<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
FORM 8-KSB
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 11, 1997
ETC TRANSACTION CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Alberta, Canada
(State or Other Jurisdiction of Incorporation)
333-07069 75-2578619
(Commission File Number) (I.R.S. Employer Identification Number)
5025 Arapaho Road, Suite 515, Dallas, Texas 75248
(Address of Principal Executive Offices) (Zip Code)
(972) 980-0900
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
================================================================================
<PAGE> 2
INFORMATION INCLUDED IN REPORT ON FORM 8-KSB
ITEM 1. CHANGE IN CONTROL OF REGISTRANT.
On May 1, 1996, ETC Transaction Corporation, f/k/a Solo Petroleums
Ltd. (the "Registrant"), entered into that certain Agreement and Plan of Merger
(the "Merger Agreement") with Electronic Transmission Corporation, a Texas
corporation ("ETC-Texas"), whereby ETC-Texas would be merged (the "Merger")
with and into the Registrant, with the Registrant being the surviving
corporation.The Merger provides that each share of issued and outstanding
common stock of ETC-Texas, no par value (the "ETC-Texas Common Stock"), shall
be converted into the right to receive one and one-fourth shares of common
stock, $0.001 par value (the "Common Stock"), of the Registrant. As of
February 11, 1997, the Registrant had 2,007,145 issued and outstanding shares
of Common Stock, while ETC-Texas had issued and outstanding 7,153,601 shares of
ETC-Texas Common Stock. As a result of the Merger, the shareholders of
ETC-Texas received 8,942,001 shares of Common Stock in exchange for all of the
issued and outstanding shares of ETC-Texas Common Stock. As a result of the
Merger and upon completion of the exchange of securities, the former
shareholders of ETC-Texas will beneficially own and control approximately 82%
of the issued and outstanding shares of the Registrant's Common Stock. For
additional information regarding the Merger Agreement and the Merger, please
see "Item 2. Acquisition and Disposition of Assets" below.
L. Cade Havard, the Chairman, President and Chief Executive Officer of
the Registrant, beneficially owns and controls 3,052,868 shares of Common Stock
or 27.9% of the issued and outstanding Common Stock of the Registrant and is
therefor the control person of the Registrant. The following table provides
certain information based on the outstanding securities of the Registrant as of
February 11, 1997, and gives effect to the Merger with respect to each director
and each beneficial owner of more than 5% of the Common Stock and all corporate
officers and directors of the Registrant as a group.
<TABLE>
<CAPTION>
Amount of Percent of
Name and Address Beneficial Outstanding
of Beneficial Owner(1)(2) Ownership Common Stock
------------------------------------------------------------- --------------------- ------------
<S> <C> <C>
L. Cade Havard(3)(4) 3,052,868(4)(5) 27.88
Sterling National Corporation(5) 243,868 2.23
Anneal Osbon Havard(6) 500,000 4.57
Elaine Boze(3)(7) 165,465 1.51
Louann C. Smith(8) 32,034 *
Ann C. McDearmon(9) 33,334 *
Timothy P. Powell(3)(10) 375,000 3.42
David O. Hannah(3) 910,678 8.32
Michael Eckstein(3) -0- -0-
Rick L. Snyder(3) -0- -0-
Edward Bollinger(11)(12) 13,000 *
Katherine L. MacDonald(11)(12) 10,000 *
All executive officers and directors as a group (10 persons as 4,592,379 41.94
to the Registrant)
</TABLE>
______________________________
* Indicates less than 1%.
- 2 -
<PAGE> 3
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days following the date of this Current
Report upon the exercise of options or warrants. Each beneficial owner's
percentage ownership is determined by assuming that options or warrants
that are held by such person (but not those held by any other person) and
which are exercisable within 60 days from the date of this Current Report
have been exercised. Unless otherwise noted, the Registrant believes
that all persons named in the table have sole voting and investment power
with respect to all common shares beneficially owned by them.
(2) Unless otherwise indicated, the address of each beneficial owner
identified is: c/o the Registrant, 5025 Arapaho Road, Suite 515, Dallas,
Texas 75248.
(3) Director of the Registrant.
(4) Includes (i) options to purchase 100,000 shares of Common Stock at an
exercise price of $0.001 per share upon the effectiveness of the Merger;
(ii) 500,000 shares of Common Stock issued in the name of Mr. Havard's
minor children over which Mr. Havard exercises sole voting and investment
power; and (iii) 931,710 shares of Common Stock issued in the name of
Sterling National Corporation ("Sterling"), of which Mr. Havard is the
sole shareholder.
(5) Includes 243,668 shares of Common Stock issued in the name of Sterling,
but which are held for the benefit of certain former employees of
Sterling who are presently employed by the Registrant pursuant to options
(the "Sterling Options") to purchase such shares at an exercise price of
$0.001 per share over various vesting periods. The Sterling Options have
no expiration date, but are cancelable upon the termination of the holder
as an employee of the Registrant. Mr. Havard has been designated trustee
of the shares underlying the Sterling Options pursuant to a Voting Trust
Agreement, dated January 26, 1995, between Sterling and the holders of
the Sterling Options and, therefore, has sole voting and investment
control over said shares until such time as the Sterling Options are
exercised. It is anticipated that within 90 days of the date of this
Current Report, Mr. Havard will resign as trustee of the Sterling Options
and that an unaffiliated person or entity will be retained as trustee
under the terms of the Voting Trust Agreement. Any shares subject to the
Sterling Options which are not exercised will revert to Sterling.
(6) Anneal Havard is the wife of L. Cade Havard. Ms. Havard exercises sole
voting and investment control over the 500,000 shares of Common Stock of
which she is the record holder.
(7) Does not include options to purchase 83,334 shares of Common Stock under
Sterling Options granted to Ms. Boze which vest on March 1, 1998.
(8) Does not include options to purchase 16,667 shares of Common Stock under
Sterling Options granted to Ms. Smith which vest on March 1, 1998.
(9) Does not include options to purchase 16,667 shares of Common Stock under
Sterling Options granted to Ms. McDearmon which vest on March 1, 1998.
(10) Includes Sterling Options to purchase 375,000 shares of Common Stock at
$0.001 per share which became exercisable on March 1, 1996 and May 10,
1996 and which will become exercisable on March 31, 1997, all options
expire upon Mr. Powell's termination as an employee of the Company.
Does not include Sterling Options to purchase 125,000 shares of Common
Stock which vest on March 1, 1998.
(11) Former Directors of the Registrant. See "Item 5. Other Events."
(12) Includes options to purchase 10,000 shares of Common Stock at an exercise
price of $1.50 per share, which options expire on June 15, 1997.
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS
On May 1, 1996, the Registrant entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Electronic Transmission Corporation, a
Texas corporation ("ETC-Texas") pursuant to which ETC-Texas would be merged
with and into the Registrant. As a result of the merger transaction (the
"Merger"), each issued and outstanding share of common stock, no par value, of
ETC-Texas (the "ETC-Texas Common Stock") would be exchanged for one and
one-fourth shares of the Registrant's common stock, par value $0.001 per share
(the "Common Stock"). The Merger was conditioned upon the continuance and
domestication of the Registrant into the State of Delaware (the "Continuance")
and the ratification of the terms and conditions of the Merger Agreement by the
shareholders of the Registrant and ETC-Texas, respectively. ETC-Texas is in
the business of providing an electronic medical claims-flow process whereby
paper medical claims are electronically scanned and transposed into images
formatted for the claims
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<PAGE> 4
payor for adjudication and payment. ETC-Texas provides automated processing
services of health care claims for (i) self-insured companies that administer
their own health care plans and pay their own medical claims, (ii) third-party
administrators that administer health care plans and pay medical claims for
self-insured companies, (iii) preferred provider organizations, and (iv) other
managed care organizations that offer discounts for medical claims and reprice
those claims to reflect discounts offered by providers to payors.
At a special meeting of the shareholders of ETC-Texas held on January 31,
1997, the shareholders of ETC-Texas ratified and approved the terms and
conditions of the Merger Agreement and authorized the Board of Directors of
ETC- Texas to effect the Merger. At the Registrant's annual meeting held on
February 11, 1997, the shareholders of the Registrant ratified and approved
both the Continuance and the Merger Agreement and authorized the Board of
Directors of the Registrant to effect the Merger. The Merger is to be deemed
effective upon acceptance of the applicable Continuance and Merger documents as
filed with the appropriate authorities in the States of Delaware and Texas.
See "Item 7. Financial Statements and Exhibits."
As a result of the approval and ratification of the Continuance and the
Merger by the shareholders of the Registrant and the Merger by the shareholders
of ETC-Texas, the Registrant will continue and domesticate into the State of
Delaware and will be deemed organized under the laws of the State of Delaware.
The corporate affairs of the Registrant will be governed by the Certificate of
Incorporation, as filed with the Secretary of State of Delaware, and Bylaws
attached hereto as Exhibits 3.2 and 3.3, respectively. Furthermore, the
Registrant is reflecting as outstanding the 8,942,000 shares of Common Stock
issued in exchange for 7,153,601 shares of ETC-Texas Common Stock, which
represents all the issued and outstanding shares of ETC-Texas. As a result of
the Merger, the former shareholders of ETC-Texas own and control approximately
82% of all of the issued and outstanding shares of the Registrant's Common
Stock.
The Registrant and ETC-Texas intend for the merger transaction to be a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). The Registrant and ETC-Texas are each
parties to the reorganization within the meaning of Section 368(b) of the Code
and the Registrant and ETC-Texas will not recognize any gain or loss as a
result of the Merger. The Merger is in effect a reverse acquisition and will
be accounted for as a recapitalization of ETC-Texas, with ETC-Texas as the
acquirer.
ITEM 5. OTHER EVENTS.
To facilitate the Merger, the Registrant has modified its Board of
Directors. Effective February 11, 1997, Edward Bollinger and Katherine L.
MacDonald have resigned as directors of the Registrant and Elaine Boze, Timothy
P. Powell, Michael Eckstein, David L. Hannah and Rick L. Snyder have been
elected as members of the Board of Directors to serve in such capacity until
the next annual meeting of shareholders of the Registrant or until their sooner
death, resignation or removal. The resignations of Ms. MacDonald and Mr.
Bollinger were not as a result of any dispute or disagreement with management
of the Registrant.
Effective February 11, 1997, the name of the Registrant has been changed
to Electronic Transmission Corporation, with the Certificate of Incorporation
of the Registrant being duly amended to reflect the change of name.
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<PAGE> 5
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following financial statements, pro forma financial information and
exhibits are filed as a part of this report.
<TABLE>
<CAPTION>
Item Page
---- ----
<S> <C> <C>
(a) Audited Financial Statements of Electronic Transmission Corporation as of and for
the years ended December 31, 1994 and 1995 and the nine months ended September 30,
1996 and notes thereto together with the Report of Independent Accountants
7
----------
(b) Pro Forma Condensed Combined Financial Statements of ETC Transaction Corporation
and Electronic Transmission Corporation (unaudited) 28
----------
Pro Forma Condensed Combined Balance Sheet for the nine months ended
September 30, 1996 28
----------
Pro Forma Condensed Combined Statement of Operations for the nine months
ended September 30, 1996 30
----------
Pro Forma Condensed Combined Statement of Operations for the 52 Weeks Ended
December 31, 1995 33
----------
Notes to Pro Forma Condensed Financial Statements 34
----------
(c) The following exhibits are filed as part of this report.
</TABLE>
<TABLE>
<CAPTION>
Exhibits:
--------
<S> <C>
2.1 Agreement and Plan of Merger dated as of May 1, 1996, by and among the Registrant and Electronic
Transmission Corporation.
2.2 Certificate of Merger, dated February 11, 1997, as filed with the Secretary of State of Delaware.
2.3 Articles of Merger, dated February 11, 1997, as filed with the Secretary of State of Texas.
3.1 Certificate of Domestication of the Registrant from Alberta, Canada to the State of Delaware.
3.2 Certificate of Incorporation of the Registrant as filed with the Secretary of State of Delaware.
3.3 Bylaws of the Registrant.
23.1 Consent of Simonton, Kutac & Barnidge, L.L.P. as to the financial statements of Electronic
Transmission Corporation.
</TABLE>
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<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ETC TRANSACTION CORPORATION
(Registrant)
By: /s/ L. Cade Havard
---------------------------------------
L. CADE HAVARD, Chief Executive Officer
Dated: February 12, 1997
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<PAGE> 7
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
of Electronic Transmission Corporation:
We have audited the accompanying balance sheets of Electronic Transmission
Corporation as of December 31, 1994 and 1995 and September 30, 1996, and the
related statements of operations, stockholders' equity and cash flows for the
years ended December 31, 1994 and 1995 and the nine months ended September 30,
1996. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide 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 Electronic Transmission
Corporation as of December 31, 1994 and 1995 and September 30, 1996, and the
results of operations and its cash flows for the years ended in conformity with
generally accepted accounting principles.
As described in Note 2, the accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. The
Company has experienced accumulated net losses of $2,868,036 and has not
generated any significant revenue since its inception. Additionally, the
Company's current assets exceeded its current liabilities by $10,930 at
September 30, 1996. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans regarding
those matters are also described in Note 2. Unless the Company obtains
additional financing, it will not be able to meet its obligations as they come
due and it will be unable to execute its long-term business plan. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ SIMONTON, KUTAC & BARNIDGE, L.L.P.
Simonton, Kutac & Barnidge, L.L.P.
Houston, Texas
November 27, 1996
7
<PAGE> 8
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, December 31, September 30,
1994 1995 1996
----------------- ---------------- ---------------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,000 $ 114,885 $ 159,178
Accounts receivable
Trade -- 7,059 248,211
Shareholder -- 82,744 25,972
Employees -- 5,734 30,822
Current portion, capital lease
receivable -- -- 24,478
Prepaid assets -- 9,204 17,786
----------------- -------------- ---------------
Total Current Assets 1,000 219,626 506,447
----------------- -------------- ---------------
Property and Equipment, net -- 137,348 404,409
----------------- -------------- ---------------
Other Assets:
Capital lease receivable -- -- 34,233
Deposits and other -- -- 9,584
----------------- -------------- ---------------
Total Other Assets -- -- 43,817
----------------- -------------- ---------------
Total Assets $ 1,000 $ 356,974 $ 954,673
================= ============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 9
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS (CONTINUED)
LIABILITIES & STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, December 31, September 30,
1994 1995 1996
----------------- ---------------- ----------------
<S> <C> <C> <C>
Current Liabilities:
Accounts payable $ -- $ 56,340 $ 181,998
Accrued expenses -- 809 81,929
Accrued payroll and taxes -- 109,131 193,128
Current portion, capital lease
obligations -- -- 60,322
----------------- -------------- ---------------
Total Current Liabilities -- 166,280 517,377
Note payable -- -- 779,575
Long-term capital lease obligations -- -- 68,949
----------------- -------------- ---------------
Total Liabilities -- 166,280 1,365,901
----------------- -------------- ---------------
Commitments and Contingencies
Stockholders' equity:
Preferred stock, no par value,
2,000,000 shares authorized;
no shares issued and outstanding -- -- --
Common stock, no par value,
8,000,000 shares authorized;
1,000; 6,158,210; 7,153,601
shares issued and outstanding,
respectively 1,000 1,494,023 2,435,637
Additional paid-in-capital - stock options -- -- 231,171
Deficit accumulated during
development stage -- (1,303,329) (3,078,036)
----------------- --------------- ---------------
Total Stockholders' Equity -- 190,694 (411,228)
----------------- --------------- ---------------
Total Liabilities & Stockholders' Equity $ 1,000 $ 356,974 $ 954,673
================= =============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 10
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
FOR THE PERIODS FROM DECEMBER 22, 1994 (INCEPTION) TO SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
For the For the
Period from For the For the Nine Period from
Inception to Year Ended Months Ended Inception to
December 31, December 31, September 30, September 30,
1994 1995 1996 1996
-------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C>
Service revenues earned
during development stage $ -- $ 66,612 $ 570,025 $ 636,637
------------ ----------- --------------- --------------
Costs and Expenses:
Direct costs incurred
during development stage -- 40,764 287,947 328,711
Start up costs -- 939,347 395,866 1,335,213
Research and development -- 179,830 1,469,858 1,649,688
General and administrative -- -- 191,061 191,061
------------ ----------- --------------- --------------
Total Costs and Expenses -- 1,159,941 2,344,732 3,504,673
------------ ----------- --------------- --------------
Loss from operations -- (1,093,329) (1,774,707) (2,868,036)
Income tax expense -- -- -- --
------------ ---------- -------------- -------------
Net loss $ -- (1,093,329) $ (1,774,707) $ (2,868,036)
============ ========== ============== =============
Loss per common share:
Primary and fully-diluted $ -- $ (0.32) $ (0.26)
============ ========== ==============
Weighted average common
shares outstanding:
Primary and fully-diluted 53 3,377,069 6,824,522
============ ========== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 11
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Add'l. Deficit
Common Stock Paid-In Accumulated
---------------------------------- Capital During the
$ Per stock Development
Shares Share Amount Options Stage Total
------ -------- ----------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 22,1994
(date of inception) -- $ -- $ -- $ -- $ -- $ --
Issuance of shares for cash 1,000 1.0000 1,000 -- -- 1,000
--------- ----------- ------ -------- -----------
Balance at December 31, 1994 1,000 1,000 -- -- 1,000
Issuance of shares for business 3,965,100 0.0052 20,751 -- -- 20,751
Dividend paid -- -- -- (210,000) (210,000)
Issuance of shares for cash 79,000 0.0040 316 -- -- 316
Issuance of shares for cash
to related party 50,000 0.0040 200 -- -- 200
Issuance of shares for cash 268,449 0.0373 10,000 -- -- 10,000
Issuance of shares for cash 20,000 0.0500 1,000 -- -- 1,000
Issuance of shares for cash
to related party 4,800 0.0600 288 -- -- 288
Issuance of shares for cash 258,288 0.1192 30,793 -- -- 30,793
Issuance of shares for cash 271,430 0.2210 60,000 -- -- 60,000
Issuance of shares for cash 16,000 0.3125 5,000 -- -- 5,000
Issuance of shares for cash 5,200 0.3846 2,000 -- -- 2,000
Issuance of shares for cash 120,212 0.6322 76,000 -- -- 76,000
Issuance of shares for cash 26,667 0.7500 20,000 -- -- 20,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 12
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Add'l. Deficit
Common Stock Paid-In Accumulated
--------------------------------------- Capital During the
$ Per Stock Development
Shares Share Amount Options Stage Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Issuance of shares for cash 58,824 0.8500 50,000 -- -- 50,000
Issuance of shares for cash
to related party 50,000 0.8640 43,200 -- -- 43,200
Issuance of shares for cash 202,000 1.0000 202,000 -- -- 202,000
Issuance of shares for cash 582,040 1.2500 727,550 -- -- 727,550
Issuance of shares for cash
to related party 55,200 1.2500 69,000 -- -- 69,000
Issuance of shares for cash 3,000 1.5000 4,500 -- -- 4,500
Issuance of shares for cash 5,000 2.5000 12,500 -- -- 12,500
Issuance of shares for services
to related party 4,000 1.0000 4,000 -- -- 4,000
Issuance of shares for furniture
and equipment 16,000 2.1200 33,925 -- -- 33,925
Issuance of shares on conversion
of convertible debentures 96,000 1.2500 120,000 -- -- 120,000
Net loss -- -- -- (1,093,329) (1,093,329)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1995 6,158,210 1,494,023 -- (1,303,329) 190,694
Issuance of shares for cash 20,000 1.2500 25,000 -- -- 25,000
Issuance of shares for cash 36,000 1.2500 45,000 -- -- 45,000
Issuance of shares for cash 65,000 1.2500 81,250 -- -- 81,250
Issuance of shares for cash 38,000 1.2500 47,500 -- -- 47,500
Issuance of shares for cash 26,000 1.2500 32,500 -- -- 32,500
Issuance of shares for cash 2,400 0.8333 2,000 -- -- 2,000
Issuance of shares for cash 60,900 1.2500 76,125 -- -- 76,125
Issuance of shares for services 10,625 1.0000 10,625 -- -- 10,625
Issuance of shares for cash 68,000 1.2500 85,000 -- -- 85,000
Issuance of shares for cash 5,000 0.2000 1,000 -- -- 1,000
Issuance of shares for cash 3,000 1.0000 3,000 -- -- 3,000
Issuance of shares for cash 16,800 1.2500 21,000 -- -- 21,000
Issuance of shares for cash 2,000 1.0000 2,000 -- -- 2,000
Issuance of shares for cash 10,000 1.2500 12,500 -- -- 12,500
Issuance of shares for services 12,000 1.0000 12,000 -- -- 12,000
Issuance of shares for services 80,000 1.0000 80,000 -- -- 80,000
Issuance of shares for services 40,000 1.0000 40,000 -- -- 40,000
Issuance of shares for cash 40,000 0.5000 20,000 -- -- 20,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 13
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Add'l. Deficit
Common Stock Paid-In Accumulated
--------------------------------------- Capital During the
$ Per Stock Development
Shares Share Amount Options Stage Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Issuance of shares for services 120,000 1.0000 120,000 -- -- 120,000
Issuance of shares for cash 118,000 1.0010 110,008 -- -- 110,008
Issuance of shares for cash 106,666 0.0010 106 -- -- 106
Issuance of shares for cash 115,000 1.0000 115,000 -- -- 115,000
Compensation expense -- -- -- 231,171 -- 231,171
Net loss -- -- -- -- (1,774,707) (1,774,707)
----------- ----------- ----------- ----------- -----------
Balance,
September 30, 1996 7,153,601 $ 2,435,637 $ 231,171 $(3,078,036) $ (411,228)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 14
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
FOR THE PERIODS FROM DECEMBER 22, 1994 (INCEPTION) TO SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
For the For the
Period from For the For the Nine Period from
Inception to Year Ended Months Ended Inception to
December 31, December 31, September 30, September 30,
1994 1995 1996 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Cash Flows from Operations:
Net loss $ -- $ (1,093,329) $ (1,774,707) $ (2,868,036)
Adjustments to Reconcile Net Loss to
Net Cash Provided (Used) by
Operations:
Non-cash issuance of common
stock for services rendered -- 4,000 262,625 266,625
Non-cash compensation from stock options -- -- 234,285 234,285
Depreciation and amortization -- 32,173 82,015 114,188
Increase in accounts receivable-trade -- (7,059) (241,152) (248,211)
Increase in employee advances -- (5,734) (25,088) (30,822)
(Increase) decrease in advances
to shareholders -- (82,744) 56,772 (25,972)
Increase in prepaid expenses -- (9,204) (8,582) (17,786)
Increase in deposits and other assets -- -- (9,584) (9,584)
Increase in accounts payable -- 56,340 125,658 181,998
Increase in accrued expenses -- 809 81,120 81,929
Increase in accrued payroll and taxes -- 109,131 83,997 193,128
--------------- --------------- --------------- ---------------
Net Cash Used in Operations -- (995,617) (1,132,641) (2,128,258)
--------------- -------------- --------------- ---------------
Cash Flows from Investing Activities:
Payments on capital leases receivable -- -- 5,749 5,749
Purchases of furniture and equipment -- (114,845) (258,084) (372,929)
--------------- --------------- --------------- ---------------
Net Cash Used in Investing Activities -- (114,845) (252,335) (367,180)
--------------- -------------- --------------- ---------------
Cash Flows from Financing Activities:
Issuance of convertible debentures -- 120,000 -- 120,000
Dividend paid -- (210,000) -- (210,000)
Proceeds from note payable -- -- 779,575 779,575
Payments on capital leases payable -- -- (26,181) (26,181)
Issuances of common stock for cash 1,000 1,314,347 675,875 1,991,222
--------------- --------------- --------------- ---------------
Net Cash Used in Financing Activities 1,000 1,224,347 1,429,269 2,654,616
--------------- --------------- --------------- ---------------
Net increase in cash 1,000 113,885 44,293 159,178
Cash, beginning of period -- 1,000 114,885 --
--------------- --------------- --------------- ---------------
Cash, end of period $ 1,000 $ 114,885 $ 159,178 $ 159,178
=============== =============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 15
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES AND BACKGROUND
Electronic Transmission Corporation ("ETC" or "Company") is currently in the
development stage as it has had no significant revenue. ETC is developing its
business plan to provide electronic transaction processing services to the
health care market. The principal service being developed is the electronic
capture and transfer of medical claims for on-line eligibility verification and
adjudication between health care providers, self-insured organizations, third
party administrators and other managed care organizations.
Background -- ETC was incorporated in the state of Texas on December 22, 1994.
On April 19, 1995, the Company entered into an agreement to purchase the
rights to the technology and business of electronically editing and
transmitting medical claims from providers to payment organizations (the
Purchased Business) from Sterling National Corporation ("SNC") by issuing
3,965,100 common shares and a cash payment of $210,000. SNC is a company
wholly-owned and controlled by ETC's Chairman of the Board, C.E.O. and majority
shareholder. The transaction was accounted for using the purchase method as
follows:
<TABLE>
<S> <C>
Assets Acquired:
Accounts receivable $ 5,630
Computer hardware 1,403
Computer software 13,718
-----------------
Total tangible assets 20,751
Consideration Paid:
Cash $ 210,000
3,965,100 common shares 20,751
-----------------
Total Consideration 230,751
-----------------
Dividend paid to shareholder $ 210,000
=================
</TABLE>
Treatment of the excess cash consideration paid for the acquired business is
accounted for as a deemed dividend in accordance with generally accepted
accounting principles. Goodwill was not recorded since this transaction was
consummated with a related party and this treatment would have constituted a
step-up in basis. The transaction is reflected in the financial statements on
the date the transaction occurred (April 19, 1995), in accordance with
generally accepted accounting principles.
15
<PAGE> 16
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES AND BACKGROUND (CONTINUED)
The following supplemental schedule reflects the transaction had the purchase
taken place on December 22, 1994. There was no effect on the statement of
operations for the period of inception to December 31, 1994.
<TABLE>
<CAPTION>
Pro-forma
December 31,
1994
-----------------
<S> <C>
Assets:
Accounts Receivable $ 5,630
Equipment 15,121
-----------------
$ 20,751
=================
Liabilities and Stockholder's Equity:
Accounts payable $ (209,000)
Stockholder's Equity 188,249
-----------------
$ 20,751
=================
</TABLE>
Cash Equivalents -- For purposes of the statements of cash flows, the Company
considers any short-term cash investment with a maturity of three months or
less to be a cash equivalent.
Accounts receivable -- The Company's trade receivables arise from sales in the
normal course of business. ETC uses the allowance method to account for
uncollectible accounts; in management's opinion, all accounts are collectible
and no allowance is necessary at December 31, 1995 and September 30, 1996.
Revenue recognition - The Company recognizes revenue when services are
performed.
Office Furniture and Equipment -- Office furniture, computer equipment and
office equipment, and software are stated at cost. Maintenance and repairs are
charged to operating expense. Costs of significant improvements and renewals
are capitalized. Depreciation is provided on the straight-line basis over the
following useful lives:
<TABLE>
<CAPTION>
Useful
Lives
-----------------
<S> <C>
Office furniture 5 years
Computer and office equipment 3 years
Computer software 3 years
Leasehold improvements 5 years
</TABLE>
16
<PAGE> 17
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES AND BACKGROUND (CONTINUED)
Periodically, the Company evaluates whether changes have occurred that would
require revision of the remaining estimated useful lives of the equipment or
rendered the value of the equipment not recoverable. The recoverability is
evaluated by estimating the future cash flows expected to result from use of
the asset and its eventual disposition. Equipment as of December 31, 1995, is
not considered to be impaired.
Start-Up Costs -- Start-up costs incurred during the period of developing ETC's
business plan are expensed as incurred in accordance with generally accepted
accounting principles.
Research and Development -- Research and development costs incurred are
expensed as incurred in accordance with generally accepted accounting
principles.
Income Taxes -- ETC utilizes the asset and liability approach to financial
accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed annually for differences between the financial
statement and tax basis of assets and liabilities that will result in taxable
or deductible amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. Income tax expense
is the tax payable or refundable for the period plus or minus the change during
the period in deferred tax assets and liabilities.
Loss Per Share -- Loss per common share was calculated by dividing the
Company's net loss by the weighted average common shares outstanding. Common
stock equivalents were excluded from the calculation as such inclusion would
have had an anti-dilutive effect; therefore, fully diluted earnings per share
is considered to be the same as primary earnings per share. Loss per common
share assuming full dilution was calculated in the same manner as described
above, except that those shares that were issued in connection with debt
conversions were assumed to be outstanding for the entire period.
Use of Estimates and Assumptions -- Management uses estimates and
assumptions in preparing its financial statements. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported amounts of
revenues and expenses. Actual results could vary from the estimates that were
used.
Stock-based Compensation -- The Company compensated certain employees for
services rendered by issuing shares of common stock to these individuals during
1995. The measurement date for determining compensation costs is the date of
the grant. Compensation cost is the excess, if any, of the quoted market price
of the stock at grant date over the amount the employee must pay to acquire the
stock. Compensation cost is recognized as an expense over the period of
employment attributable to the option.
17
<PAGE> 18
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES AND BACKGROUND (CONTINUED)
New Accounting Standards -- In October 1995, Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-based Compensation" (SFAS
123), was issued. This statement requires the fair value of stock options and
other stock-based compensation issued to employees to either be included as
compensation expense in the income statement or the pro forma effect on net
income and earnings per share of such compensation expense to be disclosed in
the footnotes to the Company's financial statements commencing with the
Company's 1996 fiscal year. ETC adopted SFAS 123 on January 1, 1996. The
Company will continue to measure compensation costs using the "intrinsic value
based method" of accounting for stock issued to employees.
NOTE 2 - GOING CONCERN AND CONTINUED OPERATIONS
The financial statements have been prepared on the assumption that the Company
will continue as a going concern. The financial statements do not include any
adjustments to reflect the possible effects on the recoverability and
classification of assets or classification of liabilities which may result from
the inability of the Company to continue as a going concern. ETC sustained a
net operating loss of $1,093,329 and $1,774,707 during the year ended December
31, 1995 and the nine months ended September 30, 1996, respectively, and has
accumulated losses of approximately $2,868,036 since December 22, 1994
(Inception). Cash used by operating activities and dividends for the same
periods aggregated $995,617 and $1,132,641, respectively. Additionally, at
September 30, 1996, ETC's current assets exceeded its current liabilities by
$10,930. ETC's continued existence depends upon the success of management's
efforts to raise sufficient capital to execute its business plan.
Management plans to mitigate the going concern issues by marketing its services
to large self-insured insurance companies to develop its customer base and
increase profitability. Management believes that it will be successful in
generating sufficient cash to support its operations. There can be no degree
of assurance that the Company will be successful in raising additional working
capital or executing its business plan to the extent that it will be
profitable.
18
<PAGE> 19
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - OFFICE FURNITURE AND EQUIPMENT
The following is a summary of office furniture and equipment:
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
--------------- --------------
<S> <C> <C>
Furniture $ 43,056 $ 64,348
Computer & Office Equipment 68,752 342,319
Computer Software 57,713 111,929
Leasehold Improvements -- 839
--------------- ---------------
169,521 519,435
Less: accumulated depreciation (32,173) (115,026)
--------------- ---------------
$ 137,348 $ 404,409
=============== ===============
</TABLE>
Depreciation expense was $0 and $32,173 for 1994 and 1995, respectively, and
$82,853 for the nine months ended September 30, 1996.
NOTE 4 - LEASE OBLIGATIONS RECEIVABLE
The Company, as lessor, has entered into a non-cancelable lease for service
equipment. Future minimum lease payments receivable under non-cancelable leases
at September 30, 1996 are as follows:
<TABLE>
<CAPTION>
For the Twelve Months Ended Capital
September 30, Leases
---------------------------------- ---------------
<S> <C>
1997 $ 29,248
1998 29,248
1999 7,312
---------------
Total minimum lease payments 65,808
Less: amount representing interest (7,097)
---------------
Present value of minimum lease payments 58,711
Less: current portion (24,478)
---------------
Long-term capital lease obligation $ 34,233
===============
</TABLE>
19
<PAGE> 20
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - CONVERTIBLE DEBENTURES
At various times throughout 1995 the Company issued convertible debentures
totalling $120,000. These debentures bore interest at 12% per annum and were
convertible into common shares at the option of the holder at a conversion rate
of one common share per $1.25 of debenture being converted. As of December 31,
1995 all debenture holders had exercised their options and converted their
debentures into a total of 96,000 common shares.
NOTE 6 - LEASE OBLIGATIONS PAYABLE
The Company, as lessee, has entered into various non-cancelable leases for
service equipment, vehicles, and office facilities. The cost of assets subject
to capital leases included in office furniture and equipment amounted to
$90,992 less accumulated depreciation of $14,626 at September 30, 1996. Future
minimum lease payments under non-cancelable leases at September 30, 1996 are as
follows:
<TABLE>
<CAPTION>
For the Twelve Months Ended Capital Operating
September 30, Leases Leases
----------------------------- --------------- ---------------
<S> <C> <C>
1997 $ 70,535 $ 176,561
1998 66,612 182,256
1999 6,322 187,952
2000 -- 193,647
Thereafter -- 199,342
--------------- ---------------
Total minimum lease payments 143,469 $ 939,758
===============
Less: amount representing interest (14,198)
--------------
Present value of minimum lease payments 129,271
Less: current portion (60,322)
---------------
Long-term capital lease obligation $ 68,949
===============
</TABLE>
Rent expense during the years ended December 31, 1994 and 1995 for all
operating leases was $0 and $49,988, respectively, and is included in operating
expenses. Rent expense during the nine months ended September 30, 1996 for all
operating leases was $82,554, respectively, and is included in operating
expenses.
20
<PAGE> 21
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - LEASE OBLIGATIONS PAYABLE (CONTINUED)
In April 1996, The Company entered into an equipment lease agreement and stock
option agreement with a leasing company which is recorded as a capital lease by
the Company. The agreement is for a term of five years and allows the Company
to lease certain equipment for amounts specified in the agreement with rental
payments due on the first of each month. As of September 30, 1996, monthly
payments required under the lease agreement amounted to $5,879 expiring in
1998. The Company has agreed to escrow all accounts received which are
derived from the use of this equipment, less third party costs, until any
class of securities of ETC, or any company with which ETC merges, is registered
under the Securities Exchange Act of 1934 or otherwise becomes publicly traded,
or the funds in escrow equal the total purchase price of the equipment as
stated in the agreement.
At any time during the term of the agreement, the leasing company has the right
to 1) sell to ETC any or all of the equipment in exchange for the number of
shares of ETC common stock, or stock of any company with which ETC merges, that
is equal to the purchase of the equipment divided by $1.25 per share or, 2)
purchase, at $1.25 per share, the number of shares of ETC stock, or stock of
the merged company, equal to the purchase price of the equipment divided by
1.25, and give ETC the option to purchase the equipment at the end of the lease
for $1.00; provided, that if ETC issues, agrees to issue or grants an option to
purchase ETC stock to any other person for a price less than $1.25 per share,
the price payable to the leasing company will be reduced to such lower price.
The leasing company agreement contains certain restrictive covenants which (i)
require ETC to escrow all accounts received which are derived from the use of
this equipment, less third party costs, through March 31, 1996 or until any
class of stock is registered with the SEC are otherwise becomes publicly
traded, or the funds in escrow equal the total purchase price of the equipment,
and (ii) restrict ETC from issuing additional securities before ETC merges with
a public company. ETC is in violation of each of these covenants and has
obtained a waiver from the leasing company which releases ETC from any claims
under the escrow requirement and violations relating to the issuance of
securities.
21
<PAGE> 22
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - LINE OF CREDIT
Under the agreement with the leasing company discussed in Note 6, ETC has
obtained a $500,000 line of credit from the leasing company to be used as
working capital. ETC may draw from this line up to 80% of its accounts
receivable that are under 65 days past due. To secure this line of credit,
ETC will pledge shares of its common stock on a two for one basis (i.e., two
dollars trade value of its stock for every one dollar drawn from the line of
credit). ETC will pay a loan origination fee, beginning three months after ETC
merges with a public company, in an amount equal to 10% of the leasing
company's exposure under this agreement including the amount spent to purchase
equipment and the amount drawn on the line of credit. This fee will be a
cumulative amount calculated each quarter. As of September 30, 1996, the
Company has made no draws on this line of credit.
NOTE 8 - INCOME TAXES
ETC has net operating loss carryforwards approximately $2,605,000 that are
available to offset its future income tax liability. The net operating loss
carryforwards expire in the year 2010. The realization of the benefits from
these net operating loss carryforwards appears uncertain due to going concern
questions and the possible effects of the ETC Transaction Corporation merger.
Accordingly, a valuation allowance of $372,000 and $885,000 has been recorded
at December 31, 1995 and September 30, 1996, respectively, against the deferred
tax asset resulting from the net operating loss carryforward. There are no
other significant temporary differences for financial and income tax reporting
purposes at December 31, 1994 or 1995 and September 30, 1996.
NOTE 9 - STOCK OPTIONS
The Company has issued various stock options to employees of ETC which
are considered compensatory. Stock options were initially granted by the
ETC during 1995 and no stock options were vested as of December 31, 1995.
Vesting varies by employee agreement ranging from 2 to 3 years.
A summary of the status of stock options is set forth below:
<TABLE>
<CAPTION>
Year ended Period ended
December 31, 1995 September 30, 1996
----------------- ------------------
Weighted Weighted
Average Average
Exercise Exercise
Fixed Options Shares Price Shares Price
- ------------- ------ -------- ------- --------
<S> <C> <C> <C> <C>
Outstanding, beginning of period -- -- 675,000 $0.001
Granted 675,000 $0.001 260,000 $0.001
Exercised -- -- (108,333) $0.001
Forfeited/expired -- -- (125,000) $0.001
-------- ---------
Outstanding, end of period 675,000 $0.001 701,667 $0.001
======== =========
Options exercisable, end of
period -- -- 13,333 $0.001
======== =========
Weighted average fair value
of options granted during
the year $ 1.25 $ 1.12
======== =========
</TABLE>
The following table summarizes information about fixed stock options
outstanding at September 30, 1996:
Range of exercise prices $0.001 per common share
Weighted average remaining contractual life 2.98 years
Weighted average exercise price $0.001 per common share
22
<PAGE> 23
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
Compensation costs will be recognized as an expense over the periods of
employment attributable to the options at an amount equal to the excess of the
fair market value of the stock at the measurement over the amount the employee
must pay. The measurement date is generally the grant date. As of December
31, 1994 and 1995, no compensation cost was recognized as expense. Future
compensation expense to be recorded in subsequent periods as of December 31,
1994 and 1995, was $0 and $474,540, respectively. Compensation cost totalling
$231,171 was recognized as expense during the fiscal year ended September 30,
1996. Future compensation expense to be recorded in subsequent periods as of
September 30, 1996 was $646,796. Had compensation cost for ETC's stock-based
compensation been determined on the fair value at the grant dates for awards
with the method of FASB Statement 123, ETC's net loss and loss per share would
have been unchanged.
NOTE 10 - COMMITMENTS
On April 19, 1995, ETC entered into an agreement with Texas Administrators,
Inc. ("TAI"), a third party administrator for medical claims. The agreement
called for TAI to assign the rights to third party administrator accounts for a
total purchase price of $75,000, representing 1.15 times one year's contracted
revenue. Of the purchase price, $35,000 was paid to TAI subsequent to year
end. Additionally, ten (10) monthly payments of $4,000 commencing June 10,
1995, are payable to TAI under an executed promissory note.
The agreement called for ETC to enter into consulting agreements with each of
the 3 key employees/sole shareholders of TAI. The consulting agreements
called for each of the individuals to assist ETC in retaining and servicing the
assigned accounts and to seek out new third party administrator accounts for
which the individuals would be paid commissions. The consulting agreements
were for a period of one year commencing April 30, 1995. The Company intended
to use TAI's third party administrator accounts as a basis to test ETC's
electronic processing work flow system for processing self-insured medical
claims.
23
<PAGE> 24
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 10 - COMMITMENTS (CONTINUED)
On June 1, 1995, ETC terminated the agreement for breach of contract, claiming
the medical claims accounts assigned were not in full force and effect. As of
December 31, 1995, ETC has received $26,232 as third party administrator fees
from accounts assigned by TAI. ETC does not expect to be successful in
recovering the $35,000 paid to TAI for the accounts, and accordingly, the
amount has been expensed in 1995 as research and development third party
administrator fees. During 1996, ETC settled with TAI for the net amount of
$5,000.
On April 22, 1995, ETC also purchased office furniture from TAI having an
estimated value of $33,925, with the issuance of 16,000 common shares of ETC to
TAI.
In December 1995, the Company entered into an agreement with a marketing firm
to assist in obtaining and servicing customers. A member of the marketing
firm is a member of the Board of Directors. Compensation for services
rendered to the Company will be paid through November 1997 on a monthly basis
equal to 15% of the gross realized revenue from new accounts obtained on behalf
of the Company by the firm. In return, the Company has agreed to market the
services offered by the marketing representative and will be paid monthly over
the same term an amount equal to 10% of the gross realized revenue from new
accounts obtained on behalf of the firm by the Company.
In September 1996, ETC made a two-year agreement with a large national
self-insured company to provide electronic transaction processing services for
insurance claims. As of September 30, 1996, revenues from this customer
amounted to approximately 65% of total revenues and trade accounts receivable
include $141,406 of accounts receivable from this customer.
ETC is engaged in a marketing strategy of utilizing a 90-day trial period with
other organizations. These agreements allow for a 90-day trial period for
processing claims and ETC has been successful in providing the service at a fee
of $1 per claim.
Effective June 1, 1996, the Company issued 220,000 stock warrants which expire
on June 15, 1997, and allow the holder of each warrant to purchase one share of
common stock at a price of $1.50 per share.
24
<PAGE> 25
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 11 - PROPOSED MERGER
As of September 30, 1996, ETC is negotiating a merger with ETC Transaction
Corporation, formerly known as Solo Petroleum Ltd. ETC Transaction Corporation
is presently attempting to reorganize its affairs and is primarily inactive.
The merger would be effected by ETC Transaction Corporation issuing 1.25 shares
for each issued and outstanding common share in ETC. As of September 30, 1996,
ETC has 7,153,601 shares issued and outstanding and accordingly, the merger
would result in the issuance of 10,949,146 shares in ETC Transaction
Corporation for all of the issued and outstanding common shares of Electronic
Transmission Corporation.
The merger is in effect a reverse acquisition and will be accounted for as a
recapitalization of Electronic Transmission Corporation, with Electronic
Transmission Corporation as the acquirer. Accordingly, no goodwill or other
intangible assets will be recorded.
NOTE 12 - RELATED PARTY TRANSACTIONS
On May 15, 1996, the Company received a cash advance of $779,575 from ETC
Transaction Corporation to be used as working capital to fund its post-merger
business plan. The capital for the ETC Transaction Corporation cash advance
was raised in a private placement offering of ETC Transaction Corporation
common stock.
The Company advanced funds for working capital infusions to SNC during 1995 and
1996. As of December 31, 1995 and September 30, 1996, the Company had a
receivable of $82,744 and $25,972, respectively, from SNC.
At September 30, 1996, the Company has a trade receivable due from Electra-net,
L.C., a company wholly-owned and operated by the Chairman of the Board, C.E.O.
and majority shareholder of ETC. The receivable totalling $51,513 relates to
administrative fees for providing computer processing for medical claims.
The Company has an agreement to purchase equipment from SNC. The relationship
exists through SNC's purchase contract with an equipment wholesaler which
allows SNC to purchase equipment at a significant discount. Since the Company
is able to purchase the equipment from SNC at the discounted price, the Company
intends to utilize this relationship for capital expenditures as deemed
necessary in the future. The Company will record the equipment purchases at
SNC's cost.
25
<PAGE> 26
ELECTRONIC TRANSMISSION CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
NOTE 13 - CASH FLOW SUPPLEMENTAL INFORMATION
The following is a schedule of required supplemental cash flow information:
<TABLE>
<CAPTION>
1994 1995 1996
----------------- ---------------- ---------------
<S> <C> <C> <C>
Interest paid $ -- $ 6,424 $ 6,955
================= ================ ===============
Income taxes paid $ -- $ -- $ --
================= ================ ===============
</TABLE>
Non-cash investing and financing activities included the following:
The Company purchased assets valued at $155,452 through capital lease
obligations during the nine months ended September 30, 1996.
The Company disposed of assets with a carrying value of $64,460 through a
capital lease receivable during the nine months ended September 30, 1996.
During the year ended December 31, 1995 and the nine months ended September 30,
1996, the Company issued common stock shares for services rendered at $1 per
share in the total amount of $4,000 and $262,625, respectively.
26
<PAGE> 27
ETC TRANSACTION CORPORATION
PRO-FORMA BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 1996
ASSETS
<TABLE>
<CAPTION>
ETC Electronic
Transaction Transmission Pro Forma
Corporation Corporation Adjustments Combined
---------------- ----------------- --------------- --------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 140 $ 159,178 $ -- $ 159,318
Accounts receivable
Trade -- 248,211 -- 248,211
Shareholder -- 25,972 -- 25,972
Employees -- 30,822 -- 30,822
Current portion, capital lease
receivable -- 24,478 -- 24,478
Prepaid assets -- 17,786 -- 17,786
---------------- ----------------- -------------- -------------
Total Current Assets 140 506,447 -- 506,587
Property and Equipment, net -- 404,409 -- 404,409
---------------- ----------------- -------------- -------------
Other Assets:
Note receivable 779,575 -- (779,575) --
Current portion, capital lease
receivable -- 34,233 -- 34,233
Deposits and other -- 9,584 -- 9,584
---------------- ----------------- -------------- -------------
Total Other Assets 779,575 43,817 (779,575) 43,817
---------------- ----------------- -------------- ------------
Total Assets $ 779,715 $ 954,673 $ (779,575) $ 954,813
================ ================= ============== ============
</TABLE>
27
<PAGE> 28
ETC TRANSACTION CORPORATION
PRO-FORMA BALANCE SHEET (UNAUDITED), CONTINUED
SEPTEMBER 30, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ETC Electronic
Transaction Transmission Pro Forma
Corporation Corporation Adjustments Combined
----------------- ----------------- --------------- --------------
<S> <C>
Current Liabilities:
Accounts payable $ 26,919 $ 181,998 $ -- $ 208,917
Accrued expenses 48,345 74,440 -- 122,785
Accrued payroll and taxes -- 193,128 -- 193,128
Current lease obligations -- 60,322 -- 60,322
Loan payable 23,182 7,489 -- 30,671
Short term debentures 52,500 -- -- 52,500
----------------- ----------------- --------------- ------------
Total Current Liabilities 150,946 517,377 -- 668,323
Note payable -- 779,575 (779,575) --
Long-term capital leases -- 68,949 -- 68,949
----------------- ----------------- --------------- ------------
Total Liabilities 150,946 1,365,901 (779,575) 737,272
----------------- ----------------- --------------- ------------
Stockholders' equity:
Preferred stock, $1 par value,
2,000,000 shares authorized;
no shares issued and outstanding -- -- -- --
Common stock, $0.001 par value,
15,000,000 shares authorized;
10,949,146 shares issued
and outstanding 1,704,569 2,435,637 -- 4,140,206
Additional paid-in-capital -
stock options -- 231,171 -- 231,171
Accumulated deficit (1,075,800) (3,078,036) -- (4,153,836)
----------------- ---------------- -------------- ------------
Total Stockholders' Equity 628,769 (411,228) -- 217,541
----------------- ---------------- --------------- ------------
Total Liabilities and
Stockholders' Equity $ 779,715 $ 954,673 $ (779,575) $ 954,813
================= ================= =============== ============
</TABLE>
28
<PAGE> 29
ETC TRANSACTION CORPORATION
PRO-FORMA STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
ETC Electronic
Transaction Transmission Pro Forma
Corporation Corporation Adjustments Combined
----------------- ----------------- --------------- --------------
<S> <C> <C> <C> <C>
Service revenues earned during
development stage $ -- $ 570,025 $ -- $ 570,025
----------------- ----------------- -------------- -------------
Costs and Expenses:
Direct costs incurred during
development stage -- 287,947 -- 287,947
Start up costs -- 395,866 -- 395,866
Research and development -- 1,469,858 -- 1,469,858
General and administrative -- 191,061 -- 191,061
----------------- ----------------- -------------- -------------
Total Costs and Expenses -- 2,344,732 -- 2,344,732
---------------- ----------------- -------------- -------------
Loss from operations -- (1,774,707) -- (1,774,707)
Other Income (Expense):
Other income 572 -- -- 572
Interest expense (7,875) -- -- (7,875)
---------------- ----------------- -------------- ------------
Total Other Income (Expense) (7,303) -- -- (7,303)
---------------- ----------------- -------------- ------------
Loss before income tax expense (7,303) (1,774,707) -- (1,782,010)
Income tax expense -- -- -- --
----------------- ----------------- -------------- -------------
Net loss $ (7,303) $ (1,774,707) $ -- $ (1,782,010)
================ ================= =============== =============
Loss per common share:
Primary and fully-diluted $ (0.18)
=============
Weighted average common
shares outstanding:
Primary and fully-diluted $ 9,998,724
=============
</TABLE>
29
<PAGE> 30
ETC TRANSACTION CORPORATION
PRO-FORMA BALANCE SHEET (UNAUDITED)
DECEMBER 31, 1995
ASSETS
<TABLE>
<CAPTION>
ETC Electronic
Transaction Transmission Pro Forma
Corporation Corporation Adjustments Combined
----------------- ----------------- --------------- --------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 143 $ 114,885 $ -- $ 115,028
Accounts receivable
Trade -- 7,059 -- 7,059
Shareholder -- 82,744 -- 82,744
Employees -- 5,734 -- 5,734
Prepaid assets -- 9,204 -- 9,204
----------------- ----------------- --------------- --------------
Total Current Assets 143 219,626 -- 219,769
Property and Equipment, net -- 137,348 -- 137,348
----------------- ----------------- --------------- --------------
Total Assets $ 143 $ 356,974 $ -- $ 357,117
================= ================= =============== ==============
</TABLE>
30
<PAGE> 31
ETC TRANSACTION CORPORATION
PRO-FORMA BALANCE SHEET (UNAUDITED), CONTINUED
DECEMBER 31, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ETC Electronic
Transaction Transmission Pro Forma
Corporation Corporation Adjustments Combined
----------------- ----------------- --------------- --------------
<S> <C> <C> <C> <C>
Current Liabilities:
Accounts payable $ 110,845 $ 56,340 $ -- $ 167,185
Accrued expenses 40,470 809 -- 41,279
Due to shareholder 201,111 -- -- 201,111
Accrued payroll and taxes -- 109,131 -- 109,131
Loan payable 23,647 -- -- 23,647
Short term debentures 605,000 -- -- 605,000
----------------- ----------------- --------------- --------------
Total Current Liabilities 981,073 166,280 -- 1,147,353
Stockholders' equity:
Preferred stock, $1 par value,
2,000,000 shares authorized;
no shares issued and outstanding -- -- -- --
Common stock, $0.001 par value,
unlimited shares authorized;
8,302,751 shares issued
and outstanding 87,567 1,494,023 -- 1,581,590
Accumulated deficit (1,068,497) (1,303,329) -- (2,371,826)
---------------- ---------------- --------------- -------------
Total Stockholders' Equity (980,930) 190,694 -- (790,236)
---------------- ----------------- --------------- -------------
Total Liabilities and
Stockholders' Equity $ 143 $ 356,974 $ -- $ 357,117
================= ================= =============== ==============
</TABLE>
31
<PAGE> 32
ETC TRANSACTION CORPORATION
PRO-FORMA STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
ETC Electronic
Transaction Transmission Pro Forma
Corporation Corporation Adjustments Combined
----------------- ----------------- --------------- --------------
<S> <C> <C> <C> <C>
Service revenues earned during
development stage $ -- $ 66,612 $ -- $ 66,612
----------------- ----------------- -------------- --------------
Costs and Expenses:
Direct costs incurred during
development stage -- 40,764 -- 40,764
Start up costs -- 939,347 -- 939,347
Research and development -- 179,830 -- 179,830
----------------- ----------------- -------------- --------------
Total Costs and Expenses -- 1,159,941 -- 1,159,941
----------------- ----------------- -------------- --------------
Loss from operations -- (1,093,329) -- (1,093,329)
Other Income (Expense):
Other income (807) -- -- (807)
Interest expense (93,375) -- -- (93,375)
----------------- ----------------- -------------- -------------
Total Other Income (Expense) (94,182) -- -- (94,182)
----------------- ----------------- -------------- -------------
Loss before income tax expense (94,182) (1,093,329) -- (1,187,511)
Income tax expense -- -- -- --
----------------- ----------------- --------------- --------------
Net loss $ (94,182)$ (1,093,329) $ -- $ (1,187,511)
================= ================= =============== =============
Loss per common share:
Primary and fully-diluted $ (0.21)
=============
Weighted average common
shares outstanding:
Primary and fully-diluted $ 5,708,763
=============
</TABLE>
32
<PAGE> 33
ETC TRANSACTION CORPORATION
NOTES TO PRO-FORMA FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
On February 12, 1997, Electronic Transmission Corporation merged with and into
ETC Transaction Corporation.
The pro-forma financial statements included herein do not include all
information and foot note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles.
In the opinion of management, the pro-forma financial statements include all
necessary adjustments for the fair presentation of the balance sheets and the
related statements of operations for the periods noted therein.
The balance sheets show pro-forma adjustments reflect the effects of related
intercompany loan which was eliminated when the two entities were combined.
33
<PAGE> 34
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
------ -------------------------------------------------------------------------- ----------------
<S> <C>
2.1 Agreement and Plan of Merger dated as of May 1, 1996, by and among the
Registrant and Electronic Transmission Corporation.
2.2 Certificate of Merger, dated February 11, 1997, as filed with the
Secretary of State of Delaware.
2.3 Articles of Merger, dated February 11, 1997, as filed with the Secretary
of State of Texas.
3.1 Certificate of Domestication of the Registrant from Alberta, Canada to
the State of Delaware.
3.2 Certificate of Incorporation of the Registrant as filed with the
Secretary of State of Delaware.
3.3 Bylaws of the Registrant.
23.1 Consent of Simonton, Kutac & Barnidge, L.L.P. as to the financial
statements of Electronic Transmission Corporation.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and between
ELECTRONIC TRANSMISSION CORPORATION,
a Texas corporation
and
ETC TRANSACTION CORPORATION,
an Alberta, Canada corporation
May 1, 1996
<PAGE> 2
<TABLE>
<CAPTION>
ARTICLE/SECTION PAGE
- --------------- ----
<S> <C> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Directors and Officers of the Surviving Corporation . . . . . . . . . . . . . . . . 2
ARTICLE 2 CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Conversion of Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3 REPRESENTATION AND WARRANTIES OF TRANSACTION CORP. . . . . . . . . . . . . . . . . . 4
3.1 Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Certain Corporate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF ETC-TEXAS . . . . . . . . . . . . . . . . . . . . 5
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Capitalization and Ownership of ETC-Texas . . . . . . . . . . . . . . . . . . . . . 5
4.3 Certain Corporate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.4 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.5 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . 6
4.6 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . 6
4.7 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.8 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.9 Events Subsequent to Financial Statements . . . . . . . . . . . . . . . . . . . . . 7
4.10 Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.11 Tax Returns and Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.12 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.13 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.14 Questionable Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.16 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.18 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.19 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.20 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.21 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.22 Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.23 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.24 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 5 CONDUCT OF BUSINESS PENDING THE CLOSING . . . . . . . . . . . . . . . . . . . . . . 12
5.1 Conduct of Business by ETC-Texas Pending the Closing . . . . . . . . . . . . . . . . 12
5.2 Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 6 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.1 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
6.2 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Meetings of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 Reimbursement of Transaction Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 7 CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Conditions to Obligations of Each Party to Effect the Closing . . . . . . . . . . . 15
7.2 Additional Conditions to Transaction Corp.'s Obligations . . . . . . . . . . . . . . 15
7.3 Additional Conditions to ETC-Texas' Obligations . . . . . . . . . . . . . . . . . . 17
ARTICLE 8 REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.1 Indemnification by ETC-Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Indemnification by Transaction Corp. . . . . . . . . . . . . . . . . . . . . . . . . 18
8.3 Conditions of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.5 Remedies Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 9 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.1 Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.2 Termination by Any Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.3 Effect of Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 10 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.2 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.4 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.5 Separate Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May
1, 1996, is made and entered into by and between ETC Transaction Corporation,
an Alberta, Canada corporation ("Transaction Corp.") f/k/a Solo Petroleums,
Ltd. ("Solo") and Electronic Transmission Corporation, a Texas corporation
("ETC-Texas").
RECITALS
WHEREAS, the Board of Directors of Transaction Corp. has adopted
resolutions approving and adopting the continuance and domestication of
Transaction Corp. into a Delaware corporation (the "Continuance") for the
purposes of merging with ETC-Texas (the "Merger");
WHEREAS, the Board of Directors of ETC-Texas has adopted resolutions
approving and adopting the Merger;
WHEREAS, the Merger is intended to qualify as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"); and
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties and agreements herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the conditions set forth herein, the parties
hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.3 hereof), ETC-Texas shall be
merged with and into Transaction Corp. and the separate corporate existence of
ETC-Texas shall thereupon cease. Transaction Corp. (sometimes hereinafter
referred to as the "Surviving Corporation") shall be the surviving corporation
in the Merger. The Merger shall have the effects set forth in the applicable
provisions of the Delaware General Corporation Law (the "DGCL") and the Texas
Business Corporation Act (the "TBCA").
1.2 Closing. The closing of the Merger (the "Closing") shall take place at
a time and place to be mutually agreed upon by ETC-Texas and Transaction Corp.
as soon as the conditions set forth in Article 7 have been satisfied or waived
or as soon as practicable thereafter. Such date is herein referred to as the
"Closing Date."
1.3 Effective Time of the Merger. If all of the conditions to the Merger
set forth in Article 7 shall have been fulfilled or waived in accordance
herewith and this Agreement shall not have been terminated as provided in
Article 9, the parties hereto shall cause Articles of Merger (the "Articles of
Merger") that meet the requirements of the applicable provisions of the DGCL
and the TBCA, respectively, to be properly executed and filed with the
Secretary of State of the States of Delaware and Texas, respectively, on the
Closing Date. The Merger shall be effective at the time of acceptance of the
filing of the Articles of Merger with the Secretary of State of the States of
Delaware and Texas in accordance with the DGCL and the TBCA, respectively, or
at such later time which the parties hereto shall have agreed upon and
designated in such filing as the effective time of the Merger (the "Effective
Time").
1.4 Certificate of Incorporation and Bylaws. In continuing and
domesticating into Delaware, Transaction Corp. shall file a Certificate of
Incorporation and Bylaws with the Secretary of State of the State of Delaware
and such Certificate of Incorporation and Bylaws of Transaction Corp. shall
become the Certificate of Incorporation and Bylaws of Transaction Corp. and of
the Surviving Corporation, subject always to the right of the Surviving
Corporation to amend its Articles of Incorporation and Bylaws in accordance
with the laws of the State of Delaware and the provisions of the Certificate of
Incorporation and Bylaws.
AGREEMENT AND PLAN OF MERGER - Page 1
<PAGE> 5
1.5 Directors and Officers of the Surviving Corporation. The directors and
officers of ETC-Texas immediately prior to the Effective Time shall be the
initial directors and officers of the Surviving Corporation and shall hold such
positions from the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation or as otherwise provided
by law.
ARTICLE 2
CONVERSION OF SHARES
2.1 Conversion of Company Common Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of Transaction Corp. or
ETC-Texas or any holder of capital stock of any of them:
(a) Subject to the limitations contained herein, each share of
common stock of ETC-Texas, no par value (the "ETC-Texas Common
Stock"), issued and outstanding immediately prior to the Effective
Time shall be automatically converted into the right to receive one
and one-fourth of a share of common stock of Transaction Corp. no par
value (the "Transaction Corp. Common Stock").
(b) All shares of ETC-Texas Common Stock shall be cancelled and
cease to be outstanding and each holder of a certificate representing
ETC-Texas Common Stock shall thereafter cease to have any rights with
respect thereto except as set forth in this Article 2.
2.2 Stock Certificates. At or following the Effective Time, each holder
of an outstanding certificate or certificates representing ETC-Texas Common
Stock shall surrender the same to Transaction Corp. and Transaction Corp.
shall, in exchange therefor, cause to be issued to the holder of such
certificate(s) a new certificate representing shares of Transaction Corp.
Common Stock in accordance with this Article 2, less any amount required to be
withheld under applicable federal, state or local tax requirements, and the
surrendered certificate(s) shall be cancelled. Until so surrendered and
exchanged, each such certificate shall represent solely the right to receive
shares of Transaction Corp. Common Stock in accordance with this Article 2,
without interest and less any tax withholding.
2.3 Fractional Shares. No fractional shares of Transaction Corp. Common
Stock shall be issued in the Merger. In lieu thereof, all fractional shares of
Transaction Corp. Common Stock that a holder of ETC-Texas Common Stock would
otherwise be entitled to receive as a result of the Merger shall be
automatically converted into the right to receive one full share of Transaction
Corp. Common Stock.
2.4 Dissenting Shares. Each share of ETC-Texas Common Stock issued and
outstanding immediately prior to the Effective Time not voted in favor of the
Merger, the holder of which has given written notice of the exercise of
dissenter's rights as required by the TBCA is herein called a "Dissenting
Share." Dissenting Shares shall not be converted into or represent the right
to receive shares of Transaction Corp. Common Stock pursuant to this Article 2
and shall be entitled only to such rights as are available to such holder
pursuant to the TBCA, unless the holder thereof shall have withdrawn or
forfeited his dissenter's rights. Each holder of Dissenting Shares shall be
entitled to receive the value of such Dissenting Shares held by him in
accordance with the applicable provisions of the TBCA. Transaction Corp. will
promptly pay to any holder of Dissenting Shares such amount as such holder
shall be entitled to receive in accordance with the applicable provisions of
the TBCA. If any holder of Dissenting Shares shall effectively withdraw or
forfeit his dissenter's rights under the TBCA, such Dissenting Shares shall be
converted into the right to receive shares of Transaction Corp. Common Stock in
accordance with this Article 2.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TRANSACTION CORP.
Transaction Corp. hereby represents and warrants to ETC-Texas as
follows:
3.1 Organization. Transaction Corp. has been duly incorporated, is
validly existing as a corporation and is in good standing under the laws of
Alberta, its province of incorporation, and has the requisite corporate power
to carry on its business as now conducted.
AGREEMENT AND PLAN OF MERGER - Page 2
<PAGE> 6
3.2 Capitalization. The authorized capital stock of Transaction Corp.
consists of an unlimited number of Class "A" Common Shares and an unlimited
number of Class "B" Preferred Shares in the capital stock of Transaction Corp.
As of the date of this Agreement, 1,487,428 Class "A" Common Shares of
Transaction Corp. are issued and outstanding. No Class "B" Preferred Shares
have been issued. All of the issued and outstanding shares of Transaction
Corp. Common Stock are validly issued, fully paid and nonassessable and free of
preemptive rights. All shares of Transaction Corp. Common Stock issuable in
accordance with this Agreement will be, when so issued, duly authorized,
validly issued, fully paid and nonassessable.
3.3 Certain Corporate Matters. Transaction Corp. is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the ownership of its properties, the employment of its personnel or
the conduct of its business requires it to be so qualified, except where such
failure would not have a material adverse effect on Transaction Corp.'s
financial condition, results of operations or business. Transaction Corp. has
full corporate power and authority and all authorizations, licenses and permits
necessary to carry on the business in which it is engaged and to own and use
the properties owned and used by it.
3.4 Authority Relative to this Agreement. Transaction Corp. has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution, delivery and performance of
this Agreement by Transaction Corp. and the consummation by Transaction Corp.
of the transactions contemplated hereby have been duly authorized by the Board
of Directors of Transaction Corp. and, subject to stockholder approval as set
forth in this Agreement, no other actions on the part of Transaction Corp. are
necessary to authorize this Agreement or the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Transaction
Corp. and constitutes, subject to stockholder approval as set forth in this
Agreement, a valid and binding agreement of Transaction Corp., enforceable
against Transaction Corp. in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity.
3.5 Consents and Approvals; No Violations. Except for applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), state
securities or blue sky laws, and the filing and recordation of a certificate of
merger or the articles of merger as required by the DGCL and the TBCA, no
filing with, and no permit, authorization, consent or approval of, any public
body or authority is necessary for the consummation by Transaction Corp. of the
transactions contemplated by this Agreement. Neither the execution or delivery
of this Agreement by Transaction Corp. nor the consummation by Transaction
Corp. of the transactions contemplated hereby, nor compliance by Transaction
Corp. with any of the provisions hereof, will (a) conflict with or result in
any breach of any provisions of the Certificate of Incorporation or Bylaws of
Transaction Corp. (b) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which Transaction
Corp. is a party or by which it or its properties or assets may be bound or (c)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Transaction Corp. or any of its properties or assets, except in
the case of clauses (b) and (c) for violations, breaches or defaults which are
not in the aggregate material to Transaction Corp. taken as a whole.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
ETC-TEXAS
ETC-Texas hereby represents and warrants to Transaction Corp. as
follows:
4.1 Organization. ETC-Texas is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and has the requisite corporate power to carry on its business as now
conducted.
4.2 Capitalization and Ownership of ETC-Texas. ETC-Texas' entire
authorized capital stock consists of 8,000,000 shares of ETC-Texas Common
Stock, no par value and 2,000,000 shares of ETC-Texas Preferred Stock, no par
value. All shares of ETC-Texas Common Stock have been duly authorized and are
validly issued,
AGREEMENT AND PLAN OF MERGER - Page 3
<PAGE> 7
fully paid and nonassessable and have not been issued in violation of any
pre-emptive rights. Except as set forth on Schedule 4.2 hereto, there are no
outstanding or authorized options, rights, warrants, calls, convertible
securities, rights to subscribe, conversion rights or other agreements or
commitments to which ETC-Texas is a party or which is binding upon ETC-Texas
providing for the issuance by ETC-Texas or transfer by ETC-Texas of additional
shares of its capital stock and ETC-Texas has not reserved any shares of its
capital stock for issuance, nor are there any outstanding stock option rights,
phantom equity or similar rights, contracts, arrangements or commitments based
upon the book value, income or other attribute of ETC-Texas.
4.3 Certain Corporate Matters. ETC-Texas is duly licensed or qualified to
do business and is in good standing as a foreign corporation in every
jurisdiction in which the character of ETC-Texas' properties or nature of
ETC-Texas' business requires it to be so licensed or qualified other than such
jurisdictions in which the failure to be so licensed or qualified does not, or
insofar as can reasonably be foreseen, in the future will not, have a material
adverse effect on its financial condition, results of operations or business.
ETC-Texas has full corporate power and authority and all authorizations,
licenses and permits necessary to carry on the business in which it is engaged
or in which it proposes presently to engage and to own and use the properties
owned and used by it. ETC-Texas has delivered to Transaction Corp. true,
accurate and complete copies of its Articles of Incorporation and Bylaws, which
reflect all amendments made thereto at any time prior to the date of this
Agreement. The records of meetings of the shareholders and Board of Directors
of ETC-Texas are complete and correct in all material respects. The stock
records of ETC-Texas and the shareholder lists of ETC-Texas that ETC-Texas has
previously furnished to Transaction Corp. are complete and correct in all
material respects and accurately reflect the record ownership and the
beneficial ownership of all the outstanding shares of ETC-Texas' capital stock
and all other outstanding securities issued by ETC-Texas. ETC-Texas is not in
default under or in violation of any provision of its Articles of Incorporation
or Bylaws in any material respect. ETC-Texas is not in default or in
violation of any restriction, lien, encumbrance, indenture, contract, lease,
sublease, loan agreement, note or other obligation or liability by which it is
bound or to which any of its assets is subject.
4.4 Subsidiaries. ETC-Texas does not own, directly or indirectly, any of
the capital stock of any other corporation or any equity, profit sharing,
participation or other interest in any corporation, partnership, joint venture
or other entity.
4.5 Authority Relative to this Agreement. ETC-Texas has the requisite
corporate power and authority to enter into this Agreement and carry out its
obligations hereunder. The execution, delivery and performance of this
Agreement by ETC-Texas and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of ETC-Texas and,
subject to shareholder approval as set forth in this Agreement, no other
actions on the part of ETC-Texas are necessary to authorize this Agreement or
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by ETC-Texas and constitutes, subject to shareholder
approval as set forth in this Agreement, a valid and binding obligation of
ETC-Texas, enforceable in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity.
4.6 Consents and Approvals; No Violations. Except for applicable
requirements of the Securities Act, the Exchange Act, state securities or blue
sky laws, and the filing and recordation of a certificate of merger or the
articles of merger as required by the DGCL and the TBCA, no filing with, and no
permit, authorization, consent or approval of, any public body or authority is
necessary for the consummation by ETC-Texas of the transactions contemplated by
this Agreement. Neither the execution or delivery of this Agreement by
ETC-Texas nor the consummation by ETC-Texas of the transactions contemplated
hereby, nor compliance by ETC-Texas with any of the provisions hereof, will (a)
conflict with or result in any breach of any provisions of the Articles of
Incorporation or Bylaws of ETC-Texas, (b) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which ETC-Texas is a party or by which it or any of its properties or assets
may be bound or (c) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to ETC-Texas, or any of its properties or assets,
except in the case of clauses (b) and (c) for violations, breaches or defaults
which are not in the aggregate material to ETC-Texas taken as a whole.
AGREEMENT AND PLAN OF MERGER - Page 4
<PAGE> 8
4.7 Financial Statements. ETC-Texas has delivered to Transaction Corp.
all financial information requested by Transaction Corp. (the "Financial
Statements"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods covered thereby and present fairly the financial condition of ETC-Texas
as of such dates and the results of its operations and changes in cash flows
for such periods.
4.8 Events Subsequent to Financial Statements. Since March 31, 1996, there
has not been:
(a) Any adverse change in the financial condition, results of
operations or business of ETC-Texas;
(b) Any sale, lease, transfer, license or assignment of any assets,
tangible or intangible, of ETC-Texas;
(c) Any damage, destruction or property loss, whether or not covered
by insurance, affecting adversely the properties or business of
ETC-Texas;
(d) Any declaration, setting aside or payment of any dividend or
distribution with respect to the shares of capital stock of ETC-Texas
or any redemption, purchase or other acquisition of any such shares;
(e) Any subjection to any lien on any of the assets, tangible or
intangible, of ETC-Texas;
(f) Any incurrence of indebtedness or liability or assumption of
obligations by ETC-Texas;
(g) Any waiver or release by ETC-Texas of any right of any material
value;
(h) Any increase in compensation or benefits to officers or directors
of ETC-Texas;
(i) Any change made or authorized in the Articles of Incorporation or
Bylaws of ETC-Texas;
(j) Except as set forth on Schedule 4.9 hereto, any issuance,
transfer, sale or other disposition by ETC-Texas of any shares of its
capital stock or other equity securities, or any grant of any options,
warrants or other rights to purchase or obtain (including upon
conversion or exercise) shares of its capital stock or other equity
securities;
(k) Any loan to or other transaction with any officer, director or
shareholder of ETC-Texas giving rise to any claim or right of
ETC-Texas against any such person or of such person against ETC-Texas;
or
(l) Any other transaction or commitment entered into other than in the
ordinary course of business by ETC-Texas.
4.9 Undisclosed Liabilities. ETC-Texas has no material liability or
obligation whatsoever, either accrued, absolute, contingent or otherwise.
4.10 Tax Returns and Audits. ETC-Texas has duly and timely filed or caused
to be filed all federal, foreign, state and local income, franchise, sales,
value added and property tax returns (the "Tax Returns") required to be filed
by it and has paid in full or fully reserved against in the Financial
Statements all taxes, interest, penalties, assessments and deficiencies due or
claimed to be due by it to foreign, federal, state or local taxing authorities
(including taxes on properties, income, franchises, licenses, sales, use and
payrolls). The income tax returns filed by ETC-Texas are not being, to the
knowledge of ETC-Texas, examined by the Internal Revenue Service (the "IRS") or
other applicable taxing authorities for any period. All taxes or estimates
thereof that are due as of December 31, 1995, or are claimed or asserted by any
taxing authority to be due as of such date, have been (a) timely and
appropriately paid so as to avoid penalties for underpayment or (b) accrued for
on the balance sheet as of December 31, 1995, as contained in the Financial
Statements. Except for amounts not yet due and payable, all tax liabilities to
which the properties of ETC-Texas may be subject have been paid and
discharged. The provisions for income and other taxes payable reflected in the
Financial Statements make adequate provision for all then accrued and unpaid
taxes of ETC-Texas. There are no tax liens on any property of ETC-Texas, nor
are there any pending or threatened examinations or tax claims asserted.
ETC-Texas has
AGREEMENT AND PLAN OF MERGER - Page 5
<PAGE> 9
not been granted any extensions of limitation periods applicable to tax claims.
Since December 31, 1996, except jurisdictions in which ETC-Texas filed tax
returns, no claim has been made by a taxing authority that ETC-Texas is or may
be subject to taxation by that jurisdiction. All copies of Tax Returns
delivered to Transaction Corp. by ETC-Texas are true and correct, and any and
all notices from foreign, federal, state and local taxing authorities, tax
examination reports and statements of deficiencies assessed against or agreed
to by ETC-Texas since December 31, 1996 have been made available to Transaction
Corp. ETC-Texas is not a party to, or bound by, any tax indemnity, tax sharing
or tax allocation agreement. ETC-Texas is not a member of an "affiliated
group," as defined in Section 1504(a) of the Code and is not the owner of any
interest in a partnership, joint venture, trust, limited liability company or
other entity or organization. All positions taken on federal Tax Returns that
could give rise to a penalty for substantial understatement pursuant to Section
6662(d) of the Code have been disclosed on such Tax Returns. ETC-Texas has not
agreed to and is not required to make any adjustment pursuant to Section 481(a)
of the Code (or any predecessor provision) by reason of any change in any
accounting method. ETC-Texas has no application pending with any taxing
authority requesting permission for any changes in any accounting method, and
the IRS has not proposed any such adjustment or change in accounting method.
ETC-Texas is not subject to any limitation under Section 382 or Section 383 of
the Code.
4.11 Real Property. ETC-Texas does not own any real property. ETC-Texas
does lease the premises located at 5025 Arapaho Road, Suite 515, Dallas, Texas
75248 as its principal place of business.
4.12 Books and Records. The books and records of ETC-Texas fairly reflect
the transactions to which ETC-Texas is a party or by which its properties are
bound.
4.13 Questionable Payments. ETC-Texas nor any employee, agent or
representative of ETC-Texas has, directly or indirectly, made any bribes,
kickbacks, illegal payments or illegal political contributions using ETC-Texas
funds or made any payments from ETC-Texas' funds to governmental officials for
improper purposes or made any illegal payments from ETC-Texas' funds to obtain
or retain business.
4.14 Environmental Matters.
(a) Environmental Laws. ETC-Texas is not currently in violation of,
or subject to any existing, pending or threatened investigation or
inquiry by any governmental authority or to any remedial obligations
under, any laws or regulations pertaining to health or the environment
(hereinafter sometimes collectively called "Environmental Laws"),
including without limitation (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. 9601 et
seq.), as amended by the Superfund Amendments and Reauthorization Act
of 1986 ("CERCLA"), and the regulations promulgated thereunder, (ii)
the Resource Conservation and Recovery Act of 1976 (42 U.S.C. 6901 et
seq.), as amended by the Hazardous and Solid Waste Amendment of 1984
("RCRA"), and the regulations promulgated thereunder, (iii) any
statutes, rules or regulations, whether federal, state or local,
relating to asbestos or polychlorinated biphenyls, and (iv) the
provisions contained in any applicable state statutes, rules and
regulations. This representation and warranty would continue to be
true and correct following disclosure to the applicable governmental
authorities of all relevant facts, conditions and circumstances, if
any, pertaining to the assets and operations of ETC-Texas.
(b) Use of Assets. To the best knowledge of ETC-Texas, the assets of
ETC-Texas have never been used in a manner that would be in violation
of any of the Environmental Laws, including without limitation CERCLA,
RCRA and any applicable state statutes, rules or regulations.
(c) Permits. ETC-Texas has not obtained and is not required to
obtain, and ETC-Texas has no knowledge of any reason that Transaction
Corp. will be required to obtain, any permits, licenses or similar
authorizations to construct, occupy, operate or use any buildings,
improvements, fixtures and equipment owned or leased by ETC-Texas by
reason of any Environmental Laws.
(d) Superfund List. To the best knowledge of ETC-Texas, none of the
assets owned or leased by ETC-Texas are on any federal or state
"Superfund" list or subject to any environmentally related liens.
AGREEMENT AND PLAN OF MERGER - Page 6
<PAGE> 10
4.15 Intellectual Property. Except as set forth on Schedule 4.15, there
are no patents and patent applications, trade names, trademark and service mark
registrations and applications for or registered trade dress rights, common law
trademarks and copyright registrations and applications owned by ETC-Texas or
which ETC-Texas is licensed to use.
4.16 Insurance. Except as disclosed on Schedule 4.16, ETC-Texas has no
insurance policies in effect.
4.17 Contracts. Except as disclosed on Schedule 4.17, ETC-Texas has no
material contracts, leases, arrangements and commitments (whether oral or
written). ETC-Texas is not a party to or bound by or affected by any contract,
lease, arrangement or commitment (whether oral or written) relating to: (a)
collective bargaining with, or any representation of any employees by, any
labor union or association; (b) the purchase or sale of real property; (c)
distribution, agency or construction; and (d) lending or advancing of funds.
4.18 Litigation. ETC-Texas is not subject to any judgment or order of any
court or quasijudicial or administrative agency of any jurisdiction, domestic
or foreign, nor is there any charge, complaint, lawsuit or governmental
investigation pending or, to the best knowledge of ETC-Texas, threatened
against ETC-Texas. ETC-Texas is not a plaintiff in any action, domestic or
foreign, judicial or administrative. There are no existing actions, suits,
proceedings or investigations of ETC-Texas, and ETC-Texas knows of no basis for
such actions, suits, proceedings or investigations. There are no unsatisfied
judgments, orders, decrees or stipulations affecting ETC-Texas or to which
ETC-Texas is a party.
4.19 Employees. ETC-Texas currently leases 30 persons. ETC-Texas has
entered into written employment agreements with certain officers and/or
directors of ETC-Texas as outlined on Schedule 4.19. ETC-Texas is not a party
to or bound by any collective bargaining agreement. There are no loans or other
obligations payable or owing by ETC-Texas to any shareholder, officer, director
or employee of ETC-Texas, nor are there any loans or debts payable or owing by
any of such persons to ETC-Texas or any guarantees by ETC-Texas of any loan or
obligation of any nature to which any such person is a party.
4.20 Employee Benefit Plans. ETC-Texas has no (a) non-qualified deferred or
incentive compensation or retirement plans or arrangements, (b) qualified
retirement plans or arrangements, (c) other employee compensation, severance or
termination pay or welfare benefit plans, programs or arrangements or (d) any
related trusts, insurance contracts or other funding arrangements maintained,
established or contributed to by ETC-Texas within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended.
4.21 Legal Compliance. No claim has been filed against ETC-Texas alleging a
violation of any applicable laws and regulations of foreign, federal, state and
local governments and all agencies thereof. ETC-Texas holds all of the material
permits, licenses, certificates or other authorizations of foreign, federal,
state or local governmental agencies required for the conduct of its business
as presently conducted.
4.22 Broker's Fees. ETC-Texas nor anyone on its behalf has any liability to
any broker, finder, investment banker or agent, or has agreed to pay any
brokerage fees, finder's fees or commissions, or to reimburse any expenses of
any broker, finder, investment banker or agent in connection with the Merger or
any similar transaction.
4.23 Disclosure. The representations and warranties and statements of fact
made by ETC-Texas in this Agreement and in any Schedule hereto are, as
applicable, accurate, correct and complete and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements and information contained herein or therein not
misleading.
ARTICLE 5
CONDUCT OF BUSINESS PENDING THE CLOSING
5.1 Conduct of Business by ETC-Texas Pending the Closing. ETC-Texas
covenants and agrees that prior to the Closing Date:
AGREEMENT AND PLAN OF MERGER - Page 7
<PAGE> 11
(a) ETC-Texas shall conduct its business and operations only in the
usual and ordinary course of business and consistent with past custom
and practice;
(b) ETC-Texas shall not directly or indirectly do any of the
following: (i) sell, pledge, dispose of or encumber any of its assets;
(ii) amend or propose to amend its Articles of Incorporation or
Bylaws; (iii) split, combine or reclassify any outstanding shares of
its capital stock, or declare, set aside or pay any dividend or other
distribution payable in cash, stock, property or otherwise with
respect to shares of its capital stock; (iv) redeem, purchase or
acquire or offer to acquire any shares of its capital stock or other
securities; (v) create any subsidiaries; (vi) enter into or modify any
contract, agreement, commitment or arrangement with respect to any of
the foregoing;
(c) ETC-Texas shall not (i) issue, sell, pledge or dispose of, or
agree to issue, sell, pledge or dispose of, any additional shares of,
or any options, warrants, conversion privileges or rights of any kind
to acquire any shares of, its capital stock; (ii) acquire (by merger,
consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division or
the material assets thereof; (iii) incur any indebtedness for borrowed
money, issue any debt securities or guarantee any indebtedness to
others; or (iv) enter into or modify any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(d) ETC-Texas shall not enter into any employment, severance or
similar agreements or arrangements with, or grant any bonus, salary
increase, severance or termination pay to, any officers or directors;
(e) ETC-Texas shall not adopt any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, employment
or other employee benefit plan, agreement, trust, fund or arrangement
for the benefit or welfare of any employee;
(f) Except as otherwise required by its Articles of Incorporation or
Bylaws, by this Agreement or by applicable law, ETC-Texas shall not
call any meeting of its shareholders;
(g) ETC-Texas shall (i) use their best efforts not to take any action
which would render, or which reasonably may be expected to render, any
representation or warranty made by it in this Agreement untrue at any
time prior to the Closing Date as if then made; and (ii) notify
Transaction Corp. of any emergency or other change in the normal
course of its business or in the operation of its properties and of
any tax audits, tax claims, governmental or third party complaints,
investigations or hearings (or communications indicating that the same
may be contemplated) if such emergency, change, audit, claim,
complaint, investigation or hearing would be material, individually or
in the aggregate, to the financial condition, results of operations or
business of ETC-Texas, or to the ability of any of the parties hereto
to consummate the transactions contemplated by this Agreement;
(h) ETC-Texas shall notify Transaction Corp. promptly of any material
adverse event or circumstance affecting ETC-Texas (including the
filing of any material litigation against ETC-Texas or the existence
of any dispute with any person or entity which involves a reasonable
likelihood of such litigation being commenced); and
(i) ETC-Texas shall comply with all legal requirements and contractual
obligations applicable to its operations and business and pay all
applicable taxes.
5.2 Other Actions. Unless approved in writing by Transaction Corp.,
ETC-Texas shall not take any action or permit any action to occur that might
reasonably be expected to result in any of the representations and warranties
of ETC- Texas contained in this Agreement becoming untrue after the date hereof
or any of the conditions to the Closing set forth in Article 7 of this
Agreement not being satisfied.
AGREEMENT AND PLAN OF MERGER - Page 8
<PAGE> 12
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Access and Information. Except for information relating to any claims
any party may have against the other, ETC-Texas and Transaction Corp. shall
each afford to the other and to the other's financial advisors, legal counsel,
accountants, consultants and other representatives full access during normal
business hours throughout the period prior to the Effective Time to all of its
books, records, properties and personnel and, during such period, each shall
furnish promptly to the other (a) a copy of each report, schedule and other
document filed or received by it pursuant to the requirements of federal or
state securities laws, and (b) all other information as such other party may
reasonably request. Each party shall hold in confidence all non-public
information until such time as such information is otherwise publicly available
and, if this Agreement is terminated, each party will upon written request
deliver to the other all documents, work papers and other material obtained by
such party or on its behalf from the other party as a result of this Agreement
or in connection herewith, whether so obtained before or after the execution
hereof.
6.2 Registration Statement. ETC-Texas and Transaction Corp. shall jointly
prepare and file with the SEC as soon as practicable a Registration Statement
on Form S-4 (the "Registration Statement") under the Securities Act with
respect to all issued and outstanding Transaction Corp. Common Stock as well as
stock to be issued in the Merger. The Registration Statement shall also serve
as the proxy statement with the respect to the meetings of the respective
shareholders of ETC-Texas and Transaction Corp. to approve the Merger and the
transactions contemplated thereby. ETC-Texas and Transaction Corp. shall use
their reasonable best efforts to have the Registration Statement declared
effective by the SEC as promptly as practicable. ETC-Texas and Transaction
Corp. shall use their reasonable best efforts to obtain, prior to the effective
date of the Registration Statement, all necessary state securities or blue sky
permits or approvals required to carry out the transactions contemplated by the
Registration Statement. The Registration Statement, when declared effective by
the SEC, will not include an untrue statement of material fact or omit to state
a material fact which is required to be stated or that is necessary to make a
statement not misleading in light of the circumstances in which it is made.
6.3 Press Releases. ETC-Texas and Transaction Corp. shall consult with
each other as to the form and substance of any press release or other public
disclosure of matters related to this Agreement or any of the transactions
contemplated hereby; provided, however, that nothing in this Section 6.3 shall
be deemed to prohibit any party hereto from making any disclosure that is
required to fulfill such party's disclosure obligations imposed by law,
including, without limitation, federal, state or provincial securities laws.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of Each Party to Effect the Closing. The
respective obligations of each party to effect the Closing shall be subject to
the fulfillment on or prior to the Closing Date of the following conditions:
(a) Transaction Corp. will have been continued and domesticated in
the State of Delaware;
(b) The Registration Statement shall have been deemed and declared
effective by the SEC, no stop order with respect thereto shall be in
effect and no proceedings for the purpose of suspending the
effectiveness of the Registration Statement shall have been issued by
the SEC;
(c) The Merger shall have been approved by the shareholders of
ETC-Texas and Transaction Corp., respectively, in accordance with the
laws of the State of Texas and the Province of Alberta, respectively;
and
(d) No order shall have been entered and remain in effect in any
action or proceeding before any foreign, federal or state court or
governmental agency or other foreign, federal or state regulatory or
administrative agency or commission that would prevent or make illegal
the consummation of the transactions contemplated hereby.
AGREEMENT AND PLAN OF MERGER - Page 9
<PAGE> 13
7.2 Additional Conditions to Transaction Corp.'s Obligations. The
obligations of Transaction Corp. to effect the Closing are subject to the
satisfaction of the following additional conditions on or before the Closing
Date:
(a) The representations and warranties set forth in Article 4 of this
Agreement will be true and correct in all material respects as of the
date hereof and at and as of the Closing Date as though then made;
(b) ETC-Texas shall have performed, in all material respects, each
obligation and agreement and complied with each covenant to be
performed and complied with by it under Articles 5 and 6 of this
Agreement prior to the Closing Date;
(c) All consents by governmental or regulatory agencies or otherwise
that are required for the consummation of the transactions
contemplated hereby or that are required for Transaction Corp. to own,
operate or control ETC-Texas or any portion of the assets of
ETC-Texas to prevent a breach of or a default under or a termination
of any agreement material to ETC-Texas to which ETC-Texas is a party
or to which any material portion of the assets of ETC-Texas is
subject, will have been obtained;
(d) No action or proceeding before any court or governmental body will
be pending or threatened wherein a judgment, decree or order would
prevent any of the transactions contemplated hereby or cause such
transactions to be declared unlawful or rescinded or which might
adversely affect the right of Transaction Corp. to own, operate or
control ETC-Texas;
(e) Transaction Corp. and its financial and legal advisors shall have
completed a due diligence review of the business, operations and
financial statements of ETC-Texas, the results of which shall be
satisfactory to Transaction Corp. in its sole discretion; and
(f) At the Closing, ETC-Texas shall have delivered or caused to be
delivered to Transaction Corp. the following:
(i) a certificate executed on behalf of ETC-Texas stating that
the conditions set forth in Sections 7.2(a) through (d) of
this Agreement have been satisfied;
(ii) certified copies of the resolutions duly adopted by
ETC-Texas' Board of Directors authorizing and approving the
Merger and the execution, delivery and performance of this
Agreement;
(iii) certified copies of resolutions duly adopted by
ETC-Texas' shareholders authorizing and approving the Merger
and the execution, delivery and performance of this Agreement;
(iv) certificates of good standing or comparable certificates
for ETC-Texas from the jurisdiction of its incorporation and
from every jurisdiction where a failure to be qualified or
licensed would have a material adverse effect on its financial
condition, results of operations or business, dated not
earlier than five (5) days prior to the Closing Date;
(v) a copy of ETC-Texas' Articles of Incorporation certified
as of a recent date by the Secretary of State of the State of
Texas;
(vi) an incumbency certificate of the officers of ETC-Texas;
and
(vii) such other documents as Transaction Corp. may reasonably
request in connection with the transactions contemplated
hereby.
7.3 Additional Conditions to ETC-Texas' Obligations. The obligations of
ETC-Texas to effect the Closing are subject to the satisfaction of the
following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article 3 of this
Agreement will be true and correct in all material respects as of the
date hereof and at and as of the Closing Date as though then made;
AGREEMENT AND PLAN OF MERGER - Page 10
<PAGE> 14
(b) Transaction Corp. shall have performed, in all material respects,
each obligation and agreement and complied with each covenant required
to be performed and complied with by it under Article 6 of this
Agreement prior to the Closing Date;
(c) No action or proceeding before any court or governmental body will
be pending or threatened wherein a judgment, decree or order would
prevent any of the transactions contemplated hereby or cause such
transactions to be declared unlawful or rescinded;
(d) On the Closing Date, Transaction Corp. shall have delivered to
ETC-Texas the following:
(i) a certificate executed on behalf of Transaction Corp.
stating that the conditions set forth in Sections 7.3(a)
through (c) of this Agreement have been satisfied;
(ii) certified copies of resolutions duly adopted by
Transaction Corp.'s Board of Directors authorizing and
approving the Merger and the execution, delivery and
performance of this Agreement;
(iii) certified copies of the resolutions duly adopted by the
shareholders of Transaction Corp. authorizing and approving
the Merger and the execution, delivery and performance this
Agreement;
(iv) a good standing certificate for Transaction Corp. from
the Secretary of State of the State of Delaware, dated not
earlier than five (5) days prior to the Closing Date;
(v) a copy of Transaction Corp.'s Certificate of
Incorporation certified by the Secretary of State of the State
of Delaware;
(vi) an incumbency certificate of the officers of
Transaction Corp.; and
(vii) such other documents as ETC-Texas may reasonably
request in connection with the transactions contemplated
hereby.
ARTICLE 8
REMEDIES
8.1 Indemnification by ETC-Texas. Subject to the terms and conditions of
this Article 8, ETC-Texas agrees to indemnify, defend and hold Transaction
Corp. and its directors, officers, agents, attorneys and affiliates harmless
from and against all losses, claims, obligations, demands, assessments,
penalties, liabilities, costs, damages, attorneys' fees and expenses
(collectively, "Damages"), asserted against or incurred by any such person or
entity by reason of or resulting from a breach of any representation, warranty
or covenant of ETC-Texas contained in this Agreement.
8.2 Indemnification by Transaction Corp. Subject to the terms and
conditions of is Article 8, Transaction Corp. hereby agrees to indemnify,
defend and hold ETC-Texas and its directors, officers, agents, attorneys and
affiliates harmless from and against all Damages asserted against or incurred
by any such person or entity by reason of or resulting from a breach of any
representation, warranty or covenant of Transaction Corp. contained in this
Agreement.
8.3 Conditions of Indemnification. The respective obligations and
liabilities of ETC-Texas and Transaction Corp. (the "indemnifying party") to
the other (the "party to be indemnified") under Sections 8.1 and 8.2 with
respect to claims resulting from the assertion of liability by third parties
shall be subject to the following terms and conditions:
(a) Within 20 days (or such earlier time as might be required to
avoid prejudicing the indemnifying party's position) after receipt of
notice of commencement of any action evidenced by service of process
or other legal pleading, the party to be indemnified shall give the
indemnifying party written notice
AGREEMENT AND PLAN OF MERGER - Page 11
<PAGE> 15
thereof together with a copy of such claim, process or other legal
pleading, and the indemnifying party shall have the right to undertake
the defense thereof by representatives of its own choosing and at its
own expense; provided that the party to be indemnified may participate
in the defense with counsel of its own choice, the fees and expenses
of which counsel shall be paid by the party to be indemnified unless
(i) the indemnifying party has agreed to pay such fees and expenses,
(ii) the indemnifying party has failed to assume the defense of such
action or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnifying party and the party
to be indemnified and the party to be indemnified has been advised by
counsel that there may be one or more legal defenses available to it
that are different from or additional to those available to the
indemnifying party (in which case, if the party to be indemnified
informs the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of
such action on behalf of the party to be indemnified, it being
understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys at any time for the party to be indemnified, which firm
shall be designated in writing by the party to be indemnified).
(b) If the indemnifying party, by the 30th day after receipt of
notice of any such claim (or, if earlier, by the 10th day preceding
the day on which an answer or other pleading must be served in order
to prevent judgment by default in favor of the person asserting such
claim), does not elect to defend against such claim, the party to be
indemnified will (upon further notice to the indemnifying party) have
the right to undertake the defense, compromise or settlement of such
claim on behalf of and for the account and risk of the indemnifying
party and at the indemnifying party's expense, subject to the right of
the indemnifying party to assume the defense of such claims at any
time prior to settlement, compromise or final determination thereof.
(c) Notwithstanding the foregoing, the indemnifying party shall not
settle any claim without the consent of the party to be indemnified
unless such settlement involves only the payment of money and the
claimant provides to the party to be indemnified a release from all
liability in respect of such claim. If the settlement of the claim
involves more than the payment of money, the indemnifying party shall
not settle the claim without the prior consent of the party to be
indemnified.
(d) The party to be indemnified and the indemnifying party will each
cooperate with all reasonable requests of the other.
8.4 Waiver. No waiver by any party of any default or breach by another
party of any representation, warranty, covenant or condition contained in this
Agreement shall be deemed to be a waiver of any subsequent default or breach by
such party of the same or any other representation, warranty, covenant or
condition. No act, delay, omission or course of dealing on the part of any
party in exercising any right, power or remedy under this Agreement or at law
or in equity shall operate as a waiver thereof or otherwise prejudice any of
such party's rights, powers and remedies. All remedies, whether at law or in
equity, shall be cumulative and the election of any one or more shall not
constitute a waiver of the right to pursue other available remedies.
8.5 Remedies Not Exclusive. The remedies provided in this Article 8 shall
not be exclusive of any other rights or remedies available to one party against
the other, either at law or in equity.
ARTICLE 9
TERMINATION
9.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time by the
mutual consent of the parties hereto.
9.2 Termination by Any Party. This Agreement may be terminated and the
Merger may be abandoned by action of the Board of Directors of any party hereto
if a United States federal or state court of competent jurisdiction or United
States federal or state governmental, regulatory or administrative agency or
commission
AGREEMENT AND PLAN OF MERGER - Page 12
<PAGE> 16
shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and non-appealable; provided, that the party seeking to
terminate this Agreement pursuant to this clause shall have used all reasonable
efforts to remove such injunction, order or decree.
9.3 Effect of Termination and Abandonment. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this Article 9,
all obligations of the parties hereto shall terminate, except the obligations
of the parties pursuant to Section 6.1.
ARTICLE 10
GENERAL PROVISIONS
10.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
sent by telex, telecopy, facsimile or overnight courier, or mailed by
registered or certified mail (postage prepaid and return receipt requested), to
the party to whom the same is so delivered, sent or mailed at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Transaction Corp.:
5025 Arapaho Road, Suite 515
Dallas, Texas 75248
Attn: L. Cade Havard
Phone: (214) 980-0900
Fax: (214) 980-0929
(b) if to ETC-Texas:
5025 Arapaho Road, Suite 515
Dallas, Texas 75248
Attn: L. Cade Havard
Phone: (214) 980-0900
Fax: (214) 980-0929
10.2 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise stated.
10.3 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated and the parties shall negotiate
in good faith to modify this Agreement to preserve each party's anticipated
benefits under this Agreement.
10.4 Miscellaneous. This Agreement (together with all other documents and
instruments referred to herein): (a) constitutes the entire agreement and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties with respect to the subject matter hereof; (b) except as
expressly set forth herein, is not intended to confer upon any other person any
rights or remedies hereunder and (c) shall not be assigned by operation of law
or otherwise.
10.5 Separate Counsel. Each party hereby expressly acknowledges that it
has been advised and urged to seek its own separate legal counsel for advice
with respect to this Agreement.
10.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS,
INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF
TEXAS, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
AGREEMENT AND PLAN OF MERGER - Page 13
<PAGE> 17
10.7 Counterparts. This Agreement may be executed in two or more
counterparts which together shall constitute a single agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ETC-TEXAS:
ELECTRONIC TRANSMISSION CORPORATION
By: /s/ L. Cade Havard
-----------------------------
Name: L. Cade Havard
Its: Chief Executive Officer
TRANSACTION CORP.:
ETC TRANSACTION CORPORATION
By: /s/ L. Cade Havard
-----------------------------
Name: L. Cade Havard
Its: Chief Executive Officer
AGREEMENT AND PLAN OF MERGER - Page 14
<PAGE> 1
EXHIBIT 2.2
CERTIFICATE OF MERGER
OF
ELECTRONIC TRANSMISSION CORPORATION,
A TEXAS CORPORATION
INTO
ETC TRANSACTION CORPORATION,
A DELAWARE CORPORATION
The undersigned corporation DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
State of
Name Incorporation
---- -------------
Electronic Transmission Corporation Texas
ETC Transaction Corporation Delaware
SECOND: That an Agreement of Merger between the parties to the merger
has been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with the requirements of Section 252 of
the General Corporation Law of Delaware.
THIRD: That the name of the surviving corporation of the merger is ETC
Transaction Corporation, which shall hereinwith be changed to Electronic
Transmission Corporation, a Delaware corporation.
FOURTH: That the amendments or changes in the Certificate of
Incorporation of ETC Transaction Corporation, a Delaware corporation, which is
the surviving corporation, that are to be effected by the merger are as
follows:
FIRST: The name of this corporation is Electronic Transmission
Corporation.
FIFTH: That the executed Agreement of Merger is on file at the
principal place of business of the surviving corporation, the address of which
is 5025 Arapaho Road, Suite 515, Dallas, Texas 75248.
SIXTH: That a copy of the Agreement of Merger will be furnished by the
surviving corporation, on request and without cost, to any stockholder of any
constituent corporation.
SEVENTH: The authorized capital stock of each foreign corporation
which is a party to the merger is as follows:
<TABLE>
<CAPTION>
Number of Par Value
Corporation Class Shares per Share
----------- ----- ------ ---------
<S> <C> <C> <C>
Electronic Transmission Corporation Common 8,000,000 No par value
Electronic Transmission Corporation Preferred 2,000,000 No par value
</TABLE>
CERTIFICATE OF MERGER - Page 1
<PAGE> 2
Dated: February 11, 1997.
ETC TRANSACTION CORPORATION
By: /s/ L. Cade Havard
---------------------------------------------
L. Cade Havard, Chief Executive Officer
CERTIFICATE OF MERGER - Page 2
<PAGE> 1
EXHIBIT 2.3
ARTICLES OF MERGER
with respect to
the merger of
ELECTRONIC TRANSMISSION CORPORATION,
a Texas corporation
with and into
ETC TRANSACTION CORPORATION,
a Delaware corporation
Pursuant to the provisions of Articles 5.04 of the Texas Business
Corporation Act, ETC Transaction Corporation, a Delaware corporation ("ETC"),
as the surviving corporation, and Electronic Transmission Corporation, a Texas
corporation, hereby execute, deliver and adopt the following Articles of Merger
for the purpose of merging Electronic Transmission Corporation, a Texas
corporation, with and into ETC (the "Merger").
1. The names of the corporations participating in the merger and the
states under the laws of which they are respectively organized are as
follows:
<TABLE>
<CAPTION>
Name of Corporation State
------------------- -----
<S> <C>
ETC Transaction Corporation Delaware
Electronic Transmission Corporation Texas
</TABLE>
2. The plan of merger is set forth as Exhibit A.
3. The plan of merger was duly approved by the shareholders of each of
the corporations as follows:
As to each of the undersigned corporations, the number of
shares outstanding, the designation and number of shares
outstanding, the designation and number of outstanding shares
of each such class or series entitled to vote as a class on
such plan are as follows:
<TABLE>
<CAPTION>
Number of Entitled
Shares to Vote
Name of Corporation Outstanding as a Class
------------------- ----------- ----------
<S> <C> <C>
ETC Transaction Corporation 2,007,145 None
Electronic Transmission Corporation 7,153,601 None
</TABLE>
As to each of the undersigned corporations, the total number
of shares voted for and against the plan of merger,
respectively, are as follows. None of the outstanding shares
of any of the corporations are entitled to vote as a class
with respect to the plan of merger:
ARTICLES OF MERGER - Page 1
<PAGE> 2
<TABLE>
<CAPTION>
Total Total
Name of Corporation Voted For Voted Against
------------------- --------- -------------
<S> <C> <C>
ETC Transaction Corporation 596,947 -0-
---------- ------------
Electronic Transmission Corporation 6,106,213 -0-
</TABLE>
4. The plan of merger and performance of its terms were duly authorized
by all action required by the laws under which ETC, the surviving
corporation, was incorporated or organized and by its constituent
documents.
5. These Articles of Merger and the Merger shall be effective when deemed
filed with the Secretary of State of the State of Texas.
IN WITNESS WHEREOF, each of the undersigned corporations has caused
these Articles of Merger to be executed on its behalf by its duly authorized
officer as of the 11th day of February, 1997.
ETC TRANSACTION CORPORATION
By: /s/ L. Cade Havard
---------------------------------------------
L. Cade Havard, Chief Executive Officer
ELECTRONIC TRANSMISSION CORPORATION
By: /s/ L. Cade Havard
---------------------------------------------
L. Cade Havard, President
ARTICLES OF MERGER - Page 2
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF DOMESTICATION
The undersigned, L. Cade Havard, Chief Executive Officer of ETC
Transaction Corporation, in accordance with the provisions of Section 388 of
Title 8 of the Delaware Code, does hereby certify:
1. The corporation was first formed on September 5, 1986 in
Calgary, Alberta, Canada.
2. The name of the corporation immediately prior to the filing of
this Certificate of Domestication was ETC Transaction Corporation.
3. The name of the corporation as set forth in its Certificate of
Incorporation is ETC Transaction Corporation.
4. The jurisdiction that constituted the seat, siege social,
principal place of business or central administration of the corporation
immediately prior to the filing of this Certificate of Domestication was
Calgary, Alberta, Canada.
IN WITNESS WHEREOF, I, being the Chief Executive Officer and being
duly authorized to sign this Certificate of Domestication on behalf of the
corporation have made and signed this Certificate of Domestication on this 11th
day of February 1997.
ETC TRANSACTION CORPORATION
By: /s/ L. Cade Havard
-----------------------------------------
L. Cade Havard, Chief Executive Officer
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF INCORPORATION
OF
ETC TRANSACTION CORPORATION
I, the undersigned natural person acting as an incorporator of a
corporation (hereinafter called the "Corporation") under the General
Corporation Law of the State of Delaware (the "DGCL"), do hereby adopt the
following Certificate of Incorporation for the Corporation:
FIRST: The name of this corporation is ETC Transaction Corporation.
SECOND: The registered office of the Corporation in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, Delaware 19801, County of New Castle. The name of the
registered agent of the Corporation at such address is The Corporation Trust
Company.
THIRD: The purpose for which the Corporation is organized is to
engage in any and all lawful acts or activity for which corporations may be
organized under the DGCL. The Corporation will have perpetual existence.
FOURTH: The Corporation shall have authority to issue two classes of
shares to be designated respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the Corporation is authorized to issue is
Seventeen Million (17,000,000) shares of which Fifteen Million (15,000,000)
shall be Common Stock and Two Million (2,000,000) shall be Preferred Stock.
Each share of Common Stock shall have a par value of $0.001, and each share of
Preferred Stock shall have a par value of $1.00.
The Preferred Stock authorized by this Certificate of Incorporation
may be issued from time to time in one or more series, each of which shall have
such designation(s) or title(s) as may be fixed by the Board of Directors prior
to the issuance of any shares thereof. The Board of Directors is hereby
authorized to fix or alter the dividend rates, conversion rights, rights and
terms of redemption, including sinking fund provisions, the redemption price or
prices, voting rights and liquidation preferences of any wholly unissued series
of Preferred Stock, and the number of shares constituting any such series and
the designation thereof, or any of them. The rights, powers, preferences,
limitations and restrictions, if any, accompanying such shares of Preferred
Stock shall be set forth by resolution of the Board of Directors providing for
the issue thereof prior to the issuance of any shares thereof, in accordance
with the applicable provisions of the DGCL. Each share of any series of
Preferred Stock shall be identical with all other shares of such series, except
as to the date from which dividends, if any, shall accrue.
FIFTH: The name of the incorporator is George L. Diamond, and the
mailing address of such incorporator is Looper, Reed, Mark & McGraw
Incorporated, 1601 Elm Street, Suite 4100, Dallas, Texas 75201.
SIXTH: The number of directors constituting the initial board of
directors is six (6), and the names and addresses of the persons who are to
serve as directors until the first annual meeting of stockholders or until
their successors are elected and qualified are as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
L. Cade Havard 5025 Arapaho Road, Suite 515
Dallas, Texas 75248
Elaine Boze 5025 Arapaho Road, Suite 515
Dallas, Texas 75248
</TABLE>
CERTIFICATE OF INCORPORATION - Page 1
<PAGE> 2
<TABLE>
<CAPTION>
Name Address
-------
<S> <C>
Michael Eckstein 5025 Arapaho Road, Suite 515
Dallas, Texas 75248
David O. Hannah 5025 Arapaho Road, Suite 515
Dallas, Texas 75248
Timothy P. Powell 5025 Arapaho Road, Suite 515
Dallas, Texas 75248
Rick L. Snyder 5025 Arapaho Road, Suite 515
Dallas, Texas 75248
</TABLE>
SEVENTH: Directors of the Corporation need not be elected by written
ballot unless the bylaws of the Corporation otherwise provide.
EIGHTH: The directors of the Corporation shall have the power to
adopt, amend and repeal the bylaws of the Corporation.
NINTH: No contract or transaction between the Corporation and one or
more of its directors, officers or stockholders, or between the Corporation and
any person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers or stockholders are directors, officers or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee which authorizes the contract or transaction, or solely
because his, her or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest
and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified by the board of directors, a committee
thereof, or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of directors or
of a committee which authorizes the contract or transaction.
TENTH: The Corporation shall indemnify any person who was, is or is
threatened to be made a party to a proceeding (as hereinafter defined) by
reason of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent permitted under the DGCL, as the same exists or may hereafter be
amended. Such right shall be a contract right and as such shall run to the
benefit of any director or officer who is elected and accepts the position of
director or officer of the Corporation or elects to continue to serve as a
director or officer of the Corporation while this Article Tenth is in effect.
Any repeal or amendment of this Article Tenth shall be prospective only and
shall not limit the rights of any such director or officer or the obligations
of the Corporation with respect to any claim arising from or related to the
services of such director or officer in any of the foregoing capacities prior
to any such repeal or amendment to this Article Tenth. Such right shall
include the right to be paid by the Corporation expenses incurred in defending
any such proceeding in advance of its final disposition to the maximum extent
permitted under the DGCL, as the same exists or may hereafter be amended. If a
claim for indemnification or advancement of expenses hereunder is not paid in
full by the Corporation within sixty (60) days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid
CERTIFICATE OF INCORPORATION - Page 2
<PAGE> 3
amount of the claim, and if successful in whole or in part, the claimant shall
also be entitled to be paid the expenses of prosecuting such claim. It shall
be a defense to any such action that such indemnification or advancement of
costs of defense are not permitted under the DGCL, but the burden of proving
such defense shall be on the Corporation. Neither the failure of the
Corporation (including its board of directors or any committee thereof,
independent legal counsel, or stockholders) to have made its determination
prior to the commencement of such action that indemnification of, or
advancement of costs of defense to, the claimant is permissible in the
circumstances nor an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible shall
be a defense to the action or create a presumption that such indemnification or
advancement is not permissible. In the event of the death of any person having
a right of indemnification under the foregoing provisions, such right shall
inure to the benefit of his or her heirs, executors, administrators and
personal representatives. The rights conferred above shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, bylaw, resolution of stockholders or directors, agreement, or
otherwise.
Without limiting the generality of the foregoing, to the extent
permitted by then applicable law, the grant of mandatory indemnification
pursuant to this Article Tenth shall extend to proceedings involving the
negligence of such person.
The Corporation may additionally indemnify any employee or agent of
the Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, any appeal in such an action, suit or proceeding,
and any inquiry or investigation that could lead to such an action, suit or
proceeding.
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 Section 145 of the DGCL.
ELEVENTH: A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper benefit. Any repeal or
amendment of this Article Eleventh by the stockholders of the Corporation shall
be prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation arising from an act or
omission occurring prior to the time of such repeal or amendment. In addition
to the circumstances in which a director of the Corporation is not personally
liable as set forth in the foregoing provisions of this Article Eleventh, a
director shall not be liable to the Corporation or its stockholders to such
further extent as permitted by any law hereafter enacted, including, without
limitation, any subsequent amendment to the DGCL.
TWELFTH: The Corporation prohibits the use of a written consent in
lieu of any meeting of the stockholders of the Corporation.
THIRTEENTH: Cumulative voting with respect to the election of
directors is expressly prohibited.
FOURTEENTH: The Corporation expressly elects not to be governed by
Section 203 of the DGCL.
CERTIFICATE OF INCORPORATION - Page 3
<PAGE> 4
I, the undersigned, for the purpose of forming the Corporation under
the laws of the State of Delaware, do make, file and record this Certificate of
Incorporation and do certify that this is my act and deed and that the facts
stated herein are true and, accordingly, I do hereunto set my hand on this 11th
day of February, 1997.
/s/ George L. Diamond
---------------------------------------------
GEORGE L. DIAMOND
CERTIFICATE OF INCORPORATION - Page 4
<PAGE> 1
EXHIBIT 3.3
CORPORATE BYLAWS OF
ETC TRANSACTION CORPORATION
(A DELAWARE CORPORATION)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION SUBJECT MATTER PAGE
<S> <C> <C>
ARTICLE I. NAME AND OFFICES . . . . . . . . . . . . . . . . . . . . . 1
1.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Registered Office and Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) Registered Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(c) Change of Registered Office or Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. STOCKHOLDERS
2.1 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Voting List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Requisite Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Withdrawal of Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 Voting at Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Voting Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Exercise of Voting Power; Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Record Date for Meetings; Closing Transfer Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 No Action Without Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.12 No Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III. DIRECTORS
3.1 Management Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Number and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Election and Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Voting on Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 New Directorships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.7 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(e) Notice and Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(g) Requisite Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.9 Action Without Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.10 Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Designation and Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Members; Alternate Members; Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(e) Change in Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
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<TABLE>
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(f) Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(h) Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(i) Quorum; Requisite Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(j) Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(k) Action Without Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(l) Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.12 Maintenance of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 Interested Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV. NOTICES
4.1 Method of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE V. OFFICERS AND AGENTS
5.1 Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Election of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.4 Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.5 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.6 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.7 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.8 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.9 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.10 President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.11 Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.12 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.13 Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.14 Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.15 Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI. INDEMNIFICATION
6.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 Determination of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.3 Advance of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.4 Nature of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.6 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII. STOCK CERTIFICATES AND TRANSFER REGULATIONS
7.1 Description of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.2 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.3 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.4 Issuance of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.5 Payment for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(d) Allocation of Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.6 Closing of Transfer Records; Record Date for Action With Meetings . . . . . . . . . . . . . . . . . . . 18
7.7 Registered Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.8 Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
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(a) Proof of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Timely Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(c) Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(d) Other Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.9 Registration of Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(a) Endorsement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Guaranty and Effectiveness of Signature . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Adverse Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(d) Collection of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(e) Additional Requirements Satisfied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.10 Restrictions on Transfer and Legends on Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) Shares in Classes or Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Restriction on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Unregistered Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII. GENERAL PROVISIONS
8.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Declaration and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.2 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.4 Annual Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.5 Contracts and Negotiable Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.6 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.7 Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.8 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.9 Amendment of Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.10 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.11 Table of Contents; Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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BYLAWS
OF
ETC TRANSACTION CORPORATION
(A DELAWARE CORPORATION)
ARTICLE I.
NAME AND OFFICES
1.1 Name. The name of the Corporation is ETC Transaction
Corporation, hereinafter referred to as the "Corporation."
1.2 Registered Office and Agent. The Corporation shall establish,
designate and continuously maintain a registered office and agent in the State
of Delaware, subject to the following provisions:
(a) Registered Office. The Corporation shall establish
and continuously maintain in the State of Delaware a registered office
which may be, but need not be, the same as its place of business.
(b) Registered Agent. The Corporation shall designate
and continuously maintain in the State of Delaware a registered agent,
which agent may be either an individual resident of the State of
Delaware whose business office is identical with such registered
office, or a domestic corporation or a foreign corporation authorized
to transact business in the State of Delaware, having a business
office identical with such registered office.
(c) Change of Registered Office or Agent. The
Corporation may, by resolution of its Board of Directors, change its
registered office or change its registered agent, or both, upon the
filing in the Office of the Secretary of State of Delaware of a
statement setting forth the facts required by law, and executed for
the Corporation by its President or a Vice President. A certified
copy of the certificate certifying the change shall be recorded in the
office of the recorder for the county in which the new office is
located.
1.3 Other Offices. The Corporation may also have offices at such
other places within and without the State of Delaware as the Board of Directors
may, from time to time, determine the business of the Corporation may require.
ARTICLE II.
STOCKHOLDERS
2.1 Place of Meetings. Each meeting of the stockholders of the
Corporation is to be held at the principal offices of the Corporation or at
such other place, either within or without the State of Delaware, as may be
specified in the notice of the meeting or in a duly executed waiver of notice
thereof.
2.2 Annual Meetings. The annual meeting of the stockholders for
the election of Directors and for the transaction of such other business as may
properly come before the meeting shall be held within one hundred
BYLAWS - Page 1
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twenty (120) days after the close of the fiscal year of the Corporation on a
day during such period to be selected by the Board of Directors; provided,
however, that the failure to hold the annual meeting within the designated
period of time or on the designated date shall not work a forfeiture or
dissolution of the Corporation.
2.3 Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, may be called by the Chairman of the Board or the
President. Special meetings of the stockholders shall be called by the
President or Secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of stockholders owning ten percent
(10%) of the capital stock of the Corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting and the business to be transacted at any such special meeting
of stockholders, and shall be limited to the purposes stated in the notice
therefor.
2.4 Notice. Written or printed notice of the meeting stating the
place, day and hour of the meeting, and in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not
less than ten (10) nor more than sixty (60) days before the date of the
meeting, either personally or by mail, by or at the direction of the Chairman
of the Board or the President, the Secretary or a majority of the members of
the Board of Directors calling the meeting, to each stockholder entitled to
vote at such meeting as determined in accordance with the provisions of Section
2.10 hereof. If mailed, such notice shall be deemed to be delivered when
deposited in the United States Mail, with postage thereon prepaid, addressed to
the stockholder entitled thereto at his address as it appears on the stock
transfer records of the Corporation.
2.5 Voting List. The officer or agent having charge and custody
of the stock transfer records of the Corporation, shall prepare, at least ten
(10) days before each meeting of stockholders, a complete list of the
stockholders entitled to vote at such meeting, arranged in alphabetical order
and containing the address and number of voting shares held by each, which list
shall be kept on file at the registered office or principal place of business
of the Corporation for a period of not less than ten (10) days prior to such
meeting and shall be subject to inspection by any stockholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
stockholder during the entire time of the meeting. The original stock ledger
or transfer book, or a duplicate thereof, shall be evidence as to the identity
of the stockholders entitled to examine such list or stock ledger or transfer
book and to vote at any such meeting of the stockholders.
2.6 Quorum. The holders of a majority of the shares of the
capital stock issued and outstanding and entitled to vote thereat, represented
in person or by proxy, shall be requisite and shall constitute a quorum at all
meetings of the stockholders for the transaction of business except as
otherwise provided by statute or by
BYLAWS - Page 2
<PAGE> 7
the Certificate of Incorporation or by these Bylaws. The stockholders
represented in person or by proxy at a meeting of the stockholders at which a
quorum is not present may adjourn the meeting until such time and to such place
as may be determined by a vote of the holders of a majority of the shares
represented in person or by proxy at that meeting. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
2.7 Requisite Vote. If a quorum is present at any meeting, the
vote of the holders of a majority of the shares of capital stock having voting
power, present in person or represented by proxy, shall determine any question
brought before such meeting, unless the question is one upon which, by express
provision of the Certificate of Incorporation or of these Bylaws, a different
vote shall be required or permitted, in which case such express provision shall
govern and control the determination of such question.
2.8 Withdrawal of Quorum. If a quorum is present at the time of
commencement of any meeting, the stockholders present at such duly convened
meeting may continue to transact any business which may properly come before
said meeting until adjournment thereof, notwithstanding the withdrawal from
such meeting of sufficient holders of the shares of capital stock entitled to
vote thereat to leave less than a quorum remaining.
2.9 Voting at Meeting. Voting at meetings of stockholders shall
be conducted and exercised subject to the following procedures and regulations:
(a) Voting Power. In the exercise of voting power with
respect to each matter properly submitted to a vote at any meeting of
stockholders, each stockholder of the capital stock of the Corporation
having voting power shall be entitled to one (1) vote for each such
share held in his name on the records of the Corporation, except to
the extent otherwise specified by the Certificate of Incorporation.
(b) Exercise of Voting Power; Proxies. At any meeting of
the stockholders, every holder of the shares of capital stock of the
Corporation entitled to vote at such meeting may vote either in
person, or by proxy executed in writing by such stockholder. A
telegram, telex, cablegram, or similar transmission by a stockholder,
or a photographic, photostatic, facsimile, or similar reproduction of
a writing executed by a stockholder, shall be treated as an execution
in writing. No proxy shall be valid after the expiration of eleven
(11) months from the date of its execution, unless otherwise stated
therein. A proxy shall be revocable unless expressly designated
therein as irrevocable and coupled with an interest. Proxies coupled
with an interest include the appointment as proxy of: (a) a pledgee;
(b) a person who purchased or agreed to purchase or owns or holds an
option to purchase the shares voted; (c) a creditor of the Corporation
who extended its credit under terms requiring the appointment; (d) an
employee of the Corporation whose employment contract requires the
appointment; or (e) a party to a voting agreement created under
Section 218 of the General Corporation Law of Delaware, as amended.
Each proxy shall be filed with the Secretary of the Corporation prior
to or at the time of the meeting. Voting for directors shall be in
accordance with the provisions of paragraph (c) below of this Section
2.9. Any vote may be taken by voice vote or by show of hands unless
someone entitled to vote at the meeting objects, in which case written
ballots shall be used.
(c) Election of Directors. In all elections of Directors
cumulative voting shall be prohibited.
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2.10 Record Date for Meetings; Closing Transfer Records. As more
specifically provided in Article 7, Section 7.6 hereof, the Board of Directors
may fix in advance a record date for the purpose of determining stockholders
entitled to notice of or to vote at a meeting of stockholders, such record date
to be not less than ten (10) nor more than sixty (60) days prior to such
meeting, or the Board of Directors may close the stock transfer records for
such purpose for a period of not less than ten (10) nor more than sixty (60)
days prior to such meeting. In the absence of any action by the Board of
Directors, the date upon which the notice of the meeting is mailed shall be
deemed the record date.
2.11 No Action Without Meetings. No written consent of the
stockholders may be used in lieu of any meeting of the stockholders.
2.12 No Preemptive Rights. Unless otherwise determined by the
Board of Directors in the manner provided under the General Corporation Law of
Delaware, as amended, no holder of shares of capital stock of the Corporation
shall, as such holder, have any right to purchase or subscribe for any capital
stock of any class which the Corporation may issue or sell, whether or not
exchangeable for any capital stock of the Corporation of any class or classes,
whether issued out of unissued shares authorized by the Certificate of
Incorporation, as amended, or out of shares of capital stock of the Corporation
acquired by it after the issue thereof; nor, unless otherwise determined by the
Board of Directors in the manner provided under the General Corporation Law of
Delaware, as amended, shall any holder of shares of capital stock of the
Corporation, as such holder, have any right to purchase, acquire or subscribe
for any securities which the Corporation may issue or sell whether or not
convertible into or exchangeable for shares of capital stock of the Corporation
of any class or classes, and whether or not any such securities have attached
or appurtenant thereto warrants, options or other instruments which entitle the
holders thereof to purchase, acquire or subscribe for shares of capital stock
of any class or classes.
ARTICLE III.
DIRECTORS
3.1 Management Powers. The powers of the Corporation shall be
exercised by or under the authority of, and the business and affairs of the
Corporation shall be managed under the direction of, its Board of Directors
which may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Certificate of Incorporation or
by these Bylaws directed or required to be exercised or done by the
stockholders.
3.2 Number and Qualification. The Board of Directors shall
consist of three (3) or more members; provided, however, the initial Board of
Directors shall consist of six (6) members. Directors need not be
BYLAWS - Page 4
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residents of the State of Delaware nor stockholders of the Corporation. Each
Director shall qualify as a Director following election as such by agreeing to
act or acting in such capacity. The number of Directors may be increased or
decreased from time to time by amendment of these Bylaws; however, any director
or the entire board of directors may be removed, with or without cause, by the
holders of a majority of the shares then entitled to vote at an election of
directors.
3.3 Election and Term. Members of the Board of Directors shall
hold office until the annual meeting of stockholders and until their successors
shall have been elected and qualified. At the annual meeting of the
stockholders, the stockholders entitled to vote in an election of Directors
shall elect Directors to hold office until the next succeeding annual meeting.
Each Director shall hold office for the term for which he is elected, and until
his successor shall be elected and qualified or until his death, resignation or
removal, if earlier.
3.4 Voting on Directors. Directors shall be elected by the vote
of the holders of a plurality of the shares entitled to vote in the election of
Directors and represented in person or by proxy at a meeting of stockholders at
which a quorum is present. Cumulative voting in the election of Directors is
expressly prohibited.
3.5 Vacancies. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining Directors
then in office, though less than a quorum of the Board of Directors. For
purposes of these Bylaws, a "vacancy" shall be defined as an unfilled
directorship arising by virtue of the death, resignation or removal of a
Director theretofore duly elected to serve in such capacity in accordance with
the relevant provisions of these Bylaws. A Director elected to fill a vacancy
shall be elected for the unexpired portion of the term of his predecessor in
office.
3.6 New Directorships. Any directorship to be filled by reason of
an increase in the number of Directors actually serving as such may be filled
by the affirmative vote of a majority of the Directors then in office, though
less than a quorum of the Board of Directors, for a term of office continuing
only until the next election of one or more Directors by the stockholders.
3.7 Removal. Any Director may be removed either for or without
cause at any duly convened special or annual meeting of stockholders, by the
affirmative vote of a majority in number of shares of the stockholders present
in person or by proxy at any meeting and entitled to vote for the election of
such Director.
3.8 Meetings. The meetings of the Board of Directors shall be
held and conducted subject to the following regulations:
(a) Place. Meetings of the Board of Directors of the
Corporation, annual, regular or special, are to be held at the
principal office or place of business of the Corporation, or such
other
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place, either within or without the State of Delaware, as may be
specified in the respective notices, or waivers of notice, thereof.
(b) Annual Meeting. The Board of Directors shall meet
each year immediately after the annual meeting of the stockholders, at
the place where such meeting of the stockholders has been held (either
within or without the State of Delaware), for the purpose of
organization, election of officers, and consideration of any other
business that may properly be brought before the meeting. No notice
of any kind to either old or new members of the Board of Directors for
such annual meeting shall be required.
(c) Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and at such place or
places as shall from time to time be determined and designated by the
Board.
(d) Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board or the President
of the Corporation on notice of two (2) days to each Director either
personally or by mail or by telegram; special meetings shall be called
by the Chairman of the Board or the President or Secretary in like
manner and on like notice on the written request of two (2) Directors.
(e) Notice and Waiver of Notice. Attendance of a
Director at any meeting shall constitute a waiver of notice of such
meeting, except where a Director attends for the express purpose of
objecting to the transaction of any business because the meeting is
not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular meeting of the Board of
Directors need be specified in the notice or waiver of notice of such
meeting.
(f) Quorum. At all meetings of the Board of Directors, a
majority of the number of Directors fixed by these Bylaws shall
constitute a quorum for the transaction of business, unless a greater
number is required by law or by the Certificate of Incorporation. If
a quorum shall not be present at any meeting of Directors, the
Directors present thereat may adjourn the meeting, from time to time,
without notice other than announcement at the meeting, until a quorum
shall be present.
(g) Requisite Vote. In the exercise of voting power with
respect to each matter properly submitted to a vote at any meeting of
the Board of Directors, each Director present at such meeting shall
have one (1) vote. The act of a majority of the Directors present at
any meeting at which a quorum is present shall be the act of the Board
of Directors.
3.9 Action Without Meetings. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
by law to be taken at any meetings of the Board of Directors, or any committee
thereof, may be taken without a meeting, if all members of the Board of
Directors, or any committee thereof, consent thereto in writing, and such
written consent is filed in the minutes or proceedings of the Board of
Directors or committee.
3.10 Committees. Committees designated and appointed by the Board
of Directors shall function subject to and in accordance with the following
regulations and procedures:
(a) Designation and Appointment. The Board of Directors
may, by resolution adopted by a majority of the entire Board,
designate and appoint one or more committees under such name or names
and for such purpose or function as may be deemed appropriate.
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(b) Members; Alternate Members; Terms. Each Committee
thus designated and appointed shall consist of one or more of the
Directors of the Corporation, one of whom, in the case of the
Executive Committee, shall be the President. The Board of Directors
may designate one or more of its members as alternate members of any
committee, who may, subject to any limitations imposed by the entire
Board, replace absent or disqualified members at any meeting of that
committee. The members or alternate members of any such committee
shall serve at the pleasure of and subject to the discretion of the
Board of Directors.
(c) Authority. Each Committee, to the extent provided in
the resolution of the Board creating same, shall have and may exercise
such of the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation as the Board
of Directors may direct and delegate, except, however, those matters
which are required by statute to be reserved unto or acted upon by the
entire Board of Directors.
(d) Records. Each such Committee shall keep and maintain
regular records or minutes of its meetings and report the same to the
Board of Directors when required.
(e) Change in Number. The number of members or alternate
members of any Committee appointed by the Board of Directors, as
herein provided, may be increased or decreased from time to time by
appropriate resolution adopted by a majority of the entire Board of
Directors.
(f) Vacancies. Vacancies in the membership of any
committee designated and appointed hereunder shall be filled by the
Board of Directors, at a regular or special meeting of the Board of
Directors, in a manner consistent with the provisions of this Section
3.10.
(g) Removal. Any member or alternate member of any
committee appointed hereunder may be removed by the Board of Directors
by the affirmative vote of a majority of the entire Board, whenever in
its judgment the best interests of the Corporation will be served
thereby.
(h) Meetings. The time, place and notice (if any) of
committee meetings shall be determined by the members of such
committee.
(i) Quorum; Requisite Vote. At meetings of any committee
appointed hereunder, a majority of the number of members designated by
the Board of Directors shall constitute a quorum for the transaction
of business. The act of a majority of the members and alternate
members of the committee present at any meeting at which a quorum is
present shall be the act of such committee, except as otherwise
specifically provided by statute or by the Certificate of
Incorporation or by these Bylaws. If a quorum is not present at a
meeting of such committee, the members of such committee present may
adjourn the meeting from time to time, without notice other than an
announcement at the meeting, until a quorum is present.
(j) Compensation. Appropriate compensation for members
and alternate members of any committee appointed pursuant to the
authority hereof may be authorized by the action of a majority of the
entire Board of Directors pursuant to the provisions of Section 3.11
hereof.
(k) Action Without Meetings. Any action required or
permitted to be taken at a meeting of any committee may be taken
without a meeting if a consent in writing, setting forth the action so
taken, is signed by all members of such committee. Such consent shall
have the same force and effect as a unanimous vote at a meeting. The
signed consent, or a signed copy, shall become a part of the record of
such committee.
(l) Responsibility. Notwithstanding any provision to the
contrary herein, the designation and appointment of a committee and
the delegation of authority to it shall not operate to relieve the
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Board of Directors, or any member or alternate member thereof, of any
responsibility imposed upon it or him by law.
3.11 Compensation. By appropriate resolution of the Board of
Directors, the Directors may be reimbursed for their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed
sum (as determined from time to time by the vote of a majority of the Directors
then in office) for attendance at each meeting of the Board of Directors or a
stated salary as Director. No such payment shall preclude any Director from
serving the Corporation in another capacity and receiving compensation
therefor. Members of special or standing committees may, by appropriate
resolution of the Board of Directors, be allowed similar reimbursement of
expenses and compensation for attending committee meetings.
3.12 Maintenance of Records. The Directors may keep the books and
records of the Corporation, except such as are required by law to be kept
within the State, outside the State of Delaware or at such place or places as
they may, from time to time, determine.
3.13 Interested Directors and Officers. No contract or other
transaction between the Corporation and one or more of its Directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its Directors or
officers are directors, officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because of the presence or
participation of such Director or officer at the meeting of the Board of
Directors of the Corporation or a committee thereof, which authorizes such
contract or transaction, or solely because his or their votes are counted for
such purpose, if (a) the material facts of such relationship or interest shall
be disclosed or known to the Board of Directors and the Board of Directors
shall, nevertheless in good faith, authorize, approve and ratify such contract
or transaction by a vote of a majority of the Directors present, such
interested Director or Directors to be counted in determining whether a quorum
is present, but not to be counted in calculating the majority of such quorum
necessary to carry such vote; (b) the material facts of such relationship or
interest as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by the vote of the stockholders; or (c) the
contract or transaction is fair to the Corporation as of the time it is
authorized, approved or ratified by the Board of Directors, a committee thereof
or the stockholders. The provisions of this Section shall not be construed to
invalidate any contract or other transaction which would otherwise be valid
under the common and statutory law applicable thereto.
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ARTICLE IV.
NOTICES
4.1 Method of Notice. Whenever under the provisions of the
General Corporation Law of Delaware or of the Certificate of Incorporation or
of these Bylaws, notice is required to be given to any Director or stockholder,
it shall not be construed to mean personal notice, but such notice may be given
in writing, by mail, addressed to such Director or stockholder, at his address
as it appears on the records of the Corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same shall be
deposited in the United States Mail.
4.2 Waiver. Whenever any notice whatsoever is required to be
given under the provisions of the General Corporation Law of Delaware or under
the provisions of the Certificate of Incorporation or these Bylaws, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Attendance by such person or persons, whether in
person or by proxy, at any meeting requiring notice shall constitute a waiver
of notice of such meeting, except as provided in Section 3.8(e) hereof.
ARTICLE V.
OFFICERS AND AGENTS
5.1 Designation. The officers of the Corporation shall be chosen
by the Board of Directors and shall consist of the offices of:
(a) President and Secretary; and
(b) Such other offices and officers (including a Chairman
of the Board, one or more Vice Presidents and a Treasurer) and
assistant officers and agents as the Board of Directors shall deem
necessary.
5.2 Election of Officers. Each officer designated in Section
5.1(a) hereof shall be elected by the Board of Directors on the expiration of
the term of office of such officer, as herein provided, or whenever a vacancy
exists in such office. Each officer or agent designated in Section 5.1(b)
above may be elected by the Board at any meeting.
5.3 Qualifications. No officer or agent need be a stockholder of
the Corporation or a resident of Delaware. No officer or agent is required to
be a Director, except the Chairman of the Board. Any two or more offices may
be held by the same person.
5.4 Term of Office. Unless otherwise specified by the Board of
Directors at the time of election or appointment, or by the express provisions
of an employment contract approved by the Board, the term of
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office of each officer and each agent shall expire on the date of the first
meeting of Directors next following the annual meeting of stockholders each
year. Each such officer or agent shall serve until the expiration of the term
of his office or, if earlier, his death, resignation or removal.
5.5 Authority. Officers and agents shall have such authority and
perform such duties in the management of the Corporation as are provided in
these Bylaws or as may be determined by resolution of the Board of Directors
not inconsistent with these Bylaws.
5.6 Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interests of the Corporation will be served thereby. Such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
5.7 Vacancies. Any vacancy occurring in any office of the
Corporation (by death, resignation, removal or otherwise) shall be filled by
the Board of Directors.
5.8 Compensation. The compensation of all officers and agents of
the Corporation shall be fixed from time to time by the Board of Directors.
5.9 Chairman of the Board. If a Chairman of the Board is elected,
he shall be chosen from among the Directors and shall be the chief executive
and principal officer of the Corporation. He shall have the power to call
special meetings of the stockholders and of the Directors for any purpose or
purposes, and he shall preside at all meetings of the stockholders and of the
Board of Directors, unless he shall be absent or unless he shall, at his
election, designate the President to preside in his stead. The Chairman of the
Board shall be responsible for the operations and business affairs of the
Corporation and shall possess all of the powers granted by the Bylaws to the
President, including the power to make and sign contracts and agreements in the
name and on behalf of the Corporation. He shall, in general, have supervisory
power over the President and all other officers and the business activities of
the Corporation, subject to the discretion of the Board of Directors.
5.10 President. Subject to the supervision of the Chairman of the
Board, or in the absence of the election of a Chairman of the Board, the
President shall be the chief executive officer of the Corporation; shall
preside at all meetings of the stockholders and the Board of Directors; shall
have general and active management of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. The President shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise executed and except where the execution
thereof shall be expressly delegated by the Board of Directors to some other
officer or agent
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of the Corporation. The President shall perform such other duties and possess
such other authority and powers as the Board of Directors may from time to time
prescribe.
5.11 Vice Presidents. The Vice President, or if there shall be
more than one, the Vice Presidents in the order determined by a majority vote
of the Board of Directors, shall, in the prolonged absence or disability of the
President (and Chairman of the Board, if one is elected), perform the duties
and exercise the powers of the President and shall perform such other duties
and have such other powers as the Board of Directors may from time to time
prescribe or the chief executive officer may from time to time delegate.
5.12 Secretary. The Secretary may attend all meetings of the Board
of Directors and shall attend all meetings of the stockholders of the
Corporation and record all proceedings of the meetings of the Corporation and
of the Board of Directors in a book to be maintained for that purpose and shall
perform like duties for the standing committees when required. The Secretary
shall give, or cause to be given, notice of all meetings of the stockholders
and special meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors, the Chairman of the
Board, or the President. He shall have custody of the corporate seal of the
Corporation, and he, or an Assistant Secretary, shall have authority to affix
the same to any instrument requiring it and when so affixed, it may be attested
by his signature or by the signature of such Assistant Secretary. The Board of
Directors may give general authority to any other officer to affix the seal of
the Corporation and to attest the affixing by his signature.
5.13 Assistant Secretaries. The Assistant Secretary, or if there
be more than one, the Assistant Secretaries in the order determined by the
Board of Directors, shall in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe or the chief executive officer may from time to time
delegate.
5.14 Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President (and Chairman of the Board, if
one is elected) and the Board of Directors, at its regular meetings, or when
the Board of Directors so requires, an account of all his transactions as
Treasurer and of the financial condition of the Corporation. If required by
the Board of Directors, he shall give the Corporation a bond in such sum and
with such surety or sureties as shall be satisfactory to the Board of
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Directors for the faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money, and other
property of whatever kind in his possession or under his control owned by the
Corporation. The Treasurer shall perform such other duties and have such other
authority and powers as the Board of Directors may from time to time prescribe
or as the chief executive officer may from time to time delegate.
5.15 Assistant Treasurers. The Assistant Treasurer, or, if there
shall be more than one, the Assistant Treasurers in the order determined by the
Board of Directors, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer and shall perform
such other duties and have such other powers as the Board of Directors may from
time to time prescribe or as the chief executive officer may from time to time
delegate.
ARTICLE VI.
INDEMNIFICATION
6.1 Indemnification. Each person who was or is made a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that such individual is or was a Director, officer,
employee or agent of the Corporation, or while a Director, officer, employee or
agent of the Corporation is or was serving at the request of the Corporation as
a director, officer, partner, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, may be indemnified and
held harmless by the Corporation from and against any judgments, expenses,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if it is determined
that he acted in good faith and reasonably believed (i) in the case of conduct
in his official capacity on behalf of the Corporation that his conduct was in
the Corporation's best interests, (ii) in all other cases, that his conduct was
not opposed to the best interests of the Corporation, and (iii) with respect to
any criminal action or proceeding, that he had no reasonable cause to believe
his conduct was unlawful; provided, however, that in the event a determination
is made that such person is liable to the Corporation or is found liable on the
basis that personal benefit was improperly received by such person, no
indemnification shall be made in respect of any claim, issue or matter unless
and only to the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself create a presumption that the person did
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not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful. A person shall be deemed to have been found liable in
respect of any claim, issue or matter only after the person shall have been so
adjudged by a court of competent jurisdiction after exhaustion of all appeals
therefrom.
6.2 Determination of Indemnification. Any indemnification under
the foregoing Section 6.1 (unless ordered by a court of competent jurisdiction)
shall be made by the Corporation only as authorized in the specific case upon a
determination that indemnification of such person is proper in the
circumstances by virtue of the fact that it shall have been determined that
such person has met the applicable standard of conduct. Such determination
shall be made (1) by a majority vote of the Directors who at the time of the
vote are not named defendants or respondents in the action, suit or proceeding
even though less than a quorum; (2) by independent legal counsel (in a written
opinion) if there are no such Directors, or if such Directors so direct; or (3)
by the stockholders of the Corporation in a vote that excludes the shares held
by Directors who are named defendants or respondents in the Proceeding.
6.3 Advance of Expenses. Reasonable expenses, including court
costs and attorneys' fees, incurred by a person who was or is named as a
defendant or respondent in any civil, criminal, administrative or investigative
proceeding, by reason of the fact that such individual is or was a Director or
officer of the Corporation, shall be paid by the Corporation at reasonable
intervals in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such person to
repay the amount paid or reimbursed by the Corporation if it is ultimately
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article 6. Such expenses incurred by other employees or
agents may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate. Such written undertaking shall be an unlimited
obligation of such person and it may be accepted without reference to financial
ability to make repayment.
6.4 Nature of Indemnification. The indemnification and
advancement of expenses provided hereunder shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under the Certificate of Incorporation, these Bylaws, any
agreement, vote of stockholders or disinterested Directors or otherwise, both
as to actions taken in an official capacity and as to actions taken in any
other capacity while holding such office, shall continue as to a person who has
ceased to be a Director, officer, employee or agent of the Corporation and
shall inure to the benefit of the heirs, executors and administrators of such
person.
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6.5 Insurance. The Corporation shall have the power and authority
to purchase and maintain insurance or another arrangement on behalf of any
person who is or was a Director, officer, employee or agent of the Corporation,
or who is or was serving at the request of the Corporation as a director,
officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise against any liability,
claim, damage, loss or risk asserted against such person and incurred by such
person in any such capacity or arising out of the status of such person as
such, irrespective of whether the Corporation would have the power to indemnify
and hold such person harmless against such liability under the provisions
hereof.
6.6 Notice. Any indemnification or advance of expenses to a
present or former director of the Corporation in accordance with this Article 6
shall be reported in writing to the stockholders of the Corporation with or
before the notice or waiver of notice of the next stockholders' meeting or with
or before the next submission of a consent to action without a meeting and, in
any case, within the next twelve month period immediately following the
indemnification or advance.
ARTICLE VII.
STOCK CERTIFICATES AND TRANSFER REGULATIONS
7.1 Description of Certificates. The shares of the capital stock
of the Corporation shall be represented by certificates in the form approved by
the Board of Directors and signed in the name of the Corporation by the
President or a Vice President and the Secretary or an Assistant Secretary of
the Corporation, and sealed with the seal of the Corporation or a facsimile
thereof. Each certificate shall state on the face thereof the name of the
holder, the number and class of shares and the designation of the series, if
any, which such certificate represents, the par value of shares covered thereby
or a statement that such shares are without par value, and such other matters
as are required by law. At such time as the Corporation may be authorized to
issue shares of more than one class or any class in series, every certificate
shall set forth upon the face or back of such certificate a statement of the
designations, preferences, limitations and relative rights of the shares of
each class or series authorized to be issued, as required by the laws of the
State of Delaware.
7.2 Delivery. Every holder of the capital stock in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation by the President or a Vice President and the Secretary or an
Assistant Secretary of the Corporation, certifying the class of capital stock
and the number of shares represented thereby as owned or held by such
stockholder in the Corporation.
7.3 Signatures. The signatures of the President, Vice President,
Secretary or Assistant Secretary upon a certificate may be facsimiles. In case
any officer or officers who have signed, or whose facsimile signature or
signatures have been placed upon any such certificate or certificates, shall
cease to serve as such
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officer or officers of the Corporation, transfer agent or registrar, whether
because of death, resignation, removal or otherwise, before such certificate or
certificates are issued and delivered by the Corporation, such certificate or
certificates may be issued and delivered with the same effect as though the
person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to
serve as such officer or officers of the Corporation.
7.4 Issuance of Certificates. Certificates evidencing shares of
its capital stock (both treasury and authorized but unissued) may be issued for
such consideration (except for shares of stock with par value which may be
issued for such consideration not less than par value thereof), and to such
persons as the Board of Directors may determine from time to time. Shares
shall not be issued until the full amount of the consideration, fixed as
provided by law, has been paid.
7.5 Payment for Shares. Consideration for the issuance of shares
shall be paid, valued and allocated as follows:
(a) Consideration. The consideration for the issuance of
shares shall consist of money paid, labor done (including services
actually performed for the Corporation), or property (tangible or
intangible) actually received. Neither promissory notes nor the
promise of future services shall constitute payment of consideration
for shares.
(b) Valuation. In the absence of fraud in the
transaction, the determination of the Board of Directors as to the
value of consideration received shall be conclusive.
(c) Effect. When consideration, fixed as provided by
law, has been paid, the shares shall be deemed to have been issued and
shall be considered fully paid and nonassessable.
(d) Allocation of Consideration. The consideration
received for shares shall be allocated by the Board of Directors, in
accordance with law, between the stated capital and capital surplus
accounts.
7.6 Closing of Transfer Records; Record Date for Action With
Meetings. For the purpose of determining stockholders entitled to notice of or
to vote at any meeting of stockholders, or any adjournment thereof, or entitled
to receive a distribution by the Corporation (other than a distribution
involving a purchase or redemption by the Corporation of any of its own shares)
or a share dividend, or in order to make a determination of stockholders for
any other proper purpose (other than determining stockholders entitled to
consent to action by stockholders proposed to be taken without a meeting of
stockholders), the Board of Directors may provide that stock transfer records
shall be closed for a stated period of time not to exceed, in any case, sixty
(60) days. If the stock transfer records shall be closed for the purpose of
determining stockholders, such records shall be closed for at least ten (10)
days immediately preceding such meeting. In lieu of closing the stock transfer
records, as aforesaid, the Board of Directors may fix in advance a date as the
record
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date for any such determination of stockholders, such date in any case to be
not more than sixty (60) days, and in the case of a meeting of stockholders,
not less than ten (10) days prior to the date on which the particular action
requiring such determination of stockholders is to be taken. If the stock
transfer records are not closed and no record date is fixed for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders (or stockholders entitled to receive a distribution [other than a
distribution involving a purchase or redemption by the Corporation of any of
its own shares] or a share dividend), the close of business on the day next
preceding the date on which notice of the meeting is given or, if the notice is
waived, at the close of business on the day next preceding the date on which
the meeting is held (the close of business on the day on which the resolution
of the Board of Directors declaring such distribution or share dividend is
adopted), as the case may be, shall be the record date for such determination
of stockholders. When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this Section, such
determination shall be applied to any adjournment thereof except where the
determination has been made through the closing of the stock transfer books and
the stated period of closing has expired.
7.7 Registered Owners. Prior to due presentment for registration
of transfer of a certificate evidencing shares of the capital stock of the
Corporation in the manner set forth in Section 7.9 hereof, the Corporation
shall be entitled to recognize the person registered as the owner of such
shares on its records (or the records of its duly appointed transfer agent, as
the case may be) as the person exclusively entitled to vote, to receive notices
and dividends with respect to, and otherwise exercise all rights and powers
relative to such shares; and the Corporation shall not be bound or otherwise
obligated to recognize any claim, direct or indirect, legal or equitable, to
such shares by any other person, whether or not it shall have actual, express
or other notice thereof, except as otherwise provided by the laws of Delaware.
7.8 Lost, Stolen or Destroyed Certificates. The Corporation shall
issue a new certificate in place of any certificate for shares previously
issued if the registered owner of the certificate satisfies the following
conditions:
(a) Proof of Loss. Submits proof in affidavit form
satisfactory to the Corporation that such certificate has been lost,
destroyed or wrongfully taken; and
(b) Timely Request. Requests the issuance of a new
certificate before the Corporation has notice that the certificate has
been acquired by a purchaser for value in good faith and without
notice of an adverse claim; and
(c) Bond. Gives a bond in such form, and with such
surety or sureties, with fixed or open penalty, as the Corporation may
direct, to indemnify the Corporation (and its transfer agent and
registrar, if any) against any claim that may be made or otherwise
asserted by virtue of the alleged loss, destruction, or theft of such
certificate or certificates; and
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(d) Other Requirements. Satisfies any other reasonable
requirements imposed by the Corporation.
In the event a certificate has been lost, apparently destroyed or wrongfully
taken, and the registered owner of record fails to notify the Corporation
within a reasonable time after he has notice of such loss, destruction, or
wrongful taking, and the Corporation registers a transfer (in the manner
hereinbelow set forth) of the shares represented by the certificate before
receiving such notification, such prior registered owner of record shall be
precluded from making any claim against the Corporation for the transfer
required hereunder or for a new certificate.
7.9 Registration of Transfers. Subject to the provisions hereof,
the Corporation shall register the transfer of a certificate evidencing shares
of its capital stock presented to it for transfer if:
(a) Endorsement. Upon surrender of the certificate to
the Corporation (or its transfer agent, as the case may be) for
transfer, the certificate (or an appended stock power) is properly
endorsed by the registered owner, or by his duly authorized legal
representative or attorney-in-fact, with proper written evidence of
the authority and appointment of such representative, if any,
accompanying the certificate; and
(b) Guaranty and Effectiveness of Signature. The
signature of such registered owner or his legal representative or
attorney-in-fact, as the case may be, has been guaranteed by a
national banking association or member of the New York Stock Exchange,
and reasonable assurance in a form satisfactory to the Corporation is
given that such endorsements are genuine and effective; and
(c) Adverse Claims. The Corporation has no notice of an
adverse claim or has otherwise discharged any duty to inquire into
such a claim; and
(d) Collection of Taxes. Any applicable law (local,
state or federal) relating to the collection of taxes relative to the
transaction has been complied with; and
(e) Additional Requirements Satisfied. Such additional
conditions and documentation as the Corporation (or its transfer
agent, as the case may be) shall reasonably require, including without
limitation thereto, the delivery with the surrender of such stock
certificate or certificates of proper evidence of succession,
assignment or other authority to obtain transfer thereof, as the
circumstances may require, and such legal opinions with reference to
the requested transfer as shall be required by the Corporation (or its
transfer agent) pursuant to the provisions of these Bylaws and
applicable law, shall have been satisfied.
7.10 Restrictions on Transfer and Legends on Certificates.
(a) Shares in Classes or Series. If the Corporation is
authorized to issue shares of more than one class, the certificate
shall set forth, either on the face or back of the certificate, a full
or summary statement of all of the designations, preferences,
limitations, and relative rights of the shares of each such class and,
if the Corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences
of the shares of each such series so far as the same have been fixed
and determined, and the authority of the Board of Directors to fix and
determine the relative rights and preferences of subsequent series.
In lieu of providing such a statement in full on the certificate, a
statement on the face or back of the certificate may provide that the
Corporation will furnish such information to any stockholder without
charge upon written request to the Corporation at
BYLAWS - Page 17
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its principal place of business or registered office and that copies
of the information are on file in the office of the Secretary of
State.
(b) Restriction on Transfer. Any restrictions imposed or
agreed to by the Corporation on the sale or other disposition of its
shares and on the transfer thereof must be copied at length or in
summary form on the face, or so copied on the back and referred to on
the face, of each certificate representing shares to which the
restriction applies. The certificate may however state on the face or
back that such a restriction exists pursuant to a specified document
and that the Corporation will furnish a copy of the document to the
holder of the certificate without charge upon written request to the
Corporation at its principal place of business.
(c) Preemptive Rights. Any preemptive rights of a
stockholder to acquire unissued or treasury shares of the Corporation
which are limited or denied by the certificate of incorporation must
be set forth at length on the face or back of the certificate
representing shares subject thereto. In lieu of providing such a
statement in full on the certificate, a statement on the face or back
of the certificate may provide that the Corporation will furnish such
information to any stockholder without charge upon written request to
the Corporation at its principal place of business and that a copy of
such information is on file in the office of the Secretary of State.
(d) Unregistered Securities. Any security of the
Corporation, including, among others, any certificate evidencing
shares of the Common Stock or warrants to purchase Common Stock of the
Corporation, which is issued to any person without registration under
the Securities Act of 1933, as amended, or the Blue Sky laws of any
state, shall not be transferable until the Corporation has been
furnished with a legal opinion of counsel with reference thereto,
satisfactory in form and content to the Corporation and its counsel,
to the effect that such sale, transfer or pledge does not involve a
violation of the Securities Act of 1933, as amended, or the Blue Sky
laws of any state having jurisdiction. The certificate representing
the security shall bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW BUT HAVE BEEN
ACQUIRED FOR THE PRIVATE INVESTMENT OF THE HOLDER HEREOF AND
MAY NOT BE OFFERED, SOLD OR TRANSFERRED UNTIL EITHER (i) A
REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE
WITH REGARD THERETO, OR (ii) THE CORPORATION SHALL HAVE
RECEIVED AN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION
AND ITS COUNSEL THAT REGISTRATION UNDER SUCH SECURITIES ACT OR
SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED OFFER, SALE OR TRANSFER.
ARTICLE VIII.
GENERAL PROVISIONS
8.1 Distributions. Subject to the provisions of the General
Corporation Law of Delaware, as amended, and the Certificate of Incorporation,
distributions of the Corporation shall be declared and paid pursuant to the
following regulations:
(a) Declaration and Payment. Distributions on the issued
and outstanding shares of capital stock of the Corporation may be
declared by the Board of Directors at any regular or special meeting
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<PAGE> 23
and may be paid in cash, in property, or in shares of capital stock.
Such declaration and payment shall be at the discretion of the Board
of Directors.
(b) Record Date. The Board of Directors may fix in
advance a record date for the purpose of determining stockholders
entitled to receive payment of any distribution, such record date to
be not more than sixty (60) days prior to the payment date of such
distribution, or the Board of Directors may close the stock transfer
books for such purpose for a period of not more than sixty (60) days
prior to the payment date of such distribution. In the absence of
action by the Board of Directors, the date upon which the Board of
Directors adopts the resolution declaring such distribution shall be
the record date.
8.2 Reserves. There may be created by resolution of the Board of
Directors out of the surplus of the Corporation such reserve or reserves as the
Directors from time to time, in their discretion, think proper to provide for
contingencies, or to equalize distributions, or to repair or maintain any
property of the Corporation, or for such other purposes as the Directors shall
think beneficial to the Corporation, and the Directors may modify or abolish
any such reserve in the manner in which it was created.
8.3 Books and Records. The Corporation shall maintain books and
records of account and shall prepare and maintain minutes of the proceedings of
its stockholders, its Board of Directors and each committee of its Board of
Directors. The Corporation shall keep at its registered office or principal
place of business, or at the office of its transfer agent or registrar, a
record of the original issuance of shares issued by the Corporation and a
record of each transfer of those shares that have been presented to the
Corporation for registration of transfer. Such records shall contain the names
and addresses of all past and present stockholders of the Corporation and the
number and class of shares issued by the Corporation held by each of them.
8.4 Annual Statement. The Board of Directors shall present at or
before each annual meeting of stockholders a full and clear statement of the
business and financial condition of the Corporation, including a reasonably
detailed balance sheet and income statement under current date.
8.5 Contracts and Negotiable Instruments. Except as otherwise
provided by law or these Bylaws, any contract or other instrument relative to
the business of the Corporation may be executed and delivered in the name of
the Corporation and on its behalf by the Chairman of the Board, the Chief
Executive Officer, or the Chief Operating Officer, if any, or the President of
the Corporation. The Board of Directors may authorize any other officer or
agent of the Corporation to enter into any contract or execute and deliver any
contract in the name and on behalf of the Corporation, and such authority may
be general or confined to specific instances as the Board of Directors may
determine by resolution. All bills, notes, checks or other instruments for the
payment of money shall be signed or countersigned by such officer, officers,
agent or agents and in such manner as are permitted by these Bylaws and/or as,
from time to time, may be prescribed by resolution of the Board of Directors.
Unless authorized to do so by these Bylaws or by the Board of Directors, no
officer, agent or
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employee shall have any power or authority to bind the Corporation by any
contract or engagement, or to pledge its credit, or to render it liable
pecuniarily for any purpose or to any amount.
8.6 Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
8.7 Corporate Seal. The Corporation seal shall be in such form as
may be determined by the Board of Directors. The seal may be used by causing
it or a facsimile thereof to be impressed or affixed or in any manner
reproduced.
8.8 Resignations. Any director, officer or agent may resign his
office or position with the Corporation by delivering written notice thereof to
the President or the Secretary. Such resignation shall be effective at the
time specified therein, or immediately upon delivery if no time is specified.
Unless otherwise specified therein, an acceptance of such resignation shall not
be a necessary prerequisite of its effectiveness.
8.9 Amendment of Bylaws. These Bylaws may be altered, amended, or
repealed and new Bylaws adopted at any meeting of the Board of Directors at
which a quorum is present, by the affirmative vote of a majority of the
Directors present at such meeting, provided notice of the proposed alteration,
amendment, or repeal be contained in the notice of such meeting. This shall
not in any way divest the stockholders or members of the power, nor limit their
power, to adopt, amend or repeal the Bylaws.
8.10 Construction. Whenever the context so requires herein, the
masculine shall include the feminine and neuter, and the singular shall include
the plural, and conversely. If any portion or provision of these Bylaws shall
be held invalid or inoperative, then, so far as is reasonable and possible:
(1) the remainder of these Bylaws shall be considered valid and operative, and
(2) effect shall be given to the intent manifested by the portion or provision
held invalid or inoperative.
8.11 Table of Contents; Captions. The table of contents and
captions used in these Bylaws have been inserted for administrative convenience
only and do not constitute matter to be construed in interpretation.
IN DUE CERTIFICATION WHEREOF, the undersigned, being the Secretary of
ETC Transaction Corporation, confirms the adoption and approval of the
foregoing Bylaws, effective as of the 12th day of February, 1997.
/s/ Louann Smith
---------------------------------------
Louann Smith, Secretary
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EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in this Form 8-K of our report dated November 27, 1996
relating to the Balance Sheets of Electronic Transmission Corporation as of
December 31, 1994 and 1995 and September 30, 1996 and the Statements of
Operations, Stockholders' Equity and Cash Flows for the years ended December
31, 1994 and 1995 and the nine months ended September 30, 1996.
/s/ SIMONTON, KUTAC & BARNIDGE, L.L.P.
Simonton, Kutac & Barnidge, L.L.P.
Houston, Texas
February 12, 1997
34
