition to the insurance required pursuant to Section 4.7, Prime Air shall
take cut and keep in force and effect "all risk_ insurance upon property of
every kind and description owned by Prime Air, or for which Prime Air is legally
liable, or installed by or on behalf of Prime Air which comprises or is located
within the Terminal Facilities including, without limitation, furniture,
fixtures, fittings, installations, fixtures and plate glass.
4.9 Policy Endorsements
The policies of insurance required pursuant to Sections 4.7 and 4.8 hereof shall
name Pemberton as an insured, as its interests may appear and shall contain an
endorsement requiring the insurance company to notify Pemberton, if cancellation
is not authorized by Pemberton, of any cancellation or material change to the
policy at least 30 days prior to the cancellation or material charge. The
policy required pursuant to Section 4.8 hereof shall, to the extent applicable,
contain an endorsement waiving the right of subrogation in favour of the named
insured. Prime Air shall deliver to Pemberton, at the commencement of the
Terminal Lease, or promptly thereafter, a certificate of insurance as evidence
such policies are in place.
4.10 Registration of Terminal Lease
Pemberton hereby acknowledges and agrees that it is the intention of the Parties
that this Agreement and the Terminal Lease be registered in the appropriate
British Columbia Land Title Office and that for the purposes hereof, Prime Air
shall, at its expense, cause to be prepared such reference plan, explanatory
plan and other documents as may be necessary to effect such registration.
Pemberton hereby covenants and agrees that it shall co-operate with and assist
Prime Air on all matters necessary to complete the registration of this
Agreement and the Terminal Lease and that it shall, within ten (1 0) Business
Days of receipt of a written request therefor from Prime Air re-execute this
Agreement in registrable form, or if determined advisable by Prime Air, execute
a short form of the Terminal Lease for registration by Prime Air.
ARTICLE 5
EXCLUSIVE RIGHT TO OPERATE TERMINAL FACILITIES
5.1 Ownership of Terminal Facilities
Pemberton hereby acknowledges and agrees that, notwithstanding its legal and
beneficial ownership of the Lands, it has no interest, right or title in the
Terminal Facilities or any of the rents, income, benefits, or advantages arising
therefrom which shall, during the Term, remain the property of Prime Air, or to
any Person to which Prime Air may effect a transfer of its interest in the
Terminal Facilities. All chattels, equipment, supplies, fixtures or other
materials comprising the Terminal Facilities or otherwise installed by Prime Air
over, on, in or under the Terminal Lands are and shall remain the property of
Prime Air during the Term, any rule of law or equity to the contrary
notwithstanding. All such chattels, equipment, supplies, fixtures and other
materials will be at the sole risk of Prime Air.
5.2 Removal of Fixtures
Notwithstanding the provisions of Section 5.1 hereof, Prime Air agrees that any
buildings, structures and fixtures comprising the Terminal Facilities (but not
including any of Prime Air's trade fixtures,' chattels, personal property and
moveables) not removed from the Terminal Lands by Prime Air at the expiration of
the Term shall become the sole property of Pemberton, at no cost to Pemberton.
5.3 Destruction of the Terminal Facilities
If the Terminal Facilities or any part of them, are at any time during the Term
burned down or damaged by fire, lightening, explosion, tempest or earthquake so
as to render them unfit for the purposes of Prime Air.-
(a) the Terminal Rent, or a proportionate part of it according to the
nature and extent of the damage sustained, shall be suspended and
abated until the Terminal Facilities have been rebuilt or made fit for
the purposes of Prime Air; and
(b) at the option of Pemberton, if the Terminal Facilities are not
rebuilt within 180 days, the Terminal Lease shall end and Prime Air
shall not be required to pay Terminal Rent except Terminal Rent
then due.
Prime Air agrees that it shall within 30 days after any damage or destruction of
the Terminal Facilities advise Pemberton in writing whether Prime Air intends to
restore, repair or replace the Terminal Facilities or the portion damaged. If
Prime Air intends to under-take a complete restoration, repair or replacement it
shall do so within 12 months after the date the damage occurred. In the event
Prime Air elects not to undertake restoration, repair or replacement of the
Terminal Facilities the Terminal Lease shall terminate and if Prime Air does not
advise Pemberton-of its intention within the 30 days aforesaid, Prime Air shall
be deemed to have elected not to undertake the restoration, repair or
replacement of the Terminal Facilities. If Prime Air elects, or is deemed to
have elected, not to restore, repair or replace the Terminal Facilities, it will
return the Terminal Lands to the condition in which they existed prior to the
construction of the Terminal Facilities.
5.4 Use of Terminal Facilities
Subject to the terms and conditions set out herein, Prime Air shall be entitled
to use the Terminal Lands and operate the Terminal Facilities in connection with
its operation of t,-ir= Airline Business and for any other purpose. Without in
any way limiting the generality of the foregoing, Prime Air shall be entitled,
at its option and without interruption or interference from Pemberton, to:
(a) operate the Terminal Facilities as an international airport terminal
serving passengers and cargo arriving at and departing from the
Airport;
(b) operate, or cause to be operated, from the Terminal Facilities, such
services, concessions, agencies and businesses as it, in its
discretion, determines necessary or desirable for the proper and
efficient operation of the Airline Business, including without
limitation:
(i) ground transportation service to and from the Airport;
(ii) motor vehicle rentals;
(iii) food and beverage outlets;
(iv) souvenir sales;
(v) air and ground transportation ticket sales; and
(vi) freight and cargo handling services;
(c) grant such Space Tenant Leases as it determines necessary or
desirable in connection with the operation of the Airline Business
and Terminal Facilities;
(d) make all decisions in connection with the management of the Terminal
Facilities and the supervision of the management, operation,
maintenance, servicing and leasing thereof;
(e) maintain the Terminal Facilities and arrange for, carry out or cause
to be carried out all such repairs, maintenance, alterations,
replacements and decorations to the Terminal Facilities as it
determines desirable; and
(f) provide such utilities, services and works to the Terminal
Facilities as may be necessary or desirable for the proper and
efficient operation thereto.
5.5 Compliance with Laws
Prime Air shall in undertaking the operation of the Terminal Facilities, take
all such action as is necessary to ensure that the Terminal Facilities and
Terminal Lands remain in compliance with all municipal, provincial or federal
statutes, regulations, bylaws rules and orders throughout the Term.
5.6 Grant of Easements
Pemberton will grant, or cause to be granted, to Prime Air such easements,
rights of way, licences and like interests (the 'Easements") as are reasonably
required by Prime Air, its servants, agents, contractors, invitees and guests,
for the purpose of providing utilities and all requisite services to the
Terminal Facilities and for ingress and egress from the Terminal Lands for
vehicular and pedestrian passengers from and to, inter alia:
(a) the public roads and walkways adjacent or leading to the Lands;
(b) the parking areas, plaza areas, loading areas and walkways on the
Lands;
(c) the Runway and Parking Apron; and.
(d) such other areas on and about the Lands as may be reasonably required
by Prime Air to operate the Terminal Facilities in a proper and
efficient manner.
Such easements shall be granted for the length of the Term and v,(iii be given
for nominal consideration.
Pemberton will, if Pemberton's consent is required in connection with the
granting of easements for utilities and services including, without limitation,
water, gas, electricity, telephone, sewer or storm drain, for the benefit of the
Terminal Lands, not unreasonably withhold its consent thereto, and at the
expense of Prime Air will execute all instruments and make all such attendance
as are required in connection therewith.
ARTICLE 6
TERMINAL RENT AND AIRPORT MAINTENANCE COSTS
6. 1 Terminal Rent
Prime Air shall pay to Pemberton as a basic rent for the Terminal Lands for each
and every Accounting Period without set-off, deduction or abatement the amount
set out in Section 6.2 (the 'Terminal Rent') and in accordance therewith.
6.2 Payment of Terminal Rent
The Terminal Rent payable by Prime Air to Pemberton shall be calculated and
paid in accordance with the following:
(a) the Terminal Rent payable for the first, second, third, fourth, fifth
and sixth Accounting Periods shall be the full amount of $100; and
(b) for each Accounting Period subsequent to the sixth Accounting Period,
(i) $2,500 by way of an advance on the Terminal Rent on or before
the first day of July in such Accounting Period; and
(ii) an amount equal to five percent (5%) of the Gross Receipts for
such Accounting Period, less the advance made pursuant to
paragraph 6.2(b)(i), an or before the first day of April of the
Accounting Period following the Accounting Period for which the
Terminal Rent is payable.
6.3 Statement of Gross Receipts
Concurrently with each payment of Terminal Rent, other than in respect of the
first -six Accounting Periods or the advances on the Terminal Rent paid pursuant
to paragraph 6.2(b)(i), Prime-Air shall deliver to Pemberton a written
statement, signed by an officer of Prime Air, showing the Gross Receipts for the
Accounting Period for which the Terminal Rent then being paid is payable.
6.4 Books and Audit
Prime Air shall keep proper and sufficient books and records of the Gross
Receipts. Pemberton shall have the right on one occasion during each Accounting
Period subsequent to the sixth Accounting Period, and upon ten (10) days prior
written notice to Prime Air, to inspect the books and records of Prime Air
pertaining to the Gross Receipts and Terminal Rent in respect of any particular
Accounting Period. For a period of six (6) months after delivery by Prime Air
of any statement pursuant to Section 6.3, Pemberton may, acting reasonably,
require Prime Air to prepare and deliver to Pemberton an independent audit of
such statement. If Pemberton does not require an independent audit within the
time limited for any Accounting Period it shall be deemed to have accepted the
calculations submitted by Prime Air in respect of such Operating Year.
6.5 Airport Maintenance Costs
In addition to the Terminal Rent, Prime Air shall pay to Pemberton its
proportionate share of the costs incurred by or on behalf of Pemberton in
connection with the maintenance and repair of the Airport Facilities including
the cost of snow and ice removal and periodic sanding and the cost of
maintaining the Airport Facilities in good and safe repair and operational
order' (the 'Airport Maintenance Costs"). For the purposes hereof, Prime Air's
proportionate share of the Airport Maintenance Costs shall be the fraction which
has as its numerator the total number of landings Prime Air makes on the Runway
in an Accounting Period and has as its denominator the total number of
commercial landings on the Runway in the same Accounting Period.
6.6 Payment of Airport Maintenance Costs
Prime Air's proportionate share of Airport Maintenance Costs to be paid pursuant
to Section 6.5 hereof, may be estimated by Pemberton for an Accounting Period
and Prime Air agrees to pay such estimated amount in equal monthly instalments
over such Accounting Period. As soon as practical after the expiration of each
Accounting Period, Pemberton shall make a final determination of Prime Air's
proportionate share of Airport Maintenance Costs and notify Prime Air of the
amount due, which shall be paid by Prime Air within 30 days of receipt of such
notice. In the event Prime Air has over paid its proportionate share of Airport
Maintenance Costs, Pemberton shall credit Prime Air's rental account with the
amount of such over payment. Any dispute as to the amount of Prime Air's
proportionate share of Airport Maintenance Costs shall be settled by an
independent accounting firm which shall be deemed to be acting as an expert and
not as an arbitrator.
ARTICLE 7
FBO LANDS
7.1 Option to Lease FBO Lands
Subject to Pemberton Is rights pursuant to Section 7.2, Prime Air shall have the
irrevocable option to lease and use the FBO Lands, or any portion thereof, (the
"FBO Option") in accordance with the following:
(a) provided Prime Air is not then in Material Default, Prime Air may
exercise the FBO Option by giving written notice to Pemberton any time
during the continuance of the Term specifying the portion of the FBO
Lands it wishes to lease;
(b)
shall within thirty (30) days thereafter grant Prime Air an exclusive
and irrevocable lease in respect of the FBO Lands specified in Prime
Air's notice (the 'FBO Lease");
(c) the FBO Lease shall provide, inter alia:
(i) for a term commencing on the date which is thirty (30) days after
the date on which notice of the exercise of the FBO Option is
delivered by Prime Air to Pemberton and ending on the expiration of
the Term;
(ii)that Prime Air shall be entitled to construct such FBO Facilities
on the FBO Lands (including aircraft hangers and such other
structures, improvements, equipment and supplies as are typically
used in the maintenance, repair and storage of aircraft and in the
operation of an airline business) as may be reasonably approved by
Pemberton;
(iii)that Prime Air be entitled to operate the FBO Facilities for the
purposes of undertaking aircraft maintenance and repairs,
accommodating itinerant aircraft parking and storage, storing,
maintaining and repairing aircraft parts and such equipment,
material and supplies as are used in connection with the operation
of the Airport and Airline Business and for such other purposes as
are reasonably desirable in connection with the operation of the
Airline Business, Terminal Facilities and Airport;
(iv) that Prime Air shall indemnify and save harmless Pemberton from
and against all losses, costs, damages and claims suffered by
Pemberton which would not have occurred but for the granting of
the FBO Lease or the use of the FBO Lands by Prime Air;
(v)
Lands for each Accounting Period an amount equal to the annual
basic fee that would be paid by an occupier of lands substantially
similar in nature, size and location to the FBO Lands, on the
basis such user would comply with Prime Air's covenants under this
Agreement and the FBO Lease; and
(vi)
within sixty (60) days of the FBO Facilities being approved by
Pemberton and that in the event it does not do so for reasons
other than Unavoidable Delay, it shall within thirty (30) days of
receipt of a written demand therefor from Pemberton either
commence and diligently proceed with the construction of the FBO
Facilities or return the FBO Lands to Pemberton whereupon the FBO
Lease shall immediately terminate.
The FBO Lease shall be prepared by Pemberton, at the expense of Prime Air,
shall contain such other terms and conditions as the Parties shall agree upon
and shall be in registerable form.
7.2 First Right to Occupy FBO Lands
Pemberton shall not Transfer, lease or grant any Person any lease or the right
to occupy the FBO Lands or any portion thereof, without first giving Prime Air a
written
offer to lease (in this Section 7.2 called the "Offer") the FBO Lands or portion
thereof that it wishes to lease. The Offer shall specify the proposed
commencement date of the term of the lease and the portion of the FBO Lands that
Pemberton wishes to lease. Prime Air may by giving written notice of acceptance
of the Offer to Pemberton within thirty (30) days after receipt of the Offer,
lease the FBO Lands, or portion thereof, from and including the proposed
commencement date, on the terms and conditions set out in Section 7.l.
In the event Prime Air does not accept the Offer within the time specified,
Pemberton may grant a lease or licence of occupation in respect of the portion
of the FBO Lands specified in the Offer to any party within six (6) months after
the date of the Offer on any terms acceptable to Pemberton. In the event
Pemberton does not grant a lease or licence to occupy the FBO Lands within such
six month period, it shall not a licence of occupation or otherwise transfer the
FBO Lands without again complying with this Section 7.2.
ARTICLE 8
RIGHT TO USE TERMINAL FACILITIES
8.1 Right to Use Airport Facilities
Subject to Prime Air's obligation to pay its proportionate share of Airport
Maintenance Costs pursuant to Section 6.5 hereof, Pemberton shall at all
reasonable times during the continuance of the Term make the Airport Facilities
available for the use of Prime Air. Pemberton further covenants and agrees that
it shall keep the Airport Facilities in good repair and operational order and
that it shall install, operate and maintain the Airport Facilities and all other
improvements, structures, machinery, equipment and materials reasonably
necessary or desirable in connection with the proper, efficient and safe
operation of the Airport and with Prime Air's use thereof.
8.2 Co-operation of Parties
Prime Air and Pemberton each acknowledge and agree that, subject to the terms
and conditions set out herein, they shall work together, co-operate and
collaborate with one another in respect of all matters incidental to the proper
and efficient operation of the Airport and that during the continuance of this
Agreement, they will both act diligently and in good faith in performing their
respective responsibilities as set out herein and in ensuring the successful
completion and operation of the Airport.
ARTICLE 9
RIGHT OF ACCESS
9.1 Right of Access
Pemberton shall, during such period as Prime Air is undertaking the planning,
development, construction, equipping, furnishing, fixturing, operating and
managing of the Terminal Facilities or FBO Facilities, grant to Prime Air such
rights of access to and ingress to and egress from the Terminal Lands or FBO
Lands, as the case may be, as Prime Air, its agents, servants, representatives,
contractors, sub-contractors, invitees and guests, may reasonably require or
determine desirable for the purposes set out in this Article 9.1 hereof (the
"Right of Access") and Pemberton shall work together and cooperate with Prime
Air in establishing the most appropriate and efficient access routes.
9.2 Use of Right of Access
The Right of Access granted pursuant to Section 9.1 shall be made available and
shall be used' by Prime Air for the delivery of all materials, equipment and
supplies used in connection with the development and construction of the
Terminal Facilities or FBO Facilities, as the case may be, for the purpose of
providing vehicular and pedestrian traffic with the right of ingress to and
egress from the Terminal Facilities or FBO Facilities, and for the purposes of
providing all persons using the Terminal Facilities or the Airport with parking
facilities.
ARTICLE 10
ENVIRONMENTAL PROTECTION
10.1 Protection of Environment
Prime Air shall at all times ensure that all activities undertaken by it with
respect to the construction and operation of the Terminal Facilities or FBO
Facilities are conducted in such a manner that they have the least possible
adverse effect on the natural, physical and biological environment. Prime Air
shall comply with all applicable federal and provincial environmental laws and
regulations and all municipal bylaws in effect on the date hereof or
subsequently passed by Pemberton in good faith, all at Prime Air's expense.
ARTICLE 11
TRANSFERS
11.1 Restriction on Transfers
Prime Air may not effect a Transfer, except as specifically authorized in this
Agreement without the prior written consent of Pemberton, which consent may not
be unreasonably withheld.
11.2 Permitted Transfers
Prime Air may at any time and from time to time effect a Transfer to any
mortgagee, trustee or lender for the proposes of securing any mortgage, deeds of
trust, debentures or grant by assignment by Prime Air in respect of financing
the cost of the construction of the Terminal or FBO Facilities. No such
Transfer shall release Prime Air from its obligations hereunder, however the
transferee shall expressly assume by covenant in favour of Pemberton all the
obligations of Prime Air hereunder.
ARTICLE 12
TERMINATION
12.1 Termination by Pemberton for Material Default
If, in the case of Prime Air, a Material Default occurs, Pemberton may provide a
notice (a "Notice of Complaint') to Prime Air specifying in reasonable detail
the Material Default. If, within 30 days of receipt of any Notice of Complaint,
Prime Air fails to cure or remedy the Material Default in a reasonable manner
or, if more than 30 days is required to cure or remedy the Material Default,
Prime Ai r fails to proceed and continue diligently to cure or remedy the
Material Default or give reasonable assurances to Pemberton that such Material
Default will be cured or remedied within a reasonable period of time, Pemberton
may terminate this Agreement by written notice (a 'Notice of Termination') to
Prime Air stating that this Agreement is terminated and the reason for
termination. Such termination shall be effective as and from the date on which
the Notice of Termination was received by Prime Air.
12.2 Additional Termination Rights by Pemberton
In the event an Act of Bankruptcy occurs in respect of Prime Air, Pemberton may
terminate this Agreement by Notice of Termination to Prime Air stating that this
Agreement is terminated and the reason for termination. Such termination shall
be effective as and from the date set out in the Notice of Termination.
12.3 Termination by Prime Air
If, in the case of Pemberton, a Material Default occurs as a result of any acts
or omissions of Pemberton, Prime Air may provide a Notice of Complaint to
Pemberton specifying in reasonable detail the Material Default. If, within 30
days of receipt of the Notice of Complaint, Pemberton fails to cure or remedy
the Material Default in a .reasonable manner or, if more than 30 days is
required to cure or remedy the Material Default, Pemberton fails to proceed and
continue diligently to cure or remedy the Material Default or give reasonable
assurances to Prime Air that such Material Default will be cured or remedied
within a reasonable period of time, Prime Air may terminate this Agreement by a
Notice of Termination to Pemberton stating that this Agreement is terminated and
the reason for termination. Such termination shall be effective as and from the
date on which the Notice of Termination was received by Pemberton.
12.4 Remedies Available to Non-Defaulting Parties
If a Material Default occurs as the result of any act or omission of either
Party hereto, and such Party fails to cure or remedy the Material Default within
the time specified in Sections 12.1 or 12.3, as the case may be, the other Party
shall have the right to remedy the Material Default and shall be entitled, upon
demand, to be reimbursed by the defaulting Party for any monies expended to
remedy such Material Default and any other reasonable expenses incurred by the
non-defaulting Party, together with interest at 2% above the Prime Rate from the
time the monies are expended until reimbursed.
ARTICLE 13
GENERAL
13.1 Notices
Any notice, statement or demand required to be given under this Agreement shall
be in writing, and either delivered by hand or transmitted by telecopy and, in
the latter case, subsequently confirmed by registered addressed, if to:
(a) Prime Air, at:
Prime Air Inc.
c/o 1724 - 1055 Dunsmuir Street
Vancouver, British Columbia
V7X 1C4
Attention: Mr. Blaine Hauq
Telecopier No. (604) 689 - 8003
(b) Pemberton, at:
The Village of Pemberton
P.O. Box 100
Pemberton, British Columbia
VON 2LO
Attention: Mayor
Telecopier No.: (604) 894 - 6526
or such other addresses as Prime Air or Pemberton shall designate in the manner
herein provided. Any such notice, statement or demand shall be deemed to have
been given and received on the day of delivery or transmission, as the case may
be.
13.2 Waivers
The failure of either Party to insist upon the strict performance of any of the
terms or provisions of this Agreement, or to exercise any option, right or
remedy herein contained, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option, right or remedy,
but the same shall continue and remain in full force and effect.
13.3 Amendments
This Agreement may not be modified or amended except with the written consent of
the parties hereto.
13.4 Registration
Pemberton covenants and agrees with Prime Air that Prime Air shall be entitled
to register the Terminal Lease, FBO Lease, FBO Option, Rights of Access,
Easements and all other rights herein granted against title to the Lands in the
appropriate Land Title Office and that in furtherance thereof it shall execute
and deliver this Agreement and such other agreements as may be reasonably
necessary or desirable in respect of such rights in registerable form under the
Land Title Office Act (British Columbia). For the purpose hereof, Prime Air
acknowledges and agrees that it shall, at its cost, prepare all documents,
plans, surveys and agreements as may be necessary to effect such registrations.
13.5 Further Assurances
The Parties shall execute and deliver from time to time all other appropriate
supplemental agreements and other instruments, and take any other actions
necessary to make this Agreement legally effective, binding and enforceable as
between them and as against third Persons and as may otherwise be reasonably
required to carry out the intent of this Agreement.
13.6 Collateral Representations and Agreements
This Agreement constitutes the entire agreement between the Parties relating to
this subject matter hereof, superceding all preceding and contemporaneous
agreements, understandings, negotiations, and discussions, whether oral or
written, of the Parties and there are no warranties, representations or other
agreements between the Parties in connection with the subject matter hereof
except as specifically set forth herein.
13.7 Binding Agreement
This Agreement shall be binding upon and enure to the benefit of each of the
Parties, including their respective successors and permitted assigns.
ARTICLE 14
EXECUTION
14.1 Execution
In witness whereof the Parties hereto have caused their corporate seals to be
affixed under the hands of their proper officers, duly authorized in that
behalf.
PRIME AIR
Authorized Signatory
Authorized Signatory
THE VILLAGE OF PEMBERTON
Authorized Signatory
Authorized Signatory
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 18th day of January, 1996
BETWEEN:
PRIME AIR INC.
105 - 1008 Beach Avenue
Vancouver, BC
V6E 1T7
(hereinafter called the "Company")
OF THE FIRST PART
- and -
ROYLE SMITH
8598-112 Street
Fort Saskatchewan, AB
T8L 3V8
(hereinafter called the "Employee")
OF THE SECOND PART
WHEREAS:
A. The Company has requested the Employee to accept the position of
General Manager of the Company;
B. The Employee has agreed to accept the position of General Manager of
the Company, upon the terms and conditions hereafter set out;
NOW THEREFORE this Agreement witnesseth that in consideration of the premises
and for other good and valuable consideration and the mutual covenants herein
contained, the Parties hereto hereby covenant and agree as follows:
1. INTERPRETATION
1.1
provided or unless the context otherwise requires:
(a) "Company" shall mean Prime Air Inc., or any successor company however
formed, whether as a result of merger, amalgamation, or other action,
and shall include any corporation associated with the Company in any,
manner whatsoever which may require or receive any benefits from the
Employee in the nature described in this Agreement;
(b) "this Agreement" means this Employment Agreement as from time to time
supplemented or amended by one or more agreements entered into
pursuant to the applicable provisions hereof;
(c) the words "herein", "hereof_ and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular paragraph, subparagraph or other subdivision;
1.2 The headings are for convenience only and do not form a part of
this Agreement nor are they intended to interpret, define or limit the scope,
extent or intent of this Agreement or any portion hereof.
1.3 A reference to a statute includes all regulations made pursuant
thereto, all amendments to such statute or regulations enforced from time to
time and any statute or regulation which supplements or supersedes such statute
or regulation.
1.4 This Agreement shall be governed by and construed in accordance
with the laws of the Province of British Columbia, and in accordance with the
rules and guidelines of the governing securities regulatory bodies.
1.5
Agreement, the same shall be construed as being the plural or feminine or neuter
when the context so requires.
1.6 All currency referred to herein is currency of United States of
America.
2. ENGAGEMENT AND TERM OF EMPLOYMENT
2.1
Company to serve during the Term of Employment (as hereinafter defined) upon and
subject to the terms and conditions hereinafter set out, and the Employee hereby
accepts such employment upon such terms and conditions.
2.2 The "Term of Employment" as used herein shall mean that period
beginning on January 1, 1996 and continuing to December 31, 2000 or until
this Agreement is terminated as defined in paragraph 4 hereof, renewable by
mutual consent of the Employee and the Company for successive five(5) year
periods.
2.3
Employee shall be appointed by the Company and shall act as General Manager of
the Company to carry out the policies and programs as established by agreement
between the Board of Directors of the Company and the Employee and the Employee
shall have all such powers and shall be entitled to exercise all such authority
as are customarily held and exercised by an General Manager of a company
carrying on similar types of businesses that are carried on by the Company.
2.4 The Employee shall at all times during the
Term of Employment, excepting during periods of vacation or when disabled by
sickness or incapacity, faithfully and diligently perform his duties and promote
and advance the business and affairs of the Company.
2.5
from providing management services and other services of any nature whatsoever
to any other person, firm or corporation during the Term of Employment.
3. REMUNERATION
3.1 Subject to adjustment under paragraph 3.2, during
the Term of Employment, the Company shall pay or cause to be paid
to the Employee for his services hereunder the sum of $100,000.00
US per annum (the "Compensation"), payable in equal monthly
instalments commencing January 31, 1996 or at the option of the
Employee, payment of the Compensation by receipt of restricted
shares of the Company at a price equal to fifty ($0.50) cents per
share (total 200,000 shares of the Company) to be paid and
delivered by the Company to the Employee quarterly on March 3 1,
June 30, September 30, and December 31, 1996. For the years
1997, 1998, 1999 and 2000, the share remuneration option shall
continue but the price per share shall be subject to agreement
between the Employee and the Company acting reasonably subject to
arbitration if there is failure to agree. The Employee hereby
exercises the share option payment of the Compensation for the
year 1996.
3.2 The Board of Directors of the Company shall
in the month of December in each year of the Term of Employment,
review the Employee's total remuneration and at its sole
discretion, the amount of his Compensation may be varied but the
amount must not be lower than $100,000.00 US.
3.3 In addition to the said Compensation, the Employee
shall receive from the Company during the Term of Employment:
(a) payment or reimbursement of all out-of-pocket expenses payable or
incurred by the Employee in connection with his duties under this
Agreement. Such payments or reimbursements shall be made immediately
upon submission by the Employee of vouchers, bills or receipts for
such expenses;
(b) all reasonable traveling expenses incurred by the Employee in the
course of his duties as General Manager of the Company;
(c) rights and benefits under any profit sharing, deferred compensation,
stock appreciation rights, stock option and other plans or programs
adopted by the Company comparable to rights and benefits under such
plans and programs as are customarily granted to persons holding the
position of Assistant General Manager, or performing duties similar to
those performed by the Employee in corporations of similar size that
carry on a similar type of business as that carried on by the Company.
3.4 If the Employee's ability to perform his duties hereunder has
been impaired by illness or mental or physical disability, which illness or
disability has been certified by a medical doctor's certificate, then the
Company shall, unless the Employee's employment hereunder has been terminated,
pay the Employee the following:
(a) the Compensation for a period of one (1) year from the start of such
interruption payable monthly after deducting therefrom an amount equal
to any sickness or disability payments received by the Employee under
the Company's sickness and disability plan;
(b) the continuation of all of the benefits provided for pursuant to the
provisions of paragraph 3.3 hereof for a minimum period of one (1)
year from the date of such interruption or such longer period as the
Company's sickness or disability plan will permit.
(c) the Compensation at the rate of 100% of that herein provided for the
remainder of the Term of Employment
4. TERMINATION
4.1 Notwithstanding the provisions of paragraph
3.4 hereof, the Employee's employment hereunder may be
terminated by the Company at any time upon ninety (90) days
written notice subject to paragraph 4.3.
4.2 The Employee may terminate his employment
with the Company at any time on ninety (90) days written notice.
4.3 In the event of the Company terminating the Employee's
employment pursuant to the provisions of paragraph 4.1 hereof, the Company shall
pay to the Employee the full balance of the Compensation to the end of the Term
of Employment including the continuation of all the benefits provided pursuant
to the provisions of paragraph 3.1 hereof to the end of the Term of Employment.
4.4 In the event of the Employee terminating his employment
hereunder pursuant to the provisions of paragraph 4.2 hereof, the Company shall
pay to or provide for the Employee within thirty (30) days of such termination
the Compensation and other remuneration to the date of termination.
4.5 If the Employee's employment hereunder shall terminate by reason
of the death of the Employee, then the Compensation and other remuneration
payable to him as herein provided and any benefit or welfare plan extended to
widows or to the Employee's estate shall continue to be payable to the
Employee's widow or estate, as the case may be, in respect of a period of six
(6) months after such termination.
4.6 If the Employee's employment hereunder is terminated by illness
or mental or physical disability, which illness or disability has been certified
by a medical doctor's certificate, then the Company shall pay to or provide to
the Employee the following:
(a) the Compensation for a period of one (1) year from the date of such
termination, payable monthly after deducting therefrom an amount equal
to any sickness or disability payments received by the Employee under
the Company's sickness and disability plan;
(b) the continuation of all the benefits provided pursuant to the
provisions of paragraph 3.3. hereof for a period of one (1) year from
the date of such termination or for such longer period as the
Company's sickness and disability plan will permit.
4.7 The Company shall not amalgamate, merge or
consolidate with any other person or corporation or undertake
with any person or corporation any corporate change including the
sale, transfer or other disposition of all of the assets or
substantially all the assets of the Company unless or until such
person or corporation shall have expressly assumed the Company's
obligations to the Employee hereunder, or the Company pays to the
Employee:
(a) within thirty (30) days of the closing of any such transaction,
payment of the full Compensation and other remuneration hereunder plus
consideration equal to five years compensation.
5. LEGAL COSTS
The Company must pay, on a solicitor and client basis, all legal costs
(including fees and disbursements) incurred by the Employee in connection with
the preparation and negotiation of this Agreement.
6. SEVERABILITY
If any provision of this Agreement is unenforceable or invalid for any reason
whatsoever, such provision shall be severable from the remainder of this
Agreement and the validity of the remainder shall continue in full force and
effect and be construed as if this Agreement has been executed without the
invalid or unenforceable provision.
7. WAIVER
No consent or waiver, express or implied, by any Party to or of any breach or
default by any other Party of any or all of its obligations -under this
Agreement will:
(a) be valid unless it is in writing and stated to be a consent or waiver
pursuant to this paragraph
(b) be relied upon as a consent or waiver to or of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver pursuant
to this paragraph in any other or subsequent instance.
8. NOTICE
All notices, requests, payments, demands or directors to the Parties hereto
shall be in writing and delivered or sent by registered mail postage paid, or by
telex, telecopy, telegram or cable addressed as follows:
If to the Employee:
To his address set out on Page 1 of this Agreement
If to the Company:
To its address set out on Page 1 of this Agreement
or to such other address as may be specified by one Party to the other in a
notice given in the manner herein provided. Any notice, request, demand or
direction given in such manner shall be deemed to have been received by the
Party to whom it is given:
(a) On the 7th business day following the mailing there, if sent by
registered mail;
(b) One the 2nd business day following delivery, if delivered; or
(c) On the business day following the transmittal thereof, if sent by
telex, telecopy, telegram or cable.
If normal mail service, telex service or telegraph service is interrupted by
strike, slow-down, force majeure or other cause, notice, request, demand or
direction sent by the impaired means of communication will not be deemed to be
received until actually received, and the Party sending the notice, request,
demand or direction shall utilize any other such services which have not been
interrupted or shall deliver such notice, request, demand or direction in order
to ensure prompt receipt thereof.
9. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the Parties and there
are no representations or warranties, express or implied, statutory or otherwise
or no agreements collateral hereto other than expressly set forth or referred to
herein.
10. ASSIGNMENT
This Agreement is a personal services agreement and may not be assigned by
either Party without the prior written consent of the other Party, PROVIDED
HOWEVER, that during the Term of Employment the Employee may, by written
assignment, assign all or any portion of the Compensation to which he is
entitled under this Agreement to any member of his immediate family or to any
corporation, partnership or other business entity controlled by the Employee.
11. BINDING EFFECT
This Agreement shall be binding upon and ensure to the benefit of the Parties
and their respective heirs, personal representatives, successors and assigns,
except as otherwise expressly provided herein.
12. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement or any
breach of this Agreement shall be finally settled by arbitration in accordance
with the provisions of the Arbitration Act of British Columbia.
13. INDEMNITY
The Company shall at all times indemnify and save harmless the Employee and his
heirs, successors and legal representatives, from and against all costs, legal
and other fees (on a solicitor and client full indemnity basis), charges and
expenses as they occur or are agreed, including any amount paid to settle an
action or satisfy a judgment, reasonably incurred by him in respect of any
civil, criminal or administrative action or proceeding to which he is made a
party by reason of being or having been a General Manager of the Company, if he
acted honestly and in good faith with a view to the best interests of the
Company, and other-wise in accordance with the By-laws of the Company.
14. GENERAL PROVISIONS
14.1 The Parties hereto will, from time to time, at the request of
the other, execute and deliver all such other and additional instruments,
notices, releases, agreements, undertakings or other required documents and
shall do all such other acts and things as may be reasonably necessary to more
fully assure the carrying out of the intent and purpose of the terms of this
Agreement.
14.2 This Agreement may be amended by mutual
consent of both Parties hereto and any such amendment to be effective must be
rendered to writing and executed by the Parties.
14.3 In the event that any Party is delayed or
hindered in the performance of its obligations hereunder by
force majeure, this Agreement shall remain in suspense until
the cause thereof has ceased to delay or hinder performance.
For the purposes of this Agreement, but not by way of
limitation, force majeure shall mean any cause beyond the
reasonable control of the Party liable to perform, and shall
include strikes, lockouts, civil commotion, riot, war,
threat of or preparation for war, fire, explosion, sabotage,
storm, floor, earthquake or other natural disaster.
15 EXECUTION IN COUNTERPART
This Agreement may be executed in several parts in the same
form and such parts as so executed shall together form one
original agreement and such parts if more than one shall be
read together and construed as if all the signing Parties
hereto had executed one copy of this Agreement.
IN WITNESS WHEREOF the Parties hereto have executed this
Agreement as of the day and year first above written.
THE CORPORATE SEAL OF
PRINM AIR INC. was hereunto
affixed in the presence of:
Per:
Authorized Signatory c/s
Per:
Authorized Signatory
The Signature of Royle Smith
the Employee was hereby
witnessed by:
ROYLE SMITH
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 19th day of January, 1996
BETWEEN: PRIME AIR, INC.
105-1008 Beach Avenue
Vancouver, BC
V6E IT7
(hereinafter called the _Company_)
OF THE FIRST PART
-and-
BLAINE HAUG
105-1008 Beach Avenue
Vancouver, BC
V6E 1T7
(hereinafter called the _employee_)
OF THE SECOND PART
WHEREAS:
A. The Company has requested the Employee to accept the position of
Assistant General Manager of the Company;
B. The Employee has agreed to accept the position of Assistant General
Manager of the Company, upon the terms and conditions hereafter set
out;
NOW THEREFORE this Agreement witnesseth that in consideration of
the premises and for other good and valuable consideration and
the mutual covenants herein contained, the Parties hereto hereby
covenant and agree as follows:
1. INTERPRETATION
1.1 For all purpose of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) _Company_ shall mean Prime Air Inc., or any
successor company however formed whether as a result of
merger, amalgamation or any other action and shall include
any corporation associated with the Company in any manner
whatsoever which may require or receive any benefits from
the Employee in the nature described in this Agreement;
(b) _this Agreement_ means this Employment
Agreement as from time to time supplemented or amended by
one or more agreements entered into pursuant to the
applicable provisions hereof;
(c) the words _herein_, _hereof_ and _hereunder_
and other words of similar import refer to this Agreement as
a whole and not to any particular paragraph, subparagraph or
other subdivision;
1.2 The headings are for convenience only and do not
form a part of this Agreement nor are they intended to interpret,
define or limit the scope, extent or intent of this Agreement or
any portion hereof.
1.3 A reference to a statute includes all regulations
made pursuant thereto, all amendments to such statute or
regulations enforced from time to time and any statute or
regulation which supplements or supersedes such statute or
regulation.
1.4 This Agreement shall be governed by and construed
in accordance with the laws of the Province of British Columbia,
and in accordance with the rules and guidelines of the governing
securities regulatory bodies.
1.5 Wherever the singular or masculine are used
throughout this Agreement, the same shall be construed as being
the plural or feminine or neuter when the context so requires.
1.6 All currency referred to herein is currency of
United States of America.
2. ENGAGEMENT AND TERM OF EMPLOYMENT
2.1 The Company hereby agrees to employ the Employee
as Assistant General Manager of the Company to serve during the
Term of Employment (as hereinafter defined) upon and subject to
the terms and conditions hereinafter set out, and the Employee
hereby accepts such employment upon such terms and conditions.
2.2 The "Term of Employment" as used herein shall
mean that period beginning on January 1, 1996 and continuing to
December 31, 2000 or until this Agreement is terminated as
defined in paragraph 4 hereof, renewable by mutual consent of the
Employee and the Company for successive five (5) year periods.
2.3 Subject as only herein provided, during the Term of
Employment, the Employee shall be appointed by the Company and
shall act as Assistant General Manager of the Company to carry
out the policies and programs as established by agreement between
the Board of Directors of the Company and the Employee and the
Employee shall have all such powers and shall be entitled to
exercise all such authority as are customarily held and exercised
by an Assistant General Manager of a company carrying on similar
types of businesses that are carried on by the Company.
2.4 The Employee shall at all times during the Term of
Employment, excepting during periods of vacation or when disabled
by sickness or incapacity, faithfully and diligently perform his
duties and promote and advance the business and affairs of the
Company.
2.5 Nothing in this Agreement shall be construed as
preventing the Employee from providing management services and
other services of any nature whatsoever to any other person, firm
or corporation during the Term of Employment.
3. REMUNERATION
3.1 Subject to adjustment under paragraph 3.2, during
the Term of Employment, the Company shall pay or cause to be paid
to the Employee for his services hereunder the sum of $100,000.00
US per annum (the "Compensation"), payable in equal monthly
instalments commencing January 31, 1996 or at the option of the
Employee, payment of the Compensation by receipt of restricted
shares of the Company at a price equal to fifty ($0.50) cents per
share (total 200,000 shares of the Company) to be paid and
delivered by the Company to the Employee quarterly on March 31,
June 30, September 30, and December 31, 1996. For the years
1997, 1998, 1999 and 2000, the share remuneration option shall
continue but the price per share shall be subject to agreement
between the Employee and the Company acting reasonably subject to
arbitration if there is failure to agree. The Employee hereby
exercises the share option payment of the Compensation for the
year 1996.
3.2 The Board of Directors of the Company shall in the
month of December in each year of the Term of Employment, review
the Employee's total remuneration and at its sole discretion, the
amount of his Compensation may be varied but the amount must not
be lower than $100,000.00 US.
3.3 In addition to the said Compensation, the Employee
shall receive from the Company during the Term of Employment:
(a) payment or reimbursement of all out-of-pocket expenses payable or
incurred by the Employee in connection with his duties under this
Agreement. Such payments or reimbursements shall be made immediately
upon submission by the Employee of vouchers, bills or receipts for
such expenses;
(b) all reasonable traveling expenses incurred by the Employee in the
course of his duties as Assistant General Manager of the Company;
(c) rights and benefits under any profit sharing, deferred compensation,
stock appreciation rights, stock option and other plans or programs
adopted by the Company comparable to rights and benefits under such
plans and programs as are customarily granted to persons holding the
position of Assistant General Manager, or performing duties similar to
those performed by the Employee in corporations of similar size that
carry on a similar type of business as that carried on by the Company.
3.4 If the Employee's ability to perform his duties hereunder has
been impaired by illness or mental or physical disability, which illness or
disability has been certified by a medical doctor's certificate, then the
Company shall, unless the Employee's employment hereunder has been terminated,
pay the Employee the following:
(a) the Compensation for a period of one (1) year from the start of such
interruption payable monthly after deducting therefrom an amount equal
to any sickness or disability payments received by the Employee under
the Company's sickness and disability plan;
(b) the continuation of all of the benefits provided for pursuant to the
provisions of paragraph 3.3 hereof for a minimum period of one (1)
year from the date of such interruption or such longer period as the
Company's sickness or disability plan will permit.
4. TERMINATION
4.1 Notwithstanding the provisions of paragraph 3.4
hereof, the Employee's employment hereunder may be terminated by
the Company at any time upon ninety (90) days written notice
subject to paragraph 4.3.
4.2 The Employee may terminate his employment with the
Company at any time on ninety (90) days written notice.
4.3 In the event of the Company terminating the Employee's
employment pursuant to the provisions of paragraph 4.1 hereof, the Company shall
pay to the Employee the full balance of the Compensation to the end of the Term
of Employment including the continuation of all the benefits provided pursuant
to the provisions of paragraph 3.1 hereof to the end of the Term of Employment.
4.4 In the event of the Employee terminating his employment
hereunder pursuant to the provisions of paragraph 4.2 hereof, the Company shall
pay to or provide for the Employee within thirty (30) days of such termination
the Compensation and other remuneration to the date of termination.
4.5 If the Employee's employment hereunder shall terminate by reason
of the death of the Employee, then the Compensation and other remuneration
payable to him as herein provided and any benefit or welfare plan extended to
widows or to the Employee's estate shall continue to be payable to the
Employee's widow or estate, as the case may be, in respect of a period of six
(6) months after such termination.
4.6 If the Employee's employment hereunder is terminated by illness
or mental or physical disability, which illness or disability has been certified
by a medical doctor's certificate, then the Company shall pay to or provide to
the Employee the following:
(a) the Compensation for a period of one (1) year from the date of such
termination, payable monthly after deducting therefrom an amount equal
to any sickness or disability payments received by the Employee under
the Company's sickness and disability plan;
(b) the continuation of all the benefits provided pursuant to the
provisions of paragraph 3.3. hereof for a period of one (1) year from
the date of such termination or for such longer period as the
Company's sickness and disability plan will permit.
4.7 The Company shall not amalgamate, merge or
consolidate with any other person or corporation or undertake
with any person or corporation any corporate change including the
sale, transfer or other disposition of all the shares or assets
or substantially all the shares or assets of the Company unless
or until such person or corporation shall have expressly assumed
the Company's obligations to the Employee hereunder:
(a) for a Term of Employment which shall be deemed to have been renewed
for a period of five (5) years from the closing date of such
transaction; or
(b) the Company pays to the Employee within thirty (30) days of the
closing of any such transaction, payment of the greater of the full
Compensation and other remuneration hereunder for a full term of five
(5) years; or Five Hundred Thousand ($500,000.OO US) Dollars.
5. LEGAL COSTS
The Company must pay, on a solicitor and client basis, all legal costs
(including fees and disbursements) incurred by the Employee in connection with
the preparation and negotiation of this Agreement.
6. SEVERABILITY
If any provision of this Agreement is unenforceable or invalid for any reason
whatsoever, such provision shall be severable from the remainder of this
Agreement and the validity of the remainder shall continue in full force and
effect and be construed as if this Agreement has been executed without the
invalid or unenforceable provision.
7. WAIVER
No consent or waiver, express or implied, by any Party to or of any breach or
default by any other Party of any or all of its obligations -under this
Agreement will:
(a) be valid unless it is in writing and stated to be a consent or waiver
pursuant to this paragraph
(b) be relied upon as a consent or waiver to or of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver pursuant
to this paragraph in any other or subsequent instance.
8. NOTICE
All notices, requests, payments, demands or directors to the Parties hereto
shall be in writing and delivered or sent by registered mail postage paid, or by
telex, telecopy, telegram or cable addressed as follows:
If to the Employee:
To his address set out on Page 1 of this Agreement
If to the Company:
To its address set out on Page 1 of this Agreement
or to such other address as may be specified by one Party to the other in a
notice given in the manner herein provided. Any notice, request, demand or
direction given in such manner shall be deemed to have been received by the
Party to whom it is given:
(a) On the 7th business day following the mailing there, if sent by
registered mail;
(b) One the 2nd business day following delivery, if delivered; or
(c) On the business day following the transmittal thereof, if sent by
telex, telecopy, telegram or cable.
If normal mail service, telex service or telegraph service is interrupted by
strike, slow-down, force majeure or other cause, notice, request, demand or
direction sent by the impaired means of communication will not be deemed to be
received until actually received, and the Party sending the notice, request,
demand or direction shall utilize any other such services which have not been
interrupted or shall deliver such notice, request, demand or direction in order
to ensure prompt receipt thereof.
9. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the Parties and there
are no representations or warranties, express or implied, statutory or otherwise
or no agreements collateral hereto other than expressly set forth or referred to
herein.
10. ASSIGNMENT
This Agreement is a personal services agreement and may not be assigned by
either Party without the prior written consent of the other Party, PROVIDED
HOWEVER, that during the Term of Employment the Employee may, by written
assignment, assign all or any portion of the Compensation to which he is
entitled under this Agreement to any member of his immediate family or to any
corporation, partnership or other business entity controlled by the Employee.
11. BINDING EFFECT
This Agreement shall be binding upon and ensure to the benefit of the Parties
and their respective heirs, personal representatives, successors and assigns,
except as otherwise expressly provided herein.
12. ARBITRATION
Any controversy or claim arising out of or relating to this Agreement or any
breach of this Agreement shall be finally settled by arbitration in accordance
with the provisions of the Arbitration Act of British Columbia.
13. INDEMNITY
The Company shall at all times indemnify and save harmless the Employee and his
heirs, successors and legal representatives, from and against all costs, legal
and other fees (on a solicitor and client full indemnity basis), charges and
expenses as they occur or are agreed, including any amount paid to settle an
action or satisfy a judgment, reasonably incurred by him in respect of any
civil, criminal or administrative action or proceeding to which he is made a
party by reason of being or having been an Assistant General Manager of the
Company, if he acted honestly and in good faith with a view to the best
interests of the Company, and other-wise in accordance with the By-laws of the
Company.
14. GENERAL PROVISIONS
14.1 The Parties hereto will, from time to time, at the request of
the other, execute and deliver all such other and additional instruments,
notices, releases, agreements, undertakings or other required documents and
shall do all such other acts and things as may be reasonably necessary to more
fully assure the carrying out of the intent and purpose of the terms of this
Agreement.
14.2 This Agreement may be amended by mutual
consent of both Parties hereto and any such amendment to be effective must be
rendered to writing and executed by the Parties.
14.3 In the event that any Party is delayed or
hindered in the performance of its obligations hereunder by
force majeure, this Agreement shall remain in suspense until
the cause thereof has ceased to delay or hinder performance.
For the purposes of this Agreement, but not by way of
limitation, force majeure shall mean any cause beyond the
reasonable control of the Party liable to perform, and shall
include strikes, lockouts, civil commotion, riot, war,
threat of or preparation for war, fire, explosion, sabotage,
storm, floor, earthquake or other natural disaster.
15 EXECUTION IN COUNTERPART
This Agreement may be executed in several parts in the same
form and such parts as so executed shall together form one
original agreement and such parts if more than one shall be
read together and construed as if all the signing Parties
hereto had executed one copy of this Agreement.
IN WITNESS WHEREOF the Parties hereto have executed this
Agreement as of the day and year first above written.
THE CORPORATE SEAL OF
PRINM AIR INC. was hereunto
affixed in the presence of:
Per:
Authorized Signatory c/s
Per:
Authorized Signatory
The Signature of Blaine Haug
the Employee was hereby
witnessed by:
BLAINE HAUG
THE CORPORATION OF THE VILLAGE OF PEMBERTON
-MINUTES-
Minutes of the Special Meeting of Council for the Village of
Pemberton, held on Thursday, October 26, 1995 at 1:00 pm in the
Committee Room. This was the 800th meeting.
IN ATTENDANCE Mayor John Steward
Councillor Elinor Warner
Councillor Cathy McLeod
STAFF IN ATTENDANCE Bryan Kirk, Clerk-Treasurer
1) Call to Order Mayor Steward called the meeting to order at 1:00
pm
2) Treaty Negotiations
Warner/McLeod
THAT Councillor Cathy McLeod be appointed as
Village representative regarding treaty
negotiations
CARRIED
3) Prime Air Warner/McLeod
THAT the Municipal Council agree to extend the
completion date of the Terminal Building in the
existing lease between Prime Air Inc. and the
Corporation of the Village of Pemberton, to June
1, 1996.
AND THAT no further extension beyond the June 1,
1996 date will be considered by the Municipal
Council. If not completed at that time the
Terminal Building will become the property of the
Municipality.
AND FURTHER THAT this extension is subject to
Clause 2.1 _Terminal Opening Date_ of the
agreement being amended to _October 31, 1994"
CARRIED
4) Santa Fe Station Restaurant
THAT the undated correspondence from Robert Sequin
on behalf of the Santa Fe Station Restaurant
regarding their application for a Class _B_ liquor
license be tabled pending further information.
CARRIED
SILVERTHORN INVESTMENTS, LTD
Corporate Consultancy Firm
18241 Timber Trails Drive
Marysville, Ohio 43040
(513)642-7305 Phone & Fax
This Agreement is made as of June 10, 1996, by and between Prime Air,
Inc. (the _Company_) and Silverthorn Investments, Ltd. (the
_consultant_)
The parties hereto agree as follows:
1. Consulting Services. The Company hereby retains Consultant and
Consultant hereby agrees to perform consulting services under the
terms and conditions contained in this Agreement. This Agreement
shall commence on the date hereof and shall remain in effect through
June 1st, 2000 unless earlier terminated pursuant to the provisions
hereof.
2. Extent of Consulting; Consulting Fees.
(a) Consultant shall be available to perform a maximum of sixty
(60) business days of not less than eight hours each of service to the
Company per year (480 hours/year) and shall receive therefor the sum
of $48,000 dollars ($100.00) per hour for each hour of service
rendered for the duration of this Agreement. The exact hours of
service rendered by the Consultant shall be submitted to the Company
on a monthly basis, with a description of the services rendered. The
types of services to be performed shall be agreed upon between the
Company and Consultant, provided, however that Consultant agrees to
remain available to consult with the Company on at least five (5)
business days each month during the entire term hereof unless
Consultant obtains prior written consent from the Company to
Consultant's non-availability during any month or months during the
term hereof.
It is understood and agreed that the primary services to be performed
by Consultant hereunder during said sixty (60) days are to provide
such consulting and assistance as may be necessary to assist in
facilitating the full operation of the Company's business. Services
performed by Consultant on weekends, holidays, or in excess of 98)
hours on any business day shall count toward the sixty (60) days of
service per year required to be performed by Consultant hereunder.
(b) Consultant agrees to remain available to perform services for
more than the sixty (60) days per year contemplated by this Agreement,
in which event Consultant shall be paid one hundred fifty dollars
($150.00)per hour for each additional hour in excess of sixty (60)
days per calendar year on which Consultant renders services hereunder.
In order to claim any compensation hereunder beyond forty eight
thousand dollars ($48,000) per year, Consultant shall notify the
Company in writing when said sixty (60) days per year of consulting
services have been fulfilled, and Consultant shall specify in such
notice that additional days of consulting shall be charged at the rate
of one hundred fifty dollars ($150.00) per hour. In no event shall
Consultant be required to render consulting services for more than
eighty (80) days per year. Except with the prior written consent of
the Company, no services performed by Consultant on weekends,
holidays, or in excess of (8) hours on any business day shall count as
additional days of consulting as described in this #2(b).
3. Manner of Payment. Consultant shall be paid the sum of one
hundred ($100.00) per hour for each hour of service rendered during
each calendar month and payment shall be considered due five business
days following the last day of each month. Said payments to be made
following each month of consulting, provided, however, that for any
period during which Consultant exceeds the sixty (60) days of
consulting services specified in #2 hereof, the payment with respect
to the month immediately following said month shall be billed at a
rate of one hundred fifty ($150.00) per hour times the number of hours
of service beyond sixty (60) days which Consultant has rendered during
that year. At the option of the Company, 75% of the payment due may
be made to the Consultant in the form of restricted common stock of
the Company. The conversion ratio for each dollar owed to restricted
shares shall be based on an average of the last three months closing
bid prices for the common shares of the Company divided by the total
dollar amount due hereunder. For example, if the Consultant provides
40 hours of service in a month the total due would be four thousand
dollars ($4,000). If the average closing bid prices for the preceding
three (3) moths had averaged one dollar ($1.00) the total number of
shares to be issued would be 3000 restricted common shares for said
month, plus one thousand dollars ($1,000.00) cash consideration.
4. Monthly Statements. By the third day of every month during the
term of this Agreement, Consultant shall submit to the Company a
statement showing the number of hours of service rendered within the
immediately preceding month, giving the year-to-date total of hours on
which Consultant has performed services hereunder and giving a
description of the services provided in the immediately preceding
month.
5. Location of Services; Reimbursement. Consultant's services
hereunder shall be performed in locations to be designated by the
Consultant within the City of Marysville, Ohio, provided, however,
that Consultant may be required to perform services outside of said
area for up to four (4) days per month. In each instance in which
Consultant shall be required to perform services outside the City of
Marysville, Consultant shall be entitled to reasonable reimbursement
for travel expenses, meals and lodging upon delivery to the Company of
receipts for same. The Company shall provide Consultant with
reasonable, necessary and appropriate administrative support at
locations to be designated by the Company.
6. Independent Contractor Status. Consultant acknowledges that
he/she is solely an independent contractor and consultant, is not an
employee of the Company, and is not entitled to any employment rights
or benefits from the Company. Because of Consultant's independent
contractor status, no tax withholding shall be made from the payments
contemplated by #3 hereof provided that Consultant furnishes evidence
to the Company that he/she is making all required tax deposits and
payments and provided, further, that notwithstanding such evidence the
Company may make such withholding from the payments specified in #3
hereof if it shall be so instructed by the Internal Revenue Service or
state tax authorities or if the Company shall deem such withholding to
be required.
7. Confidentiality. Consultant recognizes and acknowledges that the
Company, in the conduct of its business, generates and comes into
possession of confidential information, including but not limited to
information furnished by the Company's clients concerning their
business affairs, finances, properties, methods of operation and other
information. Consultant recognizes and acknowledges that the business
of and goodwill toward the Company depend, in part, upon the Company
keeping such services and information confidential, and that
unauthorized disclosure of said information would irreparably damage
the Company. All such information, including information concerning
the clients of the Company and services rendered by the Company to
such clients, is hereinafter collectively referred to as Confidential
Information.
8. Nondisclosure. Consultant agrees that, except as directed by the
Company, Consultant shall not at any time, during or after the term of
this Agreement, use or disclose any Confidential Information or any
other information designated as confidential or proprietary by the
Company to any person whosoever, or, except as authorized in writing
by the Company, permit any person whosoever, or, except as authorized
in writing by the Company, permit any person whosoever to examine
and/or take copies of any reports or any documents prepared by him/her
or that come into his/her possession or under his/her control by
reason of his/her services hereunder or otherwise.
9. Injunctive Relief. Consultant acknowledges that breach of his/her
obligations under either ##7 or 8 hereof will give rise to irreparable
injury to the Company, which injury will be inadequately compensable
in money damages. Accordingly, the Company may seek and obtain
injunctive relief against the breach or threatened breach of the
foregoing undertakings, in addition to any other legal remedies that
may be available. Consultant further acknowledges and agrees that in
the event of termination of this Agreement because of violations of
##7 or 8 hereof, his/her experience and capabilities are such that
he/she can obtain a consulting agreement or employment in business
activities that are of a different or noncompeting nature with his/her
activities as a consultant for the Company, and that the enforcement
of a remedy hereunder by way of injunction will not prevent him/her
from earning a reasonable livelihood. Consultant further acknowledges
and agrees that the covenants contained herein are necessary for the
protection of the Company's legitimate business interests and are
reasonable in scope and content.
10. Copies. Consultant shall cause any copies or reproductions of
the Confidential Information made by Consultant to bear the copyright
or proprietary notices contained in the original, or such legends as
the Company may require.
11. Return on Termination. Consultant shall, upon completion of the
tasks assigned to Consultant, upon termination of Consultant's
engagement hereunder, or upon demand, whichever is earliest, return to
the Company any and all Confidential Information, or information or
data related directly or indirectly thereto, including any copies or
reproductions thereof, if Consultant's possession or control.
12. Unauthorized Use. Consultant shall promptly advise Company if
Consultant learns of any unauthorized use or disclosure of
Confidential Information, and Consultant shall provide to Company
complete details regarding same.
13. Work Product. The Company shall own all rights to any and all
work, processes, studies, flow charts, diagrams, devices and programs,
inventions, original works of authorship, know-how, and other tangible
or intangible material of any nature developed by Consultant or as a
result of any of his/her services hereunder during the term hereof,
whether or not performed during hours of service that would entitle
Consultant to compensation hereunder, which are performed at the
request or discretion of the Company.
16. Termination. The company may terminate this Agreement fortwith
and without further obligations hereunder in the event Consultant
breaches any of his/her obligations under ##7 or 8 hereunder. Any
such termination shall not affect any other rights to injunctive
relief and/or damages that the Company may have by reason of such
breach. No such termination before the expiration of the term hereof
shall affect Consultant's continuing obligations under ## 7, 8, 11, 12
and 13 hereof relating, respectively to Confidentiality,
Nondisclosure, Return on Termination, Unauthorized Use, and Work
Product.
17. Publicity. Consultant shall not use and shall keep its employees
and agents from using the name (company) in any sales or marketing
publication or advertisement without the prior written consent of the
Company.
18. Governing Law; Complete Agreement. This Agreement shall be
governed by the laws of the State of Ohio. It constitutes the
complete and conclusive agreement between the parties, which
supersedes all proposals, oral or written, and all other
communications between the parties relating to the subject of this
Agreement.
19. Severability. If any of the provisions of this Agreement are
held to be invalid, illegal, or unenforceable, the validity, legality,
and enforeceability of the remaining provisions shall not in any way
be affected or impaired thereby.
20. Modification. This Agreement may only be changed in writing,
executed on behalf of Consultant and the Company.
21. Notices. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have
been duly given on the date of service if personally served on the
party to whom notice is to be given, or on the third day after mailing
if mailed to the party to whom notices is to be given, by first class
mail or registered or certified mail, postage prepaid, and properly
addressed as follows:
To Consultant at: Silverthorn Investments, Ltd.
c/o Matthew L. Smith
18241 Timber Trails Dr.
Marysville, Ohio 43040
(513)642-7305 Phone
(513)642-0943 Fax
(888)586-1834 Pager
To Company at: Prime Air, Inc.
P.O. Box 1078
Whistler, B.C. VON 1B0
(800)685-7722 Phone
(604)685-7870 Fax
(604)834-5534 Blaine
Attention: Blaine Haug, C.E.O.
or to such other address as the person to whom such notice is
addressed shall have last designated by notice to the others.
22. Subject Headings. The headings in this Agreement are included
for purposes of convenience only and shall not affect the construction
or interpretation of any of its provisions.
23. Attorneys' Fees. If any legal action or arbitration or other
proceeding is brought for the enforcement of the Agreement or because
of an alleged dispute, breach, default, or misrepresentation in
connection with any of the provisions of the Agreement, the successful
or prevailing party shall be entitled to recover reasonable attorneys'
fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it or they may be entitled.
24. Successors and Assigns. This Agreement is binding upon and shall
inure to the benefit of the parties and their respective successors
and assigns. As used herein, the term Company shall be deemed to
refer to (company) and any successor or assignee thereof.
This Agreement is executed as of the first date above written.
Silverthorn Investments, Ltd. Prime Air, Inc.
By: By:
Matthew L. Smith, President Blaine Haug, Director & CEO
By:
Royle Smith, President
ACCOUNTANTS' CONSENT
We hereby consent to the use of our audit report of Prime Air,
Inc. (Delaware) dated March 14, 1997 for the years ended December
31, 1996 and 1995 in the Form S-4 Registration Statement for
Prime Air, Inc. (Delaware).
We also consent to the use of our auditing firm as experts in the
S-4 Registration Statement for Prime Air, Inc. (Delaware).
May 31, 1997 Rutherford & Company
Richmond, Canada CHARTERED ACCOUNTANTS
ACCOUNTANTS' CONSENT
We hereby consent to the use of our audit report on Prime Air, Inc.
(Nevada) dated April 23, 1997 for the year ended December 31, 1996
in the form S-4 Registration Statement for Prime Air, Inc.
(Nevada).
We also consent to the use of our auditing firm as experts in the
S-4 Registration Statement for Prime Air, Inc. (Nevada).
Orton & Company
May 20, 1997
Salt Lake City, Utah
