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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS
ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
AVE, Inc.
(Name of Small Business Issuer in its charter)
Nevada 13-3389415
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
45 Breamore Court
Castle Rock, CO 80104
(Address of principal executive offices) (Zip Code)
(303) 663-3927
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Common Stock, $0.001 par value OTC
Securities to be registered under Section 12(g) of the Act:
None
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AVE, Incorporated
PART I
Item 1 - Description of Business
Business
- - --------
Certain matters discussed in this Form may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Reform Act") and as such may involve risks and uncertainties. These forward-
looking statements relate to, among other things, expectations of the business
environment in which the Company operates, projections of future performance,
perceived opportunities in the market and statements regarding the Company's
goals, the Company's actual results, performance, or achievements expressed or
implied in such forward-looking statements.
The Company
- - -----------
AVE, Incorporated was incorporated in 1921 under the name Deluxe Onyx Company.
In 1987, the Company's name was changed to Walsh communications Group, Inc. and
the Company's domicile was changed to Nevada. On January 5, 1990, the Board of
Directors authorized the name of the Company be changed and on May 4, 1990,
amended Articles of Incorporation were filed changing the Company's name to AVE,
Inc. The Company's initial principal business was the production of motion
pictures. The Company was inactive from 1990 until April, 1997 when activity
began to seek to acquire assets of, or interest in, a small to medium size
company or venture actively engaged in a business generating revenues or having
immediate prospects of generating revenues. Digital Manufacturing Inc. (DMI), a
Texas company located in Fort Worth was acquired in a reverse merger on December
28, 1997. The Company's fiscal year end is December 31.
AVE, Inc.'s offices are located at 45 Breamore Court, Castle Rock, Colorado
80104.
In November 1996 DMI/AVE approached NASA's Technology Transfer group and
discussed the possibility of licensing antenna technology. NASA had a flat-
plane, high-gain, phased-array antenna that, while not having been originally
designed for the home satellite frequency spectrum, could be re-engineered to
operate in that frequency range. The antenna appears to offer advantages to
those presently in use by consumers who receive their television signal from
direct broadcast satellites. Further it appears to have significant and similar
advantages in a number of other applications in other bandwidths.
The Company entered into an agreement with NASA to complete design of a
prototype antenna. In the course of this development work, NASA determined that
significant mathematical errors existed in the patent and a substantial effort
would be required to "re-engineer" the antenna. In view of the time required to
"re-invent" the antenna, the Company decided to pursue another core business
strategy. Consistent with this decision, on February 22, 1999, the Company
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entered a letter of intent with Zenith Technology, Inc. (a wholly owned
subsidiary of Prime Companies, inc.) to sell to the same, all rights to the NASA
patent and license agreement.
No later than July 31, 1999 AVE, Inc., having divested itself of its antenna
license rights and seeking a new core business, acquired CYCO.NET, Inc. of
Albuquerque, New Mexico in a reverse merger transaction. Under the terms of the
agreement AVE, Inc. will change its name to CYCO.NET, Inc. R. Gene Klawetter,
formerly Chairman and CEO of AVE, Inc. will become a director of CYCO.NET, Inc.,
George Sullivan, formerly Vice President of Operations has resigned as has Henri
Hornby, former Director of AVE, Inc.
In early August, 1999, amended Articles of Incorporation will be filed with the
Secretary of State of Nevada to change the name of the Company from AVE, Inc. to
CYCO.NET, Inc. Concurrently, a request will be submitted to NASD to change AVE's
listing symbol from AVEN to CYCO.
CYCO.NET, Inc.'s executive offices are located at 600 Central Avenue SW, 3rd
Floor, Albuquerque, New Mexico and its telephone number is (505) 244-0088 and
fax is (505) 244-0089.
Core Business
CYCO.NET, Inc. (hereafter the "Company") was established in December 1998 to
develop a network of web based companies. These companies are centered around a
central site called cyco.net (www.cyco.net). This site is a lighthearted
destination that presents the Internet to individuals through quick wit,
interesting links and other standard Internet offerings (i.e. stock quotes,
horoscopes, etc.). The goal of this site is to provide the Internet surfer with
a destination that will be a starting point for their daily excursions into the
World Wide Web. It is intended to put the most interesting of the millions of
sites on the web at site visitors' fingertips. The focus is to provide a virtual
atmosphere of sophistication, intelligence and cunning.
The site is currently formatted as a bi-weekly with expansion to a daily
magazine or e-zine. Content will consist of interviews, short comical lists and
topical stories that may be about upcoming movies, albums, artists, events, fun
places to visit and things to do. Much like current fashion and lifestyle
magazines such as Esquire, Maxim, Cosmopolitan or Redbook. The site will have
two separate areas for men and women with combined areas for food, travel,
shopping, horoscopes etc.
This site will focus on maximizing the number of hits or visitors a day. The
Internet is a virtual world that is expanding everyday. This virtual world has
citizens that represent every facet of the real world. By attracting all of
these virtual citizens to the CYCO.NET, they immediately become real customers
for a plethora of products and services provided by CYCO.NET owned companies,
affiliates and or advertisers.
As more and more customers visit the CYCO.NET, the Company will position itself
to take advantage of the audience that the CYCO.NET is attracting. This will be
accomplished by building e-businesses which will sell products and services to
the CYCO.NET visitors.
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Along with the e-businesses taking advantage of the traffic on the CYCO.NET
site, the Company has also affiliated itself with several larger e-commerce
sites including Amazon.com, Lobster.net and Digitalchef.com who will pay the
CYCO.NET a percentage of sales derived from a CYCO.NET visitor.
The Company sees an advantage in targeting the Tobacco and Spirits companies as
its major advertisers. Additionally CYCO.NET, Inc. believes that the absence of
fees or registration requirement, it can eliminate barriers to view the pages of
its site. Without barriers, there is no inhibitor to "check it out" and the
number of visitors to the CYCO.NET will multiply. Many users have a reluctance
to provide personal information over the Internet. With regards to the Tobacco
and Spirits companies, CYCO.NET, Inc. feels these advertisers do not need to
know the demographics of their audience. The advertisers need only know that
they are hitting millions of viewers, and the fact that they are on a computer
says that they have some financial means. This means of advertising will appeal
to a large segment of consumers just like their products. These advertisers are
slowly losing their current mediums of advertising, including billboards and
major sports. Their only current medium is print ads. The Company feels that
this target advertising group has been overlooked and are, for one reason or
another, not heavily pursued by current major Internet operators who are leaving
billions of dollars worth of advertising on the table.
Industry Analysis
The Internet is a virtual world. In this world a complete society exists. People
work, play, learn, communicate and shop all at the touch of a button from their
home or office. The Internet gives almost unfettered access to communication,
information and products to the user. At the same time giving advertisers almost
unlimited access to the consumer. The Internet has become an open market where
anyone can find just about anything they want.
Explosive Growth
The Internet is the fastest growing medium of communication in History. It has
only taken 5 years to reach 50 million U.S. users, while Cable required 10
years, m took 13 years and radio needed 38 years. By the end of 1998 the
Internet had attracted 63 million US viewers, and is expected to have 149
million US viewers by the year 2002. At the same time World Wide Web users are
expected to grow from 142 million in 1998 to 399 million by 2002.
Lost Time
The Internet is so popular that it is taking viewing time from other mediums of
communication. It is reported that 78% of viewers are taking time from TV, 17%
from magazines, and 12 % from newspapers to be on the Internet.
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Frenzied Spending
Along with the record growth in users, the amount of money being spent on the
Internet is growing just as fast. In the US alone web users are spending $37
billion a year, and are expected to spend $407 billion by the end of the year
2002. World Wide Web users spent $50 billion by the end of 1998 and are expected
to spend $734 Billion by the year 2002.
E-Commerce
As stated before, the Internet is like an open-air market where anyone can set
up a booth and trade their wares. People from all over the world open booths
(web sites) and sell everything from photographs to cars. Any product a consumer
wants to buy can be found on the Internet. Often people can find things that
they cannot find in their own city. Any person who has a simple Internet account
with an Internet Service Provider (ISP) has the ability to start a site and sell
what ever they have or participate in a new phenomenon called the internet
auction.
Advertising
Like all other mediums of communication, a major source of revenues is
advertising. But the Internet is different from all other means of
communication. The difference is in the way people experience the Internet. In
this medium of communication, the viewer is actively involved in what is being
presented. They are constantly making involved choices as to what they are
seeing. They are not just passively accepting information as they do when
watching TV or reading the newspaper. This highly attentive state creates an
interaction that builds brand value even as it drives consumer action. Unlike
other mediums of communication, the Internet, as a whole, is experiencing a
growth spurt in advertising revenues. Between 1996 and 1997, ad spending on the
Internet rose from $220.5 million to $544.8 million. This represents an increase
of 147.1%. The second largest growth in advertising revenues was seen in the
outdoor arena with only a 32% increase. That is a difference of 115%. No other
advertising medium is even close to this type of growth in revenues.
CYCO.NET, Inc. is a developmental stage company having one full-time employee
and two part-time employees who will become full time employees once the Company
is funded and operational. The Company has a beta web site in operation
(www.cyco.net) with expectations of expanding the site and making it fully
operational when funding is secured. Further CYCO.NET outsources accounting and
legal support and will do so until cost considerations make it reasonable to
bring either or both in house.
There is no effect of existing or probable governmental regulation anticipated
which could materially affect the Company or the business.
There are no anticipated costs or effects associated with any federal, state or
local environmental laws.
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The Company is not at present required to deliver an annual report to security
holders however it is CYCO.NET's intent to become a full-reporting company no
later than September 1, 1999 and, therefore, to produce an annual report after
filing the 1999 10K-SB.
AVE, Inc. (now CYCO.NET, Inc.) filed a 15c2-11 and commenced actively trading
shares on the OTC Electronic Bulletin Board effective October 27, 1998.
Item 2 - Management's Discussion and Analysis or Plan of Operation
Financial Condition
- - -------------------
AVE, Inc. was dormant up to April of 1997 and for all intents and purposes
activity relating to the Company for the balance of the year was connected to
acquiring a business which was accomplished on December 28, 1997. The pre-merger
Company has been in a developmental stage since the beginning of 1997. The
accumulated deficit includes $33,630 from the developmental stage in the
cumulative total of $1,042,176. The net operating loss carry-forward is
approximately $1,000,000 which will expire through year 2008. New management
anticipates the balance of 1999 will be devoted to completion of the web site
and launch of marketing and advertising campaigns. As a result the Company will
continue to be in a developmental mode but this is expected to change materially
commencing in late 1999 the web site becomes fully active and
advertising/marketing effects begin to accelerate hits.
The following is a pro forma for the CYCO.NET business assuming an average ad
rate of $20 per thousand impressions which is standard for the general internet
without key word or specific demographics.
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3 Year 4 Year 5
<S> <C> <C> <C> <C> <C>
Page Views
per Month (000,000) 100 200 300 400 450
Advertising $
per Month (000,000) 2.0 4.0 6.0 8.0 9.0
Advertising $
Per Year (000,000) 24.0 48.0 72.0 96.0 108.0
</TABLE>
While the Company believes this will come to pass there can be no assurances it
will happen as planned.
Notes to the Consolidated Financial Statements contained at the end of this
document stock transactions which have occurred since the Company became active
in 1997. Additionally the attached balance sheets show an increase in assets
from $8,651 in 1997 to $33,991 at year end 1998.
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Liquidity and Capital Resources
- - -------------------------------
Cash on-hand on December 31, 1998 was $18,665 and was nominal in view of the
Company's not-yet-executed plan to raise funds for development and
advertising/marketing. Late in 1997 4,000,000 shares of stock were issued to Mr.
Thomas A. Athans (President of DMI) as a result of the reverse merger of DMI
into AVE, Inc. This stock was subsequently repurchased by the Company founder,
Henri Hornby and the remaining 60,000 shares were subscribed for by two separate
parties as a part of the Athans/Hornby transaction. One million nine hundred and
forty thousand of the shares were returned to the Company treasury and 2M were
issued to Mr. Hornby.
Inflation
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The Company believes that inflation affects the Company's business to no greater
or lesser extent than the general economy.
Item 3 - Description of Property.
The Company, as of August 1, 1999, will operate from an office at 600 Central
Avenue SW, 3rd floor, Albuquerque, New Mexico. It is anticipated that this
office will be adequate for the first year of operations.
Item 4 - Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the names of persons who own of record, or were
known by the Company to own beneficially, more than 5 percent of its issued and
outstanding common stock, and the beneficial ownership of stock as of July 31,
1999 date by officers and directors of the Company and all officers and
directors as a group. Except as otherwise noted, each person listed below is the
sole beneficial owner of the shares and has sole investment and voting power of
such shares. No person listed below has any option, warrant or other rights to
acquire additional securities of the Company, except as may be otherwise noted.
<TABLE>
<CAPTION>
Title of Name and Address Common Stock Percent
Class of Beneficial Owners Beneficially Owned of Class
<C> <S> <C> <C>
Common Stock, Richard Urrea 2,549,302 13.2
$0.001 600 Alcalde SW #4D
Par Albuquerque, NM 87104
Common Stock, Matthew Urrea 2,546,302 13.2
$0.001 2213 Matthew NW
Par Albuquerque, NM 87110
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Common Stock, Daniel Urrea 2,546,302 13.2
$0.001 3009 Charleston NE
Par Albuquerque, NM 87110
Common Stock, Nunzio P. De Santis 2,549,302 13.2
$0.001 600 Central Ave. SW, 3rd Floor
Par Albuquerque, NM 87102
Common Stock, Francisco Urrea Jr. 2,230,640 11.5
$0.001 3009 Charleston NE
Par Albuquerque, NM 87110
Common Stock, Brent Wolford 2,124,419 11.0
$0.001 2601 Silver Avenue SE #8
Par Albuquerque, NM 87106
Common Stock, Henri Hornby 1,082,540 5.6
$0.001 3653 Hemlock Court
Par Reno, NV 89509
</TABLE>
Item 5 - Directors, Executive Officers, Promoters and Control Persons.
The present directors and executive officer of the Company, their age, positions
held in the Company and duration as such, are listed below. Each director will
serve until the first annual meeting of shareholders, or until his or her
respective successor has been elected and duly qualified. Directors serve one-
year terms. Officers hold office at the pleasure of the Board of Directors,
absent any employment agreement.
Name Age Position Held and Tenure
Richard Urrea 35 President/CEO
(since January 1, 1999)
Daniel Urrea 28 Chief Financial Officer
(since January 1, 1999)
Brent Woford 23 Chief Technical Officer
(since January 1, 1999)
Matthew Urrea 32 Chief Council
(since January 1, 1999)
Francisco Urrea, Jr. 67 Director
(since January 1, 1999)
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R. Gene Klawetter 61 Director
(since July 31, 1999)
The following is a brief account of the business experience during at least the
past five years of each director and executive officer, indicating the principal
occupation and employment during that period, and the name and principal
business of the organization in which such occupation and employment were
carried out.
Richard Urrea
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Mr. Urrea's has been president of Sycom International, Inc. since 1997. Sycom is
a data communications company. Mr. Urrea led the company from start up through
national marketing plan and implementation of manufacturing plan. The company
currently manufactures its products and markets them throughout the U.S and is
in the process expanding into foreign markets. From 1996 to 1997 Mr. Urrea was
President of Klaire International Ltd., an export company distributing
automotive parts in Mexico. From 1995-1996 Mr. Urrea served as the managing
member of Toltec Fruit, L.C. a limited liability company involved in the
importation of fruit into the United States from Mexico and South America. From
1993 to 1995 Mr. Urrea worked on the development and marketing plan for Septima
Enterprises Inc. From 1991 to 1993, Mr. Urrea managed the Albuquerque Office of
White Discount Securities. In 1990, Mr. Urrea was contract administrator for
Foresight, Inc., an Albuquerque, laser-optics, government contractor. In 1989,
Mr. Urrea served as marketing director for HDI System, Inc. where he devised and
implemented an international marketing plan for an ignition system for marine
application. In 1985 and 1986, Mr. Urrea owned and operated Shannon Euro
Motorcars, a European automobile importing and maintenance company. Mr. Urrea
sold the business in 1986 to attend Baylor University. Mr. Urrea received his
Bachelor of Business Administration in Marketing and Business Broadcasting from
Baylor University's Hankammer School of Business in 1989.
Francisco Urrea, Jr.
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Mr. Urrea has founded numerous public companies including Diagnostek, Inc., a
prescription benefits management and hospital pharmacy management company (New
York Stock Exchange), Nuclear Pharmacy Incorporated, a centralized
radiopharmacuetical company servicing several hundred hospitals throughout the
United States (NASDAQ), Summa Medical Corporation, a research and development
company (American Stock Exchange), Septima Enterprises, Inc., a company that has
developed a high voltage automotive ignition system (NASDAQ Bulletin Board) and
Advanced Optics Electronics, Inc., a company developing a high-intensity, flat-
panel display (NASDAQ Bulletin Board). Mr. Urrea served as Chairman of the Board
of Directors of Nuclear Pharmacy Incorporated from 1974 until 1982. Mr. Urrea
served as Chairman of the Board of Summa Medical Corporation from 1978 until
1990, as president from 1978 through April 1982 and as president again from
October 1986 through February 1990. Mr. Urrea served as Chairman of the Board of
Directors of Diagnostek from 1983 through 1985. Mr. Urrea also was a director of
Septima Enterprises and served as president from 1988 through 1992. Mr. Urrea
has served as Vice Chairman of the New Mexico State
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Investment Council, Chairman of the New Mexico Game and Fish Department,
Commissioner of the New Mexico State Racing Commission, Member of the New Mexico
Industrial Development Commission, Member of the New Mexico Foreign Trade and
Investment Council, and Member of the United States Department of Commerce's
Biotechnology Advisory Committee. Mr. Urrea graduated from Saint Mary's
Highschool in 1949 after which he served two years in the United States Navy
during the Korean War. He is currently Chairman of the Board of Directors of
Klaire International, Ltd., a company holding the exclusive distribution rights
in Mexico for a patented automotive ignition product developed in the United
States by Septima Enterprises, Inc.
Daniel Urrea
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Mr. Urrea has been associated with the CYCO.NET since inception in December of
1998. Prior to his involvement with the CYCO.NET, Mr. Urrea worked with Sycom
International, manufacturer and distributor of Radio Telemetry Units. During
that time Mr. Urrea was responsible for the maintenance of the accounting
records for the company, and was instrumental in the development of the
company's business plan. Before this, Mr. Urrea worked for Klaire International,
an exporter of automotive accessories to Mexico, in the same capacity. From
January 1996 thorough August of 1996 Mr. Urrea worked with Equinox
International. An international marketing and distribution company, where he was
involved in sales and talent recruiting activities. In the Spring of 1995, Mr.
Urrea received a Bachelors in Business Administration with a concentration in
Finance from the Anderson Schools of Management at the University of New Mexico.
Mr. Urrea has also spent several months out of the country where he studied
business and other cultures.
Brent Wolford
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Mr. Wolford has been involved in CYCO.NET since inception, and is in charge of
Web page design and maintenance. Mr. Wolford will graduate from the University
of New Mexico with a Major in Computer Science, and a Minor in Business
Management in May of 1999. He is literate in all major operating systems
including DOS 6.2, Macintosh OS8, UN*X, and Windows 95/98/NT, and has extensive
experience with several applications including Microsoft Office + Frontpage,
Adobe Photoshop + Pagemaker, Alias Wavefront, Bryce 3D and many more. Before
becoming involved with CYCO.NET, Mr. Wolford built and continues to maintain
several Web Sites including the Dartmouth Street Gallery (http://www.dsg-
art.com), Mortgage Internet Technologies (http://www.vlender.com), and Digital
Skunk Bud Productions (http://www.dsbp.cx).
Matthew Urrea
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Mr. Urrea is a tax lawyer with a private law practice in Albuquerque. He
received his Master of Laws in Taxation from New York University School of Law
(May 1993), his Juris Doctor from the University of New Mexico School of Law
(May 1992), and his Bachelors of Business Administration in Finance from the
University of New Mexico's Anderson School of Management (May 1989). From 1993
until April 1996, Mr. Urrea was an associate with the law firm of Miller,
Stratvert, Torgerson & Schlenker, P.A. in Albuquerque, New Mexico where he
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practiced primarily in the area of taxation, including individual, estate and
business tax planning, business entity formation, mergers, sales, acquisitions
and reorganizations of business entities, international tax planning, and like-
kind exchanges. Mr. Urrea has lectured before professional and civic groups on
various tax subjects and is a member of the New Mexico, American, and
Albuquerque Bar Associations.
R. Gene Klawetter
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Mr. Klawetter brings a decade of professional wireless communications experience
and growth to AVE. He was previously Chairman, President and CEO of American
Digital Communications, a company involved in building out 105 channels of 220
MHz spectrum for low-cost analog dispatch applications. Mr. Klawetter
successfully sold the systems to a larger provider and guided the company to a
merger with TrackPower International of Toronto, Canada. The company
subsequently moved its headquarters to Toronto. Prior to ADC he was President
and CEO of Millicom Radio Telephone Company, Inc., a 900 MHz provider in 5
states. Mr. Klawetter has extensive experience in working with the FCC in the
areas of licensing and legal interface. He has successfully negotiated
contracts, management agreements, option, lease and purchase agreements which
gave him the administrative expertise necessary to manage the ADC operation and
his experience with high tech communications systems will be of substantial
benefit to AVE. Subsequent to the decision of Millicom's parent company to exit
the SMR industry, Mr. Klawetter successfully liquidated approximately $5
million in assets on behalf of Millicom. Mr. Klawetter's extensive experience in
the computer, communications and information systems environment has given him
the executive skills necessary to successfully implement the strategies of AVE.
Mr. Klawetter is formerly the President and Chief Operating Officer of Pinetree
Computer Systems, a company he helped take public in 1984 (OTC) and was National
Sales Manager of NBI, Inc., of Boulder, Colorado. Mr. Klawetter attended Blinn
College in Brenham, Texas, TCU, Fort Worth, Texas and Pace University, New York.
Graduate-level studies included historical case study analysis at Exeter Academy
in New Hampshire taught by Harvard Business School. This program was sponsored
by Xerox Corp.
Former Officers and Directors
- - -----------------------------
Tom Athans
- - ----------
Mr. Athans served as a Director and President of the Company from December 28,
1997 to June 1, 1998. Mr. Athans resigned from both positions effective June 1,
1998 to pursue other business interests.
Henri Hornby
- - ------------
Mr. Hornby was first elected a Director of the Company in June of 1995. Since
November, 1989 Mr. Hornby has been engaged in private asset management.
Additionally, from May, 1994 to present he has been an Officer and Director for
Wincanton Corporation, a company which, through its subsidiary Trademan
Industries, is involved in development of specialty motor
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vehicles. Mr. Hornby has also been a Director for Adven, Inc., whose business is
oil clean-up products. Mr. Hornby resigned as Director of AVE, Inc. effective
July 31, 1999.
George Sullivan
- - ---------------
Mr. Sullivan served the Company as Vice President of Operations from January,
1998 and resigned as a part of the reverse merger agreement with CYCO.NET, Inc.
Dan Smith
- - ---------
Mr. Smith served the Company as Chief Financial Officer from January, 1998 until
April, 1998 at which time he resigned to pursue other opportunities.
Executive Compensation
- - ----------------------
The following table sets forth information regarding compensation authorized for
the Company's Chief Executive Officer and such compensation as has been
authorized board members since December 28, 1997. The CEO's total annual salary
does not exceed $100,000 nor does that of any other board member.
<TABLE>
<CAPTION>
Securities
Name and Year Salary Bonus Other Annual Underlying All Other
Principal ($)(1) ($)(2) Compensation Options Compensation
Position ($)(3) ($) ($)(4)
<S> <C> <C> <C> <C> <C> <C>
Richard Urrea, 1999 $3,333 - - - -
President/CEO
Daniel Urrea, 1999 $2,500 - - - -
CFO
Brent Wolford, 1999 $1,000 - - - -
CTO
Matthew Urrea, 1999 - - - - -
Chief Counsel
Francisco Urrea, 1999 - - - - -
Jr., Director
R. Gene 1999 - - - - (5)
Klawetter,
Director
</TABLE>
(1) Monthly salary shown. Salaries have not been accrued. Salaries will
commence June 1, 1999. Prior to June 1, 1999 the officers have received no
compensation. Mr. Klawetter
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was previously president of AVE, Inc. and from
January 1, 1999 to June 1, 1999 received compensation in the amount of
$5,000 per month.
(2) No bonuses have been paid to date. No bonuses are expected to be paid in
1999.
(3) Certain of the Company's executive officers may receive personal benefits
in addition to salary and other cash bonuses. The aggregate amount of the
personal benefits, however, will not exceed the lesser of $10,000 or 10% of
the total of the annual salary and bonus reported for the named officers.
(4) 1,500,000 shares of stock were awarded to Mr. Klawetter and 250,000 shares
were awarded to Mr. George Sullivan as previous officers and founders of
the Company on January 12, 1998. Said shares will be reversed to 607,287
and 101,215 as a result of the merger of AVE, Inc. and CYCO.NET, Inc. Sale
of the shares are restricted to 20% of the respective post split holdings
for one year from the effective date of the merger.
(5) CYCO.NET, Inc. has agreed to a term as Director for a period of one year
and to re-imburse Mr. Klawetter $500 per Board meeting plus expenses.
<TABLE>
<CAPTION>
Options Granted Since December 28, 1997
Individual Grants
Number of % of Total Options
Name and Securities Granted to Exercise or Base
Principal Underlying Employees in Price ($/Share) Expiration Date
Position Options Granted Fiscal Year
(Note 1)
<S> <C> <C> <C>
R. Gene 400,000 $0.10 Jan 2003
Klawetter, CEO,
Chairman
George Sullivan, 200,000 $0.10 Jan 2003
VP, Operations,
Corp. Secretary
</TABLE>
Note 1. Number of options shown are pre-merger.
No options have been exercised since December 28, 1997 and the number of
securities underlying unexercised options is the same as that shown in the above
table. Under the agreement reached in the merger of AVE, Inc. and CYCO.NET,
Inc., and pursuant to an agreement with the Company as detailed in Board minutes
dated January 12, 1999, the Company will purchase the above number of options
for $0.10 per option within 48 hours after receiving proceeds from the
anticipated 504 Reg D funding described later in this document (See Item 8).
The company has no stock appreciation rights (SAR) plan in place and has not
awarded SAR's to any person. The Company has no long-term incentive plans, as
that term is defined in the rules and regulations of the Securities and Exchange
Commission.
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The Company does not have an Incentive Stock Option Plan though it is
anticipated that such a plan will be adopted in the future as needs of the
business dictate.
Item 7 - Certain Relationships and Related Transactions
On May 2, 1997, the Company borrowed $4,000 in the form of a non-interest
bearing promissory note from a director. The promissory note was subsequently
repaid on August 14, 1997.
On December 24, 1997, 6,000,000 shares of common stock were issued to officers
and directors of the Company for prior services rendered to the Company for a
value of $6,000. Four million of these shares were subsequently repurchased by a
Director of the Company and 1,940,000 shares were returned to the Treasury.
On January 1, 1997, 288,874 shares of common stock were issued for $289 of
expenses paid on the Company's behalf during 1996 by two former directors of the
Company.
On January 19, 1998 the company entered into a one-year financial consulting
contract with Messrs. Kenneth Adelberg and Larry Fox of Philadelphia, PA. Under
the agreement, the parties are to raise $300,000 immediately and $3.2 million
subsequent to the successful test of the Company's prototype antenna. In return,
the parties will receive 1,000,000 of the Company's CSO options at $0.01 per
share. Messrs. Adelberg and Fox did not meet the terms of this agreement and,
therefore the agreement terminated on January 18, 1999 with no further
obligation by either party. In February, 1998, Mr. Adelberg loaned the Company
$10,000 at 8% interest. Neither interest or principle has been paid or repaid.
Item 8 - Description of Securities
The Company is seeking initial equity funding by offering common stock pursuant
to 504 Reg D. The initial capital requirement for development of the web site,
marketing and advertising and operations is $892,000 which will be offered at
$0.75 per share. This will result in the issuance of 1,189,333 shares of common
stock. These shares, as offered, will be entitled to dividends at such time as
the Company deems proper and will have full voting rights. The Company has never
paid a cash dividend on its common stock and does not expect to pay one in the
foreseeable future. Payment of dividends in the future will depend on the
Company's earnings and its cash requirements at that time. The Company will not
be issuing any preferred stock.
CYCO.NET, Inc. will subsequently raise an additional $1M to meet the
requirements of the business plan to expand the web site, expand marketing and
staff and advertising and for acquisitions. The price per share for this
offering will be based on current market price of the shares trading at that
time. The common stock in this offering will have full voting rights and will be
entitled to dividends on the same basis as described in the previous paragraph.
14
<PAGE>
PART II
Item 1 - Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
The OTC Bulletin Board is the principal market where the Company stock is
traded. Active trading commenced October 27, 1998. Previously AVE, Inc. filed a
Rule 15c2-11 in April of 1997 by Citadel Securities and became listed with the
trading symbol "AVEN". At that time the Company did not follow through with a
business plan to support a market for its stock and the listing again became
dormant. The shares never traded and there was no trading activity until October
27, 1998. The Company refiled its 15c211 in October, 1998 through Public
Securities, Spokane, Washington.
AVE, Inc. has authorized 30,000,000 shares (approved by the Secretary of the
State of Nevada on July 8, 1999 from 15,000,000 shares) and the outstanding
post-merger common shares are 19,343,000 as of July 31, 1999. Of this
outstanding stock 18,132,827 shares will be legend stock, 93.7% of the total.
Non-restricted shares amount to the difference between the outstanding and
legend-restricted for a total of 1,210,173 shares. Pursuant to the merger
agreement between AVE, Inc. and CYCO.NET, Inc., post-merger share positions of
pre-merger AVE shareholders will be subject to an 80% lock-up for a period of
one year. The total number of shareholders of record is 451.
No dividends have been paid on the existing shares of stock though there is no
restriction limiting dividends in the future.
It is the intent of the Company, at some time in the future, to provide for its
employees a Compensatory Stock Option plan, Stock Compensation Plan and
Incentive Stock Option plan as the needs of the business dictate.
The Company has adopted Stock Compensation Plan for employees, officers,
directors of the Company and advisors to the Company (the "ESC Plan"). The
Company has reserved a maximum of 1,000,000 Common Shares to be issued upon the
grant of awards under the ESC Plan. Employees will recognize taxable income upon
the grant of Common Stock equal to the fair market value of the Common Stock on
the date of the grant and the Company will recognize a compensation deduction at
such time. The ESC Plan will be administered by the Board of Directors. No stock
has been granted under the ESC Plan as of July 1, 1998. This plan was registered
under the Securities Act in July, 1996. The options aggregate as of July 1, 1998
under the ESC plan is 600,000 at an exercise price of $0.10 per share.
The Company has adopted a Compensatory Stock Option Plan for officers, key
employees, potential key employees, non-employee directors and advisors (the
"CSO Plan"). The Company has reserved a maximum of 4,000,000 Common Shares to be
issued upon the exercise of options granted under the CSO Plan. The CSO Plan
will not qualify as an "incentive stock option" plan under Section 422A of the
Internal Revenue Code of 1986, as amended. Options will be granted under the CSO
Plan at exercise prices to be determined by the Board of Directors or other CSO
Plan administrator. With respect to options granted pursuant to the CSO Plan,
optionees will not
15
<PAGE>
recognize taxable income upon the grant of options, but will realize income (or
capital loss) at the time the options are exercised to purchase Common Stock.
The amount of income will be equal to the difference between the exercise price
and the fair market value of the Common Stock on the date of exercise. The
Company will be entitled to a compensating deduction in an amount equal to the
taxable income realized by an optionee as a result of exercising the option. The
CSO Plan will be administered by the Board of Directors or a committee of
directors.
Item 2 - Legal Proceedings
The Company is not a party to any pending or threatened litigation.
Item 3 - Changes in and Disagreements with Accountants
The Company was dormant for a number of years and, as such, has not had need for
an accountant. The accounting firm of Robert Moe & Associates, P.S., located in
Spokane, Washington, was retained by previous management to conduct an audit for
the years ending December 31 of 1994, 1995 and 1996 and the results of the audit
are contained in the exhibits. The Company's pre-merger management had engaged
the firm of Stark Tinter and Associates as its auditor for reasons of
convenience. There was no disagreement with the previous auditor. Stark Tinter
completed an audit of the Company for 1997 which was published on February 12,
1998. Stark Tinter also did the Company's 1998 audit which was published in
April, 1999. It is anticipated that Post-merger Company management will change
auditors for reasons of geography and convenience.
Item 4 - Recent Sales of Unregistered Securities
No securities of the Company have been sold within the last three years without
registration of such securities under the Securities Act.
Indemnification of Directors and Officers
There is no statute, charter provision, by-laws, contract or other arrangement
that insures or indemnifies officers or directors of the Company. It is the
intent of Management Ave, Inc. to provide for such indemnification at such time
as is practical based on the operations of the Company and to the fullest extent
permitted by New Mexico law.
16
<PAGE>
PART F/S
AVE, Inc. and subsidiary
For the years ended December 31, 1997
and December 31, 1996
17
<PAGE>
STARK TINTER & ASSOCIATES, LLC
Certified Public Accountants Financial Consultants
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors AVE, Inc.
Englewood, Colorado
We have audited the accompanying consolidated balance sheet of AVE, Inc. and
subsidiary (a development stage company) as of December 31, 1997, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit. The financial statements of AVE,
Inc. as of December 31, 1996, were audited by other auditors whose report dated
February 1, 1997, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AVE, Inc. and subsidiary (a
development stage company) as of December 31, 1997, and the results of its
operations, and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.
Stark Tinter & Associates, LLC Englewood, Colorado February 12, 1998
5299 DTC Boulevard, Suite 300 . Englewood, Colorado 80111
(303) 694-6700 Fax (303) 694-6761
18
<PAGE>
AVE, Inc.
AVE, Inc.
Consolidated Balance Sheet
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
December 31,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 8,651 $ 8,946
----------- -----------
$ 8,651 $ 8,946
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable - $ 1,000
Commitments and contingencies (Note 2) - -
Stockholders' equity (Note 3):
Common stock, $0.001 par value,
authorized, 15,000,000 shares,
issued and outstanding, 7,574,675
in 1997 and 672,793 in 1996 7,575 673
Additional paid in capital 933,521 840,423
Accumulated deficit (932,445) (833,150)
----------- -----------
Total stockholders' equity 8,651 7,946
----------- -----------
8,651 8,946
=========== ===========
</TABLE>
19
<PAGE>
AVE, Inc.
Consolidated Statements of Operations
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
December 31,
(Note 5)
----------- -----------
1997 1996
<S> <C> <C>
Revenue - -
Operating Expenses: (99,295) (1,198)
----------- -----------
Net Loss $ (99,295) $ (1,198)
=========== ===========
Per share information
Weighted average shares outstanding 899,130 672,793
=========== ===========
Net loss per share $ (0.11) NIL
=========== ===========
</TABLE>
20
<PAGE>
AVE, Inc.
Consolidated Statements of Stockholder's Equity
For the years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Common Stock Additional Accumulated
------------------------ Paid in Deficit
Shares Amount Capital (Note 5) Total
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Balance at Jan 1, 1996 122,793 $ 113 $ 840,893 $ (831,952) $ 6,664
Stock Subscription paid 2,500
Net Loss for 1996 (1,198) (1,198)
---------- ---------- ---------- ----------- ---------
Balance at Jan 1, 1997 as
previously reported 112,793 113 840,983 (833,150) 7,946
Prior period adjustment -
correction of error 560,000 560 (560) -
---------- ---------- ---------- ----------- ---------
Balance at Jan 1, 1997
as restated 672,983 673 840,423 (833,150) 7,946
Issuance of stock for cash
at $0.01/share (Note 3) 133,333 133 99,867 - 100,000
Issuance of stock in
consideration of expenses
paid by two former
directors (Note 4) 288,874 289 (289) - -
Issuance of stock in
consideration of services
provided by officers (Note 4) 6,000,000 6,000 (6,000) - -
Issuance of stock in
consideration of services
provided by unrelated
parties (Note 3) 479,675 480 (480) - -
Net Loss for 1997 (99,295) (99,295)
---------- ---------- ---------- ----------- ---------
Balance at Dec 31, 1997 7,574,675 $ 7,575 $ 933,521 $ (932,445) $ 8,651
========== ========== ========== =========== =========
</TABLE>
21
<PAGE>
AVE, Inc.
Consolidated Statement of Cash Flows
For the Years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
December31,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net Loss $ (99,295) $ (1,198)
Increase (decrease) in accounts payable (1,000) 1,000
------------ ------------
Net cash used by operating activities (100,295) (198)
------------ ------------
Cash flows from investing activities - -
------------ ------------
Cash flows from financing activities:
Proceeds from stock issuance 100,000 2,500
------------ ------------
Net cash provided by financing activities 100,000 2,500
------------ ------------
Net increase (decrease) in cash (295) 2,302
Beginning - cash balance 8,946 6,644
------------ ------------
Ending - cash balance $ 8,651 $ 8,946
============ ============
</TABLE>
22
<PAGE>
AVE, Inc.
Notes to Financial Statements
For the years ended December 31, 1997 and 1996
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated in 1921 under the name of Deluxe Onyx Company. In
1987, the Company's name was changed to Walsh Communications Group, Inc. and the
Company's domicile was changed to Nevada. On January 5, 1990, the Board of
Directors authorized that the name of the Company be changed and on May 4, 1990,
amended Articles of Incorporation were filed to change the Company's name to
AVE, Inc. The Company was inactive from 1990 through 1996. The Company intends
to market a flat plane antenna to Direct Broadcast Satellite television
providers.
The Company purchased 1,000 shares of Digital Manufacturing, Inc. ("DMI") no par
value stock on May 4, 1997. This purchase being 100% of the issued and
outstanding common stock of DMI is a reorganization pursuant to Section 368
(a)(l)(B) of the Internal Revenue Code. The Company has accounted for the merger
using the purchase method. As of December 31, 1997 all assets and liabilities of
DMI were transferred to AVE.
Consolidation
The accompanying consolidated financial statements include the accounts of The
Company and DMI, a 100% owned subsidiary. All significant inter-company accounts
and transactions have been eliminated.
Net loss per share
The net loss per share amounts are based on the weighted average number of
common shares outstanding for the period.
Note 2. LICENSE AGREEMENT
The Company's subsidiary DMI entered into a Patent License Agreement with the
National Aeronautics and Space Administration on August 14, 1997. As
consideration for the grant of the license DMI paid a one time royalty of
$2,000. Under the terms of the agreement, DMI will pay royalties based on 5% of
the net selling price with a minimum $3,000 annual payment. The first royalty
payment must be made by August, 1999 from commercial sales sufficient to
generate $1,000 in royalties.
23
<PAGE>
Note 3. STOCKHOLDERS' EQUITY
On May 22, 1997, the Company issued 133,000 shares of its common stock to an
investor for cash of $100,000.
On December 24, 1997, 479,675 shares of common stock were issued to unrelated
parties for consulting services rendered to the company for a value of $480.
Note 4. RELATED PARTY TRANSACTIONS
On May 2, 1997, the Company borrowed $4,000 in the form of a non-interest
bearing promissory note from a director. The promissory note was subsequently
repaid on August 14, 1997.
On December 24, 1997, 6,000,000 shares of common stock were issued to officers
and directors of the Company for prior services rendered to the company for a
value of $6,000.
On January 1, 1997, 288,874 shares of common stock were issued for $289 of
expenses paid on the Company's behalf during 1996 by two former directors of the
company .
Note 5. DEVELOPMENT STAGE
The Company has been in a development stage since the beginning of 1997. The
accumulated deficit includes $99,295 from the development stage in the
cumulative total of $932,445.
Note 6. INCOME TAXES
The net operating loss carryforward as of December 31, 1997 is approximately
$950,000 which will expire through year 2007.
Due to the merger with DMI and the subsequent issuance of stock to new
shareholders, the Company has certain limitations on the use of its net
operating loss carryforward under I.R.C. section 382.
24
<PAGE>
AVE, Inc. and subsidiary
For the years ended December 31, 1998
and December 31, 1997
25
<PAGE>
STARK TINTER & ASSOCIATES, LLC
Certified Public Accountants Financial Consultants
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors AVE, Inc.
Englewood, Colorado
We have audited the accompanying consolidated balance sheet of AVE, Inc. and
subsidiary as of December 31, 1998, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the 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 by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AVE, Inc. and subsidiary as of
December 31, 1998, and the results of its operations, and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
Stark Tinter & Associates, LLC Englewood, Colorado, March 19, 1999
5299 DTC Boulevard, Suite 300 . Englewood, Colorado 80111
(303) 694-6700 Fax (303) 694-6761
26
<PAGE>
AVE, Inc.
Consolidated Balance Sheets
December 31, 1998 and 1997
<TABLE>
<CAPTION>
December 31,
1998 1997
---------------------- ------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 18,665 $ 8,651
Subscription Receivable (Note 3) 4,000 -
---------------------- ------------------------
Total current assets 22,665 8,651
---------------------- ------------------------
$ 22,665 $ 8,651
====================== ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 9,837 -
Accrued Interest 687 -
---------------------- ------------------------
Total Current Liabilities 10,524 -
---------------------- ------------------------
Other Liabilities:
Note payable (Note 5) 10,000 -
---------------------- ------------------------
Commitments and contingencies (Notes 2 and 7) - -
Stockholders' equity (Notes 3, 4 and 6):
Common stock, $0.001 par value,
authorized, 15,000,000 shares in 1998 and,
20,000,000 in 1997, issued and outstanding,
6,534,675 in 1998 and 7,574,675 in 1997 6,535 7,575
Additional paid in capital 1,004,152 933,521
Accumulated deficit (1,008,546) (932,445)
---------------------- ------------------------
Total stockholders' equity 2,141 8,651
---------------------- ------------------------
22,665 8,651
====================== ========================
</TABLE>
See accompanying notes to consolidated financial statements.
27
<PAGE>
AVE, Inc.
Consolidated Statements of Operations
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
December 31,
1998 1997
---------------------- ----------------------
<S> <C> <C>
Revenue - -
Operating Expenses:
General and administrative expenses (75,414) (1,198)
Interest expense (687)
---------------------- ----------------------
Net Loss $ (76,101) $ (1,198)
====================== ======================
Per share information
Weighted average shares outstanding 7,298,976 672,793
====================== ======================
Net loss per share $ (0.01) NIL
====================== ======================
</TABLE>
See accompanying notes to consolidated financial statements.
28
<PAGE>
AVE, Inc.
Consolidated Statements of Stockholder's Equity
For the year ended December 31, 1998
<TABLE>
<CAPTION>
Common Stock Additional
---------------------- Paid in Accumulated
Shares Amount Capital Deficit Total
---------- --------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C>
Balance at Jan 1, 1998 as
previously reported 112,793 $ 113 $ 840,983 $ (833,150) $ 7,946
Prior period adjustment -
correction of error 560,000 560 (560)
---------- --------- ------------ ------------- ---------
Balance at Jan 1, 1998 as restated 672,793 673 840,423 (833,150) 7,946
Issuance of stock for cash
at $0.001 per share (Note 3) 133,333 133 99,867 - 100,000
Issuance of stock in consideration
of expenses paid by two former
directors (Note 4) 288,874 289 (289) - -
Issuance of stock in consideration
of services provided by officers
(Note 4) 2,000,000 2,000 (2,000) - -
Issuance of stock for reverse
acquisition transaction (Note 6) 4,000,000 4,000 (4,000) - -
Issuance of stock in consideration
of services provided by
unrelated parties (Note 3) 479,675 480 (480) - -
Net loss for 1997 (99,295) (99,295)
---------- --------- ------------ ------------- ---------
Balance at December 31, 1998 7,574,675 7,575 933,521 (932,445) 8,651
Issuance of stock for a
Subscription Receivable (Note 3) 200,000 200 19,800 20,000
Cancellation of shares (Note 3) (1,940,000) (1,940) 1,940 -
Issuance of stock for cash at $0.01 per
share, in exchange for a Subscription
receivable and a Note receivable (Note 3) 600,000 600 5,400 6,000
Issuance of stock for cash at $0.20 per
share, net of issuance costs (Note 3) 250,000 250 44,841 45,091
Issuance of stock for cash at $0.01 per
share and in exchange for a
Note receivable (Note 3) 250,000 250 2,250 2,500
Net Loss for 1998 (76,101) (76,101)
---------- --------- ------------ ------------- ---------
Subtotal 6,934,675 $ 6,935 $1,007,752 $ (1,008,546) $ 6,141
Less amt rec. for stock (Note 4) (400,000) (400) (3,600) (4,000)
---------- --------- ------------ ------------- ---------
Balance at December 31, 1998 6,534,675 $ 6,535 $1,004,152 $ (1,008,546) $ 2,141
========== ========= ============ ============= =========
</TABLE>
29
<PAGE>
AVE, Inc.
Consolidated Statement of Cash Flows
For the Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
December31,
1998 1997
-------------------- ---------------------
<S> <C> <C>
Cash flows from operating activities
Net Loss $(76,101) $ (99,295)
Increase (decrease) in accounts payable and accrued
expenses 9,837 (1,000)
Increase in accrued interest 687
-------------------- ---------------------
Net cash used by operating activities (65,577) (100,295)
-------------------- ---------------------
Cash flows from investing activities - -
-------------------- ---------------------
Cash flows from financing activities:
Proceeds from stock issuance 65,591 100,000
Proceeds from Note payable 10,000
-------------------- ---------------------
Net cash provided by financing activities 75,591 100,000
-------------------- ---------------------
Net increase (decrease) in cash 10,014 (295)
Beginning - cash balance 8,651 8,946
-------------------- ---------------------
Ending - cash balance $ 18,665 $ 8,651
==================== =====================
Non-cash financing activities:
Issuance of stock in exchange for a subscription receivable 4,000 -
-------------------- ---------------------
Issuance of stock in exchange for an account receivable 4,000 -
-------------------- ---------------------
</TABLE>
See accompanying notes to consolidated financial statements.
30
<PAGE>
AVE, Inc. and subsidiary
Notes to Consolidated Financial Statements
For the years ended December 31, 1998 and 1997
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated in 1921 under the name of Deluxe Onyx Company. In
1987, the Company's name was changed to Walsh Communications Group, Inc. and the
Company's domicile was changed to Nevada. On January 5, 1990, the Board of
Directors authorized that the name of the Company be changed and on May 4, 1990,
amended Articles of Incorporation were filed to change the Company's name to
AVE, Inc.
On May 4, 1997 the Company acquired Digital Manufacturing, Inc.("DMI") an
unrelated corporation in a reverse acquisition accounted for as a purchase (See
Note 7). For the year ended December 31, 1997 the financial statements include
the accounts of the Company and its wholly owned subsidiary. All significant
inter-company transactions have been eliminated.
During 1998 the corporate charter for DMI was allowed to expire. As of December
31, 1998 the financial statements include only the accounts of the Company.
Net loss per share
The net loss per share amounts are based on the weighted average number of
common shares outstanding for the period.
Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the Company's management to
make estimates and assumptions that affect the amounts reported in these
financial statements and accompanying notes. Actual results could differ from
those estimates.
Comprehensive Income
There were no items of other comprehensive income in 1998, and, thus, net income
is equal to comprehensive income for the year ended December 31, 1998.
31
<PAGE>
AVE, Inc. and subsidiary
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 1998 and 1997
Note 2. LICENSE AGREEMENT
The Company's Subsidiary DMI entered into a Patent License Agreement with the
National Aeronautics and Space Administration (`NASA') on August 14, 1997. This
patent referred to in the Agreement in currently under revision by NASA. As
consideration for the grant of the license DMI paid a one time royalty of
$2,000. Under the terms of the agreement, DMI will pay royalties based on 5% of
the net selling price with a minimum $3,000 annual payment. The first royalty
payment must be made by August, 1999 from commercial sales sufficient to
generate $1,000 in royalties. Upon revision of the patent by NASA the Company
anticipates entering into a revised agreement with NASA (see Note 9).
Note 3. STOCKHOLDERS' EQUITY
On May 22, 1997, the Company issued 133,000 shares of its common stock to an
investor at $0.001 per share for cash of $100,000.
During 1997 479,675 shares of its common stock were issued to other investors in
exchange for services performed.
The Company granted 200,000 stock compensation options, at an exercise price of
$0.10 per share, as part of a Financial Consulting Agreement. On July 20, 1998
and September 11, 1998 the Company issued a total of 200,000 shares to this
consultant at the option price of $0.10 per share for cash of $20,000.
Treasury stock is shown at the cost of the 1,940,000 shares of common stock
purchased during 1998. There were no shares in Treasury stock at December 31,
1997.
During November 1998, the Company issued 600,000 shares of its $0.001 par value
common stock to various investors at $0.01 per share for a subscription
receivable of $4,000 and a Note Receivable of $2,000 (See Note 10). The Note
Receivable has been recorded as a reduction to Stockholders equity at December
31, 1998 (See Note 4).
On November 12, 1998 the Company issued 250,000 shares of its $0.01 par value
common stock to various investors at $0.20 per share for cash of $50,000.
Issuance costs were $4,909.
In addition, on November 19, 1998 the Company issued 250,000 shares of its $0.01
par value common stock to various investors at $0.01 per share for cash of $500
and a Note receivable of $2,000. The Note Receivable has been recorded as a
reduction to Stockholders equity at December 31, 1998.
32
<PAGE>
AVE, Inc. and subsidiary
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 1998 and 1997
Note 3. STOCKHOLDERS' EQUITY (Continued)
The Company has a compensatory stock option plan. Under the plan, the Company
may grant options for up to 4,000,000 shares of common stock. The exercise price
of each option shall be determined by the Compensation Committee or by the CEO
with reference to factors such as current fair market value of the Stock, net
book value per share, regular or other remuneration already being received by
the optionee. The maximum term of the options is five years and they vest on the
date granted. In January 1999 the Company granted 600,000 shares to officers of
the Company. As of December 31, 1998 these 600,000 shares remain exercisable.
Note 4. RELATED PARTY TRANSACTIONS
On May 2, 1997, the Company borrowed $4,000 in the form of a non-interest
bearing promissory note from a director. The promissory note was subsequently
repaid on August 14, 1997.
During 1997 the Company issued 288,874 shares of common stock in consideration
for payment of expenses by two former directors of the Company.
In addition, 2,000,000 shares of its common stock were issued during 1997 to
officers in exchange for services performed.
The Company has an amount due from two stockholders for a total of $4,000. The
Company had issued stock to both of these stockholders in 1998 with the
assumption that these funds would be paid to the Company.
Note 5. NOTE PAYABLE
On January 27, 1998 the Company borrowed $10,000 from an unrelated party at 8%
interest. The principle and interest are due to the Noteholder on January 27,
2000.
Note 6. RECAPITALIZATION
On May 4, 1997 the Company entered into an Acquisition Agreement with an
unrelated corporation, DMI. On that date DMI became a wholly owned subsidiary of
the Company. Pursuant to this agreement the shareholders of DMI would have
received 8,500,000 shares of the Company's common stock in exchange for all of
the issued and outstanding shares of DMI. This original transaction was modified
pursuant to an amended agreement dated December 22, 1997. The amended agreement
reduced the number of shares to be received by the shareholders of DMI to
4,000,000 shares of the Company's common stock. This transaction has been
accounted for by the purchase method of accounting.
33
<PAGE>
AVE, Inc. and subsidiary
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 1998 and 1997
Note 7. INCOME TAXES
The Company has a Federal net operating loss carryforward of approximately
$200,000, which will expire in the year 2013. The tax benefit of this net
operating loss of approximately $40,000 has been offset by a full allowance for
realization. This carryforward may be limited upon the consummation of a
business combination under Section 381 of the Internal Revenue Code.
Note 8. YEAR 2000
The Company has assessed its exposure to date sensitive computer software
programs that may not be operative subsequent to 1999 and has implemented a
requisite course of action to minimize Year 2000 risk and ensure that neither
significant costs nor disruption of normal business operations are encountered.
However, because there is no guarantee that all systems of outside vendors or
other entities affecting the Company's operations rely will be 2000 compliant,
the Company remains susceptible to consequences of the Year 2000 issue.
Note 9. SUBSEQUENT EVENTS
In January 1999, the Company received $4,000 cash as payment for the
subscriptions receivable outstanding at December 31, 1998 (See Note 3).
On February 19, 1999 the Company issued 250,000 shares of its $0.01 par value
common stock to various investors at $0.20 per share for cash of $50,000.
On February 22, 1999 the Company entered into a letter of intent with Zenith
Technology, Inc. (a wholly owned subsidiary of Prime Companies, inc.) to sell to
the same, all rights to the NASA patent and license agreement (See Note 2). In
consideration for the sale of the rights the Company would receive a common
shares of Prime Companies, Inc. having a total value of $50,000.
On March 16, 1999 the company entered into a letter of intent with Green Dolphin
Systems Corp. (Green), an unrelated company who develops, manufactures and
distributes chemicals in Canada. The Company is to acquire Green in a reverse
acquisition with Green becoming a wholly owned subsidiary of the Company. The
name of the Company would be changed to Green Dolphin Systems Corporation.
34
<PAGE>
AVE, Inc. and subsidiary
(A Development Stage Company)
For the three months ended March 31, 1999
(Unaudited)
35
<PAGE>
AVE, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Balance Sheet
March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
March
1999
<S> <C>
ASSETS
Current Assets:
Cash $ 27,491
Due to stockholder (Note 2) 11,000
Other receivables 500
------------------------------
$ 38,991
==============================
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable $ 5,578
Note payable (Note 3) 10,000
Accrued interest (Note 3) 902
------------------------------
Total current liabilities 16,480
Commitments and contingencies (Note 5)
Stockholders' equity (Note 4)
Common stock, $0.001 par value, authorized,
15,000,000 shares, issued and outstanding, 7,585,675 7,185
Additional paid in capital 1,057,502
Accumulated deficit (1,042,176)
Total stockholders' equity 22,511
$ 38,991
==============================
</TABLE>
See accompanying notes to consolidated financial statements
36
<PAGE>
AVE, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statement of Operations
March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
March 31
1999
(Note 7)
-------------------------------
<S> <C>
Revenue $ -
Operating expenses:
General and administrative expenses (33,630)
Net loss $ (33,630)
-------------------------------
Per share information:
Weighted average share outstanding 7,184,675
===============================
Net loss per share $ (0.005)
===============================
</TABLE>
See accompanying notes to consolidated financial statements
37
<PAGE>
AVE, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
----------------------------------- Paid in Accumulated
Shares Amount Capital Deficit Total
---------------- -------------- --------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at Jan 1, 1999 6,934,675 $ 6,935 $ 1,007,752 $ (1,008,546) $ 6,141
Issuance of stock for cash
at $0.01 per share
(Note 4) 250,000 250 49,750 50,000
Net Loss as of March 31, 1999 - - - (33,630) $ (33,630)
Balance at March 31, 1999 7,184,675 $ 7,185 $ 1,057,502 $ (1,042,176) $ 22,511
</TABLE>
See accompanying notes to consolidated financial statements
38
<PAGE>
AVE, Inc. and Subsidiary
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
March 31
1999
--------------------------------
<S> <C>
Cash flows from operating activities
Net loss $ (33,630)
Increase in receivables $ (11,500)
Decrease in accounts payable (4,059)
Increase in accrued expenses 15
--------------------------------
Net cash (used by) operating activities (49,174)
--------------------------------
Cash flows from investing activities 50,000
--------------------------------
Net cash provided by increasing activities 50,000
Cash flows from financing activities:
Proceeds from promissory notes 8,000
--------------------------------
Net cash provided by financing activities 8,000
--------------------------------
Net (decrease) in cash 8,826
Beginning - cash balance 18,665
--------------------------------
Ending - cash balance $ 27,491
================================
</TABLE>
See accompanying notes to consolidated financial statements
39
<PAGE>
AVE, Inc. and Subsidiary
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the twelve months ended March 31, 1999
(Unaudited)
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated in 1921 under the name Deluxe Onyx Company. In
1987, the Company's name was changed to Walsh Communications Group, Inc. and the
Company's domicile was changed to Nevada. On January 5, 1990, the board of
Directors authorized that the name of the Company be changed and on May 4, 1990,
amended Articles of Incorporation were filed to change the Company's name to
AVE, Inc. The Company was inactive from 1990 through 1996. The Company intends
to market a flat plane antenna to Direct Broadcast Satellite television
providers.
The Company purchased 1,000 shares of Digital Manufacturing, Inc. ("DMI") no par
value stock on may 4, 1997. This purchase being 100% of the issued and
outstanding common stock of DMI is a reorganization pursuant to Section 368
(a)(1)(B) of the Internal Revenue Code. The Company has accounted for the merger
using the purchase method. As of December, 31, 1997 all assets and liabilities
of DMI were transferred to AVE.
Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and DMI a, 100% owned subsidiary. All significant inter-company accounts
and transactions have been eliminated.
Net loss per share
The net loss per share amounts are based on the weighted average number of
common shares outstanding for the period.
Note 2. NOTE RECEIVABLE
On March 4, 1999, the Company loaned $11,000 in the form of a ninety day
promissory note bearing no interest. The principal is payable in full June 30,
1999.
Note 3. NOTE PAYABLE
On January 30, 1998, the Company borrowed $10,000 in the form of a twelve month
promissory note bearing interest at 8%. The principal and all accrued interest
is payable on demand.
40
<PAGE>
AVE, Inc. and Subsidiary
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the twelve months ended March 31, 1999
(Unaudited)
Note 4. STOCKHOLDERS' EQUITY
On February 18, 1999, the Company issued 175,000 shares to an investor for cash
of $35,000.
On February 19, 1999, the Company issued 75,000 shares to an investor for cash
of $15,000.
Note 5. LICENSE AGREEMENT
The Company's subsidiary DMI entered into a Patent License Agreement with the
National Aeronautics and Space Administration on August 14, 1997. As
consideration for the grant of the license DMI paid a one-time royalty of
$2,000. Under the terms of the agreement, DMI will pay royalties based on 5% of
the net selling price with a minimum $3,000 annual payment. The first royalty
payment must be made by August 1999 from commercial sales sufficient to generate
$1,000 in royalties.
Note 6. DEVELOPMENT STAGE
The Company has been in a development stage since the beginning of 1998. The
accumulated deficit includes $33,630 from the development stage in the
cumulative total of $1, 042,176.
Note 7. INCOME TAXES
The net operating loss carryforward as of December 31, 1998 is approximately
$1,000,000, which will expire through year 2008.
Due to the merger with DMI and the subsequent issuance of stock to new
shareholders, the Company has certain limitations on the use of its net
operating loss carryforward under I.R.C. section 382.
41
<PAGE>
PART III
Item 1 - Index to Exhibits
Document Tab No.
2 Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession -
History of the Company A
Certificate and Agreement of Merger of De Luxe Onyx B
Company, a California Corporation... into De Luxe
Onyx Company a Nevada Corporation...1/23/87
Certificate Amending the Certificate of Incorporation C
of De Luxe Onyx Company, 1/23/87
Certificate of Incorporation of Deluxe Onyx Company, 1/23/87 D
Certificate of Relief from Suspension or Forfeiture, 1/22/87 E
Certification of Filing of Articles of Incorporation, 1/23/87 F
Certificate of Corporate Status G
Certificate of Reinstatement 8/15/94 H
Certificate of Corporate Existence, 6/21/98 I
Certificate of Reinstatement, 2/02/98 J
NASD Regulation, Inc. Letter Confirming Clearance for K
an Unpriced Quotation on the OTC Bulletin Board for
AVE, Inc., 4/03/97
Audit of AVE, Inc. 5/19/95 L
Certificate of Corporate Existence (State of Nevada) M
for AVE, Inc. 6/21/95
Board Minutes Reverse Split of Stock, 6/26/95 N
Report of Independent Certified Public Accountants O
(Audit for 12/31/95 and 12/31/96), 2/01/97
Acquisition of DMI (by AVE, Inc.), 5/02/97 P
42
<PAGE>
Board Minutes Naming New Officers, 1/05/98 Q
3 (i) Articles of Incorporation of Deluxe Onyx as filed R
with the State of Nevada, 1/23/87
(ii) By-Laws S
Board Minutes Amending By-Laws, 1/20/98 T
4 Instruments Establishing Rights of Security Holders U
5 Letter from Counsel Re Tradeability of Shares of W
AVE, Inc., 5/31/90
5 Letter from Counsel Re Tradeability of Shares of X
Walsh Communications, 5/18/88
10 Patent License Agreement between NASA and Digital Y
Manufacturing, Inc., License No. DE-236, 8/07/97
U.S. Patent Z
17 Board Minutes detailing the resignation of Victor 1
Alexander as Sole Director and naming Henri Hornby
and Neil Hornby as New Directors, 6/19/95
Letter of resignation from Tom Athans as President 2
and Director effective 6/01/98
Board minutes authorizing amendment to Aritcles of 3
Incorporation regarding 1:200 reverse stock split,
decreasing the amount of authorized stock from
50,000,000 to 15,000,000 shares.
Board minutes detailing the repurchase by Henri Hornby 4
of 4,000,000 shares from Tom Athans and the return of
1,940,000 shares to AVE's treasury effective August 27,
1998
Board minutes detailing the sale of AVE's intellectual 5
property rights with NASA to Prime Companies effective
February 16, 1999.
Board minutes detailing an amendment to Articles of 6
Incorporation to increase authorized shares from
15,000,000 to 30,000,000 effective July 7, 1999
43
<PAGE>
22 Letter of intent to acquire CYCO.NET, Inc. in a 7
reverse merger transaction dated July 9, 1999.
99 Specimen Stock Certificate of the Company V
44
<PAGE>
EXHIBIT 2
Plan of Acquisition, Reorganization, Arrangement, Liquidiation or Succession
<PAGE>
TAB A
Item 8: THE NATURE OF THE ISSUER'S BUSINESS.
------------------------------------
MOTION PICTURE COMPANY COMPRISED OF FOUR
DIVISIONS: PRODUCTION, POST-PRODUCTION & SOUND
STUDIO, INTERACTIVE MEDIA AND DISTRIBUTION.
ITEM 9: THE NATURE AND EXTENT OF THE ISSUER'S FACILITIES:
-------------------------------------------------
MOTION PICTURE (FILM/VIDEO) LIBRARY AND EQUIPMENT.
ITEM 10: HISTORY.
-------
The Company was incorporated on Jan 11, 1921, as De Luxe Onyx under
the Laws of the State of California. By Aug 8, 1922, the Company had
at least One hundred and One (101) Shareholders and Three Thousand
(3,000) shares of Common Stock outstanding. On or about Jan 20th,
1987, shareholders of the Company voted to change its domicile to the
State of Nevada, its name to Walsh Communications Group, Inc., change
the Total authorized capital of the Corporation, the sum of Fifty
Thousand Dollars ($50,000), comprised of Fifty Million (50,000,000)
Common One Mil ($0.001) par value share and forward split the 3,000
issued and outstanding 1000 to 1 forward One Hundred (100) One Mil
($0.001) par value shares to be issued in exchange for each One (1)
One Dollar ($1.00) Common par value shares presently outstanding. Upon
completion of the exchange, there were Three Million (3,000,000) One
Mil ($0.001) Common par value shares outstanding. The Corporation
issued Six Million (6,000,000) shares of its Restricted Stock for the
Restricted Stock of another Corporation. On Jan 5, 1990, the Company
renamed the Corporation AVE INC. and issued an additional 11,700,000
shares of its Restricted Stock in exchange for Motion Picture
Equipment, Sets and Services. On May 4, 1990, amended Articles of
Incorporation were filed in the State of Nevada to change the Company
name to AVE INC.
ITEM 11: MANAGEMENT.
-----------
SEE EXHIBIT F
<PAGE>
TAB B
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JAN 23 1987
FRANKIE SUE DEL PAPA
SECRETARY OF STATE
/s/ FRANKIE SUE DEL PAPA
No. 465-87
-------------------
CERTIFICATE AND AGREEMENT OF MERGER
OF
DE LUXE ONYX COMPANY
A California corporation
Pursuant to the Corporation Code of California Chapter 11 Section 1100
INTO
DE LUXE ONYX COMPANY
a Nevada corporation as the surviving corporation
Pursuant to Section 450 et seq, Nevada Revised Statutes
AGREEMENT OF MERGER, dated the 23rd day of January, 1987 between DE LUXE
ONYX COMPANY, a California corporation, and all of the Directors thereof and DE
LUXE ONYX COMPANY, a Nevada corporation and all of the Directors thereof, the
two corporations being hereinafter sometimes called the Constituent Corporation.
WHEREAS the Board of Directors of each of the Constituent Corporations deem
it advisable and generally to the welfare of the Constituent Corporations that
these corporations merge under the terms and conditions hereafter set forth,
such merger to be effected pursuant to the statutes of the State of California
and the Statutes of the State of Nevada, and they have approved and authorized
the form of agreement and merger.
WHEREAS DE LUXE ONYX COMPANY is a corporation duly organized under the laws
of the State of California, having been incorporated January 11th, 1921 with
authorized capital stock consisting of 100,000 shares of common stock with a par
value of $1.00 per share of which 3,000 shares are issued and outstanding; and,
WHEREAS DE LUXE ONYX COMPANY, is a corporation duly organized under the
laws of the State of Nevada, having been incorporated January 23rd, 1987 with
authorized capital stock consisting of 100,000 shares of common stock with a par
value of $1.00.
WHEREAS the laws of the State of California and Nevada permit such a
merger, and the Constituent Corporations desire to merge, under and pursuant to
the provision of the laws of their respective states:
NOW THEREFORE, in consideration of the promises and of the mutual
agreements and covenants herein contained, it is agreed that DE LUXE ONYX
COMPANY, a California corporation, and DE LUXE ONYX COMPANY, a Nevada
corporation, shall be merged into DE LUXE ONYX COMPANY, a Nevada corporation,
which shall be the Surviving Corporation, and the terms and conditions of such
merger and the mode of carrying it into effect are and shall be as follows:
1. NAME OF SURVIVING CORPORATION. The name of the corporation, which is
------------------------------
sometimes hereinafter referred to as the Surviving Corporation, shall, from and
after the effective date of the merger, be DE LUXE ONYX COMPANY. The separate
existence of DE LUXE ONYX COMPANY, of California, shall cease at the effective
time of the merger, except insofar as it may be continued by law or in order to
carry out the purpose of this Agreement of Merger and except as continued in the
Surviving Corporation.
2. ARTICLES OF INCORPORATION OF SURVIVING CORPORATION. The
---------------------------------------------------
<PAGE>
Articles of Incorporation of the Surviving Corporation shall be the Articles of
Incorporation of DE LUXE ONYX COMPANY, of Nevada, a copy of which is annexed as
Exhibit "A" hereto.
3. BYLAWS. The By laws of DE LUXE ONYX COMPANY, of Nevada at the
------
effective time of the merger shall be By laws of the Surviving Corporation until
altered or replaced as provided therein.
4. BOARD OF DIRECTORS AND OFFICERS. The members of the Board of
-------------------------------
Directors and the officers of the Surviving Corporation immediately after the
effective time of the merger shall be those persons who were the members of the
Board of Directors and the officers, respectively, DE LUXE ONYX COMPANY, of
Nevada immediately prior to the effective time of the merger, and such persons
shall serve in such offices, respectively, for the terms provided by law or in
the Bylaws or until their respective successors are elected and qualified.
5. AUTHORITY TO CONDUCT BUSINESS. DE LUXE ONYX COMPANY, of Nevada
-----------------------------
represents that the corporation has not filed an application for authority to do
business in California. The Surviving Corporation will conduct no such business
in California without first filing and having such application approved.
6. CONVERSION OF SHARES. The manner of converting the shares of
--------------------
the Constituent Corporation into the shares of the Surviving Corporation shall
be set forth in this paragraph as follows:
Immediately upon the effective date of the merger, each share of stock
of DE LUXE ONYX COMPANY, of California outstanding in the hands of the
public (being all of the shares of DE LUXE ONYX COMPANY, of California
outstanding) without any action on the part of the holder thereof, shall
automatically become and be converted into stock of the Surviving
Corporation, as the case may be, at the rate of one share of stock of
the Surviving Corporation for one share of stock of DE LUXE ONYX
COMPANY, of Nevada. All shares thus converted shall be deemed for all
corporate purposes (other than the payment of dividends) to evidence the
ownership of the number of fully-paid, nonassessable shares of common
stock of the Surviving Corporation into which shares of common stock of
DE LUXE ONYX COMPANY, of California shall have been so converted.
7. FIGHT OF SHAREHOLDERS. After the effective time of the merger,
---------------------
each holder of a certificate or certificates which theretofore represented
shares of common stock of DE LUXE ONYX COMPANY, of California shall cease to
have any rights as a shareholder of DE LUXE ONYX COMPANY, of California are,
except such as expressly reserved to such stockholders by statute. After the
effective time of the merger, any holder of a certificate or certificates which
theretofore represented shares of common stock of DE LUXE ONYX COMPANY, of
California may, but shall not be required to, surrender the same to the Transfer
Agent of the Surviving Corporation, and shall thereupon be entitled to receive
in exchange therefore a certificate or certificates representing the number of
shares of common stock of DE LUXE ONYX COMPANY, of Nevada theretofore
represented by such certificate or certificates as shall have been converted.
( 2 )
<PAGE>
8. EFFECTIVE DATE OF MERGER.
------------------------
A. For all purposes of the Laws of the State of California, this
Agreement of Merger and the merger herein provided for shall become effective
and the separate existence of DE LUXE ONYX COMPANY, a California corporation,
except insofar as it may be continued by statute, shall cease as soon as; this
Agreement of Merger shall have been adopted, approved, signed and acknowledged
in accordance with the laws of the State of California and certificates of its
adoption and approval shall have been executed in accordance with such laws; and
this Certificate and Agreement of merger shall have been filed in the office
of the Secretary of State of the State of California.
B. For all purposes of the Laws of the State of Nevada, this Agreement of
Merger and the merger herein provided for shall become effective and the
separate existence of DE LUXE ONYX COMPANY, a California corporation, except
insofar as it may be continued by statute, shall cease as soon as; this
Agreement of Merger shall have been adopted, approved, signed and acknowledged
in accordance with the laws of the State of Nevada and certificates of its
adoption and approval shall have been executed in accordance with such laws; and
this Certificate and Agreement of merger shall have been filed in the office of
the Secretary of State of the State of Nevada.
C. The corporate identity, existence, purpose, powers, objects,
franchises, rights and immunities of DE LUXE ONYX COMPANY, of Nevada shall
continue unaffected and unimpaired by the merger hereby provided for; and the
corporate identities, existences, purposes, powers, objects, franchises, rights
and immunities of DE LUXE ONYX COMPANY, of California shall be continued in and
merged into DE LUXE ONYX COMPANY, of Nevada and DE LUXE ONYX COMPANY, of Nevada
shall be fully vested therewith.
D. The date upon which this Agreement is filed in the offices mentioned
above and upon which the Constituent Corporations shall so become a single
corporation is the effective date of the merger.
9. AUTHORIZATION. The parties hereto acknowledge and respectively
-------------
represent that this Merger Agreement is authorized by the laws of the respective
jurisdictions of the Constituent Corporations and that the matter was approved
by the board of directors of the Nevada corporation and at a special meeting of
shareholders of the California corporation at which the California shareholders
voted as follows:
CORPORATION SHARES OUTSTANDING VOTED FOR VOTED AGAINST
- - ----------- ------------------ --------- -------------
CALIFORNIA 3,000 1,800 None
10. FURTHER ASSURANCES OF TITLE. As and when requested by the Surviving
---------------------------
Corporation or by its successors or assigns, DE LUXE ONYX COMPANY, of Nevada
will execute and deliver or cause to be executed and delivered all such deeds
and instruments and will take or cause to be taken all such further action as
the Surviving Corporation may deem necessary or desirable in order to vest in
and confirm to the Surviving Corporation title to and possession of any property
of any of the Constituent Corporations acquired by the Surviving Corporation by
reason or as a result of the merger herein provided for and otherwise to carry
out the intent and purposes hereof, and the officers
( 3 )
<PAGE>
directors of DE LUXE ONYX COMPANY, of California and the officers and directors
of the Surviving Corporation are fully authorized in the name of the respective
Constituent Corporations or otherwise to take any and all such action.
11. SERVICE OF PROCESS ON SURVIVING CORPORATION. The Surviving
-------------------------------------------
Corporation agrees that it may be served with process in the State of California
in any proceeding for enforcement of any obligation of DE LUXE ONYX COMPANY, of
California as well as for the enforcement of any obligation of the Surviving
Corporation rising from the merger, including any suit or other proceeding to
enforce the right of any shareholder as determined in appraisal proceedings
pursuant to the provisions of the California Corporations Code, of California,
and hereby irrevocably appoints the Secretary of State of California, as its
agent to accept service of process in any suit or other proceeding. Copies of
such process shall be mailed to the Resident Agent, Resident Agency National,
377 South Carson Street, Carson City, Nevada until further notice.
12. SHAREHOLDERS FIGHT TO PAYMENT. The Surviving Corporation agrees
-----------------------------
that subject to the provisions of the California Corporations Code of the State
of California, that it will pay to the shareholders of DE LUXE ONYX COMPANY the
amounts, if any, to which such shareholders may be entitled under the provisions
of the above statutes of the laws of California as the case may be.
13. ABANDONMENT. This Agreement of Merger may be abandoned (a) by
-----------
either Constituent Corporation, acting by its Board of Directors, at any time
prior to its adoption by the shareholders of both of the Constituent
Corporations as provided by law, or (b) by the mutual consent of the Constituent
Corporations, acting each by its Board of Directors, at any time after such
adoption by such shareholders and prior to the effective time of the merger. In
the event of abandonment of this Agreement of Merger pursuant to (a) above,
notice thereof shall be given by the Board of Directors of the Constituent
Corporation so terminating to the other Constituent Corporation, and thereupon,
an abandonment pursuant to (b) above, this Agreement of Merger shall become
wholly void and of no effect and there shall be no further liability or
obligation hereunder on the part of either of the Constituent Corporations or of
its Board of Directors or shareholders.
IN WITNESS WHEREOF each of the Constituent Corporations, pursuant to
authority duly granted by its Board of Directors, has caused this Agreement of
Merger to be executed by a majority of is Directors and its President and
Secretary.
The respective Directors and officers of the Constituent Corporations
( 4 )
<PAGE>
do hereby certify that the above Merger Agreement was adopted as set forth in
the above Agreement and that said resolution has not been revoked or amended.
DE LUXE ONYX COMPANY DE LUXE ONYX COMPANY
(a California corporation) (a Nevada corporation)
/s/ MARK TIMOTHY /s/ MARK TIMOTHY
- - ----------------------------- ---------------------------
Mark Timothy Mark Timothy
President & Director President & Director
/s/ JERRY TIMOTHY /s/ JERRY TIMOTHY
- - ----------------------------- ---------------------------
Jerry Timothy Jerry Timothy
Secretary & Director Secretary & Director
STATE OF UTAH
: ss
COUNTY OF SALT LAKE )
This instrument was acknowledged before me this 23rd day of January,
1987, by Mark Timothy and Jerry Timothy known to me to be the officers and
directors of DE LUXE ONYX COMPANY, (California) as set forth under their
respective signatures.
This instrument was acknowledged before me this 23rd day of January,
1987, by Mark Timothy and Jerry Timothy known to me to be the officers and
directors of DE LUXE ONYX COMPANY, (Nevada) as set forth under their respective
signatures.
My Commission Expires: /s/
----------------------------
12-1-89 Notary Public
- - ------- Residing at:
( 5 )
<PAGE>
SECRETARY'S CERTIFICATE
-----------------------
The undersigned, the duly elected Secretary of Deluxe Onyx Company, a
California corporation, hereby certify as follows:
1. A special meeting of the stockholders of the Corporation was duly
called and held on January 20, 1987 at 2089 Donnelson Lane, Salt Lake City,
Utah. Notice of such meeting was mailed by first class mail to all stockholders
of record of the Corporation prior to ten days form the date of such meeting.
2. At the aforementioned meeting of stockholders there were present in
person or by proxy 1,800 shares of common stock of the Corporation. As of the
date of the notice and the date of the meeting, there was 3,000 issued and
outstanding shares of common stock of the Corporation.
3. Attached hereto is a true and correct copy of the minutes of the
meeting of stockholders of the Corporation.
IN WITNESS WHEREOF, the undersigned, the Secretary of Deluxe Onyx Company,
has executed this Certificate as of January 20, 1987.
/s/ JERRY TIMOTHY
-----------------------------------
JERRY TIMOTHY, Secretary
<PAGE>
TABC
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JAN 23 1987
FRANKIE SUE DEL PAPA SECRETARY OF STATE
/s/Frankie Sue Del Papa
- - ----------------------------------------
CERTIFICATE AMENDING THE CERTIFICATE OF INCORPORATION
OF
DE LUXE ONYX COMPANY
The undersigned, being the President and Secretary of DE LUXE ONYX
COMPANY, a Nevada corporation, hereby certify that by majority vote of the Board
of Directors and majority vote of the stockholders at a meeting held on January
5th, 1987, it was agreed by unanimous vote that this Certificate Amending the
Articles of Incorporation be filed.
The undersigned further certify that the original Articles of
Incorporation of DE LUXE ONYX COMPANY, were filed with the Secretary of State of
the State of Nevada, on January 23rd, 1987, and a certified copy of said
Articles were filed with the Carson City County Clerk on January 23rd, 1987.
The undersigned further certify that the Article First through Article
Eleventh of the original Articles of Incorporation files on January 23rd, 1987
herein are amended to read as follows:
ARTICLE FIRST: The name of this corporation is:
Walsh Communications Group, Inc.
ARTICLE SECOND: No change.
ARTICLE THIRD: No change.
ARTICLE FOURTH: Authorization of Capital Stock. The amount of the
total authorized capital stock of this corporation shall be Fifty Thousand
Dollars ($50,000) consisting of Fifty Million (50,000,000) shares of common
stock with a "par value of $.001" per share. The stock shall be common,
non-assessable and voting stock may be issued as, when and for such
consideration as the Board of Directors may from time to time determine. The
amount of capital stock with which it will commence business is One Thousand
Dollars ($1,000).
ARTICLE FIFTH: No change.
ARTICLE SIXTH: No change.
ARTICLE SEVENTH: No change.
ARTICLE EIGHT: No change.
ARTICLE NINTH: No change.
ARTICLE TENTH: No change.
ARTICLE ELEVENTH: No change.
<PAGE>
The number of common shares outstanding at the time of adoption were
Three Thousand (3,000) and the number voted for such amendment were One Thousand
Eight Hundred (1,800) and the number of shares voted against such amendment were
Zero (0).
The manner, if not set forth in such amendment, in which any exchange,
reclassification, or cancellation of issued shares provided for in the amendment
shall be effected, as follows:
The 3,000 - "$1.00 par value common shares" presently outstanding are
hereby forward split 1000 - 1 share forward. Said Exchange shall be completed as
follows: 100 - "$.001 par value common shares" shall be issued in exchange for
each 1 - "$1.00 par value common share" presently outstanding. Upon completion
of the exchange there will be 3,000,000 - "$.001 par value common shares" issued
and outstanding.
The undersigned hereby certify that they have on this 23rd day of
January, 1987, executed this certificate amending the original Articles of
Incorporation heretofore filed with the Secretary of State of Nevada.
/s/ MARK TIMOTHY /s/ JERRY TIMOTHY
- - ----------------------------- ------------------------------
Mark Timothy, President Jerry Timothy, Secretary
STATE OF UTAH )
: ss
COUNTY OF SALT LAKE )
On this 23rd day of January, 1987, before me the undersigned a Notary Public in
and for the County of Salt Lake, State of Utah, personally appeared Mark Timothy
and Jerry Timothy, known to me to be the persons whose names are subscribed to
the foregoing Certificate Amending Articles of Incorporation and acknowledged to
me that they executed the same.
My Commission Expires: /s/
------------------------------
12-1-89 Notary Public
- - -------
Residing at: Salt Lake City, Utah
---------------------
( Page 2 )
<PAGE>
TAB D
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JAN 23, 1987
FRANKIE SUE DEL PAPA, SECRETARY OF STATE
/s/ FRANKIE SUE DEL PAPA
No. 465-87
------
CERTIFICATE OF INCORPORATION
OF
DE LUXE ONYX COMPANY
First: Name. The name of this corporation is: DE LUXE ONYX COMPANY.
----
Second: Principal Office. The principal office or place of business of this
----------------
corporation shall be located at:
Resident Agency National, 377 South Carson Street, Carson City,
Nevada.
Third: Purpose. The purpose for which this corporation is formed is to engage in
-------
any lawful activity; and,
To buy, own, possess, improve, develop, sell, mortgage, lease and
otherwise deal in all kinds of real property in the State of California
and elsewhere; to buy, sell, own mortgage or otherwise deal in and
handle all kinds of personal property.
Fourth: Authorization of Capital Stock. The amount of the total authorized
------------------------------
capital stock of this corporation shall be One Hundred Thousand Dollars
($100,000), consisting of One Hundred Thousand (100,000) shares of common stock
with a par value of One Dollar ($1.00) per share. The stock shall be common,
non-assessable and voting stock may be issued as, when and for such
consideration as the Board of Directors may from time to time determine. The
amount of capital stock with which it will commence business is One Thousand
Dollars ($1,000).
Fifth: Incorporators. The names and addresses of each of the incorporators
-------------
signing these Articles of Incorporation are as follows:
1. Mark S. Timothy, 1133 Brickyard Rd., Salt Lake City, Utah.
2. Jerry Timothy, 2089 Donelson Lane, Salt Lake City, Utah.
Sixth: Directors. The governing board of this corporation shall be known as
---------
directors and the number of directors may from time to time be increased or
decreased in such manner as shall be specified by the bylaws of the corporation;
provided, however, the number of directors shall not be reduced to less than two
(2).
The names and addresses of the directors comprising the first Board of Directors
are as follows:
<PAGE>
1. Mark S. Timothy, 1133 Brickyard Rd., Salt Lake City, Utah.
2. Jerry Timothy, 2089 Donelson Lane, Salt Lake City, Utah.
The name and residence address within the State of Nevada of this corporation's
initial resident agent shall be:
Resident Agency National, 377 South Carson Street, Carson City, Nevada.
Seventh: Stock Nonassessable. The capital stock or the holders thereof, after
-------------------
the amount of the subscription price has been paid in, shall not be subject to
any assessment whatsoever to pay the debts of the corporation.
Eighth: Term of Existence. The existence of the Corporation is to be
-----------------
"perpetual".
Ninth: Cumulative Voting. No cumulative voting shall be permitted in the
-----------------
election of Directors.
Tenth: Preemptive Rights. Stockholders shall not be entitled to preemptive
-----------------
rights.
Eleventh: The Directors of the Corporation above named, and their duly elected
and qualified successors shall have the unqualified right of adoption of and
subsequent revision or amendment to the bylaws of this corporation, without
resort to approval thereof by the shareholders of this corporation.
Twelfth: The Directors of the Corporation above named, and their duly elected
and qualified successors shall have the unqualified right to authorize and issue
other and additional classes of shares of stock of this corporation in addition
to those as herein provided, without resort to approval thereof by the
shareholders of this corporation.
IN WITNESS WHEREOF, we have hereunto set our hands and seals this 23rd day
of January, 1987.
/s/ MARK TIMOTHY
----------------------------
Mark Timothy
/s/ JERRY TIMOTHY
----------------------------
Jerry Timothy
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
I, DON G. TIMOTHY, a Notary Public, hereby certify
Page 2 of 3
<PAGE>
that on the 23rd day of January, 1986, Mark Timothy and Jerry Timothy personally
appeared before me who, being first duly sworn, severally declared that they are
the persons who signed the foregoing document as incorporators and that the
statements therein contained are true.
DATED this 23rd day of January, 1987.
My Commission Expires: /s/ DON G. [ILLEGIBLE]
12-1-89 -------------------------------
- - --------------------- Notary Public
Residing at: Salt Lake City, Utah
<PAGE>
TAB E
STATE OF CALIFORNIA [LOGO]
================================================================================
FRANCHISE TAX BOARD
SACRAMENTO, CA 95857-0026
De Lux Onyx Company
17134 Devonshire
Northridge, Ca 91325
Subject : CERTIFICATE OF RELIEF FROM SUSPENSION OR FORFEITURE
Corporate Name : DE LUX ONYX COMPANY
Corporate Number: 0094010
Effective Date : January 22, 1987
This corporation has been relieved of suspension of forfeiture and is now
in good standing with the Franchise Tax Board.
/s/ JANE GERMAIN
Jane Germain
Collection Section
Telephone (916) 369-4700
<PAGE>
TAB F
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- - --------------------------------------------------------------------------------
State of Nevada [SEAL OF THE STATE OF Department of State
NEVADA APPEARS HERE]
I, FRANKIE SUE DEL PAPA, Secretary of State of the State of Nevada, do
hereby certify that DE LUXE ONYX COMPANY did on the TWENTY-THIRD day of JANUARY,
1987, file in this office the original Articles of Incorporation; that said
Articles are now on file and of record in the office of the Secretary of State
of the State of Nevada, and further, that said Articles contain all the
statements of facts required by the law of said State of Nevada.
[SEAL APPEARS HERE] IN WITNESS WHEREOF, I have hereunto set my hand and
affixed the Great Seal of State, at my office in
Carson City, Nevada, this
TWENTY-THIRD day of JANUARY, A.D. 1987
/s/ FRANKIE SUE DEL PAPA
---------------------------------------------------
Secretary of State
By /s/ BEVERLY J. DAVENPORT
--------------------------------------------------
Deputy
- - --------------------------------------------------------------------------------
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
- - --------------------------------------------------------------------------------
<PAGE>
------------------------------------------
STATE OF NEVADA
DEPARTMENT OF
STATE
I hereby certify that this is a
true and complete copy of the document
as filed in this office.
DATED: JAN 23 1987
------------
/s/ FRANKIE SUE DEL PAPA
-------------------------
FRANKIE SUE DEL PAPA
Secretary of State
BY /s/ BEVERLY J. DAVENPORT
------------------------
------------------------------------------
<PAGE>
TAB G
STATE OF NEVADA
SECRETARY OF STATE
------------
CERTIFICATE OF CORPORATE STATUS
I, FRANKIE SUE DEL PAPA, the duly elected, qualified and acting
Secretary of State of the State of Nevada, do hereby certify that I am, by the
laws of said State, the custodian of the records relating to corporations
organized under the laws thereof; the revocation of their corporate charters,
and their right to transact and carry on their corporate business; and am the
proper officer to execute this certificate.
I further certify that, at the date of this certificate,
AVE, INC.
is a corporation duly organized and existing under and by virtue of the laws of
the State of Nevada, having fully complied therewith; is entitled to exercise
therein all the corporate powers and functions recited in its charter or
articles of incorporation, and is in good standing in this State.
[SEAL APPEARS HERE] IN WITNESS WHEREOF, I have hereunto
set my hand and affixed the Great
Seal of the State at my office in
Carson City, Nevada, this SEVENTH
day of MAY, A.D., 1990.
/s/ FRANKIE SUE DEL PAPA
-------------------------------------
Secretary of State
By: /s/ Tammy Saling
----------------------------------
Deputy
<PAGE>
STATE OF NEVADA
DEPARTMENT OF
STATE
I hereby certify that this is
a true and complete copy of the
document filed in this office.
DATED: MAY 7, 1990
------------
/s/ FRANKIE SUE DEL PAPA
FRANKIE SUE DEL PAPA
Secretary of State
/s/ TAMMY SALING
- - -----------------
<PAGE>
TAB H
STATE OF NEVADA
DEPARTMENT OF STATE
---------
CERTIFICATE OF REINSTATEMENT
I, CHERYL A. LAU, the duly elected Secretary of State of the State of
Nevada, do hereby certify that AVE, INC. a corporation formed under the laws of
the State of NEVADA having paid all filing fees, licenses, penalties and costs,
in accordance with the provisions of Section 78.180 NRS, as amended, for the
years and in the amounts as follows:
1991-92 LIST OF OFFICERS PLUS PENALTY $100.00
1992-93 LIST OF OFFICERS PLUS PENALTY 100.00
1993-94 LIST OF OFFICERS PLUS PENALTY 100.00
1994-95 LIST OF OFFICERS PLUS PENALTY 100.00
REINSTATEMENT FEE 50.00
and otherwise complied with the provisions of said section, the said
corporation has been reinstated, and that by virtue of such reinstatement it is
authorized to transact its business in the same manner as if the aforesaid
filing fees, licenses, penalties and costs had been paid when due.
[SEAL APPEARS HERE] IN WITNESS WHEREOF, I have hereunto set my hand and
affixed the Great Seal of State, at my office,
in Carson City, Nevada, this 15TH day of
AUGUST, A.D., 1994
/s/ Cheryl A. Lau
-------------------------------------------------
Secretary of State
<PAGE>
AVE, INC.
A NEVADA CORPORATION INCORPORATED ON JAN 23, 1987. 455-87
THIS LIST IS FOR THE PERIOD JAN 1995 TO 1996. DUE BY JAN 31, 1995.
FILED
JAN 23 1995
Dean (unreadable)
RESIDENT AGENCY NATIONAL
377 SOUTH NEVADA STREET
CARSON CITY NV 89703 4290
The Secretary of State of Nevada does hereby certify that the above
corporation after having paid the annual fee of $85.00 for filing in this office
a list of its officers and directors and designation of resident agent for the
above filing period, together with penalty in the sum of and
having also filed the aforesaid list as required by Nevada Revised Statutes
Sections 78.150-78.165 and 80.110-80.140, as amended, is hereby authorized to
transact and conduct its business within this state for the aforesaid period.
THIS CERTIFICATE BECOMES A RECEIPT /s/ CHERYL A. LAU
UPON BEING VALIDATED BY THE OFFICE CHERYL A. LAU
OF SECRETARY OF STATE Secretary of State Form #LO-GRN
(Rev. 1/94)
CERTIFICATE STATE OF NEVADA - SECRETARY OF STATE File Number
Jan 94-95 /s/ AVE, Inc. 46587
The Secretary of State of Nevada does hereby certify that the above
corporation after having paid the annual fee of $85.00 for filing in this office
a list of its officers and directors and designation of resident agent for the
above filing period, together with penalty in the sum of
and having also filed the aforesaid list as required by Nevada Revised
Statutes Sections 78.150-78.165 and 80.110-80.140, as amended, is hereby
authorized to transact and conduct its business within this state for the
aforesaid period.
THIS CERTIFICATE BECOMES A RECEIPT /s/ CHERYL A. LAU
UPON BEING VALIDATED BY THE OFFICE CHERYL A. LAU
OF SECRETARY OF STATE Secretary of State
<PAGE>
TAB I
SECRETARY OF STATE
[SEAL OF THE STATE OF NEVADA]
CERTIFICATE OF EXISTENCE
WITH STATUS IN GOOD STANDING
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of
State, do hereby certify that I am, by the laws of said State, the
custodian of the records relating to filings by corporations, limited-
liability companies, limited partnerships, and limited-liability
partnerships pursuant to Title 7 of the Nevada Revised Statutes which
are either presently in a status of good standing or were in good
standing for a time period subsequent of 1976 and am the proper officer
to execute this certificate.
I further certify that the records of the Nevada Secretary of State, at
the date of this certificate, evidence, AVE, INC., as a corporation duly
organized under the laws of Nevada and existing under and by virtue of
the laws of the State of Nevada since January 23, 1987, and is in good
standing in this state.
IN WITNESS WHEREOF, I have hereunto
set my hand and affixed the Great
Seal of State, at my office, in
carson City, Nevada, on July 16,
[SEAL APPEARS HERE] 1999.
/s/ DEAN HELLER
----------------
Secretary of State
By
/s/ L. MUSSELMAN
-----------------
Certification Clerk
<PAGE>
TAB J
STATE OF NEVADA
SECRETARY OF STATE
CERTIFICATE OF REINSTATEMENT
I, DEAN HELLER, the duly elected Secretary of State of the State of
Nevada, do hereby certify that AVE, INC. a corporation formed under the laws of
the State of NEVADA having paid all filing fees, licenses, penalties and costs,
in accordance with the provisions of Title 7 of the Nevada Revised Statutes as
amended, for the years and in the amounts as follows:
1997-1998 List of officers + penalty $ 100.00
1998-1999 List of officers + penalty $ 85.00
Reinstatement $ 50.00
Total: $ 235.00
and otherwise complied with the provisions of said section, the said corporation
has been reinstated, and that by virtue of such reinstatement it is authorized
to transact its business in the same manner as if the aforesaid filing fees,
licenses, penalties and costs had been paid when due.
IN WITNESS WHEREOF, I have hereunto set
my hand and affixed the Great Seal of
State, at my office in Carson City,
Nevada, on February 2, 1998.
[SEAL APPEARS HERE]
/s/ DEAN HELLER
----------------
Secretary of State
By: /s/ SCOTT W. ANDER
-------------------
Deputy
<PAGE>
TAB K
[Logo NASD Regulation, Inc.
Appears 9513 Key West Avenue
Here] Rockville, MD 20850-3389
301-590-8500
NASD REGULATION
TELECOPIER
April 3, 1997
Ms. Melissa Goez
Citadel Securities Corp.
45 Church Street, Suite 25
Freeport, NY 11520
Re; AVE, Inc. Common Stock (7036)
---------------------------------
Dear Ms. Goez:
The Association has reviewed the information you submitted
pursuant to NASD Rule 6740 and Rule 15c2-11 under the Securities
Exchange Act of 1934 in connection with the above referenced
security(ies).
This letter will confirm that on April 3, 1997, acting in
reliance upon the information contained in the filing, we have cleared
your request for an unpriced quotation on the OTC Bulletin Board for
AVE, Inc. Common Stock. If you decide to enter a priced quotation (bid
or offer) in this security in any quotations medium, you must supplement
your filing with the Form 211. This supplemental filing must include the
basis and factors for your priced quotation and be received by the NASD
three days before the priced entry appears in a quotations medium (See
Notice to Members 90-40).
Please be advised that in clearing your filing it should not be
assumed that any federal, state, or self-regulatory requirements other
than Rule 6740 and Rule 15c2-11 have been considered. Furthermore, this
clearance should not be construed as indicating that the NASD has passed
upon the accuracy or adequacy of the documents contained in your Rule
15c2-11 submission.
For members who receive clearance to enter quotations on the OTC
Bulletin Board, the Association's Market Operations Unit will contact
your firm within 24 hours of receipt of this letter. If you have any
questions regarding this matter, please contact the undersigned at (301)
208-2802.
Very truly yours,
/s/ W. Bush
------------
W. Wayne Bush
Associate Compliance Examiner
OTC Compliance Unit
cc: National Quotations Bureau
<PAGE>
TAB L
LINDA'S BOOKKEEPING & TAX SERVICE
771 E. Minnesota
Turlock, CA 95382
(209)668-3231
May 19, 1995
To the Board of Directors of
AVE, Inc.
I have reviewed the Certified Financials as of March 31, 1990
and the subsequent six month extension through September of
1990. I have found the financials to be in order.
I have conducted an audit of the following three dates: December 31, 1993,
December 31, 1994 and May 16, 1995. I have incorporated these into one
statement. I conducted our audit in accordance with generally accepted auditing
standards.
The corporation has been inactive and there has been no activity in the last
three years. The Corporation is now a Corporate Shell with no assets or
liabilities. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on the material provided to me.
Based on my knowledge, in preparation of personal taxes of Victor Alexander, the
outgoing CEO, all activities in regard to his earning a living are not connected
with the corporation.
Sincerely yours,
/s/ LINDA A. SEYMOUR
- - ---------------------
Linda Seymour
<PAGE>
AVE, INC.
(Formerly Walsh Communications Group, Inc.)
Statements of Stockholders' Equity
For the six months and years ended May 16, 1995,
Dec 31, 1994, Dec 31, 1993, March 31, 1990, December 31, 1989 and 1988
Additional Total
Common Paid-in Accumulated Stockholders'
Stock Capital Deficit Equity
----- ------- ------- ------
Balance at January
1, 1988 8,536 $622,126 $(614,217) 16,445
Issuance of 25,000
shares for cash 25 18,148 18,173
Issuance of 278,000
shares for services 278 278
Net (loss) for 1988 ---- ---- (72,274) (72,274)
-------- --------
Balance at December
1, 1988 8,839 640,274 (686,491) (37,378)
Net (loss) for 1989 ---- ---- (2,573) (2,573)
------- -------
Balance at December
31, 1989 8,839 640,274 (689,064) (39,951)
Issuance of
11,700,000 shares of
common stock for
assets, debt
reduction and
services 11,700 170,283 81,983
Net (loss) for the
three months ended
March 31, 1990 ---- ---- (5,046) (5,046)
------- -------
Balance at:
Dec 31, 1993;
Dec 31, 1994; &
May 16, 1995 $20,539 $ 845,557 $ (694,110) $(44,997)
------ --------- ----------- ---------
<PAGE>
AVE, INC.
(Formerly Walsh Communication)
Balance Sheets
May 16 ,1995, Dec 31, 1993, Dec 31, 1994, Dec 31, 1989, and Dec 31, 1988
Dec 31, May 16 Dec 31 Dec 31,
ASSETS 1993, 1994 & 1995 1989 1988
- - ------ ----------------- ---- ----
Cash $ 0 $ 15 $ 29
Film Cost Inventory (Notes 3 and 6) 0 -- --
Equipment, net of $3,631 of
accumulated depreciation at
March 31, 1990 (Notes 4 and 6) 0 - -
---- ---- ----
Total Assets $ 0 15 29
---- ---- ----
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
Liabilities:
Accounts payable
and accrued liabilities (Note 6) $ 0 $ 24,446 $ 26,407
Notes payable (Note 5) ---- 15,500 11,000
------ ------
Total Liabilities 39,966 37,407
---- ------ ------
Stockholders' equity (Note 6):
Common stock; par value $.001,
50,000,000 shares authorized,
20,539,000 shares issued and out-
standing at March 31, 1990 and
8,839,000 shares issued and
outstanding at December 31, 1988-89 20,539 8,839 8,839
Additional paid-in capital 810,557 640,274 640,274
Accumulated (deficit) (689,064) (689,064) (686,491)
--------- --------- ---------
Total stockholders' equity (deficit) 0 (39,951) (37,378)
- -------- --------
Total liabilities & stockholders' equity $ 0 $ 15 $ 29
---- ---- ----
The accompanying notes to financial statements are an integral part of these
balance sheets.
<PAGE>
AVE. INC.
(Formerly Walsh Communication Group, Inc.)
Statements of Operations
For the six months and years ended
May 16, 1995, Dec 31, 1994, Dec 31, 1993, March 31, 1990,
December 31, 1989 and 1988
May 16, May 31, Dec 31, Dec 31,
1995 1990 1989 1988
---- ---- ---- ----
(Dec 31, 1994
----
Dec 31, 1993)
----
Interest Income $ 0 $ $ $ 257
---- ---- ---- -----
Expenses:
Depreciation (Note 4) 0 3,631 ---- -----
Interest (Note 5) 0 180 743 -
Other Operating and
administrative expenses
(Note 6) 0 1,235 1,830 72,531
----- ----- ------
Total expenses 0 5,046 2,573 72,531
----- ----- ------
Net (loss) 0 $(5,046) $(2,573) $(72,274)
-------- -------- ---------
Net (loss) per share 0 $(.0003) $(.0003) $(.0082)
-------- -------
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
AVE, INC.
(Formerly Walsh Communications Group, Inc.)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY
- - --------------------
AVE, Inc. (the "Company") was incorporated in 1921 under the name of
DeLuxe Onyx Company. In 1987, the Company's name was changed to Walsh
Communications Group, Inc. and the Company's domicilie was changed to Nevada. On
January 5, 1990, the Board of Directors authorized that the name of the Company
be changed and on May 4, 1990, amended Articles of Incorporation were filed to
change the Company's name to AVE, Inc.
The Company has been a motion picture company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- - ---------------------------------------------------
Film Cost Inventory
The cost of acquiring and developing motion pictures is capitalized as
film cost inventory and amortized using the individual-film-forecasting-
computation method.
This method amortizes film costs in the same ratio that current gross
revenues bear to anticipated gross revenues. If the cost of any motion
picture exceeds the anticipated net realizable value, it is written down
to net realizable value.
Depreciation of Equipment
-------------------------
Equipment is being depreciated over its estimated useful life ranging
from three to five years, using the straight-line method.
Income Taxes
------------
The Company has had losses from inception. Accordingly no income tax
liability has been accrued or provided for. The Company has a net
operating loss carry forward of approximately $672,000 available to
offset future income. The loss carry forward expires between the years
2002 to 2005.
Earnings (Loss) per Share
-------------------------
The earnings (loss) per share is calculated using the weighted average
shares outstanding during the period.
<PAGE>
NOTE 3 - FILM COST INVENTORY
- - ----------------------------
Film cost inventory consists of the following at March 31, 1990 (See note 6):
Films released $ 65,000
Films in process 41,000
Supplies 7,000
--------
Total film cost inventory $ 113,000
--------
NOTE 4 - EQUIPMENT
- - ------------------
Equipment consists of the following at March 31, 1990 (See note 6):
Production equipment $ 20,080
Post-production equipment 16,650
Motion Picture Equipment 3,000
Movie Setr equipment 15,000
Office equipment 7,895
--------
Subtotal 62,625
Less: accumulated depreciation (3,631)
--------
Net equipment $ 58,994
NOTE 5 - NOTES PAYABLE
- - ----------------------
The Company reduced $9,500 of notes payable owing as of December 31, 1989, by
issuing common stock (see Note 6).
In July 1988, the Company extinguished $303,680 of debt owed to a company
control led by a Company officer, by transferring back all rights to certain
television and/or motion picture properties recorded at the same amount, which
had been acquired from that company in a prior year.
NOTE 6 - ISSUANCE OF COMMON STOCK
- - ---------------------------------
On January 5, 1990, the Board of Directors approved the issuance of 11,700,000
shares of its common stock to acquire film cost inventory and related equipment
recorded at $175,625, to reduce notes payable by $9,500, to reduce accrued
liabilities by $83 and to pay expenses of %875.
The amount of $175,625 recorded for the assets acquired through the issuance of
common stock does not exceed the cost basis represented by the previous owner,
who is currently an officer and stockholder of the Company. Management believes
that the fair market value of the assets acquired are substantially higher than
the cost basis recorded in the accompanying balance sheet.
<PAGE>
AVE, INC.
(Formerly Walsh Communications Group, Inc.)
Statements of Cash Flows
May 16, 1995, Dec 31, 1994, Dec 31, 1993, March 31, 1990,
December 31, 1989 and 1988
Dec 31,
1993
----
Dec 31,
1994
----
May 16, March 31, Dec 31, Dec 31,
Increase (decrease) in cash: 1995 1990 1989 1988
---- ---- ---- ----
Cash flows from operating
activities:
Net (loss) 0 $(5,046) $(2,573) $(72,274)
Depreciation 0 3,631 ---- ----
Loss from abandoned equipment ---- ---- 4,965
Common stock for services 0 875 ---- 278
Increase (decrease) in
accounts payable and
accrued liabilities 0 525 (1,941) (101,352)
--- ------- ---------
Net cash (used) by 0 (15) (4,514) (168,383)
---- ------- ---------
Cash flows from investing
activities:
Note receivable proceeds 0 ---- ---- (41,327)
--------
Cash flows from financing
activities:
Issuance of common stock 0 ---- ---- 18,173
Note borrowings 0 ---- 4,500 12,093
Note principal paid 0 (1,093)
---- ---- -------
Net cash provided by
financing activities 0 4,500 29,173
---- ----- ------
Net (decrease) in cash 0 (15) (14) (97,883)
Cash, beginning of
period 0 (15) (29) 97,912
---- ----- ------
Cash, end of period 0 $ $ 15 $ 29
---- ----- ------
Supplemental schedule of non-cash investing and financing activities:
During the three months ended March 31, 1990, the Company issued common stock to
acquire $113,000 of film cost inventory and $62,625 of equipment, and to reduce
notes payable and accrued liabilities by $9,500 and $83, respectively.
During the year ended Dec 31, 1988, $303,680 of debt was extinguished by
transferring all rights to certain television and/or motion picture properties
recorded at the same amount.
<PAGE>
TAB M
SECRETARY OF STATE
[SEAL OF THE STATE OF NEVADA]
STATE OF NEVADA
CERTIFICATE OF CORPORATE EXISTENCE
(EXCLUDING AMENDMENTS)
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of
State, do hereby certify that I am, by the laws of said State, the custodian of
the records relating to corporations organized under the laws thereof; the
revocation of their corporate charters, and their right to transact and carry on
their corporate business; and am the proper officer to execute this certificate.
I further certify that, at the date of this certificate, AVE, INC. is a
corporation duly organized and existing under and by virtue of the laws of the
State of Nevada, having fully complied therewith, is entitled to exercise
therein all the corporate powers and functions recited in its charter or
articles of incorporation, and is in good standing in this State.
[SEAL APPEARS HERE] IN WITNESS WHEREOF, I have hereunto set
my hand and affixed the Great Seal of
State, at my office, in Carson City,
Nevada, this 21st day of June, 1995.
/s/ DEAN HELLER
----------------
Secretary of State
By /s/ RICK JORDEN
----------------
Certification Clerk
<PAGE>
TAB N
A.V.E., INC.
A NEVADA STATE CORPORATION
BOARD OF DIRECTORS
RESOLUTION
JULY 12, 1995
RENO, NEVADA
RESOLVED: That, by signature below, the Board of Directors approve of such
actions taken during a meeting of the shareholders of AVE, Inc. at a special
meeting held July 11, 1995 (Certification of such meeting being attached to this
resolution) and such actions being:
1. Reelection of the two existing Directors, Mr. Henri Hornby and Mr. Neil
Hornby.
2. Approval for a 1:200 stock split of the Company's outstanding shares,
reducing the number of shares outstanding from 20,558,600 to 102,793.
3. Approval of a resolution to amend the Company's by-laws to authorize a
total capitalization of common shares to 15,000,000 of $0.001 par
value stock.
No other business was brought before the Board and the meeting was adjourned.
ATTEST:
/s/ HENRI R. HORNBY /s/ NEIL F. HORNBY
- - -------------------- -------------------
Henri R. Hornby Neil F. Hornby
Director Director
A.V.E. INC., 3653 HEMLOCK COURT, RENO, NEVADA 89509 702-829-8812
FAX 702-829-8813
<PAGE>
TAB O
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Ave, Inc.
3653 Hemlock Court
Reno, Nevada 89509
We have audited the accompanying balance sheets of AVE, INC. as of December 31,
1996 and 1995, and the related statements of income and expenses, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AVE, INC. as of December 31,
1996 and 1995, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
/s/ ROBERT MOE & ASSOCIATES
----------------------------
ROBERT MOE & ASSOCIATES, P.S.
Spokane, Washington
February 1, 1997
<PAGE>
AVE, INC.
BALANCE SHEETS
December 31, 1996 and 1995
ASSETS
1996 1995
------ ------
CURRENT ASSETS
Cash $ 8,946 $ 6,644
OTHER ASSETS -- --
------ ------
TOTAL ASSETS $ 8,946 $ 6,644
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,000 $ None
------ ------
STOCKHOLDERS' EQUITY
Common stock, $.001 par value,
15,000,000 shares authorized,
112,793 shares issued, 10,000
shares subscribed but unissued
in 1995 113 113
Additional paid-in capital 840,983 840,983
------- -------
841,096 841,096
Less stock subscriptions receivable 2,500
------- -------
841,096 838,596
Accumulated (Deficit) (833,150) (831,952)
------- -------
Total Stockholders' Equity 7,946 6,644
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 8,946 $ 6,644
======= =======
The accompanying notes are an integral part of these financial statements
2
<PAGE>
AVE, INC.
COMPARATIVE STATEMENT OF INCOME AND EXPENSES
For the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
------ ------ ------
REVENUES $ -- $ -- $ --
------ ------ ------
OPERATING EXPENSES
Administrative expenses 1,198 856 --
------ ------ ------
1,198 856 --
OPERATING (LOSS) (1,198) (856)
OTHER INCOME (EXPENSES) -- -- --
------ ------ ------
INCOME (LOSS) BEFORE PROVISION
FOR FEDERAL INCOME TAX (1,198) (856) --
PROVISION FOR FEDERAL INCOME TAX -- -- --
------ ------ ------
NET INCOME (LOSS) $(1,198) $ (856) $ --
====== ====== ======
EARNINGS (LOSS) PER SHARE $ NIL $ NIL $ NIL
====== ====== ======
The accompanying notes are an integral part of these financial statements
3
<PAGE>
AVE, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
December 31, 1996
<TABLE>
<CAPTION>
Common Stock Retained Total
----------------------------- Paid-In Earnings Stockholders'
Shares Amount Capital (Deficit) Equity
------------ ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance at Jan. 1, 1988 8,536,000 $ 8,536 $622,126 $(614,217) $ 16,455
Issuance of 25,000 shares for cash 25,000 25 18,148 18,173
Issuance of 278,000 shares for services 278,000 278 278
Net (Loss) for 1988 (72,274) (72,274)
------------ ----------- ----------- ------------ -----------
Balance at December 1, 1988 8,839,000 8,839 640,274 (686,491) (37,378)
Net (Loss) for 1989 (2,573) (2,573)
------------ ----------- ----------- ------------ -----------
Balance at December 31, 1989 8,839,000 8,839 640,274 (689,064) (39,951)
Issuance of 11,700,000 shares of
common stock for assets, debt
reduction and services 11,700,000 11,700 170,283 181,983
Net (Loss) for 1990 (142,032) (142,032)
------------ ----------- ----------- ------------ -----------
Balance at December 31, 1990 20,539,000 20,539 810,557 (831,096) -0-
Net (Loss) for 1991-1994 -0- -0-
------------ ----------- ----------- ------------ -----------
Balance at December 31, 1994 20,539,000 20,539 810,557 (831,096)
Reduction of outstanding shares
200 to 1 for reverse stock split (20,436,305) (20,436) 20,436
Adjustment for fractional shares 98
Net (loss) for 1995 (856) (856)
Sale of common stock 10,000 10 9,990 10,000
Less stock subscription receivable (2,500)
------------ ----------- ----------- ------------ -----------
Balance at December 31, 1995 112,793 113 840,983 (831,952) 6,644
Stock subscription paid 2,500
Net (Loss) for 1996 (1,198) (1,198)
------------ ----------- ----------- ------------ -----------
Balance at December 31, 1996 112,793 $ 113 $840,983 $(833,150) $ 7,946
============ =========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
AVE, INC.
COMPARATIVE STATEMENT OF CASH FLOWS
For the years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(1,198) $ (856) $ -0-
Increase in accounts payable 1,000 -- --
--------- --------- --------
(198) (856) -0-
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 2,500 7,500 --
--------- --------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,302 6,644 --
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 6,644 -- --
--------- --------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 8,946 $ 6,644 $ --
--------- --------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the year for:
Interest $ -- $ -- $ --
Income taxes $ -- $ -- $ --
</TABLE>
For purposes of this statement short term investments which have an initial
maturity of ninety days or less are considered cash equivalents.
The accompanying notes are an integral part of these financial statements
5
<PAGE>
AVE, INC.
NOTES TO FINANCIAL STATEMENTS
1 - ORGANIZATION
AVE, Inc. (the "Company") was incorporated in 1921 under the name of Deluxe
Onyx Company. In 1987, the Company's name was changed to Walsh
Communications Group, Inc. and the Company's domicile was changed to Nevada.
On January 5, 1990, the Board of Directors authorized that the name of the
Company be changed and on May 4, 1990, amended Articles of Incorporation
were filed to change the Company's name to AVE, Inc. The Company's principal
business was the production of motion pictures. The Company has been
inactive since 1990. The Company's year end is December 31.
2 - SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation: The accompanying financial statements have been
---------------------
prepared on a going concern basis which contemplates the realization of
assets and the satisfaction of liabilities and commitments in the normal
course of business.
Accounting Method: The Company uses the accrual method of accounting for
-----------------
revenues and expense.
Depreciation of Equipment: Equipment will be depreciated over its estimated
-------------------------
useful life.
Income Taxes: The Company has had losses from inception. Accordingly, no
------------
income tax liability has been accrued. The Company has a net operating loss
carryforward of approximately $833,150 available to offset future income.
The loss carryforward expires between 2002 to 2006.
Earnings (Loss) Per Share: The earnings (loss) per share is calculated using
-------------------------
the weighted average shares outstanding during the period.
3 - CAPITALIZATION
The Company approved a 200 to 1 reverse stock split on July 11, 1995 which
reduced the numbers of authorized shares from 50,000,000 to 250,000 and
reduced the amount of issued and outstanding shares from 20,539,000 to
102,793 shares. Immediately after the reverse stock split the Company
approved an increase in the authorized common stock to 15,000,000 shares.
6
<PAGE>
AVE, INC.
NOTES TO FINANCIAL STATEMENTS
4 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial Accounting Standards Board ("FASB") Statement No. 107 "Disclosure
about Fair Value of Financial Instruments," is a part of a continuing
process by the FASB to improve information on financial instruments. The
following methods and assumptions were used by the Company in estimating its
fair value disclosures for such financial instruments as defined by the
Statement.
Cash: The carrying amount reported in the balance sheet for cash
----
approximates fair value.
Accounts Payable: The carrying amount reported in the balance sheet for
----------------
payables approximates fair value because the maturity is less than one year
in duration.
7
<PAGE>
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------
Board of Directors
Ave, Inc.
3653 Hemlock Ct
Reno, Nevada 89509
We hereby consent to the use of our opinion, dated February 1, 1997 on the
financial statements of AVE, INC. for the year ended December 31, 1996 in the
Form 10-K included herein.
/s/ ROBERT MOE & ASSOCIATES, P.S.
ROBERT MOE & ASSOCIATES, P.S.
Spokane, Washington
February 4, 1997
<PAGE>
TAB P
R. G. K.
- - -------------------------------------------------------------------------------
Fax Transmission (REVISION #1, TUESDAY, 12/23/97)
From: R. Gene Klawetter Date: 12/22/97
To: Tom Athans Time: 11:30 A.M. MST
Company: Digital Manufacturing Corporation Fax: 817 498 6874
Subject: "Working Agreement" Pages: 3
- - -------------------------------------------------------------------------------
Dear Tom:
I really enjoyed our meeting last Friday and sincerely look forward to working
with you to make a lot of good things happen. I relate to your personal interest
and think we have a lot in common in terms of goals and objectives.
You requested that I send you a letter outlining the details of an approach to
getting things going. Please regard this as an initial attempt to express our
thoughts. You will find that we are open to whatever discussion is necessary in
order for everyone to feel comfortable with the ultimate approach. Therefore,
please review the following action items and give me your input at the earliest
point in time.
1. The first thing that needs to happen is that AVE Inc. needs to be finalized
in terms of the incorporation documents and perhaps the By-laws. In this
regard, the following is suggested:
Corporate Officers: R. Gene Klawetter, Chairman, CEO
Tom Athans, President
Daniel M. Smith, V.P. Finance, CFO
George Sullivan, V.P. Operations &
Corp. Sec.
NOTE: Officers will initially receive
firm, two year management agreements.
Board of Directors: Five (5); members appointed by Chairman,
one of which will be Tom Athans.
Additionally, the Henri Hornby group
will be entitled to one Board seat with
the balance to be filled by
independents.
Corporate Headquarters: Because of the industry, it would seem
very advantageous to locate the
corporate headquarters in Denver. We
have office space etc., plus many of the
industry potential clients are here. For
obvious reasons, we could keep an office
in Ft. Worth which
[LETTERHEAD OF R. GENE KLAWETTER APPEARS HERE]
<PAGE>
"Working Agreement"
Page -2-
would enable effective travel out of DFW (which we
will be doing a lot in all probability).
2. Once AVE, Inc. is finalized (minor revisions to basic agreement), we need
to immediately complete and file 10Q's for two periods, complete an audit, and
file the 10K for 1997. This will enable us to not only get the stock trading,
but be in a position to raise equity capital. With regard to issuing stock, as I
understand all of the commitments at this time, the following would be the
suggested capitalization (revised):
Capitalization: 7.1% Shell Owners (Consultants) 1,063,874
26.6% Tom Athans 4,000,000
2.0% Marvin Athans (Consultants) 300,000
0.9% H. Hornby 132,000
0.7% Currently Issued Shares 102,793
1.7% D. Smith 250,000
1.7% G. Sullivan 250,000
10.0% G. Klawetter 1,500,000
13.3% 504 Reg D Offering 2,000,000
36.0% Private Placement (Treasury Stock) 5,401,333
Total Authorized Shares 15,000,000
3. With respect to compensation; Dan Smith, George Sullivan and I will work
WITHOUT compensation until we are able, as a team, to secure funding for the
Company. In other words, we will earn "our stripes" by performing to get the
Company funded. Once the Company has secured operating capital, we would see the
following general levels of compensation.
Salaries (per month): Tom Athans $8,333
Gene Klawetter $8,333
Dan Smith $5,000
George Sullivan $5,000
Additionally, the proforma financials which we have drafted assume an annual
bonus opportunity of 20% of the base salary. To the extent affordable, the
Company would also pay auto allowance. NOTE: the above salaries WILL NOT become
effective until funding is in place.
Tom, any of the other issues which may be relevant will simply be a matter of
day-to-day management of the business which we can discuss at the appropriate
time. An example would be creation and administration of stock option plans,
medical benefits plans, SAR-SEP plans, etc. We will work through these issues
together when it is called for.
Tom, let me know as soon as possible if you generally agree with the above.
Further, at your earliest convenience, I need for you to overnight me the
following:
[LETTERHEAD OF R. GENE KLAWETTER APPEARS HERE]
<PAGE>
"Working agreement"
Page -3-
1. Any and all information you have on the product, including a copy of
the patent and the license you have with NASA. This is the key to raising money
at this early state.
2. Copy of your agreement with Henri.
3. Copy of Digital Manufacturing Corp. Corporate records, ie. Articles of
Incorporation, By-laws, etc.
Also, Tom, I have made several contacts on "some" immediate cash. I have a
conference call this afternoon and will call you after the conference call with
the outcome.
Also, Tom, I am going to include a copy of the DRAFT proforma financial package
which we have put together. It includes substantially more cost than you had in
your plan. However, there are certain costs as a result of being public and the
cost of financing, etc. that you perhaps had not considered. We have also
included warranty reserves, Director and Officer Insurance, etc. Just remember
as you review these numbers, Tom, that this is a plan, a proforma. We have tried
to make it as complete as possible to facilitate our financing effort. But as we
all know, plans can change or be adjusted as circumstances dictate. Just let me
know if you have any questions.
Tom, again, I cannot emphasize enough how much we need to receive any and all
information which you have on the product, etc. in order for us to complete an
offering document so that we can raise money. The sooner we have the
information, the sooner we can complete the document we need and the sooner we
can begin raising the money. HELP!!!
Tom, on behalf of George and Dan I want you to know that we are excited,
enthusiastic and really look forward to working with you to "hit a homerun."
Best regards,
/s/ [ILLEGIBLE]
Gene
RGK/me
AGREED:
/S/ TOM ATHANS 12/23/97
- - ------------------------------ ------------------------------
(Tom Athans) (Date)
[LETTERHEAD OF R. GENE KLAWETTER APPEARS HERE]
<PAGE>
ACQUISITION [ILLEGIBLE]
AGREEMENT (the "Agreement") dated April [ILLEGIBLE] incorporated under
the laws of the State of Nevada [ILLEGIBLE] DIGITAL MANUFACTURING INCORPORATED,
a company incorporated under the laws of the State of Texas (hereinafter
referred to as "DIGITAL") and the persons listed on Exhibit "A-1" attached
hereto and made a part hereof, being all of DIGITAL's stockholders now and as of
the closing date of this Agreement (hereinafter referred to as the "Sellers").
WHEREAS, the Sellers own a total of 1,000 shares of common stock, no par
value, of DIGITAL, said shares being one hundred (100%) percent of the issued
and outstanding common stock of DIGITAL; and
WHEREAS, the Sellers desire to sell and AVE desires to purchase one
hundred (100%) percent of such shares;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereby agree as
follows:
1. Purchase and Sale. The Sellers hereby agree to sell, transfer,
-----------------
assign and convey to AVE and AVE hereby agrees to purchase and acquire from the
Sellers, one hundred (100%) percent of DIGITAL's issued and outstanding common
stock (the "DIGITAL Common Shares"), in a reorganization pursuant to Section 368
(a)(1)(B) of the Internal Revenue Code.
2. Purchase Price. The aggregate purchase price to be paid by AVE
--------------
for the DIGITAL Common Shares shall be 8,500,000 shares of AVE $0.001 par value
voting common stock, (the "AVE Common Shares"). The AVE Common Shares will be
issued as follows: (a) to the Sellers (8,500,000); (b) to private investors
acquiring shares in exchange for their investment of $400,000 in DIGITAL
(533,333); and (c) to consultants for services rendered under Rule 504
(1,063,874 shares) described in Section 12 herein ("Consultants") in accordance
with Exhibit "A-2", attached hereto. No fractional shares of AVE Common Stock
will be issued; in lieu thereof, the number of shares of AVE Common Stock to be
issued to each Seller will be rounded up to the next whole share. Each of the
Sellers hereby agrees to the terms of this Agreement.
3. Warranties and Representations of DIGITAL and Sellers. In
-----------------------------------------------------
order to induce AVE to enter into this Agreement and to complete the transaction
contemplated hereby, DIGITAL and Sellers warrant and represent to AVE as of the
date hereof and as of the Closing that:
(a) Organization and Standing. DIGITAL is a corporation
-------------------------
duly organized, validly existing and in good standing under the laws of the
State of Texas, is qualified to do business as a foreign corporation in ______
__________ and in every other state or jurisdiction in which it operates to the
extent required by the laws of such states and jurisdictions, and has full power
and authority to carry on its business as now conducted and to own and operate
its assets, properties and business. Attached hereto as Exhibit "B" are true
and correct copies of DIGITAL's Certificate of Incorporation, amendments thereto
and all current By-laws of DIGITAL. No changes thereto will be made in any of
the Exhibit "B" documents before the Closing.
(b) Capitalization. As of the date hereof, DIGITAL's entire
--------------
authorized equity capital consists of __,1,000 shares of Common Stock $0.00 par
value, of which 1,000 shares of Common Stock are issued and outstanding. As of
the Closing Date, there will be no other voting or equity securities authorized
or issued, nor any authorized or issued securities convertible into voting
stock, and no outstanding subscriptions, warrants, calls, options, rights,
commitments or agreements by which DIGITAL or the Sellers are bound, calling for
the
<PAGE>
issuance of any additional shares of common stock or any other voting or equity
security. All of such Digital Common Shares have been duly authorized and
validly issued and are fully paid and non-assessable and were not issued in
violation of any preemptive rights or any applicable securities laws. The 1,800
issued and outstanding DIGITAL Common Shares constitute one hundred (100%)
percent of the equity capital of DIGITAL, which includes, inter alia, one
----- ----
hundred (100%) percent of DIGITAL's voting power, right to receive dividends,
when, as and if declared and paid, and the right to receive the proceeds of
liquidation attributable to common stock, if any.
(c) Ownership of DIGITAL Shares. As of the date hereof, the Sellers are
---------------------------
the sole owners of the DIGITAL Common Shares, free and clear of all liens,
encumbrances, and restrictions whatsoever, except that the DIGITAL Common Shares
have not been registered under the Securities Act of 1933, as amended (the "'33
Act"), or any applicable State Securities laws. By the transfer of the DIGITAL
Common Shares to AVE pursuant to this Agreement, AVE will thereby acquire good
and marketable title to 100% of the capital stock of DIGITAL, free and clear of
all liens, encumbrances and restrictions of any nature whatsoever, except by
reason of the fact that the DIGITAL Common Shares will not have been registered
under the '33 Act, or any applicable State Securities laws.
(d) Taxes. DIGITAL has filed all federal, state and local income or
-----
other tax returns and reports that it is required to file with all governmental
agencies, wherever situate, and has paid or accrued for payment all taxes as
shown on such returns, such that a failure to file, pay or accrue will not have
a Material Adverse Effect on DIGITAL. Such returns have been prepared in
accordance with the applicable tax laws and rules and regulations thereunder to
which DIGITAL is subject and Sellers have delivered true and complete copies of
all such tax returns to AVE.
(e) Pending Actions. There are no material legal actions, lawsuits,
---------------
proceedings or investigations, either administrative or judicial, pending or
threatened, against or affecting DIGITAL, or against DIGITAL's Officers or
Directors or the Sellers that arise out of their operation of DIGITAL, except as
described in Exhibit "C" attached hereto. DIGITAL is not knowingly in violation
of any law, material ordinance or regulation of any kind whatever, including,
but not limited to laws, rules and regulations governing the sale of its
products and/or services, the '33 Act, the Securities Exchange Act of 1934 (the
"'34 Act") as amended, the Rules and Regulations of the U.S. Securities and
Exchange Commission ("SEC"), or the securities laws and regulations of any
state. Neither DIGITAL nor Sellers are subject to any order, writ, judgment,
injunction, decree, determination or award of any court, arbitrator or
administrative, governmental or regulatory authority or body.
(f) Governmental Regulation. No approval of any trade or professional
-----------------------
association or agency of government other than as set forth on Exhibit "D" is
required for any of the transactions effected by this Agreement, and the
completion of the transactions contemplated by this Agreement will not, in and
of themselves, affected or jeopardize the validity or continuation of any of
them.
(g) Ownership of Assets. Except as set forth in Exhibit "E", DIGITAL has
-------------------
good, marketable title, without any liens or encumbrances of any nature
whatever, to all of the following, if any: its assets, properties and rights of
every type and description, including, without limitation, all cash on hand and
in banks,
-2-
<PAGE>
certificates of deposit, stocks, bonds, and other securities, good will,
customer lists, its corporate name and all variants thereof, trademarks and
trade names, copyrights and interests thereunder, licenses and registrations,
pending licenses and permits and applications therefor, inventions, processes,
know-how, trade secrets, real estate and interests therein and improvements
thereto, machinery, equipment, vehicles, notes and accounts receivable,
fixtures, rights under agreements and leases, franchises, all rights and claims
under insurance policies and other contracts of whatever nature, rights in funds
of whatever nature, books and records and all other property and rights of
every kind and nature owned or held by DIGITAL as of this date, and will
continue to hold such title on and after the completion of the transactions
contemplated by this Agreement; nor, except in the ordinary course of its
business, has DIGITAL disposed of any such asset since the date of the most
recent balance sheet described in Section 3(o) of this Agreement.
(h) No Interest in Suppliers, Customers, Landlords or Competitors.
-------------------------------------------------------------
Neither the Sellers nor any member of their families have any interest of any
nature whatever in any supplier, customer, landlord or competitor of DIGITAL.
(i) No Debt Owed by DIGITAL to Sellers. Except as set forth in Exhibit
----------------------------------
"F", DIGITAL does not owe any money, securities, or property to either the
Sellers or any member of their families or to any company controlled by or under
common control with such a person, directly or indirectly.
(j) Corporate Records. All of DIGITAL's books and records, including,
-----------------
without limitation, its books of account, corporate records, minute book, stock
certificate books and other records of DIGITAL are up-to-date, complete and
reflect accurately and fairly the conduct of its business in all material
respects since its date of incorporation. All reports, returns and statements
currently required to be filed by DIGITAL, with respect to the business and
operations of DIGITAL, with any governmental agency have been filed or valid
extensions have been obtained in accordance with normal procedures and all
governmental reporting requirements have been complied with.
(k) No Misleading Statements or Omissions. Neither this Agreement nor
-------------------------------------
any financial statement, exhibit, schedule or document attached hereto or
presented to AVE in connection herewith, contains any materially misleading
statement, or omits any fact or statement necessary to make the other statements
or facts therein set forth not materially misleading.
(l) Validity of the Agreement. All corporate and other proceedings
-------------------------
required to be taken by the Sellers and by DIGITAL in order to enter into and to
carry out this Agreement have been duly and properly taken. This Agreement has
been duly executed by the Sellers and by DIGITAL, and constitutes the valid and
binding obligation of each of them, except to the extent limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws relating to or
effecting generally the enforcement of creditors rights. The execution and
delivery of this Agreement and the carrying out of its purposes will not result
in the breach of any of the terms or conditions of, or constitute a default
under or violate, DIGITAL's Certificate of Incorporation or By-Laws, or any
material agreement, lease, mortgage, bond, indenture, license or other material
document or undertaking, oral or written, to which DIGITAL or the Sellers is a
party or is bound or may be affected, nor will such execution, delivery and
carrying out violate any order, writ, injunction, decree, law, rule or
regulation of any court, regulatory agency or other governmental body; and the
business now conducted by
-3-
<PAGE>
DIGITAL can continue to be so conducted after completion of the transaction
contemplated hereby, with DIGITAL as a wholly-owned subsidiary of AVE.
(m) Enforceability of the Agreement. When duly executed and delivered,
-------------------------------
this Agreement and the Exhibits hereto which are incorporated herein and made a
part hereof are legal, valid, and enforceable by AVE according to their terms,
except to the extent limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws relating to or effecting generally the
enforcement of creditors rights, and that at the time of such execution and
delivery, AVE will have acquired title in and to the DIGITAL Common Shares free
and clear of all claims, liens and encumbrances.
(n) Access to Books and Records. AVE will have full and free access to
---------------------------
DIGITAL's books during the course of this transaction prior to and at the
Closing, during regular business hours.
(o) DIGITAL Financial Statements. Attached hereto as Exhibit "G-1" are
----------------------------
recent unaudited financial statements of DIGITAL. Before the Closing, DIGITAL's
audited financial statements will be provided to AVE, and will be annexed hereto
as Exhibit "G-2"; the DIGITAL financial statements will accurately describe
DIGITAL's financial position as of the date thereof. DIGITAL's financial
statements will have been prepared in accordance with generally accepted
accounting principles in the United States ("GAAP") (or as permitted by
regulation S-X, S-B, and/or the rules promulgated under the U.S. Securities Act
of 1933 and the U.S. Securities Exchange Act of 1934) and present fairly in all
material respects the financial condition of DIGITAL as of the dates thereof and
will have been certified by independent certified public accountants with
substantial SEC experience. Without limiting any of the foregoing
representations and warranties, there are no liabilities of DIGITAL which will
not be reflected on the DIGITAL financial statements; and the audited financial
statements in Exhibits "G-2" will show no material adverse change from the
unaudited financial statements contained in Exhibit "G-1".
(p) DIGITAL's Corporate Summary. DIGITAL's Corporate Summary, prepared
---------------------------
in ________________ , 1997 (attached hereto as Exhibit "L") accurately describes
DIGITAL's business, assets, proposed operations and management as of the date
thereof; since the date of the Corporate Summary, there has been no material
change in the Business Plan and no material adverse change in DIGITAL of any
kind or nature whatsoever.
(q) No Brokers. Except as set forth in paragraphs 4(b) and 12 below, no
----------
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with any of the transactions contemplated
by this Agreement.
(r) Compliance with Laws. DIGITAL represents and warrants that it has
--------------------
complied with, and is not in violation of any applicable federal, state, or
local statutes, laws or regulations as respects the ownership of its property or
the operation of its business.
(s) Compliance with Laws; Environmental or other Related Matters.
------------------------------------------------------------
DIGITAL's operations have been conducted in all material respects in accordance
with all applicable statutes, laws, rules and regulations. DIGITAL is not in
violation of any Federal, state, local or foreign law, ordinance or regulation
or any Governmental Order applicable to DIGITAL or by which any of its
properties is subject, bound or affected.
-4-
<PAGE>
There is no Governmental Order outstanding against DIGITAL (nor, to the best
knowledge of DIGITAL, threatened to be issued) that will or would have a
Material Adverse Effect. Except as disclosed herein, DIGITAL currently holds
(and at the Closing will hold) all the environmental, health and safety and
other permits, licenses, authorizations, certificates and approvals of
Governmental Authorities, whether Federal, state, local or foreign
(collectively, "Permits"), necessary or proper for the current use, occupancy or
operation of the Business, and all of the Permits are now and at the Closing
will be in full force and effect. Schedule "S" annexed hereto and made a part
hereof contains a list of all material Permits and all material applications for
Permits relating to DIGITAL and the Business. DIGITAL has not received and has
no reason to believe it will receive any notice that any Governmental Authority
is considering revoking, canceling, rescinding, materially modifying or refusing
to renew any of the Permits. Except as otherwise disclosed herein, there is no
existing practice, action or plan of DIGITAL and no existing condition of the
assets of DIGITAL that may give rise to any civil or criminal liability under,
or violate or prevent compliance with, any environmental, health or occupational
safety or other applicable statute, regulation, ordinance, decree or Permit
other than those practices, action, plans and conditions the existence of which
will not have a Material Adverse Effect. Schedule "T" identifies all Permits
that require consent, notification or other action to remain in full force and
effect following the consummation of the transaction contemplated hereby.
4. Warranties and Representations of AVE. In order to induce the Sellers
-------------------------------------
and DIGITAL to enter into this Agreement and to complete the transaction
contemplated hereby, AVE warrants and represents to DIGITAL and Sellers that:
(a) Organization and Standing. AVE is a corporation duly organized,
-------------------------
validly existing and in good standing under the laws of the State of Nevada, is
qualified to do business as a foreign corporation in every other state in which
it operates to the extent required by the laws of such states, and has full
power and authority to carry on its business as now conducted and to own and
operate its assets, properties and business.
(b) Capitalization. AVE's entire authorized equity capital consists of
--------------
15,000,000 shares of voting common stock, $.001 par value, of which 102,793
shares are issued and outstanding as of the date hereof. As of the Closing,
there will be a total of 10,200,000 post-reverse split shares of AVE issued and
outstanding, after giving effect to (a) the issuance of 8,500,000 shares under
Rule 144 to DIGITAL's shareholders; (b) the issuance of 533,333 Rule 144 shares
to private investors in exchange for their investment of $400,000 in DIGITAL;
and (c) the issuance of 1,063,874 shares under Rule 504 to Consultants as
payment for their services under Rule 504 in connection with this transaction).
Upon issuance, all of the AVE Common Stock will be validly issued fully paid and
non-assessable. The relative rights and preferences of AVE's equity securities
are set forth on the Certificate of Incorporation, as amended and AVE's By-laws
(Exhibit "H" hereto). There are no other voting or equity securities convertible
into voting stock, and no outstanding subscriptions, warrants, calls, options,
rights, commitments or agreements by which AVE is bound, calling for the
issuance of any additional shares of common stock or any other voting or equity
security. The By-laws of AVE provide that a simple majority of the shares voting
at a stockholders' meeting at which a quorum is present may elect all of the
directors of AVE. Cumulative voting is not provided for by the By-Laws or
Certificate of Incorporation of AVE. Accordingly, as of the Closing the
8,500,000 shares being issued to and acquired by the Sellers (not including the
shares issued to Consultants) will constitute 83.33% of the 10,200,000 shares of
AVE which will then be issued and outstanding, (including after giving effect to
the issuance of the above-stated number of
-5-
<PAGE>
shares as payment for all consulting fees and commissions) which includes, inter
-----
alia, that same percentage of AVE's voting power, right to receive dividends,
- - ----
when, as and if declared and paid, and the right to receive the proceeds of
liquidation attributable to common stock, if any.
(c) Ownership of Shares. By AVE's issuance of the AVE Common Shares to
-------------------
the Sellers pursuant to this Agreement, the Sellers will thereby acquire good
and marketable title thereto, free and clear of all liens, encumbrances and
restrictions of any nature whatsoever, except by reason of the fact that such
AVE shares will not have been registered under the '33 Act.
(d) Significant Agreements. AVE is not and will not at Closing be bound
----------------------
by any of the following other than where already disclosed in any other exhibit,
unless specifically listed in Exhibit "I" hereto:
(i) Employment, advisory or consulting contract;
(ii) Plan providing for employee benefits of any nature;
(iii) Lease with respect to any property or equipment;
(iv) Contract or commitment for any future expenditure in excess
of $1,000;
(v) Contract or commitment pursuant to which it has assumed,
guaranteed, endorsed, or otherwise become liable for any
obligation of any other person, firm or organization;
(vi) Contract, agreement, understanding, commitment or arrangement,
other than in the normal course of business, not fully
disclosed or set forth in this Agreement;
(vii) Agreement with any person relating to the dividend, purchase
or sale of securities, that has not been settled by the
delivery or payment of securities when due, and which remains
unsettled upon the date of this Agreement.
(e) Taxes. AVE has filed all federal, state and local income or other
-----
tax returns and reports that it is required to file with all governmental
agencies, wherever situate, and has paid all taxes a shown on such returns such
that a failure to file, pay or accrue will not have a Material Adverse Effect on
AVE. Such returns have been prepared in accordance with the applicable tax laws
and rules and regulations thereunder to which AVE is subject and AVE has
delivered true and complete copies of all such tax returns for the periods
_______________ to _______________ to DIGITAL.
(f) Absence of Liabilities. At and as of the Closing Date, AVE will have
----------------------
no liabilities of any kind or nature, undisclosed fixed or contingent, except
for (i) the costs, including legal and accounting fees and other expenses, in
connection with this transaction, for which AVE agrees to be responsible and to
pay in full at or before the Closing, and (ii) the transaction described in
section 7(b)(vi) herein.
-6-
<PAGE>
(g) No Pending Actions. There are no material legal actions, lawsuits,
------------------
proceedings or investigations, either administrative or judicial, pending or
threatened, against or affecting AVE, or against any of AVE's officers or
directors and arising out of their operation of AVE that are reasonably likely
to have a Material Adverse Effect on York. AVE is not knowingly in violation of
any law, ordinance or regulation of any kind whatever, including, but not
limited to, the '33 Act, the 1934 Act, as amended, the Rules and Regulations of
the SEC, or the securities laws and regulations of any state. AVE is not an
investment company as defined in the Securities laws. AVE is not required to
file reports pursuant to either Section 12(g) or 15(d) of the '34 Act.
(h) Corporate Records. All of AVE's books and records, including,
-----------------
without limitation, its books of account, corporate records, minute book, stock
certificate books and other records are up-to-date, complete and reflect
accurately and fairly the conduct of its business in all material respects since
its date of incorporation; all of said books and records will be delivered to
AVE's new management at the Closing.
(i) No Misleading Statements or Omissions. Neither this Agreement nor
-------------------------------------
any financial statement, exhibit, schedule or document attached hereto or
presented to DIGITAL in connection herewith contains any materially misleading
statement, or omits any fact or statement necessary to make the other statements
or facts therein set forth not materially misleading.
(j) Validity of the Agreement. All corporate and other proceedings
-------------------------
required to be taken by AVE in order to enter into and to carry out this
Agreement have been duly and properly taken. This Agreement has been duly
executed by AVE, and constitutes a valid and binding obligation of AVE except to
the extent limited by applicable bankruptcy reorganization, insolvency,
moratorium or other laws relating to or effecting generally the enforcement of
creditors rights. The execution and delivery of this Agreement and the carrying
out of its purposes will not result in the breach of any of the terms or
conditions of, or constitute a default under or violate, AVE's Certificate of
Incorporation or By-Laws, or any material agreement, lease, mortgage, bond,
indenture, license or other document or undertaking, oral or written, to which
AVE is a party or is bound or may be affected, nor will such execution, delivery
and carrying out violate any order, writ, injunction, decree, law, rule or
regulation of any court, regulatory agency or other governmental body.
(k) Enforceability of the Agreement. When duly executed and delivered,
-------------------------------
this Agreement and the Exhibits hereto which are incorporated herein and made a
part hereof are legal, valid, and enforceable by DIGITAL and the Sellers
according to their terms, except to the extent limited by applicable bankruptcy
reorganization, insolvency, moratorium or other laws relating to or effecting
generally the enforcement of creditors rights; and at the time of such execution
and delivery, the Sellers will have acquired good, marketable title in and to
the AVE Common Shares acquired pursuant hereto, free and clear of all liens and
encumbrances.
(l) Access to Books and Records. DIGITAL and Sellers will have full and
---------------------------
free access during regular business hours and on reasonable prior notice to
AVE's books and records during the course of this transaction prior to and at
the Closing.
-7-
<PAGE>
(m) AVE Financial Statements. Before the Closing, AVE will provide
------------------------
DIGITAL with recent audited financial statements, which will be certified in
accordance with GAAP by independent certified public accountants with SEC
experience.
(n) AVE Financial Condition. After consummation of all of the
-----------------------
transactions contemplated hereby AVE will have no assets or liabilities.
(o) Directors' Approval. Promptly upon the signing of this Agreement,
-------------------
AVE's Board of Directors, by meeting or consent, will authorize the matters
described in section 7(b)(i) herein.
5. Term. All representations, warranties, covenants and agreements made by
----
any party herein and the exhibits attached hereto shall survive the execution
and delivery of this Agreement and payment pursuant hereto.
6. The AVE Shares and DIGITAL Shares. All of the AVE and the DIGITAL
---------------------------------
Common Shares shall be validly issued, fully-paid and non-assessable shares of
AVE and DIGITAL Common Stock respectively, with full voting rights, dividend
rights, and right to receive the proceeds of liquidation, if any, as set forth
in the respective Articles of Incorporation.
7. Conditions Precedent to Closing. (a) The obligations of DIGITAL and
-------------------------------
Sellers under this agreement shall be and are subject to fulfillment, prior to
or at the Closing, of each of the following conditions:
(i) That AVE's representations and warranties contained herein shall
be true and correct at the time of Closing, as if such representations and
warranties were made at such time;
(ii) That AVE in all material respects shall have performed or complied
with all agreements, terms and conditions required by this Agreement to be
performed or complied with by it prior to or at the time of the Closing;
(iii) That AVE's directors, by proper and sufficient vote taken either
by consent of directors or at a meeting duly and properly called and held, shall
have properly approved all of the matters described in Section 7(b)(i) herein;
and
(iv) That AVE's common stock will be listed on the National Quotation
Bureau, Inc.'s Bulletin Board.
(b) The obligations of AVE under this Agreement shall be and are subject to
fulfillment, prior to or at the Closing of each of the following conditions:
(i) That AVE's Shareholders and Board of Directors, by proper and
sufficient vote, shall have approved this Agreement and the transactions
contemplated hereby; approved the contemplated reverse split of AVE's
outstanding Common Stock; approved the resignation of all of AVE's current
directors and the election of up to ___ designees of DIGITAL to serve as
directors in place of AVE's current directors; approved a change
-8-
<PAGE>
AVE'S corporate name to a name selected by DIGITAL and will have approved
such other changes as are consistent with this Agreement and approved by DIGITAL
for submission to AVE stockholders;
(ii) That DIGITAL's and Sellers' representations and warranties
contained herein shall be true and correct at the time of Closing as if such
representations and warranties were made at such time and that there shall have
been no Material Adverse Effect with respect to DIGITAL; and York shall have
received a certificate of DIGITAL and Sellers to such an effect signed by a duly
authorized officer of DIGITAL and by each of the Sellers; and
(iii) That DIGITAL and Sellers shall have performed or complied with
all agreements, terms and conditions required by this Agreement to be performed
or complied with by them prior to or at the time of Closing Date and AVE shall
have received a Certificate of DIGITAL and Sellers to such effect signed by or
duly authorized officer of DIGITAL and by each of the Sellers;
(iv) That DIGITAL's officers will have signed non-compete clauses
in the form attached hereto as Exhibit "J";
8. Termination. This Agreement may be terminated at any time before or
-----------
at Closing, by:
(a) The mutual agreement of the parties;
(b) Any party if:
(i) Any provision of this Agreement applicable to a party
shall be materially untrue or fail to be accomplished.
(ii) Any legal proceeding shall have been instituted or shall
be imminently threatening to delay, restrain or prevent
the consummation of this Agreement or any material
component thereof.
Upon termination of this Agreement for any reason, in accordance with the
terms and conditions set forth in this paragraph, each said party shall bear all
costs and expenses as each party has incurred and no party shall be liable to
the other for such costs and expenses.
9. Exhibits. All Exhibits attached hereto are incorporated herein by
--------
this reference as if they were set forth in their entirety.
10. Miscellaneous Provisions. This agreement is the entire agreement
------------------------
between the parties in respect of the subject matter hereof, and there are no
other agreements, written or oral, nor may this Agreement be modified except in
writing and executed by all of the parties hereto. The failure to insist upon
strict compliance with any of the terms, covenants or conditions of this
Agreement shall not be deemed a waiver or relinquishment of such right or power
at any other time or times.
- 9 -
<PAGE>
11. Closing. The Closing of the transactions contemplated by this
-------
Agreement ("Closing") shall take place at 1:00 P.M. on the first business day
after the latter of the Sellers approving this Agreement or the shareholders of
AVE approving this Agreement and the matters referred to in Section 7(b)(i), or
such other date as the parties hereto shall agree upon. At the Closing, all of
the documents and items referred to herein shall be exchanged.
12. Fees and Commission. As compensation for its services in initiating
-------------------
this transaction and ongoing consulting services to AVE, AVE acknowledges and
agrees that 1,063,874 shares being issued hereunder are being issued under Rule
504 in cancellation of all debts owned to the Consultants for their services
rendered or otherwise arising out of this Agreement and the transactions
contemplated hereby. Pursuant to the Consulting Agreements attached hereto as
Exhibit "X", these shares are being issued to (a) Olympic Capital Group, Inc.
and its designees-205,000 shares; (b>) Henri Hornby-373,874 shares; (c) Michael
Keohe-142,500; David Evans-142,500; and Kennington Investments Limited-200,000.
13. No Third Party Beneficiaries. The provisions of this Agreement are for
----------------------------
the exclusive benefit of the parties who are signatories hereto and their
permitted successors and assigns, and no third party shall be a beneficiary of,
or have any rights by virtue of, this Agreement.
14. Assignment: Binding Effect. This Agreement, including both its
--------------------------
obligations and benefits, shall redound to the benefit of, and be binding on the
respective permitted assigns, transferees and successors of the parties. This
Agreement may not be assigned or transferred in whole or in part by either party
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed.
15. Non-Recourse. Notwithstanding anything contained in this Agreement to
------------
the contrary, it is expressly understood and agreed by the parties hereto that
each and every representation, warranty, covenant, undertaking and agreement
made in this Agreement (except with respect to the Sellers) was not made nor
intended to be made as a personal representation, undertaking, warranty,
covenant, or agreement ton the part of any incorporator, stockholder, director,
officer, partner, employee or agent, past present or future, or any of them and
any recourse on account of any such representations, warranties, covenants,
undertakings or agreements made in this Agreement, whether in common law, in
equity, by statute or otherwise, against any of them (except with respect to the
Sellers) is hereby forever waived and released.
16. Material Adverse Effect. As used in this Agreement, "Material Adverse
-----------------------
Effect" with respect to a party means any change in or effect on, the business
conducted by such party that is, or is reasonably likely to be, materially
adverse to (i) the business results of operations, prospects or condition
(financial or otherwise) of such party and its Subsidiaries, taken as a whole,
or (ii) the assets and properties used or useful in the conduct of the business
of such party and its Subsidiaries, taken as a whole.
17. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of Delaware.
-10-
<PAGE>
18. Counterparts. This Agreement may be executed in duplicate facsimile
------------
counterparts, each of which shall be deemed an original and together shall
constitute one and the same binding Agreement, with one counterpart being
delivered to each party hereto.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of
the date and year above first written.
AVE, INC.
/s/ [ILLEGIBLE]
----------------------------------------
DIGITAL MANUFACTURING, INC.
By: /s/ TOM ATHANS
----------------------------------------
President
----------------------------------------
SELLERS:
/s/ TOM ATHANS
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
-11-
<PAGE>
TAB Q
A.V.E., INC.
A NEVADA STATE CORPORATION
BOARD OF DIRECTORS
RESOLUTION
JANUARY 5, 1998
RENO, NEVADA
RESOLVED: That effective 12:01 am January 6, 1998 that the Board hereby
appoints the following new Officers and Directors:
R. Gene Klawetter, Chairman, CEO
Tom Athans, President, Director
Dan M. Smith, V.P. Finance, CFO
George Sullivan, V.P. Operations, Secretary
Effective simultaneously with the new appointments, shall be the resignations
of:
Henri R. Hornby, President
Neil F. Hornby, Secretary, Director
ATTEST:
/s/ HENRI R. HORNBY /s/ NEIL F. HORNBY
Henri R. Hornby Neil F. Hornby
Director Director
A.V.E., INC., 3653 HEMLOCK COURT, RENO, NEVADA 89509, 702-829-8812,
FAX-702-829-8813
<PAGE>
EXHIBIT 3(i)
TAB R
RESOLUTION OF THE DIRECTORS
OF
WALSH COMMUNICATIONS GROUP, INC.
The following Resolutions were adopted by the Directors of Walsh
Communications Group, Inc. on the 4th day of May, 1990.
RESOLVED, that the Articles of Incorporation be amended to change Article
1, the Name of the corporation to AVE, INC. It is further
RESOLVED that the Officers and Directors take such action as is necessary
to amend the Articles of Incorporation.
WALSH COMMUNICATIONS GROUP, INC.
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
MAY 07 1990
CERTIFICATE OF AMENDMENT
TO
THE ARTICLES OF INCORPORATION
OF
WALSH COMMUNICATIONS GROUP, INC.
FRANKIE SUE DEL PAPA SECRETARY OF STATE
/s/ FRANKIE SUE DEL PAPA
- - --------------------------------------
65-87
Pursuant to the Nevada Corporations Act, the undersigned President and
Secretary, having been thereunto duly authorized, have executed the foregoing
Certificate of Amendment for the Corporation this 4th day of May, 1990.
RESOLVED, that Article I - NAME be amended to reflect the new name of
the corporation,namely: AVE, INC.
Article I - NAME is hereby amended as follows:
Article I
NAME
The name of this corporation is AVE, INC.
The amendment was approved by all of the issued and outstanding shares,
and will not increase the capitalization of the corporation.
WALSH COMMUNICATIONS GROUP, INC.
/s/ VICTOR ALEXANDER
----------------------------------------
By: Victor Alexander, President
/s/ LIV MARIE ALEXANDER
----------------------------------------
Attest: Liv Marie Alexander, Secretary
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JAN 23 1987
FRANKIE SUE DEL PAPA SECRETARY OF STATE
/s/ FRANKIE SUE DEL PAPA
- - --------------------------------------
No. 465-87
CERTIFICATE OF INCORPORATION
OF
DE LUXE ONYX COMPANY
First: Name. The name of this corporation is: DE LUXE ONYX COMPANY.
----
Second: Principal Office. The principal office or place of business of this
----------------
corporation shall be located at:
Resident Agency National, 377 South Carson Street, Carson City,
Nevada.
Third: Purpose. The purpose for which this corporation is formed is to engage
-------
in any lawful activity; and,
To buy, own, possess, improve, develop, sell, mortgage, lease and otherwise
deal in all kinds of real property in the State of California and
elsewhere; to buy, sell, own mortgage or otherwise deal in and handle
all kinds of personal property.
Fourth: Authorization of Capital Stock. The amount of the total authorized
------------------------------
capital stock of this corporation shall be One Hundred Thousand Dollars
($100,000), consisting of One Hundred Thousand (100,000) shares of common stock
with a par value of One Dollar ($1.00) per share. The stock shall be common,
non-assessable and voting stock may be issued as, when and for such
consideration as the Board of Directors may from time to time determine. The
amount of capital stock with which it will commence business is One Thousand
Dollars ($1,000).
Fifth: Incorporators. The names and addresses of each of the incorporators
-------------
signing these Articles of Incorporation are as follows:
1. Mark S. Timothy, 1133 Brickyard Rd., Salt Lake City, Utah.
2. Jerry Timothy, 2089 Donelson Lane, Salt Lake City, Utah.
Sixth: Directors. The governing board of this corporation shall be known as
---------
directors and the number of directors may from time to time be increased or
decreased in such manner as shall be specified by the bylaws of the corporation;
provided, however, the number of directors shall not be reduced to less than two
(2).
The names and addresses of the directors comprising the first Board of Directors
are as follows:
<PAGE>
1. Mark S. Timothy, 1133 Brickyard Rd., Salt Lake City, Utah.
2. Jerry Timothy, 2089 Donelson Lane, Salt Lake City, Utah.
The name and residence address within the State of Nevada of this corporation's
initial resident agent shall be:
Resident Agency National, 377 South Carson Street, Carson City,
Nevada.
Seventh: Stock Nonassessable. The capital stock or the holders thereof, after
-------------------
the amount of the subscription price has been paid in, shall not be subject to
any assessment whatsoever to pay the debts of the corporation.
Eighth: Term of Existence. The existence of this Corporation is to be
-----------------
"perpetual".
Ninth: Cumulative Voting. No cumulative voting shall be permitted in the
-----------------
election of Directors.
Tenth: Preemptive Rights. Stockholders shall not be entitled to preemptive
-----------------
rights.
Eleventh: The Directors of the Corporation above named, and their duly elected
and qualified successors shall have the unqualified right of adoption of and
subsequent revision or amendment to the bylaws of this corporation, without
resort to approval thereof by the shareholders of this corporation.
Twelfth: The Directors of the Corporation above named, and their duly elected
and qualified successors shall have the unqualified right to authorize and issue
other and additional classes of shares of stock of this corporation in addition
to those as herein provided, without resort to approval thereof by the
shareholders of this corporation.
IN WITNESS WHEREOF, we have hereunto set our hands and seals this 23rd
day of January, 1987.
/s/ MARK TIMOTHY
----------------------------------------
Mark Timothy
/s/ JERRY TIMOTHY
----------------------------------------
Jerry Timothy
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
I, DON G. TIMOTHY, A Notary Public, hereby certify
Page 2 of 3
<PAGE>
that on the 23rd day of January, 1986, Mark Timothy and Jerry Timothy personally
appeared before me who, being first duly sworn, severally declared that they
are the persons who signed the foregoing document as incorporators and that the
statements therein contained are true.
DATED this 23rd day of January, 1987.
My Commission Expires: /s/ DON G. TIMOTHY
-----------------------------------
12-1-89 Notary Public
- - ------------------------------ Residing at: Salt Lake City,Utah
Page 3 of 3
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JAN 23 1987
FRANKIE SUE DEL PAPA
SECRETARY OF STATE
/s/ FRANKIE SUE DEL PAPA
No. 465-87
-------------------
CERTIFICATE AND AGREEMENT OF MERGER
OF
DE LUXE ONYX COMPANY
A California corporation
Pursuant to the Corporation Code of California Chapter 11 Section 1100
INTO
DE LUXE ONYX COMPANY
a Nevada corporation as the surviving corporation
Pursuant to Section 450 et seq, Nevada Revised Statutes
AGREEMENT OF MERGER, dated the 23rd day of January, 1987 between DE LUXE
ONYX COMPANY, a California corporation, and all of the Directors thereof and DE
LUXE ONYX COMPANY, a Nevada corporation and all of the Directors thereof, the
two corporations being hereinafter sometimes called the Constituent Corporation.
WHEREAS the Board of Directors of each of the Constituent Corporations deem
it advisable and generally to the welfare of the Constituent Corporations that
these corporations merge under the terms and conditions hereafter set forth,
such merger to be effected pursuant to the statutes of the State of California
and the Statutes of the State of Nevada, and they have approved and authorized
the form of agreement and merger.
WHEREAS DE LUXE ONYX COMPANY is a corporation duly organized under the laws
of the State of California, having been incorporated January 11th, 1921 with
authorized capital stock consisting of 100,000 shares of common stock with a par
value of $1.00 per share of which 3,000 shares are issued and outstanding; and,
WHEREAS DE LUXE ONYX COMPANY, is a corporation duly organized under the
laws of the State of Nevada, having been incorporated January 23rd, 1987 with
authorized capital stock consisting of 100,000 shares of common stock with a par
value of $1.00.
WHEREAS the laws of the State of California and Nevada permit such a
merger, and the Constituent Corporations desire to merge, under and pursuant to
the provision of the laws of their respective states:
NOW THEREFORE, in consideration of the promises and of the mutual
agreements and covenants herein contained, it is agreed that DE LUXE ONYX
COMPANY, a California corporation, and DE LUXE ONYX COMPANY, a Nevada
corporation, shall be merged into DE LUXE ONYX COMPANY, a Nevada corporation,
which shall be the Surviving Corporation, and the terms and conditions of such
merger and the mode of carrying it into effect are and shall be as follows:
1. NAME OF SURVIVING CORPORATION. The name of the corporation, which is
------------------------------
sometimes hereinafter referred to as the Surviving Corporation, shall, from and
after the effective date of the merger, be DE LUXE ONYX COMPANY. The separate
existence of DE LUXE ONYX COMPANY, of California, shall cease at the effective
time of the merger, except insofar as it may be continued by law or in order to
carry out the purpose of this Agreement of Merger and except as continued in the
Surviving Corporation.
2. ARTICLES OF INCORPORATION OF SURVIVING CORPORATION. The
---------------------------------------------------
<PAGE>
Articles of Incorporation of the Surviving Corporation shall be the Articles of
Incorporation of DE LUXE ONYX COMPANY, of Nevada, a copy of which is annexed as
Exhibit "A" hereto.
3. BYLAWS. The By laws of DE LUXE ONYX COMPANY, of Nevada at the
------
effective time of the merger shall be By laws of the Surviving Corporation until
altered or replaced as provided therein.
4. BOARD OF DIRECTORS AND OFFICERS. The members of the Board of Directors
-------------------------------
and the officers of the Surviving Corporation immediately after the effective
time of the merger shall be those persons who were the members of the Board of
Directors and the officers, respectively, DE LUXE ONYX COMPANY, of Nevada
immediately prior to the effective time of the merger, and such persons shall
serve in such offices, respectively, for the terms provided by law or in the
Bylaws or until their respective successors are elected and qualified.
5. AUTHORITY TO CONDUCT BUSINESS. DE LUXE ONYX COMPANY, of Nevada
-----------------------------
represents that the corporation has not filed an application for authority to do
business in California. The Surviving Corporation will conduct no such business
in California without first filing and having such application approved.
6. CONVERSION OF SHARES. The manner of converting the shares of the
--------------------
Constituent Corporation into the shares of the Surviving Corporation shall be
set forth in this paragraph as follows:
Immediately upon the effective date of the merger, each share of stock of
DE LUXE ONYX COMPANY, of California outstanding in the hands of the public
(being all of the shares of DE LUXE ONYX COMPANY, of California
outstanding) without any action on the part of the holder thereof, shall
automatically become and be converted into stock of the Surviving
Corporation, as the case may be, at the rate of one share of stock of the
Surviving Corporation for one share of stock of DE LUXE ONYX COMPANY, of
Nevada. All shares thus converted shall be deemed for all corporate
purposes (other than the payment of dividends) to evidence the ownership of
the number of fully-paid, nonassessable shares of common stock of the
Surviving Corporation into which shares of common stock of DE LUXE ONYX
COMPANY, of California shall have been so converted.
7. RIGHT OF SHAREHOLDERS. After the effective time of the merger, each
---------------------
holder of a certificate or certificates which theretofore represented shares of
common stock of DE LUXE ONYX COMPANY, of California shall cease to have any
rights as a shareholder of DE LUXE ONYX COMPANY, of California are, except such
as expressly reserved to such stockholders by statute. After the effective time
of the merger, any holder of a certificate or certificates which theretofore
represented shares of common stock of DE LUXE ONYX COMPANY, of California may,
but shall not be required to, surrender the same to the Transfer Agent of the
Surviving Corporation, and shall thereupon be entitled to receive in exchange
therefore a certificate or certificates representing the number of shares of
common stock of DE LUXE ONYX COMPANY, of Nevada theretofore represented by such
certificate or certificates as shall have been converted.
( 2 )
<PAGE>
8. EFFECTIVE DATE OF MERGER.
------------------------
A. For all purposes of the Laws of the State of California, this
Agreement of Merger and the merger herein provided for shall become effective
and the separate existence of DE LUXE ONYX COMPANY, a California corporation,
except insofar as it may be continued by statute, shall cease as soon as; this
Agreement of Merger shall have been adopted, approved, signed and acknowledged
in accordance with the laws of the State of California and certificates of its
adoption and approval shall have been executed in accordance with such laws; and
this Certificate and Agreement of merger shall have been filed in the office of
the Secretary of State of the State of California.
B. For all purposes of the Laws of the State of Nevada, this Agreement of
Merger and the merger herein provided for shall become effective and the
separate existence of DE LUXE ONYX COMPANY, a California corporation, except
insofar as it may be continued by statute, shall cease as soon as; this
Agreement of Merger shall have been adopted, approved, signed and acknowledged
in accordance with the laws of the State of Nevada and certificates of its
adoption and approval shall have been executed in accordance with such laws; and
this Certificate and Agreement of merger shall have been filed in the office of
the Secretary of State of the State of Nevada.
C. The corporate identity, existence, purpose, powers, objects,
franchises, rights and immunities of DE LUXE ONYX COMPANY, of Nevada shall
continue unaffected and unimpaired by the merger hereby provided for; and the
corporate identities, existences, purposes, powers, objects, franchises, rights
and immunities of DE LUXE ONYX COMPANY, of California shall be continued in and
merged into DE LUXE ONYX COMPANY, of Nevada and DE LUXE ONYX COMPANY, of Nevada
shall be fully vested therewith.
D. The date upon which this Agreement is filed in the offices mentioned
above and upon which the Constituent Corporations shall so become a single
corporation is the effective date of the merger.
9. AUTHORIZATION. The parties hereto acknowledge and respectively
-------------
represent that this Merger Agreement is authorized by the laws of the respective
jurisdictions of the Constituent Corporations and that the matter was approved
by the board of directors of the Nevada corporation and at a special meeting of
shareholders of the California corporation at which the California shareholders
voted as follows:
CORPORATION SHARES OUTSTANDING VOTED FOR VOTED AGAINST
- - ----------- ------ ----------- ----- --- ----- -------
CALIFORNIA 3,000 1,800 None
10. FURTHER ASSURANCES OF TITLE. As and when requested by the Surviving
---------------------------
Corporation or by its successors or assigns, DE LUXE ONYX COMPANY, of Nevada
will execute and deliver or cause to be executed and delivered all such deeds
and instruments and will take or cause to be taken all such further action as
the Surviving Corporation may deem necessary or desirable in order to vest in
and confirm to the Surviving Corporation title to and possession of any property
of any of the Constituent Corporations acquired by the Surviving Corporation by
reason or as a result of the merger herein provided for and otherwise to carry
out the intent and purposes hereof, and the officers and
( 3 )
<PAGE>
========================================
STATE OF NEVADA
DEPARTMENT OF
STATE
I herby certify that this is a true
and certified copy of the document as
filed in this office.
DATED: JAN 23, 1987
------------------
/s/ FRANKIE SUE DEL PAPA
FRANKIE SUE DEL PAPA
Secretary of State
By /s/ [ILLEGIBLE]
-------------------------------
========================================
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JAN 23 1987
CERTIFICATE AMENDING THE CERTIFICATE OF INCORPORATION
OF
DE LUXE ONYX COMPANY
FRANKIE SUE DEL PAPA SECRETARY OF STATE
/s/ FRANKIE SUE DEL PAPA
NO. --------------------------------------
The undersigned, being the President and Secretary of DE LUXE ONYX COMPANY,
a Nevada corporation, hereby certify that by majority vote of the Board of
Directors and majority vote of the stockholders at a meeting held on January
5th, 1987, it was agreed by unanimous vote that this Certificate Amending the
Articles of Incorporation by filed.
The undersigned further certify that the original Articles of Incorporation
of DE LUXE ONYX COMPANY, were filed with the Secretary of State of the State of
Nevada, on January 23rd, 1987, and a certified copy of said Articles were filed
with the Carson City County Clerk on January 23rd, 1987.
The undersigned further certify that the Article First through Article
Eleventh of the original Articles of Incorporation filed on January 23rd, 1987
herein are amended to read as follows:
ARTICLE FIRST: The name of this corporation is:
Walsh Communications Group, Inc.
ARTICLE SECOND: No change.
ARTICLE THIRD: No change.
ARTICLE FOURTH: Authorization of Capital Stock. The amount of the total
authorized capital stock of this corporation shall be Fifty Thousand Dollars
($50,000) consisting of Fifty Million (50,000,000) shares of common stock with a
"par value of $.001" per share. The stock shall be common, non-assessable and
voting stock may be issued as, when and for such consideration as the Board of
Directors may from time to time determine. The amount of capital stock with
which it will commence business is One Thousand Dollars ($1,000).
ARTICLE FIFTH: No change.
ARTICLE SIXTH: No change.
ARTICLE SEVENTH: No change.
ARTICLE EIGHTH: No change.
ARTICLE NINTH: No change.
ARTICLE TENTH: No change.
ARTICLE ELEVENTH: No change.
<PAGE>
The number of common shares outstanding at the time of adoption were Three
Thousand (3,000) and the number voted for such amendment were One Thousand Eight
Hundred (1,800) and the number of shares voted against such amendment were Zero
(0).
The manner, if not set forth in such amendment, in which any exchange,
reclassification or cancellation of issued shares provided for in the amendment
shall be effected, as follows:
The 3,000 - "$1.00 par value common shares" presently outstanding are herby
forward split 1000 - 1 share forward. Said Exchange shall be completed as
follows: 100 - "$.001 par value common shares" shall be issued in exchange for
each 1 - "$1.00 par value common share" presently outstanding. Upon completion
of the exchange there will be 3,000,000 - "$.001 par value common shares" issued
and outstanding.
The undersigned hereby certify that they have on this 23rd day of January,
1987, executed this certificate amending the original Articles of Incorporation
heretofore filed with the Secretary of State of Nevada.
/s/ MARK TIMOTHY, /s/ JERRY TIMOTHY
- - ------------------------------ ------------------------------
Mark Timothy, President Jerry Timothy, Secretary
STATE OF UTAH )
: ss
COUNTY OF SALT LAKE )
On this 23rd day of January, 1987, before me the undersigned a Notary Public in
and for the County of Salt Lake, State of Utah, personally appeared Mark Timothy
and Jerry Timothy, known to me to be the persons whose names are subscribed to
the foregoing Certificate Amending Article of Incorporation and acknowledged
to me that they executed the same.
My Commission Expires: /s/ DON G [ILLEGIBLE]
------------------------------
12-1-89 Notary Public
- - ------------------
Residing at: Salt Lake City, Utah
------------------
( Page 2 )
<PAGE>
directors of DE LUXE ONYX COMPANY, of California and the officers and directors
of the Surviving Corporation are fully authorized in the name of the respective
Constituent Corporations or otherwise to take any and all such action.
11. SERVICE OF PROCESS ON SURVIVING CORPORATION. The Surviving Corporation
-------------------------------------------
agrees that it may be served with process in the State of California in any
proceeding for enforcement of any obligation of DE LUXE ONYX COMPANY, of
California as well as for the enforcement of any obligation of the Surviving
Corporation rising from the merger, including any suit or other proceeding to
enforce the right of any shareholder as determined in appraisal proceedings
pursuant to the provisions of the California Corporations Code, of California,
and hereby irrevocably appoints the Secretary of State of California as its
agent to accept service of process in any suit or other proceeding. Copies of
such process shall be mailed to the Resident Agent, Resident Agency National,
377 South Carson Street, Carson City, Nevada until further notice.
12. SHAREHOLDERS RIGHT TO PAYMENT. The Surviving Corporation agrees that
-----------------------------
subject to the provisions of the California Corporations Code of the State of
California, that it will pay to the shareholders of DE LUXE ONYX COMPANY the
amounts, if any, to which such shareholders may be entitled under the provisions
of the above statutes of the laws of California as the case may be.
13. ABANDONMENT. This Agreement of Merger may be abandoned (a) by either
-----------
Constituent Corporation, acting by its Board of Directors, at any time prior to
its adoption by the shareholders of both of the Constituent Corporations as
provided by law, or (b) by the mutual consent of the Constituent Corporations,
acting each by its Board of Directors, at any time after such adoption by such
shareholders and prior to the effective time of the merger. In the event of
abandonment of this Agreement of Merger pursuant to (a) above, notice thereof
shall be given by the Board of Directors of the Constituent Corporation so
terminating to the other Constituent Corporation, and thereupon, an abandonment
pursuant to (b) above, this Agreement of Merger shall become wholly void and of
no effect and there shall be no further liability or obligation hereunder on the
part of either of the Constituent Corporations or of its Board of Directors or
shareholders.
IN WITNESS WHEREOF each of the Constituent Corporations, pursuant to
authority duly granted by its Board of Directors, has caused this Agreement of
Merger to be executed by a majority of its Directors and its President and
Secretary.
The respective Directors and officers of the Constituent Corporations
( 4 )
<PAGE>
do hereby certify that the above Merger Agreement was adopted as set forth in
the above Agreement and that said resolution has not been revoked or amended.
DE LUXE ONYX COMPANY DE LUXE ONYX COMPANY
(a California corporation) (a Nevada corporation)
/s/ MARK TIMOTHY /s/ MARK TIMOTHY
- - ------------------------------ ------------------------------
Mark Timothy Mark Timothy
President & Director President & Director
/s/ JERRY TIMOTHY /s/ JERRY TIMOTHY
- - ------------------------------ ------------------------------
Jerry Timothy Jerry Timothy
Secretary & Director Secretary & Director
STATE OF UTAH )
: ss
COUNTY OF SALT LAKE )
This instrument was acknowledged before me this 23rd day of January, 1987,
by Mark Timothy and Jerry Timothy known to me to be the officers and directors
of DE LUXE ONYX COMPANY, (California) as set forth under their respective
signatures.
This instrument was acknowledged before me this 23rd day of January, 1987,
by Mark Timothy and Jerry Timothy known to me to be the officers and directors
of DE LUXE ONYX COMPANY, (Nevada) as set forth under their respective
signatures.
My Commission Expires: /s/ DON G [ILLEGIBLE]
------------------------------
12-1-89 Notary Public
- - ------------------------------ Residing at:
( 5 )
<PAGE>
EXHIBIT 3(ii)
TAB S
AVE, INC.
BY-LAWS
of
NEVADA
---------------------------------------------------------------
ARTICLES -- OFFICES
SECTION 1. REGISTERED OFFICE. --The registered office shall be established
and maintained at 377 South Nevada Street, Carson City, Nevada 89701 in the
County of CUSTER, in the State of Nevada.
SECTION 2. OTHER OFFICES. --The corporation may have other offices, either
within or without the State of Nevada, at such place or places as the Board of
Directors may from time to time appoint or the business of the corporation may
require.
ARTICLE II -- MEETING OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. --Annual Meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the State
of Nevada and such time and date as the Board of Directors, by resolution, shall
determine and as set forth in the notice of the meeting. In the event the Board
of Directors fails to so determine the time, date and place of meeting, the
annual meeting of stockholders shall be held at the registered office of the
corporation in Nevada on November 15 of each year.
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
may transact such other corporate business as shall be stated in the notice of
the meeting.
SECTION 2. OTHER MEETINGS. --Meetings of stockholders for any purpose
other than the election of directors may be held at such time and place, within
or without the State of Nevada as shall be stated in the notice of the meeting.
SECTION 3. VOTING. --Each stockholder entitled to vote in accordance with
the terms and provisions of the Certificates of Incorporation and these By-Laws
shall be entitled to one vote, in person or by proxy, for each share of stock
entitled to vote held by such stockholder, but no proxy shall be voted after
three years from its date unless such proxy provides for a longer period. Upon
the demand of any stockholder, the vote for directors and any question before
the meeting shall be by ballot. All elections for directors shall be decided by
plurality vote; all other questions shall be decided by majority vote except as
otherwise provided by the Certificate of Incorporation or the laws of the State
of Nevada.
SECTION 4. STOCKHOLDER LIST. --The officer who has charge of the stock
ledger of the corporation shall at least 10 days before each meeting of
stockholders prepare
<PAGE>
a complete alphabetically addressed list of the stockholders entitled to vote at
the ensuing election, with the number of shares held by each. Said list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at last ten days prior
to the meeting, either at a place within the city where the meeting is to be
held. Which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The list shall be
available for inspection at the meeting.
SECTION 5. QUORUM. -Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a meeting, a majority in interest of the
stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.
SECTION 6. SPECIAL MEETINGS. -Special meetings of the stockholders, for
any purpose, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the directors
or stockholders entitled to vote. Such request shall state the purpose of the
proposed meeting.
SECTION 7. NOTICE OF MEETINGS. -Written notice, stating the place, date
and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat at his
address as it appears on the records of the corporation, not less than ten nor
more than fifty days before the date of the meeting.
SECTION 8. BUSINESS TRANSACTED.-No business other than that stated in
the notice shall be transacted at any meeting without the unanimous consent of
all the stockholders entitled to vote thereat.
SECTION 9. ACTION WITHOUT MEETING. -Except as otherwise provided by
the Certificate of Incorporation, whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken in connection with any
corporate action by any provisions of the statues or the Certificates of
Incorporation or of these By-Laws, the meeting and vote of stockholders may be
dispensed with, if all the stockholders who would have been entitled to vote
upon the action if such meeting were held, shall consent in writing to such
corporate action being taken.
<PAGE>
ARTICLE III - DIRECTORS
SECTION 1. NUMBER AND TERM. -- The number of directors shall be not less
than 2. The directors shall be elected at the annual meeting of stockholders
and each director shall be elected to serve until his successor shall be elected
and shall qualify. The number of directors may not be less than three except
that where all the shares of the corporation are owned beneficially and of
record by either one or two stockholders, the number of directors may be less
than three but not less than the number of stockholders.
SECTION 2. RESIGNATIONS. -- Any director, member of a committee or other
officer may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. -- If the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office,
though less than a quorum by a majority vote, may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.
SECTION 4. REMOVAL. -- Any director or directors may be removed either for
or without cause at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for the purpose and the vacancies
thus created may be filled, at the meeting held for the purpose of removal, by
the affirmative vote of a majority in interest of the stockholders entitled to
vote.
SECTION 5. INCREASE OF NUMBER. -- The number of directors may be increased
by amendment of these By-Laws by the affirmative vote of a majority of the
directors, though less than a quorum, or, by the affirmative vote of a majority
in interest of the stockholders, at the annual meeting or at a special meeting
called for that purpose, and by like vote the additional directors may be chosen
at such meeting to hold office until the next annual election and until their
successors are elected and qualify.
SECTION 6. COMPENSATION. -- Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the board a fixed fee and expenses of attendance may be allowed for
attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
SECTION 7. ACTION WITHOUT MEETING. -- Any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting, if prior of such action a written consent
thereto is signed by all members of the board, or of such committee as the case
may be, and such written consent is filed with the minutes of proceedings of the
board or committee.
<PAGE>
ARTICLE IV -- OFFICERS
SECTION 1. OFFICERS. -The officers of the corporation shall consist of
a President, a Treasurer, and a Secretary, and shall be elected by the Board of
Directors and shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman, one or
more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as
it may deem proper. None of the officers of the corporation need be directors.
The officers shall be elected at the first meeting of the Board of Directors
after each annual meeting. More than two offices may be held by the same
person.
SECTION 2. OTHER OFFICERS AND AGENTS. -The Board of Directors may
appoint such officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such power and perform such duties as
shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. -The Chairman of the Board of Directors if one be
elected, shall preside at all meetings of the Board of Directors and he shall
have and perform such other duties as from time to time may be assigned to him
by the Board of Directors.
SECTION 4. PRESIDENT. -The President shall be the chief executive
officer of the corporation and shall have the general powers and duties of
supervision and management usually vested in the office of President of a
corporation. He shall preside at all meetings of the stockholders if present
thereat, and in the absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall have general
supervision, direction and control of the business of the corporation Except as
the Board of Directors shall authorize the execution thereof in some other
manner, he shall execute bonds, mortgages, and other contracts in behalf of the
corporation, and shall cause the seal to be affixed to any instrument requiring
it and when so affixed the seal shall be attested by the signature of the
Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer.
SECTION 5. VICE-PRESIDENT. -Each Vice-President shall have such powers
and shall perform such duties as shall be assigned to him by the directors.
SECTION 6. TREASURER. -The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as may be
ordered by the Board of Directors, or the President, taking proper vouchers for
such disbursements. He shall render to the President and Board of Directors at
the regular meetings of the Board of Directors, or whenever they may request it,
an account of all his transactions as Treasurer and of the financial condition
of the corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such amounts and
with such surety as the board shall prescribe.
<PAGE>
SECTION 7. SECRETARY.-The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect to do so, any such notice may be given by any person thereunto directed
by the President, or by the directors, or stockholders, upon whose requisition
the meeting is called as provided in these By-Laws. He shall record all the
proceedings of the meetings of the corporation and of directors in a book to be
kept for that purpose, and shall affix the same to all instruments requiring it,
when authorized by the directors or the President, and attest the same.
SECTION 8. ASSISTANT TREASURERS & ASSISTANT SECRETARIES. Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.
ARTICLE V
SECTION 1. CERTIFICATES OF STOCK.-Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the chairman or vice-chairman of the board of directors,
or the president or a vice-president and the treasurer or an assistant
treasurer, or the secretary of the corporation, certifying the number of shares
owned by him in the corporation. If the corporation shall be authorized to issue
more than one class of stock or more than one series of any class, the
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations, or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in section . of the General Corporation Law
of Nev., in lieu of the foregoing requirements, there may be set forth on the
face or back of the certificate which the corporation shall issue to represent
such class or series of stock, a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Where a certificate is
countersigned (1) by a transfer agent other than the corporation or its
employee, or (2) by a registrar other than the corporation or its employee, the
signatures of such officers may be facsimiles.
SECTION 2. LOST CERTIFICATES.-New certificates of stock may be issued in
the place of any certificate therefore issued by the corporation, alleged to
have been lost or destroyed, and the directors may, in their discretion, require
the owner of the lost or destroyed certificate or his legal representatives, to
give the corporation a bond, in such sum as they may direct, not exceeding
double the value of the stock, to indemnify the corporation against it on
account of the alleged loss of any such new certificate.
SECTION 3. TRANSFER OF SHARES.-The shares of stock of the corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates
<PAGE>
Corporate Acknowledgment
State of California )
) ss
County of Los Angeles )
On this 4th day of May, 1990, before me TODD J. HENN the undersigned
officer personally appeared Victor Alexander and Liv Marie Alexander, known
personally to me to be the President and Secretary, respectively, of the above
named corporation, and that they, as such officers being authorized so to do,
executed the foregoing instrument for the purposes therein contained, by signing
the name of the corporation by themselves as such officers.
IN WITNESS WHEREOF I have hereunto set my hand and official seal.
/s/ TODD J. HENN
-----------------------------------
Notary Public
My Commission expires: 10-19-1990
------------
[NOTARY SEAL APPEARS HERE]
[SECRETARY OF STATE SEAL APPEARS HERE]
<PAGE>
TAB T
MAJORITY WRITTEN CONSENT OF DIRECTORS
of
AVE, INCORPORATED
(A Nevada Corporation)
The undersigned persons, constituting all of the members of the Board of
Directors ("Board") of AVE, INCORPORATED, a Nevada corporation (the "Company"),
hereby take the following action by unanimous written consent in lieu of
meeting, pursuant to Section 17-16-821 of the Nevada Business Corporation Act:.
WHEREAS, the Board of Directors, in the interest of establishing
headquarters of the Company in Arapahoe County, Colorado and in support of the
detail needed to set up a functioning organization hereby finds for the
following changes to the bylaws of AVE, Inc.:
BE IT RESOLVED by the Company's Board of Directors, after giving due
consideration to the matters presented for action by means hereof, that:
1. Changes to the Bylaws of AVE, Inc. The AVE, Inc. Bylaws be changed as
shown below:
Article I, Section 1. The principal office be changed from Washoe
County, Nevada to Arapahoe County,
Colorado.
Article II, Section 4. Change the newspaper of general circulation
from one in Washoe County, Nevada to one in
Arapahoe County, Colorado.
Article III, Section 2. Change the number of Directors from two to
five.
Article III, Section 12. Conduct of meeting be changed from
President to CEO.
Article IV, Section 1. Add CEO to the list of officers of the
Company.
Article IV, Section 3. Change to say "The Board may elect, and may
empower the CEO to appoint...
Article IV, Section 6. Change the first sentence to read, "The
President or Chairman shall be the chief
executive officer and general manager of
the corporation."
2. Corporate Bank Account. That the Chief Financial Officer shall be
authorized to establish a corporate bank account and it shall be
required that all checks must have two signatures, one of which must
be the Chief Financial Officer. The signatories authorized shall be
Dan Smith, Gene Klawetter and George Sullivan.
3. Stock Compensation Plan. That the Company adopt a Stock Compensation
Plan with number of shares authorized not to exceed 1,000,000 shares
a copy of which is attached.
4. Compensatory Stock Option Plan. That the Company adopt a Compensatory
Stock Option Plan with number of shares authorized not to exceed
4,000,000 shares a copy of which is attached.
Page 1
<PAGE>
5. Appointment of Auditor. (a) That the accounting firm of
Stark Tinter and Associates
Certified Public Accountants
5299 DTC Boulevard, Suite 300
Englewood, CO 80111
is appointed as the Company's auditor and independent public
accountant within the meaning of the rules and regulations of the
Securities and Exchange Commission, and (b) no approval of
shareholders shall be needed to dismiss such firm as the Company's
auditors or from time to time to engage one or more other accounting
firms as the Company's auditors, the vote of a majority of the Board
of Directors being sufficient for such purpose.
6. Engagement of Attorney. That the following named individual
David J. Babiarz
Overton, Babiarz & Sykes, P.C.
5675 DTC Parkway, Suite 200
Englewood, CO 80111
be appointed as the Company's attorney.
7. Stock Transfer Agent. That the Board authorize as corporate stock
transfer agent
Corporate Stock Transfer
Republic Plaza
370 Seventeenth Street, Suite 2350
Denver, CO 80202-4614
8. 504-D Subscription Agreement. That the Board authorize the attached
504-D Subscription Agreement for use with the issuance of 504-D
shares.
9. 144 Restricted Stock Subscription Agreement. That the Board authorize
the attached 144 Restricted Stock Subscription Agreement for use with
the issuance of 144 Restricted shares.
FURTHER RESOLVED, to adopt the authorization to issue up to 2,000,000
shares of unrestricted 504-D shares at a price not less than $0.50 per share.
FURTHER RESOLVED, to modify the Articles of Incorporation of AVE, Inc.
to increase the authorized shares from 15,000,000 to 20,000,000 in order to
provide for an Employee Stock Option Plan and an Employee Stock Compensation
Plan.
Page 2
<PAGE>
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above actions and proceedings effective as of the date set forth
below.
Dated: January 20, 1998
/s/ R. GENE KLAWETTER /s/ TOM ATHANS
- - ------------------------------ -------------------------------
R. Gene Klawetter, Chairman Tom Athans
Seal
/s/ HENRI HORNBY
- - ------------------------------
Henri Hornby
Page 3
<PAGE>
EXHIBIT 4
TAB U
ACQUISITION
AGREEMENT (the "Agreement" dated April [illegible] incorporated under the
laws of the State of Nevada [illegible] DIGITAL MANUFACTURING INCORPORATED, a
company incorporated under the laws of the State of Texas (hereinafter referred
to as "DIGITAL") and the persons listed on Exhibit "A-1" attached hereto and
made a part hereof, being all of DIGITAL's stockholders now and as of the
closing date of this Agreement (hereinafter referred to as the "Sellers").
WHEREAS, the Sellers own a total of 1,000 shares of common stock, no par
value, of DIGITAL, said shares being one hundred (100%) percent of the issued
and outstanding common stock of DIGITAL; and
WHEREAS, the Sellers desire to sell and AVE desires to purchase one hundred
(100%) percent of such shares;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereby agree as
follows:
1. Purchase and Sale. The Sellers hereby agree to sell, transfer, assign
-----------------
and convey to AVE and AVE hereby agrees to purchase and acquire from the
Sellers, one hundred (100%) percent of DIGITAL's issued and outstanding common
stock (the "DIGITAL Common Shares"), in a reorganization pursuant to Section
368(a)(1)(B) of the Internal Revenue Code.
2. Purchase Price. The aggregate purchase price to be paid by AVE for
--------------
the Digital Common Shares shall be 8,500,000 shares of AVE $0.001 par value
voting common stock, (the "AVE Common Shares"). The AVE Common Shares will be
issued as follows: (a) to the Sellers (8,500,000); (b) to private investors
acquiring shares in exchange for their investment of $400,000 in DIGITAL
(533,333); and (c) to consultants for services rendered under Rule 504
(1,063,874 shares) described in Section 12 herein ("Consultants") in accordance
with Exhibit "A-2", attached hereto. No fractional shares of AVE Common Stock
will be issued; in lieu thereof, the number of shares of AVE Common Stock to be
issued to each Seller will be rounded up to the next whole share. Each of the
Sellers hereby agrees to the terms of this Agreement.
3. Warranties and Representations of DIGITAL and Sellers. In order to
-----------------------------------------------------
induce AVE to enter into this Agreement to complete the transaction contemplated
hereby, DIGITAL and Sellers warrant and represent to AVE as of the date hereof
and as of the Closing that:
(a) Organization and Standing. DIGITAL is a corporation duly
-------------------------
organized, validly existing and in good standing under the laws of the State of
Texas, is qualified to do business as a foreign corporation in _____________
___________ and in every state or jurisdiction in which it operates to the
extent required by the laws of such states and jurisdictions, and has full power
and authority to carry on its business as now conducted and to own and operate
its assets, properties and business. Attached hereto as Exhibit "B" are true
and correct copies of DIGITAL's Certificate of Incorporation, amendments thereto
and all current By-laws of DIGITAL. No changes thereto will be made in any of
the Exhibit "B" documents before the Closing.
(b) Capitalization. As of the date hereof, DIGITAL's entire
--------------
authorized equity capital consists of 1,000 shares of Common Stock $0.00 par
value, of which 1,000 shares of Common Stock are issued and outstanding. As of
the Closing Date, there will be no other voting or equity securities authorized
or issued, nor any authorized or issued securities convertible into voting
stock, and no outstanding subscriptions, warrants, calls, options, rights,
commitments or agreements by which DIGITAL or the Sellers are bound, calling for
the
<PAGE>
issuance of any additional shares of common stock or any other voting or equity
security. All of such Digital Common Shares have been duly authorized and
validly issued and are fully paid and non-assessable and were not issued in
violation of any preemptive rights or any applicable securities laws. The 1,000
issued and outstanding DIGITAL Common Shares constitute one hundred (100%)
percent of the equity capital of DIGITAL, which includes, inter alia, one
----- ----
hundred (100%) of DIGITAL's voting power, right to receive dividends, when, as
and if declared and paid, and the right to receive the proceeds of liquidation
attributable to common stock, if any.
(c) Ownership of DIGITAL Shares. As of the date hereof, the Sellers
---------------------------
are the sole owners of the DIGITAL Common Shares, free and clear of all liens,
encumbrances, and restrictions whatsoever, except that the DIGITAL Common Shares
have not been registered under the Securities Act of 1933, as amended (the "'33
Act"), or any applicable State Securities laws. By the transfer of the DIGITAL
Common Shares to AVE pursuant to this Agreement, AVE will thereby acquire good
and marketable title to 100% of the capital stock of DIGITAL, free and clear of
all liens, encumbrances and restrictions of any nature whatsoever, except by
reason of the fact that the DIGITAL Common shares will not have been registered
under the '33 Act, or any applicable State Securities Laws.
(d) Taxes. DIGITAL has filed all federal, state and local income or
-----
other tax returns and reports that it is required to file with all governmental
agencies, wherever situate, and has paid or accrued for payment all taxes as
shown on such returns, such that a failure to file, pay or accrue will not have
a Material Adverse Effect on DIGITAL. Such returns have been prepared in
accordance with the applicable tax laws and rules and regulations thereunder to
which DIGITAL is subject and Sellers have delivered true and complete copies of
all such tax returns to AVE.
(e) Pending Actions. There are no material legal actions, lawsuits,
---------------
proceedings or investigations, either administrative or judicial, pending or
threatened, against or affecting DIGITAL, or against DIGITAL's Officers or
Directors or the Sellers that arise out of their operation of DIGITAL, except as
described in Exhibit "C" attached hereto. DIGITAL is not knowingly in violation
of any law, material ordinance or regulation of any kind whatever, including,
but not limited to laws, rules and regulations governing the sale of its
products and/or services, the '33 Act, the Securities Exchange Act of 1934 (the
"'34 Act") as amended, the Rules and Regulations of the U.S. Securities and
Exchange Commission ("SEC"), or the securities laws and regulations of any
state. Neither DIGITAL nor Sellers are subject to any order, writ, judgment,
injunction, decree, determination or award of any court, arbitrator or
administrative, governmental or regulatory authority or body.
(f) Governmental Regulation. No approval of any trade or
-----------------------
professional association or agency of government other than as set forth on
Exhibit "D" is required for any of the transactions effected by this Agreement,
and the completion of the transactions contemplated by this Agreement will not,
in and of themselves, affect or jeopardize the validity or continuation of any
of them.
(g) Ownership of Assets. Except as set forth in Exhibit "E",
-------------------
DIGITAL has good, marketable title, without any liens or encumbrances of any
nature whatever, to all of the following, if any: its assets, properties and
rights of every type and description, including, without limitation, all cash on
hand and in banks,
- 2 -
<PAGE>
certificates of deposit, stocks, bonds, and other securities, good will,
customer lists, its corporate name and all variants thereof, trademarks and
trade names, copyrights and interests thereunder, licenses and registrations,
pending licenses and permits and applications therefor, inventions, processes,
know-how, trade secrets, real estate and interests therein and improvements
thereto, machinery, equipment, vehicles, notes and accounts receivable,
fixtures, rights under agreements and leases, franchises, all rights and claims
under insurance policies and other contracts of whatever nature, rights in funds
of whatever nature, books and records and all other property and rights of every
kind and nature owned or held by DIGITAL as of this date, and will continue to
hold such title on and after the completion of the transactions contemplated by
this Agreement; nor, except in the ordinary course of its business, has DIGITAL
disposed of any such asset since the date of the most recent balance sheet
described in Section 3(o) of this Agreement.
(h) No Interest in Suppliers, Customers, Landlords or Competitors.
-------------------------------------------------------------
Neither the Sellers nor any member of their families have any interest of any
nature whatever in any supplier, customer, landlord or competitor of DIGITAL.
(i) No Debt Owed by DIGITAL to Sellers. Except as set forth in
----------------------------------
Exhibit "F", DIGITAL does not owe any money, securities, or property to either
the Sellers or any member of their families or to any company controlled by or
under common control with such a person, directly or indirectly.
(j) Corporate Records. All of DIGITAL's books and records,
-----------------
including, without limitation, its books of account, corporate records, minute
book, stock certificate books and other records of DIGITAL are up-to-date,
complete and reflect accurately and fairly the conduct of its business in all
material respects since its date of incorporation. All reports, returns and
statements currently required to be filed by DIGITAL, with respect to the
business and operations of DIGITAL, with any governmental agency have been filed
or valid extensions have been obtained in accordance with normal procedures and
all governmental reporting requirements have been complied with.
(k) No Misleading Statements or Omissions. Neither this Agreement
-------------------------------------
nor any financial statement, exhibit, schedule or document attached hereto or
presented to AVE in connection herewith, contains any materially misleading
statement, or omits any fact or statement necessary to make the other statements
or facts therein set forth not materially misleading.
(l) Validity of the Agreement. All corporate and other
-------------------------
proceedings required to be taken by the Sellers and by DIGITAL in order to enter
into and to carry out this Agreement have been duly and properly taken. This
Agreement has been duly executed by the Sellers and by DIGITAL, and constitutes
the valid and binding obligation of each of them, except to the extent limited
by applicable bankruptcy, reorganization, insolvency, moratorium or other laws
relating to or effecting generally the enforcement of creditors rights. The
execution and delivery of this Agreement and the carrying out of its purposes
will not result in the breach of any of the terms or conditions of, or
constitute a default under or violate, DIGITAL's Certificate of Incorporation or
By-Laws, or any material agreement, lease, mortgage, bond, indenture, license or
other material document or undertaking, oral or written, to which DIGITAL or the
Sellers is a party or is bound or may be affected, nor will such execution,
delivery and carrying out violate any order, writ, injunction, decree, law, rule
or regulation of any court, regulatory agency or other governmental body; and
the business now conducted by
- 3-
<PAGE>
DIGITAL can continue to be so conducted after completion of the transaction
contemplated hereby, with DIGITAL as a wholly-owned subsidiary of AVE.
(m) Enforceability of the Agreement. When duly executed and
-------------------------------
delivered, this Agreement and the Exhibits hereto which are incorporated herein
and made a part hereof are legal, valid, and enforceable by AVE according to
their terms, except to the extent limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws relating to or effecting
generally the enforcement of creditors rights, and that at the time of such
execution and delivery, AVE will have acquired title in and to the DIGITAL
Common Shares free and clear of all claims, liens and encumbrances.
(n) Access to Books and Records. AVE will have full and free access
---------------------------
to DIGITAL's books during the course of this transaction prior to and at the
Closing, during regular business hours.
(o) DIGITAL Financial Statements. Attached hereto as Exhibit "G-1"
----------------------------
are recent unaudited financial statements of DIGITAL. Before the Closing,
DIGITAL's audited financial statements will be provided to AVE, and will be
annexed hereto as Exhibit "G-2"; the DIGITAL financial statements will
accurately describe DIGITAL's financial position as of the date thereof.
DIGITAL's financial statements will have been prepared in accordance with
generally accepted accounting principles in the United States ("GAAP") (or as
permitted by regulation S-X, S-B, and/or the rules promulgated under the U.S.
Securities Act of 1933 and the U.S. Securities Exchange Act of 1934) and present
fairly in all material respects the financial condition of DIGITAL as of the
dates thereof and will have been certified by independent certified public
accountants with substantial SEC experience. Without limiting any of the
foregoing representations and warranties, there are no liabilities of DIGITAL
which will not be reflected on the DIGITAL financial statements; and the audited
financial statements in Exhibits "G-2" will show no material adverse change from
the unaudited financial statements contained in Exhibit "G-1".
(p) DIGITAL's Corporate Summary. DIGITAL's Corporate Summary,
---------------------------
prepared in _____, 1997 (attached hereto as Exhibit "L") accurately describes
DIGITAL's business, assets, proposed operations and management as of the date
thereof; since the date of the Corporate Summary, there has been no material
change in the Business Plan and no material adverse change in DIGITAL of any
kind or nature whatsoever.
(q) No Brokers. Except as set forth in paragraphs 4(b) and 12
----------
below, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with any of the transactions
contemplated by this Agreement.
(r) Compliance with Laws. DIGITAL represents and warrants that it
--------------------
has complied with, and is not in violation of any applicable federal, state, or
local statutes, laws or regulations as respects the ownership of its property or
the operation of its business.
(s) Compliance with Laws; Environmental or other Related Matters.
------------------------------------------------------------
DIGITAL's operations have been conducted in all material respects in accordance
with all applicable statutes, laws, rules and regulations. DIGITAL is not in
violation of any Federal, state, local or foreign law, ordinance or regulation
or any Governmental Order applicable to DIGITAL or by which any of its
properties is subject, bound or affected.
- 4 -
<PAGE>
There is no Governmental Order outstanding against DIGITAL (nor, to the best
knowledge of DIGITAL, threatened to be issued) that will or would have a
Material Adverse Effect. Except as disclosed herein, DIGITAL currently holds
(and at the Closing will hold) all the environmental, health and safety and
other permits, licenses, authorizations, certificates and approvals of
Governmental Authorities, whether Federal, state, local or foreign
(collectively, "Permits"), necessary or proper for the current use, occupancy or
operation of the Business, and all of the Permits are now and at the Closing
will be in full force and effect. Schedule "S" annexed hereto and made a part
hereof contains a list of all material Permits and all material applications for
Permits relating to DIGITAL and the Business. DIGITAL has not received and has
no reason to believe it will receive any notice that any Governmental Authority
is considering revoking, canceling, rescinding, materially modifying or refusing
to renew any of the Permits. Except as otherwise disclosed herein, there is no
existing practice, action or plan of DIGITAL and no existing condition of the
assets of DIGITAL that may give rise to any civil or criminal liability under,
or violate or prevent compliance with, and environmental, health or occupational
safety or other applicable statute, regulation, ordinance, decree or Permit
other than those practices, action, plans and conditions the existence of which
will not have a Material Adverse Effect. Schedule "T" identifies all Permits
that require consent, notification or other action to remain in full force and
effect following the consummation of the transaction contemplated hereby.
4. Warranties and Representations of AVE. In order to induce the
-------------------------------------
Sellers and DIGITAL to enter into this Agreement and to complete the transaction
contemplated hereby, AVE warrants and represents to DIGITAL and Sellers that:
(a) Organization and Standing. AVE is a corporation duly
-------------------------
organized, validly existing and in good standing under the laws of the State of
Nevada, is qualified to do business as a foreign corporation in every other
state in which it operates to the extent required by the laws of such states,
and has full power and authority to carry on its business as now conducted and
to own and operate its assets, properties and business.
(b) Capitalization. AVE's entire authorized equity capital
--------------
consists of 15,000,000 shares of voting common stock, $.001 par value, of which
102,793 shares are issued and outstanding as of the date hereof. As of the
Closing, there will be a total of 10,200,000 post-reverse split shares of AVE
issued and outstanding, after giving effect to (a) the issuance of 8,500,000
shares under Rule 144 to DIGITAL'S shareholders; (b) the issuance of 533,333
Rule 144 shares to private investors in exchange for their investment of
$400,000 in DIGITAL; and (c) the issuance of 1,063,874 shares under Rule 504 to
Consultants as payment for their services under Rule 504 in connection with this
transaction). Upon issuance, all of the AVE Common Stock will be validly issued
fully paid and non-assessable. The relative rights and preferences of AVE's
equity securities are set forth on the Certificate of Incorporation, as amended
and AVE's By-laws (Exhibit "H" hereto). There are no other voting or equity
securities convertible into voting stock, and no outstanding subscriptions,
warrants, calls, options, rights, commitments or agreements by which AVE is
bound, calling for the issuance of any additional shares of common stock or any
other voting or equity security. The By-laws of AVE provide that a simple
majority of the shares voting at a stockholders' meeting at which a quorum is
present may elect all of the directors of AVE. Cumulative voting is not provided
for by the By-Laws or Certificate of Incorporation of AVE. Accordingly, as of
the Closing the 8,500,000 shares being issued to and acquired by the Sellers
(not including the shares issued to Consultants) will constitute 83,33% of the
10,200,000 shares of AVE which will then be issued and outstanding, (including
after giving effect to the issuance of the above-stated number of
- 5 -
<PAGE>
shares as payment for all consulting fees and commissions) which includes,
inter alia, that same percentage of AVE's voting power, right to receive
- - ----- ----
dividends, when, as and if declared and paid, and the right to receive the
proceeds of liquidation attributable to common stock, if any.
(c) Ownership of Shares. By AVE's issuance of the AVE Common Shares
-------------------
to the Sellers pursuant to this Agreement, the Sellers will thereby acquire good
and marketable title thereto, free and clear of all liens, encumbrances and
restrictions of any nature whatsoever, except by reason of the fact that such
AVE shares will not have been registered under the '33 Act.
(d) Significant Agreements. AVE is not and will not at Closing be
----------------------
bound by any of the following other than where already disclosed in any other
exhibit, unless specifically listed in Exhibit "I" hereto:
(i) Employment, advisory or consulting contract;
(ii) Plan providing for employee benefits of any nature;
(iii) Lease with respect to any property or equipment;
(iv) Contract or commitment for any future expenditure in
excess of $1,000;
(v) Contract or commitment pursuant to which it has assumed,
guaranteed, endorsed, or otherwise become liable for any
obligation of any other person, firm or organization;
(vi) Contract, agreement, understanding, commitment or
arrangement, other than in the normal course of
business, not fully disclosed or set forth in this
Agreement;
(vii) Agreement with any person relating to the dividend,
purchase or sale of securities, that has not been
settled by the delivery or payment of securities when
due, and which remains unsettled upon the date of this
Agreement.
(e) Taxes. AVE has filed all federal, state and local income or
-----
other tax returns and reports that it is required to file with all governmental
agencies, wherever situate, and has paid all taxes as shown on such returns such
that a failure to file, pay or accrue will not have a material Adverse Effect
on AVE. Such returns have been prepared in accordance with the applicable tax
laws and rules and regulations thereunder to which AVE is subject and AVE has
delivered true and complete copies of all such tax returns for the periods
________ to ___________ to DIGITAL.
(f) Absence of Liabilities. At and as of the Closing Date, AVE will
----------------------
have no liabilities of any kind or nature, undisclosed fixed or contingent,
except for (i) the costs, including legal and accounting fees and other
expenses, in connection with this transaction, for which AVE agrees to be
responsible and to pay in full at or before the Closing, and ii) the transaction
described in section 7(b)(vi) herein.
- 6 -
<PAGE>
(g) No Pending Actions. There are no material legal actions, lawsuits,
------------------
proceedings or investigations, either administrative or judicial, pending or
threatened, against or affecting AVE, or against any of AVE's officers or
directors and arising out of their operation of AVE that are reasonably likely
to have a Material Adverse Effect on York. AVE is not knowingly in violation of
any law, ordinance or regulation of any kind whatever, including, but not
limited to, the '33 Act, the 1934 Act, as amended, the Rules and Regulations of
the SEC, or the securities laws and regulations of any state. AVE is not an
investment company as defined in the Securities laws. AVE is not required to
file reports pursuant to either Section 12(g) or 15(d) of the '34 Act.
(h) Corporate Records. All of AVE's books and records, including,
-----------------
without limitation, its books of account, corporate records, minute book, stock
certificate books and other records are up-to-date, complete and reflect
accurately and fairly the conduct of its business in all material respects since
its date of incorporation; all of said books and records will be delivered to
AVE's new management at the Closing.
(i) No Misleading Statements or Omissions. Neither this Agreement nor
-------------------------------------
any financial statement, exhibit, schedule or document attached hereto or
presented to DIGITAL in connection herewith contains any materially misleading
statement, or omits any fact or statement necessary to make the other statements
or facts therein set forth not materially misleading.
(j) Validity of the Agreement. All corporate and other proceedings
-------------------------
required to be taken by AVE in order to enter into and to carry out this
Agreement have been duly and properly taken. This Agreement has been duly
executed by AVE, and constitutes a valid and binding obligation of AVE except to
the extent limited by applicable bankruptcy reorganization, insolvency,
moratorium or other laws relating to or effecting generally the enforcement of
creditors rights. The execution and delivery of this Agreement and the carrying
out of its purposes will not result in the breach of any of the terms or
conditions of, or constitute a default under or violate, AVE's Certificate of
Incorporation or By-Laws, or any material agreement, lease, mortgage, bond,
indenture, license or other document or undertaking, oral or written, to which
AVE is a party or is bound or may be affected, nor will such execution, delivery
and carrying out violate any order, writ, injunction, decree, law, rule or
regulation of any court, regulatory agency or other governmental body.
(k) Enforceability of the Agreement. When duly executed and delivered,
-------------------------------
this Agreement and the Exhibits hereto which are incorporated herein and made a
part hereof are legal, valid, and enforceable by DIGITAL and the Sellers
according to their terms, except to the extent limited by applicable bankruptcy
reorganization, insolvency, moratorium or other laws relating to or effecting
generally the enforcement of creditors rights; and at the time of such execution
and delivery, the Sellers will have acquired good, marketable title in and to
the AVE Common Shares acquired pursuant hereto, free and clear of all liens and
encumbrances.
(l) Access to Books and Records. DIGITAL and Sellers will have full and
---------------------------
free access during regular business hours and on reasonable prior notice to
AVE's books and records during the course of this transaction prior to and at
the Closing.
-7-
<PAGE>
(m) AVE Financial Statements. Before the Closing, AVE will provide
------------------------
DIGITAL with recent audited financial statements, which will be certified in
accordance with GAAP by independent certified public accountants with SEC
experience.
(n) AVE Financial Condition. After consummation of all of the
-----------------------
transactions contemplated hereby AVE will have no assets or liabilities.
(o) Directors' Approval. Promptly upon the signing of this Agreement,
-------------------
AVE's Board of Directors, by meeting or consent, will authorize the matters
described in section 7(b)(i) herein.
5. Term. All representations, warranties, covenants and agreements made by
----
any party herein and in the exhibits attached hereto shall survive the execution
and delivery of this Agreement and payment pursuant thereto.
6. The AVE Shares and DIGITAL Shares. All of the AVE and the DIGITAL Common
---------------------------------
Shares shall be validly issued, fully-paid and non-assessable shares of AVE and
DIGITAL Common Stock respectively, with full voting rights, dividend rights, and
right to receive the proceeds of liquidation, if any, as set forth in the
respective Articles of Incorporation.
7. Conditions Precedent to Closing. (a) The obligations of DIGITAL and
-------------------------------
Sellers under this Agreement shall be and are subject to fulfillment, prior to
or at the Closing, of each of the following conditions:
(i) That AVE's representations and warranties contained herein shall
be true and correct at the time of Closing, as if such representations and
warranties were made at such time;
(ii) That AVE in all material respects shall have performed or complied
with all agreements, terms and conditions required by this Agreement to be
performed or complied with by it prior to or at the time of the Closing;
(iii) That AVE's directors, by proper and sufficient vote taken either
by consent of directors or at a meeting duly and properly called and held, shall
have properly approved all of the matters described in Section 7(b)(i) herein;
and
(iv) That AVE's common stock will be listed on the National Quotation
Bureau, Inc.'s Bulletin Board.
(b) The obligations of AVE under this Agreement shall be and are subject to
fulfillment, prior to or at the Closing of each of the following conditions:
(i) That AVE's Shareholders and Board of Directors, by proper and
sufficient vote, shall have approved this Agreement and the transactions
contemplated hereby; approved the contemplated reverse split of AVE's
outstanding Common Stock; approved the resignation of all of AVE's current
directors and the election of up to ___ designees of DIGITAL to serve as
directors in place of AVE's current directors; approved a change
-8-
<PAGE>
AVE's corporate name to a name selected by DIGITAL and will have approved such
other changes as are consistent with this Agreement and approved by DIGITAL for
submission to AVE stockholders;
(ii) That DIGITAL's and Sellers' representations and warranties
contained herein shall be true and correct at the time of Closing as if such
representations and warranties were made at such time and that there shall have
been no Material Adverse Effect with respect to DIGITAL; and York shall have
received a Certificate of DIGITAL and Sellers to such an effect signed by a duly
authorized officer of DIGITAL and by each of the Sellers; and
(iii) That DIGITAL and Sellers shall have performed or complied with all
agreements, terms and conditions required by this Agreement to be performed or
complied with by them prior to or at the time of Closing Date and AVE shall have
received a Certificate of DIGITAL and Sellers to such effect signed by or duly
authorized officer of DIGITAL and by each of the Sellers;
(iv) That DIGITAL's officers will have signed non-compete clauses in
the form attached hereto as Exhibit "J";
8. Termination. This Agreement may be terminated at any time before or at
-----------
Closing, by:
(a) The mutual agreement of the parties;
(b) Any party if:
(i) Any provision of this Agreement applicable to a party shall be
materially untrue or fail to be accomplished.
(ii) Any legal proceeding shall have been instituted or shall be
imminently threatening to delay, restrain or prevent the
consummation of this Agreement or any material component
thereof.
Upon termination of this Agreement for any reason, in accordance with the
terms and conditions set forth in this paragraph, each said party shall bear all
costs and expenses as each party has incurred and no party shall be liable to
the other for such costs and expenses.
9. Exhibits. All Exhibits attached hereto are incorporated herein by this
--------
reference as if they were set forth in their entirety.
10. Miscellaneous Provisions. This Agreement is the entire agreement between
------------------------
the parties in respect of the subject matter hereof, and there are no other
agreements, written or oral, nor may this Agreement be modified except in
writing and executed by all of the parties hereto. The failure to insist upon
strict compliance with any of the terms, covenants or conditions of this
Agreement shall not be deemed a waiver or relinquishment of such right or power
at any other time or times.
-9-
<PAGE>
11. Closing. The Closing of the transactions contemplated this Agreement
-------
("Closing") shall take place at 1:00 P.M. on the first business day after the
latter of the Sellers approving this Agreement or the shareholders of AVE
approving this Agreement and the matters referred to in Section 7(b)(i), or such
other date as the parties hereto shall agree upon. At the Closing, all of the
documents and items referred to herein shall be exchanged.
12. Fees and Commissions. As compensation for its services in initiating
--------------------
this transaction and ongoing consulting services to AVE, AVE acknowledges and
agrees that 1,063,874 shares being issued hereunder are being issued under Rule
504 in cancellation of all debts owed to the Consultants for their services
rendered or otherwise arising out of this Agreement and the transactions
contemplated hereby. Pursuant to the Consulting Agreements attached hereto as
Exhibit "X", these shares are being issued to (a) Olympic Capital Group, Inc.
and its designees-205,000 shares; (b) Henri Hornby-373,874 shares; (c) Michael
Keohe-142,500; David Evans-142,500; and Kennington Investments Limited-200,000.
13. No Third Party Beneficiaries. The provisions of this Agreement are for
----------------------------
the exclusive benefit of the parties who are signatories hereto and their
permitted successors and assigns, and no third party shall be a beneficiary of,
or have any rights by virtue of, this Agreement.
14. Assignment: Binding Effect. This Agreement, including both its
--------------------------
obligations and benefits, shall redound to the benefit of, and be binding on the
respective permitted assigns, transferees and successors of the parties. This
Agreement may not be assigned or transferred in whole or in part by either party
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed.
15. Non-Recourse. Notwithstanding anything contained in this Agreement to
------------
the contrary, it is expressly understood and agreed by the parties hereto that
each and every representation, warranty, covenant, undertaking and agreement
made in this Agreement (except with respect to the Sellers) was not made nor
intended to be made as a personal representation, undertaking, warranty,
covenant, or agreement on the part of any incorporator, stockholder, director,
officer, partner, employee or agent, past present or future, or any of them and
any recourse on account of any such representations, warranties, covenants,
undertakings or agreements made in this Agreement, whether in common law, in
equity, by statute or otherwise, against any of them (except with respect to the
Sellers) is hereby forever waived and released.
16. Material Adverse Effect. As used in this Agreement, "Material Adverse
-----------------------
Effect" with respect to a party means any change in, or effect on, the business
conducted by such party that is, or is reasonably likely to be, materially
adverse to (i) the business results of operations, prospects or condition
(financial or otherwise) of such party and its Subsidiaries, taken as a whole,
or (ii) the assets and properties used or useful in the conduct of the business
of such party and its Subsidiaries, taken as a whole.
17. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the State of Delaware.
-10-
<PAGE>
18. Counterparts. This Agreement may be executed in duplicate facsimile
------------
counterparts, each of which shall be deemed an original and together shall
constitute one and the same binding Agreement, with one counterpart being
delivered to each party hereto.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of
the date and year above first written.
AVE, INC.
/s/ [ILLEGIBLE]
------------------------------------
DIGITAL MANUFACTURING, INC.
By: /s/ TOM ATHANS
------------------------------------
President
------------------------------------
SELLERS:
/s/ TOM ATHANS
------------------------------------
------------------------------------
------------------------------------
------------------------------------
-11-
<PAGE>
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JAN 23 1987
FRANKIE SUE DEL PAPA
SECRETARY OF STATE
/s/ FRANKIE SUE DEL PAPA
No. 465-87
-------------------
CERTIFICATE AND AGREEMENT OF MERGER
OF
DE LUXE ONYX COMPANY
A California corporation
Pursuant to the Corporation Code of California Chapter 11 Section 1100
INTO
DE LUXE ONYX COMPANY
a Nevada corporation as the surviving corporation
Pursuant to Section 450 et seq, Nevada Revised Statutes
AGREEMENT OF MERGER, dated the 23rd day of January, 1987 between DE LUXE
ONYX COMPANY, a California corporation, and all of the Directors thereof and DE
LUXE ONYX COMPANY, a Nevada corporation and all of the Directors thereof, the
two corporations being hereinafter sometimes called the Constituent Corporation.
WHEREAS the Board of Directors of each of the Constituent Corporations deem
it advisable and generally to the welfare of the Constituent Corporations that
these corporations merge under the terms and conditions hereafter set forth,
such merger to be effected pursuant to the statutes of the State of California
and the Statutes of the State of Nevada, and they have approved and authorized
the form of agreement and merger.
WHEREAS DE LUXE ONYX COMPANY is a corporation duly organized under the laws
of the State of California, having been incorporated January 11th, 1921 with
authorized capital stock consisting of 100,000 shares of common stock with a par
value of $1.00 per share of which 3,000 shares are issued and outstanding; and,
WHEREAS DE LUXE ONYX COMPANY, is a corporation duly organized under the
laws of the State of Nevada, having been incorporated January 23rd, 1987 with
authorized capital stock consisting of 100,000 shares of common stock with a par
value of $1.00.
WHEREAS the laws of the State of California and Nevada permit such a
merger, and the Constituent Corporations desire to merge, under and pursuant to
the provision of the laws of their respective states:
NOW THEREFORE, in consideration of the promises and of the mutual
agreements and covenants herein contained, it is agreed that DE LUXE ONYX
COMPANY, a California corporation, and DE LUXE ONYX COMPANY, a Nevada
corporation, shall be merged into DE LUXE ONYX COMPANY, a Nevada corporation,
which shall be the Surviving Corporation, and the terms and conditions of such
merger and the mode of carrying it into effect are and shall be as follows:
1. NAME OF SURVIVING CORPORATION. The name of the corporation, which is
------------------------------
sometimes hereinafter referred to as the Surviving Corporation, shall, from and
after the effective date of the merger, be DE LUXE ONYX COMPANY. The separate
existence of DE LUXE ONYX COMPANY, of California, shall cease at the effective
time of the merger, except insofar as it may be continued by law or in order to
carry out the purpose of this Agreement of Merger and except as continued in the
Surviving Corporation.
2. ARTICLES OF INCORPORATION OF SURVIVING CORPORATION. The
---------------------------------------------------
<PAGE>
Articles of Incorporation of the Surviving Corporation shall be the Articles of
Incorporation of DE LUXE ONYX COMPANY, of Nevada, a copy of which is annexed as
Exhibit "A" hereto.
3. BYLAWS. The By laws of DE LUXE ONYX COMPANY, of Nevada at the
------
effective time of the merger shall be By laws of the Surviving Corporation until
altered or replaced as provided therein.
4. BOARD OF DIRECTORS AND OFFICERS. The members of the Board of Directors
-------------------------------
and the officers of the Surviving Corporation immediately after the effective
time of the merger shall be those persons who were the members of the Board of
Directors and the officers, respectively, DE LUXE ONYX COMPANY, of Nevada
immediately prior to the effective time of the merger, and such persons shall
serve in such offices, respectively, for the terms provided by law or in the
Bylaws or until their respective successors are elected and qualified.
5. AUTHORITY TO CONDUCT BUSINESS. DE LUXE ONYX COMPANY, of Nevada
-----------------------------
represents that the corporation has not filed an application for authority to do
business in California. The Surviving Corporation will conduct no such business
in California without first filing and having such application approved.
6. CONVERSION OF SHARES. The manner of converting the shares of the
--------------------
Constituent Corporation into the shares of the Surviving Corporation shall be
set forth in this paragraph as follows:
Immediately upon the effective date of the merger, each share of stock of
DE LUXE ONYX COMPANY, of California outstanding in the hands of the public
(being all of the shares of DE LUXE ONYX COMPANY, of California
outstanding) without any action on the part of the holder thereof, shall
automatically become and be converted into stock of the Surviving
Corporation, as the case may be, at the rate of one share of stock of the
Surviving Corporation for one share of stock of DE LUXE ONYX COMPANY, of
Nevada. All shares thus converted shall be deemed for all corporate
purposes (other than the payment of dividends) to evidence the ownership of
the number of fully-paid, nonassessable shares of common stock of the
Surviving Corporation into which shares of common stock of DE LUXE ONYX
COMPANY, of California shall have been so converted.
7. FIGHT OF SHAREHOLDERS. After the effective time of the merger, each
---------------------
holder of a certificate or certificates which theretofore represented shares of
common stock of DE LUXE ONYX COMPANY, of California shall cease to have any
rights as a shareholder of DE LUXE ONYX COMPANY, of California are, except such
as expressly reserved to such stockholders by statute. After the effective time
of the merger, any holder of a certificate or certificates which theretofore
represented shares of common stock of DE LUXE ONYX COMPANY, of California may,
but shall not be required to, surrender the same to the Transfer Agent of the
Surviving Corporation, and shall thereupon be entitled to receive in exchange
therefore a certificate or certificates representing the number of shares of
common stock of DE LUXE ONYX COMPANY, of Nevada theretofore represented by such
certificate or certificates as shall have been converted.
(2)
<PAGE>
8. EFFECTIVE DATE OF MERGER.
------------------------
A. For all purposes of the Laws of the State of California, this Agreement
of Merger and the merger herein provided for shall become effective and the
separate existence of DE LUXE ONYX COMPANY, a California corporation, except
insofar as it may be continued by statute, shall cease as soon as; this
Agreement of Merger shall have been adopted, approved, signed and acknowledged
in accordance with the laws of the State of California and certificates of its
adoption and approval shall have been executed in accordance with such laws; and
this Certificate and Agreement of merger shall have been filed in the office of
the Secretary of State of the State of California.
B. For all purposes of the Laws of the State of Nevada, this Agreement of
Merger and the merger herein provided for shall become effective and the
separate existence of DE LUXE ONYX COMPANY, a California corporation, except
insofar as it may be continued by statute, shall cease as soon as; this
Agreement of Merger shall have been adopted, approved, signed and acknowledged
in accordance with the laws of the State of Nevada and certificates of its
adoption and approval shall have been executed in accordance with such laws; and
this Certificate and Agreement of merger shall have been filed in the office of
the Secretary of State of the State of Nevada.
C. The corporate identity, existence, purpose, powers, objects, franchises,
rights and immunities of DE LUXE ONYX COMPANY, of Nevada shall continue
unaffected and unimpaired by the merger hereby provided for; and the corporate
identities, existences, purposes, powers, objects, franchises, rights and
immunities of DE LUXE ONYX COMPANY, of California shall be continued in and
merged into DE LUXE ONYX COMPANY, of Nevada and DE LUXE ONYX COMPANY, of Nevada
shall be fully vested therewith.
D. The date upon which this Agreement is filed in the offices mentioned
above and upon which the Consitutent Corporations shall so become a single
corporation is the effective date of the merger.
9. AUTHORIZATION. The parties hereto acknowledge and respectively represent
-------------
that this Merger Agreement is authorized by the laws of the respective
jurisdictions of the Constitutent Corporations and that the matter was approved
by the board of directors of the Nevada corporation and at a special meeting of
shareholders of the California corporation at which the California shareholders
voted as follows:
CORPORATION SHARES OUTSTANDING VOTED FOR VOTED AGAINST
- - ----------- ------ ----------- ----- --- ----- -------
CALIFORNIA 3,000 1,800 None
10. FURTHER ASSURANCES OF TITLE. As and when requested by the Surviving
---------------------------
Corporation or by its successors or assigns, DE LUXE ONYX COMPANY, of Nevada
will execute and deliver or cause to be executed and delivered all such deeds
and instruments and will take or cause to be taken all such further action as
the Surviving Corporation may deem necessary or desirable in order to vest in
and confirm to the Surviving Corporation title to and possession of any property
of any of the Constitutent Corporations acquired by the Surviving Corporation by
reason or as a result of the merger herein provided for and otherwise to carry
out the intent and purposes hereof, and the officers
(3)
<PAGE>
directors of DE LUXE ONYX COMPANY, of California and the officers and directors
of the Surviving Corporation are fully authorized in the name of the respective
Constituent Corporations or otherwise to take any and all such action.
11. SERVICE OF PROCESS ON SURVIVING CORPORATION. The Surviving Corporation
-------------------------------------------
agrees that it may be served with process in the State of California in any
proceeding for enforcement of any obligation of DE LUXE ONYX COMPANY, of
California as well as for the enforcement of any obligation of the Surviving
Corporation rising from the merger, including any suit or other proceeding to
enforce the right of any shareholder as determined in appraisal proceedings
pursuant to the provisions of the California Corporations Code, of California,
and hereby irrevocably appoints the Secretary of State of California as its
agent to accept service of process in any suit or other proceeding. Copies of
such process shall be mailed to the Resident Agent, Resident Agency National,
377 South Carson Street, Carson City, Nevada until further notice.
12. SHAREHOLDERS FIGHT TO PAYMENT. The Surviving Corporation agrees that
-----------------------------
subject to the provisions of the California Corporations Code of the State of
California, that it will pay to the shareholders of DE LUXE ONYX COMPANY the
amounts, if any, to which such shareholders may be entitled under the provisions
of the above statutes of the laws of California as the case may be.
13. ABANDONMENT. This Agreement of Merger may be abandoned (a) by either
-----------
Constituent Corporation, acting by its Board of Directors, at any time prior to
its adoption by the shareholders of both of the Constituent Corporations as
provided by law, or (b) by the mutual consent of the Constituent Corporations,
acting each by its Board of Directors, at any time after such adoption by such
shareholders and prior to the effective time of the merger. In the event of
abandonment of this Agreement of Merger pursuant to (a) above, notice thereof
shall be given by the Board of Directors of the Constituent Corporation so
terminating to the other Constituent Corporation, and thereupon, an abandonment
pursuant to (b) above, this Agreement of Merger shall become wholly void and of
no effect and there shall be no further liability or obligation hereunder on the
part of either of the Constituent Corporations or of its Board of Directors or
shareholders.
IN WITNESS WHEREOF each of the Constituent Corporations, pursuant to
authority duly granted by its Board of Directors, has caused this Agreement of
Merger to be executed by a majority of its Directors and its President and
Secretary.
The respective Directors and officers of the Constituent Corporations
(4)
<PAGE>
do hereby certify that the above Merger Agreement was adopted as set forth in
the above Agreement and that said resolution has not been revoked or amended.
DE LUXE ONYX COMPANY DE LUXE ONYX COMPANY
(a California corporation) (a Nevada corporation)
/s/ MARK TIMOTHY /s/ MARK TIMOTHY
- - ----------------------------- ----------------------------
Mark Timothy Mark Timothy
President & Director President & Timothy
/s/ MARK TIMOTHY /s/ JERRY TIMOTHY
- - ----------------------------- ----------------------------
Jerry Timothy Jerry Timothy
Secretary & Director Secretary & Director
STATE OF UTAH
: ss
COUNTY OF SALT LAKE )
This instrument was acknowledged before me this 23rd day of January,
1987, by Mark Timothy and Jerry Timothy known to me to be the officers and
directors of DE LUXE ONYX COMPANY, (California) as set forth under their
respective signatures.
This instrument was acknowledged before me this 23rd day of January,
1987, by Mark Timothy and Jerry Timothy known to me to be the officers and
directors of DE LUXE ONYX COMPANY, (Nevada) as set forth under their respective
signatures.
My Commission Expires:
----------------------------
12-1-89 Notary Public
- - ----------------- Presiding at:
<PAGE>
SECRETARY'S CERTIFICATE
-----------------------
The undersigned, the duly elected Secretary of Deluxe Onyx Company, a
California corporation, hereby certify as follows:
1. A special meeting of the stockholders of the Corporation was duly
called and held on January 20, 1987 at 2089 Donnelson Lane, Salt Lake City,
Utah. Notice of such meeting was mailed by first class mail to all stockholders
of record of the Corporation prior to ten days from the date of such meeting.
2. At the aforementioned meeting of stockholders there were present in
person or by proxy 1,800 shares of common stock of the Corporation. As of the
date of the notice and the date of the meeting, there were 3,000 issued and
outstanding shares of common stock of the Corporation.
3. Attached hereto is a true and correct copy of the minutes of the
meeting of stockholders of the Corporation.
IN WITNESS WHEREOF, the undersigned, the Secretary of Deluxe Onyx
Company, has executed this Certificate as of January 20, 1987.
/s/ JERRY TIMOTHY
-------------------------------------
J. TIMOTHY, Secretary
<PAGE>
EXHIBIT 5
TAB W
EXHIBIT B
- - ---------
LAW OFFICES
DAVID M. KAYE
744 BROAD STREET
NEWARK, NEW JERSEY 07102
------------------------
(201) 242-1515
FACSIMILE 67 WALL STREET
(201) 622-5515 SUITE 2411
NEW YORK, N.Y. 10005
As of May 31, 1990
Board of Directors
AVE, INC.
26935 Calamine Drive
Agoura, California 91301
Re: Tradeability of Shares of AVE, INC.
f/k/a Walsh Communications Group, Inc.,
f/k/a De Luxe Onyx Company
---------------------------------------
Gentlemen:
You have requested that I render an opinion with respect to the tradeability
under the Securities Act of 1933, as amended (the "1933 Act"), of the issued
and outstanding shares of common stock, $.00l par value per share, of AVE,
INC., f/k/a Walsh Communications Group, Inc., f/k/a De Luxe Onyx Company (the
"Company").
In rendering my opinion, I have examined certain documents supplied to me by
the Company, including, but not limited to, the Company's Articles of
Incorporation and Amendments, Certificate and Agreement of Merger dated
January 23, 1987, certificate of corporate status from the State of Nevada
dated May 7, 1990, and Information Statement pursuant to Rule l5c2-11 under
the Securities Exchange Act of 1934, as amended (the "1934 Act"). In such
examination, I have assumed the genuineness of all signatures, the
authenticity of all documents submitted to me as originals, and the
conformity with originals of all documents submitted to me as copies. In
rendering this opinion, I have assumed and relied upon the accuracy of all
information provided to me by the Company. As to various questions of fact
material to my opinion, I have relied upon the information provided to me by
the Company and upon oral statements of officers of the Company.
From an examination of the foregoing materials and documents, it appears that
the Company was incorporated as De Luxe Onyx Company on January 11, 1921
under the laws of the State of California. By August 8, 1922, the Company had
at least 101 shareholders and 3,000 shares of common stock outstanding. On or
about January 20, 1987, shareholders of the Company voted to change its
domicile to the State of Nevada, its name to Walsh Communications Group,
Inc., change the total authorized capital of the Company to 50,000,000 shares
of common stock, $.001 par value per share, and split the
<PAGE>
LAW OFFICES
DAVID M. KAYE
Page 2
3,000 issued and outstanding shares of common stock on a 1,000 to 1 basis. Upon
completion of the exchange, there were 3,000,000 shares of common stock
outstanding. The Company issued 6,000,000 shares of its common stock for the
common stock of another corporation. On October 5, 1990, the Company was renamed
to AVE, INC. and issued an additional 11,700,000 shares of its common stock in
exchange for certain motion picture equipment, sets and services. On May 4,
1990, an amended Articles of Incorporation were filed in the State of Nevada to
change the name to AVE, INC.
The purpose of this letter is not to express an opinion as to the foregoing
transactions and distribution of shares by the Company in connection therewith,
but simply to give an opinion as to the tradeability of the Company's shares of
common stock in secondary trading transactions.
Section 5 of the 1933 Act prohibits, among other things, the sale of a security
unless a registration statement is in effect or an exemption from the
registration requirement is available. As a result, any holder of shares of the
common stock of the Company must establish his individual entitlement to an
exemption from the registration requirements of Section 5 of the Act for any
transaction in such shares which he desires to affect.
Section 4(1) of the 1933 Act, which exempts "transactions by any person other
than an issuer, underwriter or dealer" is commonly referred to as the "ordinary
trading exemption" and is the most commonly used exemption for resales of
securities by the investing public. Section 4(1) was intended to exempt only
routine trading transactions between individual shareholders with respect to
securities already issued and not to exempt distributions by issuers or acts of
other individuals who engage in steps necessary to such distributions.
An "issuer" is defined under Section 2(4) of the 1933 Act to include every
person who issues or proposes to issue any security. The Company is included
within this definition. Also included within this definition are individuals who
directly or indirectly are in control of, controlled by or under common control
with the Company and are deemed to be "affiliates" of the issuer. Both Rule 405
and Rule 144 define "control", "controlling", "controlled by", "under common
control with" and "affiliate" generally as one who directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or in common
control with the issuer (i.e., AVE, INC.). Please note that officers, directors,
and/or shareholders owning 10% or more of the issued and outstanding shares of
a corporation are deemed to be in control.
An "underwriter" is broadly defined under Section 2(11) of the 1933 Act to mean
"any person who has purchased from an issuer with a
<PAGE>
LAW OFFICES
DAVID M. KAYE
Page 3
view to, or offers or sells for an issuer in connection with, the
distribution of any security or offers or sells for an issuer in
connection with, the distribution of any security or participates or has a
direct or indirect participation in any such undertaking, or participates
or has a participation in the direct or indirect underwriting of any such
undertaking". A securities firm which undertakes to sell an issuer's
securities to the public is clearly an underwriter. However, individual
investors who are not professionals in the securities business can also be
considered to have sold for the issuer "in connection with" a
"distribution", and thus to be a so--called "statutory underwriters" if
they resell restricted securities in a public distribution. Persons in a
"control" relationship with the issuer can also become underwriters by
selling securities in a manner that constitutes participation in a public
distribution. Over the years, the term "underwriter" has proven to be an
elusive concept.
A "dealer" is defined under Section 2(12) of the 1933 Act as any person
who engages either for all or part of his time, directly, or indirectly,
as agent, broker or principal, in the business of offering, buying,
selling, or otherwise dealing or trading in securities issued by another
person. Generally, individual shareholders will not be deemed to be in the
business of trading in securities, and therefore will not be considered
dealers, as a result of his involvement in a single and isolated
transaction.
Brokers who may wish to engage in transactions in the shares of common
stock of the Company that are within the purview of the opinion expressed
in this letter should be advised that they are obliged to make proper
inquiry of shareholders proposing to sell their shares to determine that
such selling shareholders qualify for the exemption provided under Section
4(1) of the 1933 Act, that is, that such shareholders are not issuers,
dealers, underwriters, control persons or affiliates of the Company, and
therefore prohibited from selling under the exemption provided by Section
4(1). Any proposed seller who is an officer or director of the Company,
and/or holds beneficially and of record, either directly or indirectly,
10% or more of the shares of common stock of the Company then outstanding,
is not eligible for the exemption from registration provided by Section
4(1) of the 1933 Act. Such shareholders may fall within the meaning of
"underwriters" as that term is defined in the 1933 Act, and therefore can
only resell their shares in compliance with Rule 144 promulgated by the
Securities and Exchange Commission pursuant to the 1933 Act ("Rule 144").
Such shareholders should obtain legal opinions from their attorneys to
determine if they qualify for sales under Rule 144 prior to any resale of
their shares.
While Rule 144 is not the exclusive means for reselling unregistered
securites and securities held by affiliates without
3
<PAGE>
LAW OFFICES
DAVID M. KAYE
Page 4
registration, compliance with the Rule 144 by these or any other
shareholders would allow the sale of unregistered securities without a
question. Rule 144 is a so--called "safe harbor" rule which if complied
with, should eliminate any questions as to whether or not a shareholder
selling restricted shares has acted as an "underwriter".
While it is not the purpose of this opinion to determine the eligibility
of individual shareholders, it is my intent to give an opinion that those
shareholders who qualify in general for the exemption provided by Section
4(1) of the 1933 Act, or who comply with Rule 144, may resell their
securities without registration under Section 5. In connection therewith,
the Company and its officers and directors, have an affirmative duty under
the 1933 Act to take reasonable measures to prevent violations of the 1933
Act by holders of the Company's common stock. In order to protect the
Company from any SEC allegation that it has aided and abetted violations
of the 1933 Act, it should at the very least provide its transfer agent a
copy of this opinion and determine those shareholders of record who appear
to be affiliates or to have directly acquired their shares from
affiliates.
The availability of the Section 4(1) exemption, as well as Rule 144, is
conditioned on the existence of adequate current public information as
specified in Rule 15c2--11. Broker--dealers cannot publish bid and asked
quotations for the Company's shares unless there is publicly available
certain information about the Company which is specified in Rule 15c2-ll
under the 1934 Act including current financial information. The Company
has prepared an Information Statement with accompanying exhibits thereto
in an attempt to comply with this rule. I have not examined the
Information Statement as to the sufficiency of the information provided
therein and this opinion is not directed to, and in no way should be
interpreted as, an opinion as to the availability of the information or
the sufficiency of information available to the brokerage community either
in compliance with the provisions of Rule 15c2--ll or otherwise. Each
broker-dealer will have to satisfy itself as to the sufficiency of the
information available to it and the public as well as the broker's
customers.
In addition, although this letter expresses my opinion cornerning the
tradeability under the 1933 Act of the issued and outstanding shares of
the common stock of the Company, broker--dealers and other persons are
hereby cautioned that transactions in the shares of common stock of the
Company may be made in only those states in which the shares have been
registered or are exempt from registration under the applicable state blue
sky laws. This opinion is not directed to, and in no way should be
interpreted as, an opinion as to the applicability of and/or compliance
with any such state blue sky laws.
4
<PAGE>
LAW OFFICES
DAVID M. KAYE
Page 5
I would caution you that opinion letters of counsel are not binding upon
the Securities and Exchange Commission nor the courts, and to the extent
that persons relying on this letter may have knowledge of facts or
circumstances which are contrary to those upon which this opinion is
based, then the opinion would not be applicable.
This opinion is limited in its use to the Company and to those broker-
dealers submitting quotations on its common stock to a quotation medium.
No other person may rely upon the opinion set forth herein. This opinion
is given as of the date hereof.
Very truly yours,
/s/ David M. Kaye
David M. Kaye
DMK:jsw
<PAGE>
TAB X
[LETTERHEAD OF O. ROBERT MEREDITH APPEARS HERE]
May 18, 1988
Walsh Communications Group, Inc.
6363 Sunset Blvd., Suite 930
Los Angeles, CA 90028
Re: Tradeability of Shares of Walsh Communications Group, Inc.
(FKA: De Luxe Onyx Company)
Dear Sirs:
You have requested that I render an opinion as to the affect that the Securities
and Exchange Commission Authorization Act of 1987 (Sec. 203, Pub. Law 100-181,
101 Stat. 1249) ("The Act of December 4, 1987") has on the transferability of
certain shares of Walsh Communications Group, Inc., a Nevada corporation (Walsh)
formerly known as "De Luxe Onyx Company". After a review of the relevant law, I
am of the opinion that the deletion of the language of former Section 3(a)(1) of
the Securities Act of 1933, as amended (the "1933 Act") has no material affect
on the ability of certain present shareholders of Walsh to avail themselves of
the exemption provided by Section 4(1) of the 1933 Act to effect market
transactions in their securities.
The securities in question were originally issued by Walsh during the period of
January 11, 1921 through August 7, 1922. During that period Walsh issued 3,000
shares to 101 shareholders of record. Those securities that were bona fide
issued to the public prior to July 1933 would have been exempt under former
Section 3(a)(1) of the 1933 Act. However, the Act of December 4, 1987 struck
from Section 3(a)(1) of the 1933 Act the language:
Section (a) Except as hereinafter provided the provisions of this title
shall not apply to any of the following classes of securities: (a) Any
security which, prior to or within sixty days after the enactment of
this title, has been sold or disposed of by the issuer or bona fide
offered to the public, but this exemption shall not apply to any new
offering of any such security or an issuer or underwriter subsequent to
such sixty days;
and substituted the following language:
<PAGE>
Walsh Communications Group, Inc.
May 18, 1988
Page 2
Section 3(a) Except as hereinafter provided the provisions of this title
shall not apply to any of the following classes of securities, (1)
Reserved.
As a result, any holder of such shares has, since December 4, 1987, been obliged
to establish his individual entitlement to an exemption from the registration
requirements of Section 5 of the 1933 Act for any transaction in such shares
which he desired to affect. The exemption most typically relied upon for such
secondary transactions has been Section 4(1) of the 1933 Act which exempts
transactions by persons other than "issuers", "underwriters" or "dealers" from
the registration requirements of Section 5. Accordingly, no such exemption is,
or ever has been available to a holder of Section 3(a)(1) exempt shares who was
an "issuer" or "underwriter" of the securities as those terms are defined by the
1933 Act.
Section 4(1) of the 1933 Act reads:
Section 4. The provisions of Section 5 shall not apply to (1)
transactions by any person other than an issuer, underwriter or dealer.
Section 4(1) was intended to exempt only routine trading transactions between
individual shareholders with respect to securities already issued and not to
exempt distributions by issuers or acts of other individuals who engage in steps
necessary to such distributions. Therefore, an understanding of the terms
"issuer", "affiliate", "control person", "underwriter", and "dealer" are
important in determining if a new offering may be involved which would require
registration.
An "issuer" is defined under Section 2(4) of the 1933 Act to include every
person who issues or proposes to issue any security. Walsh is included within
this definition. Also included within this definition are individuals who
directly or indirectly are in control of, controlled by or under common control
with Walsh and are deemed to be "affiliates" of the issuer. Both S.E.C. Rule 405
and Rule 144 define "control", "controlling", "controlled by", "under common
control with" and "affiliate" generally as one who directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or in common
control with an issuer (i.e., Walsh). The Securities and Exchange Commission has
set an arbitrary rule that shareholders owning 10% or more of the issued and
outstanding shares of a corporation are in control.
An "underwriter" is broadly defined under Section 2(11) of the 1933 Act to mean
any person who has purchased from an "issuer" with a view to, or offers or sells
for an issuer in connection
<PAGE>
Walsh Communications Group, Inc.
May 18, 1988
Page 3
with, the distribution of any security, or participates or has a direct or
indirect participation in any such undertaking, or participates or has a
participation in the direct or indirect underwriting of any such undertaking.
The interpretation of this definition has traditionally focused on the words
"with a view to" in the phrase "purchased from an issuer with a view to
...distribution." Individual shareholders who are not professionals in the
securities business may also be underwriters within the meaning of that term as
used in the 1933 Act if they act as links in a chain of transactions through
which securities move from an issuer to the public. Because the statutory
language of Section 2(11) is in the disjunctive, it is insufficient to conclude
that a shareholder is not an underwriter solely because he did not purchase
securities from an issuer with a view to their distribution. It must also be
established that the shareholder is not offering or selling for an issue (i.e.
Walsh) in connection with the distribution of the securities, does not
participate or have a direct or indirect participation in any such undertaking,
and does not participate or have a participation in the direct or indirect
underwriting of such an undertaking. Subsequent acts and circumstances such as
the length of time the shareholder has held the securities and whether there has
been an unforeseeable change in circumstances of the shareholder have been
considered in determining whether such shareholder took with a view to
distribution at the time of his acquisition.
A "dealer" is defined under Section 2(12) of the 1933 Act as any person who
engages either for all or part of his time, directly, or indirectly, as agent,
broker, or principal, in the business of offering, buying, selling, or otherwise
dealing or trading in securities issued by another person. Generally, individual
shareholders will not be deemed to be in the business of trading in securities,
and therefore will not be considered dealers, as a result of his involvement in
a single and isolated transaction. Further individual shareholders who deal with
securities personally owned by them and not securities issued by another person
generally do not fall within the definition of dealer.
A review of Walsh's transfer records reflect that a number of Walsh's present
shareholders, acquired their shares from predecessor shareholders who in all
likelihood could not be deemed to be affiliates in a transaction, or series of
transactions, that would be exempt under Section 4(1) of the 1933 Act. It is
unclear, but possible that there may have been a number of transactions in
violation of Section 5 of the 1933 Act, but I am of the opinion that as to these
shareholders the statute of limitations under Section 13(1) of the 1933 Act has
run. Section 13(1) denotes the statute of limitations for violations of Section
5. An action must be brought within one year of the
<PAGE>
Walsh Communications Group, Inc.
May 18, 1988
Page 4
violation upon which the action is based. Absolute cutoff for bringing an action
in any case is three years after the security was bona fide offered to the
public. Other present shareholders, however, have acquired their shares from
predecessor shareholders who by definition would be construed to be affiliates
of Walsh. These shareholders may fall within the meaning of "underwriters"as
that term is defined in the 1933 Act, and therefore can only re-sell their
shares in compliance with Rule 144 promulgated by the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended ("Rule 144").
These shareholders should obtain legal opinions from their attorneys to
determine if they qualify for sales under Rule 144 prior to any re-sale of their
shares. While Rule 144 is not the exclusive means of qualifying for the Section
4(1) exemption, compliance with the Rule by these shareholders would allow the
sale of unregistered securities without question. Rule 144 is a so-called "safe
harbor" rule which is complied with, should eliminate any questions as to
whether or not a shareholder selling restricted shares has acted as an
"underwriter".
In general, Rule 144 provides that a person seeking to re-sell restricted
securities will be presumed not to be an "underwriter" when he sells, and thus
be entitled to the 491) exemption if (1) when he sells, there is publicly
available current information about the issuer as specified in Rule 144(c), and
(2) the Seller has beneficially owned the Securities for more than 2 years, and
(3) the shares are sold in limited amounts as defined by paragraph (e) of Rule
144, and (4) the shares are sold in normal broker transactions, after (5) filing
a notice of intent to sell with the S.E.C. on Form 144.
Paragraph (k) of Rule 144 allows shareholders who have held their shares for a
period of 3 years or more and who have not been affiliates of Walsh for 90 days
preceding any proposed sale or transfer, to sell or transfer such shares in any
manner they wish without the requirement of registration and without complying
with the requirements of paragraphs (c) Current Public Information, (e)
Limitation on Amount of Securities Sold, (f) Manner of Sale (i.e. sold in a
brokerage transaction), and (h) Notice of Proposed Sale of Rule 144.
While it is not the purpose of this opinion to go into the eligibility of
individual shareholders, it is my intent to opine that those shareholders who
qualify in general for the exemption provided by Section 4(1) of the 1933 Act,
or who comply with Rule 144, may re-sell their securities without registration
under Section 5. Walsh and its officers and directors, however, have an
affirmative duty under the 1933 Act to take reasonable measures to prevent
violations of the 1933 Act by holders of Walsh shares. In order to protect Walsh
from the S.E.C.
<PAGE>
Walsh Communications Group, Inc.
Page 5
May 18, 1988
allegation that it has aided and abetted violations of the 1933 Act it should,
at the very least, provide its transfer agent a copy of this opinion, and
determine those shareholders of record who appear to be affiliates or to have
directly acquired their shares from affiliates. Such shareholders should be
notified that they should obtain a legal opinion as to their ability to qualify
for the exemption provided by Section 4(1) of the 1933 Act or their ability to
rely on Rule 144 prior to any re-sales of their securities. It is possible that
undisclosed persons might own more than 10% of Walsh's shares without that fact
being disclosed by Walsh's transfer records. This opinion therefore does not
apply to any such affiliates, control persons or undisclosed "control blocks",
which may or may not exist.
Brokers who may wish to engage in transactions in the shares of Walsh that are
within the purview of the opinions expressed in this letter should be advised
that they are also obliged to make proper inquiry of shareholders proposing to
sell their shares to determine that such selling shareholders qualify for the
exemption provided under Section 4(1) of the 1933 Act. That is, that such
shareholders are not issuers, dealers, underwriters, control persons or
affiliates of Walsh, and therefore prohibited from selling under the exemption
provided by Section 4(1). Any proposed seller who is an officer or director of
Walsh, and/or holds beneficially and of record, either directly or indirectly,
more than 10% of the common shares of Walsh then outstanding, is not eligible
for the exemption from the registration provided by Sections 491) of the 1933
Act.
Finally, the availability of the Section 4(1) exemption is conditioned on the
existence of adequate current public information as specified in S.E.C. Rule
15c2-11. Broker-dealers cannot publish bid and ask quotations for Walsh's shares
unless there is publicly available certain information about Walsh which is
specified in S.E.C. Rule 15c2-11 under the Exchange Act of 1934 including
current financial information. Walsh has prepared an information statement with
accompanying exhibits thereto in an attempt to comply with this rule. I have not
examined the information statement and this opinion is not direct to, and in no
way should be interpreted as, opining to the availability of information or the
sufficiency of information available to the brokerage community either in
compliance with the provisions of Rule 15c2-11, subsection a(5) or otherwise.
Each broker-dealer will have to satisfy itself as to the sufficiency of the
information available to it and the public as well as the broker's customers.
In conclusion, it is my opinion that the Securities and Exchange Commission
Authorization Act of 1987 would not prohibit certain
<PAGE>
Walsh Communications Group, Inc.
May 18, 1988
Page 6
the exemption provided by Section 4(1) of the 1933 Act or are able to avail
themselves of Rule 144, and who can trace their ownership of their shares back
to the shares issued by Walsh (originally known as "De Luxe Onyx Company") prior
to July 27, 1933 from effecting market transactions in their shares.
Sincerely,
/s/ O. ROBERT MEREDITH
O. Robert Meredith
Attorney at Law
ORM:bh
<PAGE>
EXHIBIT 10
TABY
PATENT LICENSE AGREEMENT
United States of America
represented by the
National Aeronautics and Space Administration
and
Digital Manufacturing, Inc
License No.: DE-236
Effective Date: 8/7/97
<PAGE>
TABLE OF CONTENTS
ARTICLE PAGE
- - ------- ----
PREAMBLE.....................................................................2
ARTICLE I Definitions...................................................3
ARTICLE II License Grant.................................................4
ARTICLE III Term of Agreement.............................................4
ARTICLE IV Practical Application.........................................5
ARTICLE V United States Manufacture.....................................5
ARTICLE VI Royalty and Payment...........................................5
ARTICLE VII Reports.......................................................8
ARTICLE VIII Books, Records and Examination................................10
ARTICLE IX Sublicenses...................................................10
ARTICLE X Patent Marking and Advertising................................11
ARTICLE XI Nontransferability............................................11
ARTICLE XII Disputes......................................................11
ARTICLE XIII Modification or Termination by LICENSOR.......................12
ARTICLE XIV Termination by LICENSEE.......................................14
ARTICLE XV Reservation of Rights.........................................14
ARTICLE XVI Representation and Warranties.................................14
ARTICLE XVII Enforcement of Licensed Patents...............................16
ARTICLE XVIII Furnishing Know-How...........................................16
ARTICLE XIX Improvements..................................................17
ARTICLE XX Nonwaiver.....................................................17
ARTICLE XXI Merger and Integration........................................17
ARTICLE XXII Applicable Law................................................17
ARTICLE XXIII Addresses.....................................................17
ARTICLE XXIV Nonassertion..................................................18
ARTICLE XXV Acceptance....................................................18
APPENDIX CONFIDENTIAL AND PROPRIETARY..................................19
1
<PAGE>
EXCLUSIVE LICENSE AGREEMENT
---------------------------
LICENSOR: The United States of America, represented by the
National Aeronautics and Space Administration
LICENSEE: Digital Manufacturing, Inc.
NASA CASE NUMBER: MSC-2 1982-1, "High Performance Circular
Polarized Microstrip Antenna."
PREAMBLE
--------
This Agreement ("this Agreement") is between the United States of America
represented by the National Aeronautics and Space Administration ("NASA"),
herein referred to as LICENSOR, and Digital Manufacturing, Inc., a Texas
corporation having a principal place of business in Ft. Worth, Texas, herein
referred to as LICENSEE.
WITNESSETH:
WHEREAS, uniform regulations, 37 C.F.R., Part 404, "Licensing of Government
Owned Invention," have been issued specifying the terms and conditions upon
which licenses will be granted for LICENSOR owned inventions; and
WHEREAS, such regulations provide that LICENSOR owned inventions will best
serve the interest of the United States when they are brought to practical
application in the shortest time possible; and
WHEREAS, it is the policy of LICENSOR to grant licenses when such licenses
will provide the necessary incentive to licensees to achieve early practical
application of the invention; and
WHEREAS, LICENSOR is the exclusive owner, free from outstanding license
agreements except as otherwise described below, of the inventions and
improvements ("the LICENSED INVENTIONS") disclosed in the United States Patent
described below and has the sole right to grant licenses for the United States,
its territories and possessions; and
WHEREAS, LICENSOR desires in the public interest that the LICENSED
INVENTIONS be perfected, marketed, and practiced so that the benefits thereof
become readily available in the marketplace for the widest utilization in the
shortest time; and
WHEREAS, LICENSEE, in consideration of the grant of the limited exclusive
license granted herein, is willing to pay a royalty, and to make substantial
capital investment and use commercially reasonable efforts to achieve expedient
practical application of the LICENSED INVENTIONS; and
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<PAGE>
WHEREAS, LICENSOR has determined that the grant of a license to LICENSEE to
practice the LICENSED INVENTIONS will provide the necessary incentive for
LICENSEE to achieve the desired expedient practical application and that the
granting of a license to the LICENSEE will therefore be in the public interest;
NOW THEREFORE, in accordance with 37 C.F.R., Part 404, "Licensing of
Government Owned Invention," and in consideration of the money to be paid by
LICENSEE as set forth in Article VI, below, and of the covenants and agreements
herein contained, the parties mutually covenant and agree as set out herein
ARTICLE I
Definitions
-----------
1.1 For the purpose of this Agreement, the following definitions shall be
applicable:
(a) "LICENSED INVENTIONS" means any invention claimed by and any and
all devices, products, processes, and methods covered by the
following United States Patent Application Serial Number (refer
to Appendix, item 1) including all divisions and continuations
(but not continuations in part) thereof, if any, and any
corresponding patent, reissue or extension patent, or
reexamination certificate to issue therefrom.
(b) "ROYALTY-BASE PRODUCTS" means any and all products, processes, and
systems which employ or are produced by the practice of any
invention claimed in any of the LICENSED INVENTIONS.
(c) "LICENSED AREA" means the United States of America, including the
District of Columbia and the Commonwealth of Puerto Rico, and
its territories and possessions.
(d) "PRACTICAL APPLICATION" means to manufacture (in the case of
composition or product), to practice (in the case of a process
or method), or to operate (in the case of a machine or system);
and in each case under such conditions as to establish that the
invention is being utilized and that its benefits are to the
extent permitted by law or Government regulations available to
the public on reasonable terms. PRACTICAL APPLICATION shall be
deemed to have been achieved upon attainment of the objectives
stated in Section 4.2, below.
(e) "GROSS SALES" means the dollar value sum of all sales of ROYALTY-
BASE PRODUCTS during each year of this Agreement.
(f) "NET SELLING PRICE" shall mean, in the case of a sale to a third
parry at arm's length for monetary consideration, the gross
invoice price of the ROYALTY-BASE PRODUCTS, f.o.b. factory, less
allowances for returns and less (to the extent separately stated
on the invoices): (1) cash and other trade discounts, (2)
shipping, customs, and insurance charges,
3
<PAGE>
(3) sales, use. value added, and similar taxes, and (4) that
portion of the gross invoice price that relates directly to
packaging, adaptation, accessories, applicators, and the like,
requested by the purchaser that are not customarily and
ordinarily sold by LICENSEE with the ROYALTY-BASE PRODUCTS. In
the case of a sale or other disposition of the ROYALTY BASE
PRODUCTS which are transferred to a purchaser who does not deal
at arm's length, or transferred or otherwise disposed of for
other than monetary consideration (including allocations to
LICENSEE's own beneficial use, NET SELLING PRICE shall be
calculated in accordance with Sections 6.5 and 6.6 of this
Agreement. In the case of a sale or other disposition of
ROYALTY-BASE PRODUCTS which are incorporated in combination
with or as parts of other products, the NET SELLING PRICE
shall be calculated in accordance with Section 6.7 of this
Agreement.
(g) "SUBLICENSEE" means any person who has the right, granted by
LICENSEE in accordance with Article IX of this Agreement, to
make, use, or sell the inventions claimed in any of the LICENSED
INVENTIONS.
(h) "AFFILIATE" means (I) any entity in which LICENSEE or any of its
stockholders or other owners owns a controlling interest in
LICENSEE, or (2) any entity that directly or indirectly, through
one or more intermediaries, controls, is controlled-by, or is
under common control with LICENSEE.
(i) "EFFECTIVE DATE" means the date on which this Agreement is signed
by the last party to do so.
ARTICLE II
License Grant
-------------
2.1 LICENSOR hereby grants to LICENSEE a revocable (but only by
termination as set forth herein), royalty-bearing, exclusive right of license,
including the right of sublicensing, to make, have made, use, sell, transfer, or
dispose of, for use and for resale, any and all products, processes, and systems
embodying the invention claimed in the LICENSED INVENTIONS throughout the
LICENSED AREA. This license is limited to only those ROYALTY-BASE PRODUCTS
operating within the frequency range of ll.7 GHz to 12.7 GHz.
ARTICLE III
Term of the Agreement
---------------------
3.1 Unless revoked or terminated in accordance with other provisions of
this Agreement, the license with respect to each patent or patent application
(i.e., LICENSED INVENTIONS described in Section 1.1(a)) granted herein shall
commence as of the EFFECTIVE DATE and shall continue until the later of:
4
<PAGE>
(a) the date of expiration of the patent,
(b) final abandonment of the patent application, or
(c) final adjudication of invalidity by a court of competent jurisdiction.
ARTICLE IV
Practical Application
---------------------
4.1 LICENSEE shall achieve PRACTICAL APPLICATION of the LICENSED
INVENTIONS in accordance with Section 4.2, below.
4.2 For the purposes of this Agreement, PRACTICAL APPLICATION shall have
been achieved if LICENSEE attains the following objectives by the stated dates:
(a) within nine (9) months of the EFFECTIVE DATE, LICENSEE shall have
(refer to Appendix, item 2), and
(b) within eighteen (18) months of the EFFECTIVE DATE, LICENSEE shall have
(refer to Appendix, item 3), and
(c) within twenty four (24) months of the EFFECTIVE DATE, LICENSEE shall
have achieved commercial sales of ROYALTY-BASED PRODUCT sufficient to have an
obligation to pay at least (refer to Appendix, item 4), in royalties under
Section 6.2, below.
4.3 LICENSEE, once PRACTICAL APPLICATION is achieved, thereafter shall
maintain it throughout the term of this Agreement.
4.4 LICENSEE shall promptly report to LICENSOR its discontinuance of
making the benefits of any of the LICENSED INVENTIONS available to the public.
4.5 Failure to comply with the terms of this Article shall be cause for
modification or termination of this Agreement in accordance with Article XIII,
below.
ARTICLE V
United States Manufacture
-------------------------
5.1 During the term of this Agreement, LICENSEE agrees to achieve and
maintain PRACTICAL APPLICATION of the LICENSED INVENTIONS by manufacturing or
having made in the United States and offering for sale in the United States
ROYALTY-BASE PRODUCTS.
ARTICLE VI
Royalty and Payment
-------------------
6.1 As part of the consideration for grant of license, LICENSEE agrees to
pay LICENSOR an initial, one-time, royalty of (refer to Appendix, item 5) within
fifteen (15) days after the EFFECTIVE DATE.
5
<PAGE>
6.2 LICENSEE further agrees to pay to LICENSOR a running royalty of (refer
to Appendix, item 6) percent of the NET SELLING PRICE of the ROYALTY-BASE
PRODUCTS sold in the LICENSED AREA under the license granted herein.
6.3 LICENSEE further agrees to pay LICENSOR an annual minimum royalty
of (refer to Appendix, item 7) for each calendar year, or part thereof (except
for the calendar year in which the EFFECTIVE DATE falls), that this Agreement is
in effect.
6.4 The minimum royalty payment specified in Section 6.3, above, shall be
credited by LICENSOR against the running royalty specified in Section 6.2,
above, and against any royalties paid by LICENSEE pursuant to a sublicense as
specified in Section 9.1, below. Such credits shall be applied only against
minimum royalties due annually and not cumulatively.
6.5 In order to ensure to the LICENSOR the full royalty payments
contemplated in this Agreement, the LICENSEE agrees that, in the event any
ROYALTY-BASE PRODUCTS shall be sold by LICENSEE in the LICENSED AREA for
purposes of resale (1) to its AFFILLATE, or (2) to any entity (a "FAVORED
PURCHASER") with which the LICENSEE, its stockholders or other owners, or its
AFFILIATE shall have any agreement, understanding, or arrangement (such as,
among other things, an option to purchase stock, an arrangement involving a
division of profits, or special rebates or allowances) without which agreement,
understanding, or arrangement, prices paid by such FAVORED PURCHASER for the
ROYALTY-BASE PRODUCTS would be higher than the NET SELLING PRICE to such FAVORED
PURCHASER reported by the LICENSEE, or if such agreement, understanding, or
arrangement results in extending to such AFFILIATE or FAVORED PURCHASER lower
prices for ROYALTY-BASE PRODUCTS than those charged to other organizations or
individuals buying similar merchandise in similar amounts and under similar
conditions, then the royalties to be paid under this Agreement for the ROYALTY-
BASE PRODUCTS shall be based upon the NET SELLING PRICE at which the AFFILIATE
or the FAVORED PURCHASER buying the ROYALTY-BASE PRODUCTS resells the ROYALTY-
BASE PRODUCTS, rather than upon the NET SELLING PRICE of the LICENSEE; provided,
however, that the LICENSEE shall not be obligated under the foregoing to pay
royalties based upon selling prices in excess of the NET SELLING PRICE at which
it or any of its AFFILIATES shall sell ROYALTY-BASE PRODUCTS to any wholly
independent party.
6.6 Where the ROYALTY-BASE PRODUCTS are not sold, and are otherwise
disposed of, excluding disposal to uses identified in Section 6.10, and
excluding disposal in which the ROYALTY-BASE PRODUCTS are disposed by
reprocessing, are disposed for resource recovery, and are sent to waste disposal
facilities, either operated by LICENSEE or others, and in which such disposed
ROYALTY-BASE PRODUCTS will not be reused or resold, the NET SELLING PRICE of
such
6
<PAGE>
products for the purpose of computing royalties shall be the selling price at
which products of a similar kind and quality, sold in similar quantities, are
currently being offered for sale by the LICENSEE. Where such products are not
currently sold or offered for sale by the LICENSEE, then the NET SELLING PRICE,
for the purpose of computing royalties, shall be the LICENSEE's cost of
manufacture, determined by LICENSEE's customary accounting procedures, plus
twenty five percent (25%).
6.7 Where the ROYALTY-BASE PRODUCTS are not sold separately, but are sold
in combination with or as parts of other products, the NET SELLING PRICE of the
ROYALTY-BASE PRODUCTS so sold shall be estimated, for the purpose of computing
royalties, by applying to the total NET SELLING PRICE (as defined above) of the
combined or composite products a fractional multiplier having as its denominator
the total manufacturing cost of the combined or composite products (estimated in
accordance with the LICENSEE's customary accounting procedures) and as its
numerator the manufacturing cost of the included ROYALTY-BASE PRODUCTS
(similarly determined). In situations and under conditions in which the
application of customary accounting practices are cumbersome, costly, or
otherwise not feasible, LICENSEE shall make such estimate in good faith, based
on all reasonably available, relevant data. In the event that LICENSOR shall
have a reasonable basis to believe that LICENSEE's estimate is inaccurate,
LICENSOR shall have the right, at its own expense, to audit all relevant data
to determine the accuracy of the estimate and to establish a more accurate
fractional proportionment.
6.8 Under this Agreement, the ROYALTY-BASE PRODUCTS will be considered
sold when invoiced, except that upon expiration of any patent covering such
ROYALTY-BASE PRODUCTS, or upon termination of the license, all shipments made on
or prior to the day of such expiration or termination which have not been
invoiced prior thereto shall also be considered sold (and therefore subject to
royalty). Royalties paid on ROYALTY-BASE PRODUCTS which are not paid for by the
customer shall be credited against any amounts owed by LICENSEE under this
Agreement.
6.9 LICENSEE agrees that it shall annually pay to LICENSOR twenty (20%)
percent of the royalty received from SUBLICENSEE of LICENSEE as set forth in
Section 9.1(f), below, for the sale of any ROYALTY-BASE PRODUCTS.
6.10 The sale or transfer of LICENSEE or any of its SUBLICENSEES of
ROYALTY-BASE PRODUCTS for use by or on behalf of the United States Government,
its agencies, departments, and subdivisions, shall be exempt from any royalty.
Similarly, any distribution, or disposition of products, processes, or systems
covered by the LICENSED INVENTION as samples, introductory offers, donations, or
the like, all free of charge, in order to introduce, promote, advertise, test,
research, or develop the products, processes, or systems shall be exempt from
any royalty. Similarly, any disposal of products
7
<PAGE>
by LICENSEE, or any of its SUBLICENSEES covered by the LICENSED INVENTIONS to
landfill disposal, destructive disposal, otherwise in disposal as wastes, or for
reprocessing or resource recovery in which the disposal does not result in use
or resale of the disposed materials shall be exempt from royalty.
6.11 Royalty payments due pursuant to Section 6.1 above, if any, shall be
paid within fifteen (15) days after the EFFECTIVE DATE. Royalty payments due
pursuant to Section 6.2, above, and 9.1(f), below, are due on July 31 and
January 31 for the preceding semi-annual period (January-June and
July-December) each year. Royalty payments due pursuant to Section 6.3, above,
are due on January 31 for the preceding year. All royalties due shall be paid by
check, denominated in United States dollars, made payable to "National
Aeronautics and Space Administration," and mailed, concurrently with any report
required in Article VI of this Agreement, to LICENSOR at the address set out in
Section 24.1 below.
6.12 The LICENSOR shall assess interest, penalties, and administrative
costs in accordance with the Federal Claims Collection Standards, 4 C.F.R. 100-
105, on all payments due the LICENSOR which are not timely paid by the LICENSEE.
6.13 Additionally, LICENSOR agrees to pay, and LICENSEE agrees to reimburse
LICENSOR for, all maintenance fees required by the United States Patent and
Trademark Office to continue in effect the patents that are issued pursuant to
the patent applications that cover the LICENSED INVENTIONS as described in
Section 1.1(a), above. Such fees shall be paid within thirty (30) days of
receiving a debit therefor. Failure to pay shall give the LICENSOR a right to
terminate the license as to such patent.
ARTICLE VII
Reports
-------
7.1 LICENSEE agrees to submit to LICENSOR reports semi-annually by the
thirty first day of January and July for the preceding semi-annual period (July-
December and January-June, respectively) during the life of this Agreement. Each
report shall include:
(a) A statement describing the activities of LICENSEE during the
preceding reporting period in attempting to achieve PRACTICAL APPLICATION of the
LICENSED INVENTIONS and in making the benefits of the LICENSED INVENTIONS
available to the public.
(b) Responses to the following:
(1) Date LICENSEE expects to achieve or has achieved PRACTICAL
APPLICATION of the LICENSED INVENTIONS.
(2) Estimated likelihood of LICENSEE achieving PRACTICAL
APPLICATION of ROYALTY-BASE PRODUCTS within the next twelve (12)
months if PRACTICAL APPLICATION has not been achieved.
8
<PAGE>
(c) Responses to the following:
(1) LICENSEE's GROSS SALES of ROYALTY-BASE PRODUCTS for the
preceding year, and the total of LICENSEE's GROSS SALES from the
EFFECTIVE DATE.
(2) LICENSEE's NET SALES of ROYALTY-BASE PRODUCTS for the
preceding year, and the total of LICENSEE's NET SALES from the
EFFECTIVE DATE.
(3) The number or amount of ROYALTY-BASE PRODUCTS distributed to
a marketplace by the LICENSEE for the preceding year, and the
total number or amount of ROYAlTY-BASE PRODUCTS distributed to a
marketplace by the LICENSEE from the EFFECTIVE DATE.
(4) The number or amount of ROYALTY-BASE PRODUCTS manufactured
and used by the LICENSEE in its business during the preceding
year, excluding, however, ROYALTY-BASE PRODUCTS manufactured
during the preceding year for use by the LICENSEE for the purpose
of research and development activities with respect to LICENSED
INVENTIONS.
(5) The dollar amount of the running royalty due to the LICENSOR
for the preceding year.
(6) The dollar amount of the minimum royalty due to the LICENSOR
for the reporting period.
(7) The total amount of royalties paid to LICENSEE by all its
SUBLICENSEES during the preceding year and from the EFFECTIVE
DATE.
(8) The dollar amount of sublicensing royalties due to LICENSOR
for the preceding reporting period.
(9) The total amount of royalties due to LICENSOR for the
preceding reporting period.
(10) The total amount of royalties paid to LICENSOR from the
EFFECTIVE DATE.
(d) Responses to the following:
(1) GROSS SALES for the preceding reporting period of ROYALTY-
BASE PRODUCTS sold by LICENSEE and all its SUBLICENSEES for use
by or on behalf of the United States Government.
(2) GROSS SALES from the commencement date of this Agreement of
ROYALTY-BASE PRODUCTS sold by LICENSEE and all its SUBLICENSEES
for use by or on behalf of the United States Government.
9
<PAGE>
7.2 The report required under this Article shall also be made within
thirty (30) days after the termination of this Agreement.
7.3 All reports submitted in response to the reporting requirement of
this Article and all letters of application and any versions of the confidential
business plan of LICENSEE that have been delivered to LICENSOR shall be treated
by LICENSOR, to the extent permitted by law, as commercial and financial
information, which is privileged and confidential and not subject to disclosure
under Section 552 of Title 5 of the United States Code (Freedom of Information
Act).
ARTICLE VIII
Books Records and Examination
-----------------------------
8.1 LICENSEE shall keep full, true, and accurate books of account
containing all particulars which may be necessary for the purpose of showing the
amount payable to LICENSOR by the way of royalty, as stated above. Said books of
account and supporting data will be available during normal business hours for
the duration of this Agreement and for two (2) calendar years following
the termination of this Agreement, for inspection by an authorized
representative of LICENSOR for the purpose of verifying the LICENSEE's royalty
reports; however, such inspection shall occur no more often than once per
calendar year and shall be at LICENSOR's expense.
ARTICLE IX
Sublicenses
-----------
9.1 LICENSEE may grant written sublicenses under any of the licenses
granted in this Agreement upon terms that LICENSEE may arrange provided that:
(a) Each sublicense shall refer to this Agreement and shall include the
rights reserved by the LICENSOR under Article XV of this Agreement.
(b) Each sublicense shall include the condition that the sublicense shall
automatically terminate upon the termination of this Agreement.
(c) LICENSEE shall submit to LICENSOR a written request for LICENSOR's
approval of any such sublicense in advance, including terms and conditions
thereof. LICENSOR's approval shall not be unreasonably withheld.
(d) Within thirty (30) days after a sublicense grant or modification,
LICENSEE shall furnish LICENSOR with an executed copy of the sublicense or
modification.
(e) The granting of any sublicenses by LICENSEE shall not relieve LICENSEE
from any of the requirements of this Agreement.
(f) The SUBLICENSEE of LICENSEE may exercise its license without payment
of royalty to LICENSOR. However, LICENSEE shall pay to LICENSOR fifty (50%)
percent of all royalties received
10
<PAGE>
by LICENSEE from its SUBLICENSEE for the making, using, or selling of ROYALTY-
BASE PRODUCTS. LICENSEE shall pay said amounts as royalty to LICENSOR in
accordance with Section 6.11, above.
ARTICLE X
Patent Marking and Advertisement
--------------------------------
10.1 LICENSEE and all its SUBLICENSEES shall mark all ROYALTY-BASE
PRODUCTS in accordance with the statutes of the United States relating to the
marking of patented articles (35 U.S.C. 287). Such marking shall include the
notation, "Licensed from the National Aeronautics and Space Administration under
U.S. Patent No.__________" or other appropriate reference to the license or the
patent (or patent application) serial number(s).
10.2 The LICENSEE may state in advertisements and/or on the ROYALTY-BASE
PRODUCTS that such products are made under a patent license from NASA and may
state any true facts concerning the involvement of NASA in the development of
the LICENSED INVENTIONS and describe the results of any tests, studies, and
experiments conducted by or for NASA. The letters "NASA" (1) must be used in
their normal typed or printed form, (2) must be the same size, style, color, and
intensity as the rest of the words in the sentence, and (3) must not be used in
their stylized version as they appear in the NASA logotype insignia. Uses other
than those expressly provided for in this Section 10.2 shall require the express
written approval of the LICENSOR. Approval by the LICENSOR shall be based on
applicable law (e.g., 42 U.S.C. 2459b), regulations, and policy governing the
use of the words "National Aeronautics and Space Administration" and the letters
"NASA."
ARTICLE XI
Nontransferability
------------------
11.1 The rights and licenses granted by LICENSOR in this Agreement are
personal to LICENSEE and may not be assigned or otherwise transferred without
the written consent of the LICENSOR. LICENSOR's approval shall not be
unreasonably withheld. Any attempted assignment or transfer without such consent
shall be void and shall be cause for LICENSOR to terminate all rights of the
LICENSEE under this Agreement.
ARTICLE XII
Disputes
--------
12.1 All disputes concerning the interpretation or application of this
Agreement shall be discussed mutually between the parties. Any disputes which
are not disposed of by mutual agreement shall be decided by the Associate
General Counsel (Intellectual Property), NASA Headquarters, Washington, D.C.
20546, who shall reduce his decision to writing and mail or otherwise furnish a
copy thereof to LICENSEE and to all its SUBLICENSEES of record. His decision
shall be final and conclusive, unless
11
<PAGE>
within thirty (30) days from the date of the receipt of such decision, LICENSEE
mails or otherwise furnishes a written appeal addressed to the Administrator,
National Aeronautics and Space Administration, Washington, D.C. 20546. LICENSEE
shall be afforded an opportunity to be heard and to offer evidence in support of
its appeal. The decision on the appeal shall be made by the NASA Administrator
or designee. There is no further right of administrative appeal from the
decision of the NASA Administrator or designee.
ARTICLE XIII
Modification or Termination by LICENSOR
---------------------------------------
13.1 The word "termination" and cognate words, such as "term" and
"terminate," used in this Article XIII are to be read, except where the contrary
is specifically indicated, as omitting from their effect the following rights
and obligations, all of which survive any termination to the degree necessary to
permit their complete fulfillment or discharge:
(a) LICENSEE's obligation to supply a terminal report as specified in
Section 7.4, above.
(b) LICENSOR's right to receive or recover and LICENSEE's obligation to pay
royalties accrued or accruable for payment at the time of any termination.
(c) LICENSEE's obligation to maintain records and LICENSOR's right to
conduct a final audit in accordance with Section 8.1, above.
(d) Any cause of action or claim of either party accrued or to accrue,
because of any breach of default by the other party.
(e) Licenses, releases, and agreements of nonassertion running in favor of
LICENSEE of customers or transferees of LICENSEE in respect to products sold or
transferred by LICENSEE prior to any termination and on which royalties shall
have been paid as provided in Article VI of this Agreement.
(f) LICENSEE's right to sue others for past infringement or for any cause
of action that may have accrued prior to termination of this Agreement.
13.2 The license granted pursuant to Article II of this Agreement may be
unilaterally modified or terminated by LICENSOR:
(a) If LICENSEE does not achieve PRACTICAL APPLICATION as set forth in
Section 4.2, above.
(b) If LICENSEE fails to maintain PRACTICAL APPLICATION.
(c) If the LICENSEE defaults in making payment of royalties in accordance
with Article VI of this Agreement.
(d) If the LICENSEE has willfully made a false statement of or willfully
omitted a material fact in the license application or in any report required by
this Agreement.
(e) If the LICENSEE has defaulted in making any report required by this
Agreement.
12
<PAGE>
(f) If the LICENSEE commits a substantial breach of covenant or agreement
contained in this Agreement.
13.3 The license granted pursuant to Article II of this Agreement may be
terminated by LICENSOR if LICENSEE becomes INSOLVENT. The term "INSOLVENT" means
that the LICENSEE has either ceased to pay its debts (including royalty payments
under this Agreement) in the ordinary course of business or cannot pay its debts
as they fall due or is insolvent within the meaning of the Federal Bankruptcy
Code (11 U.S.C. 101(31)). LICENSEE must notify LICENSOR if it becomes INSOLVENT
within thirty (30) days of becoming INSOLVENT. LICENSEE's failure to conform to
this requirement shall be deemed a material, incurable breach.
13.4 The LICENSEE must inform LICENSOR of its intention to file a
voluntary petition in bankruptcy or, if known by LICENSEE, of the intention of a
creditor of LICENSEE to file an involuntary petition in bankruptcy at least
thirty (30) days prior to filing such a petition. LICENSEE's filing of a
petition in bankruptcy without conforming to this requirement shall be deemed a
material, pre-petition, incurable breach.
13.5 Before modifying or terminating the license herein granted for any
cause, there will be furnished to LICENSEE and to all its SUBLICENSEES of record
a written notice stating LICENSOR's intention to modify or terminate the license
and the reasons therefor. LICENSEE and its SUBLICENSEES of record will be
allowed thirty (30) days after receipt of such notice to remedy any breach of
the license or show cause why the license should not be modified or terminated.
A response to such notice should be addressed to the General Counsel, National
Aeronautics and Space Administration, Washington, D.C. 20546.
13.6 LICENSEE may directly appeal in writing, within thirty (30) days of
receipt of the notice stating LICENSOR's intention to modify or terminate the
license, to the NASA Administrator on the question of whether the license should
be modified or terminated. If reconsideration of the intention to modify or
terminate the license has been requested under Section 13.5, above, the LICENSEE
may appeal to the NASA Administrator within thirty (30) days after receiving
notice of an adverse decision or determination from the NASA General Counsel.
The notice of appeal and all supporting documentation should be addressed to the
Administrator, National Aeronautics and Space Administration, Washington, D.C.
20546. LICENSEE shall be afforded an opportunity to be heard and to offer
evidence in support of its appeal. The decision on the appeal shall be made by
the NASA Administrator or designee. There is no further right of
administrative appeal from the decision of the NASA Administrator or designee.
13.7 If no action is taken under Sections 13.5 and 13.6, above, then the
decision to modify or terminate the license shall become final.
13
<PAGE>
13.8 All royalties due up to and including the date of termination of this
Agreement are due within thirty (30) days of such due date.
ARTICLE XIV
Termination by LICENSEE
-----------------------
14.1 LICENSEE may terminate this Agreement as a whole upon ninety (90)
days written notice to LICENSOR. All outstanding royalties become due upon
termination of this Agreement.
ARTICLE XV
Reservation of Rights
---------------------
15.1 LICENSOR reserves an irrevocable, royalty-free, right to practice and
have practiced the LICENSED INVENTIONS for governmental purposes throughout the
world by or on behalf of the Government of the United States and on behalf of
any foreign government pursuant to any existing or future treaty or agreement
with the United States.
ARTICLE XVI
Representations and Warranties
------------------------------
16.1 Nothing in this Agreement shall be construed as:
(a) A warranty or representation by the LICENSOR as to the validity or
scope of any patent covering the LICENSED INVENTIONS; or
(b) A warranty or representation that anything made, used, sold or
otherwise disposed of under any license granted in this Agreement is or will be
free from infringement of patents of third parties; or
(c) A requirement that the LICENSOR shall file any patent application,
secure any patent, or maintain any patent in force (except for LICENSOR's
agreement to use due diligence to pay maintenance fees on the LICENSED
INVENTIONS described in Section 1.1(a), above); or
(d) An obligation to bring or prosecute actions or suits against third
parties for infringement; or
(e) Conferring a right to use in advertising, publicity, or otherwise the
name of the inventor of the LICENSED INVENTION or the NASA name, seal, insignia,
logotype insignia, or any other adaptation without the prior written consent of
the LICENSOR (except as otherwise provided in Section 10.2, above); or
(f) Precluding the export or sale for export from the United States of
ROYALTY-BASE PRODUCTS on which royalties shall have been paid as provided in
Article VI of this Agreement; or
(g) Granting by implication, estoppel, or otherwise, any licenses or rights
of the LICENSOR or any other person under any foreign country patent; or
(h) Granting by implication, estoppel, or otherwise, any license or rights
under patents of LICENSOR other than those covering the LICENSED INVENTIONS,
regardless of whether such other
14
<PAGE>
patents are dominant, subordinate, or an improvement to any of the LICENSED
INVENTIONS, except as otherwise provided in section 16.5(a) below; or
(i) Conferring upon any person (1) any immunity from or defenses under the
antitrust laws, (2) any immunity from a charge of patent misuse, or (3) any
immunity from the operation of state or Federal law.
16.2 LICENSOR MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY
KIND, EITHER EXPRESS OR IMPLIED.
LICENSOR assumes no responsibility whatever with respect to the use, sale, or
other disposition by the LICENSEE or its vendees or other transferees of
products incorporating or made by the use of (1) the LICENSED INVENTIONS
licensed under this Agreement, or (2) information, if any, furnished under this
Agreement.
16.3 The LICENSEE will indemnify and hold harmless LICENSOR against any
claim, proceeding, demand, liability, or expenses (including legal expenses and
reasonable attorney's fees) which relates to injury to persons or property, or
against any other claim, proceeding, demand, expense, and liability of any kind
whatsoever resulting from LICENSEE's production, manufacture, sale, use, lease,
or from the consumption or advertisement of such products or technology
comprising the LICENSED INVENTIONS, or arising from any obligation of LICENSEE.
16.4 If, in any proceeding in which the validity, infringement, or priority
of invention of any claims of any patent covering the LICENSED INVENTIONS
licensed to the LICENSEE is in issue, a judgment or decree is entered which
becomes final through the exhaustion of all permissible applications for
rehearing or review by a superior tribunal, or through the expiration of time
permitted for such applications (below referred to as an "irrevocable
judgment"), the parties thereafter shall comply with the construction placed
upon any such claim by such irrevocable judgment, not only as to such claim but
as to all claims to which such constructions applies. If such irrevocable
judgment holds any claim invalid or is adverse to the patent as to inventorship,
the LICENSEE shall be relieved prospectively (1) from paying any royalty on and
from reporting on any ROYALTY-BASE PRODUCTS sold or otherwise disposed of that
are covered only by such claim or any broader claim to which such irrevocable
judgment is applicable, and (2) from the performance of those other acts which
may be required by this Agreement only because of any such claim.
16.5 LICENSOR agrees that:
(a) It will not assert against LICENSEE any patent, now owned or hereafter
acquired, that would interfere with LICENSEE's practice of the LICENSED
INVENTIONS within the scope of the license herein granted.
15
<PAGE>
(b) Except for the rights reserved in Article XV of this Agreement, it
will not itself practice, or authorize others to practice, the LICENSED
INVENTIONS within the scope of the license herein granted.
(c) It will refrain from granting any additional licenses relating to
the LICENSED INVENTIONS so long as this Agreement is in effect; provided,
however, that this covenant shall not prohibit LICENSOR from exercising the
right reserved to LICENSOR under Article XV of this Agreement.
ARTICLE XVII
Enforcement of Licensed Patent
------------------------------
17. 1 If LICENSEE becomes aware of an infringement or has reasonable cause
to believe that there has been an infringement of any patent covering a LICENSED
INVENTION, LICENSEE shall notify LICENSOR in writing concerning LICENSEE's
knowledge of any infringement or the reasonable cause for belief of
infringement. Such notice shall include: an analysis of how the claims of any
patents covering LICENSED INVENTIONS read-on the alleged infringement; the
identity of the alleged infringers; a statement describing the extent of the
alleged infringement; and a statement which describes and quantifies the harm
being suffered by the LICENSEE as a result of the alleged infringement. If such
notice and information are furnished, LICENSOR may voluntarily provide an
opinion as to whether reasonable cause exists to believe that there has been an
infringement. In any event, whether or not such notice and information are
furnished, LICENSEE is authorized under the provisions of Chapter 29 of Title
35, United States Code, or other statutes; (a) to bring suit in its own name at
its own expense and on its own behalf for infringement of patents on the
LICENSED INVENTIONS, (b) to bring any such suit to enjoin infringement and to
collect for its use damages, profits, and awards of whatever nature recoverable
from such infringement, and/or (c) to settle any claim or suit for infringement
of patents on the LICENSED INVENTIONS, including the right to grant a sublicense
under this Agreement. LICENSEE's right to file suit in its own name, however, is
subject to the continuing right of the United States of America to bring suit
itself or to intervene in LICENSEE's suit; and, in either event, LICENSEE shall
give LICENSOR reasonable notice and assistance.
ARTICLE XVIII
Furnishing Know-How
-------------------
18.1 LICENSOR agrees to disclose to LICENSEE, from time to time during
the term of this Agreement, for LICENSEE's use, Know-How relating to the
production of the LICENSED INVENTIONS, but only to the extent that such Know-How
is owned by LICENSOR and only at the sole discretion of LICENSOR.
16
<PAGE>
ARTICLE XIX
Improvements by LICENSEE
------------------------
19.1 It is mutually understood and agreed that LICENSOR shall have no
right, title, or interest in or to any inventions, improvements, modifications,
or enhancements developed solely by LICENSEE or its agents during the course of
this Agreement other than those rights covered by this Agreement with respect
to LICENSED INVENTIONS.
ARTICLE XX
Nonwaiver
---------
20.1 Forbearance by either party in enforcing any of the provisions of
this Agreement shall not be construed as a continuing waiver by such party of
its rights to enforce such provisions, or in any way affect the validity of this
Agreement.
ARTICLE XXI
Merger and Integration
----------------------
21.1 This instrument (including the Appendix, which is incorporated
herein and made a part hereof) contains the entire and only agreement between
the parties and supersedes all preexisting agreements between them respecting
its subject matter. Any representation, promise, or condition in connection with
the subject matter which is not incorporated in this Agreement shall not be
binding upon either party. No modification, renewal, extension, waiver, or
termination of this Agreement or any of its provisions shall be binding upon the
party against whom enforcement of such modification, renewal, extension, waiver,
or termination is sought, unless made in writing and signed on behalf of such
party by one of its executive officers. As used herein, the word "termination"
includes any and all means of bringing to an end, prior to its expiration by its
own terms, this Agreement, or any provision thereof, whether by release,
discharge, abandonment, or otherwise.
ARTICLE XXII
Applicable Law
--------------
22.1 This Agreement shall be construed and the legal relations between
the parties hereto shall be determined in accordance with United States Federal
Law and, to the extent not inconsistent therewith, the laws of the State of
Texas.
ARTICLE XXIII
Addresses
---------
23.1 Except as otherwise provided in Section 23-2, below, notices under
this Agreement including correspondence items concerning this Agreement, shall
be served upon the party to whom directed by
17
<PAGE>
depositing them postage prepaid in the U.S. mails, registered or certified with
return receipt, and addressed to the served party as follows:
Associate General Counsel (Intellectual Property)
National Aeronautics and Space Administration
Code GP
Washington, D.C. 20546
and
Digital Manufacturing, Inc.
6531 Glenview Drive, Suite 415
Ft. Worth, Texas 76180
23.2 Notice served as provided in Section 23.1, above, shall be deemed
given three (3) days following the date of deposit in the U.S. mails. If notice
is given other than as provided in Section 23.1, above, then the burden of
proving service and receipt by the addressee shall be upon the party alleging
service of notice. Either party may change its effective address by giving
thirty (30) days notice of the new address in the manner provided in Section
23.1, above.
ARTICLE XXIV
Nonassertion
------------
24.1 LICENSOR agrees not to assert any of its rights under any other of
its patents or patent applications in any country of the world against LICENSEE,
its SUBLICENSEES, vendors or customers, which rights are necessary to or
incidental to the practice of the rights granted to LICENSEE under this
Agreement.
ARTICLE XXV
Acceptance
----------
25.1 In witness whereof, each party has caused this Agreement to be
executed by its duly authorized representative:
Digital Manufacturing, Inc.
By: /s/ Tom Athans 6-17-97
------------------------------------ -----------
Tom Athans, Chief Executive Officer Date
National Aeronautics and Space Administration:
By: /s/ Edward A. Frankle 8/7/97
----------------------------------- ----------
Edward A. Frankle, General Counsel Date
18
<PAGE>
CONFIDENTIAL AND PROPRIETARY
----------------------------
APPENDIX
to Patent License Agreement between the United States of America, represented by
the National Aeronautics and Space Administration, and Digital Manufacturing,
Inc.
Item:
1. 08/410,625 (filed 3/24/95).
2. software and prototype antenna ready for manufacturing
3. developed or contracted for manufacturing facilities
4. $1,000.00
5. $8,000.00
6. five(5%)
7. $3,000.00
19
<PAGE>
[AVE, INCORPORATED LETTERHEAD GOES HERE]
April 1, 1998
Mr. Hardie R. Barr
Office of the Patent Counsel
NASA, Mail Code HA
Lyndon B. Johnson Space Center
Houston, TX 77058
Dear Hardie,
Attached is a document requesting a License Agreement for the High Performance
Circularly Plarized Microstrip Antenna, Patent Number 5,661,494. The License
Request is for all frequency bands to which the antenna technology might apply.
Also included is a copy of our business plan which supports a financial pro
forma showing the company will breakeven in the first year of operation and
remain in the black beyond that. The profits from this operation will be used
for development and exploitation of the microstrip antenna in the other
frequencies, some applications of which are shown in the document.
We appreciate your attention in this matter and look forward to hearing from you
as soon as possible regarding the granting of this license.
Respectfully,
/s/ GEORGE SULLIVAN
George E. Sullivan
Vice President, Operations
Encls:
<PAGE>
CONFIDENTIAL
LICENSE APPLICATION
Submitted to NASA Johnson Space Center, Technology Transfer & Commercialization
Office,
Mail Code HA, Houston, TX 77058
March 26, 1998
License requested for: High Performance Circularly Polarized Microstrip
Antenna
Patent Number: 5,661,494
Date of Patent: August 26, 1997
Frequency spectrum: All frequencies
License Type Requested: Exclusive
Requestor: AVE, Inc.
5575 DTC Parkway, Suite 355
Englewood, Colorado 80111
Attn: George Sullivan
Incorporated: State of Nevada, USA
Statements
AVE, Inc. (the "Company") is a manufacturing and marketing company formed to
build and sell the High Performance Circularly Polarized Antenna ("Antenna")
under an exclusive license granted to the Company by NASA on August 7, 1997,
License Number DE-236. This license grants AVE, Inc. exclusive rights to
manufacture and market said antenna in the 11.7 to 12.7 GHz frequency range. The
Company is not currently in production for reason of awaiting a prototype
antenna being developed by a contractor under NASA authorization. AVE, NASA and
the contractor are working closely to complete the project with a targeted end
date of April 15, 1998. AVE currently employees four people with plans to expand
the number of employees once the prototype antenna has been received and tests
conducted to assess its performance and market viability.
AVE, Inc. is a small business firm as defined in Section 404(c) of the Code of
Federal Regulations, Title 37, Chapter IV, Part 404.
While initial application of the Antenna is directed to the Direct Broadcast
Satellite (DBS) marketplace, the Company intends to rapidly expand its
application for a number of other uses. A copy of AVE's business plan is
attached which describes in some detail the initial application and which
further describes two future applications: Wireless Local Loop (WLL) and Local
Multipoint Distribution Service (LMDS). At least three other applications for
the antenna are envisioned; Wireless Communications Service (WCS), General
Wireless Communications
CONFIDENTIAL
<PAGE>
CONFiDENTIAL
Service (GWCS) and Wireless Internet (WI). These five applications are approved
by the FCC for operation in the frequency ranges shown in the following chart:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Application Spectrum
--------------------------------------------------------------------
<S> <C>
Wireless Local Loop (WLL) 1.4 - 4.5 GHz
--------------------------------------------------------------------
Local Multipoint Distribution Service (LMDS) 27.5 31.3 GHz
--------------------------------------------------------------------
Wireless Communication Service (WCS) 2.3 GHZ
--------------------------------------------------------------------
General Wireless Communication Service (GWCS) 4.6 GHz
--------------------------------------------------------------------
Wireless Internet 10 - 15 GHz
--------------------------------------------------------------------
</TABLE>
All of the above services, with the exception of WCS, are developing markets.
For example, the LMDS license auction was held by the FCC starting in February
1998 and was just recently completed. The GWCS auction is scheduled for May of
1998. These markets are only now being defined. Standards, in many cases, do not
exist but are being established on a vendor by vendor basis. An example is
interface definition in the LMDS market between the antenna and the modem. The
antenna manufacturer must meet with the modem manufacturer to define the
interface or face being excluded from the market. It behooves AVE, therefore, to
have an approved licence so the Company can move aggressively to participate in
the interface development.
Because user communities are still being defined it is difficult to assess the
market for the Antenna except to show the potential market in terms of
households and/or business. An assessment of the markets is shown in the
following chart:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------
Application Estimated Potential Time-Frame
- - ------------------------------------------------------------------------------
<S> <C> <C>
Wireless Local Loop (WLL) 8.0 million 1 - 5 years
- - ------------------------------------------------------------------------------
Local Multipoint Distribution Service (LMDS) 1.2 million 1 - 3 years
- - ------------------------------------------------------------------------------
Wireless Communication Service (WCS) 0.8 million 1 - 3 years
- - ------------------------------------------------------------------------------
General Wireless Communication Service (GWCS) 1.0 million 2 - 5 years
- - ------------------------------------------------------------------------------
Wireless Internet 1.0 million 1 - 5 years
- - ------------------------------------------------------------------------------
</TABLE>
Note: Potential estimated for the United States only.
The business plan (attached) shows the capital and resources which will be
invested to achieve full operations. It also outlines AVE's intent to
manufacture the antenna using contract manufacturing companies located in the
U.S. Manufacturing sources have been identified in Longmont, Colorado and in
Puerto Rico. A detailed 5-year financial proforma with income statement, balance
sheet and cash flow is an integral part of the plan and shows the Company making
a modest profit in the first year of operation.
CONFIDENTIAL
<PAGE>
CONFIDENTIAL
It remains only to complete the prototype to establish company operation. A
near-term schedule to accomplish this follows:
1. Secure a written plan regarding the final prototype development, etc.
from Dr. Bondy by Friday 3/27.
2. Attempt to secure "a prototype" before April 1.
3. Conduct testing of parabolic dish "output" per Dr. Bondy's
specification (Item 1 above)
4. Provide a PrimeStar-oriented test lab with all the necessary equipment
(in Denver) prior to April 15.
5. Establish a LNB developmental source to achieve the final integrated
product.
6. Secure "the prototype" on April 15.
7. Complete final test of "the prototype" and finalize design and
integration by 4/30.
8. Complete manufacturing bill of materials by May 8.
It will take approximately sixty days from completion of the bill of materials
to first production. AVE has verbal interest for a quantity of over 250,000
units for delivery as soon as available. Sources of capital funding have been
identified and the capital is available pending successful testing of the
antenna.
AVE believes the attached business plan offers evidence that the Company is
moving aggressively to achieve practical application of the Antenna. The
additional markets for which this License Application is made have time frames
for their practical application as pointed out in the chart on the previous
page. In order to participate in these markets, however, an exclusive license
agreement with NASA is needed to legitimize the Company's participation in their
development.
CONFIDENTIAL
<PAGE>
TAB Z
United States Patent [19] [11] Patent Number: 5,661,494
Bondyopadhyay [45] Date of Patent: Aug. 26, 1997
- - -----------------------------------------------------------------------------
[54] HIGH PERFORMANCE CIRCULARLY
POLARIZED MICROSTRIP ANTENNA
[75] Inventor: Probir K. Bondyopadhyay, Houston, Tex.
[73] Assignee: The United States of America as represented by the Administrator
of the National Aeronautics and Space Administration.
Washington, D.C.
[21] Appl. No.: 410,625
[22] Filed: Mar. 24, 1995
[51] Int. Cl. /6/ ........................... H01Q 1/38
[52] U.S. Cl. ..................... 347/700 MS: 343/829
[58] Field of Search ................... 343/700 MS. 829.
343/846; H01Q 1/38
[56] References Cited
U.S. PATENT DOCUMENTS
381,968 5/1888 Tesla
3,921,177 11/1975 Munson .............................. 343/846
4,125,837 11/1978 Kaloi ............................ 343/700 MS
4,125,838 11/1978 Kaloi ............................ 343/700 MS
4,125,839 11/1978 Kaloi ............................ 343/700 MS
4,191,959 3/1980 Kerr ............................. 343/700 MS
4,464,663 8/1984 Lalezari et al ................... 343/700 MS
4,543,579 9/1985 Teshirogi ........................... 343/365
4,713,670 12/1987 Makimoto et al ................... 343/700 MS
4,755,821 7/1988 Itoh et al. ...................... 343/700 MS
4,761,654 8/1988 Zaghloul ......................... 343/700 MS
4,833,482 5/1989 Trinh et al. ..................... 343/700 MS
4,843,400 6/1989 Tsao et al. ...................... 343/700 MS
4,866,451 9/1989 Chen ............................. 343/700 MS
4,903,033 2/1990 Taso et al. ...................... 343/700 MS
4,914,445 4/1990 Shoemaker ........................ 343/700 MS
4,929,959 5/1990 Sorbello et al. .................. 343/700 MS
4,943,809 7/1990 Zaghioul ......................... 343/700 MS
4,973,972 11/1990 Huang ............................ 343/700 MS
5,231,406 7/1993 Sreenivas ........................ 343/700 MS
5,233,361 8/1993 Boguais .......................... 343/700 MS
5,278,569 1/1994 Ohta et al. ...................... 343/700 MS
5,376,942 12/1994 Shiga ............................ 343/700 MS
5,382,959 1/1995 Pett et al. ...................... 343/700 MS
FOREIGN PATENT DOCUMENTS
0134804 10/1981 Japan ............................ 343/700 MS
OTHER PUBLICATIONS
"Circular polarisation and bandwidth." M. Haneishi & Y. Suzuki. Handbook of
Microstrip Antenna. vol .. Chapter 4.J. R.James & P.S. Hall Editors. Peter
Peregrinus Ltd. (IEEE). London. pp. 221.270-272. 1989.
"Circularly Polarised Antenna Arrays". K. Ito. T. Teshirogi & S. Nishimura.
Chapter 13. James & Hall Editors. p. 804. 1989.
Primary Examiner -- Donald T. Hajec
Assistant Examiner -- Tho Phan
Attorney, Agent, or Firm -- Hardie R. Barr
[57] ABSTRACT
A microstrip antenna for radiating circularly polarized electromagnetic waves
comprising a cluster array (20) of at least four microstrip radiator elements
(22a-22d), each of which is provided with dual orthogonal coplanar feeds in
phase quadrature relation achieved by connection to any asymmetric T-junction
power divider (30) impedance notched at resonance. The dual fed circularly
polarized reference element is positioned with its axis at a 45 degree angle
with respect to the unit cell axis. The other three dual fed elements in the
unit cell are positioned and fed with a coplanar feed structure with sequential
rotation and phasing to enhance the axial ratio and impedance matching
performance over a wide bandwidth. The centers of the radiator elements are
disposed at the corners of a square with each side of a length d in the range of
0.7 to 0.9 times the free space wavelength of the antenna radiation and the
radiator elements reside in a square unit cell area of sides equal to 2d and
thereby permit the array to be used as a phased array antenna for electronic
scanning and is realizable in a high temperature superconducting thin film
material for high efficiency
3. Claims, 11 Drawing Sheets
[DIAGRAM APPEARS HERE]
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U.S. Patent Aug. 26, 1997 Sheet 1 of 11 5,661,494
FIG. 1
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U.S. Patent Aug. 26, 1997 Sheet 2 of 11 5,661,494
FIG. 2
FIG. 3
FIG. 4
<PAGE>
U.S. Patent Aug. 26, 1997 Sheet 3 of 11 5,661,494
FIG. 5
FIG. 6
<PAGE>
U.S. Patent Aug. 26, 1997 Sheet 4 of 11 5,661,494
FIG. 7
FIG. 8
<PAGE>
U.S. Patent Aug. 26, 1997 Sheet 5 of 11 5,661,494
FIG. 9
<PAGE>
U.S. Patent Aug. 26, 1997 Sheet 6 of 11 5,661,494
FIG. 10
<PAGE>
U.S. Patent Aug. 26, 1997 Sheet 7 of 11 5,661,494
FIG. 11
<PAGE>
U.S. Patent Aug. 26, 1997 Sheet 8 of 11 5,661,494
FIG. 12
<PAGE>
U.S. Patent Aug. 26, 1997 Sheet 9 of 11 5,661,494
FIG. 13
FIG. 15
<PAGE>
U.S. Patent Aug. 26, 1997 Sheet 10 of 11 5,661,494
FIG. 14
<PAGE>
U.S. Patent Aug. 26, 1997 Sheet 11 of 11 5,661,494
FIG. 16
<PAGE>
5,661,494
1
HIGH PERFORMANCE CIRCULARLY
POLARIZED MICROSTRIP ANTENNA
FIELD OF THE INVENTION
This invention relates generally to microstrip antennas for circularly
polarized radiation and more particularly to a unique optimally configured four
element wideband array cluster arrangement of planar microstrip radiator
elements, each of which is provided with coplanar dual orthogonal microstrip
feeds with T-junction type power dividers in phase quadrature relation for
circularly polarized radiation, and wherein the array is excited in sequential
rotation and phasing to enhance the axial ratio of circular polarization over a
wide bandwidth and is optimally figured within an optimum compact unit cell to
be suitable for use in a phased array antenna for electronic scanning and for
realization in high temperature superconducting thin films for higher
efficiency.
BACKGROUND OF THE INVENTION
Microstrip array antennas transmitting or receiving circularly polarized
electromagnetic waves in the microwave and millimeter wave range are extensively
used in communications systems such as mobile-satellite communications,
direct-broadcasting-satellite systems, navigation and radar systems. They are
particularly useful where the antenna resides on a moving platform, e.g. an
automobile, truck or a spacecraft, which must be in constant communication with
its counterpart on another platform which may be either stationary or moving.
Circular polarization is usually achieved by combining two orthogonal
linearly polarized waves which are equal in amplitude and are radiating in phase
quadrature relation. The tip of the radiated electric field vector rotates in a
circle in the plane transverse to the direction of propagation and is right
circular polarized when rotating clockwise and left circular polarized when
rotating counterclockwise looking in the direction of propagation. Performance
requirements of the communication system dictate the design for the particular
microstrip antenna characteristics and often the conventional circularly
polarized microstrip antenna is comprised of an array of microstrip radiating
elements when the required gain is higher than that of a single radiating
element.
The conventional method of obtaining a circularly polarized array is to
arrange circularly polarized microstrip patches with appropriate feeding.
Various types of circularly polarized patches are used as array elements and
include those which can support two orthogonal (in space) modes of excitation,
more common ones being circular or square in shape. These two orthogonal
resonant modes are excited with equal amplitude and in phase quadrature
(differential phase shift of 90(degrees)) with dual feed to produce the
appropriate sense of circularly polarized radiation. However, by means of an
appropriate structural perturbation to the circular polarizable radiating
patches, it is possible to excite circular polarization of the appropriate sense
by means of a single feed point excitation. While the required length of feed
lines is reduced, the single feed excitation is fundamentally inferior to dual
feed excitation in terms of antenna performance such as measured by axial ratio
bandwidth. This is so because at a frequency slightly off resonance, the
amplitude and phase differential between the two orthogonal linearly polarized
fields will always be much larger than when using dual feed excitation because
of the steep slope of the impedance resonance curve at frequencies
off-resonance.
2
Microstrip radiators may be excited by direct feeding or indirect
feeding. There are essentially two ways of direct feeding. One is to use
coplanar microstrip line feed and the other is to use perpendicular coaxial feed
with a pin exciting the microstrip from the bottom. There are also two ways of
indirect feeding the microstrip radiators. One is by means of electromagnetic or
capacitive coupling through one or more dielectric layers and the other through
an aperture in a conducting surface below the microstrip and separated by one or
more layers of dielectrics from the feed. The aperture, in turn, could be fed by
a microstrip feed line one or more dielectric layers below the aperture.
The working of a practical circularly polarized microstrip array antenna
is characterized by several important performance parameters which include the
radiation gain pattern, impedance bandwidth, axial ratio bandwidth, antenna
efficiency and side lobe level. When electronic scanning by a full phased array
or subarray is involved, maximum available scan angle and the variations of
gain, beamwidth, axial ratio, side lobe level and antenna input impedance with
scanning are also important. Antenna efficiency that tells how much of the
antenna input power is converted into useful output power for communication is a
very important performance measure. Signal power losses in the feed structure
decreases the antenna efficiency. Lower efficiency for a transmitting array
antenna means lesser signal power is radiated whereas lower efficiency for a
receiving array antenna means more noise is introduced in the captured signal
adversely affecting the signal detection capability of the communication system.
Axial ratio bandwidth is a measure of the operational frequency range over which
the desired sense of circular polarization remains useful. Impedance bandwidth
of the antenna array is the operational frequency range over which the antenna
radiates the input power effectively. These two bandwidths, as is known to those
skilled in the art, most substantially be the same for a well designed
circularly polarized array. Larger axial ratio bandwidth is achieved at the
expense of implementing dual feed to the elements resulting in more feed line
loss of signal and consequent reduction in efficiency. To provide adequate
scanning capability and higher gain for a given array, the radiating elements in
an array must be arranged with smaller spacing but sufficient to incorporate the
feed structure with tolerable minimum feed structure coupling. A good array
antenna design must take into account the actual communication system
requirement and provide an optimum balance between conflicting design
requirements.
The fundamental concept of generating circularly polarized
electromagnetic fields by means of simultaneous sequential rotation and phasing
(SSRP) of N independent linearly polarized fields is the revolutionary invention
of Nikola Tesla (U.S. Pat. No. 381,968, May 1, 1888) that placed him in the U.S.
National Inventor's Hall of Fame. This technique, for N=2 applied to a single
square or circular microstrip element capable of supporting two orthogonal
degenerate (same resonant frequency) linearly polarized modes, has been used as
described before, to produce circularly polarized microstrip antennas as shown
in U.S. Pat. No. 3,921,179.
In U.S. Pat. No. 4,866,451 (Chen) there is disclosed a circular
polarization technique for a microstrip array antenna which utilizes dual feed
to the radiator elements. This description is solely concerned with the
improvement of axial ratio bandwidth and does not at all address the important
practical issue of antenna efficiency. The four element subarray in the design
disclosed therein requires seven hybrid power dividers, each requiring a lumped
resistance
<PAGE>
5,661,494
3
termination. The fact is that if quadrature hybrid power dividers are to be used
for exciting each individual element in the subarray, the axial ratio bandwidth
will be very good enough that further improvement by sequential rotation and
phasing of the 2x2 array may not be necessary. A further drawback is that each
element requires two orthogonal feed with vertical coaxial feed pins from the
bottom which is inconvenient to fabricate and is often electrically unreliable
for pure circular polarizations at frequencies above 15 GHz. A more serious
drawback is that accommodation of these seven hybrids within the array unit cell
requires larger area and space, thus severely limiting the electronic scanning
capability of the array.
While arrays of individual microstrip radiators are primarily used to
increase the antenna gain, if-electronic scanning is an additional requirement
for the array then there is necessity of placing restrictions on the element
spacings to prevent the appearance of grating lobes during scanning. The four
element cluster, acting as a building block for a larger array, then, is
provided with phase shifters to provide electronic scanning. The entire coplanar
feed structure must be accommodated within the confines of the four element
cluster in such a fashion that detrimental inter-feed line coupling is
minimized.
In order to improve upon the axial ratio bandwidth of a circularly
polarized array of single feed structurally perturbed elements, Teshirogi in
U.S. Pat. No. 4,543,579 has applied this well known SSRP technique of Tesla to a
subarray of such elements implemented by a coplanar microstripline feed
structure. There is an appreciable improvement on the available axial ratio
bandwidth but that may not be sufficient for many wideband communication
applications. Further, since sequential rotation and phasing is applied in two
stages to the multi-element array, such antenna was not designed and is
ill-suited for electronic scanning capability.
Applying the SSRP technique of generating a circular polarization
signal, a two element subarray building block has been constructed and described
by Haneishi and Suzuki (J. R. James and P.S. Hall Editors, Handbook of
Microstrip Antennas Handbook, 1989, Peter Peregrinus Ltd. (IEE), London, Chapter
4, pp. 270-272) and Ito, Teshirogi and Nishimitra (Chapter 13, pp. 804 of ref.
as above). This two element unit employs structurally perturbed circular
polarizable elements with single coplanar microstrip line feed provided by T-
junction power dividers and extra 90(degree) phase delays provided by
additional path lengths. Circular polarized microstrip elements with dual feed
provided by coplanar microstripline T-junction power dividers are well known in
the literature (J. R. James and P.S. Hall Editors, Handbook of Microstrip
Antennas, 1989, Peter Peregrinus Ltd. (IEE), London, Chapter 4, pp. 221). Using
such elements, Sreenivas in U.S. Pat. No. 5,231,406 has constructed a modified
two element building block with a staggered arrangement that leads to a
triangular grid array. Axial ratio bandwidth improvement has been considered, in
isolation, as the design goal without concurrent attention to the antenna gain,
antenna size and efficiency. The axial ratio bandwidth improvement has been
proposed at the expense of undesirable loss of antenna gain. This is evidenced
by the fact that there are only eight elements in the array area of 16d/2/ where
d is the distance between two consecutive rows or columns in the array and the
feed structure layout does not uniformly utilize the available space. This
results in a nearly 50% loss in array antenna gain for a given array area caused
by the loss in the antenna effective area.
For communications at higher microwave frequencies there is a present
need for an optimally configured denser
4
packed circularly polarized microstrip array that will eliminate the necessity
of using quadrature hybrids without sacrificing the axial ratio performance
obtainable from dual feed elements. It should be of simple construction and
permit electronic scanning. It should also be realizable in a single conducting
thin film so that very high antenna efficiency could be obtained by drastic
reduction of feed line losses with realization of the array antenna in high
temperature superconducting thin films.
It is therefore an object of the present invention to provide an optimum
circularly polarized microstrip array antenna design wherein the axial ratio
bandwidth is equal to or better than the impedance bandwidth and also wherein
the variation of axial ratio over the entire beamwidth and bandwidth of interest
is minimized without undue sacrifice of antenna gain and efficiency. It is also
an object to provide a robust microstrip array antenna with dual feed elements
that will radiate highly pure circular polarization over the frequency band of
interest, is realizable in a single conducting layer thin film, employs an
efficient and compact topology, makes optimum use of the unit array area and
space without sacrificing performance, and maintains an excellent capability of
electronic scanning.
SUMMARY OF THE INVENTION
The invention is a high performance microstrip antenna for radiating
circularly polarized electromagnetic waves. The antenna is composed of an
optimally configured cluster array of microstrip radiator elements, each of
which is provided with dual orthogonal coplanar feeds in phase quadrature
relation to produce circularly polarized radiation and wherein the array is
excited in sequential rotation and phasing to enhance the axial ratio of
circular polarization over a wide bandwidth. The relative phase shift in the
dual feeds to each radiator element is achieved by an asymmetric T-junction
power divider which is impedance matched at the resonant center frequency and
thereby eliminates the need for a hybrid power divider. All other power dividers
in the feed structure are realized by the coplanar T-junction power dividers and
necessary phase shifters realized by coplanar feed line lengths permitting the
realization of the entire cluster in one plane. The critical part of the
invention is the realization of the optimally configured dual fed four element
cluster which results from the reference element together with its microstrip
line T-junction power divider being placed with its reference axis at a
45(degree) angle with the unit cell reference axis. The dual fed power elements
of the cluster are placed in a square grid with a spacing of equal to 0.7 to
0.9 times the free space wavelength at the operating frequency and within a
square unit cell area of sides equal to 2 d thereby permitting this array to be
used in a phased array antenna for electronic scanning purposes. A mirror image
of the structure produces the opposite sense of circular polarization.
BRIEF DESCRIPTION OF THE DRAWINGS
FIG. 1 is a schematic diagram of a four element microstrip antenna array
with microstrip feed lines in accordance with the invention for producing right
circularly polarized radiation;
FIG. 2 is a schematic plane view of the four radiator elements of the
cluster array of FIG. 1 and showing the relative positioning of the radiator
elements and the excitation phase distributions of the dual feeds to these
elements;
FIG. 3 is a fragmentary cross sectional view of a typical microstrip
antenna for illustrating the relationship of the
<PAGE>
radiator element, the conducting ground plane element, and the dielectric
substrate of the antenna;
FIG. 4 is a schematic plan view of a single microstrip radiator element of
the array of FIG. 1 and showing the asymmetric T-junction power divider used for
dual feed;
FIG. 5 is a schematic plan view of a 16 element microstrip antenna array
which is comprised of a plurality of microstrip antenna arrays shown in FIG. 1;
FIG. 6 is a graph of measured return loss of a four element array of the
invention as shown in FIG. 1;
FIG. 7 is a graph showing the standing wave ratio measurement versus
frequency for the four element array shown in FIG. 1;
FIG. 8 is a Smith Chart measurement of the relation of impedance and
frequency for a four element microstrip array as shown in FIG. 1;
FIG. 9 is a graph of a radiation gain pattern of the four element
microstrip array cluster of FIG. 1 as measured at the center frequency of 14.645
GHz;
FIG. 10 is the graph of an antenna radiation gain pattern of a microstrip
antenna array as shown in FIG. 5 and as measured at the center resonant
frequency of 29.5 GHz in a principal plane when using rotating linear feed in
accordance with the intervention;
FIG. 11 is a graph of a radiation gain pattern in the principal plane at
the frequency of 30.5 GHz as measured for the antenna array of FIG. 5;
FIG. 12 is a graph of the radiation pattern of the antenna of FIG. 5 in the
principal plane as measured at the frequency of 28.5 GHz; and
FIG. 13 is a perspective view of a modification of the invention in which
the exciting signal for the antenna array is provided through a coaxial
connector mounted on the back side of a conductor backed sheet of dielectric and
extending through the dielectric to directly contact the microstrip food
structure at a feed point which is co-planar with the antenna array of radiator
elements;
FIG. 14 is a perspective view of another modification of the invention in
which the exciting signal for a planar array of antenna radiator elements is
electromagnetically coupled thereto from a network feed structure mounted in
parallel spaced relation to the antenna elements and including a second planar
array of radiator elements;
FIG. 15 is a perspective view of a further modification of the invention in
which the feed network structure is fabricated from high temperature
superconducting thin film and the exciting signal is electromagnetically coupled
to the antenna elements; and
FIG. 16 is a perspective view of a further modification of the invention in
which the feed network is of high temperature superconducting thin film and
disposed to excite the radiator elements of the antenna through apertures in a
conducting plane interposed between the feed network and the radiator elements
and the exciting signal is similarly coupled to the feed network.
DETAILED DESCRIPTION OF THE INVENTION
Referring more particularly to the drawings, there is shown in FIG. 1, an
optionally configured four element microstrip antenna array cluster 20 which
represents a preferred embodiment of the invention. The antenna array is
specifically designed for transmitting or receiving right circular polarization.
Each radiating element 22a-22d in the array 20 is a square shaped electrically
conducting metal sheet 22, such as copper, on a thin dielectric plate 24 of
thickness equal to approximately 0.015 to 0.1 times or approximately 1% to 10%
of the operating wavelength, and the backside of which is fully metallized, as
shown in FIG. 3. The backside metal cladding 26, such as copper cladding, serves
as the ground plane of the antenna.
In FIG. 2. there is shown a schematic illustration of the relative
orientations of the microstrip radiator elements (22a-22d) of FIG. 1 along with
the two feed points 28a, 28b for each radiator and the relative phases of their
feed line excitations so that the radiator elements (22a-22d) individually and
as a cluster array generate right circularly polarized radiation. Referring to
FIG. 2. one of the radiator elements, such as element 22a, is a reference
radiator element with two feed points phased at 360 degrees and 270 degrees. The
reference axis of this reference element is then defined as the line joining the
270 degrees phase feed point and the center in the direction of the center.
In this preferred embodiment of the invention, the radiator elements are
arranged in a square area 27 wherein the geometric center of each radiator
element is at a different corner of the square and the spacing between each pair
of the square radiator elements corresponding to a side of the square is 0.75
times the free space wavelength of the radiated wave, although a value or d
in the range of d=0.7/2/ to d=9./2/ is acceptable. The radiator element 22a-22d
are also symmetrically located within a square unit cell area 29 of sides equal
to 2d, and the reference element of the array is related with its reference axis
at a 45 degree angle with respect to the unit cell x-axis as shown in FIG. 2. In
other embodiments (not shown), the radiating elements could be circular in shape
or in the form of an annular ring which is resonant at the radiation frequency.
In the four element cluster array 20, a microstrip feeder structure is
provided whereby the radiator elements (22a-22d) are excited in sequential
rotation in the positions (0 degrees, 90 degrees, 180 degrees, 270 degrees) and
are simultaneously sequentially phased so as to strongly enhance the right
circularly polarized radiation.
It is shown in FIG. 4 that the feeding of each radiator element (22a-22d)
is accomplished by means of a microstrip line T-junction power divider 30. The
correct design of this T-junction is crucial to the successful operation of the
antenna.
First of all, it is to be noted that the 90 degrees phase shift to the
orthogonal feed point of the antenna element is provided by means of extra line
length (quarter wave length) of the microstrip line feed. This quarter wave
length extra line 33 is also simultaneously used to provide equal amplitude for
the excitation signal at the two feed ends at the center frequency of resonance
and this serves the dual role of an impedance transformer as well as a phase
shifter.
Again referring to FIG. 4, assume Z, be the impedance presented by each
linear polarization port of the microstrip radiating element to the feed line
and 1 /1/ and 1 /2/ be the electrical lengths of the nominal and 90 degrees
phase delayed branches of the feed line. Then
1/2 - 1/2 + 4,
where is the microstrip feed line wave length. If Z /1/ and Z /2/ be the
transformed impedances of the respective branches seen at the electrical
reference plane of the T-junction bifurcation, simultaneous satisfaction of the
phase and
<PAGE>
amplitude conditions for the right circular polarization excitation and the
quarter wavelength matching transformation requires that the following condition
be satisfied.
Real part Z/1/ - Imaginary part of Z /1/
For a microstrip feed line with chosen characteristic impedance, R, the
above condition imposed on the transmission line impedance relations gives the
unique value of the length 1/1/ by solution of the following equation:
R, R, tan /2/ (B 1/2/) 1 (R /2/ - R /2/) tan (B 1 /2/) +R, R-0
where
B = 2/
R, = real part of Z, and 2 /2/, is the microstrip feed line wave length. The
characteristic impedance of the matching
4
line can then be calculated to be /2/ times the Real part of Z, for this unique
value of 1 /1/.
It will be appreciated by those skilled in the art, that the radiation
resistance presented to the microstrip feed line by the perfect square or
circular patch radiator element is large enough such that the feed line with
characteristic impedance equal to this radiation resistance will have such a
small width that it can not be reliably fabricated for all practical purposes.
It is this situation that determines the necessity of using the matched
T-junction. The feeding microstrip line needs to be matched at the junction
using a quarter wave-length transformer as is shown in FIG. 4.
The feed structure of the element contains perpendicular bends of the feed
line for conserving space in the array and in calculating the electrical lengths
of the line the effects of the hands must be taken into account and are known to
those skilled in the art. From the analyses available in the literature for
microstrip line asymmetric T-junctions, accurate positions of the electrical
reference planes at the junction, as good as possible, should be utilized in the
design.
As shown in FIG. 1, the elements 22a-22d, each resonant at the center
frequency of radiation, are each rotated in their respective positions, as shown
by locations of their feed points, in a counter-clockwise sequence of 0
degrees, 90 degrees, 180 degrees, 270 degrees. Each radiating element has dual
feeding (equal amplitude, phase quadrature) by an impedance-matched T-junction
microstrip line power divider 30 to excite the desired sense of right circular
polarized radiation, or left circular polarized radiation if so desired. The
phase quadrature (90 degree phase shift) provided by this feed structure for
each radiator element is realized by the extra quarter wavelength long
( 4 )
feed line 33 in one of the branches of the divider 30 which is connected
directly thereto. The present invention of the optimally configured four
element cluster results from the discovery that the reference dual feed element
along with its microstrip line T-junction lower divider feed structure must be
positioned with its reference axis at a 45 degree angle with the unit cell axis
for optimal use of the entire available unit cell area for the coplanar dual
feed structure layout.
As shown in FIG. 1, such matched-fed radiator elements 22a and 22b are also
fed by a microstrip matched T-junction type, power divider 35, fifth power
divider, the two branches of which connect to the two power dividers 30
associated with the elements 22b and 22a and provides additional 90 degrees
phase shift to the element 22b by means of an extra quarter wavelength.
( 4 )
long feed line 36 in a branch thereof which is coupled to the input end of the
power divider 30 which feeds the radiator element 22b. A similar feeding
arrangement including a T-junction power divider 38, the sixth power divider, is
provided for the pair of radiator elements 22c and 22d with the extra 90 degrees
phase shift provided to the radiator element 22d by the branch 39 with a length
( 4 )
The two pairs of fed elements so created are additionally fed by a matched
microstrip line, T-junction type, power divider 40 so as to provide an extra
180 degree phase shift to the pair of elements 22c and 22d. This additional
phase shift is realized by an extra half wavelength.
( 4 )
long feed line 41 which constitutes one output branch of the seventh power
divider 40. The other output branch of the-divider 40 is also the input branch
of the divider 35. Thus, the four fed radiator elements (22a-22d), sequentially
rotated in their respective positions in the counterclockwise direction will
receive sequential phase shifts of 0 degrees, 90 degrees, 180 degrees, 270
degrees in the counterclockwise direction. The cluster 20 thus described, will
accordingly provide and very strongly favor right circular polarized radiation.
It is to be noted, however, that a mirror image of the array structure shown in
FIG. 1, will provide left circular polarized radiation.
The four element array cluster so invented is fed either by a vertical
probe from the bottom at the feed point 45 as is feasible in FIG. 1 and
illustrated in the embodiment of the invention shown in FIG. 13 to be
hereinafter described, or by microstrip line 43 as shown in the sixteen element
array 44 of FIG. 5, which array is comprised of four cluster arrays, each
similar to the array 20 of FIG. 1.
In such a sixteen element array 44, each four element cluster array may be
considered as a subarray wherein the subarrays are symmetrically disposed about
a geometric center point 46. The array 44, which is superposed above a parallel
metal ground plane 42 and separated therefrom by air or a dielectric material,
may also be considered to be comprised of two sub-array unit pairs 47a and 47b
of four element arrays, both of which are coupled by microstrip feed line to a
feed point 48, which, in turn, may be coupled through a coaxial connector or
additional microstrip feed line to an appropriate signal transmission source
(not shown). The array 44 is adapted to generate or receive circularly polarized
radiation and accordingly, the path length of microstrip line 49 between the
feed point 48 and the geometric center point 46 is such as to provide a signal
delay which produces a 180 degrees phase shift in the signal to the sub-array
unit 47b relative to the signal to the unit pair 47a.
<PAGE>
In addition, the unit pair 47b is physically rotated by 180 degrees relative to
the unit pair 47a such that the unit pairs 47a, 47b are in actual in-phase
relationship when generating or receiving circularly polarized radiation. In the
cluster array 20, there is a sequence of incremental rotational shifts of 90
degrees between the number N of radiator elements where N=4. The sixteen element
array 44 in FIG. 5 may be considered to be comprised of N subarrays of four
element clusters incrementally shifted by 360 degrees with respect to one
another, where N=2.
It is therefore to be appreciated that prominent achievements of this
invention are that the entire dual feed line structure required in this
invention has been optimally and uniformly accommodated within the array unit
cell area minimizing the size of the square grids and with all of the radiator
elements and the dual-feed structure being in the same plane.
For the four element array of FIG. 1, the measured return loss versus
frequency is shown in FIG. 6. The voltage standing wave ratio measurement versus
frequency is shown in FIG. 7.
The Smith chart for the four element microstrip array cluster of FIG. 1
is shown in FIG. 8. As is well known, the Smith chart displays the performance
of a microwave circuit in terms of input impedance versus frequency and also the
reflection coefficient versus frequency. For a given value of the measured
reflection coefficient, the corresponding input impedance can be read directly
from the plot. Since a movement by a distance d along the transmission line
corresponds to a change in the reflection coefficient, as represented by a
rotation through an angle 2 Bd, the corresponding impedance point moves as a
constant radius circle through this new angle to its new value. The contours of
R and constant X for the normalized input impedance are represented by circles
on the plot as shown. The angular rotation 2 Bl in terms of wavelength is scaled
along the circumference of the chart and the origin for the angular scale is
chosen at the left side of the circle. In the circuit design, the goal is to
match the transmission line impedance to the input impedance in order to obtain
maximum power transfer. This occurs if the impedance plot is at the exact center
of the large circle of FIG. 8 and as shown in the graph, the impedance is only
slightly off center at frequency equal to 14.645 GHz.
The radiation gain pattern in the perpendicular principal plane for the
microstrip array antenna of FIG. 1 is shown in FIG. 9 at the center resonant
frequency of 14.645 GHz. For the 16 element microstrip antenna array of FIG. 5.
there is shown in FIG. 10 an antenna radiation gain pattern as measured at 29.5
GHz in a principal plane when using a rotating linear feed in accordance with
the invention. Similar radiation gain patterns for the antenna at a center
resonant frequency of 30.5 GHz and at 28.5 GHz are shown in FIGS. 11 and 12,
respectively.
It will therefore be seen that the provision of asymmetric T-junction
type power dividers to provide dual orthogonal feed to each of the four
optimally positioned radiator elements in the array of FIG. 1, together with the
sequential rotation and feeding technique as described herein, produces a unique
and compact high performance circularly polarized antenna array that uniformly
utilizes the unit cell for layout of the feed structure and minimizing the
square grid size. This four element array antenna and its feed structure are all
disposed co-planar and reside within a square unit cell area 29 defined by sides
of a dimension 2d where d is the distance between the geometric centers of the
radiator elements, each located at the corners of a square with sides d of a
dimension in the range of about 0.7 to 0.9 times the operating wave-length. This
physical feature allows the realization of this high performance array antenna
on the higher temperature superconducting thin films, such as for example, 140
degrees Kelvin. It also permits the cluster array to be used as a phased array
antenna element a planar scanning for electronic scanning when such use is
desired.
It is also to be appreciated that heretofore designers of wideband
circularly polarized microstrip array elements have implemented the T-junction
power divider in the coplanar feed structure with dual fed elements at the cost
of additional unit cell space and without being able to optimize the utilization
of the unit cell space resulting in larger spacing between the elements. This
reduces the array area efficiency and diminishes the array scanning capability.
The array antenna of the present invention, provides superior performance
without the foregoing disadavantages.
In FIG. 13 there is disclosed a modification 50 of the invention which
is substantially identical to the array antenna 20 of FIG. 1 except that the
feed network receives the exciting signal through a coaxial connector in lieu of
microstrip. As will be seen in FIG. 13, the coaxial connector 51 is fixed to the
backside of the conductor ground plane clad dielectric sheet 52 and extends
through the dielectric substrate such that the inner conductor 53 of the
connector makes electrical contact with and is secured to the metallized
microstrip 54 on the front side of the dielectric in coplanar relation with the
radiator elements 55. A coaxial feed may be preferred for applications where
spare constraints are less limiting.
In FIG. 14, there is shown another modified form 60 of the invention
wherein a microstrip feed structure 56 which includes a cluster array of
microstrip radiator elements 58a is spaced below an array of antenna radiator
elements 58 and disposed such that the exciting signal is transmitted to each of
the radiator elements 58 by electromagnetic coupling. As will be seen in FIG.
14, the microstrip feed structure 56 is bonded on the surface of a dielectric
substrate 57 and is disposed in substantially parallel relationship to a second
cluster array of radiator elements 58 which are bonded to a planar surface of a
second dielectric substrate 59. A metallic ground plane 60a is bonded to the
opposite surface of the substrate 57. The cluster array of elements 58a and
microstrip feed structure 56 are substantially identical to the array 20 and the
microstrip feed structure 25 in the antenna 20 shown in FIG. 1.
A particular advantage of the invention 60 is that it reduces
undesirable side lobe level increase caused by and spurious radiation from the
microstrip feed lines. In addition, while the antenna elements 58 are of square
configuration and similar in size and orientation to the array of elements 58a
their size can be adjusted so as to fine tune the antenna 60 to operate at a
desired center frequency. Another advantage of the antenna 60 is that, for most
applications, only the antenna elements 58 are exposed to the outer environment
whereas the structure is protected.
A cherished goal in array antenna design is the attainment of high
efficiency which in the performance of communications systems manifests itself
as higher transmitted signal power and in the received signal as higher signal
to noise ratio. The principal cause of reduction in antenna efficiency is
conductor loss in the feed line structure. Recent advances in high temperature
superconducting (HTSC) technology involving new ceramic materials have made it
possible to realize the microstrip array feed line structure in extremely low
loss HTSC thin films, such as a thin film of the ceramic material YBa2, Cu3, 07-
X on Lanthanum Alumininate (LaALO/3/) or sapphire substrates. However, since the
radi-
<PAGE>
ating elements must interface with the outside world they can not be maintained
at the HTSC temperature, which is presently at the same level as liquid
nitrogen, and would therefore transfer heat to the feed network if they are in
direct contact therewith.
In a modified form of the invention represented by the antenna 61 shown
in FTG. 15, the feed structure is realized in a HTSC thin film 62 superposed on
a sheet of dielectric material 63a. The sheet 63a may in turn be layered atop a
second sheet of dielectric material 63b.
The feed structure 62 does not directly contact the radiator elements 65
but is electromagnetically coupled thereto when a feed signal is applied. The
radiator elements 65, which are of conventional electrical conducting material
such as copper are bonded as metal cladding atop a sheet of dielectric material
which includes layers 66a and 66b. The radiator elements 65 are arrayed in the
same configuration as the radiator elements in the cluster array 20 of FIG. 1
and reside within a unit cell area similar to the unit cell 29. The elements 65
are also disposed in coplanar relationship to one another and in parallel
relation to the plane of the feed structure 62 which is spaced therebelow at a
distance S/1/ which is in the range of 1% to 5% of the operating wavelength of
the antenna.
The antenna 61 is also provided with a conducting ground plane 68 formed
by a sheet of metal such as copper, which is in parallel relation to the feeder
network 62 at a distance S/3/ therefrom. A wide band oval-shaped aperture 70 is
provided in the ground plane 68 at a location which is substantially vertically
below the feed point 71 of the thin film feeder network and is adapted to excite
the HTSC feed network when it is itself excited by a microstrip feedline 73
bonded to the underside of a sheet of dielectric 74 which is spaced below the
plane 68. The microstrip feed line 73 is directly coupled to a signal
transmission source (not shown) and is oriented such that the feed line 73,
aperture 70 and network feed point 71 are in substantial alignment.
It is to be noted that because of the separation of the feed structure
62 from the radiator elements 65, there is no transfer of heat from the radiator
elements to the HTSC material of the feed structure, which is maintained at very
low temperature, such as that of liquid nitrogen by an appropriate cryostat (not
shown). Such a cryostat would be designed to encompass all sides of the antenna
structure except the side thereof which contains the radiator elements 65.
Furthermore, there is substantial thermal isolation between the microstrip feed
line 73 and the HTSC feed structure 62.
It is to be noted that consistent with the constraints of physical
realizations of the radiating antenna structures, the separation distances are
so chosen that the antenna at its input is matched at the desired center
frequency of operation over the optimum achievable bandwidth.
Another modified form of the invention shown in FIG. 16, comprises a
circularly polarized antenna 75 which includes a cluster array of radiator
elements 76, corresponding in form and configuration to the radiator elements 65
of the antenna 61 shown in FIG. 15. The feed structure is a feed network 77 of
HTSC film, identical in form and configuration to the HTSC feed network 62 of
the antenna 61. The feed network 77 is mounted on a sheet of dielectric material
comprised of linear sheets 78a and 78b which is disposed in coplanar relation
below the plane of the radiator elements 76 and above a metallic conducting
plane 80 spaced in parallel relation therebelow. In like manner to the antenna
61, the feed network 77 is excited by means of a wide band aperture 81 in the
conducting plane 80. The aperture 81 is located directly above a microstrip feed
line 83 bonded to the underside of a sheet of dielectric 84 spaced from and in
parallel relation to the conducting plane 80 such that the center of the
aperture is vertically below the feed point 82 of the feed network structure 77.
The antenna 75 differs from the antenna 61 shown in FIG. 15 in that a
conducting sheet 88 provided with four apertures 84 is interposed between the
radiator elements 76 and the HTSC feed structure 77 at a height D/1/ above the
feed structure and a distance D/2/ below the array elements 76. The apertures
84, which are of corresponding configuration to the square shape of the radiator
elements 76 and similarly oriented, support the same sense of circular
polarization as generated by the cluster array 76 when an exciting signal
applied to the feed network is electromagnetically coupled to the radiator
elements. The vertical separations D/1/ and D/2/ may be by one or more layers of
dielectric sheets, by air or vacuum or a combination thereof as shown in FIG.
16. These distances D/1/ and D/2/ are also chosen such that the antenna at its
input is matched at the desired center frequency of operation over the optimum
achievable bandwidth. The slot size, the dielectric constants and sheet
thicknesses contained in the separation spaces D/1/ and D/2/ are parameters that
are also selected for optimum matched performance of the antenna structure.
The antenna 75 provides benefits in that the slot excitation of the
microstrip radiator patches 76 removes the deleterious effects of coplanar
microstrip feed structure of the antenna radiation pattern as are caused by
spurious radiation from the feed lines and their bends. It therefore provides a
better axial ratio bandwidth which is a particularly desirable feature for many
applications.
While the foregoing description of the invention has been presented for
purposes of illustration and explanation, it is to be understood that it is not
intended to limit the invention to the precise form disclosed. For example, the
radiator elements could be in the form of circular discs instead of square
patches and a vertical probe feed could be used as an alternative to the
coplanar feed. In addition, the planar array of microstrip radiator elements
might comprise more than four such elements, as for example, six elements which
are oriented at a angle of 2 pi over N with respect to one another where N=6 and
which are arranged in a hexagon configuration and excited in a phase shift
relation corresponding to the orientation angle relationship. It is to be
appreciated therefore, that various structural changes may be made by those
skilled in the art without departing from the spirit of the invention.
I claim:
1. A microstrip array antenna for radiating circularly polarized
electromagnetic waves in the microwave and millimeter wave range, said antenna
comprising:
a planar array of microstrip antenna radiator elements formed on one side of a
sheet of dielectric material, said array comprising four radiator elements in
coplanar relation and arranged with the geometric centers of the radiator
elements at the respective corners of a square area having sides with a length
dimension d in the range of 0.7 to 0.9 times the wavelength of the operating
frequency of the antenna and wherein the four radiator elements reside in a
square unit cell area of sides equal to 2d;
an electrically conducting ground plane disposed in parallel spaced relation to
said planar array; and
<PAGE>
5,661,494
means for providing a feed signal in sequential phasing to said planar array of
radiator elements for generating circularly polarized radiation. said means
comprising a microstrip feeder network coupled to each said radiator element,
said feeder network including four T-junction power dividers. each of which is
coupled to a different one of the radiator elements to apply inputs of equal
magnitude and frequency at two feed points located on mutually orthogonal
input axes of the radiator element coupled thereto. each said power divider
providing a 90 degrees phase shift to one of its said inputs with respect to
the other so as to generate circular polarization radiation of the desired
sense. said radiator elements being arranged in a symmetrical orientation
wherein the radiator elements and their input axes are relatively rotated in a
selected direction of rotation with respect to one another by successive
incremental angles of 90 degrees to provide sequential spatial rotation of the
feed signal to said radiator elements. said microstrip feeder network further
comprising a thin film of high temperature superconducting material disposed
in a plane in spaced parallel relation to the plan of said radiator elements
and to said electrically conducting ground plane and between said radiator
elements and ground plane and positioned relative to said radiator elements
such that said radiator elements are electromagnetically coupled to said
microstrip feeder network.
said antenna further including a microstrip feed line formed on one side of
another sheet of dielectric material in a plane in spaced parallel relation to
said electrically conducting ground plane and being adapted for electrical
connection to a signal transmission source.
said electrically conducting ground plane being disposed between said microstrip
feeder network and said microstrip feed line and provided with an aperture in
alignment with said microstrip feed line an aperture in alignment with said
microstrip feed line and said microstrip feeder network such that a signal
supplied to said feed line is electromagnetically coupled through said
aperture to the microstrip feeder network for transmission to said radiator
elements.
2. A microstrip array antenna for radiating circularly polarized
electromagnetic waves in the microwave and millimeter wave range. said antenna
comprising:
a cluster array of microstrip antenna radiator elements formed on one side
of a sheet of dielectric material. said array comprising four radiator
elements in coplanar relation and arranged with the geometric centers of the
radiator elements at the respective corners of a square area having sides with
a length dimension d in the range of 0.7 to 0.9 times the wavelength of the
operating frequency of the antenna and wherein the four radiator elements
reside in a square unit cell area of sides equal to 2d;
an electrically conducting ground plane disposed in parallel spaced relation to
said planar array;
means for providing a feed signal in sequential phasing to said cluster planar
array of radiator elements for generating circularly polarized radiation. said
means comprising a microstrip feeder network coupled to each said radiator
element. said feeder network including four T-junction power dividers. each of
which is coupled to a different one of the radiator elements to apply inputs
of equal magnitude and frequency at two feed points located on mutually
orthogonal input axes of the radiator element coupled thereto. each said power
divider providing a 90 degree phase shift to one of its said inputs with
respect to the other so as to generate circular polarization radiation of the
desired sense. said radiator elements being arranged in a symmetrical
orientation wherein the radiator elements and their input axes are relatively
rotated in a selected direction of rotation with respect to one another by
successive angles of 90 degree to provide sequential spatial rotation of the
feed signal to said radiator elements. said
feeder network further comprising a thin film of high temperature
superconducting material disposed in a plane in spaced parallel relation to
the plane of said radiator elements and to said electrically conducting ground
plane and between said radiator elements and ground plane and positioned
relative to said radiator elements such that said radiator elements are
electromagnetically coupled to said microstrip feeder network.
a second electrically conducting plane positioned between said array of radiator
elements and said high temperature super-conducting feeder network and being
provided with four apertures wherein each of said four apertures has a
configuration corresponding to the configuration of each of said radiator
elements and is positioned in substantial alignment with said high temperature
superconducting feeder network and a different one of said radiator elements
such that a feed signal applied to said feeder network is coupled from said
feeder network through each of said apertures to different ones of said
radiator elements; and
a microstrip feed line formed on one side of another sheet of dielectric
material in a plane in spaced parallel relation to said electrically
conducting ground plane and being adapted for electrical connection to a
signal transmission source. said electrically conducting ground plane being
disposed between said microstrip feeder network and said microstrip feed line
and provided with an aperture in alignment with said microstrip feed line is
electromagnetically coupled through said aperture to the microstrip feeder
network for coupling to said radiator elements.
3. A microstrip array antenna as set forth in claim 2 wherein each said
microstrip radiator element is of square shape.
* * * * *
<PAGE>
Specification No. CM_SCD03
15 Jan 1998
Rev -02
SPECIFICATION CONTROL DRAWING
FOR
BSS ANTENNA ASSEMBLY
#CM_SCD03
Prepared by: PRIMESTAR PARTNERS, L.P.
100 North Presidential Blvd.
Bala Cynwyd, PA 19004
<PAGE>
EXHIBIT 17
TAB 1
UNANIMOUS CONSENT
OF
SOLE DIRECTOR
LIEU OF MEETING
OF
AVE, INC.
- - --------------------------------------------------------------------------------
THE UNDERSIGNED, being the sole director of AVE, INC. a Nevada
Corporation, hereby consents to and adopts the following resolutions this 19th
day of June, 1995.
RESOLVED, that as of the close of business on the date hereof, the
undersigned will resign as the sole officer and director of AVE, INC. (the
"Company"); and
RESOLVED, that as of the close of business on the date hereof, the new
directors of the Company will be:
Henri Hornby, and
Neil Hornby; and
The new officers of the Company will be:
President: Henri Hornby
Sec. Treas.: Neil Hornby
/s/ VICTOR ALEXANDER
------------------------------
Victor Alexander
<PAGE>
TAB 2
MAJORITY WRITTEN CONSENT OF DIRECTORS
of
AVE, INCORPORATED
(A Nevada Corporation)
The undersigned persons, constituting all of the members of the Board of
Directors ("Board") of AVE, INCORPORATED, a Nevada corporation (the "Company"),
hereby take the following action by unanimous written consent in lieu of
meeting, pursuant to Section 17-16-821 of the Nevada Business Corporation Act:.
WHEREAS the Board, in response to a written request dated June 1, 1998 from
Tom Athans, President and Board do hereby find it
RESOLVED that, the Company accept the resignation of Tom Athans as
President and as a member of the Board of Directors effective June 1, 1998 and
that the Company pursue such actions outlined in a letter to Mr. Athans from
Gene Klawetter dated June 9, 1998, a copy of which is attached.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their approval
of the above actions and proceedings effective as of the date set forth below.
Dated: June 9, 1998
/s/ R G KLAWETTER /s/ HENRI HORNBY
------------------------------ ---------------------
R. Gene Klawetter, Chairman Henri Hornby
Seal
Page 1
<PAGE>
[AVE, INCORPORATED LETTERHEAD APPEARS HERE]
June 9, 1998
By facsimile: 817 498 6874
Mr. Thomas E. Athans
6531 Glenview Dr., #415
Ft. Worth, TX. 76180
Dear Tom:
On behalf of AVE and its remaining Board of Directors, I reluntantly accept your
resignation as President and Board Member, effective June 1. 1998. We truly
appreciate and understand your personal need to take this action. It is
unfortunate that the timing of AVE's product availability and commensurate
funding was inconsistent with your needs. However, we all understand the reality
of necessarily "moving on" and want to wish you much success and reward in your
new endeavors, whatever they may be.
Tom, we respectfully request your continued support with regard to AVE's ongoing
efforts to raise much needed funding. A major obstacle for us has been the
number of shares which you hold. When the acquisition of DM1 was completed, it
was predicated on a number of factors. For example:
1. A product was anticipated to be available in the summer/fall of
1997. AVE has been severly hampered because neither NASA or Dr. Bondy
performed as touted.
2. A forthcoming, conditional letter of intent for orders predicated
on the presence of a working prototype.
3. Your ability to not only develop a complete business plan, but to
assist the former people involved with the AVE shell to raise necessary
funding.
4. Your long-term association with AVE.
Tom, more than one year after the initial closing of the AVE/DMI reverse merger,
none of the above exists today. Additionally, as you have mentioned to me on
more than one occassion, there is a distinct possibility that Dr. Bondy (NASA)
can not or will not build a flat-plane antenna which meets the necessary
commercial performance specifications and/or manufacturing cost targets which
permit the product to be viable. Perish the thought, but if we end up with no
antenna, then the question of what AVE acquired in the merger is questionable,
right?
<PAGE>
Mr. Tom Athans
Page -2-
Given the many uncertainties, etc. surrounding AVE at the moment, particularly
with respect to the original transaction, I would like to appeal to you to
consider an action which would definetly help all parties involved. Tom,
returning 2 million of your shares to AVE's treasury would help the Company
immensely. The bottom line is this;
1. If the Company is successful, your remaining 2 million shares (plus
Marvin's 300,000) will make both of you very wealthy. Even at the 504D offering
price of $0.50 per share, we are talking about more than $1 million. I honestly
feel that this - at a minimum - is fair for the contribution which has been
made, don't you?
2. If the Company is not successful, having 4 million shares or 2 million
shares is not material; neither pieces of paper are worth anything.
3. If the prototype ends up not being a reality, AVE could perhaps make
the case that all of the shares should be returned. By helping us now so that we
can pursue funding, etc., AVE would not feel disposed to any effort in this
regard.
Tom, as long as possible, George Sullivan and I are going to try and make
something of the AVE opportunity and we remain very positive. We look forward to
continuing our association with you. In either case mentioned above, you will
remain our largest shareholder for some time. I value our friendship and cannot
wait to play golf with you (although, I am going to wait until there is a good
chance you will be challenged).
Again, Tom, all the best and much, much success in the future. Please stay in
touch.
Sincerely,
/s/ R G KLAWETTER
R. Gene Klawetter
xc: Henri Hornby
<PAGE>
TAB 3
AVE, Inc.
State of Nevada
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the shareholders of AVE, Inc.:
Notice is hereby given that a Special Meeting of Shareholders of AVE, Inc., A
Nevada Company, will be held at 3653 Hemlock Court, Reno, Nevada, at 11:00 a.m.
on July 11, 1995. The Board of Directors has fixed the close of business on June
26, 1995 as the record date for the determination of Shareholders entitled to
notice of and to vote at the meeting.
The meeting has the following purpose:
1. To approve the appointment of two new Directors of the Company.
2. To approve a 1:200 stock split of the Company's outstanding shares,
reducing the number of shares outstanding from 20,539,000 to 102,695.
3. To approve an amendment of the Companies authorized common shares, after
the Company's 1:200 stock split has been approved, to 15,000,000 of $.001
par value stock.
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Henri R. Hornby
President
June 26, 1995
NO PROXY IS INCLUDED WITH THIS NOTICE AND NONE IS SOLICITED BY MANAGEMENT
AVE. INC. 3653 HEMLOCK COURT, RENO, NEVADA 89509,702-829-8812, FAX 702-829-8813
<PAGE>
TAB 4
MAJORITY WRITTEN CONSENT OF DIRECTORS
of
AVE, INCORPORATED
(A Nevada Corporation)
The undersigned persons, constituting all of the members of the Board of
Directors ("Board") of AVE, INCORPORATED, a Nevada corporation (the "Company"),
hereby take the following action by unanimous written consent in lieu of
meeting, pursuant to Section 17-16-821 of the Nevada Business Corporation Act:
WHEREAS the Board of Directors, in acting with prudent urgency to
enable the Company to begin trading of its shares and to subsequently implement
a 504 Reg D stock offering for the purpose of funding development and
manufacture of the Company's product do hereby find it
RESOLVED that the agreement proposed to Mr. Thomas Athans for purchase
of 4,000,000 shares of Company stock and the related issuance of 60,000 shares
of AVE stock to two persons to which he sold a portion of these shares and the
agreement proposed to Mr. Marvin Athans for purchase of 300,000 shares of
Company stock, such agreements being attached to these minutes, be approved as
being in the best interest of the Company and its shareholders.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above actions and proceedings effective as of the date set forth
below.
Dated: August 27, 1998
/s/ R. GENE KLAWETTER /s/ HENRI HORNBY
- - ----------------------------------- -----------------------------------
R. Gene Klawetter, Chairman Henri Hornby
Seal
<PAGE>
[LETTERHEAD OF AVE, INCORPORATED APPEARS HERE]
September 3, 1998
By facsimile: 303 595 0821
Corporate Stock Transfer
Attention: Sally
370 Seventeenth St., Suite 2350
Denver, CO 80202-4614
Dear Sally:
First of all, per our telephone conversation this morning, I am sending you
under separate cover the package to issue ICS Communications 400,000 shares.
Sorry for the confusion.
Additionally, attached herewith you will find the following:
1. Certificate Number 3068, Marvin Athans, 300,000 shares which is being
cancelled.
2. Certificate Number 3065, Tom Athans, 4,000,000 shares which is being
cancelled.
3. An agreement with corresponding promissory note between Henri Hornby and
Marvin Athans.
4. An agreement with corresponding promissory note between Henri Hornby and Tom
Athans.
5. Minutes authorizing the transaction on behalf of AVE, Incorporated in which,
A. 2,300,000 shares with restrictive legend of the 4,300,000 being
cancelled are to be issued to Henri Hornby, and
B. 1,940,000 shares are to be returned to AVE's treasury stock account.
6. Additionally, please issue the remaining 60,000 Tom Athans' shares of AVE
with restrictive legend per the minutes attached as follows:
20,000 shares to Darrell Gregg, 1724 Fagan St., Ft. Worth, TX 76131
40,000 shares to Gayle & Mack Morris, 5901 Montford Dr., Colleyville, TX
76103
Once the above shares are issued, please rerun an updated version of AVE's
shareholder list.
Thanks, Sally.
Sincerely,
R. Gene Klawetter
Chairman, CEO
<PAGE>
[LETTERHEAD OF AVE, INCORPORATED APPEARS HERE]
September 2, 1998
Ms. Kye K. Weeks
Corporate Stock Transfer
370 Seventeenth St., Suite 2350
Denver, CO 80202-4614
Dear Kye:
First of all, let me follow up on a request we sent you several weeks ago
regarding the issuance of 400,000 shares of stock to ICS Communications. We have
received nothing from you in this regard. Would you please check and let me know
the status?
Additionally, attached herewith you will find the following:
1. Certificate Number 3068, Marvin Athans, 300,000 shares which is being
cancelled.
2. Certificate Number 3065, Tom Athans, 4,000,000 shares which is being
cancelled.
3. An agreement with corresponding promissory note between Henri Hornby and
Marvin Athans.
4. An agreement with corresponding promissory note between Henri Hornby and Tom
Athans.
5. Minutes authorizing the transaction on behalf of AVE, Incorporated in which,
A. 2,300,000 shares with restrictive legend of the 4,300,000 being
cancelled are to be issued to Henri Hornby, and
B. 2,000,000 shares are to be returned to AVE's treasury stock account.
6. Additionally, please issue 60,000 shares of AVE with restrictive legend per
the minutes attached as follows:
20,000 shares to Darrell Gregg, 1724 Fagan St., Ft. Worth, TX 76131
40,000 shares to Gayle & Mack Morris, 5901 Montford Dr., Colleyville, TX
76103
Once the above shares are issued, please rerun an updated version of AVE's
shareholder list.
Thanks, Kye.
Sincerely,
/s/ R. GENE KLAWETTER
R. Gene Klawetter
Chairman, CEO
<PAGE>
LETTER OF AGREEMENT
Between Tom Athans & Henri R. Hornby
Representations of Mr. Athans:
1. Mr. Athans is obligated to issue two separate parties a total of 60,000 AVE,
Inc. common shares at a per share price of $0.25 for which Mr. Athans received
$15,000.
2. Mr. Athans agrees that AVE, Inc. will issue these shares direct to the above
mentioned parties upon receipt of the Names, Addresses, Telephone Numbers and
specific shares to be issued to each party. Mr. Athans agrees to forward this
information to AVE at 343 Harrison St. Denver CO 80206 within 48 hours of
signing this agreement.
3. Mr. Athans agrees to return AVE, Inc. stock certificate number 056700 in the
amount of 4,000,000 shares of AVE, Inc. common stock to Corporate Secretary, 343
Harrrison St. Denver, CO 80206 within 48 hours of signing this agreement.
4. Mr. Athans acknowledges that 2,000,000 of the 4,000,000 shares will be
returned to AVE, Inc.'s treasury account and that 2,000,000 of the shares will
be sold to Mr. Henri Hornby for a total of $10,000.
5. Mr. Athans agrees to accept payment as follows:
a. $2,500 in cash at the time this agreement is signed.
b. $7,500 by way of a promissory note which is attached.
6. Mr. Athans agrees to complete this transaction no later than August 31, 1998.
Representations of Mr. Hornby:
1. Mr. Hornby agrees to purchase 2,000,000 shares of AVE Inc. common stock from
Mr. Athans for a total price of $10,000. Mr. Hornby will pay $2,500 in cash upon
signing of this agreement and sign a promissory note for the remaining balance
(see attached). This agreement is predicated upon Mr. Athans returning 4,000,000
to AVE, Inc., 2,000,000 of which will be retired to the Company's treasury.
2. Mr. Hornby will extend and support an AVE Board resolution(s) which will
approve the issuance of the stock indicated in Representation No. 1 of Mr.
Athans, and secure corporate approval for this overall transaction (see attached
Board Minutes).
3. Mr. Hornby agrees to complete this transaction no later than August 31, 1998.
(This space left blank intentionally)
<PAGE>
Agreed: Agreed:
/s/ Tom Athans /s/ Henri Hornby
Mr. Tom Athans Mr. Henri Hornby
Date: 8-31-98 Date: 8-31-98
Notes:
Send Certificate to and correspondence relating to this matter to:
AVE, Inc.
343 Harrison St.
Denver CO 80206
Send Payment to and correspondence relating to this matter to:
Mr. Tom Athans
6531 Glenview Drive
#415
Ft. Worth, TX 76180
<PAGE>
NOTE
August 31, 1998 $7,500
Reno, Nevada
FOR VALUE RECEIVED, the undersigned Henri Hornby ("Purchaser"), hereby
promises to pay to the order of Thomas Athans ("Noteholder"), 6531 Glenview Dr.,
#415, Fort Worth, TX 76180, or at such other address or addresses as Noteholder
may subsequently designate in writing, the full and true sum of Seven Thousand
and 00/100 ($7,500)("Principal").
This Note evidences 4,000,000 common shares of AVE, Inc. stock
(Certificate No. 056700) acquired by the Purchaser from the Noteholder for a
total purchase price of $10,000, an amount of $2,500 being paid in cash upon the
signing of this note. The remaining Principal as follows $2,500 on or before
November 1, 1998, $2,500 on or before January 1, 1999 and $2,500 on or before
March 1, 1999.
In order for this Note to be binding on both parties the following
actions are required:
1. Original signatures of the Purchaser and Noteholder must be affixed
below on two copies of the Note, one copy to be retained by the
Noteholder and one copy to be returned to the Purchaser. The signed at
one certificate No. 056700 representing 4,000,000 shares of AVE, Inc.
stock is to be returned to AVE at 343 Harrison St., Denver, CO 80206
within 48 hours of the signing of this agreement.
2. The Noteholder is to have received a check from the Purchaser in the
amount of $2,500.
3. Upon receipt of the share certificate AVE, Inc. is to return evidence of
the receipt for said certificate by certified U.S. mail.
4. AVE, Inc. is to order issuance to two separate parties a total of 60,000
AVE, Inc. common shares via the Company's transfer agent upon receipt of
the Names, Addresses, Telephone Numbers and specific count of shares to
be issued to each party, such information being forwarded to AVE at 343
Harrison St., Denver, CO 80206 by the Noteholder within 48 hours of the
signing of this agreement.
In the event Noteholder shall resort to legal process to collect any sum
due under this Note, Noteholder shall be entitled to collect from Purchaser all
of the Noteholder's codes and expenses (including reasonable attorney's fees)
incurred in such collection.
Purchaser
By /s/ Henry Hornby
-----------------------------
Henry Hornby 8-31-98
Noteholder
By /s/ Thomas Athans
-----------------------------
Thomas Athans
<PAGE>
LETTER OF AGREEMENT
Between Marvin Athans & Henri R. Hornby
Representations of Mr. Athans:
1. Mr. Athans agrees to return AVE, Inc. stock certificate number 053068 in the
amount of 300,000 shares of AVE Inc. common stock to Corporate Secretary, 343
Harrison St. Denver, CO 80206 within 48 hours of signing this agreement.
2. Mr. Athans agrees to accept payment as follows:
a. $1,000 in cash at the time this agreement is signed.
b. $1,500 by way of a promissory note which is attached.
3. Mr. Athans agrees to complete this transaction no later than August 31, 1998.
Representations of Mr. Hornby:
1. Mr. Hornby agrees to purchase 300,000 shares of AVE Inc. common stock from
Mr. Athans for a total price of $2,500. Mr. Hornby will pay $1,000 in cash upon
signing of this agreement and sign a promissory note for the remaining balance
(see attached). This agreement is predicated upon Mr. Athans returning 300,000
to AVE, Inc.
2. Mr. Hornby will extend and support an AVE Board resolution(s) which will
approve the issuance of the stock indicated in Representation No. 1 of Mr.
Athans, and secure corporate approval for this overall transaction (see attached
Board Minutes).
3. Mr. Hornby agrees to complete this transaction no later than August 31, 1998.
(This space left blank intentionally)
<PAGE>
Agreed: Agreed:
/s/ Marvin Athans /s/ Henri Hornby
Mr. Marvin Athans Mr. Henri Hornby
Date: Date: 8-31-98
Notes:
Send Certificate to and correspondence relating to this matter to:
AVE, Inc.
343 Harrison St.
Denver, CO 80206
Send Payment to and correspondence relating to this matter to:
Mr. Tom Athans
6531 Glenview Drive
#415
Ft. Worth, TX 76180
<PAGE>
NOTE
August 31, 1998 $1,500
Reno, Nevada
FOR VALUE RECEIVED, the undersigned Henri Hornby ("Purchaser"), hereby
promises to pay to the order of Marvin Athans ("Noteholder"), 6531 Glenview Dr.,
#415, Fort Worth, TX 76180, or at such other address or addresses as Noteholder
may subsequently designate in writing, the full and true sum of Fifteen Hundred
and 00/100 ($1,500) ("Principal"), by December 1, 1998 ("Maturity Date").
This Note evidences 300,000 common shares of AVE, Inc. stock
(Certificate No. 056684) acquired by the Purchaser from the Noteholder for a
total purchase price of $2,500, an amount of $1,000 being paid in cash upon the
signing of this note. The remaining Principal is payable by or before the
Maturity Date in U.S. Dollars.
In order for this Note to be binding on both parties the following
actions are required:
1. Original signatures of the Purchaser and Noteholder must be affixed
below on two copies of the Note, one copy to be retained by the
Noteholders and one copy to be returned to the Purchaser. The signed at
one certificate No. 056684 representing 300,000 shares of AVE, Inc.
stock is to be returned to AVE at 343 Harrison St., Denver, CO 80206
within 48 hours of the signing of this agreement.
2. The Noteholder is to have received a check from the Purchaser in the
amount of $1,000.
3. Upon receipt of the share certificate AVE, Inc. is to return evidence of
the receipt of the share certificate to the Noteholder in the form of a
receipt for said certificate by certified U.S. mail.
In the event Noteholder shall resort to legal process to collect any sum
due under this Note, Noteholder shall be entitled to collect from Purchaser all
of the Noteholder's costs and expenses (including reasonable attorney's fees)
incurred in such collection.
Purchaser
By /s/ Henri Hornby
-------------------------
Henri Hornby 8-31-98
Noteholder
By /s/ Marvin Athans
-------------------------
Marvin Athans 8-31-98
<PAGE>
Issue all stock in my name:
Darrell Gregg
1724 Fagan
Ft. Worth, TX 76131 -- 20,000 Shares
Fax #498-6874
Mr. Tom Athens
- - --------------------------------------------------------------------------------
Gayle & Mack Morris
5901 Montford Dr.
Colleyville, TX 76134 40,000 Shares 963-5389
<PAGE>
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
3068 **300,000**
AVE, INC.
AUTHORIZED STOCK: 50,000,000 SHARES
PAR VALUE $.001 PER SHARE
CUSIP #002289-20-5
SEE REVERSE FOR
CERTAIN DEFINITIONS
This Certifies that
**MARVIN W. ATHANS**
is the registered holder of
**THREE HUNDRED THOUSAND**
Shares of
AVE, INC.
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed
this 12th day of January A.D. 1998
COUNTERSIGNED AND REGISTERED
TRANS NATIONAL TRANSFER, Salt Lake City, Utah 84110
P.O. Box 2004, Salt Lake City, Utah 84110 (801) 521-7300
BY
TRANSFER AGENT - AUTHORIZED SIGNATURE
AVE, INC.
CORPORATE
SEAL
NEVADA SECRETARY PRESIDENT
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
NO SALE OFFER TO SELL OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER FEDERAL
SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT TO SUCH ??? THEN IN EFFECT OR
AN EXEMPTION FROM REGISTRATION REQUIREMENT OF SUCH ACT, IS THEN IN FACT
APPLICABLE TO SUCH SECURITIES.
<PAGE>
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
3065 **4,000,000**
AVE, INC.
AUTHORIZED STOCK: 50,000,000 SHARES
PAR VALUE $.001 PER SHARE
CUSIP #002289-20-5
SEE REVERSE FOR
CERTAIN DEFINITIONS
This Certifies that
**TOM ATHANS**
is the registered holder of
**FOUR MILLION**
Shares of
AVE, INC.
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed
this 12th day of January A.D. 1998
COUNTERSIGNED AND REGISTERED
TRANS NATIONAL TRANSFER, Salt Lake City, Utah 84110
P.O. Box 2004, Salt Lake City, Utah 84110 (801) 521-7300
BY
TRANSFER AGENT - AUTHORIZED SIGNATURE
AVE, INC.
CORPORATE
SEAL
NEVADA SECRETARY PRESIDENT
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
NO SALE OFFER TO SELL OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER FEDERAL
SECURITIES ACT OF 1933, AS AMENDED, WITH RESPECT TO SUCH ??? THEN IN EFFECT OR
AN EXEMPTION FROM REGISTRATION REQUIREMENT OF SUCH ACT, IS THEN IN FACT
APPLICABLE TO SUCH SECURITIES.
<PAGE>
TAB 5
MAJORITY WRITTEN CONSENT OF DIRECTORS
of
AVE, INCORPORATED
(A Nevada Corporation)
The undersigned persons, constituting all of the members of the Board of
Directors ("Board") of AVE, INCORPORATED, a Nevada corporation (the "Company"),
hereby take the following action by unanimous written consent in lieu of
meeting, pursuant to Section 17-16-821 of the Nevada Business Corporation Act:.
WHEREAS the Board of Directors, acting in support of the Company's
continuing efforts to develop a microstrip antenna according to its business
plan and to take the Company in a direction consistent with the best interests
of the shareholders do hereby find it
RESOLVED that the CEO be authorized to enter into a letter of intent
with Prime Corporation to sell to the same all rights to the NASA patent and
license agreement for a consideration as outlined in the attached letter of
intent. The purpose of the proposed agreement with Prime Corporation is to
obtain operating capital and to clear the way for the Company to enter into a
merger or acquisition, such merger or acquisition to be determined at a future
time.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above actions and proceedings effective as of the date set forth
below.
Dated: January 20, 1999
/s/ R. GENE KLAWETTER /s/ HENRI HORNBY
- - ----------------------------------- -----------------------------------
R. Gene Klawetter, Chairman Henri Hornby
Seal
Page 1
<PAGE>
TAB 6
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
ARTICLES OF AMENDMENT AND RESTATEMENT
TO
ARTICLES OF INCORPORATION
OF
AVE. INC.
AVE, INC., a corporation incorporated as De Luxe Onyx Company by the filing of
its original Certificate of Incorporation with the Secretary of State of the
State of Nevada on January 23, 1987, which Certificate of Incorporation was
amended on January 23, 1987 to, among other things, change the name of the
corporation to Walsh Communications Group, Inc., and which was further amended
on May 7, 1990, to change the name of the corporation to AVE, Inc., now desiring
to integrate into a single instrument all the provisions of its Certificate of
Incorporation now in effect and operative, and desiring further to amend said
Certificate of Incorporation, certifies as follows:
I. NAME
The name of the Corporation is AVE, Inc.
II. AMENDED AND RESTATED ARTICLES
The text of the Amended and Restated Articles of Incorporation are set forth in
Exhibit A, attached hereto and incorporated herein by this reference.
III. AMENDMENTS
The amendment contained in the Amended and Restated Articles of Incorporation
were duly adopted by the shareholders of the Corporation on June 20, 1999 in
accordance with Section 78.207 of the Nevada General Corporation Law. On that
date, the following proposal was discussed and approved:
Increasing the amount of authorized common shares from 15,000,000 shares
of common stock, $.001 par value, to 30,000,000 shares of common stock,
$.001 par value.
The amendment is restated in Exhibit A with no change and only for purposes of
clarity.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment and
Restatement to the Articles of Incorporation of AVE, Inc. to be executed by its
duly authorized officer as of the date first above written.
AVE, INCORPORATED
/s/ R. Gene Klawetter
------------------------------
R. Gene Klawetter, President
/s/ George Sullivan
------------------------------
George Sullivan, Secretary
State of Colorado
)
County of Douglas ) ss
)
On this 25 day of June, 1999, before me, Pamela Miller, the undersigned officer,
personally appeared R. Gene Klawetter and George Sullivan, known personally to
me to the President and Secretary, respectively, of the above named corporation,
and that they, as such officers being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by signing the name of
the corporation by themselves as such officers.
IN WITNESS WHEREOF I have hereunto set my hand and official seal.
/s/ Pamela Miller
------------------------------
Notary Public
My commission expires: 10-5-99
-------------
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
AVE, INC.
The Certificate of Incorporation of AVE, Inc. is hereby restated, integrated and
amended to read as follows:
Article One:
The name of the Corporation is: AVE, Inc.
Article Two:
The period of its duration is: Perpetual
Article Three:
The purpose of the corporation is the transaction of any or all lawful business
for which corporations may be incorporated under the Nevada Business Corporation
Act.
Article Four:
The total number of shares of authorized capital stock of this corporation shall
be 30,000,000 shares of common stock, with a par value of $.001 per share.
Article Five:
The address of the registered office of the corporation is:
3653 Hemlock Court
Reno, NV 80509
and the name of its registered agent at such address is:
Henri R. Hornby
<PAGE>
This Amended and Restated Articles of Incorporation and the amendments and
restatement effected hereby have been duly adopted in accordance with the
provisions of Section 78.390 and have been duly adopted by the shareholders of
the Corporation in accordance with the provisions of Section 78.207, of the
Nevada General Corporation Law.
IN WITNESS WHEREOF, The AVE, Inc. has caused this instrument to be signed in its
name by its President and attested to by its Secretary this ____ day of June,
1999.
Date: June __, 1999
ATTEST: AVE, INC:
By /s/ GEORGE SULLIVAN By /s/ R. GENE KLAWETTER
------------------------------ ------------------------------
George Sullivan, Secretary R. Gene Klawetter, President
<PAGE>
MAJORITY WRITTEN CONSENT OF DIRECTORS
of
AVE, INCORPORATED
(A Nevada Corporation)
The undersigned persons, constituting all of the members of the Board of
Directors ("Board") of AVE, INCORPORATED, a Nevada corporation (the "Company"),
hereby take the following action by unanimous written consent in lieu of
meeting, pursuant to Section 17-16-821 of the Nevada Business Corporation Act:.
WHEREAS the Board of Directors, in the interest of restating the capital
structure of the Company, do hereby find it
RESOLVED that such capital structure be changed from 15,000,000 shares
of common stock, par value $.001 to 30,000,000 shares of common stock, par value
$.001 as specified in the Articles of Amendment and Restatement to Articles of
Incorporation of AVE, Inc. attached hereto.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above actions and proceedings effective as of the date set forth
below.
Dated: June 20, 1999
/s/ R. GENE KLAWETTER /s/ HENRI HORNBY
- - ---------------------------------- ----------------------------------
R. Gene Klawetter, Chairman Henri Hornby
[Seal]
Page 1
<PAGE>
EXHIBIT 22
TAB 7
[LETTERHEAD OF AVE, INCORPORATED APPEARS HERE]
July 9, 1999 (Revision #2) CONFIDENTIAL
By Fax: 505 244 0089
Mr. Francisco Urrea
Mr. Richard Urrea
CyCo.net, Inc.
600 Central Avenue, SW
Third Floor
Albuquerque, NM 87102
Re: Letter of Intent, Proposed Terms
Gentlemen:
George and I very much enjoyed our discussions in Sante Fe today. Our meeting
seemed to be mutually beneficial and productive. We look forward to progressing
this matter to closure. We departed Santa Fe feeling that you enthusiastically
share our belief that AVE is a valuable public-market vehicle from which
CyCo.net, Inc. can launch an expansion/marketing strategy and experience dynamic
growth which is key to building shareholder value for everyone involved.
Therefore, it is our understanding that,
CyCo.net, Inc., a New Mexico Corporation, intends to develop a network of
web-based companies built around a central site called cyco.net (www.cyco.net)
and desires to be acquired by a listed, non-reporting public company in a
reverse merger transaction.
Accordingly,
AVE, Incorporated, a NASDAQ listed (OTC BB symbol: AVEN) public company desires
to acquire in a tax-free exchange, 100% of the outstanding shares of CyCo.net,
Inc.
The specific proposed terms, generally based on our discussion, are as follows:
1. AVE Inc. will acquire in a tax-free exchange, 100% of the outstanding shares
of CyCo.net, Inc. for 16,443,000 shares (85%) of AVE, Inc. outstanding Common
Stock. At the close of the transaction, the existing AVE shareholders will be in
control of 2,900,000 shares (15%) of AVE Inc. Common Stock. The total
outstanding shares will be 19,343,000. This represents a 1:2.47 reverse split at
the time of the transaction for current AVE shareholders. Based on today's float
of about 1.9 million shares, the reverse will reduce the float to about 769,000
shares. AVE has recently amended its articles of incorporation to increase its
authorized shares from 15,000,000 to 30,000,000.
<PAGE>
CyCo.net, Inc.
Page -2-
2. Of the 7,184,675 shares outstanding, approximately 6,159,707, 85.7%, are
held/controlled by four individuals, Henri Hornby (2,659,707), Gene Klawetter
(1,500,000), Jim Betnar (1,800,000) and George Sullivan (200,000). In addition,
Mr. Klawetter and Mr. Sullivan hold fully-vested stock options in the amount of
400,000 and 200,000, respectively. As a part of this transaction, these major
shareholders will agree to a one-year lockup on 80% of their respective post
split holdings.
3. Prior to closing CyCo.net, Inc. will provide AVE with detailed, five year
financial proformas as well as current financial statements.
4. Upon signing of this letter of intent, CyCo.net will provide AVE with a
commitment letter from CyCo's investment bankers indicating a best efforts
commitment to immediately fund the company in the amount of $892,000 minimum.
Targeted completion date for the funding is 7/27/99. AVE will be happy to
assist in any manner to support this 504D effort.
5. The name of the public company will be changed immediately after closing to
CyCo.net, Inc.
6. All current officers and directors of AVE, Inc. will resign and a new board
of directors will be elected by the board of CyCo.net, Inc. R. Gene Klawetter,
current Chairman/CEO of AVE, Inc. will be appointed to the CyCo Board of
Directors for a one year period. Mr. Klawetter will receive expenses for meeting
attendance and a nominal Director's fee of $500 per meeting (personal or
telephonic).
Other "conditions precedent" are:
A. The merger is subject to the approval of the Board of Directors of AVE, Inc.
and CyCo.net, Inc. following completion of appropriate due diligence by both
parties. With respect to due diligence, CyCo.net, Inc. acknowledges that it has
received AVE's 15c2-11, Corporation of Records filing, four year's of audits,
current financials as of 3/31/99, draft Form 10, existing 504D offering
memorandum, copies of all Form D filings, most current business plan. Upon
signing of this LOI, AVE will forward copies of the Corporations minute book
including organizational documents, etc., current shareholders list and DTC
list.
B. Because of the 1999 NASD rule to amend Rule 6530, TIME IS OF THE ESSENCE with
respect to the AVE public shell. AVE is required to be finished with its formal
registration process NLT 9/1/99. Therefore, this closing must occur to
accommodate the following critical event.
***A registration statement must be submitted to the SEC on or before 8/01/99***
Notes: 1. The registration statement cannot be completed without a core
business strategy in
<PAGE>
CyCo.net, Inc.
Page -3-
place. This means the merger must be closed in time to provide for completion of
the Form 10.
2. AVE's deadline for completing the registration process including
satisfying the SEC's comments phase is September 1, 1999. If this is not done,
the risk of de-listing is real.
3. If desired by CyCo.net, current AVE staff will assist in every way to
contribute to the completion of the task associated with the filing deadline. We
believe that the Form 10 can be completed very quickly since it is already
drafted. It will need legal review.
C. Pursuant to an existing agreement approved by the AVE Board, the stock
options currently held by Mr. Klawetter (400,000) and Mr. Sullivan (200,000)
will be acquired by AVE Inc., (CyCo.net, Inc.) upon closing of a merger
transaction. The purchase price will be $.10 per option, payable within 48 hours
after receiving proceeds from the 504 Reg D funding.
D. CyCo.net, Inc. agrees to implement a well conceived financial public
relations campaign within 30 days after the merger closing in order to support
the stock and enhance shareholder value.
Gentlemen, please regard this LOI as a departure for whatever discussion is
appropriate. We are open to any discussion that leads to a mutually beneficial
agreement at the earliest time.
Please accept our sincere gratitude for timely consideration of this Letter of
Intent.
Regards,
/s/ R. GENE KLAWETTER
R. Gene Klawetter
Chairman, CEO
Agreed this 9th day of July, 1999:
/s/ FRANCISCO URREA /S/ RICHARD URREA
- - ----------------------------------- -----------------------------------
Mr. Francisco Urrea Mr. Richard Urrea
CyCo.net, Inc. CyCo.net, Inc.
xc: Jim Betnar
Henri Hornby
<PAGE>
MAJORITY WRITTEN CONSENT OF DIRECTORS
of
AVE, INCORPORATED
(A Nevada Corporation)
The undersigned persons, constituting all of the members of the Board of
Directors ("Board") of AVE, INCORPORATED, a Nevada corporation (the "Company"),
hereby take the following action by unanimous written consent in lieu of
meeting, pursuant to Section 17-16-821 of the Nevada Business Corporation Act:.
WHEREAS the Board of Directors, in the interest of taking action to
enhance shareholder value and to move with dispatch in the matter of a reverse
merger Cyco.Net, Inc., do hereby find it
RESOLVED that, the proposed merger, the terms and conditions of which
are detailed in the attached letter of intent from the Company to Cyco.Net,
Inc., be supported insofar as its acceptance by Cyco.Net as written.
IN WITNESS WHEREOF, the undersigned Directors have evidenced their
approval of the above actions and proceedings effective as of the date set forth
below.
Dated: July 9, 1999
/s/ R. GENE KLAWETTER /s/ HENRI HORNBY
- - ----------------------------------- -----------------------------------
R. Gene Klawetter, Chairman Henri Hornby
Seal
Page 1
<PAGE>
TAB 8
[LETTERHEAD OF AVE, INCORPORATED APPEARS HERE]
July 9, 1999 (Revision #2) CONFIDENTIAL
By Fax: 505 244 0089
Mr. Francisco Urrea
Mr. Richard Urrea
CyCo.net, Inc.
600 Central Avenue, SW
Third Floor
Albuquerque, NM 87102
Re: Letter of Intent, Proposed Terms
Gentlemen:
George and I very much enjoyed our discussions in Sante Fe today. Our meeting
seemed to be mutually beneficial and productive. We look forward to progressing
this matter to closure. We departed Santa Fe feeling that you enthusiastically
share our belief that AVE is a valuable public-market vehicle from which
CyCo.net, Inc. can launch an expansion/marketing strategy and experience dynamic
growth which is key to building shareholder value for everyone involved.
Therefore, it is our understanding that,
CyCo.net, Inc., a New Mexico Corporation, intends to develop a network of
web-based companies built around a central site called cyco.net (www.cyco.net)
and desires to be acquired by a listed, non-reporting public company in a
reverse merger transaction.
Accordingly,
AVE, Incorporated, a NASDAQ listed (OTC BB symbol: AVEN) public company desires
to acquire in a tax-free exchange, 100% of the outstanding shares of CyCo.net,
Inc.
The specific proposed terms, generally based on our discussion, are as follows:
1. AVE Inc. will acquire in a tax-free exchange, 100% of the outstanding shares
of CyCo.net, Inc. for 16,443,000 shares (85%) of AVE, Inc. outstanding Common
Stock. At the close of the transaction, the existing AVE shareholders will be in
control of 2,900,000 shares (15%) of AVE Inc. Common Stock. The total
outstanding shares will be 19,343,000. This represents a 1:2.47 reverse split at
the time of the transaction for current AVE shareholders. Based on today's float
of about 1.9 million shares, the reverse will reduce the float to about 769,000
shares. AVE has recently amended its articles of incorporation to increase its
authorized shares from 15,000,000 to 30,000,000.
<PAGE>
CyCo.net, Inc.
Page -2-
2. Of the 7,184,675 shares outstanding, approximately 6,159,707, 85.7%, are
held/controlled by four individuals, Henri Hornby (2,659,707), Gene Klawetter
(1,500,000), Jim Betnar (1,800,000) and George Sullivan (200,000). In addition,
Mr. Klawetter and Mr. Sullivan hold fully-vested stock options in the amount of
400,000 and 200,000, respectively. As a part of this transaction, these major
shareholders will agree to a one-year lockup on 80% of their respective post
split holdings.
3. Prior to closing CyCo.net, Inc. will provide AVE with detailed, five year
financial proformas as well as current financial statements.
4. Upon signing of this letter of intent, CyCo.net will provide AVE with a
commitment letter from CyCo's investment bankers indicating a best efforts
commitment to immediately fund the company in the amount of $892,000 minimum.
Targeted completion date for the funding is 7/27/99. AVE will be happy to
assist in any manner to support this 504D effort.
5. The name of the public company will be changed immediately after closing to
CyCo.net, Inc.
6. All current officers and directors of AVE, Inc. will resign and a new board
of directors will be elected by the board of CyCo.net, Inc. R. Gene Klawetter,
current Chairman/CEO of AVE, Inc. will be appointed to the CyCo Board of
Directors for a one year period. Mr. Klawetter will receive expenses for meeting
attendance and a nominal Director's fee of $500 per meeting (personal or
telephonic).
Other "conditions precedent" are:
A. The merger is subject to the approval of the Board of Directors of AVE, Inc.
and CyCo.net, Inc. following completion of appropriate due diligence by both
parties. With respect to due diligence, CyCo.net, Inc. acknowledges that it has
received AVE's 15c2-11, Corporation of Records filing, four year's of audits,
current financials as of 3/31/99, draft Form 10, existing 504D offering
memorandum, copies of all Form D filings, most current business plan. Upon
signing of this LOI, AVE will forward copies of the Corporations minute book
including organizational documents, etc., current shareholders list and DTC
list.
B. Because of the 1999 NASD rule to amend Rule 6530, TIME IS OF THE ESSENCE with
respect to the AVE public shell. AVE is required to be finished with its formal
registration process NLT 9/1/99. Therefore, this closing must occur to
accommodate the following critical event.
***A registration statement must be submitted to the SEC on or before 8/01/99***
Notes: 1. The registration statement cannot be completed without a core
business strategy in
<PAGE>
CyCo.net, Inc.
Page -3-
place. This means the merger must be closed in time to provide for completion of
the Form 10.
2. AVE's deadline for completing the registration process including
satisfying the SEC's comments phase in September 1, 1999. If this is not done,
the risk of de-listing is real.
3. If desired by CyCo.net, current AVE staff will assist in every way to
contribute to the completion of the task associated with the filing deadline. We
believe that the Form 10 can be completed very quickly since it is already
drafted. It will need legal review.
C. Pursuant to an existing agreement approved by the AVE Board, the stock
options currently held by Mr. Klawetter (400,000) and Mr. Sullivan (200,000)
will be acquired by AVE Inc., (CyCo.net, Inc.) upon closing of a merger
transaction. The purchase price will be $.10 per option, payable within 48 hours
after receiving proceeds from the 504 Reg D funding.
D. CyCo.net, Inc. agrees to implement a well conceived financial public
relations campaign within 30 days after the merger closing in order to support
the stock and enhance shareholder value.
Gentlemen, please regard this LOI as a departure for whatever discussion is
appropriate. We are open to any discussion that leads to a mutually beneficial
agreement at the earliest time.
Please accept our sincere gratitude for timely consideration of this Letter of
Intent.
Regards,
/s/ R. GENE KLAWETTER
R. Gene Klawetter
Chairman, CEO
Agreed this 9th day of July, 1999:
/s/ FRANCISCO URREA /S/ RICHARD URREA
- - ----------------------------------- -----------------------------------
Mr. Francisco Urrea Mr. Richard Urrea
CyCo.net, Inc. CyCo.net, Inc.
xc: Jim Betnar
Henri Hornby
<PAGE>
EXHIBIT 99
TAB V
SEE REVERSE FOR
CERTAIN DEFINITIONS
-------------------
CUSIP 002289 20 5
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AVE, INCORPORATED
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, $.001 PAR VALUE, OF
AVE, INCORPORATED
transferable on the books of the Corporation in person or by attorney upon
surrender of this Certificate duly endorsed or assigned. This Certificate and
the shares represented hereby are subject to the laws of the State of Nevada,
and to the Certificate of Incorporation and By-Laws of the Corporation, as now
or hereafter amended. This Certificate is not valid until countersigned by the
Transfer Agent.
Witness, the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
CORPORATE
[SIGNATURE ILLEGIBLE] /s/ GEORGE SULLIVAN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER SEAL SECRETARY
