Under Section 12(b) or (g) of the Securities Exchange Act of 1934
FORM 10SB12G OF AMALGAMATED EXPLORATIONS, INC.
(Name of small business issuer in its charter)
Colorado Fed ID #86-0551529
(State or other jurisdiction (IRS Employer )
of incorporation or organization) Identification)
1645 Court Place, Suite 201, Denver, CO 80202
(Address of principal executive offices) Zip Code
Issuer's telephone number: (303) 629-5115
Securities registered pursuant to Section l2(b) of the Act: NONE
Securities registered pursuant to Section l2(g) of the Act:
Common Stock
(Title of Class)
PART I
Item l - Description of Business
General
Amalgamated Explorations, Inc. was originally named Kispiox, Inc. and was
incorporated in Colorado on May 5, 1986. Thereafter, on April 25, 1989, the
Company changed its business and its name from Kispiox, Inc. to Sue Wong
International, Inc. and then to Amalgamated Explorations, Inc, on October 27,
1995.
Between the years 1989 and 1995, while operating under Sue Wong
International, Inc., the Company was involved in the design, manufacture
and sale of women's sportswear. However, due to low sales, the Company was
inactive up until the time of its merged with Amalgamated Explorations, Inc.
After the merger, the Company changed its focus to the oil and gas business
in the continental United States. As of September 30, 1999 the Company
employed 2 persons on a full-time basis and 5 persons on a part-time basis.
Between the date of its incorporation and April 1989 the Company was
inactive.
In January 1996, the Company's Board of Directors approved a ten-for-one
reverse split of the Company's common stock.
In February 1996 the Company acquired all of the issued and outstanding
shares of Gold Basin Exploration, Inc. ("Gold Basin") in consideration for
2,347,109 shares of the Company's common stock.
At the time of this acquisition Gold Basin held what are now the Company's
interests in the Boone Dome and Cave Gulch prospects. In connection with the
acquisition of Gold Basin, Christen F. Murer (also known as Ted Murer) and
George Kirn, both of whom are officers and directors of the Company, were the
principal shareholders of Gold Basin and received 1,332,409 and 621,600
shares, respectively, of the Company's common stock in exchange for their
shares in Gold Basin. It should be noted that Mr. Murer is also the
President and CEO of MSP Technologies, Inc., a wholly owned subsidiary of
Amalgamated Explorations.
In May 1996 the Company issued 50,000 "unregistered" and "restricted" shares
of its common stock to Chris Van Duyne a consultant in return for legal
services rendered.
In August 1996 the Company issued 500,000 shares of its common stock pursuant
to an exemption provided by Regulation 504 of Regulation D and Regulation M-
11 of the State of New York to 2 individuals in consideration of $50,000.
In June 1996 the Company issued 13,530 "unregistered" and "restricted" shares
of its common stock to 10 individuals in return for services rendered.
In November 1996, the Company issued 300,000 shares of its common stock
valued at five dollars ($5.00) per share or one million five hundred thousand
dollars ($1,500,000) in exchange for all of the issued and outstanding shares
of MSP Technologies, Inc. ("MSP"), a corporation which had developed a low
frequency instrument (known as the "Electrotelluric Survey") which quickly
and effectively detects oil and gas deposits to depths up to 17,000 feet.
This acquisition resulted in MSP becoming a wholly owned subsidiary of the
Company.
The inventor of the technology is John R. Jackson. He and his patent attorney
Andres M. Arismendi, Jr. are the owners of the Patent. MSP holds the world-
wide exclusive license for the use of the technology. This license agreement
was entered into on November 11, 1996. On July 9, 1999 Amalgamated and the
owners of the Patent agreed to the purchase of the Patent by Amalgamated with
an agreed payment plan as set forth in the Settlement Agreement of July 9,
1999. The License Agreement remains in full force and effect as to the use of
the technology to MSP.
In February 1997 the Company issued 402,652 "unregistered" and "restricted"
shares of its common stock to 37 investors pursuant to an exemption provided
by Rule 504 of Regulation D and Section 4(2) of the Securities Act at a price
of $2.50 per share for a total cash consideration to the Company of
$1,000,000.
In May of 1997 the Company issued 6,000 shares of "unregistered" and
"restricted" shares of its common stock to three investors pursuant to an
exemption provided by Regulation 504 and Section 4(2) of the Securities Act
at a price of $2.50 per share for a total cash consideration of $15,000.
In December 1997 pursuant to an exemption provided by Rule 504 of Regulation
D and Section 4(2) of the Securities Act the Company issued 180,000 shares of
"unregistered" and "restricted" shares of its common stock to IPO
Consultants, pursuant to an option granted in connection with the Company's
acquisition of Gold Basin Explorations Inc., at a price of $.10 per share for
a total cash consideration of $1,800.
Oil & Gas Exploration
The Company evaluates undeveloped oil and gas prospects and participates in
drilling activities on those prospects which in the opinion of management are
favorable for the production of oil or gas drilling activities may be
financed through farmouts to other parties or by entering into joint ventures
or other arrangements under which the Company acquires oil and gas acreage,
performs basic geologic work on the prospect, and obtains the necessary
equipment to complete a well if it is successful. In some cases, substantial
interests (typically l/8, l/4, l/2, etc.) may be sold to industry
participants on a basis which will be sufficient to cover all or a part of
the drilling costs attributable to the interest retained by the Company in a
prospect. Under these arrangements, the Company will normally be expected to
pay its share of any well completion costs. There is no assurance that any
such arrangements will result in the discovery of oil or gas or the
generation of income to the Company.
"Well completion" (also called "Completion of a Well") means more than just
the completion of the drilling process. At a minimum, it means the cleaning
out of the well after reaching a certain depth, or the shooting of the well
if there is doubt as to whether it is a producer or nonproducer. Completion
of a well involves those procedures before production occurs and after
drillers have hit the pay sand, viz, perforating the casing and washing out
the drilling mud. In Edwards v Hardwick 350 P 2d 495, 12 O. & G. R. 684
(Okla) 1960), the Court empathized that the term "completed well" has
different meanings in various contexts, e. g., when used in drilling
contracts or drilling clauses or when used to determine the commencement
period of time in which an act is to be performed or a right to be exercised.
The Company also acquires interests in oil and gas leases for the purposes of
either selling the leases subject to an overriding royalty or other form of
retained interest, or entering into farmout, joint venture, or other
arrangements, primarily with industry participants, for exploration of the
leases.
Cave Gulch
The Company owns varying working interests in a 640-acre lease in the Cave
Gulch field in Natrona County, Wyoming. The Company has a one point sixty
four percent (1.64%) working interest and a one point thirty three percent
(1.33%) net revenue interest in a gas well which produced from February 1998
until August 1998. In August 1998, the gas well blew out due to excessive
pressure. The Company and the other working interest owners in the well
successfully re-entered the well in late 1999 and resumed production.
Currently, the well is producing approximately 11 million cubic feel of gas
per day.
The Company and the other owners of the Cave Gulch lease may drill up to
three additional wells on the leased acres. Each well is expected to cost
approximately $10,000,000 to drill and complete. The Company's working
interests in these additional wells, should they be drilled, will vary from
one point one percent (1.1%) to three point forty four (3.44%). The
Company's estimates that the net revenue interest in these wells, should
commercial production be established, will vary from one point zero percent
(1.0%) to three point two percent (3.2%).
The Company considers many factors when taking a determination to drill in a
particular location. The main factor is the geological formations that may be
present and whether the said formations have shown to be hydrocarbon bearing
in other areas and/or whether there is other evidence of oil or gas in the
area. Any other supporting data such as 3-D seismic, Electrotelluric data,
or physical, geophysical and economic information available regarding each
well site is also used to help to make a determination whether a well should
be developed. When considering the Cave Gulch area, the Cave Gulch is a
proven production area with many formations of geological sands that have
produced oil and gas in the past and that are still producing today.
The Company also has a zero point forty four percent (0.44%) working interest
and a zero point thirty five percent (0.35%) net revenue interest in a second
gas well drilled in the Cave Gulch field, which was completed in 1998. As of
September 1999 this well was producing 8,000,000 cubic feet of gas per day.
Boone Dome
The Company has a thirty seven to one hundred percent (37 to 100%) working
interest and thirty five to eighty seven percent (35 to 87%) net revenue
interest in leases covering 1,984 acres in an area located approximately
twelve miles southeast of the Cave Gulch field. The Company has entered into
a partnership agreement with The Oil & Gas Technology Fund, Inc. in San Diego
which provides that the partnership will pay all of the costs of drilling and
(if warranted) completing up to fifteen (15) wells on this prospect. The Oil
& Gas Technology Fund, Inc. formed the Boone Dome Joint Venture I and II for
the partnership to drill the prospects. If production is established in wells
drilled by the partnership, the partnership will receive one hundred percent
(100%) of the proceeds from the sale of oil and gas produced, less operating
expenses, and the Company will receive a royalty of seven and one half
percent (7.5%) of the gross proceeds, without deduction for any operating
expenses. Once the partnership has received cash distributions from the sale
of oil or gas produced from the wells drilled by the partnership equal to one
hundred percent (100%) of the investment, the partnership will be entitled to
receive seventy-five percent (75%) of the proceeds from the sale of the
production, less operating expenses and the Company will convert its seven
and one half percent (7.5%) royalty interest into a twenty five percent (25%)
working interest, less operating expenses. During the period ending September
30, 1999, the partnership had drilled two (2) exploratory wells on the Boone
Dome leased lands. The first well was drilled within the depths owned and
controlled by the Company and was completed as a producing well in the upper
sand stone zone and is producing. The second exploratory well was drilled
and abandoned as a non-producing well.
The following sets forth information with respect to the Company's oil and
gas interests. The information is as of September 30, 1999, unless otherwise
indicated.
<TABLE>
Gross1 Net2
------ ------
<S> <C> <C>
Leasehold acreage 35,400 acres 27,300 acres
Developed leasehold acreage 3,224 acres 322 acres
Undeveloped leasehold acreage 32,176 acres 26,978 acres
</TABLE>
1 The gross acreage is all the acreage.
2 The net acreage is our interest in the gross acreage
<TABLE>
<CAPTION>
Total Oil Gas
----- --- ---
<S> <C> <C> <C>
Gross productive wells 3 1 2
Net productive wells 0.004 0 0.004
</TABLE>
<TABLE>
<CAPTION>
Gross Net
----- ---
<S> <C> <C>
Gas wells shut-in and/or 2 0.20
waiting on completion
</TABLE>
<TABLE>
<CAPTION>
September 30, 1998
Oil Gas
----- -----
<C> <C>
Proved reserves -- -- Mcf
Estimated future net revenues
from oil and gas reserves -- --
Incomplete
Present value of estimated
future net revenues Unknown Unknown
</TABLE>
<TABLE>
<CAPTION>
Year ending September 30,
l997 l998 l999
---- ---- ----
<S> <C> <C> <C>
Oil production (bbls.) -- -- --
Gas production (mcf) -- 1,200 22,868
Average Sales Price
Oil -- -- --
Gas -- $1.95 $2.29
Average production
cost per equivalent unit
of oil and gas -- $0.20 $0.20
Wells Drilled:
Oil -- -- --
Gas -- 2 2
Dry -- -- --
Total -- 2 2
Type of Wells Drilled:
Net productive exploratory -- 0.019 --
Net dry exploratory -- -- 2
Net productive -- -- --
Net dry development -- -- --
</TABLE>
The Company is faced with strong competition from major oil and gas
companies and other independent operators attempting to acquire prospective
oil and gas leases and other mineral interests. Many companies and
individuals are engaged in the oil and gas business and some are very large,
well-established energy companies with substantial capabilities and
established earnings records. The Company may be at a competitive
disadvantage in acquiring oil and gas prospects since it must compete with
these individuals and companies, many of which have greater financial
resources and larger technical staffs. It is impossible to estimate the
number of competitors; however, it is known that there are a large number of
companies and individuals engaged in various phases of the oil and gas
business.
The Company's business is not dependent on a single customer or a few
customers and management does not believe that it will be in the
foreseeable future since oil and gas purchasers are readily available in
today's markets. Oil and gas may be considered raw materials essential to the
Company's business. The Company's search for oil and gas is concentrated in
the continental United States. However, the acquisition, exploration,
development, production and sale of oil and gas are subject to many factors
which are outside the Company's control. These factors include worldwide and
domestic economic conditions; oil import quotas; availability of drilling
rigs, casing and other equipment and supplies; proximity to pipelines; the
supply and price of other fuels; and the regulation of prices, production,
transportation and marketing by Federal and state governmental authorities.
The oil and gas industry has at times been faced with shortages in tubular
steel, increased prices in used steel casing and a shortage of drilling rigs
which have in the past delayed drilling activities by oil and gas operators
in many instances. Pumping units and other wellhead equipment have also been
in short supply from time to time.
The Company is engaged in a facet of exploiting natural resources. It is
subject to various Federal, state and local laws and regulations regarding
environmental and ecological matters. Hence, environmental laws may
necessitate significant capital outlays, may materially affect the Company's
earnings potential and could cause material changes in the Company's proposed
business. At the present time, however, the existence of environmental laws
has not materially hindered nor adversely affected the Company's business.
Working capital is needed in the oil and gas industry to finance the
drilling and completion of wells, to acquire undeveloped leasehold
interests, and to fund lease operating expenses and general and
administrative expenses. At present, the Company is not generating
sufficient revenue from operations to supply its current working capital
requirements.
The Company has never been a party to any bankruptcy, receivership,
reorganization, readjustment or similar proceeding. No material changes
have been made in the mode of conducting its business. Since the Company is
engaged in the oil and gas exploration, the Company does not set aside or
allocate funds to for product research and development in the conventional
sense. However, the Company did expend approximately $7,200 and $39,500 for
the years ending September 30, 1999 and 1998 respectively and does have plans
to allocate funds for improvements to its Electro-telluric Survey equipment
when funds do become available. Backlog is not material to an understanding
of the Company's business. The Company's business is not subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of the federal government.
Telluric Survey Technology
The Electrotelluric Survey is capable of measuring extremely low frequency
electromagnetic waves that pass naturally through the earth. These waves
develop anomalies or disturbances as they pass through oil and gas deposits.
The Electrotelluric Survey measures these waves across a range of low
frequencies and records the anomalies, with each frequency corresponding to a
certain depth.
Currently, the most widely accepted subsurface exploration technique is the
three dimensional seismic survey which allows geologists to identify
subterranean areas that display structures of a type that are traditionally
indicative of potential hydrocarbon deposits. However, three dimensional
seismic surveys do not detect hydrocarbon deposits, only structures that may
or may not contain hydrocarbons. As a result, drilling is still required to
determine the presence of commercial quantities of hydrocarbons.
Seismic surveys sends shockwaves through the earth, either from huge
mechanized "thumpers" that pound the ground or from explosive charges placed
in the earth. The resulting vibrations pass through different densities of
rock and are measured with recording devices. Rock formations with certain
densities (i.e. sandstone and limestone) are normally considered to be
potential reservoirs of oil or gas.
However, the interpretation of data from seismic surveys can require weeks of
computer-driven calculations. Even with computer analysis, the results are
largely dependent on the subjective interpretations of the seismic operator.
Dry holes can and do occur, even with the best three-dimensional seismic
operators. Overall, a three dimensional seismic survey is an expensive, time
consuming, labor intensive process.
In contrast, the Electrotelluric Survey equipment can be carried and
operated by one person. The testing itself takes approximately fifteen
minutes per location. There is no disruptive pounding of the earth or
underground explosions. Varying densities of the earth do not affect the
survey, since the device does not measure vibrations but rather the natural,
passive, extremely-low-frequency electromagnetic waves that pass through the
earth. Off-site analysis is not necessary, since the survey discloses
hydrocarbon deposits while still on the site. The survey results can be
stored on a computer disk or printed on a strip chart in the field for
immediate review.
The survey is normally consistent, but as with all weak radio signals the
quality of the reception and the accuracy of the data generated by the
Electrotelluric Survey may suffer during periods of decreased signal
strength. Atmospheric conditions, magnetic or solar disturbances, power
lines, terrestrial condition, and random radio frequencies may have an
adverse effect on survey results. In addition, while the Electrotelluric
survey can detect the presence of oil or gas deposits, it cannot determine
the permeability of the formation where the oil or gas is located.
Our experience with the Company's Electrotelluric Survey technology since our
introduction to it in 1996 has been extremely positive. The Company has had
direct confirmation of the technology being able to identify subsurface
indications of hydrocarbons. Since the Company's primary business is oil and
gas exploration, we expect this technology to give the Company an advantage
in finding and qualifying potential oil and gas leases and acreage prospects
for future drilling and development. The Company could also expand on the
service business of doing Electrotelluric surveys for other oil and gas
companies.
The Company's Electrotelluric Survey technology has not as yet gained wide
spread acceptance in the oil and gas industry. The Company intends to utilize
the Electrotelluric Survey for oil and gas exploration. At a later date the
Company may also attempt to sublicense the Electrotelluric Survey to third
parties for terms which have not yet been determined. The Company charges
between $2,500 and $4,000 per day depending on the size, location and
complexity of the survey to be performed plus expenses per day for use of the
Electrotelluric Survey.
The MSP acquisition agreement required the Company to issue additional shares
of its common stock if the market price if the Company's common stock price
fell below a certain price. During 1998, an additional 300,000 shares of
common stock were issued to the former owners of MSP.
At the time of the Company's acquisition of MSP, the former owners of MSP
entered into a license agreement with MSP pertaining to the Electrotelluric
Survey. The license provided MSP with the worldwide exclusive right to
determine the presence of oil or gas at specific well locations for third
parties using the Electrotelluric Survey. The licensors retained the right
to personally use the Electrotelluric Survey, but does not have any rights to
provide services to third parties.
In November 1998 a dispute arouse between the Company and the licensors
concerning the value of the consideration received by the former MSP
shareholders and the resulting ability of the Company to sublicense the
technology and to forego the payment of any royalties required by the terms
of the licensing agreement. In February 1999, the Company commenced a legal
proceeding against the licensors in the District Court of Jefferson County,
Colorado seeking a determination that the value of the Consideration received
by the former MSP shareholders equaled or exceeded the amount required by the
terms of the licensing agreement and as a result the Company had the right to
sublicense the Electrotelluric Survey technology to third parties and to
forego any future payment of royalties to the licensors. Following the
commencement of this proceeding the District Court granted a preliminary
injunction against the licensors, prohibiting the licensors from terminating
the license agreement. The case has been settled through an arbitration
hearing in June 1999 with the Company purchasing the patent for
$1,500,000.00. The Company is required to make monthly payments of
$20,000.00 commencing August 15, 1999 and the inventor was required to return
395,000 shares of Company stock to the Company. The license agreement stays
in place with a right to the Company to use and sublicense the technology.
The Company has been tenants in the same building since inception. There is
no written lease and the landlord does not desire a lease. All rent payments
are month to month. The Company does not anticipate moving anytime in the
near future.
Item 2 - Management's Discussion and Analysis or Plan of Operation.
The following discussion should be read in conjunction with the Company's
consolidated financial statements and the notes thereto appearing elsewhere
in this form 10-SB12G. Certain statements contained herein are that are not
related to historical results, including without limitation, statements
regarding the company's business strategy and objectives, future financial
position, expectations about pending litigation and estimated cost saving,
are forward looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Securities Exchange Act") and involve risks and uncertainties.
Although the Company believes that the assumptions on which these forward-
looking statements are based are reasonable, there can be no assurance that
such assumptions will prove to be accurate and actual results could differ
materially from those discussed in the forward looking statements. Factors
that could cause or contribute to such differences include, but are not
limited to, regulatory policies, competition from other similar businesses,
and market and general economic factors. All forward-looking statements
contained in this Form 10-SB12G are qualified in their entirety by this
statement.
OVERVIEW OF OPERATIONS AND FINANCIAL DISCUSSIONS
During the year ended September 30, 1999, the Company adopted SFAS No. 130,
Reporting Comprehensive Income, which establishes new rule for the reporting
and display of comprehensive income and its components. During 1999 and
1998, the Company did not have any components of comprehensive income to
report.
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities, as
amended by SFAS No. 137, and is effective for fiscal years beginning after
June 15, 2000. Currently, the Company does not participate in hedging
activities; therefore, management believes that SFAS No. 133 will not impact
the Company's financial statements.
As of September 30, 1999, the Company had a working capital deficiency of
$840,436 and an equity deficit of $514,965. Additionally, the Company
incurred a net loss of $408,394 for the year ended September 30, 1999 and a
net loss of $863,829 for the year ended September 30, 1998. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described
in Note 1 of the financial statements.
To address its current cash flow concerns, the Company is in discussions
with investment bankers and other potential investors and lenders attempting
to raise funds to support current and future operations. This includes
attempting to raise additional working capital through the sale of
additional capital stock or through the issuance of debt. The Company cannot
provide any assurance that it will be able to enter into any agreements that
would raise additional funds through the issuance of debt or equity in the
Company.
The Company believes that if financing can be completed, adequate funding
may then be available to support operations for the next twelve months. The
Company believes that additional successful drilling operations, field and
lease operations, and the sales of Electrotelluric survey services may
provide additional funds to meet the Company's capital requirements.
The Company's l999 expenditures for the development and acquisition of oil
and gas properties exceeded working capital generated by operations by
approximately $545,773.
From time to time, the Company conducts drilling activities that require the
use of cash to fund the Company's proportionate cost of these activities.
Occasionally the Company is able to promote or farmout a prospect in which it
owns an interest to another party who agrees to drill a well on behalf of the
Company and the Company retains some percentage of the working interest on
the prospect. While the Company must necessarily transfer a portion of its
interest in the prospect to the party whom performs the drilling, the Company
nevertheless is spared the expense of drilling and/or completing any wells on
the prospect. The Company has currently committed to participate in the
drilling of 3 wells in Natrona County, Wyoming. These wells are being funded
by partnerships that are paying for the drilling and development costs. The
Company may form other partnerships and/or joint ventures to fund the costs
of other drilling and (if warranted) completing additional oil and gas wells.
Company entered into a debt and settlement agreement by way of a promissory
note payable to John Resing as Lender's Agent for Crest Services, Ltd. and
the John H. Resing, Trustee FBO John H. Resing Retirement Trust as per the
Loan Agreement dated February 15, 1999. The lenders hold a security interest
in all the assets of the Company. As part of the agreement, the Company
agreed to give the lenders a warrant to purchase one share of Company common
stock at fifty cents ($0.50) for each two dollars of principal advanced
exercisable until December 31, 2000. This warrant to purchase has been
extended through December 31, 2001. According to the latest accounting the
principal amount advanced is $281,000.00, which has been deferred until June
30, 2000. All monies owed to Mr. Resing have been paid in full by the
Company.
RESULTS OF OPERATIONS (See attached financials)
The Company's financial position over the last two years has been adversely
effected by the blow-out of the Cave Gulch Federal # 1-29 gas well in
September of 1998. The loss of this well caused us to lose approximately
$30,000.00 per month in revenues. The Company also has been materially
effected by the dispute with the inventor of the Electrotelluric Survey
technology. The Company had to initiate a lawsuit to clarify our
responsibilities under the terms of the License Agreement. The Company also
had two dry holes on Farmout Agreements during the spring and summer of 1999.
All of these factors drained on the Company's cash reserves and ability to
grow. However, the 1-29 gas well is back on production as of the fall of 1999
and along with the production from the 3-29 well (Cave Gulch Field) the
Company is paying approximately Two hundred fifty thousand ($250,000.00) to
Barrett Resources for the costs overruns not covered by the blow-out
insurance coverage on the 1-29 blow-out. This payback should be completed
within approximately 12-13 months. The Company is currently in the process
of drilling two additional development wells in the Cave Gulch Field. The
first well has been started and is currently at approximately 9,000 feet.
Total depth of this well is expected to go to approximately 19,000 feet. The
second well is expected to start in approximately sixty (60) days. Both wells
should be completed in the later part of 2000. Also, with the Settlement
Agreement giving the Company the opportunity to purchase the patent for the
Electrotelluric Survey technology, the Company is in a much better position
to develop and improve the technology further. The Company may also increase
it's efforts in the Electrotelluric Survey service business this coming year.
Amalgamated will also do some additional lease Farmouts for oil and gas
prospects in the coming year.
<TABLE>
<CAPTION>
For the Years Ended
September 30,
--------------------------------
l999 l998
----------- -----------
<S> <C> <C>
REVENUES
Oil and gas sales $52,370 $205,103
Lease and field operations 264,440 -
Telluric services 219,254 260,778
Total Revenues 536,064 465,881
COSTS AND EXPENSES
Oil and gas production 10,969 46,628
Oil and gas exploration
and dry holes 245,607 623,693
Cost of Telluric services 182,298 137,120
General and administrative 521,769 419,841
Depreciation, depletion
and amortization 121,194 106,548
Total Costs and Expenses 1,081,837 1,333,830
OPERATING LOSS (545,773) (867,949)
OTHER INCOME (EXPENSE)
Interest and other income 182,717 10,669
Interest and other expense (45,338) (6,549)
Total Other Income (Expense) 137,379 4,120
NET LOSS $(408,394) $(863,829)
BASIC AND DILUTED LOSS PER SHARE $(0.10) $(0.22)
WEIGHTED AVG. SHARES OUTSTANDING 4,200,248 3,840,598
</TABLE>
The Company currently has no agreement to pay anyone ten percent
(10%)commission for the use and sublicense of the technology. In addition, no
commissions have been paid in this regard and none is contemplated. The
Company holds numerous oil and gas leases and from time to time Company has
entered into Farmout Agreements with other companies that agree to provide
the drilling funds to test drill the prospect lease(s). The Company may
receive a lease fee for the farmout and/or retain a overriding interest in
the prospect if successful or The Company may convert its overriding
interest into a working interest depending on each deal. The accounting is
handled on a normal accounting basis for transactions of this kind in the oil
and gas business.
Item 3 - Description of Property
See Item 1 of this Registration Statement for information concerning the
Company's oil and gas properties and rights to certain technology.
The Company has been tenants in the same building since inception. There is
no written lease and the landlord does not desire a lease. All rent payments
are month to month. The Company does not anticipate moving anytime in the
near future.
Item 4 - Security Ownership of Certain Beneficial Owners and Management
The interoffice memo of March 12, 1999 from Mr. Resing was never officially
approved by the Board of Directors of the company. However, the company has
told Mr. Resing that it will honor the option at the stated prices for fifty
percent of the shares set forth or 250,000 shares at the stated exercised
prices of $2.50 for 75,000 shares, $3.50 for 75,000 shares, and $4.50 for
100,000 shares until March 12, 2001. Mr. Resing has not responded to this
proposal. Therefore, the company may technically withdraw the proposal at any
time.
The following table sets forth the shareholdings of the Company's officers
and directors and those persons who own more than 5% of the Company's $0.0l
par value common stock, its only class of outstanding equity securities as of
June 30, 1999. Unless otherwise specified, the shares owned reflect both
record and beneficial ownership.
<TABLE>
<CAPTION>
Name and Address of Number of Percent
of Beneficial Owner Shares Class
- ------------------- --------- -------
<S> <C> <C>
Christian F. Murer 1,331,409 36.3%
_______________
George J. Kirn 621,600 16.9%
_______________
Ronald C. Turrell 49,015 1.3%
_______________
John Resing -- --%
_______________
All Officers and Directors
as a Group (4 persons) 2,002,024 47.7%
</TABLE>
Item 5 - Directors, Executive Officers, Promoters and Control Persons of
the Company
The following sets forth certain information concerning the officers and
directors of the Company. Each director was elected for a one-year term,
which expires at the next annual meeting of the Company's shareholders. All
officers serve at the pleasure of the Company's Board of Directors.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Christian F. ("Ted") Murer 68 President, CEO, Treasurer and a
777 Washington Street Director
Denver, CO 80203
George J. Kirn 65 Vice President of Exploration,
4241 South Mobile Circle Secretary and a Director
Aurora, CO 80013
Ronald C. Turrell 58 Vice President of Engineering and
0484 338 Road a Director
Parachute, CO 81635
John Resing 53 Director (Resigned effective 02/08/00
10307 NE 19th Place see below)
Bellevue, WA 98004
</TABLE>
Christian F. Murer is the Founder, President, C.E.O. of Amalgamated
Explorations, Inc. Mr. Murer has been an employee of the Company since 1996.
Mr. Murer has been an exploration geologist and consultant for the past 40
years. He is a graduate of the Colorado School of Mines where he received a
degree in Geological Engineering in 1956. Mr. Murer has operated as an
independent contractor in the oil and gas and mining exploration business and
has experience in all phases of natural resource exploration and development
in the Western United States. He holds numerous interests in oil and gas,
minerals, and geothermal resources in Utah, Wyoming, New Mexico, Nevada,
Colorado, Montana, and Oregon. Mr. Murer was credited with finding one of the
largest uranium deposits in Garfield County, Utah. Mr. Murer holds royalties
on the production of the Tony M. Mine in Garfield County, Utah based on
mining claims that Mr. Murer had originally located on the property. U. S.
Energy Corp., Riverton, WY is the present operator of the mine. Underground
development of more than 14 miles of tunnels and the drilling of 3,700
surface holes have defined a 20 year reserve for the 750 ton per day mill
that was constructed to service the mine. Recently, while acting in his own
capacity, he had a working interest with Denver- based Barrett Resources
Corporation (NYSE symbol: "BRR") in the drilling of an oil and gas well at
the Cave Gulch area in Wyoming. In May 1995 oil and gas sands were opened to
the well-bore, producing 10.2 million cubic feet of gas and 102 barrels of
condensate per day. The well was selected for the "Best of the Rockies"
award for 1994 by Hart's Oil and Gas World Magazine -- a superior well that
set a trend for other oil and gas companies to follow.
Mr. George Joseph Kirn is Vice President, Secretary and Director of
Amalgamated Explorations. Mr. Kirn has worked for the Company since 1996. As
a graduate of the Colorado School of Mines, Mr. Kirn has more than 39 years
experience as an exploration and development geologist in the oil and
gas and minerals business. He has worked throughout the Rocky Mountain Region
and parts of the mid-continent, including Texas, Alaska, and New Mexico. Mr.
Kirn is knowledgeable in land acquisition, as well as in exploration and
development techniques in oil and gas and continues to be active as a
consultant. From 1960 to the present time, Mr. Kirn, has operated as an
independent consulting geologist developing oil and gas prospects, doing
subsurface geology, well site supervision, assembling lease blocks, selling
drilling prospects, testifying before Oil and Gas Conservation Commissions in
various states and testifying as an expert witness in arbitration hearings
concerning oil and gas matters.
Mr. Ron Turell serves as Amalgamated's Vice President of Engineering and is a
Director. Mr. Turell has worked for the Company since 1996 and has 28 years
of experience including a wide variety of operations and management
assignments, providing a broad background in all phases of the oil and gas
exploration/production business. Mr. Turell has been involved in exploration,
lease assignments and filing, fee lease negotiation and acquisition; His
extensive drilling includes: AFE and budget estimates, drilling contracts,
all drilling logistics; Completion site preparation, supervision and
logistics, AFE estimates, and all engineering calculations, perforating;
Workovers, reentry and deepening or re-completing, corroded casing, Plug and
Abandon, Cement and squeeze zone, and dismantling production facility. Over
30 years of experience in engineering, operational, management and wellsite
experience in drilling, completion, workover and production. Domestic
areas/basins worked include the Williston, Powder River, Green River, Big
Horn, Wind River, San Juan, He also performed offshore drilling in Peru as
well as geothermal drilling in Nicaragua and granite drilling and coring in
California. Various horizontal completions of wells in Venezuela and
horizontal wells with fresh water, gel, polymer and oil based mud systems. He
drilled Lower Cretaceous, high angle wells in Vat Yegan Field, Western
Siberia.
John H. Resing, Chairman and Director of Amalgamated Explorations, Inc. has
been a Director of the Company since February 1999. Since 1985 Mr. Resing is
also the President of Milestone Capital, a private consulting and venture
capital firm. He also worked for Coopers & Lybrand now Pricewaterhouse
Coopers prior to joining the Board of Directors of the Company. In addition,
Mr. Resing has not received any compensation from the Company except in the
form of stock options as indicated above. Milestone Capital is a company that
Mr. Resing claims to own and operate. Any compensation Mr. Resing receives
from Milestone Capital is not known to the Company. Mr. Resing was appointed
a Director pursuant to the terms of a loan agreement between the Company and
Mr. Resing. It should be noted that Mr. Resing has tendered his resignation
to the Company effective February 8, 2000. See Item 7 below.
John Jenkins was a Director of the Company from March 1999 to August 1999 and
has resigned effective August 24, 1999. Mr. Jenkins is the president and
chief executive officer of Tava Technologies, Inc., a publicly traded
corporation Mr. Jenkins is also the president of Morgan Technical Ceramics,
Inc.
Item 6 - Executive Compensation
The following executives: Christian F. Murer, George J. Kirn, and Ronald C.
Turell have only received consulting fees and not received any other form of
compensation during the past three fiscal years. However, the Company's
Board of Directors may determine that compensation should be paid to the
Company's officers depending upon the results of the Company's future
operations.
Employment Agreements
The Company does not have any employment agreements with any of its executive
officers.
Long Term Incentive Plans - Awards In Last Fiscal Year: None.
Employee Pension, Profit Sharing or Other Retirement Plans: The Company does
not have a defined benefit, pension plan, profit sharing or other retirement
plan, although The Company may adopt one or more of such plans in the future.
Compensation of Directors
Standard Arrangements
At present The Company does not pay its directors for attending meetings of
the Board of Directors, although The Company expects to adopt a director
compensation policy in the future. The Company has no standard arrangement
pursuant to which directors of the Company are compensated for any services
provided as a director or for committee participation or special assignments.
Other Arrangements
In March 1999 the Company granted options to purchase 250,000 shares of
common stock to John Resing, See "Stock Option Plans" below for information
concerning these options.
Except as disclosed elsewhere in this registration statement no director of
the Company received any form of compensation from the Company during the
year ended September 30, 1998.
Stock Option Plans
The Company has an Incentive Stock Option Plan, a Non-Qualified Stock Option
Plan and a Stock Bonus Plan. A summary description of each Plan follows. In
some cases these Plans are collectively referred to as the "Plans".
Incentive Stock Option Plan
The Incentive Stock Option Plan authorizes the issuance of options to
purchase up to 200,000 shares of the Company's Common Stock. The Incentive
Stock Option Plan became effective on May 26, 1995 and will remain in effect
for ten years unless terminated earlier by action of the Board. Only
officers, directors and key employees of The Company may be granted options
pursuant to the Incentive Stock Option Plan.
In order to qualify for incentive stock option treatment under the Internal
Revenue Code, the following requirements must be complied with:
1. Options granted pursuant to the Plan must be exercised no later than:
(a) The expiration of thirty (30) days after the date on which an option
holder's employment by The Company is terminated.
(b) The expiration of one year after the date on which an option holder's
employment by The Company is terminated, if such termination is due to the
employee's disability or death.
2. In the event of an option holder's death while in the employ of The
Company, his legatees or distributees may exercise (prior to the option's
expiration) the option as to any of the shares not previously exercised.
3. The total fair market value of the shares of Common Stock (determined
at the time of the grant of the option) for which any employee may be
granted options which are first exercisable in any calendar year may not
exceed $100,000.
4. Options may not be exercised until one year following the date of
grant. Options granted to an employee then owning more than ten percent
(10%) of the Common Stock of the Company may not be exercisable by its
terms after five years from the date of grant.
5. The purchase price per share of Common Stock purchasable under an
option is determined by the Board of Directors but cannot be less than the
fair market value of the Common Stock on the date of the grant of the
option (or one hundred ten percent (110%) of the fair market value in the
case of a person owning the Company's stock, which represents more than 10%
of the total combined voting power of all classes of stock).
Non-Qualified Stock Option Plan
The Non-Qualified Stock Option Plan authorizes the issuance of options to
purchase up to 300,000 shares of the Company's Common Stock. The Non-
Qualified Stock Option Plan became effective on May 26, 1995. The Company's
employees, directors, officers, consultants and advisors are eligible to be
granted options pursuant to the Non-Qualified Stock Option Plan, provided
however that bona fide services must be rendered by such consultants or
advisors and such services must not be in connection with the offer or sale
of securities in a capital-raising transaction. The option exercise price is
determined by the Board of Directors.
Options granted pursuant to the Non-Qualified Stock Option Plan terminate on
the date established by the Board of Directors when the option was granted.
Stock Bonus Plan
Up to 300,000 shares of Common Stock may be granted under the Stock Bonus
Plan. Such shares may consist, in whole or in part, of authorized but
unissued shares, or treasury shares. Under the Stock Bonus Plan, the
Company's employees, directors, officers, consultants and advisors are
eligible to receive a grant of the Company's shares; provided, however, that
bona fide services must be rendered by consultants or advisors and such
services must not be in connection with the offer or sale of securities in a
capital-raising transaction.
Other Information Regarding the Plans
The Plans are administered by the Company's Board of Directors. The Board of
Directors has the authority to interpret the provisions of the Plans and
supervise the administration of the Plans. In addition, the Board of
Directors is empowered to select those persons to whom options are to be
granted, to determine the number of shares subject to each grant of an option
and to determine when, and upon what conditions or options granted under the
Plans will vest or otherwise be subject to forfeiture and cancellation.
In the discretion of the Board of Directors, any option granted pursuant to
the Plans may include installment exercise terms such that the option becomes
fully exercisable in a series of cumulating portions. The Board of Directors
may also accelerate the date upon which any option (or any part of any
options) is first exercisable. Any options granted pursuant to the Incentive
Stock Option Plan or the Non-Qualified Stock Option Plan will be forfeited if
the "vesting" schedule established by the Board of Directors at the time of
the grant is not met. For this purpose, vesting means the period during
which the employee must remain an employee of the Company or the period of
time a non-employee must provide services to the Company. At the time an
employee ceases working for the Company (or at the time a non-employee ceases
to perform services for the Company), any options not fully vested will be
forfeited and cancelled. In the discretion of the Board of Directors payment
for the shares of Common Stock underlying options may be paid through the
delivery of shares of The Company's Common Stock having an aggregate fair
market value equal to the option price, provided such shares have been owned
by the option holder for at least one year prior to such exercise. A
combination of cash and shares of Common Stock may also be permitted at the
discretion of the Board of Directors. Options are generally non-transferable
except upon death of the option holder.
The Board of Directors of the Company may at any time, and from time to time,
amend, terminate, or suspend one or more of the Plans in any manner it deems
appropriate, provided that such amendment, termination or suspension cannot
adversely affect rights or obligations with respect to shares or options
previously granted.
The Plans are not qualified under Section 401(a) of the Internal Revenue
Code, nor are they subject to any provisions of the Employee Retirement
Income Security Act of 1974.
Summary
The following sets forth certain information as of April 30, 1999, concerning
the stock options and stock bonuses granted by the Company. Each option
represents the right to purchase one share of the Company's Common Stock.
<TABLE>
<CAPTION>
Total Shares Shares Remaining
Shares Reserved for Issued Options/
Reserved Outstanding as Stock Shares
Name of Plan Under Plan Options Bonus Under
Plan
- ------------ ---------- --------- ------- --------
- -
<S> <C> <C> <C> <C>
Incentive Stock Option Plan 200,000 0 25,000 0
Non-Qualified Stock Option 300,000 250,000 20,000 30,000
Plan N/A
Stock Bonus Plan N/A
</TABLE>
Options Granted No options were granted to any officer or director during
the fiscal year ending September 30, 1998.
The following tables set forth information concerning the options granted
during the nine months ending June 30 1999 to the Company's officers and
directors and the fiscal year-end value of all unexercised options (regard-
less of when granted) held by these persons.
<TABLE>
<CAPTION>
% of Total
Options
Number of Granted to
Securities Employees
Underlying During Nine Exercise
Options Month Price Per
Expiration
Name Granted (#) Period Share Date
- ----- ----------- ----------- ---------------- ---------
<S> <C> <C> <C> <C>
John Resing 250, 000 0 $2.50, $3.50, $4.50 3/2001
</TABLE>
Option Exercises and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying
Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized ($) Unexercisable Unexercisable
- ----- --------------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
-- -- -/- -/-
-- -- -/- -/-
-- -- -/- -/-
-- -- -/- -/-
Item 7. - Certain Relationships and Related Transactions
In February 1996, the Company acquired all of the issued and outstanding
shares of Gold Basin Exploration, Inc. ("Gold Basin") in consideration for
2,347,109 shares of the Company's common stock. At the time of this
acquisition Gold Basin held what are now the Company's interests in the Boone
Dome and Cave Gulch prospects. In connection with the acquisition of Gold
Basin, Christian F. Murer and George Kirn, both of whom are officers and
directors of the Company, were the principal shareholders of Gold Basin and
received 1,332,409 and 621,600 shares, respectively, of the Company's common
stock in exchange for their shares in Gold Basin.
In February 1999 the Company entered into an agreement with John Resing, a
director and a trust controlled by John Resing (collectively the "Lenders")
whereby the Lenders agreed to loan the Company up to $450,000 to be used by
the Company for purposes agreed to by the Lenders. To date, Crest Service
Limited and the FBO John H. Resing Retirement Trust through its agent John
Resing has advanced two hundred eighty thousands dollars ($281,000) to the
Company. As part of this agreement, the Company agreed to issue to the
Lenders warrants to purchase one share of the Company's common stock for each
$2 advanced to the Company. The warrants have an exercise price of $0.50 per
share and can be exercised at any time prior to December 31, 2000.
Item 8. - Description of Securities
Common Stock
The Company is authorized to issue 50,000,000 shares of Common Stock, (the
"Common Stock") of which 4,293,795 are outstanding with 500 stockholders on
record as of September 30th, 1999. Holders of Common Stock are each entitled
to cast one vote for each share held of record on all matters presented to
shareholders. Cumulative voting is not allowed; hence, the holders of a
majority of the outstanding Common Stock can elect all directors.
Holders of Common Stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefor
and, in the event of liquidation, to share pro rata in any distribution of
the Company's assets after payment of liabilities. The board is not
obligated to declare a dividend. It is not anticipated that dividends will
be paid in the foreseeable future.
Holders of Common Stock do not have preemptive rights to subscribe to
additional shares if issued by the Company. There are no conversion,
redemption, sinking fund or similar provisions regarding the Common Stock.
All of the outstanding shares of Common Stock are fully paid and
nonassessable and all of the shares of Common Stock offered as a component of
the Units will be, upon issuance, fully paid and non-assessable.
Preferred Stock
The Company is authorized to issue up to 2,000,000 shares of Preferred Stock.
The Company's Articles of Incorporation provide that the Board of Directors
has the authority to divide the Preferred Stock into series and, within the
limitations provided by Colorado statute, to fix by resolution the voting
power, designations, preferences, and relative participation, special rights,
and the qualifications, limitations or restrictions of the shares of any
series so established. As the Board of Directors has authority to establish
the terms of, and to issue, the Preferred Stock without shareholder approval,
the Preferred Stock could be issued to defend against any attempted takeover
of the Company.
PART II
Item 1 - Market for Company's Common Stock and Related Security Holder
Matters
The common stock of the Company trades on the OTC Bulletin Board. The
following table sets forth the high and low bid prices for the Company's
common stock for each quarter for the periods indicated. The bid prices
represent prices between dealers, do not include retail markups, markdowns,
or commissions, and may not represent actual transactions.
</TABLE>
<TABLE>
<CAPTION>
Bid Price (l)
----------------------
High Low
---- ----
<S> <C> <C>
Quarter Ending 09/30/97 9 1/4 5
Quarter Ending 12/31/97 5 3
Quarter Ending 03/31/98 4 3 1/2
Quarter Ending 06/30/98 4 1/8 3
Quarter Ending 09/30/98 3 1/8 2
Quarter Ending 12/31/98 2 3/4 2
Quarter Ending 03/31/99 3 1/8 1 9/16
Quarter Ending 06/30/99 2 3/4 9/16
Quarter Ending 09/30/99 1/2 3/8
Quarter Ending 12/31/99 1/4 1/4
Quarter Ending 03/31/00 2 1/2 2 1/2
</TABLE>
Holders of common stock are entitled to receive such dividends as may be
declared legally by the Board of Directors. The Company has not paid any
dividends on its common stock and does not anticipate paying any dividends in
the foreseeable future.
The Company is authorized to issue 50,000,000 shares of Common Stock, (the
"Common Stock") of which 4,293,795 are outstanding with 500 stockholders on
record as of December 1st. This includes 395,000 shares of stock, held by two
shareholders, that have subsequently been transferred back to the Company but
have not been reflected in the records of the Transfer Agent.
Item 2 - Legal Proceedings
In November 1998 a dispute arouse between the Company and the licensors
concerning the value of the consideration received by the former MSP
shareholders and the resulting ability of the Company to sublicense the
technology and to forego the payment of any royalties required by the terms
of the licensing agreement. In February 1999, the Company commenced a legal
proceeding against the licensors in the District Court of Jefferson County,
Colorado seeking a determination that the value of the consideration received
by the former MSP shareholders equaled or exceeded the amount required by the
terms of the licensing agreement and as a result the Company had the right to
sublicense the Electrotelluric Survey technology to third parties and to
forego any future payment of royalties to the licensors. Following the
commencement of this proceeding the District Court granted a preliminary
injunction against the licensors, prohibiting the licensors from terminating
the License Agreement. Subsequently, the case has been settled at an
arbitration hearing in June 1999 with the Company purchasing the Patent for
the Electrotelluric technology for $1,500,000.00 in monthly payments of
$20,000.00 commencing August 15, 1999 and the inventor returning 395,000
shares of Company stock to the Company. The License Agreement stays in place
with a right to the Company to use and sublicense the technology.
YEAR 2000
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. These systems and
software products will need to accept four digit entries to distinguish 21st
century dates from 20th century dates. As a result, computer systems and/or
software used by many companies may need to be upgraded to comply with such
year 2000 requirements or risk system failure or miscalculations, potentially
causing disruptions of normal business activities. The Company relies on
computers, systems and applications to operate and monitor certain aspects of
its business. Certain of the Company's computers and computing systems have
not been upgraded to year 2000 compliant equipment. In addition, failure of
the Company's third party service providers and vendors to adequately address
the problems relating to the year 2000 could materially disrupt the Company's
operations. Accordingly, the change to the year 2000, could have a material
adverse effect on the Company's business, results of operations and financial
condition.
Item 3 - Changes in and Disagreements with Accountants
Not Applicable
Item 4 - Recent Sales of Unregistered Securities
The following is a listing of all unregistered securities issued or sold by
the Company since May 1996 to September 30, 1999
<TABLE>
<CAPTION>
Date Name or
of Sale Identity of Purchaser Shares Issued Consideration
- ------- --------------------- ------------- -------------
<S> <C> <C> <C>
5-96 Former shareholders 2,347,109 All outstanding
of Gold Basin shares of Gold
Exploration, Inc. Basin Exploration, Inc.
5-96 Chris Van Duyne 50,000 Services rendered
6-96 Ten investors 13,530 Services rendered
8-96 Two investors (1) 500,000 $50,000.00
11-96 Former shareholders of
MSP Technologies, Inc.(2) 600,000 Stock of MSP
Technologies, Inc.
2-97 37 Investors (3) 402,652 $1,000,000
5-97 Three investors (4) 6,000 $15,000
12-97 IPO Consultants, Inc. (4) 180,000 $1,800
10-98 MSP Technologies, Inc. 240,000 Stock for MSP
Technologies, Inc.
12-98 Dean Young 10,000 Services rendered
1-99 Net Services 50,000 Services rendered
9-99 Elsie Lee 1,000 Services rendered
9-99 Dean Young 10,000 Services rendered
9-99 Ron Turrell 30,000 Services rendered
(1) August 1996, two investors, 500,000 shares for $50,000.00.
This was seed money raised at $.10 per share.
(2) November 1996, 600,000 shares to MSP shareholders. This was a
stock exchange. Amalgamated stock for MSP Technology Inc. stock
and the purchase of MSP by Amalgamated. MSP holds the License
Agreement for the Electrotelluric technology.
(3) February 1997, 37 investors, 504 Private Placement ("PP") to
raise $1,000,000.00.
(4) May 1997, 3 investors, 6,000 shares. These investors had invested
$15,000.00 in the 504 through an intermediary who did not forward
the money to the company. In order to avoid unhappy investors the
company issued them 6,000 shares of stock without receiving these
funds.
(5) December 1997, 180,000 shares to IPO Consultants to settle an
option agreement that was outstanding prior to the Private
Placement.
</TABLE>
Item 5 - Indemnification of Directors and Officers
The Colorado Business Corporation Act and the Company's Bylaws authorize
indemnification of a director, officer, employee or agent of the Company
against expenses incurred by him in connection with any action, suit, or
proceeding to which he is named a party by reason of his having acted or
served in such capacity, except for liabilities arising from his own
misconduct or negligence in performance of his duty. In addition, even a
director, officer, employee, or agent of the Company who was found liable for
misconduct or negligence in the performance of his duty may obtain such
indemnification if, in view of all the circumstances in the case, a court of
competent jurisdiction determines such person is fairly and reasonably
entitled to indemnification. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors,
officers, or persons controlling The Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
PART III.
Item 1. Index to Exhibits
The following exhibits are filed as part of this Registration Statement:
Exhibit
Number Description
- ------- ----------------------------------------------------------
2.1 Acquisition Agreement and Plan of Reorganization Agreement with
Amalgamated Exploration, Inc. and Gold Basin Explorations, Inc.
dated February 12, 1996.
2.2 Acquisition Agreement between Amalgamated Explorations, Inc. and
John R. Jackson dated November 13, 1996.
3.1(a) Articles of Incorporation.
3.1(b) Certificate of Amendment to Articles of Incorporation filed
April 29, 1997.
3.2 Amended and Restated By-laws.
10.1 License Agreement between John R. Jackson, Andres M. Arismendi,
and MSP, Technologies, Inc. dated November 13, 1996.
10.2 Settlement Agreement with Inventor of Electrotelluric Survey
10.3 Loan Agreement between John H. Resing and Amalgamated
Explorations, Inc. dated February 15, 1999.
13. Combined audited and interim unaudited financial statements
21 Subsidiaries of the Registrant
24 Power of Attorney
* Summaries of all exhibits contained within this Registration Statement
are modified in their entirety by reference to these exhibits.
Item 2 - Description of Exhibits
SIGNATURES
In accordance with Section l2 (d) of the Securities Exchange Act of l934,
the registrant caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: November 3, 1999
AMALGAMATED EXPLORATIONS, INC.
By: /S/
---------------------------
Christian F. Murer, President
Treasurer and a Director
By
Principal Financial Officer and Chief Accounting Officer
By
George F. Kirn, Vice President
of Exploration, Secretary and a Director
By
Ronald C. Turrell, Vice President
of Engineering and a Director
By
John Resing, Director
ACQUISITION & REORGANIZATION AGREEMENT
THIS AGREEMENT sets forth the plan of acquisition and reorganization as of
the day of February 12, 1996, which Agreement shall be effective on February
12, 1996 (the "Effective Closing Date"') by and among Amalgamated
Explorations, Inc., a Colorado corporation ("PURCHASER"), Gold Basin
Exploration Inc., a Nevada corporation, ("SELLER"), and Initial Public
Offering Consultants, Inc., ("IPO")
RECITALS
WHEREAS, this plan of reorganization shall be a reorganization within the
meaning of IRC (1954) , Section 368 (a) (1) (B) as amended; and
WHEREAS, PURCHASER shall acquire 100% of all right, title and interest, in
the common stock owned of GOLD BASIN EXPLORATION, INC. from SELLER in
exchange solely for a part of PURCHASERS'S voting common stock.
AGREEMENT
NOW THEREFORE, in order to consummate the foregoing plan of reorganization
and in consideration of the mutual benefits to be derived therefrom and the
mutual agreements hereinafter contained, PURCHASER and SELLER approve and
adopt this Agreement and plan of reorganization and mutually covenant and
agree with each other as follows:
1. Shares to be Transferred and Issued. On the Effective Closing Date, the
PURCHASER shall issue 2,347,109 shares of the PURCHASER'S common stock
bearing a restricted legend in exchange for all of the Common Stock of Gold
Basin (100%) pursuant to a shareholder approved share exchange plan. (Note
that 1,817,000 shares of Common Stock were issued to Christian F. Murer and
George J. Kirn for certain oil & gas interests pursuant to an Assignment
Agreement). It is understood by SELLER that PURCHASER is presently
authorized to issue 50,000,000 shares of common stock.
In exchange for the PURCHASER'S stock being issued to SELLER as above
described, SELLER shall on the closing date and contemporaneously with such
issuance of PURCHASER'S common stock deliver to PURCHASER shares
(representing 100% of the common stock of SELLER).
2. PURCHASER/SELLER are desirous of receiving the services of IPO as
hereinafter described and IPO is desirous of performing the said services as
hereinafter described:
a. IPO will act as a financial consultant to PURCHASER/SELLER and be
available to render advice regarding any corporate financial matter,
including corporate finance, corporate development, management/organization,
corporate philosophy and policy, and financial public relations.
b. IPO will, on a "best-efforts" basis, assist PURCHASER/SELLER with its
corporate financial needs, helping it find underwriters and assist in
negotiating terms and conditions.
C. IPO will act as PURCHASER/SELLER's financial public relations
representative helping it develop and coordinate its public relations effort.
IPO will introduce PURCHASER/SELLER to the financial community, introducing
it to brokers, market-makers, investment advisors, investors, and the
financial press as may be appropriate for PURCHASER/SELLER's financial
status.
d. IPO will assist PURCHASER/SELLER in the composition and distribution of
press releases, news articles, shareholder letters and research data to
properly inform the investment community of the investment merits of
PURCHASER/SELLER. In other words, IPO will generally act as a liaison
between the public and PURCHASER/SELLER.
e. PURCHASER/SELLER agrees to make available to IPO such information as may
be mutually determined to be desirable to be distributed to the public.
f. PURCHASER/SELLER agrees to make its management available
for such public relations activities and efforts as IPO may
determine to be necessary under the circumstances.
3. Compensation. PURCHASER has paid to IPO $25,000.00 as consideration for
IPO's efforts in negotiating this Agreement and for transferring the
ownership control of PURCHASER to the shareholders of PURCHASER.
4. Indemnification. All negotiations relative to this agreement
and the transactions contemplated hereby have been conducted with
the assistance of IPO, who is acting as a finder and consultant on behalf of
both PURCHASER and SELLER. Both PURCHASER and SELLER agree to hold harmless
and indemnify IPO, from any and all claim, demand, cause of action or suit
raised or filed in connection with the operation or promotion of PURCHASER
and/or SELLER and the trading of PURCHASER/SELLER's shares.
5 . Warranty and Representations by SELLER. No representation or warranty by
SELLER in this agreement, nor any statement, certificate, schedule or exhibit
hereto furnished or to be furnished by or on behalf of SELLER to this
agreement, nor any document or certificate delivered to PURCHASER pursuant to
this agreement or in connection with actions contemplated hereby, contains or
shall contain any untrue statement of material fact or omits a material fact
necessary to make the statement contained therein not misleading.
a. Nevada Corporation. SELLER represents and warrants that it is a
corporation duly organized, validly existing and in good standing under the
laws of the state of Nevada and duly qualified to do business.
b. Capitalization. SELLER is authorized to issue 20,000,000
shares of common stock. 2,347,109 shares of common stock are issued and
outstanding. There are no legal, administrative or other proceedings, or
other claims, judgments, injunctions or restrictions, either threatened,
pending or outstanding against or involving PURCHASER or SELLER which are
known, or have reasonable grounds to know, of any basis for any such
proceedings, or other claims, judgments, injunctions or restrictions, except
as herein disclosed.
6. Warranty and Representations by Purchaser. To the knowledge of the
officers of PURCHASER, PURCHASER is not a party to nor bound by any
agreement, deed, lease, power of attorney or other instrument other than
which is herein disclosed.
a. Colorado Corporation. PURCHASER represents and warrants that it is a
corporation duly organized, validly existing and in good standing under the
laws of the state of Colorado and is validly existing and duly qualified to
do business.
b. Capitalization. PURCHASER is authorized to issue 50,000,000 common
shares. Approximately 52,891 common shares are issued and outstanding.
PURCHASER is also authorized to issue 2,000,000 preferred shares of which
none have been issued. PURCHASER has approximately 410 Shareholders of
Record. American Securities Transfer, Inc. ("AST") has been the Transfer
Agent. The shareholder list is current. PURCHASER was incorporated May 5,
1986 and went public in September 1987. Upon the closing of the proposed
transaction between PURCHASER and Gold Basin, the shares will be quoted daily
in the National Daily Quotation Sheets (Pink Sheets).
c. Authorization. PURCHASER represents and warrants that the execution and
performance of this agreement and the issuance of stock contemplated hereby
have been authorized by the board of directors of PURCHASER. The shares of
PURCHASER'S common stock to be delivered pursuant to this agreement, when so
delivered, will have been duly and validly authorized and issued by PURCHASER
and will be fully-paid and nonassessable.
d. No Warranty as to Benefits. PURCHASER hereby further acknowledges and
agrees that no representations or warranties have been made by itself or IPO,
as to the benefits to be derived by SELLER in completing this transaction.
e. Tax and Securities. It is expressly understood and agreed that neither
IPO, nor PURCHASER or its officers or agents have made any warranty or
agreement, expressed or implied, as to the tax or securities consequences of
the transactions contemplated by this agreement or the tax or securities
consequences of any action pursuant to or growing out of this agreement.
7. Actions Prior to Closing.
a. Transfer of Property. SELLER shall duly comply with all applicable laws
as may be required for the valid and effective transfer of property, assets
and business contemplated by this agreement.
b. Survival of Warranties. The representations and warranties made by
PURCHASER in this agreement or given on its behalf hereunder shall be
substantially accurate in all material respects on and as of the closing date
with the same effect as though such representations and warranties had been
made or given on and as of the closing date.
C. Compliance with Terms of Agmt. SELLER shall perform and comply with all
its obligations under this agreement which are to be performed and complied
with by it prior to or on the closing date including the delivery of its
documents specified herein.
d. Board Approval. This Agreement shall have been approved by the boards of
directors of both PURCHASER and SELLER.
e. Restricted Sale of Stock. SELLER covenants and warrants that the shares
of common stock of the PURCHASER to be received by them pursuant to this
agreement are being acquired for their own account and for investment and not
with the present view toward the sale or distribution thereof and will not be
disposed of except (i) pursuant to an effective registration statement under
the
Securities Act of 1933, as amended, or (ii) another transaction, which, in
the opinion of counsel acceptable to PURCHASER, is exempt from registration
under the Securities Act of 1933, as amended, or the rules and regulations of
the Securities and Exchange Commission thereunder. In order to effectuate
the covenants of this paragraph, an appropriate endorsement will be placed on
the certificates for shares of common stock of PURCHASER delivered to SELLER
pursuant to this agreement and stop transfer instructions shall be placed
with the transfer agent for the securities.
f. Rule 144. SELLER is aware that the shares distributed to
him will not have been registered pursuant to the Securities Act of 1933,
as amended; and, therefore, under current interpretations and applicable
rules, particularly Rule 144, he will probably have to retain such shares for
a period of at least two (2) years and at the expiration of such two-year
period his sale may be confined to brokerage transactions of limited amounts
requiring a notification filing on Form 144 with the Securities and Exchange
Commission and such disposition may be available only if the PURCHASER is
current in his filings with the Securities and Exchange Commission and SELLER
is aware of Rule 144 issued by the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and the other limitations imposed
thereby on their disposition of PURCHASERIS shares.
8. Governing Law. This agreement may not be modified or terminated orally,
and shall be construed and interpreted according to the laws of the State of
Colorado and enforced in its courts.
9. Assignment, Amendment and Notification. This agreement shall not be
assigned by any party without the written consent of the other. PURCHASER
and SELLER may amend, modify and supplement this agreement in such manner as
may be agreed upon by them in writing.
10. Termination and Abandonment. This agreement may be terminated and the
transactions provided for by this agreement may be abandoned without
liability on the part of any party to any other, at any time before the
closing date by mutual consent of PURCHASER and SELLER. In the event of
termination and abandonment by any party as herein provided, written notice
shall forthwith be given to the other party, and each party shall pay its own
expenses incident to preparation for the consummation of this agreement and
the transactions contemplated hereunder. In the event that this Agreement
has not been completed by the closing date or within thirty days thereafter,
this Agreement and the transactions contemplated hereby shall be deemed to
have been abandoned and neither party shall be under any further obligation
to the other. In the event of such termination or abandonment, SELLER shall
forfeit any deposits, payments or other consideration tendered in connection
with the execution of this Agreement, unless otherwise expressly provided
herein.
11. Notice. All notices, requests, demands and other communications hereunder
shall be deemed to have been duly given, if delivered by hand or mailed,
certified or registered mail with postage prepaid:
If to PURCHASER:
Amalgamated Explorations, Inc.
1645 Court Place, Suite 201
Denver, Colorado 80202
If to SELLER:
Gold Basin Exploration, Inc.
c/o 5060 Shoreham Place, Suite 200 San Diego, California 92122
12. Entire Agreement. This instrument embodies the entire agreement between
the parties hereto with respect to the transactions contemplated herein, and
there have been and are no agreements, representations or warranties between
the parties other than those set forth or provided for herein. Any
announcements, amendments or modifications shall be set forth in writing and
approved by the parties hereto.
13. Counterparts. This agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
14. Further Documentation. PURCHASER and SELLER agree to execute any and all
other documents and to take such other action or corporate proceedings as may
be necessary or desirable to carry out the terms hereof.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be duly
executed all as of the day and year first above written.
AMALGAMATED EXPLORATIONS, INC.
("PURCHASER"
By:
James E.Franklin President
GOLD BASIN EXPLORATIONS, INC. ("SELLER")
By:
James E.Franklin President
INITIAL PUBLIC 0FFERING CONSULTANTS INC., ("IPO")
By:
James E.Franklin President
November 13, 1996
AGREEMENT
This Agreement, effective the 13th day of November 1996, (Effective Date) is
made and entered into by and among JOHN R. JACKSON ("Jackson"), a natural
person residing at 1403 Blalock # 7, Houston, Texas 77055, ANDRES M.
ARISMENDI, Jr. ("ARISMENDI"), a natural person residing at 178 1 0 Clearlight
Ln., Spring, Texas 77379, and AMALGAMATED EXPLORATIONS INC. ("Amalgamated"),
a Colorado corporation.
Premises
WHEREAS, JACKSON and ARISMENDI own certain patent rights and confidential
information,
WHEREAS, JACKSON has formed a Texas corporation named MSP
Technologies, Inc.,
WHEREAS, JACKSON has entered into an Employment Agreement dated November 13,
1996 with MSP,
WHEREAS, JACKSON and ARISMENDI I have entered into a License Agreement
effective November 11, 1996 with MSP Technologies, Inc, regarding such patent
rights and confidential information,
WHEREAS, AMALGAMATED is desirous of acquiring MSP Technologies, Inc. ("MSP")
as a wholly owned subsidiary, including said License Agreement,
WHEREAS, JACKSON owns all the shares of MSP, and
WHEREAS, JACKSON and AMALGAMATED entered into an Agreement on October 5, 1996
setting forth the anticipated terms whereby AMALGAMATED would acquire MSP,
NOW, THEREFORE, in consideration of the premises and of the mutual covenants,
terms and conditions hereinafter expressed, JACKSON, ARISMENDI and
AMALGAMATED agree as follows:
1. Pursuant to the Agreement dated October 5, 1996, at the time of closing
under the terms of the present Agreement, AMALGAMATED will exchange Three
Hundred Thousand (300,000) shares of AMALGAMATED common stock for all issued
and outstanding stock of MSP, whereby MSP becomes wholly owned by
AMALGAMATED.
2. The Three Hundred Thousand (300,000) shares of AMALGAMATED common stock
shall be issued to JACKSON and ARISMENDI in the following amounts.
JACKSON 225,000 shares common stock
ARISMENDI 75,000 shares common stock
wherein said common stock has a time restriction on public trading until
October 5, 1998
3. Pursuant to the Agreement of October 5, 1996, the acquisition value for
MSP, inclusive of the License Agreement, ("Value") will not fall below One
Million Five Hundred Thousand Dollars (US$ 1,500,000) Pursuant to the present
Agreement as a modification of the October 5, 1996, Agreement, the Value will
not fall below this stated amount at the end of each succeeding 180-day
period following the Effective date of this Agreement until October 5, 1998
based on comparing the Value to an average of actual market quotations of
common stock of AMALGAMATED (NASDAQ: OTCBB AXPL) for the last thirty (30)
days of the respective 180 day period ("Average Value"). In the event such
Average Value is below the Value, that is, the stated amount of One Million
Five Hundred Thousand Dollars (US$ 1,500,000.00), at the end of any of the
respective 180-day periods or on October 5, 1998, AMALGAMATED must at that
time compensate JACKSON and ARISMENDI or their assigns with additional
AMALGAMATED common stock or cash to bring the Average Value of the
compensation up to the Value, that is, the stated amount of One Million Five
Hundred Thousand Dollars (US$ 1,500,000). In the event AMALGAMATED does not
adjust the Value as required above, any royalty payments under the License
Agreement which have been deferred pursuant to Paragraph 5 hereof will become
due and payable and Paragraph 5 hereof will cease to be effective until such
time as the Value is so adjusted at which time future royalties will be
deferred pursuant to Paragraph 5. In the event such Average Value is above
the Value at the end of any of the respective 180-day periods or on October
5, 1998, no adjustment will be required or made.
4. Pursuant to the Employment Agreement of JACKSON and MSP dated October 21,
1996, JACKSON is employed as President of MSP for an initial period of five
(5) years and year to year thereafter at a wage of not less than Three
Thousand Five Hundred Dollars (US$ 3,500.00) per month. Any inventions
conceived or made by JACKSON will remain the property of JACKSON and any such
inventions related to the Field (as defined in the License Agreement) shall
be licensed to MSP pursuant to the terms and conditions of said License
Agreement. MSP and/or AMALGAMATED will have NO other rights to such
inventions.
5. Subject to Paragraph 3 hereof, the payment of any royalties, including
minimum royalties, due under said License Agreement shall be deferred until
the earlier of (1) October 5, 11998 or (2) the termination of said Employment
Agreement.
6. AMALGAMATED will provide support, both physical and financial, for the
operations of MSP. including research and development.
7. On the Effective Date, AMALGAMATED will make a cash payment of Twenty-five
Thousand Dollars (US$ 25,000.00) to JACKSON to compensate him for his
personal cost and expenses for relocation to Denver, Colorado
8. Subject to the realization of the Value in cash by JACKSON and ARISMENDI,
unless otherwise agreed to in writing by JACKSON and ARISMENDI, for JACKSON's
and ARISMENDI's respective shares of common stock of AMALGAMATED on October
5, 1 909, JACKSON and ARISMENDI agree to modify the License Agreement at that
time to allow MSP to sublicense the licensed rights, to sell the Licensed
Instruments (as defined in the License Agreement) and to eliminate all
royalty requirements contained therein. However, the License Agreement will
continue to be in effect and among the other terms and conditions remaining
therein to be subject to the reservation of a nonexclusive license to JACKSON
and ARISMENDI under such rights.
9. The terms and conditions contained in this Agreement constitute the entire
agreement between the parties and supersede all previous communications,
whether oral or written, between the parties to this Agreement with respect
to the subject matter of this Agreement, and no previous agreement (unless
specifically referred to herein) or understanding varying or extending the
same shall be binding upon either party.
10. This Agreement may be amended or modified only by a written instrument
which is signed by duly authorized representatives of the parties hereto and
which expressly states that it is an amendment to, or modification of, this
Agreement.
11. Any notice, request or other communication with reference to this
Agreement shall be deemed given on the date personally delivered or mailed if
sent to the receiving party by hand delivery, facsimile (receipt verified),
overnight courier (receipt verified), or certified or registered mail,
postage prepaid, at its respective following address or at such other address
as either of the parties may notify the other in writing:
John R. Jackson
1403 Blalock, #7
Houston, Texas 77055
Andres M. Arismendi, Jr.
178 1 0 Clearlight Ln.
Spring, Texas 77379
Amalgamated Explorations, Inc.
1645 Court Place, Suite 201
Denver, Colorado 80202
Attention: Mr. Christian F. Murer, President
12. The law applicable to this Agreement shall be the laws of the State of
Texas, United States of America, without regard to conflict of laws
principles of that State.
13. Nothing in this Agreement shall be deemed to constitute a partnership or
agency relationship among ARISMENDI, JACKSON and AMALGAMATED.
14. None of JACKSON, ARISMENDI and AMALGAMATED is granted any express or
implied night or authority to assume or create any obligation or
responsibility
on behalf of or in the name of the other or to bind the other
in any manner
or thing whatsoever.
15. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective permitted successors and assigns, to the
extent permitted herein.
16. This Agreement may be executed in more than one counterpart, each of
which shall be deemed to be an original and all of which together shall be
deemed a single document.
17. The parties agree to execute and deliver any instrument, or perform any
acts, that may be necessary or reasonably requested in order to give full
effect to this Agreement.
18. All representations, warranties and indemnities contained in this
Agreement and the covenants of Paragraphs 9, 10, 11, 12, 13, 14, 15, 16, 17
and I 8 of this Agreement shall continue in full force and effect and shall
survive notwithstanding the full payment of all amounts due hereunder or the
termination or expiration of @s Agreement in any manner whatsoever.
19. The PREMISES are incorporated into this Agreement.
IN WITNESS WHEREOF, JACKSON, ARISMENDI and AMALGAMATED caused this Agreement
to be executed in multiple counterparts by their duly authorized
representatives, to be effective as of the Effective Date
WITNESS JOHN R JACKSON
Signature By
Date: 11/13/96
Typed Name Barbara Jackson
ANDRES M. ARISMENDI, JR.
Signature By
Date: 11/13/96
Typed Name Barbara Jackson
AMALGAMATED EXPLORATIONS, INC
Signature
Date: 11/21/96
Typed Name Christian Murer
Articles Of Incorporation Of KIOSPIX, Inc.
We the undersigned natural persons of the age of eight teen or more, acting
as incorporated of a corporation under the Colorado Corporation Code, adopt
the following Articles of Incorporation for such corporation:
First: The name of the corporation shall be KIOSPIX, Inc.
Second: The periodic of duration is perpetual.
Third: The nature of the business of the Corporation and the objects and
purpose and business thereof proposed to be transacted, promoted or carried
on are as follows:
1. To engage in all aspects of review and evaluation of private companies,
partnerships or sole proprietorships for purposes of completing mergers or
acquisition with the Corporations; and to engage in mergers and acquisitions
with any or all varieties of private entities.
2. To purchase, improve, develop, subdivide, lease exchange, sell, dispose
of, mortgage, pledge, and interest therein; to purchase, lease, alter
remodel, build, construct, erect, occupy and manage buildings and
improvements of every kind and character whatever; and to finance the
purchase, improvement, development and construction of land, buildings or
other improvements to real estate or an interest herein.
3. To carry on any other business, whether or not related to the
foregoing, including the transaction of all lawful business for which
corporations may be organized pursuant to the Colorado Corporation Code, to
have and exercise all powers, permitted to corporations by the laws of the
State of Colorado, and to do any and all things herein set forth to the same
extent as natural persons could do insofar as permitted by the laws of the
State of Colorado.
It is the intention that the purpose, objects and powers specified by the
foregoing clauses shall not, except as otherwise expressed, be limited or
restricted by reference to or inference from the terms of any other clause in
theses Articles of Incorporation, but each purpose, object, or power stated
in the foregoing clauses shall be regarded as and independent purpose,
object, or power.
FOURTH: The aggregate number of Common Shares which the corporation shall
have the authority to issue is 200,000,000 and the par value of each share
shall be $.0001. The aggregate number of Preferred Shares which the
corporation shall have the authority to issue is 20,000,000, and the par
value of each share shall be $.10. The designations, preferences,
limitations
and relative rights of the shares of each class are as follows:
1. PREFERRED SHARES.
The Corporation may divide and issue the Preferred Shares in series.
Preferred Shares of each series when issued shall be designated to
distinguish them from the shares of all other series. The Board of Directors
is hereby expressly vested with Authority to divide the class of Preferred
Shares into series and to fix and determine the relative rights and
preferences of the shares of any such series so established to the full
extent permitted by theses Articles of Incorporation and the laws of the
State of Colorado in respect of the following:
(a) The number of shares to constitute such series, and the distinctive
designations thereof;
(b) The rate and preferences of dividends, if any, the time of payment
of dividends, whether dividends are cumulative and the date from which any
dividends shall accrue:
(c) Whether shares may be redeemed and , if so the redemption price and
the conditions of redemption;
(d) The amount payable upon shares in the event of involuntary
liquidation;
(e) The amount payable upon shares in the event of voluntary
liquidation;
(f) Sinking fund or other provisions, if any, for the redemption or
purchase of shares;
(g) The terms and conditions on which shares may be converted, if the
shares of any series are issued with the privilege of conversion;
(h) Voting powers, if any;
(i) Any other relative rights and performances of shares of such series,
without limitation, any restriction on an increase in the number of shares of
any series theretofore authorized and any limitation or restriction of the
rights or powers to which shares of an future series shall be subject.
2. COMMON SHARES
(a) The rights of holders of Common Share to receive dividends or share
in the distribution of assets in the event of liquidation, dissolution or
winding up of the affairs of the Corporation shall be subject to the
preferences, limitations and relative rights of the Preferred Shares fixed in
the resolution or resolutions which may be adopted from time to time by the
Board or Directors of the Corporation providing for the issuance of tone or
more series of the Preferred Shares.
(b) The holders of the Common Share shall be entitled to one vote for
each Common Share held by them of record at the time for determining the
holders thereof entitled to vote.
FIFTH: The business and the affairs of the Corporation shall be managed by
the Board of Directors. The number of directors constituting the Board of
Directors shall be fixed in the manner provided in the bylaws of the Corp,
subject to the limitation that the Initial Board of Directors of the
Corporation shall consist of one person. Each person shall serve as a
director of the Corporation until the first annual meeting of the
shareholders
or until his successor shall have been elected and qualified.
In the event, in accordance with the bylaws of the Corp, the Board of
Directors shall consist of six or more members, the directors may thereupon
be divided into three classes, each class to be as nearly equal in number as
possible, the term of office of directors of the first class to expire at the
first annual meeting of shareholders after their election, that of the second
class to expire at the second annual meeting after their election, and the of
the third class to expire at the third annual meeting after their election.
At each annual meeting, following such classification and division of the
members of the Board of Directors, a number of directors equal to the number
of directorships in the class whose term expires at the time of such meeting
shall be elected to hold office until the third succeeding annual meeting of
shareholders of the Corporation.
SIXTH: Cumulative voting shall not be allowed in the election of directors.
SEVENTH: Shareholders shall not have a preemptive right to subscribe for,
purchase or acquire additional unissued or treasury shares of the Corporation
or securities convertible into shares or carrying share purchase warrants or
privileges as the same may be issued from time to time by the Corporation.
EIGHTH: The address of the corporation's initial registered office is 2303
E. Dartmouth, Englewood, Co. 80110 and the name of the registered agent is
Robert L Pitler whose address is 2303 E. Dartmouth, Englewood, CO 80110 .
NINTH: The address of the place of business of the corporation is 8632 E Rose
Lane, Scottsdale, AZ 85253
TENTH: The number of directors constituting the initial board of directors of
the corporation is one and the same and the addresses of the persons who are
to serve as directors until the first annual meeting of the shareholders or
until their successors are elected and shall qualify are:
NAME ADDRESS
Arthur J. Frost 8632 E Rose Lane , Scottsdale, AZ 85253
ELEVENTH: The name and address of each Incorporator is:
NAME ADDRESS
Arthur J. Frost 8632 E Rose Lane , Scottsdale, AZ 85253
TWELFTH: The Board of Directors shall have the power to enact, alter, amend
and repeat such Bylaws not inconsistent with the laws of the State of
Colorado and these Articles of Incorporation as it may deem best for the
management of the Corporation as it may deem best for the management of the
Corporation.
THIRTEENTH: When, with respect to any action to be taken by the shareholders
of the Corporation, the Colorado Corporation Code requires the vote or
concurrence of the holders of two-thirds of the outstanding shares, or of any
class or series entitled to vote thereon, any such action shall be taken and
shall be effective by the vote or concurrence of the holders of a majority of
the outstanding shares, or of any class or series entitled to vote thereon,
not withstanding the requirements of the Colorado Corporation Code.
FOURTEENTH: The following paragraphs are inserted for the management of the
business and for the conduct of the affairs of the Corporation and the same
are in furtherance of and not in limitation or exclusion of the powers
conferred by law:
CONTRACTS with Directors and Officers.
(a) No contract or other transaction between Corporation and one or more
of its directors or any other corporation, firm, association or entity in
which one or more of the directors of the Corporation are directors or
officers or financially interested, shall be either void or voidable solely,
because such directors are present at the meetings of the Board of Directors
or a committee thereof which authorize or approves such contract or
transaction or solely because their votes are counted for such purpose if:
(i) the fact of such relationships or interest is disclosed or known
to the Board of Directors or committee which authorizes, approves or ratifies
the contract or transaction by a note or consent sufficient for that purpose
without counting the votes or consent of the interested director; or
(ii) the fact of such relationship or interest is disclosed or known
to the shareholders entitled to the vote and are authorized, approve or
ratify such contract on transaction by vote or written consent; or
(iii) the contract or transaction is fair or reasonable to the
Corporations.
(b) Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
2. Indemnification of Officers, Directors and Others.
The Board of Directors of the Corporation shall have the power to:
(a) Indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending criminal, administrative or
investigative (other than an action by or in the right of the Corporation),
by reason of the fact that he or she is or was a director, officer, employee
or agent of the corporation or is or was serving at the request of the
another corporation, partnership, joint venture, trust or other enterprises,
against expenses (including attorney's fees), judgements, fines and amounts,
paid in settlement actually and reasonable incurred by him in connection with
such action, suit or preceding if he acted in good faith and in an manner of
the Corporation and, with respect to any criminal action or preceding, had no
reasonable cause to believe his conduct was unlawful.
(b) Indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgement in its favor by reason
of the fact that he 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 the Corporation, partnership, joint
venture, trust or other enterprise against expenses including attorney's fees
actually and reasonably incurred by him in connection with the defense or
settlement of such action, or suit, if he acted in good faith and in a manner
he reasonably believed to be in the best interests of the Corporation; but no
indemnification shall be made in respect of any claim, issue or matter as to
which such person has been adjudged to be liable for negligence or misconduct
in the performance of his duty to the Corporation unless and only to the
extent that the court in which such action or suit was brought determines
upon application that, despite the adjudication of liability, but in view of
all circumstances of the case, such person is fairly and reasonably entitled
to indemnification of such expenses which such court deems proper.
(c) Indemnify a direction, officer employee or agent of the Corporation
to the extent that such person has been successful on the merits in defense
of any action, suit or proceeding referred to in Subparagraph (a) or (b) of
this Paragraph 2 or in defense of any claim, issue or matter therein, against
expenses (including attorney's fees) actually and reasonably incurred by him
in connection therewith.
(d) Authorize indemnification under Subparagraph (a) or (b) of this
Paragraph 2 (unless ordered by a court) in the specific case upon a
determination that indemnification of the direction, officer, employee or
agent is proper in the circumstances because he has met the applicable
standard of conduct set forth in said Subparagraph (a) Directions by a
majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or if such a quorum is not obtainable or
even if obtainable a quorum of disinterested directions so directs, by
independent legal counsel in a written opinion, or by the shareholders.
(e) Authorize payment of expenses (including attorney's fees) incurred
in defending a civil or criminal action, suit or proceeding in advance of the
final disposition of such action, suit or proceeding as authorized in
Subparagraph (d) of this Paragraph 2 upon receipt of an undertaking by or on
behalf of the director, officer employees or agent to repay such amount
unless it is ultimately determined that he is entitled to be indemnified by
the Corporation as authorized in this Paragraph 2.
(f) Purchase and maintain insurance 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 corporation, partnership, joint venture, trust
or other enterprise against any liability asserted against him and incurred
by him in any such capacity or arising out of his status as such, whether or
not the corporation would have the power to indemnify him against such
liability under the provisions of this Paragraph 2.
The indemnification provided by the Paragraph 2 shall not be deemed
exclusive of any other rights to which those indemnified may be entitled
under these Articles of Incorporation, and Bylaws, agreement, vote of
shareholders or disinterested directors or otherwise, and any procedure
provide for by any of the foregoing, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of heirs, executors and
administrators of such person.
/s/
- -----------------------------------
Incorporator, Arthur J. Frost
AMENDED
ARTICLES OF INCORPORATION
OF
AMALGAMATED EXPLORATIONS, INC.
Amalgamated Explorations, Inc., incorporated 1986, as a Colorado corporation,
hereby adapts the following Amended Articles of Incorporation of such
Corporation to reflect a name change and to conform with the revised statutes
contained in the Colorado Business Corporation Act which Act became effective
July 1, 1994:
ARTICLE I: NAME
The corporate name of the Corporation shall be changed from Sue Wong
International, Inc. to Amalgamated Explorations, Inc.
ARTICLE II: PURPOSE
The purpose for which the said Corporation is incorporated is to transact all
lawful business and do all things necessary or convenient to carry out its
business and affairs for which corporations may be incorporated pursuant to
the Colorado Business Corporation Act.
ARTICLE III: DURATION
The said Corporation shall have perpetual existence.
ARTICLE IV: CAPITAL STOCK
Section 1. Classes and share authorized. The authorized capital stock of the
Corporation shall be 50,000,000 shares of Common Stock, $.0015 par value, and
2,000,000 shares of Preferred Stock, $1.50 par value.
Section 2. Preferred Stock. Shares of Preferred Stock may be divided into
such series as may be established from time to time by the board of
directors. The board of directors from time to time may fix and determine the
relative rights and preferences of the shares of any series so established to
the full extent permitted by the laws of the State of Colorado.
Section 3. Common Stock.
(a) After the requirements with respect to preferential dividends on
the Preferred Stock, if any, shall have been met, and after the Corporation
shall have complied with all the requirements, if any, with respect to the
setting aside of sums as sinking funds or redemption or purchase accounts,
and subject further to any other conditions which may be fixed in accordance
with the provisions of Section 2 of this Article IV, then, and not otherwise,
the holders of the Common Stock shall be entitled to receive such dividends
as may be declared from time to time by the board of directors of the
Corporation paid out of funds legally available therefor.
(b) After distribution in full of the preferential amount, if any, to be
distributed to the holders of the Preferred Stock in the event of voluntary
or involuntary liquidation, distribution or sale of assets, dissolution, or
winding-up of the Corporation, the holders of the Common Stock shall be
entitled to receive all of the remaining assets of the Corporation, tangible
and intangible, of the whatever kind available for distribution to
stockholders,
ratably in proportion to the number of shares of the Common
Stock held by
them respectively.
(c) Except as may otherwise be required by law, each holder of the Common
Stock shall have one vote in respect of each share of the Common Stock held
by him on all matters voted upon by the stockholders.
Section 4. General Provisions. The capital stock of the Corporation may be
issued for money, property, services rendered, labor done, cash advanced to
or on behalf of the Corporation, or for any other assets of value in
accordance with an action of the board of directors, whose judgment as to
the value of the assets received in return for said stock shall be
conclusive,
and said stock, when issued, shall be fully paid and nonassessable.
ARTICLE V: VOTING
Cumulative voting shall not be permitted by this Corporation. Each
outstanding share,
regardless of class, is entitled to one vote, and each
fractional share
is entitled to a corresponding fractional vote on each
matter
submitted to a vote at a meeting of shareholders.
ARTICLE VI: PREEMPTIVE RIGHTS
Shareholders of the Corporation shall not have preemptive rights to acquire
unissued or treasury shares of the Corporation or securities convertible into
such shares or carrying a right to subscribe to or acquire such shares.
ARTICLE VII: BOARD OF DIRECTORS
Section 1. Board of Directors. The business and affairs of the Corporation
shall be managed by the board of directors consisting of one or more
directors, with the number specified in or fixed in accordance with the
bylaws. Each person shall serve as a director of the Corporation until the
first annual meeting of shareholders or until his successor shall have been
elected and qualified.
Section 2. Classification of Directors. In the event, that the board of
directors shall consist of six or more members, the directors may thereupon
be divided into three classes, Class 1, Class 2, and Class 3, each class to
be
as nearly equal in number as possible. The term of office of Class 1
directors
shall expire at the first annual meeting of shareholders following their
election; that of Class 2 directors shall expire at the second annual meeting
following their election; and that of Class 3 directors shall expire at the
third annual meeting following their election. At each annual meeting follow-
ing such classification, a number of directors equal to the number of the
class whose term expires at the time of such meeting shall be elected to
hold office until the third succeeding annual meeting.
Notwithstanding the foregoing, and except as otherwise required by law,
whenever the holders of any one or more series of Preferred Stock shall have
the right, voting separately as a class, to elect one or more directors of
the Company, the terms of the director or directors elected by such holders
shall expire at the next succeeding annual meeting of shareholders.
Section 3. Initial Directors. The name and address of the director who first
served on the original board of directors is:
Arthur J. Frost
2923 S. Country Club Way Tempe, Arizona 85282
Section 4. Incorporator. The incorporator, who signed the original Articles
of Incorporation, is the same person as set forth in Article VII, Section 3
above.
Section 5. Vacancy on Board. If a vacancy occurs on a board of directors,
including a vacancy resulting from an increase in the number of directors:
(i) the shareholders may fill the vacancy; (ii) the board of directors may
fill the vacancy; or (iii) if the directors remaining in office constitute
fewer than a quorum of the board, they may fill the vacancy by the
affirmative vote of a majority of all the directors remaining in office.
Section 6. Compensation. Unless otherwise provided in the bylaws, the board
of directors may fix the compensation of directors.
Section 7. Certain Powers of the Board of Directors. In furtherance and not
in limitation of the powers conferred by the Colorado Business Corporation
Act, the board of directors is expressly authorized:
(a) To manage and govern the Corporation by majority vote of members present
at any regular or special meeting at which a quorum shall be present, to
make, alter, or amend the bylaws of the Corporation at any regular or special
meeting, to fix the amount to be reserved as working capital over and above
its capital stock paid in, to authorize and cause to be executed mortgages
and liens upon the real and personal property of the Corporation, and to
designate one or more committees, each committee to consist of two or more of
the directors of the Corporation, which, to the extent provided in the
resolution or in the Bylaws of the Corporation, shall have and may exercise
the powers of the board of directors in the management of the business and
affairs of the Corporation (such committee or committees shall have such name
or names as may be stated in the Bylaws of the Corporation or as may be
determined from time to time by resolution adopted by the board of
directors);
(b) To sell, lease, exchange, or otherwise dispose of any or all of the
property and assets of the Corporation in the usual and regular course of its
business upon such terms and conditions as the board of directors may
determine without vote or consent of the shareholders;
(c) To sell, pledge, lease, exchange, liquidate, or otherwise dispose of any
or all of the property or assets of the Corporation, including its goodwill,
if not in the usual and regular course of business on the terms and
conditions and for consideration determined by the board of directors, if the
board of directors proposes and the shareholders approve the transaction by
the affirmative vote of at least a majority of the shares entitled to vote
thereon at a shareholders' meeting duly called for such purpose, or
authorized
or ratified by the written consent of the holders of all of the shares
entitled to vote thereon; and provided, further, that any such transaction
with any substantial shareholder or affiliate of the Corporation shall be
authorized or ratified by the affirmative vote of the holders of at least two
thirds of the shares entitled to vote thereon at a shareholders' meeting duly
called for that purpose, unless such transaction is with any subsidiary of
the Corporation or is approved by the affirmative vote of a majority of the
continuing directors of the Corporation, or is authorized or ratified by the
written consent of the holders of all the shares entitled to vote thereon;
(d) To merge, consolidate, or exchange all of the issued or outstanding
shares of one or more classes of the Corporation upon such terms and
conditions as the board of directors may authorize; provided, however, that
such plan of merger or share exchange, or such consolidation shall be
approved or ratified by the affirmative vote of the holders of at least a
majority of the shares entitled to vote thereon at a shareholders' meeting
duly called for that purpose, or authorized or ratified by the written
consent of the holders of all of the shares entitled to vote thereon; and
provided, further, that any such merger, consolidation, or exchange with any
substantial shareholder or affiliate of the Corporation shall be authorized
or ratified by the affirmative vote of the holders of at least two-thirds of
the shares entitled to vote thereon at a shareholders' meeting duly called
for that purpose, unless such merger, consolidation, or exchange is with any
subsidiary of the Corporation, or is approved by the affirmative vote of a
majority of the continuing directors of the Corporation, or is authorized, or
ratified by the written consent of the holders of all the shares entitled to
vote thereon, or the merger is conducted in accordance with Title 7, Article
111, Section 103(7) of the Colorado Business Corporation Act; and
(e) To distribute to the shareholders of the Corporation, without the
approval of the shareholders, in partial liquidation, out of stated capital
or capital surplus of the Corporation, a portion of the Corporation's assets,
in cash or in property, so long as the partial liquidation is in compliance
with the Colorado Business Corporation Act.
(f) As used in this Section 7, the following terms shall have the following
meaning:
(i) an "affiliate" shall mean any person or entity which is an affiliate
within the meaning of Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended;
(ii) a "continuing director" shall mean a director who was elected before the
substantial shareholder or affiliate of the Corporation which is to be a
party
to a proposed transaction within the scope of subsections (c) and (d) of this
Section 7 became such a substantial shareholder or affiliate of the
Corporation, as the case may be, or is designated at or prior to his first
election or appointment to the board of directors by the affirmative vote of
a majority of the board of directors who are continuing directors;
(iii) a "subsidiary" shall mean any Corporation in which the Corporation owns
the majority of each class of equity security; and
(iv) a "substantial shareholder" shall mean any person or entity which is the
beneficial owner, within the meaning of Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended, of 10
percent or more of the outstanding capital stock of the Corporation.
ARTICLE VIII: INDEMNIFICATION
Section 1. Direct Actions. The Corporation shall indemnify any person who was
or is 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 (other than an action by or in the right of
the Corporation), by reason of the fact that such person 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 expenses (including attorney fees), judgments, fines, and
amounts paid in settlement, actually and reasonably incurred by such person
in connection with the action, suit, or proceeding, if such person (i) acted
in good faith; (ii) such person reasonably believed that his or her conduct
was in the best interests of the Corporation or at least not opposed to the
Corporation's best interests; and (iii) in the case of any criminal
proceeding, the person had no reasonable cause to believe his or her conduct
was unlawful; except that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been (i) adjudged
to be liable to the Corporation in the discharge of his or her duties, or
(ii) adjudged liable on the basis that he or she derived an improper personal
benefit.
The termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
does not of itself create a presumption that such person did not act in good
faith and in a manner that such person 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 reasonable cause to believe that his or
her conduct was unlawful.
Section 2. Derivative Actions. The Corporation shall indemnify any person
whom was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that
such person 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 expenses (including amounts
paid in settlement and attorney's fees) actually and reasonably incurred by
such person in connection with the defense or settlement of the action or
suit, if such person acted in good faith and in a manner such person
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been (i) adjudged
to be liable to the Corporation in the discharge of his or her duties, or
(ii) adjudged liable on the basis that he or she derived an improper personal
benefit.
Section 3. Expenses. To the extent that a director, officer, employee, or
agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit, or proceeding referred to in Section 1 and 2 of
this Article VIII, or in defense of any claim, issue, or matter therein, such
person must be indemnified by the Corporation against expenses (including
attorney fees) actually and reasonably incurred by such person in connection
with the defense.
ARTICLE IX: PLACE OF OPERATION
The operations of the said Corporation shall be carried on in the State of
Colorado and the Corporation shall also be permitted to conduct business in
any other state of the United States or elsewhere and to have one or more
offices outside the State of Colorado. The board of directors and
stockholders
of the Corporation shall have the right to hold their meetings outside of the
State of Colorado when deemed most convenient or in the best interest of the
Corporation.
ARTICLE X: REGISTERED OFFICE AND AGENT
The address of the Corporation's registered office is 1645 Court Place, Suite
201, Denver, Colorado 80202 and the name of the registered agent is Christian
F. Murer whose address is 1645 Court Place, Suite 201, Denver, Colorado
80202.
ARTICLE XI: CONFLICTS OF INTEREST
Section 1. Related Party Transactions.
(a) No "conflicting interest transaction" as defined in the Colorado Business
Corporation Act, shall be void or voidable or be enjoined, set aside, or give
rise to an award of damages or other sanctions in a proceeding by a
shareholder or by or in the right of the Corporation, solely because the
conflicting interest transaction involves a Director of the Corporation or an
entity in which a director of the Corporation is a director or officer or has
a financial interest or solely because the Director is present at or
participates in the meeting of the Corporation's board of directors or of the
Committee of the board of directors which authorizes, approves, or ratifies
the conflicting interest transaction or solely because the Director's vote is
counted for such purpose if:
(i) the material facts as to the Director's relationship or interest and as
to the conflicting interest 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, approves, or ratifies the conflicting interest
transaction by the affirmative vote of a majority of the disinterested
Directors, even though the disinterested Directors are less than a quorum; or
(ii) the material facts as to the Director's relationship or interest and as
to the conflicting interest transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the conflicting interest
transaction is specifically authorized, approved, or ratified in good faith
by a vote of the shareholders; or
(iii) the conflicting interest 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 shareholders.
(b) 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, approves, or ratifies the conflicting interest transaction.
Section 2. Corporate Opportunities. The officers, directors, and other
members of management of the Corporation shall be subject to the doctrine of
corporate opportunities only insofar as it applies to business opportunities
in which the Corporation has expressed an interest as determined from time to
time by resolution of the board of directors. When such areas of interest are
delineated all such business opportunities within such areas of interest
which come to the attention of the officers, directors, and other members of
management of the Corporation shall be disclosed promptly to the Corporation
and made available to it. The board of directors may reject any business
opportunity presented to it, and thereafter any officer, director, or other
member of management may avail himself of such opportunity. Until such time
as the Corporation, through its board of directors, has designated an area of
interest, officers, directors, and other members of management of the
Corporation shall be free to engage in such areas of interest on their own.
The provisions hereof shall not limit the rights of any officer, director, or
other member of management of the Corporation to continue a business existing
prior to the time that such area of interest is designated by the
Corporation, nor shall they be construed to release any employee of the
Corporation (other than an officer, director, or member of management) from
any duties which such employee may have to the Corporation.
ARTICLE XII: BYLAWS
The board of directors, by majority vote, shall have the power to make and
amend such prudential bylaws as they deem proper and not inconsistent with
the Constitution or the laws of the United States or of the State of Colorado
for the management of the property of the Corporation, the regulation and
government of its affairs and for the certification and transfer of its
stock.
ARTICLE XIII: SHAREHOLDERS' MEETING
Shareholders' meetings may be held at such time and place as may be stated or
fixed in accordance with the Bylaws. At all shareholders' meetings, one-third
of all shares entitled to vote shall constitute a quorum.
IN WITNESS WHEREOF, the undersigned has placed his hand and seal this lst day
of June, 1995.
Christian F. Murer, President
_____________________________
/s/
AMENDED AND RESTATED BYLAWS OF AMALGAMATED EXPLORATIONS, INC.
(A Colorado Corporation)
TABLE OF CONTENTS
OFFICES
1.1 Principal Executive Office . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2.1 Number and Qualifications . . . . . . . . . . . . . . . . . . . . . . .1
2.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Election and Term of Office . . . . . . . . . . . . . . . . . . . . . .3
2.3 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.4 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4.1 Organization Meeting . . . . . . . . . . . . . . . . . . . . . . . 4
2.4.2 Other Regular Meetings . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . 5
2.7 Action at a Meeting: Quorum and Required Vote . . . . . . . . . . . . .5
2.8 Validation of Defectively Called or Noticed Meetings . . . . . .. .. . 6
2.9 Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.10 Fees and Compensation . . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 Committees of Directors . . . . . . . . . . . . . . . . . . . . . . . 6
2.12 Conflicting Interest Transaction . . . . . . . . . . . . . . . . . . .8
2.13 Corporate Opportunities Doctrine . . . . . . . . . . . . . . . . . . .9
OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
3.3 Subordinate Officers . . . . . . . . . . . . . . . . . . . . . . . . .10
3.4 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . 10
3.8 President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.9 Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
3.11 Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . .12
MEETINGS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . .12
4.1 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
4.3 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . .13
4.4 Notice of Shareholders' Meetings . . . . . . . . . . . . . . . . . . .13
4.5 Manner of Giving Notice . . . . . . . . . . . . . . . . . . . . . . . 13
4.6 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
4.7 Adjourned Meeting and Notice Thereof . . . . . . . . . . . . . . . . .14
4.8 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
4.9 Validation of Defectively Called Meetings . . . . . . . . . . . . . . 15
4.10 Action Without a Meeting . . . . . . . . . . . . . . . . . . . . . . 15
4.11 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
4.12 Inspectors of Election . . . . . . . . . . . . . . . . . . . . . . . 16
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
5.2 Actions Generally - Standard of Conduct . . . . . . . . . . . . . . . 17
5.3 Actions by or in the Right of the Corporation . . . . . . . . . . . . 18
5.4 Indemnification for Expenses . . . . . . . . . . . . . . . . . . . . .18
5.5 Nonexclusive Right to Indemnification . . . . . . . . . . . . . . . . 18
5.6 Conflict With Articles or Bylaws . . . . . . . . . . . . . . . . . . .19
5.8 Power to Maintain Insurance . . . . . . . . . . . . . . . . . . . . . 19
5.10 Fiduciary of Employee Benefit Plan . . . . . . . . . . . . . . . . . 19
RECORDS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 Maintenance of Records . . . . . . . . . . . . . . . . . . . . . . . .19
6.2 Inspection of Shareholders . . . . . . . . . . . . . . . . . . . . . .20
6.3 Inspection by Directors . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .21
MISCELLANEOUS .
7.1 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 Checks, Drafts, and Other Instruments . . . . . . . . . . . . . . . . 22
7.3 Executing Corporate Contract and Instrument . . . . . . . . . . . . . 22
7.4 Certificate for Shares . . . . . . . . . . . . . . . . . . . . . . . .23
7.5 Representation of Shares of Other Corporations . . . . . . . . . . . .24
7.6 Registrars and Transfer Agents . . . . . . . . . . . . . . . . . . . .24
7.7 S Corporation Election . . . . . . . . . . . . . . . . . . . . . . . .24
7.8 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.9 Construction and Definitions . . . . . . . . . . . . . . . . . . . . .24
AMENDMENTS
8.1 Power of the Shareholders . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Power of Directors . . . . . . . . . . . . . . . . . . . . . . . . . .25
BYLAWS OF
AMALGAMATED EXPLORATIONS, INC.
(A Colorado Corporation)
ARTICLE 1
OFFICES
1.1 Principal Executive Office. The principal executive office of the
Corporation is hereby fixed at 1645 Court Place, Suite 201, Denver, Colorado
80202. The board of directors is hereby granted full power and authority to
change the principal executive office to any location within or outside the
State of Colorado. If the principal executive office is located outside
Colorado, and the Corporation has one or more business offices in Colorado,
the board of directors shall fix a principal business office in the State of
Colorado.
1.2 Other Offices. The Corporation additionally may have other
business offices at such other places, both within and outside the State of
Colorado as the board of directors from time to time may determine or the
business of the Corporation may reasonably require.
ARTICLE 2
DIRECTORS
2.1 Number and Qualifications; Committees. The property interests,
business and
transactions of the Corporation shall be managed and conducted
by a board of directors, which shall consist of three (3) persons. The board
of directors shall be elected annually by ballot of the holders of the shares
of the Corporation entitled to vote thereon for the term of one year and
shall serve until the election and qualification of their successors, unless
they sooner resign. The number of directors may be changed by a majority vote
of the whole board of directors, provided that a proposal to reduce the
authorized number of directors shall not have the effect of removing any
incumbent director prior to the expiration of such director's term of office.
The board of directors by resolution passed by a majority of the whole
board of directors may designate from among its members an executive
committee, or one or more other committees each of which, to the extent
provided in the resolution, section 2.11 of these bylaws, and in the articles
of incorporation. The committee shall have all the authority of the board of
directors, but no such committee shall have the authority of the board of
directors in reference to amending the articles of incorporation, adopting a
plan of merger or consolidation, recommending to the shareholders the sale,
lease, exchange or other disposition of all or substantially all the property
and assets of the Corporation otherwise than in the usual and regular course
of its business, recommending to the shareholders a voluntary dissolution of
the Corporation or a revocation thereof, or amending the bylaws of the
Corporation. The designation of such committees and the delegation thereto
shall not operate to relieve the board of directors, or any member thereof,
of any responsibility imposed by law.
2.2 Powers. Subject to limitations of the articles of incorporation and
of the Colorado Business Corporation Act relating to action required to be
approved by the shareholders, or by the outstanding shares, or by a less than
majority vote of a class or series of preferred shares, and subject to the
duties of directors as prescribed by the bylaws -- the business and affairs
of the Corporation shall be managed by, and all corporate powers shall be
exercised by or under the direction of, the board of directors. The board of
directors may delegate the management of day-to-day operation of the business
of the Corporation to a management Company or other person provided that the
business and affairs of the Corporation shall be managed and all corporate
powers shall be exercised under the ultimate direction of the board. Without
prejudice to such general powers, but subject to the same limitations, it is
hereby expressly declared that the directors shall have the following powers,
to wit:
2.1.1 To select and remove all the officers, agents and employees of the
Corporation, prescribe such powers and duties for them as may not be
inconsistent with law, with the articles of incorporation or the bylaws, fix
their compensation and require from them security for faithful service.
2.1.2 To conduct, manage and control the affairs and business of the
Corporation, and to make such rules and regulations therefor not inconsistent
with law, or with the articles of incorporation or the bylaws, as they may
deem best.
2.1.3 To change the principal executive office and principal office for the
transaction of the business of the Corporation from one location to another
as
provided in Article 1, Section 1.1, hereof; to fix and locate from time to
time one or more subsidiary offices of the Corporation within or without the
State of Colorado, as provided in Article 1, Section 1.2, hereof; to
designate
any place within or without the State of Colorado for the holding of any
shareholders' meeting or meetings; and to adopt, make and use a corporate
seal, and to prescribe the forms of certificates of stock, and to alter the
form of such seal and of such certificates from time to time, as in their
judgment they may deem best, provided such seal and such certificates shall
at
all times comply with the provisions of law.
2.1.4 To authorize the issue of shares of stock of the Corporation from time
to time, upon such terms and for such consideration as may be lawful.
2.1.5 To borrow money and incur indebtedness for the purposes of the
Corporation, and to cause to be executed and delivered therefor, in the
corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations or other evidences of debt and securities
therefor.
2.1.6 To designate an executive and other committees.
2.2 Election and Term of Office. The directors shall be elected at each
annual meeting of shareholders; provided that, if any such annual meeting is
not held or the directors are not elected thereat, the directors may be
elected at any special meeting of shareholders held for that purpose. All
directors shall hold office until the expiration of the term for which
elected and until their respective successors are elected and qualified,
subject to the provisions of these bylaws with respect to removal of
directors and vacancies on the board.
2.3 Vacancies. A vacancy in the board of directors shall be deemed to exist
in case of the death, resignation or removal of any director, if a director
has been declared of unsound mind by order of court or convicted of a felony,
if the authorized number of directors is increased, or if the shareholders
fail, at any annual or special meeting of shareholders at which any director
or directors are elected, to elect the full authorized number of directors to
be voted for at that meeting.
Unless otherwise provided in the articles of incorporation or herein, except
for a vacancy created by the removal of a director, vacancies on the board
may be filled by approval of a majority of the directors present at a meeting
duly held at which a quorum is present or, if the number of directors then in
office is less than a quorum, by a majority of the directors then in office,
or by a sole remaining director.
A vacancy in the board of directors created by the removal of a director by
the vote or written consent of the shareholders or by court order may only be
filled by the vote of a majority of the shares entitled to vote represented
at a duly held meeting at which a quorum is present, or by the written
consent of the holders of a majority of the outstanding shares. Each director
so elected shall hold office until his successor is elected at an annual or a
special meeting of the shareholders.
The shareholders may elect a director at any time to fill any vacancy or
vacancies not filled by the directors. Any such election by written consent
shall require the consent of a majority of the outstanding shares entitled to
vote.
Any director may resign effective upon giving written notice to the chairman
of the board, the president, the secretary or the board of directors of the
Corporation, unless the notice specifies a later time for the effectiveness
of such resignation. If the resignation is effective at a future time, a
successor may be elected to take office when the resignation becomes
effective.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of such director's term of
office.
2.4 Meetings. All meetings of the board of directors shall be held at any
place within or without the State of Colorado which has been designated in
the notice of the meeting or, if not stated in the notice or there is no
notice, designated from time to time by resolution of the board. In the
absence of such designation, meetings shall be held at the principal
executive office of the Corporation.
2.4.1 organization Meeting. Immediately following each annual meeting of
shareholders, the board of directors shall hold a regular meeting at the
place of such annual meeting or at such other place as shall be fixed by the
board of directors, for the purpose of organization, election of officers,
and the transaction of other business. Call and notice of such meetings are
hereby dispensed with.
2.4.2 Other Regular Meetings. Other regular meetings of the board of
directors shall be held without call on such dates and at such times as may
be fixed from time to time by the board; provided, however, that should the
day of the meeting fall upon a legal holiday, then the meeting shall be held
at the same time on the next day thereafter ensuing which is a full business
day. Notice of all such regular meetings of the board of directors is hereby
dispensed with.
2.5 Special Meetings. Special meetings of the board of directors for any
purpose or purposes may be called at any time by the president, any vice
president or by any two directors.
Special meetings of the board shall be held upon three days notice. Written
notice shall be delivered personally to each director addressed to him at
his address as it appears on the records of the Corporation.
The notice of each such special meeting shall indicate the time and place and
briefly the subjects thereof. No notice of the time, place or purpose of any
meeting of the board of directors or any committee designated by such board
need be given to any director or committee person who attends in person or
who, in writing executed and filed with the records of the meeting, either
before or after the holding thereof, waives such notice. No notice need be
given of any adjourned meeting of the board of directors.
As to any director who shall sign the minutes of any special or regular
directors' meeting, such meeting shall be deemed to have been legally and
duly called, noticed, held and construed as if all the directors were
actually present at said meeting, and all who signed the minutes were duly
noticed, and signature of any director to the minutes of a meeting shall for
all purposes and as to all persons be held to be an approval of the action
thereof.
2.6 Action Without Meeting. Any action required or permitted to be taken by
the board may be taken without a meeting, if all members of the board shall
individually or collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the proceedings of the
board. Such action by written consent shall have the same force and effect as
a unanimous vote of such directors.
2.7 Action at a Meeting: Quorum and Required Vote. A majority of the
authorized number of directors constitutes a quorum of the board for the
transaction of business, except as hereinafter provided. Every act or
decision done or made by a majority of the directors present at a meeting
duly held at which a quorum is present is the act of the board of directors,
unless a greater number, or the same number after disqualifying one or more
directors from voting, is required by law, by the articles of incorporation,
or by these bylaws. A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of directors, if
any action taken is approved by at least a majority of the required quorum
for such meeting. Members of the board may participate in a meeting through
use of conference telephone or similar communications equipment, so long as
all members participating in such meeting can hear one another. Participation
in a meeting as permitted in the preceding sentence constitutes presence in
person at such meeting.
2.8 Validation of Defectively Called or Noticed Meetings. The transactions of
any meeting of the board of directors, however called and noticed or wherever
held, shall be as valid as though had at a meeting duly held after regular
call and notice, if a quorum is present and if, either before or after the
meeting, each of the directors not present or who, though present, has prior
to the meeting or at its commencement protested the lack of proper notice to
such director, signs a written waiver of notice or a consent to holding such
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
2.9 Adjournment. A majority of the directors present at any meeting, whether
or not a quorum is present, may adjourn the meeting to another time and
place. If any meeting is reconvened for more than 48 hours, notice of any
adjournment to another time or place shall be given prior to the time of the
reconvened meeting to the directors who were not present at the time of
adjournment. Otherwise, notice of the time and place of holding a reconvened
meeting need not be given to absent directors if the time and place is fixed
at the meeting adjourned.
2.10 Fees and Compensation. Directors and members of committees may receive
such compensation, if any, for their services, and such reimbursement for
expenses, as may be fixed or determined by resolution of the board. This
Section shall not be construed to preclude any director from serving the
Corporation in any other capacity as an officer, agent, employee or
otherwise, and receiving compensation for these services.
2.11 Committees of Directors.
2.11.1 Formation and Powers of Committees. The board of directors may, by
resolution adopted by a majority of the authorized number of directors,
designate an executive and other committees, each consisting of two or more
directors, to serve at the pleasure of the board. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent member at any meeting of the committee. The appointment of members or
alternate members of any committee requires the vote of a majority of the
authorized number of directors.
Any such committee, to the extent provided in the resolution of the board,
shall have all the authority of the board, except with respect to:
a. The approval of any action which requires shareholders' approval or
approval of the outstanding shares;
b. The filling of vacancies on the board of directors or in any committee;
c. The fixing of compensation of the directors for serving on the board or on
any committee;
d. The amendment or repeal of any resolution of the board of directors which
by its express terms is not so amendable or repealable;
e. A distribution to the shareholders of the Corporation, except at a rate,
in a periodic amount or within a price range determined by the board of
directors; or
f. The appointment of other committees of the board of directors or the
members thereof;
g. The amendment of the articles of incorporation;
h. The adoption of a plan of merger or consolidation;
i. The recommendation to the shareholders for the sale, lease, exchange or
other disposition of all or substantially all the property and assets of the
Corporation otherwise than in the usual and regular course of its business;
j. The recommendation to the shareholders of a voluntary dissolution of the
Corporation or a revocation thereof; or
k. The amendment of the bylaws of the Corporation.
2.11.2 Meetings and Action of Committees. Meetings and action of committees
shall be governed by, and held and taken in accordance with, the provisions
of this Article 2, with such changes in the context of these bylaws as are
necessary to substitute the committee and its members for the board of
directors and its members, except that:
a. Written notice of the time and place of special meetings of any committee
shall be mailed or delivered personally to each committee member at least
three days prior to the time of the holding of the meeting; and
b. Notice of special meetings of any committee also shall be given to all
alternate committee members, who shall have the right to attend all meetings
of the committee.
The board of directors may adopt rules for the governance of any committee
not inconsistent with the provisions of these bylaws.
2.12 Conflicting Interest Transaction. No "conflicting interest transaction"
as defined in the Colorado Business Corporation Act, shall be void or
voidable or be enjoined, set aside, or give rise to an award of damages or
other sanctions in a proceeding by a shareholder or by or in the right of the
Corporation, solely because the conflicting interest transaction involves a
Director of the Corporation or an entity in which a director of the
Corporation is a director or officer or has a financial interest or solely
because the Director is present at or participates in the meeting of the
Corporation's Board of Directors or of the Committee of the Board of
Directors which authorizes, approves, or ratifies the conflicting interest
transaction or solely because the Director's vote is counted for such purpose
if:
a. The material facts as to the Director's relationship or interest and as to
the conflicting interest 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, approves, or ratifies the conflicting interest
transaction by the affirmative vote of a majority of the disinterested
Directors, even though the disinterested Directors are less than a quorum; or
b. The material facts as to the Director's relationship or interest and as to
the conflicting interest transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the conflicting interest
transaction is specifically authorized, approved, or ratified in good faith
by
a vote of the shareholders; or
c. The conflicting interest 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 shareholders. 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, approves, or ratifies the
conflicting interest transaction.
2.13 Corporate Opportunities Doctrine. The officers, directors and other
members of management of this Corporation shall be subject to the doctrine of
corporate opportunities only insofar as it applies to business opportunities
in which this Corporation has expressed an interest as determined from time
to time by the Corporation's Board of Directors as evidenced by resolutions
appearing in the Corporation's minutes. When such areas of interest are
delineated, all such business opportunities within such areas of interest
which come to the attention of the officers, directors and other members of
management of this Corporation shall be disclosed promptly to the Corporation
and made available to it. The Board of Directors may reject any business
opportunity presented to it and thereafter any officer, director or other
member of management may avail himself of such opportunity. Until such time
as this Corporation, through its Board of Directors, has designated an area
as one to which the doctrine of corporate opportunities applies, the
officers, directors and other members of management of this Corporation shall
be free to engage in such areas of interest on their own. The provisions
hereon shall not limit the rights of any officer, director or other member of
management of management of this Corporation to continue a business existing
prior to the time that such area of interest is designated by this
Corporation.
This provision shall not be construed to release any employee of
the Corporation (other than an officer, director or member of management)
from any duties, which he may have to the Corporation.
ARTICLE 3
OFFICERS
3.1 Officers. The officers of the Corporation shall be a president, a
secretary and a treasurer or chief financial officer. The Corporation may
also have, at the discretion of the board of directors, a chairman of the
board, one or more vice presidents, one or more assistant secretaries, one or
more assistant treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 3.3 of this Article 3. Any number
of offices may be held by the same person.
3.2 Election. The officers of the Corporation, except such officers as may be
appointed in accordance with the provisions of Section 3.3 or Section 3.6 of
this Article 3, shall be chosen annually by the board and serve at the
pleasure of the board, subject to the rights, if any, of an officer under any
contract of employment. Each shall hold his office until he shall resign or
shall be removed or otherwise disqualified to serve, or his successor shall
be duly elected and qualified.
3.3 Subordinate Officers. The board of directors may appoint, and may empower
the president to appoint, such other officers as the business of the
Corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in the bylaws or as
the board of directors may from time to time determine.
3.4 Removal. Any officer may be removed, with or without cause or notice, by
the board of directors, at any regular or special meeting thereof, or, except
in case of an officer chosen by the board of directors, by any officer upon
whom such power of removal may be conferred by the board of directors
(subject, in each case, to the rights, if any, of an officer under any
contract of employment).
3.5 Resignation. Any officer may resign at any time by giving written notice
to the board of directors or to the president, or to the secretary of the
Corporation, without prejudice to the rights, if any, of the Corporation
underany contract to which such officer is a party. Any such resignation
shall take effect at the date of the receipt of such notice or at any later
time specified therein, and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
3.6 Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled in the manner
prescribed
in the bylaws for regular appointments to such office.
3.7 Chairman of the Board. The board of directors may elect a chairman who
shall preside, if present, at all meetings of the board of directors and
exercise and perform such other powers and duties as may be from time to time
assigned to him by the board of directors or prescribed by the bylaws. If
there is no president, the chairman of the board shall in addition be the
general manager and the chief executive officer of the Corporation, and shall
have the powers and duties as set forth in Section 3.8 of this Article.
3.8 President. Subject to such supervisory powers, if any, as may be given by
the board of directors to the chairman of the board, if there be such an
officer, the president shall be the general manager and the chief executive
officer of the Corporation and shall, subject to the control of the board of
directors, have general supervision, direction and control of the business
and officers of the Corporation. He shall preside at all meetings of the
shareholders and, in the absence of the chairman of the board, or if there is
none, at all meetings of the board of directors. He shall be ex officio a
member of all the standing committees, including the executive committee, if
any, and shall have the general powers and duties of management usually
vested in the office of president of a corporation, and shall have such other
powers and duties as may be prescribed by the board of directors or the
bylaws.
3.9 Vice Presidents. In the absence or disability of the president, the vice
presidents, if any, in order of their rank as fixed by the board of directors
or, if not ranked, the vice president designated by the board of directors,
shall perform all the duties of the president, and when so acting shall have
all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by
the board of directors or the bylaws.
3.10 Secretary. The secretary shall record or cause to be recorded, and shall
keep or cause to be kept, at the principal executive office and such other
place as the board of directors may order, a book of minutes of actions taken
at all meetings of directors and shareholders, with the time and place of
holding, whether regular or special, and, if special, how authorized, the
notice thereof given, the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office or at the office of the Corporation's transfer agent, a share register
or a duplicate share register, showing the names of the shareholders and
their addresses, the number and classes of shares held by each, the number
and date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all the meetings of
the shareholders and of the board of directors required by the bylaws or by
law to be given, and he shall keep the seal of the Corporation in safe
custody, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or the bylaws.
3.11 Chief Financial Officer. The chief financial officer (who also may
be called the treasurer) shall keep and maintain, or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus and
shares. The books of account shall at all reasonable times be open to
inspection by any director.
The chief financial officer shall deposit all moneys and other valuables in
the name and to the credit of the Corporation with such depositories as may
be designated by the board of directors. He shall disburse the funds of the
Corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
Corporation, and shall have such other powers and perform such other duties
As may be prescribed by the board of directors or the bylaws.
ARTICLE 4
MEETINGS OF SHAREHOLDERS
4.1 Place of Meetings. Meetings of shareholders shall be held at the
principal executive office of the Corporation, or at such other place within
or outside the State of Colorado which may be designated either by the board
of directors or by the written consent of all persons entitled to vote
thereat and not present at the meeting, given either before or after the
meeting and filed with the secretary of the Corporation.
4.2 Annual Meeting. The annual meeting of shareholders shall be held on
such date and at such time during the month of January in each year as may be
fixed from year to year by the board of directors. At such meeting, directors
shall be elected, reports of the affairs of the Corporation shall be
considered, and any other business within the powers of the shareholders may
be transacted.
4.3 Special Meetings. Special meetings of the shareholders, for the
purpose of taking any action permitted by the shareholders under the Colorado
Business Corporation Act and the articles of incorporation of the
Corporation, may be called at any time by the board of directors, the
chairman of the board, the president, secretary, vice president, or the
holders of shares entitled to cast not less than 10 percent of the votes
entitled to be cast at the meeting.
Upon request in writing that a special meeting of shareholders be
called for any proper purpose, directed to the chairman of the board,
president, vice president or secretary by any person (other than the board)
entitled to call a special meeting of shareholders, the officer forthwith
shall cause notice to be given to shareholders entitled to vote that a
meeting will be held at a 'time requested by the person or persons calling
the meeting, not more than 60 days after receipt of the request. Such notice
shall be in accordance with the provisions of Sections 4.4 and 4.5 of this
Article 4.
4.4 Notice of Shareholders' Meetings. Whenever shareholders are required or
permitted to take action at a meeting, a written notice of the meeting shall
be given not less than 10 nor more than 60 days before the date of the
meeting
to each Shareholder entitled to vote thereat. The notice shall state the
place, date and hour of the meeting and (a) in the case of a special meeting,
a description of the purpose for which the meeting is called; or (b) in the
case of the annual meeting, those matters which the board of directors, at
the
time of the mailing of the notice, intends to present for action by the
shareholders. The notice of any meeting at which directors are to be elected
shall include the names of nominees intended at the time of the notice to be
presented by the board, if any, for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect
financial interest; (ii) an amendment of the articles of incorporation; (iii)
a reorganization of the Corporation; (iv) a voluntary dissolution of the
Corporation; or (v) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, the notice shall also state
the general nature of that proposal.
4.5 Manner of Giving Notice. Pursuant to the Colorado Business Corporation
Act, Title 7, Article 101, Section 402, notice shall be in writing unless
oral notice is reasonable under the circumstances. Notice may be given in
person; by telephone, telegraph, teletype, electronically transmitted
facsimile, or other form of wire or wireless communication; or by mail or
private carrier.
Notice of a shareholders' meeting or any report shall first be given either
personally or by first-class mail or other means of written communication,
postage prepaid, addressed to the shareholder at the address of such
shareholder appearing on the books of the Corporation.
If no such address appears on the Corporation's books or is given, notice
shall be deemed to have been given if sent to that shareholder by first-class
mail or other means of written communication to the Corporation's principal
executive office, or if published at least once in a newspaper of general
circulation in the county in which the principal executive office is located.
The notice or report shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by telegram or other
means of written communication.
If three successive letters mailed to the last-known address of any
shareholder are returned as undeliverable, no further notices to such
shareholder shall be necessary until another address for the shareholder is
made known to the corporation.
4.6 Quorum. Pursuant to the Colorado Business Corporation Act, Title 7,
Article 107, Section 206, the presence of a majority of the shares entitled
to vote, represented in person or by proxy, shall constitute a quorum for the
transaction of business at a meeting of the shareholders. The shareholders
present at a duly called or held meeting at which a quorum is present may
continue to do business until adjournment, notwithstanding the withdrawal of
enough shareholders to leave less than a quorum, if any action taken (other
than adjournment) is approved by at least a majority of the shares required
to constitute a quorum. Notwithstanding the foregoing, the sale, transfer and
other disposition of substantially all of the corporation's properties; and a
merger or consolidation of the corporation shall require the approval by an
affirmative vote of not less than two-thirds (2/3) of the corporation's
issues and outstanding shares.
4.7 Adjourned Meeting and Notice Thereof. Any shareholders' meeting, annual
or special, whether or not a quorum is present, may be adjourned from time to
time by the vote of a majority of the shares, represented either in person or
by proxy.
4.8 Voting. The shareholders entitled to vote at any meeting of shareholders
shall be determined in accordance with the provisions of Section 7.1.1 below.
Except as otherwise set forth in the articles of incorporation of the
Corporation, each outstanding share, regardless of class, shall be entitled
to one vote on each matter submitted to a vote of shareholders. Such vote may
be voice vote or by ballot; provided, however, that all elections for
directors must be by ballot upon demand made by a shareholder at any election
and before the voting begins. Any holder of shares entitled to vote on any
matter may vote part of the shares in favor of the proposal and refrain from
voting the remaining shares or vote them against the proposal, other than
elections to office, but, if the shareholder fails to specify the number of
shares such shareholder is voting affirmatively, it will be conclusively
presumed that the shareholder's approving vote is with respect to all shares
such shareholder is entitled to vote. Subject to the provisions of Section
4.6 above, if a quorum is present, the affirmative vote of the majority of
the shares represented at the meeting and entitled to vote on any matter
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required by the Colorado Business Corporation Act or the
articles of incorporation.
4.9 Validation of Defectively Called or Noticed Meetings. The transactions of
any meeting of shareholders, either annual or special, however called and
noticed, and wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum is present either in person
or by proxy, and if, either before or after the meeting, each of the persons
entitled to vote, not present in person or by proxy, signs a written waiver
of notice, or a consent to the holding of such meeting, or an approval of the
minutes thereof. All such waivers, consents or approvals shall be filed with
the corporate records or made a part of the minutes of the meeting.
Attendance of a person at a meeting shall constitute a waiver of notice and
presence at such meeting, except when the person objects, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened, and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters required by the
Colorado Business Corporation Act to be included in the notice but not so
included, if such objection is expressly made at the meeting.
4.10 Action Without a Meeting. Pursuant to the Colorado Business Corporation
Act, Title 7, Article 107, Section 104, unless articles of incorporation
provide otherwise, any action which may be taken at any annual or special
meeting of shareholders may be taken without a meeting and without prior
notice, if a consent in writing, setting forth the action so taken, is signed
by all of the shareholders entitled to vote thereon. Any such writing may be
received by the corporation by electronically transmitted facsimile or other
form of wire or wireless communication providing the corporation with a
complete copy thereof, including a copy of the signature thereto.
The effective date shall be the date of the last writing necessary to effect
the action received by the corporation, unless all of the writings necessary
to effect the action specify a later date as the effective date of the
action.
4.11 Proxies. Pursuant to the Colorado Business Corporation Act, Title 7,
Article 107, Section 203, every person entitled to vote shares may authorize
another person or persons to act by written proxy. Any proxy purporting to be
executed in accordance with the provisions of this Section 4.11 shall be
presumptively valid. No proxy shall be valid after the expiration of eleven
months from the date thereof unless otherwise provided in the proxy. Every
proxy shall continue in full force and effect until revoked by the person
executing it prior to the vote pursuant thereto, except as otherwise provided
in the Colorado Business Corporation Act. Such revocation may be effected by
a
writing delivered to the Corporation stating that the proxy is revoked, or by
a subsequent proxy executed by the person executing the prior proxy and
presented to the meeting, or as to any meeting by attendance at such meeting
and voting in person by the person executing the proxy.
4.12 Inspectors of Election. In advance of any meeting of shareholders, the
board of directors may appoint any persons other than nominees for office as
inspectors of election to act at such meeting or any adjournment thereof. If
inspectors of election are not so appointed, or if any persons so appointed
fail to appear or refuse to act, the chairman of any such meeting of
shareholders may, and on the request of any shareholder or a shareholder's
proxy shall, appoint inspectors of election (or persons to replace those who
so fail or refuse) at the meeting. The number of inspectors shall be either
one or three. If appointed at a meeting on the request of one or more
shareholders or proxies, the majority of shares represented in person or by
proxy shall determine whether one or three inspectors are to be appointed.
The inspectors of election shall determine the number of shares outstanding
and the voting power of each, the shares represented at the meeting, the
existence of a quorum and the authenticity, validity and effect of proxies,
receive votes, ballots or consents, hear and determine all challenges and
questions in any way arising in connection with the right to vote, count and
tabulate all votes or consents, determine when the polls shall close,
determine the result, and do such acts as may be proper to conduct the
election or vote with fairness to all shareholders.
The inspectors of election shall perform their duties impartially, in good
faith, to the best of their ability and as expeditiously as is practical. If
there are three inspectors of election, the decision, act or certificate of a
majority is effective in all respects as the decision, act or certificate of
all. Any report or certificate made by the inspectors of election is prima
facie evidence of the facts stated therein.
ARTICLE 5
INDEMNIFICATION
5.1 Definitions. For purposes of this Article 5, "agent" means 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 domestic or foreign corporation, partnership,
joint venture, trust or other enterprise, or was a director, officer,
employee or agent of a domestic or foreign corporation which was a
predecessor corporation of the Corporation or of another enterprise at the
request of such predecessor corporation; "proceeding" means any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expenses" includes, without limitation,
attorneys' fees and any other expenses of establishing a right to
indemnification under Section 5.4 or 5.5.
5.2 Actions Generally Standard of Conduct. Pursuant to the Colorado Business
Corporation Act, Title 7, Article 109, Section 101, et al, the Corporation
shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or
in the right of the Corporation to procure a judgment in its favor) by reason
of the fact that such person is or was an agent of the Corporation, against
expenses, judgments, merits, fines, settlements and other amounts actually
and reasonably incurred in connection with such proceeding, if such person
acted in good faith and in a manner such person reasonably believed to be in
the best interests of the Corporation and, in the case of a criminal
proceeding, had no reasonable cause to believe the conduct of such person was
unlawful. The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contenders or its equivalent, shall not,
of itself, create a presumption that the person did not act in good faith and
in a manner which the person reasonably believed to be in the best interests
of the Corporation, or that the person had reasonable cause to believe that
the person's conduct was unlawful.
5.3 Actions by or in the Right of the Corporation Standard of Conduct. The
Corporation shall have power to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action by or in the right of the Corporation to procure a judgment in its
favor by reason of the fact that such person is or was an agent of the
Corporation, against expenses actually and reasonably incurred by such person
in connection with the defense or settlement of such action, if such person
acted in good faith and in a manner such person reasonably believed to be in
the best interests of the Corporation and its shareholders.
No indemnification shall be made under this Section 5.3 with respect to a
proceeding by or in the right of the corporation in which the director was
adjudged liable to the Corporation in the performance of such person's duty
to the Corporation and its shareholders, unless and only to the extent that
the court in which such proceeding is or was pending shall determine upon
application that, in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for expenses, and then only to
the extent that the court shall determine.
5.4 Successful Defense on the Merits - Indemnification for Expenses. To the
extent that an agent of the Corporation has been successful on the merits in
defense of any proceeding referred to in Sections 5.2 or 5.3 or in defense of
any claim, issue or matter therein, the agent shall be indemnified against
expenses actually and reasonably incurred by the agent in connection
therewith.
5.5 Nonexclusive Right to Indemnification. The indemnification provided by
this Article 5 shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any bylaw, agreement,
vote of shareholders or disinterested directors, or otherwise, both as to
action in an official capacity and as to action in another capacity, while
holding such office, to the extent such additional rights to indemnification
are authorized in the articles of incorporation of the Corporation. The
rights to indemnity hereunder shall continue as to a person who has ceased
to be a director, officer, employee or agent, and shall inure to the benefit
of the heirs, executors and administrators of the person. Nothing contained
in this Article 5 shall affect any right to indemnification to which persons
other than such directors and officers may be entitled by contract or
otherwise.
5.6 Conflict With Articles, Bylaws or Condition of Settlement. No
indemnification or advance shall be made under this Article 5, except as
provided in Section 5.4, in any circumstance where it appears:
5.7.1 That it would be inconsistent with a provision of the
articles of incorporation, bylaws, a resolution of the shareholders or an
agreement in effect at the time of the accrual of the alleged cause of action
asserted in the proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification.
5.7.2 That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
5.8 Power to Maintain Insurance. Pursuant to the Colorado Business
Corporation Act, Title 7, Article 109, Section 108, the Corporation shall
have power to purchase and maintain insurance on behalf of any officer,
director, employee or any agent of the Corporation against any liability
asserted against or incurred by the officer, director, employee or agent in
such capacity or arising out of the agent's status as such, whether or not
the Corporation would have the power to indemnify the officer, director,
employee or agent against such liability under the provisions of this
Article 5.
5.10 Fiduciary of Employee Benefit Plan. This Article 5 does not apply
to any proceeding against any trustee, investment manager or other fiduciary
of an employee benefit plan in such person's capacity as such, even though
such person may also be an agent of the Corporation. The Corporation shall
have power to indemnify such a trustee, investment manager or other fiduciary
to the extent permitted by Law.
ARTICLE 6
RECORDS AND REPORTS
6.1 Maintenance of Books and Records of Account, Minutes of Meetings
and Shareholder Record. Pursuant to the Colorado Business Corporation Act,
Title 7, Article 116, Section 101, the Corporation shall keep adequate and
correct books and records of account and shall keep minutes of the
proceedings of its shareholders, board and committees of the board, and
waivers of notice. The Corporation or its agent shall maintain a record of
the names and addresses of its shareholders, in a form that permits
preparation of a list of shareholders that is arranged by voting group and
within each voting group by class or series of shares, that is alphabetical
within each class or series, and that shows the address of, and the number of
shares of each class and series held by, each shareholder.
6.1.1 A corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable
time.
6.1.2 A corporation shall keep a copy of each of the following records
at its principal office:
a. Its articles of incorporation;
b. Its bylaws;
c. The minutes of all shareholders' meetings, and records of all action
taken by shareholders without a meeting, for the past three years;
d. All written communications within the past three years to shareholders as
a group or to the holders of any class or series of shares as a group;
e. A list of the names and business addresses of its current directors
and officers;
f. A copy of its most recent corporate report delivered to the secretary;
and
g. All financial statements prepared for periods ending during the last three
years that a shareholder could have requested under the Colorado Business
Corporation Act, Title 7, Article 116, Section 105.
6.2 Inspection of Shareholders. Pursuant to the Colorado Business Corporation
Act, Title 7, Article 116, Section 102, a shareholder is entitled to inspect
and copy, during regular business hours at the corporation's principal
office, any of the records of the corporation described above in section
6.1.2 if the shareholder gives the corporation written demand at least five
business days before the date on which the shareholder wishes to inspect and
copy such records.
6.3 Inspection by Directors. Every director shall have the absolute right at
any reasonable time to inspect all books, records and documents of every kind
and to inspect the physical properties of the Corporation and each of its
subsidiary corporations, domestic or foreign. This inspection by a director
may be made in person or by agent or attorney, and the right of inspection
includes the right to copy and make extracts.
6.4 Financial Statements. If no annual report for the last fiscal year has
been sent to shareholders, the Corporation shall, upon written request of any
shareholder deliver or mail to such shareholder its most recently published
financial statements, if any, showing in reasonable detail its assets and
liabilities and results of operations.
ARTICLE 7
MISCELLANEOUS
7.1 Record Date.
7.1.1 For Shareholder Notice, Voting and Giving Consents. For purposes of
determining shareholders entitled to notice of any meeting or to vote, or
entitled to give consent to corporate action without a meeting, the board of
directors may fix, in advance, a record date, which shall not be more than 60
days nor fewer than 10 days prior to the date of any such meeting, nor more
than 60 days before any such action without a meeting. Only shareholders of
record at the close of business on the record date are entitled to notice and
to vote, or to give consents, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after the record date,
except as otherwise provided in the articles of incorporation or under the
Colorado Business Corporation Act. The determination of shareholders of
record entitled to notice of or to vote at a meeting of shareholders shall
apply to any adjournment of the meeting unless the board fixes a new record
date for the adjourned meeting. If the board of directors does not so fix a
record date:
a. The record date for determining shareholders entitled to notice of or to
vote at a meeting of shareholders shall be at the close of business on the
business day on the day on which notice is given or, if notice is waived, at
the close of business on the business day preceding the day on which the
meeting is held.
b . The record date for determining shareholders entitled to give consent to
corporate action in writing without a meeting, when no prior action by the
board has been taken, shall be the day on which the first written consent is
given or, when prior action of the board has been taken, shall be at the
close of business on the day on which the board adopts the resolution
relating to that action.
7.1.2 for Purposes Other than Notice, Voting and Giving Consents. For
purposes of determining the shareholders entitled to receive any report, to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any other lawful
action (other than action by shareholders by written consent taken without a
meeting), the board of directors may fix, in advance, a record date, which
shall not be more than 60 days prior to any such action. Only shareholders of
record at the close of business on the record date are entitled to receive
the report, dividend, distribution, or allotment of rights or to exercise the
rights, as the case may be, notwithstanding any transfer of any shares on the
books of the Corporation after the record date so fixed, except as otherwise
provided in the articles of incorporation or in the Colorado Business
Corporation Act. If the board of directors does not so fix a record date, the
record date for determining shareholders for any such purpose shall be at the
close of business on the day on which the board adopts the applicable
resolution.
7.2 Checks, Drafts, and Other Instruments. All checks, drafts or other orders
for payment of money, notes or other evidences of indebtedness, issued in the
name of or payable to the Corporation, shall be signed or endorsed by such
person or persons and in such manner as, from time to time, shall be
determined by resolution of the board of directors.
7.3 Executing Corporate Contracts and Instruments. Subject to the provisions
of applicable law, any note, mortgage, evidence of indebtedness, contract,
agreement, share certificate, conveyance, or other instrument in writing, and
any assignment or endorsements thereof, executed or entered into between the
Corporation and any other person, when signed by the chairman of the board,
the president or any vice president, and the secretary, any assistant
secretary, the chief financial officer or any assistant treasurer of the
Corporation, shall be valid and binding on the Corporation in the absence of
actual knowledge on the part of the other person that the signing officers
had no authority to execute the same. Any such instruments may be signed by
any other person or persons and in such manner as from time to time shall be
determined by the board and, unless so authorized by the board, no other
officer, agent, or 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 for any purpose or amount.
7.4 Certificate for Shares. Every holder of shares in the Corporation shall
be entitled to have a certificate signed in the name of the Corporation by
the chairman or vice chairman of the board or the president or a vice
president, and by the chief financial officer or an assistant treasurer or
the secretary or any assistant secretary, certifying the number of shares and
the class or series of shares owned by the shareholder. Any or all of the
signatures on the certificate may be facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if such person were an officer, transfer
agent or registrar at the date of issue.
Any such certificate shall also contain such legend or other statement as may
be required by the Colorado Business Corporation Act, the federal securities
laws, and any agreement between the Corporation and the issuee thereof.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the board of directors or the bylaws
may provide; provided, however, that any such certificate so issued prior to
full payment shall state on the face thereof the amount remaining unpaid and
the terms of payment thereof.
No new certificates for shares shall be issued in lieu of an old certificate
unless the latter is surrendered and canceled at the same time; provided,
however, that the board of directors may authorize the issuance of a new
share certificate or a new certificate for any other security in the place of
any certificate theretofore issued by the corporation and alleged to be lost,
stolen or destroyed in the event that (a) the request for the issuance of the
new certificate is made within a reasonable time after the holder of the old
certificate has notice of its loss, destruction or theft and prior to the
receipt of notice by the Corporation that the older certificate has been
acquired by a bona fide purchaser or holder in due course; and (b) the owner
of the old certificate (or the owner's legal representative) gives to the
Corporation an indemnity bond (or other adequate security) sufficient to
indemnify the Corporation against any claim that may be made against it
(including any expense or liability) on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate,
and satisfies any other reasonable requirements imposed by the board.
7.5 Representation of Shares of other Corporations. The president or any vice
president, and the secretary or any assistant secretary of the Corporation
are authorized to vote, represent and exercise on behalf of the Corporation
all rights incident to any and all shares of any other corporation or
corporations standing in the name of the Corporation. The authority herein
granted to said officers to vote or represent on behalf of the Corporation
any and all shares held by the Corporation in any other corporation or
corporations may be exercised either by such officers in person or by any
other person authorized so to do by proxy or power of attorney duly executed
by said officers.
7.6 Registrars and Transfer Agents. The board of directors may appoint one or
more registrars of transfers, which shall be incorporated banks or trust
companies, either domestic or foreign, and one or more transfer agents or
transfer clerks, who shall be appointed at such times and places as the board
of directors shall determine, in its sole discretion.
7.7 S Corporation Election. If the Corporation has elected to be taxed
pursuant to the provisions of the Internal Revenue Code pertaining to S
corporations, then the Corporation, any shareholder and any person to whom
any of its shares are transferred shall not do any act or take any course of
conduct which shall have the effect of terminating such election without the
prior vote of at least 66-2/3 percent of the outstanding shares of the
Corporation or the written consent of the persons entitled to vote such
shares.
7.8 Fiscal Year. The fiscal year of the Corporation shall be determined
by the board of directors, and having been so determined, is subject to
change from time to time as the board of directors shall determine. If the
board elects under Subchapter S, then the fiscal year will be a calendar
year.
7.9 Construction and Definitions. Unless the context otherwise requires
and without limiting the generality of the foregoing, the masculine gender
includes the feminine and neuter, the singular number includes the plural,
the plural number includes the singular, and the term "person" includes a
corporation as well as a natural person.
ARTICLE 8
AMENDMENTS
8.1 Power of the Shareholders. Except as otherwise provided by law or by the
articles of incorporation, new bylaws may be adopted or these bylaws may be
amended or repealed or added to by the approval of the outstanding shares
entitled to vote.
8.2 Power of Directors. Except as otherwise provided by law or by the
articles of incorporation, new bylaws may be adopted or these bylaws may be
amended or repealed or added to at any annual or special meeting of the board
of directors called for that purpose.
November 13, 1996
LICENSE AGREEMENT
This agreement, effective the I with day of November, 1996, is made and
entered into by and among JOHN R. JACKSON ("Jackson"), a natural person
residing at 1403 Blalock #7, Houston, Texas 77055, ANDRES M. ARISMENDI, JR.
("Arismendi"), a natural person residing at 17810 Clearlight Ln., Spring,
Texas, and MSP TECHNOLOGIES INC ("MSP"). a Texas corporation having an office
at 1403 Blalock, Suite #7, Houston, Texas 77055.
Premises
WHEREAS, JACKSON and ARISMENDI own certain patent rights and confidential
information and have the right to grant licenses of the scope granted in this
Agreement under those rights; and
WHEREAS, MSP is desirous of acquiring certain exclusive rights and licenses
to use said patent rights and confidential information to provide and sell
Licensed Services (hereinafter defined);
NOW, THEREFORE, in consideration of the premises and of the mutual covenants,
terms and conditions hereinafter expressed, JACKSON, ARISMENDI, and MSP agree
as follows:
Section 1. Definitions
1.1 "Effective Date" means the date entered in the first paragraph of this
Agreement.
1.2 "Field of the Agreement" or the Field" is for geophysical exploration of
oil, gas and valuable minerals using the method and/or apparatus of the
Licensed Patent and the Licensed Technology.
1.3 "Letters Patent" or "Patent" means a patent, US or foreign, including
patents of importation improvement patents, patents and certificates of
addition, and utility models, as @'ell as divisions. reissues, continuations,
renewals and extensions of any of the Foregoing, and applications therefor
(including patents which may issue on such applications)
1.4 "Licensed Technology" means Jackson's and ARISMENDI's technical material
and information in the Field of the Agreement, including trade secrets,
relating to the Licensed Patents and the Licensed Instruments, including
their
manufacture and design, and the Licensed Services, including the use of the
Licensed Instruments and marketing of the Licensed Services.
1.5 "Basic Patent" means any U.S. patent maturing from JACKSON's and
ARISMENDI's pending U S. Patent Application, entitled "Passive Geophysical
Prospecting Apparatus and ,Method Based on the Detection of Discontinuities
Associated with Extremely Low Frequency Electromagnetic Fields" filed August
27, 1996, having Application No.08/703,485, including are, continuation,
division, and reissue applications thereof.
1.6 "Licensed Patents" means the Letters Patent(s) listed in Appendix A and
Letters Patent(s) maturing from the Applications for Letters Patent listed in
Appendix A, and any improvement patents, continuations, decisions,
continuations-in-part, substitutes, reissues, renewals, and/or extensions of
any such Letters Patent. A Letters Patent will cease to be a Licensed Patent
when its term expires, or all its claims are held to be invalid, or ad] its
claims are held to be unenforceable
1.7 "Licensed Service" means any service in the Field of the Agreement (I )
covered by any valid and enforceable claim of a Licensed Patent in the
country where the service is provided and/or (2) using the Licensed
Technology.
1.8 "Licensed Instrument" means any apparatus for use in the Field of the
Agreement I covered by any valid and enforceable claim of a Licensed Patent
in the country of manufacture and/or use and/or (2) using the Licensed
Technology. Licensed Instruments "III not be sold by MSP or LICENSOR.
1.9 "Net Sales" means the net selling price invoiced or otherwise charged by
MSP for performance of Licensed Services, excluding only the following items
to the extent they are included in the net selling price:
(a) sales or excise taxes, and
(b) expenses associated with the provision of the Licensed
Services (travel, room and board, and supplies).
1.10 "Subsidiary(ies)" means a corporation, Company or other entity in which
more than fifty percent (50%) of whose outstanding shares or securities
(representing the night to vote for the election of directors or other
managing
authority) are, now or hereafter, owned or controlled, directly or
indirectly.
by a party hereto, but such corporation, Company or other entity shall be
deemed to be a Subsidiary only so long as such ownership or control exists.
1.11 "Parties" means JACKSON, ARISMENDI and MSP
1.12 "Licensor" means JACKSON and ARISMENDI
1.13 "Third Party" means a party other than JACKSON, ARISMENDI and MSP
Therefore, any Subsidiary of MSP or entity to which MSP is a Subsidiary is a
Third Party for purposes of this Agreement.
Section 2. Grant of Right
2.1 LICENSOR grants to MSP a worldwide exclusive right and license under the
Licensed Patents and Licensed Technology in the Field (1) to make, have made
and use, but not sell, Licensed Instruments for use in providing Licensed
Services and (2) to provide and sell Licensed Services
2.2 LICENSOR grants to MSP a worldwide exclusive license to use the Licensed
Technology in the Field.
2.3 MSP shall not grant sublicenses under the Licensed Patents nor under the
Licensed Technology.
2.4 The licenses granted in Paragraphs 2.1 and 2.2 of this Agreement are
subject to a reserved nonexclusive license in the LICENSOR to make and use
the Licensed Instruments to personally perform Licensed Services and to make
improvements to same.
2.5 LICENSOR herein agrees that MSP shall have the first right of refuse to
purchase the Licensed Patents in the event of a sale of the Licensed Patents
on terms as may be offered in writing by a bona fide Third Party purchaser.
Section 3. Royalty and Service Income
3.1 Subject to Paragraph 3,3 below, MSP agrees to pay LICENSOR as a royalty
a
percentage of the Net Sales of any Licensed Service which it sells to Third
Parties so long as a Licensed Patent is in force or a patent application is
pending. Any Licensed Service provided for a Subsidiary of MSP or for any
entity of which MSP is a Subsidiary shall be sold or otherwise accounted for
as a sale at the same rates as any other Third Party. The royalty under this
Paragraph shall be 10% of such Net Sales of Licensed Services.
3.2 MSP shall pay to LICENSOR royalties stated in Paragraph 3 1, but in no
event shall the cumulative royalties paid to LICENSOR pursuant to Paragraph 3
1 for EACH CALENDAR MONTH of a calendar year be less than the following
minimum royalties per calendar month during each of the calendar years
indicated:
<TABLE>
<CAPTION>
Royalty Schedule
Minimum Royalty per
Calendar Year Calendar Month (US Dollars)
- ------------- ---------------------------
<S> <C>
1997 3,500 (Three Thousand Five Hundred)
1998 3,500 (Three Thousand Five Hundred)
1999 and each calendar
year thereafter during
the term of this Agreement 50,000 (Fifty Thousand)
</TABLE>
3.3 In the event that the royalties payable under this Agreement for any
calendar month for the calendar year in question shall not at least equal the
corresponding minimum required in Paragraph 3 2, LICENSOR shall have the
eight to notify MSP of the amount of the deficiency MSP shall thereupon
within fifteen (15) days pay to LICENSOR the difference between the actual
royalties received by MSP for the calendar month in question and the
corresponding minimum royalty due. Since time is of the essence, following
said fifteen 15 day period, if the royalties paid by MSP, to LICENSOR for the
calendar month in question still do not satisfy the minimum royalties
required by Paragraph 3 2, LICENSOR at LICENSOR's sole option may terminate
this agreement and the licenses herein granted.
3.4 In connection with the minimum royalty, it is agreed that if in any
calendar month or months the royalty paid by MSP to LICENSOR exceeds the
minimum required for that calendar month or months, such excess WILL NOT be
taken into consideration and used by MSP for ]Its credit toward the minimum
required in any calendar month or months that the royalty called for by the
actual Net Sales of MSP has not equaled the minimum required by Paragraph
3.2.
Section 4. Royalty Payments and Reporting
4.1 Royalty payments from MSP to LICENSOR shall be made monthly within
fifteen (15) days after the end of each calendar month for which royalty
payments are due following the Effective Date with seventy-five (75) percent
of the respective royalty payment paid to JACKSON and twenty-five (25)
percent paid to ARISMENDI. Royalty payments for each calendar month period
shall be based on Net Sales of those Licensed Services invoiced by MSP during
that period. All such payments shall be accompanied by a full and complete
report detailing the computation of the royalty payment. Payments shall be
made in U. S. Dollars. For purposes of computing royalties payable hereunder,
amounts in currencies other than U.S. Dollars will be converted into U S
Dollars using as a rate of exchange for such payments the midpoint between
the buying and selling rate for U S Dollars as quoted by Texas Commerce Bank
in Houston. Texas (or any other bank agreeable to the parties should this
bank cease operations) at the close of business on the last business day of
the calendar month for which royalties are due.
4.2 During the term of this Agreement, MSP shall maintain for a period of
three (3) years following the date of each royalty report and payment
accurate and complete books and records which support the determination of
Net
Sales in such detail as to enable a determination of the royalty payment
which was due under this Agreement on the date of that report and payment.
Such books and records shall be kept in accordance with generally accepted
accounting principles.
4.3 Upon twenty (20) days' written notice. MSP shall permit the examination
of such records, using general]y accepted auditing standards, by LICENSOR or
its designated representation e, at any time during normal business hours
throughout the term of this Agreement and for one (1) year following its
termination, for the purpose of verifying the payments due hereunder. Such
examinations shall be at LICENSOR's expense so long as such records are
located in the United States of America (U.S.A.). If such records are outside
the U.S.A., LICENSOR shall be reimbursed its reasonable expenses by MSP Such
examination shall not be made more than once each calendar year. Any error in
royalty payments, whether in favor of LICENSOR or MSP, shall be corrected by
payment of the amount in error within sixty (60) days of receipt by the party
which would be required to make such payment of written notice of such error.
4.4 MSP, as exclusive licensee, shall have power to institute and prosecute
at its own expense suits for infringement of the Licensed Patents, and, if
required by law, LICENSOR will join as a party plaintiff in such suits All
expenses in such suits shall be borne entirely by MSP, and MSP will pay to
LICENSOR twenty-five percent (25%) of any excess of recoveries over the
expenses in such suits.
Section 5. Confidentially of Licensed Technology
5.1 "Technology" under this Agreement means any information that is (a)
disclosed in writing by the disclosing party which is marked as being
confidential at the time it is provided to the receiving party, or that is
(b) disclosed by the disclosing party in any other manner and is indicated to
be confidential at the time of disclosure. The receiving party shall employ
all reasonable efforts to maintain the confidentiality of such information,
such efforts to represent no less than the degree of care employed by the
receiving party to protect its own confidential information. Information
supplied under this Agreement shall not be considered Technology if (i) at
the time of disclosure to the receiving party the information was in the
public knowledge, or (ii) after disclosure to the receiving party the
information became part of the public knowledge through no fault of the
receiving, party, or (iii) at the time of disclosure to the receiving party
the information was already in the possession of the receiving party without
an obligation of confidentiality, or (iv) after disclosure @o the receiving
party, the receiving party acquired the information from a third party
without an obligation of confidentiality and without a direct or indirect
Misappropriation or breach of an obligation of confidentiality.
5.2 MSP shall use Licensed Technology solely for the design and manufacture
of Licensed Instruments and in the use of the Licensed Instruments to provide
Licensed Services during the term of this Agreement. To the extent MSP must
disclose Licensed Technology in connection with its marketing of the Licensed
Services, MSP shall first obtain in writing the agreement of the recipient to
maintain the confidentiality of the Licensed Technology to be disclosed.
5.3 For purposes of the provisions of this Section 5, disclosures made under
this Agreement which are specific, such as engineering and design practices
and techniques, equipment, products, operating conditions, and the like,
shall not be deemed to be within the foregoing exceptions of Paragraph 5.1
merely because they are embraced by general disclosures which are in the
receiving party's possession or are generally available to the public. In
addition, any combination of features shall not be deemed to be within the
foregoing exceptions merely because individual features of the combination
are separately within such exceptions, but only if the combination itself is
within such exceptions.
Section 6. Research and Development
6.1 In order to maintain the Licensed Technology which is the subject of
this Agreement in the most advanced possible state of development, LICENSOR
and MSP agree to Jointly, or independently perform research and development
directed to improving the Licensed Instruments. Licensed Services, Licensed
Technology and Licensed Patents.
Section 7. Term and Termination
7.1 Subject to Paragraph 7.2, the term of this Agreement shall be from the
Effective Date until there are no remaining valid and enforceable Licensed
Patents and there is no Licensed Technology.
7.2 Should either LICENSOR or MSP breach this Agreement and fail to remedy
such breach, the other party thereafter shall have the right to terminate
this Agreement, at any time after thirty (30) days, written notice to the
breaching party. Subject to Paragraph 7.5 and Section 10, upon termination of
this Agreement pursuant to this Paragraph, all rights granted herein to the
breaching party shall terminate immediately.
7.3 Termination of this Agreement shall be in addition to and not exclusive
of any other rights or remedies at law or in equity of the nondefaulting
party.
7.4 Termination or expiration of this Agreement shall not: (i) relieve
LICENSOR or MSP of any obligation or liability accrued hereunder prior to
such termination or expiration or (ii) give rise to any right to rescind
anything done or any payments made or other consideration given hereunder
prior to the time of such termination or expiration.
7.5 Upon any termination of this Agreement, other than according to
Paragraph 7.1 or to Paragraph 7.2 for breach by LICENSOR, MSP shall have the
right to complete all orders for Licensed Services which result from bids or
quotations transmitted prior to the termination date and pay to LICENSOR the
corresponding royalty due therefor. Following such completion, MSP shall
deliver to LICENSOR all Licensed Instruments and all copies of Licensed
Technology and any other documents prepared by MSP containing Licensed
Technology obtained directly or indirectly from LICENSOR.
Section 8. Warranties
8.1 LICENSOR warrants that it has the right and power to enter into this
Agreement and the power to grant to MSP the rights contemplated by this
Agreement under the Licensed Patents and the Licensed Technology.
8.2 MSP warrants that it has the right and power to enter into this
Agreement.
8.3 LICENSOR DOES NOT WARRANT THE VALIDITY NOR ENFORCEABILITY OF THE
LICENSED PATENT RIGHTS, LICENSOR DOES NOT WARRANT THAT THE USE OF THE
LICENSED TECHNOLOGY DOES NOT INFRINGE THE RIGHTS OF ANY THIRD PARTY,
INCLUDING PATENT RIGHTS. LICENSOR DOES NOT WARRANT THAT THE MAKING OR USING
OF THE LICENSED INSTRUMENTS DOES NOT INFRINGE THE RIGHTS OF ANY THIRD PARTY,
INCLUDING PATENT RIGHTS LICENSOR DOES NOT WARRANT THAT THE PROVISION OF
LICENSED SERVICES DOES NOT INFRINGE THE RIGHTS OF ANY THIRD PARTY, INCLUDING
PATENT RIGHTS.
Section 9. Product Marking
Where required by law, MSP shall place a legend or notice (a) on each
Licensed Instrument manufactured by or for MSP identifying that such Licensed
Instrument is covered by The Licensed Patents and (b) on sales brochures
regarding the Licensed Service and the reports providing the results of the
Licensed Service.
Section 10, Improvements
10.1 LICENSOR and MSP agree to keep each other regularly and fully
informed about the designs, applications and other developments relating
to the Licensed Patents and the Licensed Technology in the Field of the
Agreement and the Licensed Instruments and Licensed Service, which become
available to them and which they are not legally prevented from
communicating to the other party.
10.2 If MSP, independent of LICENSOR, develops improvements to the
Licensed Instruments and/or Licensed Services, whether or not patentable
or patented, MSP agrees that LICENSOR shall have a royalty-free,
nonexclusive license to such improvements and provide LICENSOR with an
instrument embodying the improvement(s) to the Licensed Instrument. Any
patent applications filed and resulting Letters Patent(s) relating to
such improvements shall be the property of MSP, and shall be prosecuted
and maintained at MSP's expense, unless the parties agree that the
invention shall be assigned to LICENSOR, in which event such patent
applications and resulting Letters Patent(s) shall be treated as Licensed
Patents and treated consistently with all the terms and conditions of the
license grant in this Agreement.
10.3 If patentable improvements result from the collaboration between
LICENSOR (either, or both of JACKSON and ARISMENDI) and agents or
employees of MSP (wherein if JACKSON is employed by MSP, JACKSON shall
still be deemed part of LICENSOR), MSP hereby assigns such improvements
to LICENSOR and such improvements will be the property of LICENSOR. If
LICENSOR decides not to file a patent application thereon, such
improvements shall be included in Licensed Technology. If a patent
application is filed thereon and the costs of filing, processing and
maintaining same are borne by MSP, such improvements shall be included in
the Licensed Patents. If a patent application is filed thereon and the
costs of filing, processing and maintaining same are not borne by MSP,
such improvements will be excluded from the Licensed Technology and from
the Licensed Patents. If a patent application is filed on such
Improvements, whether or not MSP bears the costs therefor, MSP agrees to
fully cooperate in such efforts to obtain patent protection.
Section 11. Indemnification and Release.
11.1 LICENSOR shall not be liable to MSP or any Third Party for any
injuries, losses, damages (including incidental, special, punitive and
consequential damages) or other liabilities incurred by MSP or any Third
Party, arising out of the manufacture and use of Licensed Instrument or
performance and sale of Licensed Services by MSP to the extent such
liability arises from patent infringement and/or from errors, defects or
omissions by MSP in the manufacture and/or use of such Licensed
Instruments, and MSP hereby releases LICENSOR and agrees to indemnify,
defend and hold LICENSOR harmless from any such liability.
11.2 Any obligation of indemnification under Paragraph 11.1 shall
be conditioned upon prompt written notice by the party seeking
indemnification to the other party of any claim for which indemnification
is sought, and allowing the indemnification party to control the defense
and settlement of any such claim. However, failure to provide prompt
written notice shall not relieve either party of its obligations, except
to the extent the other party has been materially prejudiced by such
failure.
Section 12, Patent Rights.
12.1 MSP shall bear the costs and expenses of obtaining and
maintaining the Licensed Patents MSP agrees that it will not permit the
Licensed Patents to lapse due to nonpayment of any applicable annuity or
maintenance fee.
12.2 LICENSOR shall be under no obligation to MSP to defend
against challenges to the scope, enforceability or validity of the
Licensed Patents.
Section 13 Assignability.
13.1 LICENSOR can assign its interests in this Agreement to a Third
Party, provided that:
(i) LICENSOR also assigns the Licensed Patents and Licensed
Technology to such Third Party; and
(ii) the Third Party enters into an agreement with MSP assuming all
obligations of LICENSOR hereunder.
13.2 MSP cannot assign its interest in this Agreement.
Section 14, Waiver.
The failure of any party at any time to require performance by any
party of any provision in this Agreement shall in no way affect the full
right to require such performance at any time thereafter. The waiver by
any party of a breach of any provision in this Agreement shall not
constitute a waiver of any succeeding breach of the same provision or any
other provision and shall not constitute a waiver of the provision
itself. The failure of any party to exercise any, of its rights provided
under this Agreement shall not constitute a waiver of such rights.
Section 15, Severability.
If for any reason any pro of this Agreement shall be invalid,
illegal or unenforceable, then such provision shall be to be severable
from the other provisions of this Agreement, all of which shall remain in
full force and effect and be binding on the parties hereto.
Section 16, Force Majeure.
Neither party to this Agreement shall be liable for any default or
delay in performance of any obligation under this Agreement caused by any
event that is beyond the reasonable control of and not the result of
willful or negligent co conduct of such party ("Force Majeure event").
During any default or delay resulting from a Force Majeure event, the
affected obligations shall be suspended, except that any obligation of
either party to pay money then due or accrued under this Agreement shall
not be affected. At the conclusion of any Force Majeure event, the
previously affected obligations shall resume. The party invoking this
Section shall give the other party notice of the full particulars of the
Force Majeure event as soon as possible after the event occurs. The
affected party shall use all reasonable efforts to overcome the effect of
the Force Majeure event as promptly as possible and shall allow the other
party such access and information as may be reasonably necessary to
evaluate such event.
Section 17, Entire Agreement.
The terms and conditions contained in this Agreement constitute the
entire agreement between the parties and supersede all previous
communications, whether oral or written, between the parties to this
Agreement with respect agreement or understanding varying or extending
the same shall be binding upon each party.
Section 18, Modification and Amendment.
This Agreement may be amended or modified only by a written instrument
which is signed by duly authorized representatives of the parties hereto
and which expressly states that its is an amendment to, or modification
of this Agreement.
Section 19, Notice.
Any notice, request or other communication with reference to this
Agreement shall be deemed given on the date personally delivered or
mailed if sent to the receiving party by hand delivery, facsimile
(receipt verified), overnight courier (receipt verified), or certified or
registered mail postage prepaid, at its respective following address or
at such other address as either of the parties may notify the other in
writing:
John R. Jackson
1403 Blalock, #7
Houston, Texas 77055
Andres M. Arismendi, Jr.
17810 Clearlight Ln.
Spring, Texas 77379
MSP Technologies, Inc.
1403 Blalock, Suite #7
Houston, Texas 77055
Attention: Mr. John R. Jackson, President
Section 20, Headings
The titles and headings herein are used for convenience of reference only
and shall not be deemed part of this Agreement for purpose of
interpretation.
Section 21, Applicable Law
The law applicable to this Agreement shall be the laws of the State of
Texas, United States of America, without regard to conflict of laws
principles of that State.
Section 22, Relationship of the Parties.
22.1 Nothing in this Agreement shall be deemed to constitute a
partnership or agency relationship among ARISMENDI, JACKSON, and MSP,
except to the extent JACKSON may be an officer of MSP.
22.2 Neither LICENSOR nor MSP is granted an express or implied right
or
authority to assume or create any obligation or responsibility on behalf
of or in the name of the other or to bind the other in any manner or
thing whatsoever.
Section 23, Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective permitted successors and assigns, to
the extent permitted herein.
Section 24, Counterparts.
This Agreement may be in more than one counterpart, each of which shall
be deemed to be an original and all which together shall be deemed a
single document.
Section 25, Further Assurances.
The parties agree to execute and deliver any instrument, or perform any
acts, that may be necessary or reasonably requested in order to give full
effect to this Agreement.
Section 26, Survival.
All representations, warranties and indemnities contained in this in this
Agreement and the covenants of Paragraphs 4.2, 4.3 and 7.5 and Sections
5, 11, 15, 17, 18, 19, 21, 22, 23, 24, 25 and 26 of this Agreement shall
continue in full force and effect and shall survive notwithstanding the
full payment of all amounts due hereunder or the termination or
expiration of this Agreement in any manner whatsoever.
IN WITNESS WHEREOF JACKSON, ARISMENDI and MSP caused this Agreement to be
executed in multiple counterparts by their duly authorized
representatives,
to be effective as of the Effective Date.
WITNESS: JOHN R. JACKSON
/S/ Barbara M. Jackson /s/ John R. Jackson
- ------------------------ -------------------------
11/13/96
ANDRES M. ARISMENDI
/S/ Barbara M. Jackson /s/ Andres M. Arismendi
- ------------------------ -------------------------
11/13/96
MSP TECHNOLOGIES, INC.
/S/ Barbara M. Jackson /s/ John R. Jackson
- ------------------------ -------------------------
Title: President
-------------------------
11/13/96
SETTLEMENT AGREEMENT WITH INVENTOR OF ELECTROTELLURIC SURVEY
Cause Number 99CV0435
AMALGAMATED EXPLORATIONS, INC. IN THE DISTRICT COURT OF
and MSP TECHNOLOGIES, INC.
vs. JEFFERSON COUNTY
JOHN R. JACKSON and
ANDRES M. ARISMENDI, JR. STATE OF COLORADO
SETTLEMENT AGREEMENT
The parties hereto agree that this lawsuit and all claims and controversies
between them, asserted or assertable in this case against all parties named
herein are hereby settled in accordance with the following terms of this
Settlement Agreement.
1. The parties acknowledge that bona fide disputes and controversies exist
between them, both as to liability and the amount thereof, if any, and by
reason of such disputes and controversies, they desire to compromise and
settle all claims and causes of action of any kind whatsoever which the
parties have
or
may have arising out of the transaction or occurrence which is the subject of
this litigation. It is further understood and agreed that this is a
compromise of a disputed claim, and nothing contained herein shall be
construed as an admission of liability by any party, all such liability being
expressly denied.
2. Each signatory hereto warrants and represents:
(a) he or she has authority to bind the parties for whom that signatory acts.
(b) the claims, suits, rights and/or interests which are the subject matter
hereto are owned by the party asserting same, have not been assigned,
transferred or sold, and are free of any encumbrance.
3. The consideration to be given for this agreement in full and final
settlement is as follows:
(a) $1,500,000.00 to be escrowed by Plaintiff, Amalgamated to bear interest
at 5% per annum.
(b) Plaintiff, Amalgamated, pays Defendants $20,000.00 per month commencing
August 15, 1999, and payable on the 15th of the month thereafter, each
monthly payment to be applied toward principal while interest accumulates on
the
principal balance and interest until paid in full. Defendants will provide
written notice of non-payment by the 20th of any month of default, and
Amalgamated shall have 10 days after receipt of notice to cure default. Time
is of the essence and failure to cure the default shall result to Plaintiffs
retaining the stock, cancellation of the assignment, reversion of the patent
to Defendants and Plaintiffs will no longer have any rights to the
technology.
(c) Defendants shall escrow 395,000 shares of Amalgamated stock to remain in
escrow until paid in full.
(d) Defendants shall assign the patent covered by the licensing agreement to
MSP Technologies to be held in escrow until paid in full. The said assignment
shall be to Amalgamated.
(e) Amalgamated grants Defendants a non-exclusive, royalty free license in
the patent covered by the licensing agreement, and Defendants shall be the
only ones entitled to use the technology under the non-exclusive license.
(f) While this agreement is in place, no royalty shall be due or payable to
Defendants.
(g) Defendant, Jackson, commits to upgrading the Electrotelluric system
already in place at Plaintiff's expense. The upgrade will involve on board
microprocessor capability and enhanced filtering. The instrument will have
the ability to record digitally the sweep for DSP (Digital Signal
Processing).
(h) Patent herein means the patent and application in the attached appendix.
(i) Upon final payment, the stock and assignment held in escrow shall be
delivered to Amalgamated.
Taxable costs will be paid as follows: The parties bear their own costs.
4. Except for the agreements set forth herein, the parties agree to release,
discharge, and forever hold the other and their respective insurers harmless
from. ' any and all claims, demands or suits, known or unknown, fixed or
contingent, liquidated or unliquidated, whether or not asserted in the above
case, as of this date, arising from or related to the events and transactions
which are the subject matter of this case, including claims for attorney's
fees, indemnification, and costs. This mutual release runs to the benefit of
all attorneys, agents, employees, officers, parent corporations, subsidiary
corporations, directors, shareholders, partners, heirs, assigns, successors
in interest, and legal representatives of the parties hereto.
5. The parties will execute and file: Agreed Order dismissing all claims with
prejudice and/or a Take-Nothing Judgment as to all claims and/or any other
documents necessary to effectuate the terms of this agreement pursuant to
law.
6. Within 14 days from the date hereof, counsel for Plaintiff shall deliver
the documents to be executed in connection with this settlement to counsel
for
the other parties hereto. The parties and their counsel agree to cooperate
with each other in the drafting and execution of such additional documents as
are reasonably requested or required to implement the provisions and spirit
of this Settlement Agreement. Notwithstanding such additional documents, the
parties confirm that this is a written Settlement Agreement as contemplated
by Section 154.071 of the Texas Civil Practice and Remedies Code, is a
complete, valid and binding contract, is intended to be an enforceable
agreement as contemplated by Rule 1 1, Texas Rules of Civil Procedure, and
may be used as the basis for a motion for judgment, motion for summary
judgment, or motion to enforce with each party waiving all rights to a jury
trial.
7. THIS SETTLEMENT AGREEMENT IS NOT SUBJECT TO REVOCATION.
8. If one or more disputes arise with regard to the interpretation and/or
performance of this agreement or any of its provisions, the parties agree to
attempt resolution by phone conference with Gus J. Zgourides, the mediator
who facilitated this settlement. If the parties cannot resolve their
differences by phone conference(s) with the mediator, then each agrees to
schedule one day of mediation with him as soon as possible to resolve the
disputes and to share the costs of same equally. If a party refuses to
mediate, then that party may not recover attorney's fees or costs in any
litigation brought to construe or enforce this agreement, and the prevailing
party or parties shall be entitled to recover reasonable attorney's fees and
expenses, including the cost of the mediation.
9. This agreement is made and performable in Harris County and shall be
construed in accordance with the laws of the State of Texas.
10. By signing this Settlement Agreement, each signatory agrees and
acknowledges that: Although the mediator has provided a basic outline of
the agreement to the parties and their counsel as a courtesy to facilitate
the final resolution of this dispute, the parties and their counsel have
thoroughly reviewed it and have where necessary, modified it to conform to
the requirements of their agreement; Each signatory to the agreement has
entered into it freely and without duress after having consulted with
attorneys of their choice; Each party has been advised by the mediator that
the mediator is not the attorney for any party and that each party should
have this agreement reviewed by that party's attorney prior to executing it;
Each signatory agrees to release, indemnify and hold the mediator harmless
from any and all claims, demands, or suits arising directly or indirectly
from the mediation and drafting of this settlement agreement.
Signed this date, July 9, 1999.
Plaintiffs: Defendants:
/S/ /S/
- ------------------------------ ----------------------------
Christian Murer, CEO John R. Jackson
Amalgamated Explorations, Inc.
/S/ /S/
- ------------------------------ ----------------------------
Christian Murer on behalf of Andres M. Arismendi, Jr.
MSP Technologies, Inc.
APPENDIX
U.S. Patents
- ------------
U.S. Patent No. 5,777,478
U.S. Patent Applications
- ------------------------
Application No. 09/109,853, filed July 2, 1998
Foreign Applications
Australia: Application No. 40439/97
Brazil Application based on PCT/US97/12882
China Application No. 97198316.X
European Application No. 97938018.5
Japan Application No. 511643/98
Mexico Application No. 9901952
New Zealand Application No. 334267
Norway Application No. 19990932
Russia Application No. 99106410
S. Korea Application No. 10-1999-7001555
DISTRICT COURT FOR JEFFERSON COUNTY, STATE OF COLORADO
Case No. 99 CV 0435
STIPULATION FOR DISMISSAL WITH PREJUDICE
AMALGAMATED EXPLORATIONS, INC., a Colorado corporation in good standing, and
MSP
TECHNOLOGIES, INC., a Texas corporation authorized to conduct business in
Colorado, Plaintiffs,
V.
JOHN R. JACKSON and ANDRES M. ARISMENDI, JR.
Defendants.
Pursuant to C.R.C.P. 41(a)(1) and in accordance with the Settlement Agreement
dated July 9, 1999 between and among the parties, Plaintiffs, Amalgamated
Explorations, Inc. and MSP Technologies, Inc. and Defendants John R. Jackson
and Andres M. Arismendi, Jr., by and through their respective attorneys,
hereby stipulate to the dismissal with prejudice of all claims asserted in
this action. Each party shall bear its own fees and costs.
Bond & Morris, P.C. KELLER WAHLBERG & MORRATO, P.C.
By: /S/ By: /S/
------------------------------- ----------------------------
Daniel F. Warden, Esq. #13514 James J. Morrato, Esq. #939
303 E. 17th Avenue, Suite #888 1050 171h Street, #1440
Denver, Colorado 80203 Denver, CO 80265-1401
Telephone: (303) 837-9222 Telephone: (303) 571-5302
Attorneys for Plaintiffs Attorneys for Defendants
ESCROW INSTRUCTIONS
September 17, 1999
To: Escrow Document Services
for Lawyers, Inc.
Re: Escrow Account No. 99-120
Gentlemen:
Amalgamated Explorations, Inc. and MSP Technologies, Inc. (collectively,
"First Party") and John R. Jackson ("Jackson") and Andres M, Arismendi, Jr.
("Arismendi"), or, Jackson and Arismendi being (collectively referred to as
"Second Party") hereby requests that Escrow Document Services for Lawyers,
Inc., a Colorado corporation ("EDSL") act as Escrow Agent on the following
Terms and conditions:
INSTRUCTIONS
First Party and Second Party are to deliver the documents identified on
Schedule "A" to EDSL.
EDSL is directed to hold the documents identified on Schedule "A" in escrow
and deliver them in accordance with the instructions on Schedule "B.
GENERAL TERMS AND CONDITIONS
These Escrow Instructions are not binding upon EDSL unless and until they
have been accepted in writing in the space provided for such purpose below.
EDSL is not a party and is not bound by any other agreement which may be
evidenced by outside events, or which arises out of these Escrow
Instructions,
except as specifically set forth herein. EDSL looks solely to these Escrow
Instructions for its duties and responsibilities.
EDSL is to act under these Escrow Instructions as a depositary only and is
not responsible for or liable in any manner whatever for the sufficiency,
correctness, genuineness, or validity of any instrument deposited with it, or
for the form or execution of such instrument, or for the identity, authority,
or rights of any person executing or depositing it.
EDSL acts as a document holding and disbursing agent only. EDSL shall not be
required to file Form 1099's on behalf of the par-ties, and the parties agree
to file all required IRS Form 1099's.
EDSL shall not be required to take notice of any default or to take any
action with respect to such default involving any expense or liability,
unless notice in writing of such default is given to it, and unless it is
indemnified in a manner satisfactory to it against such expense or liability.
EDSL shall be protected in acting upon any written notice, request, waiver,
consent, receipt, or other paper or document signed by the proper party or
parties.
EDSL may seek advice from and employ legal counsel in the event of any
lawsuit, dispute, or question as to the construction of any of the provisions
of these Escrow Instructions, or EDSL's duties under these Escrow
Instructions. EDSL shall incur no liability and shall be fully protected when
it acts in accordance with the opinion and instructions of counsel. The
parties hereto agree to reimburse EDSL its reasonable attorneys' fees if
counsel is so employed.
If there is any disagreement between any of the parties to these Escrow
Instructions, or between them or any of them and any other person, that
results in adverse claims and demands being made on EDSL in connection with
or for any property involved in or affected by these Escrow Instructions,
EDSL shall be entitled, at its option, to refuse to comply with any claims or
demands on it as long as such disagreement shall continue. In so refusing,
EDSL may make no delivery or other disposition of any documents involved in
or
affected by these Escrow Instructions. EDSL shall not be or become liable in
any way or to any person for its failure or refusal to comply with
conflicting or adverse demands.
EDSL shall be entitled to continue so to refrain from acting and so to refuse
to act until (1) the right of adverse claimants shall have been finally
settled by arbitration or adjudicated in a court assuming and having
jurisdiction of the property involved in or affected by these Escrow
Instructions, or (2) all differences shall have been adjusted by agreement,
and (3) after such resolution EDSL has been notified in writing signed by all
interested persons. EDSL shall have a right to file suit in the event
settlement of any dispute appears to be impossible, and, in such event, each
party consents to jurisdiction in the Denver District Court, State of
Colorado and the parties hereto agree to pay reasonable attorneys' fees and
costs incurred. The laws of Colorado shall apply to any questions of
interpretation under these Escrow Instructions.
These Escrow Instructions may be executed in one or more counterparts,
each of which shall be an original, but all of which shall constitute one and
the same instrument.
NOTICES
All notices and other communications to any party shall be sufficiently given
if (i) delivered in person, (ii) sent by certified mail, return receipt
requested, or (iii) sent by courier. All notices shall be effective and shall
be deemed delivered (i) if by personal delivery, on the date of delivery, and
(ii) if by mail or courier, on the first day after mailing or delivery to the
courier. Until a change of address is communicated as indicated above, all
notices shall be addressed as follows:
EDSL: [Items by courier or items requiring signature upon receipt]
Escrow Document Services
c/o Rodney D. Knutson
1625 Broadway Suite 1600
Denver, CO 80202
EDSL: [Routine Mail]
Escrow Document Services
640 S. Garfield Street
Denver, CO 80209
First Party: Second Party:
Amalgamated Explorations, Inc. and John R. Jackson and
MSP Technologies, Inc. Andres M. Arismendi, Jr.
1645 Court Place, Suite 201 c/o Payne, Lundeen,
Denver, Colorado 80202 D'Ambrosio & Arismendi, LLP
Attn: Christian F. Murer 1700 W. Loop South, Suite
1230
Phone: 303-629-5115 Houston, Texas 77027
Facsimile: 303-893-3289 Phone: 713-940-8008
Facsimile: 713-840-8088
with copy to: with copy to:
Daniel F. Warden Alton W. Payne
303 E. 17th Avenue, Suite #888 Payne, Lundeen,
Denver, Colorado 80203-1264 D'Ambrosio & Arismendi, LLP
Phone: 303-837-9222 1700 W. Loop South, Suite
1230
Facsimile: 303-837-0849 Houston, Texas 77027
Phone: 713-840-8008
Facsimile: 713-840-8088
INVESTMENT INSTRUCTIONS
EDSL shall invest funds delivered to EDSL only in accordance with the written
instructions of the parties, if any, to be set out in a separate Amendment to
this Escrow Agreement.
FEES AND DISBURSEMENTS
EDSL shall be entitled to receive the following fees:
Set-up Fee $700
(first two parties)
Set-up Fee $100
(for each additional party)
Amendment Fee $250
Annual Fee $250
Account Fee $100
Transaction Fees $ 25
An additional closing fee of $100/hr will be charged for (1) closings after
normal business hours, (2) closings outside the business offices of EDSL and
its officers or loan closers, or (3) for additional services beyond normal
escrow services, such as courier deliveries or additional services may be
approved by the parties.
A party is one or more persons, associations, or corporation having identical
interests in the escrow. For example, any number of persons who are joint
payees or to whom documents are to be distributed jointly constitute a
"party." If parties are added after the escrow has been set up, the
additional set-up fee will be applicable.
The amendment fee applies to each amendment of the escrow instructions. If
the amendment adds parties, the additional set-up fee will be applicable.
The account fee applies to the opening of a certificate of deposit, money
market fund, or other investment account, or the investment of funds pursuant
to these Escrow Instructions or the instructions of the parties.
A transaction is (1) the deposit in escrow of a document after the escrow has
been set up, and (2) the receipt of funds by EDSL in excess of one receipt
per year, (3) the "roll-over" of funds held in a certificate of deposit,
money market fund, or other investment account or investment, (4) the closing
of a certificate of deposit, money market fund, or other investment account,
(5) the disbursement of funds by EDSL in excess of one disbursement per year
(each check or other instrument being a separate disbursement), (6) the
recording or filing of a document, or (7) the giving of any notice required
or permitted by these Escrow Instructions or an Escrow Agreement.
These fees are subject to reasonable adjustments from time to time
commensurate with (a) the duties and responsibilities per-formed by EDSL, as
they may increase or decrease, (b) changing economic conditions, and (c) the
schedule of compensation established. from time to time by EDSL for the
administration of escrows of similar character. EDSL will not institute any
such adjustments without first giving notice to the appropriate interested
party or parties at least thirty (30) days in advance of the date of the
proposed change.
The parties shall reimburse EDSL for all fees, expenses, and charges incurred
by EDSL -in -connection with the performance of any duty under these Escrow
Instructions, including recording fees, telephone, postage, FAX, or courier
charges, and commissions, fees, and charges incurred by EDSL in investing
funds.
EDSL shall send the bills for fees, expenses and charges as follows:
1/2 First Party, 1/2 Second Party
Regardless of any agreement between the parties, however, First Party and
Second Party shall be jointly and severally liable for EDSL's fees, and EDSL
shall be entitled to collect its fees out of funds held for disbursement.
EDSL shall not be required to deliver any documents held by it until its fees
have been paid.
This instrument shall be binding upon the parties hereto, their heirs,
representatives, successors, and assigns.
Amalgamated Explorations, Inc.
First Party
By: /S/
--------------------------
Name: Christian F. Murer
Title: Chief Executive Officer
Telephone: (303) 629-5115
FAX: (303) 893-3289
Tax I.D. # 86-0551529
MSP Technologies, Inc.
By: /S/
--------------------------
Name: Christian F. Murer
Title: Chief Executive Officer
Telephone: (303) 629-5115
FAX: (303) 893-3299
Tax I.D. # - 0 C;11 7 AT%
Second Party
By: /S/
--------------------------
Name: John R. Jackson
Telephone: (713) 840-8008
FAX: (713) 840-8088
Tax I.D. # ###-##-####
By: /S/
--------------------------
Name: Andres M. Arismendi, Jr.
Telephone: (713) 840-8008
FAX: (713) 840-8088
Tax I.D. # ###-##-####
ACCEPTED FOR ENTRY in the records of Escrow Document Set-vices for Lawyers,
Inc., Denver, Colorado, this 2nd "May of October 1999.
Escrow Document Services for Lawyers, Inc.
By: /S/
--------------------------
Rodney D. Knutson
President
SCHEDULE A T0
ESCROW INSTRUCTIONS
First Party delivers the following document(s) to EDSL
(1) Copy of July 9, 1999, Settlement Agreement to Case Number 99CV0435
filed in Jefferson County, Colorado that explains, generally, the purpose for
the escrow,
(2) Monthly, a copy of a $15,000 cashiers or bank check to Jackson, and a
$5,000 cashiers or bank check to Arismendi, both of which checks shall be
from a U.S. national bank.
(3) A copy of the Motion to Dismiss with Prejudice, Case Number 99 CV
0435, filed in Jefferson County, Colorado, bearing the court's filing date
stamp; and
(4) A copy of the order signed by Jefferson County District Judge James D.
Zimmerman, Division 4, dismissing such case, with prejudice.
Second Party delivers the following document(s) to EDSL
(1) One or more Stock Certificates for common stock of Amalgamated
Explorations, Inc.,
totaling 395,000 shares, endorsed for transfer to
Amalgamated
Explorations, Inc., signatures guaranteed.
(2) The original U.S. Patent 5,777,478.
(3) The Assignment of the following described "Patent" to Amalgamated
Explorations, Inc., duly executed with signatures witnessed by two witnesses.
U.S. Patents
- ------------
U.S. Patent No. 5,777.478
U.S, Patent Applications
Application No. 09/109,853, filed July 2, 1999
Foreign Applications
Including, but not limited to:
Australia: Application No. 40439/97
Brazil Application based on PCT/US97/12882
Canada Application No. 2264190
China Application No. 97199316.X
European Application No. 97938018.5
Japan Application No. 5 11643/98
Mexico Application No. 9901952
New Zealand Application No. 334267
Norway Application No. 1999 0932
Russia Application No. 99016410
S. Korea Application No. 10-1999-7001555
SCHEDULE B
TO
ESCROW INSTRUCTIONS
EDSL is directed to hold the documents identified on Schedule A and deliver
them in accordance with the following instructions
(1) First Party has delivered a $20,000 bank check to Escrow Agent. When
First Party (Amalgamated) signs and returns this Escrow Agreement to Escrow
Agent, this first monthly payment shall be delivered to Second Party promptly
after First Party's attorney completes the review in paragraph (2) below.
(2) Upon receipt of the documents from the Second Party identified in
Schedule A by EDSL, the attorneys for First Party will review the original
documents at the offices of EDSL as to form and sufficiency. No copies of
such documents may be made, obtained or retained by First Party or its
attorneys.
(3) Thereafter, EDSL shall hold the documents identified in Schedule A
delivered to EDSL by the Second Party so long as EDSL receives (i) a copy of
the
$15,000 and $5,000 checks for the respective month from the First Party as
required of the First Party in Schedule A accompanied by a letter from
Amalgamated Explorations, Inc. or its attorney certifying the monthly checks
were transmitted to the Second Party in accordance with the Settlement
Agreement and (ii) a letter from the Second Party certifying that the monthly
checks in question were received and were successfully cashed and not
returned as being insufficient funds. If either of these letters are not
received within sixty (60) days of the date of the check, EDSL shall conclude
the checks were timely sent and duly honored when presented for payment.
Schedule C is the amortization schedule utilized herein, with the payments
due on the 15th of the respective month commencing with payment number 1
corresponding to the payment to be made for August 15, 1999. At any time
during the term of the Escrow Agreement, Amalgamated has the option to pay in
a lump sum the then outstanding principle identified in Schedule C without
having to pay the remaining interest identified in Schedule C. In such an
event, (i) and (ii) would be modified to reflect checks in the amount of 75%
of the outstanding principle made to Jackson and 25% of the outstanding
principle made to Arismendi.
(4) If and when Amalgamated Explorations, Inc. pays the sum of $1,500,000
plus interest as required in the Settlement Agreement pursuant to Schedule C
attached hereto with all the requirements of Instruction 3 above being
satisfied, EDSL shall release the documents the Second Party placed into
escrow to the First Party, and this Escrow Agreement shall terminate.
(5) If and when Amalgamated Explorations, Inc. fails to pay or refuses to pay
the monthly funds or final payments to the Second Party according to Schedule
C, and if Amalgamated Explorations, Inc. admits such failure to EDSL in
writing,
EDSL shall deliver the Stock to Amalgamated Explorations, Inc. and EDSL shall
deliver the Assignment, the Patent and any other documents held by EDSL to
Arismendi for the Second Party, and this Escrow Agreement shall be
terminated.
(6) If and when Amalgamated Explorations, Inc. fails to pay or refuses to pay
the monthly funds or final payments to the Second Party according to Schedule
C, and Amalgamated Explorations, Inc. (i) fails to give such notice to EDSL,
or (ii) fails to certify the funds were paid as required by Instruction 2
above, or (iii) fails to deliver a copy of the checks as required by
Instruction 2 above, or (iv) Second Party advises EDSL in writing that one of
the monthly checks sent to the Second Party is returned for insufficient
funds, then EDSL shall give a ten (10) day written notice to the First and
Second Parties requiring that Amalgamated Explorations, Inc. pay the amount
due within ten days. If payment is not then made and received by the Second
Party within the ten (10) day period, then after such ten (10) day period
EDSL shall deliver the Stock to Amalgamated Explorations, Inc. and EDSL shall
deliver the Assignment, the Patent, and any other documents held by EDSL to
Arismendi for the Second Party, and this Escrow Agreement shall be
terminated.
(Rest of page left blank.)
SCHEDULE C
TO
ESCROW INSTRUCTIONS
Principal Sum $1,500,00.00
interest 5 % per annum
Monthly Payment $20,000.00
Final Payment $2,267.64
Cumulative Cumulative
Month Interest Interest Principal Principal
No. Paid Paid Paid Paid
- ---- ------------ --------- ---------- ---------- ----------
1. $1,500,000.00 $6,250.00 $ 6,250.00 $13,750.00 $ 13,750.00
2 $1,486,250.00 $6,192.71 $ 12,442.71 $13,807.29 $ 27,557.29
3 $1,472,442.71 $6,135.18 $ 18,577.89 $13,864.82 $ 41,422.11
4 $1,458,577.89 $6,077.41 $ 24,655.29 $13,922.59 $ 55,344.71
5 $1,444,655.29 $6,019.40 $ 30,674.69 $13,980.60 $ 69,325.31
6 $1,430,674.69 $5,961.14 $ 36,635.84 $14,038.86 $ 83,364.16
7 $1,416,635.84 $5,902.65 $ 42,538.49 $14,097.35 $ 97,461.51
8 $1,402,538.49 $5,843.91 $ 48,382.40 $14,156.09 $111,617.60
9 $1,388,382.40 $5,784.93 $ 54,167.32 $14,215.07 $125,832.68
10 $1,374,167.32 $5,725.70 $ 59,893.02 $14,274.30 $140,106.98
11 $1,359,891.02 $5,666.22 $ 65,559.24 $14,333.78 $754,440.76
12 $1,345,559.24 $5,606.50 $ 71,165.74 $14,393.50 $168,834.26
13 $1,331,165.74 $5,546.52 $ 76,712.26 $14,453.48 $183,287.74
14 $1,316,712.26 $5,496.30 $ 82,198.56 $14,513.70 $197,801.44
15 $1,302,199.56 $5,425.83 $ 87,624.39 $14,574.17 $212,375.61
16 $1,287,624.39 $5,365.10 $ 92,989.49 $14,634.90 $227,010-51
17 $1,272,989.49 $5,304.12 $ 98,293.61 $14,695.88 $241,706.39
18 $1,258,293.61 $5,242.89 $103,536.50 $14,757.11 $256,463.50
19 $1,243,536.50 $5,181.40 $108,717.91 $14,818.60 $271,282.09
20 $1,228,717.91 $5,119.66 $113,937.56 $14,880.34 $286,162.44
21 $1,213,837.56 $5,057.66 $118,895.22 $14,942.34 $301,104.78
22 $1,198,895.22 $4,995.40 $123,890.62 $15,004.60 $316,109.38
23 $1,183,890.62 $4,932.88 $128,823.49 $15,067.12 $331,176.51
24 $1,168,823.49 $4,870.10 $133,693.59 $15,129.90 $346,306.41
25 $1,153,693.59 $4,807.06 $138,500.65 $15,192.94 $361,499.35
26 $1,138,500.65 $4,743.75 $143,244.40 $15,256.25 $376,755.60
27 $1,123,244.40 $4,680.19 $147,924.59 $15,319.81 $392,075.41
28 $1,107,924.59 $4,616.35 $152,543.94 $15,383.65 $407,459.06
29 $1,092,540.94 $4,552.25 $157,093.19 $15,447.75 $422,906.81
30 $1,077,093.19 $4,487.89 $161,581.08 $15,512.11 $438,418.92
31 $1,061,581.08 $4,423.25 $166,004.34 $15,576.75 $453,995.66
32 $1,046,004.34 $4,358.35 $170,362.69 $15,641.65 $469,637.31
33 $1,030,362.69 $4,293-18 $174,655.87 $15,706.82 $485,344.13
34 $1,014,655.87 $4,227.73 $178,883.60 $15,772.27 $501,116.40
35 $ 998,883.60 $4,162.01 $183,045.61 $15,837.99 $516,954.39
36 $ 983,045.61 $4,096.02 $187,141.64 $15,903.98 $532,858.36
37 $ 967,141.64 $4,029.76 $191,171.39 $15,970.24 $548,828.61
38 $ 951,171.38 $3,963.21 $195,134.61 $16,036.79 $564,865.39
39 $ 935,134.61 $3,896.39 $199,031.00 $16,103.61 $580,969.00
40 $ 929,031.00 $3,829.30 $202,860.30 $16,170.10 $597,139.70
41 $ 902,860.30 $3,761.92 $206,622.22 $16,238.08 $613,377.78
42 $ 886,622.22 $3,694.26 $210,318.47 $16,305.74 $629,683.53
43 $ 870,316.47 $3,626.32 $213,942.79 $16,373.68 $646,057.21
44 $ 853,942.79 $3,558-09 $217,500.89 $16,441.91 $662,499.11
SCHEDULE C (continued)
Cumulative Cumulative
Month Interest Interest Principal Principal
No. Paid Paid Paid Paid
- ---- ------------ --------- ---------- ---------- ----------
45 $ 837,500.89 $3,489.59 $220,990.48 $16,510.41 $ 679,009.52
46 $ 820,990.48 $3,420.79 $224,411.27 $16,579.21 $ 695,588.73
47 $ 804,411.27 $3,351.71 $227,762.98 $16,648.29 $ 712,237.02
48 $ 787,762.98 $3,282.35 $231,045.33 $16,717.65 $ 728,954.67
49 $ 771,045.33 $3,212.69 $234,258.02 $16,787.31 $ 745,741.98
50 $ 754,258.02 $3,142.74 $237,400.75 $16,857.26 $ 762,599.24
51 $ 737,400.76 $3,072.50 $240,473.26 $16,927.50 $ 779,526.74
52 $ 720,473.26 $3,001.97 $243,475.23 $16,998.03 $ 796,524.77
53 $ 703,475.23 $2,931.15 $246,406.38 $17,068.85 $ 813,593.62
54 $ 686,406.38 $2,860.03 $249,266.41 $17,139.97 $ 830,733.59
55 $ 669,266.41 $2,788.61 $252,055.02 $17,211.39 $ 847,944.98
56 $ 653,055.02 $2,716.90 $254,771.91 $17,283.10 $ 865,228.09
57 $ 634,771.91 $2,644.88 $257,416.80 $17,355-12 $ 882,583.20
58 $ 617,416.80 $2,572.57 $259,989.37 $17,427.43 $ 900,010.63
59 $ 599,983.37 $2,499.96 $262,489.32 $17,500.04 $ 917,510.68
60 $ 582,489.32 $2,427.04 $264,916.36 $17,572.96 $ 935,083.64
61 $ 564,916.36 $2,353.82 $267,270.18 $17,646.18 $ 932,729.82
62 $ 547,270.18 $2,280.29 $269,550.47 $17,719.71 $ 970,449.53
63 $ 529,550.47 $2,206.46 $271,756.93 $17,793.54 $ 988,243.07
64 $ 511,756.93 $2,132.32 $273,889.25 $17,867.68 $1,006,110.75
65 $ 493,889.25 $2,057.87 $275,947.12 $17,942.13 $1,024,052.88
66 $ 475,947.12 $1,983.11 $277,930.24 $18,016.89 $1,042,069.76
67 $ 457,930.24 $1,908.04 $279,838.28 $18,091.96 $1,060,161.72
68 $ 439,838.28 $1,832.66 $281,670.94 $18,157.34 $1,078,329.06
69 $ 421,670.94 $1,756.96 $283,427.90 $18,243.04 $1,096,572.10
70 $ 403,427.90 $1,680.95 $285,108.85 $18,319.05 $1,114,891.15
71 $ 385,108.85 $1,604.62 $286,713.47 $18,395.38 $1,113,286.53
72 $ 366,713.47 $1,527.97 $288,241.44 $18,472.03 $1,151,758.56
73 $ 348,241.44 $1,451.01 $289,692.45 $18,548.99 $1,170,305.59
74 $ 329,692.45 $1,373.72 $291,066.17 $18,626.23 $1,188,933.83
75 $ 311,066.17 $1,296.11 $292,362.28 $18,703.89 $1,207,637.72
76 $ 292,362,28 $1,218.18 $293,580.45 $18,781.82 $1,226,419.55
77 $ 273,580.45 $1,139.92 $294,720.37 $18,850.08 $1,245,279.63
78 $ 254,720.37 $1,061.33 $295,781.71 $18,938.67 $1,264,218.29
79 $ 235,781.71 $ 982.42 $296,764.13 $19,017.58 $1,283,235.87
80 $ 216,764.13 $ 903.18 $297,667.32 $19,096.82 $1,302,332.68
8 1 $ 197,667.32 $ 823.61 $298,490.93 $19,176.39 $1,321,509.07
82 $ 178,490.93 $ 743.71 $299,234.64 $19,256.29 $1,340,765.36
83 $ 159,234.64 $ 663.48 $299,898.12 $19,333.52 $1,360,101.88
84 $ 139,898.12, $ 582.91 $300,481.03 $19,417.09 $1,379,518.97
85 $ 120,481.03 $ 502.00 $300,983.03 $19,498.00 $1,399,016.97
86 $ 100,983.03 $ 420.75 $301,403.79 $19,579.24 $1,418,596.21
87 $ 81,403.79 $ 339.18 $301,742.98 $19,660.82 $1,438,257.02
88 $ 61,742.98 $ 257.26 $302,000.24 $19,742.74 $1,457,999.76
89 $ 42,000.24 $ 175.00 $302,175.24 $19,838.00 $1,477,824.76
90 $ 22,175.24 $ 92.40 $302,267.64 $19,907.60 $1,497,732.36
91 $ 2,267.64
LOAN AGREEMENT
This Agreement is made this 15th day of February, 1999 by and between John H.
Resing, Lender's Agent representing Crest Services Ltd. and John H. Resing,
Trustee FBO John H. Resing Retirement Trust (the "Lender") and Amalgamated
Explorations, Inc. (the "Company") for the purpose of setting forth the terms
and conditions upon which the Lender will advance funds to the Company.
NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
I . The Lender agrees to advance up to $450,000 to the Company in accordance
with the form of Promissory Note attached as Exhibit A.
2. Any advances against the Note will be secured by all assets of the Company
pursuant to the form of Security Agreement attached as Exhibit B. A UCC
financing statement pertaining to the Company's personal property will be
filed in Colorado, Wyoming, Nevada and Montana. Mortgages and/or deeds of
trust pertaining to the Company's oil, gas and mining properties will be
filed in such states with the applicable county clerks and recorders.
3. The Company agrees to issue to the Lender a warrant, in the form attached
as Exhibit C, to purchase one share of the Company's common stock for each
two dollars of principal advanced. The warrant will have an initial exercise
price of $0.50 per share and will be exercisable at any time prior to
December 31, 2000.
4. The Company agrees to appoint John H. Resing as Chairman of the Board of
Directors of the Company and MSP Technologies. The compensation of $8,000 per
month payable to Milestone Capital as contemplated in the term sheet for the
$4.5 million equity financing between the Company and Milestone Capital will
be deferred pending the closing of the equity capital financing. Expenses
accumulated to date by Resing and Seed & Berry (approximately $30,000) will
be paid from the first advance against the Note.
5, The Company and MSP waive the conflicts inherent in Resing's role and
transactions in the future contemplated by the term sheet and the corporate
opportunity doctrine applied to any of Resing's business opportunities,
disclosed or undisclosed, that may have arisen prior to February 16, 1999 and
his duty to represent the lenders in this transaction.
The addresses of the parties are:
John H. Resing
P.O. Box 1317
Bellevue, WA 98009
V: (425) 454 7992
F: (425) 454 4073
Crest Services, Ltd.
c/o Jim Franklin
5256 Greenwich Dr. Suite 250
San Diego CA 92122
V: (619) 552 0295
F: (619) 552 0173
AGREED TO AND ACCEPTED
JOHN H. RESING, LENDER'S AGENT
REPRESENTING CREST SERVICE, LTD.
By: /S/
- --------------------------------
JOHN H. RESING
JOHN H. RESING, FBO JOHN H. RESING
RETIREMENT TRUST
By: /S/
- --------------------------------
JOHN H. RESING
AMALGAMATED EXPLORATIONS, INC.
By: /S/
- --------------------------------
CHRISTIAN MURER, PRESIDENT
LETTER FROM AUDITORS
GELFOND HOCHSTADT
PANGBURN & CO.
A Professional Corporation
Certified Public Accountants and Business Consultants
Suite 2500
1600 Broadway
Denver, CO 80202-4925
(303) 831-5000 / Fax: (303) 831-5032
A member of Horwath International
INDEPENDENT AUDITORS' REPORT
Board of Directors
Amalgamated Explorations, Inc.
We have audited the accompanying consolidated balance sheets of Amalgamated
Explorations, Inc. and subsidiaries as of September 30, 1999 and 1998, and
the related consolidated statements of operations, changes in stockholders'
equity (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Amalgamated Explorations, Inc. and subsidiaries as of September 30, 1999
and 1998, and the results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, at September 30, 1999, the Company had a working
capital deficiency of $840,436 and an equity deficit of $514,965.
Additionally, the Company incurred a net loss of $408,394 for the year
ended September 30, 1999 and a net loss of $863,829 for the year ended
September 30, 1998. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
GELFOND HOCHSTADT PANGBURN, P.C.
Denver, CO
January 14, 2000
AMALGAMATED EXPLORATIONS, INC. AND SUBSIDIARIES
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998
CONTENTS
Page
Independent auditors' report F-1
Consolidated financial statements:
Balance sheets F-2
Statements of operations F-3
Statements of shareholders' equity (deficit) F-4
Statements of cash flows F-5
Notes to consolidated financial statements F-6 - F-17
<TABLE>
<CAPTION>
Amalgamated Explorations, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For Years Ended September 30, 1999 and 1999
</CAPTION>
For the years
ended September 30,
-----------------------------
1999 1998
--------- ----------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $(408,394) $(863,829)
Adjustments to reconcile
net loss to net cash
used in operating
activities Depreciation
and amortization 121,194 106,548
Stock issued for services 206,162 -
Gain or loss on sale
of assets 968 -
Change in operating assets and liabilities
Accounts receivable, trade (15,863) (11,137)
Accounts receivable, related parties 5,737 20,359
Accounts payable 12,261 277,832
Drilling advances (64,976) 64,976
Accrued expenses (47,181) 37,167
Other 9,474 89
-------- -------
Total Adjustments 227,776 495,834
-------- -------
NET CASH USED IN OPERATING
ACTIVITIES (180,618) (367,995)
--------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchases of property and equipment (98,561) (182,687)
Addition to Telluric survey technology (75,000) -
NET CASH USED IN INVESTING
ACTIVITIES (173,561) (182,687)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from sale of
common stock and common stock options 55,010 270
Proceeds from long-term debt 313,316 -
Payments on long-term debt (40,427) (3,573)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 327,899 (3,303)
NET (DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS (26,280) (553,985)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 44,884 598,869
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 18,604 $ 44,884
SUPPLEMENTAL SCHEDULE OF
CASH FLOW INFORMATION
Cash paid during the
period for Interest $ 24 $ 6,549
Non-cash investing and
financing activities
Issuance of 240,000 and
60,000 shares of common
stock during the years ended
September 30, 1999 and 1998,
respectively, pursuant
to MSP Technologies, Inc.
acquisition agreement (see Note 2)
<CAPTION>
The accompanying notes are an integral part of these consolidated financial
statements.
</CAPTION>
</TABLE>
<TABLE>
<CAPTION>
Amalgamated Explorations, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 1999 and 1998
</CAPTION>
ASSETS
1999 1998
----------- -----------
<S> <C> <C>
CURRENT ASSET
Cash and cash equivalents $18,604 $44,884
Accounts receivable, trade,
net of allowance for doubtful
accounts of $6,336 and $0,
respectively 15,86 11,137
Accounts and notes receivable,
related parties 5,400 9,474
------ ------
Total Current Assets 39,867 65,496
------ ------
PROPERTY AND EQUIPMENT
Proved oil and gas properties,
successful efforts method 349,181 250,620
Equipment and vehicles 7,139 30,637
Furniture and fixtures 5,785 5,785
362,105 287,042
Less accumulated depletion,
depreciation, and amortization (19,967) (11,474)
------- -------
Net Property and Equipment 342,138 275,568
------- -------
OTHER ASSETS
Telluric survey technology,
net of $296,667 and $191,557
accumulated amortization 1,278,333 1,308,333
--------- ---------
Total Other Assets 1,278,333 1,308,333
========= =========
TOTAL ASSETS $1,660,338 $1,649,396
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Current portion of notes payable $528,315 $3,908
Accounts payable 302,092 289,831
Drilling advances 64,976 -
Accrued expenses 49,897 97,078
-------- -------
Total Current Liabilities 880,303 455,793
======== =======
LONG-TERM LIABILITIES
Notes payable, net of
current portion 1,295,000 61,346
--------- -------
Total Long-term Liabilities 1,295,000 61,346
--------- -------
Total Liabilities 2,175,303 517,139
========= =======
COMMITMENTS
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, par value
$1.50, 2,000,000 shares
authorized, no shares issued
and outstanding Common Stock,
par value $0.0015, 50,000,000
shares authorized, 4,284,795
and 3,910,461 shares issued
and outstanding, respectively 6,428 5,866
Additional paid-in capital 3,691,156 3,430,546
Stock held in escrow (1,500,000) -
Accumulated deficit (2,712,549) (2,304,155)
--------- ---------
Total stockholders' equity (deficit) (514,965) 1,132,257
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $1,660,338 $1,649,396
========= =========
<CAPTION>
The accompanying notes are an integral part of these consolidated financial
statements.
</CAPTION>
</TABLE>
<TABLE>
<CAPTION>
Amalgamated Explorations, Inc. and Subsidiaries
Consolidated Statements of Operations
For the years Ended September 30, 1999 and 1998
</CAPTION>
1999 1998
-------- --------
<S> <C> <C>
REVENUES
Oil and gas sales $52,370 $205,103
Lease and field operations 264,440 -
Telluric services 219,254 260,778
------- -------
Total Revenues 536,064 465,881
------- -------
COSTS AND EXPENSES
Oil and gas production 10,969 46,628
Oil and gas exploration
and dry holes 245,607 623,693
Cost of Telluric services 182,298 137,120
General and administrative 521,769 419,841
Depreciation, depletion
and amortization 121,194 106,548
------- -------
Total Costs and Expenses 1,081,837 1,333,830
--------- ---------
OPERATING LOSS (545,773) (867,949)
OTHER INCOME (EXPENSE)
Interest and other income 182,717 10,669
Interest and other expense (45,338) (6,549)
------- -------
Total Other Income (Expense) 137,379 4,120
------- -------
NET LOSS $(408,394) $(863,829)
======= =======
BASIC AND DILUTED LOSS PER SHARE $(0.10) $(0.22)
======= =======
WEIGHTED AVG. SHARES OUTSTANDING 4,200,248 3,840,598
========= =========
<CAPTION>
The accompanying notes are an integral part of these consolidated financial
statements.
</CAPTION>
</TABLE>
Amalgamated Explorations, Inc. and Subsidiaries
Notes To Consolidated Financial Statements
For the Years Ended September 30,1999 and 1999
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Operations:
On February 12, 1996, the stockholders of Gold Basin Exploration, Inc. ("Gold
Basin") approved a merger with Amalgamated Explorations, Inc.
("Amalgamated").
For financial statement purposes, Gold Basin is considered the acquiring
company, and this transaction has been accounted for as a reverse acquisition
of Amalgamated by Gold Basin as the shareholders of Gold Basin owned 97.8% of
the shares of Amalgamated after the merger. The combined entity retained
Amalgamated's capital structure. Each share of Gold Basin's common stock was
exchanged for one share of Amalgamated's common stock, for a total of
2,347,106 shares. Certain officers and directors of Gold Basin were officers
and directors of Amalgamated at the date of the purchase. The net assets of
Gold Basin continued to be carried in the financial statements at their net
historical value.
Amalgamated Explorations, Inc. (formerly Sue Wong International, Inc.) was
incorporated on May 5, 1986 under the laws of the State of Colorado. The
Company engages in oil and gas exploration and production and Telluric
surveys.
Principles of Consolidation:
The consolidated financial statements include the accounts of Amalgamated,
Gold Basin, and MSP Technologies, Inc. (referred to collectively as the
"Company"). All significant intercompany transactions and accounts have been
eliminated from the consolidated financial statements.
Going Concern, Results of Operations, and Management's Plans:
The Company's financial statements for the year ended September 30, 1999
have been prepared on a going concern basis, which contemplates the
realization of assets and the settlement of liabilities and commitments in
the normal course of business. At September 30, 1999, the Company had a
working capital deficiency of $840,436 and an equity deficit of $514,965.
Additionally, the Company incurred a net loss of $408,394 for the year ended
September 30, 1999 and a net loss of $863,829 for the year ended September
30, 1998. These factors raise substantial doubt about the Company's ability
to continue as a going concern. These financial statements do not include
any adjustments relating to recoverability and classification of assets or
the amounts and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern.
To address its current cash flow concerns, the Company is in discussions
with investment bankers and other potential investors and lenders
attempting to raise funds to support current and future operations.
This includes attempting to raise additional working capital through the
sale of additional capital stock or through the issuance of debt. The
Company cannot provide any assurance that it will be able to enter into any
agreements that would raise additional funds through the issuance of debt or
equity in the Company.
The Company believes that if financing can be completed, adequate funding may
then be available to support operations for the next twelve months. The
Company believes that additional successful drilling operations, field and
lease operations, and the sales of Telluric survey services may provide
additional funds to meet the Company's capital requirements.
Cash and Cash Equivalents:
Cash and cash equivalents include investments that are readily convertible
into cash and have an original maturity of three months or less. All short-
term investments are held to maturity and are reported at cost.
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fair Value of Financial Instruments:
The Company's on-balance sheet financial instruments consist of cash, cash
equivalents, accounts receivable, accounts payable, other accrued liabilities
and notes payable. Except for long-term debt, the carrying amounts of such
financial instruments approximate fair value due to their short maturities.
At September 30, 1999, based on rates available for similar types of debt,
the fair value of long-term debt was not materially different from its
carrying amount. The Company has no material off-balance sheet financial
instruments.
Oil and Gas Properties:
The Company uses the successful efforts method of accounting for oil and gas
producing activities. Costs to acquire mineral interests in oil and gas
properties, to drill and equip exploratory wells that find proved
reservespotential hydrocarbon bearing horizons,and to drill and
equip development wells are capitalized. Costs to drill
exploratory wells that do not find proved reservespotential hydrocarbon
bearing horizons, geological and geophysical costs, and costs of carrying and
retaining unproved properties are expensed.
Unproved oil and gas properties that are individually significant are
periodically assessed for impairment value, and a loss is recognized at the
time of impairment by providing an impairment allowance. Other unproved
properties are amortized based on the Company's experience of successful
drilling and average holding period. Capitalized costs of producing oil and
gas properties, after considering estimated dismantlement and abandonment
costs and estimated salvage values, are depreciated and depleted by the units
of production method. At September 30, 1999, substantially all of the
Company's oil and gas properties were proved properties.
On the sale or retirement of a complete unit of a proved property, the cost
and related accumulated depreciation, depletion and amortization are
eliminated from the property accounts, and the gain or loss is recognized.
On the retirement or sale of a partial unit of proved property, the cost is
charged to accumulated depreciation, depletion, and amortization with a
resulting gain or loss recognized in operations.
Other Property and Equipment:
Other property and equipment is recorded at cost and depreciated over the
estimated useful lives (three to seven years) using the straight-line method.
The cost of normal maintenance and repairs is charged to expense as incurred.
Significant expenditures that increase the life of an asset are capitalized
and depreciated over the estimated useful life of the asset. Upon retirement
or disposition of assets, related gains or losses are reflected in
operations.
Intangible Assets:
Intangible assets, currently consisting of the Company's Telluric survey
technology, are amortized over the estimated 15-year useful life of the
technology (based on the remaining patent life) using the straight-line
method.
Long-lived Assets:
Long-lived assets to be held and used are reviewed for impairment whenever
events or changes in circumstances indicate that the related carrying amount
may not be recoverable. When required, impairment losses on assets to be held
and used are recognized based on the fair value of the asset and long-lived
assets to be disposed of are reported at the lower of carrying amount or fair
value less cost to sell.
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration of Credit Risk:
The Company sells oil and gas production and Telluric surveys to oil and gas
companies and pays vendors for oil and gas services and general and
administrative expenses. The risk of non-payment by the purchasers is
considered minimal and the Company does not obtain collateral for sales to
them. Joint interest receivables and receivables from the sales of Telluric
surveys are subject to collection under the terms of operating agreements and
contracts which provide lien rights, and the Company considers the risk of
loss to be minimal.
The Company is exposed to credit losses in the event of non-performance by
Counter parties to financial instruments, but does not expect any
Counter parties to fail to meet their obligations. The Company generally does
not obtain collateral or other security to support financial instruments
subject to credit risk, but does monitor the credit standing of
counter parties.
Substantially all of the Company's oil and gas sales were to one customer.
Non oil and gas sales to customers in excess of 10% of total revenues for
the years ended September 30, 1999 and 1998 were:
1999 1998
Customer A $133,300 $66,700
Customer B 18,000 59,900
Revenue Recognition:
The Company recognizes oil and gas revenues for its production under the
entitlement method. Telluric service revenues are recognized as earned. Field
and lease operations are recognized as earned under the full accrual method.
Research and Development Costs:
Research and development costs are charged to operations in the period
incurred. Research and development costs approximated $7,200 and $39,500 for
the years ended September 30, 1999 and 1998, respectively.
Stock-Based Compensation:
The Company has adopted Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-Based Compensation." As permitted under SFAS
No. 123, the Company has elected to continue to measure compensation cost
using the intrinsic value based method of accounting prescribed by APB
Opinion
No. 25, "Accounting for Stock Issued to Employees.
Per Share Data:
Per share data is calculated using the weighted average number of common
shares outstanding during each period. Potential common shares are excluded
from the calculation in loss years because they are anti-dilutive.
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates and Significant Risks:
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
significant estimates and assumptions that affect the amounts reported in
these financial statements and accompanying notes. The more significant
areas requiring the use of estimates relate to oil and gas reserves
potential hydrocarbon bearing horizons, fair value of financial instruments,
future cash flows associated with long-lived assets, valuation allowance for
deferred tax assets, and useful lives for depreciation, depletion and
amortization. Actual results could differ from those estimates.
The Company and its operations are subject to numerous risks and
uncertainties. Among these are risks related to the oil and gas business
(including operating risks and hazards and the regulations imposed thereon),
risks and uncertainties related to the volatility of the prices of oil and
gas, uncertainties related to the estimation of reserves potential
hydrocarbon bearing horizons of oil and gas and the value of such reserves
potential hydrocarbon bearing horizons, the effects of competition and
extensive environmental regulation, and many other factors, many of which
are necessarily out of the Company's control. The nature of oil and gas
drilling operations is such that the expenditure of substantial drilling and
completion costs is required well in advance of the receipt of revenues from
the production developed by the operations. Thus, it will require more than
several quarters for the financial success of that strategy to be
demonstrated. Drilling activities are subject to numerous risks, including
the risk that no commercially productive oil or gas reservoirs will be
encountered.
Income Taxes:
Provisions for income taxes are based on taxes payable or refundable for the
current year and deferred taxes on temporary differences between the amount
of taxable income and pretax financial income and between the tax bases of
assets and liabilities and their reported amounts in the financial
statements. Deferred tax assets and liabilities are included in the
financial statements at currently enacted income tax rates applicable to the
period in which the deferred tax assets and liabilities are expected to be
realized or settled as prescribed in SFAS No, 109, "Accounting for Income
Taxes." As changes in tax laws or rates are enacted, deferred tax assets and
liabilities are adjusted through the provision for income taxes.
New Accounting Pronouncements:
During the year ended September 30, 1999, the Company adopted SFAS No. 130,
Reporting Comprehensive Income, which establishes new rule for the reporting
and display of comprehensive income and its components. During 1999 and
1998, the Company did not have any components of comprehensive income to
report.
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities, as
amended by SFAS No. 137, and is effective for fiscal years beginning after
June 15, 2000. Currently, the Company does not participate in hedging
activities; therefore, management believes that SFAS No. 133 will not impact
the Company's financial statements.
Note 2. ACQUISITION OF MSP TECHNOLOGIES, INC.
On November 13, 1996, Amalgamated issued 300,000 shares of its common stock
in exchange for all of the issued and outstanding shares of MSP
Technologies, Inc. ("MSP"), a company specializing in Telluric surveys, a
technology used in detecting hydrocarbons. The acquisition was accounted
for as a purchase. The MSP acquisition agreement required Amalgamated to
issue additional shares of its common stock if the market price of the
Company's common stock price fell below $5.00 per share. On May 27, 1998
and October 5, 1998, an additional 60,000 and 240,000 shares, respectively,
were issued pursuant to this provision of the agreement.
On July 9, 1999, the Company and the former stockholders of MSP signed an
agreement whereby the Company agreed to pay the former MSP stockholders
$1,500,000 in monthly principal payments of $20,000 bearing interest at 5%
annually. In exchange, the Company is to receive the patents to the
Technology. Additionally, the Company is to receive 395,000 shares of the
Company's stock upon payment of the $1,500,000 and will not have to pay any
past or futures royalties for use of the Technology. The shares of stock are
currently being held in escrow, and are to be returned to the Company upon
full payment of the $1,500,000. In the event of default, the patent holder is
entitled to retain all payments under the agreement, retain ownership of the
patents and the 395,000 shares of stock are to be returned to the Company.
Note 3. COMMITMENTS
The Company leases office space under a month-to month rental agreement.
Rent expense was $11,700 and $8,509 for the years ended September 30, 1999
and 1998, respectively. Pursuant to an agreement dated April 6, 1997,
between MSP and an individual who provides electronic assembly services, the
individual is to receive a 10% commission on gross sales related to the
Telluric technology. The commission was payable monthly based on cash
collections during that month. Commission expense was $7,188 and $26,080 for
the years ended September 30, 1999 and 1998, respectively. In conjunction
with the settlement with the former stockholders of MSP, the Company will
not have to pay any past or future commissions for sales related to the
Technology.
Pursuant to a separate License Agreement dated November 11, 1996, between the
licensors (who were original stockholders of MSP) and MSP, all sales to third
parties (including Amalgamated) were to bear an additional 10% royalty.
Royalty expense was $149,658 and $42,000 for the years ended September 30,
1999 and 1998, respectively. As a part of the July 9, 1999 settlement with
the former stockholders of MSP, the Company will not have to pay any past
or future royalties for use of the Telluric technology.
Note 4. NOTES PAYABLE
Notes payable at September 30 consist of the following:
1999 1998
Note payable to an investment company, unsecured,
interest at 10%, interest and principal due
November 2000 $50,000 $50,000
Note payable to an investment company,
Collateralized by substantially all of the
Company's assets, interest at 12%, interest and
principal due December 1999 $280,000 -
Note payable, vendor, unsecured, interest at 8%,
due January 2000 8,315 -
Note payable, related party, unsecured, interest
at 8%, due September 30, 2001 25,000 -
Note payable, bank, collateralized by auto,
interest at 9%, due in monthly installments
of $427 - $18,828
Note payable to the former stockholders of
MSP, unsecured, interest at 5%, due in
$20,000 monthly payments, interest and
remaining principal due January 2005 $1,460,000 -
Total 1,798,315 65,254
Less current portion (528,315) ( 3,908)
Long-term portion $1,295,000 $ 61,346
Interest expense totaled $45,337 and $6,549 for the years ended September 30,
1999 and 1998, respectively. The president of the Company advanced the
Company $25,000 in August 1999. The note is unsecured, bears interest at 8%
and is due September 30, 2001. In January 2000, the Company renegotiated its
$280,000 note payable to an investment company. The Company paid the note
down to $250,000 and extended the term of the note until June 15, 2000. The
lender released its collateral position and waived payment of accrued
interest. In return, the lender received a total of 515,500 warrants to
purchase the Company's common stock at 0.50 per share. Of the total, 15,500
warrants expire December 31, 2000 and the remaining 500,000 warrants expire
December 31, 2001.
Aggregate maturities of long-term debt at September 30, 1999 are as follows:
September 30, 2000 $ 528,315
September 30, 2001 315,000
September 30, 2002 240,000
September 30, 2003 240,000
September 30, 2004 240,000
Thereafter 260,000
Total $1,798,315
Subsequent to year end, the Company converted $22,856 of vendor accounts
payable to a note bearing interest at 12%, and requiring monthly payments of
$1,500 with remaining unpaid interest and principal due July 1, 2000.
Note 5. EQUITY
Preferred Stock:
The Board of Directors is authorized to issue up to 2,000,000 shares of
preferred stock having a par value of $1.50 per share, to establish the
number of shares to be included in each series, and to fix the designation,
rights, preferences and limitations of the shares of each series.
Common Stock:
During 1997, the Company sold shares of its common stock pursuant to a
private placement memorandum. A total of 199,877 units were sold, each unit
consisting of two shares of the Company's common stock and a Class A Warrant
to purchase one share of the Company's common stock at an exercise price of
$5.00. Each Class A Warrant is exercisable for two years, expiring in the
Company's 1999 fiscal year. All of the 199,877 Class A Warrants remain
outstanding at September 30, 1999.
On March 20, 1995, a consulting firm was granted an option by the former
principals of Sue Wong International, Inc. entitling the firm to purchase up
to 244,000 shares of common stock at the option price of $.001 per share
until March 20, 2001. A provision in the option allowed the firm to
purchase an aggregate number of common shares equating to 7.5% of the
outstanding shares of the Company's stock as of the date the options are
exercised. Effective December 1, 1997, the firm exercised 180,000 options
for the purchase of 180,000 shares of the Company's common stock for $180
and all remaining provisions of the option were canceled.
In connection with a loan from an investment company, the Company agreed to
issue warrants to purchase one share of the Company's common stock for each
two dollars of principal (140,000 shares at September 30, 1999) advanced to
the Company. The warrants had an initial exercise price of $0.50 per share
and expire December 31, 2000.
The Company accounts for the issuance of common stock options granted to
consultants in accordance with SFAS No. 123. The estimate of the fair value
of
each stock award at the grant date by using the Black-Scholes option-pricing
model with the following weighted average assumptions, dividend yield of 0%,
expected volatility of 0%, risk free interest rate of 6%, and expected lives
of 3 years for the stock awards. Based on the calculation of compensation to
be recorded using the Black-Scholes option-pricing model, the amount was not
material.Note 5. EQUITY (CONTINUED)
Stock Option Plans:
The Company's board of directors has adopted a Stock Option Plan (the
"Plan"). The Plan is intended for key employees, including officers
and directors who are employees, under which a total of 200,000 shares of
common stock have been reserved for the exercise of the options. The
exercise price shall be equal to 100% of the fair market value of the common
stock at the date of the grant. The exercise price for a person owning more
than 10% of the total combined total voting power of the common stock will
be 110% of the fair market value and must be approved by a majority of the
stockholders. The options are immediately exercisable for a maximum period
of ten years from the date of grant. No options have been granted or are
outstanding under the Plan. The Company's board of directors has also
adopted a Stock Option Plan for Non-Employee Directors and Technical
Advisors (the "Directors' Plan"), under which a total of 300,000 shares of
common stock have been reserved for the exercise of the options. The
exercise price shall be set by a committee consisting of members of the
Board. The options are immediately exercisable for a maximum period
of ten years from the date of grant. No options have been granted or are
outstanding under the Directors Plan.
The Company's board of directors has also adopted a Compensatory Benefit plan
intended for key employees, including officers and directors, under which a
total of 100,000 shares of common stock have been reserved. The purpose of
this plan is to allow certain compensation to be paid in stock in lieu of
cash. All common stock issued pursuant to this plan is to be valued at fair
market value established each day as the average of that day's high and low
bid prices and the high and low ask prices as quoted by N.A.S.D. Regulatory
Systems. No stock has been issued under this plan.
Other Stock Options:
The Company has elected to continue with the accounting treatment for stock
options and warrants issued to employees under APB 25, which is an intrinsic
value-based method, and has adopted SFAS 123, which is a fair-value based
method of accounting for stock options. The Company estimates the fair value
of each stock award at the grant date by using the Black-Scholes option-
pricing model with the following weighted average assumptions, dividend yield
of 0%, expected volatility of 0%, risk free interest rate of 6%, and expected
lives of 3 years for the stock award. If compensation costs had been
determined based on the fair value at the grant date for stock option and
stock warrant grants to employees, consistent with the method in SFAS No.
123, the Company's net loss from continuing operations and net loss per share
from continuing operations would have increased as indicated below for the
year ended December 31, 1999:
Net (loss) from continuing operations,
as reported $ (408,394)
Net (loss) from continuing operations,
pro-forma $ (xxx,xxx)
Net (loss) per share, continuing operations,
basic and diluted, as reported $ (0.10)
Net (loss) per share, continuing operations,
basic and diluted, pro-forma $ (0.xx)
During the year ended September 30, 1999, the Company agreed to issue options
to a stockholder and officer of the Company as follows:
Shares Exercise Price Expiration Date
75,000 $2.50 March 12, 2001
75,000 $3.50 March 12, 2001
100,000 $4.50 March 12, 2001
Additionally in1999, the Company has issued options to a consultant as
follows:
Shares Exercise Price Expiration Date
50,000 $1.00 December 31, 2003
50,000 $1.25 December 31, 2003
50,000 $1.50 December 31, 2003
50,000 $1.75 December 31, 2003
The Company has issued options to another consultant in 1999, all expiring
February 15, 2004, as follows:
Shares Exercise Price Vesting Date
6,250 $1.70 March 15, 2000
6,250 $1.70 March 15, 2001
6,250 $1.70 March 15, 2002
6,250 $1.70 March 15, 2003
During 1999, the Company sold options to two individuals. The first
individual
purchased options for $5,000 for the right to purchase 30,000 shares at $5.00
per share through December 1, 2001. The other individual purchased, for $10,
options to purchase stock as follows:
Shares Exercise Price Expiration Date
25,000 $1.50 February 1, 2000
25,000 $1.75 May 1, 2000
25,000 $2.00 July 1, 2000
25,000 $2.50 September 1, 2000
A summary of the status of the Company's stock options as of September 30,
1998 and 1999, and changes during the years then ended is presented below:
<TABLE>
1998 1999
------------------- ------------------
Weighted Weighted
Average Average
Exercise Exercise
Options Outstanding Shares Price Shares Price
- ------------------- ------ -------- ------ --------
<C> <C> <C> <C>
Beginning of the year 30,000 $8.00 30,000 $8.00
Granted - - 605,000 $2.53
Exercised - - - -
Forfeited - - - -
Options exercisable
at year end 30,000 $8.00 616,250 $2.87
</TABLE>
<TABLE>
<CAPTION>
The following table summarizes information about options outstanding at
September 30, 1999:
</CAPTION>
Options Outstanding Options Exercisable
--------------------------------- ---------------------
Weighted
Average Weighted Weighted
Remaining Average Number Average
Number Contractual Exercise Exercis- Exercise
Outstanding Life Price able Price
----------- ----------- --------- -------- --------
<C> <C> <C> <C> <C> <C>
$1.00 - $1.75 275,000 2.50 $1.45 256,250 $1.33
$2.00 - $2.75 125,000 1.26 $2.40 157,500 $2.40
$3.50 - $4.50 175,000 1.50 $4.07 175,500 $4.07
$5.00 - $8.00 60,000 1.13 $6.50 60,000 $6.50
$1.00 - $8.00 635,000 1.85 $2.84 616,250 $2.79
Note 6. INCOME TAXES
The Company incurred a loss for book and tax purposes for the years ended
September 30, 1999 and 1998. Thus there is no income tax benefit or expense.
Deferred tax assets are comprised of the following as of September 30:
1999 1998
Net operating loss carryforward $550,000 $475,000
Less valuation allowance (550,000) (475,000)
Net deferred tax assets (liabilities) $ -- $ --
At September 30, 1999, for US Federal income tax purposes, the Company had a
net operating loss ("NOL") carryforward of approximately $1,500,000 that
expires in varying amounts in 2011 through 2019.
Note 7.RELATED PARTY TRANSACTIONS
Prior to the merger between Amalgamated and Gold Basin, two officers of Gold
Basin assigned all of their rights to oil and gas leases covering
approximately 2,000 acres of property to Gold Basin.
The accounts receivable from related parties consist primarily of joint
interest billings and other ordinary transactions to directors, officers,
shareholders, employees and affiliated entities for drilling and operating
costs incurred on oil and gas properties in which these related parties
participate with the Company and for other insignificant items. These amounts
will generally be settled in the ordinary course of business, without
interest.
Note 8. SUPPLEMENTARY INFORMATION ON OIL AND GAS OPERATIONS
Certain historical costs and operating information relating to the Company's
oil and gas producing activities for the years ended September 30, 1999 and
1998 are as follows:
1999
1998
Capitalized Costs Relating to Oil and Gas Activities:
Oil and gas properties $ 349,181 $ 250,620
Less accumulated depreciation,
Depletion and amortization (10,500) --
Capitalized costs relating to oil and gas properties $338,681
$70,978250,620
Certain historical costs and operating information relating to the Company's
oil and gas producing activities for the years ended September 30, 1999 and
1998 are as follows:
1999
1998
Capitalized Costs Relating to Oil and Gas Activities:
Proved oil and gas properties $ 296,940 $
197,695
Unproved oil and gas properties & 52,241 & 52,925
Less accumulated depreciation,
Depletion and amortization (10,500) --
Capitalized costs relating to oil and gas properties $338,681 $250,620
Costs Incurred in Oil and Gas Producing Activities:
Property acquisition costs $153,396 $48,721
Oil and gas production costs 10,969 46,628
Exploration, geological and geophysical costs 245,607 623,693
Development costs -- 135,932
Costs incurred in oil and gas producing activities $409,972 $854,974
Results of Operations from Oil and Gas Producing Activities:
Oil and gas sales $ 52,370 $
205,103
Lease and field operations 264,440 --
Oil and gas production costs ( 10,969) (46,628)
Exploration, geological and geophysical costs ( 245,607) (623,693)
Depletion ( 10,500) --
Results of operations from oil and gas
producing activities $( 49,734) $(465,218)
Note 9. ESTIMATED QUANTITIES OF PROVED GAS RESERVES (UNAUDITED)
Set forth below is a summary of the changes in the net quantities of the
Company's proved crude natural gas reserves potential hydrocarbon bearing
horizons estimated by an independent
consulting petroleum engineering firm for the year ended September 30, 1999.
All of the Company's reservespotential hydrocarbon bearing horizons are
located in the continental United States.
Gas
Proved Reserves Potential hydrocarbon bearing horizons
(MMcf)
Reserves Potential hydrocarbon bearing horizons, October 1, 1998
- -
Extensions, discoveries and additions 861.100
Production ( 25.400)
Revisions -
Reserves Potential hydrocarbon bearing horizons, September 30, 1999
835.700
Proved Developed Reserves Potential hydrocarbon bearing horizons
October 1, 1998 -
September 30, 1999 138.000
Standardized Measure of Discounted Future Net Cash Flows and Changes Therein
Relating to Proved Gas Reserves Potential hydrocarbon bearing horizons
(unaudited):
The following summary sets forth the Company's unaudited future net cash
flows relating to proved gas reserves potential hydrocarbon bearing horizons,
based on the standardized measure prescribed in Statement of Financial
Accounting Standards No. 69, for the year ended September 30, 1999:
Future cash in-flows $1,947,000
Future production and development costs
(752,000467,000)
Future production costs
(285,000)
Future income taxes (115,000)
Future net cash flows 1,080,000
Discount at 10% (458,000)
Standardized measure of discounted future
net cash flows, end of year $622,000
Future net cash flows were computed using year-end prices and year-end
statutory income tax rates (adjusted for permanent differences, operating
loss
carry forwards and tax credits) that relate to existing proved gas reserves
potential hydrocarbon bearing horizons in
which the Company has an interest.
The following are the principal sources of changes in the standardized
measure
of discounted future net cash flows for the year ended September 30, 1999:
Standardized measure, beginning of year $ -
Extensions, discoveries and additions 789,000
Sales of oil and gas produced, net of production costs (52,000)
Net change in income taxes (115,000)
Standardized measure, end of year $ 622,000
There are numerous uncertainties inherent in estimating quantities of proved
gas reserves potential hydrocarbon bearing horizons and in projecting the
future rates of production, particularly
as to natural gas, and timing of development expenditures. Such estimates
may
not be realized due to curtailment, shut-in conditions and other factors that
cannot be accurately determined. The above information represents estimates
only and should not be construed as the current market value of the Company's
gas reserves potential hydrocarbon bearing horizons or the costs that would
be incurred to obtain equivalent
reserves potential hydrocarbon bearing horizons.
</TABLE>
SUBSIDIARIES OF AMALGAMATED EXPLORATIONS, INC.
MSP TECHNOLOGIES, INC.
1. MSP Technologies was formed in the summer of 1996. The name is short for
"Micro Self Potential", a gradient surface survey, patented in the 1980's.
MSP is a geophysical Company that carries on research and development, field
surveys, and prospect analysis based on the Electrotelluric survey developed
by John Jackson.
The survey measures discontinuities associated with hydrocarbons, in the
vertical components of the Earth's magnetic fields (a direct detection tool).
These discontinuities exhibit a signature in the transient pulses associated
with these fields. A fundamentally new approach was sought, and perfected, in
order to measure this phenomenon. The survey detects the presence or absence
of hydrocarbons at depth, and has proven to be extremely accurate at doing
so. In 1996 MSP was granted an exclusive worldwide license.
The main focus of the research and development program began in 1997 to
digitize the system, and write software to automatically calibrate the
instrument, thus eliminating operator error in the set-up. Amalgamated
acquired the proprietary rights to this patented instrument known as the
Electrotelluric Survey (ETS) in 1996.
Y2K COMPLIANCE
The Company does not anticipate any problem with the transaction into the
year 2000 The Company currently has one Standard IBM compatible computer
using Microsoft Windows as its operating platform that is being used for
general office purposes. The maker of the computer has assured the Company
that the computer will not shut down and if it does will be repairable
without any loss of data or significant impact on the day to day business of
the company. Furthermore, the Company is not networked with any other
computer systems, however, the Company plans to back up all of its data just
in case. Therefore, the risk factor to Amalgamated is in our opinion very
low.
POWER OF ATTORNEY
Amalgamated Explorations, Inc., by Mr. Christian F. Murer, President and CEO,
herein appoints IPO Consultants, Inc. 6265 Greenwich Drive, Suite 250, San
Diego, California 92122 as the Company agent (attorney in fact) to act for
the Company in any lawful way with respect to the following matter:
To prepare and file a Form 10 et. al. and related securities documents with
the U. S. Securities Exchange Commission for and on behalf of the Company.
This authority shall be effective for the calendar year of 1999.
The Company agrees that any third party who receives a copy of this document
may act under it. Revocation of this power of attorney is not effective as
to a third party until the third party has actual knowledge of the
revocation. The Company agrees to indemnify the third party for any claims
that arise against the third party because of reliance on this power of
attorney.
Signed the 27th day of October 1999.
Amalgamated Explorations, Inc.
Christian F. Murer, President and CEO
BY ACCEPTING OR ACTING UNDER THE APPOINTMENT OF THIS POWER OF ATTORNEY, THE
AGENT ASSUMES THE FIDUARCY AND OTHER LEGAL RESPONSIBILITIES OF AN AGENT
THERETO.
NOTARY PUBLIC
Mr. Christian F. Murer, did this date personally appear before me and affix
his
signature hereto.
/S/ Maxine J. Jensen 10-27-99
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Notary Public Date
My Commission Expires 03/18/2003
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My commission expires
