<PAGE>
U.S. 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
EUROTELECOM COMMUNICATIONS INC.
(Name of Small Business Issuer in its Charter)
DELAWARE 87-0409699
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
MEXBOROUGH BUSINESS CENTER
COLLEGE ROAD
MEXBOROUGH
YORKSHIRE
UNITED KINGDOM
(Address of Principal Executive Offices)
Tel: 011 44 1709 590899
Fax: 011 44 1709 590939
Issuer's Telephone number
SECURITIES TO BE REGISTERED UNDER SECTION 12(B) OF THE ACT: NOT APPLICABLE
SECURITIES TO BE REGISTERED UNDER SECTION 12(G) OF THE ACT: COMMON STOCK, $.01
PAR VALUE
<PAGE>
PART I
EuroTelecom Communications Inc. (EuroTelecom or the Company) is including the
following cautionary statement to make applicable and take advantage of the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995 for
any forward-looking statements made by, or on behalf of, the Company.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, expectations, future events or performance and underlying
assumptions and other statements, which are other than statements of historical
facts. Certain statements contained herein are forward-looking statements and,
accordingly, involve risks and uncertainties, which could cause actual results,
or outcomes, to differ materially from those expressed in the forward-looking
statements. EuroTelecom's expectations, beliefs and projections are expressed in
good faith and are believed by the Company to have a reasonable basis, including
without limitations, management's examination of historical operating trends,
data contained in the Company's records and other data available from third
parties, but there can be no assurance that management's expectations, beliefs
or projections will result or be achieved or accomplished. In addition to other
factors and matters discussed elsewhere herein, the following are important
factors that, in the view of the Company, could cause actual results to differ
materially from those discussed in the forward-looking statements: the ability
of the Company to obtain acceptable forms and amounts of financing to fund
planned acquisitions and operations, technology development, marketing and other
expansion efforts; the global market for technology; and the ability of the
Company to complete proposed acquisitions. The Company has no obligation to
update or revise these forward-looking statements to reflect the occurrence of
future events or circumstances.
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
EUROTELECOM IS AN E-LINKING COMPANY.
EuroTelecom delivers services to its customers which enables them to make the
best and most innovative use of digital, e-linking technology that is the key to
competitive success in the e-business age. E-linking is the delivery mechanism
that links all of the complex control and information flows of a modern
business. E-linking allows customers to reduce costs, provide better service,
understand and respond appropriately to a fast changing market and to use the
power of new technology to take an innovative approach to their market.
EuroTelecom customers can be developers, management services, or tenants of
commercial facilities, building management services or the tenant businesses.
EUROTELECOM OFFERS THE DEVELOPER:
o Reduced installation costs of hardware and fiber optic cabling.
o The competitive advantage of more advanced electronic facilities.
o The opportunity for a continuing revenue stream from tenant advanced
services.
EUROTELECOM OFFERS THE MANAGEMENT SERVICES CONTRACTOR:
o Improved site safety and security.
o Enhanced environmental controls.
o Reduced operating costs.
o Simplified management controls.
o Advanced, built-in information technology networks.
<PAGE>
EUROTELECOM OFFERS THE TENANT BUSINESS:
* Up to date networking facilities at greatly reduced costs, compared with
installing their own networks:
* Flexible "plug-and-play" electronic information networks within the site;
into their corporate networks, or e-business and e-commerce.
* Facilities management of localized computer networks.
* High speed access for video conferencing and visual information delivery.
(Remote presentations).
* High speed networks for displays, video games, or TV distribution.
* Efficient, economic, managed access to corporate networks or to the
global networks for e- business, e-commerce low cost telephony.
In new developments the Company installs a single, secure, resilient,
intelligent, optical fiber circuit, with multiple modes of access (communication
protocols) thereby sharing all the e-linking resources rather than using a
multiplicity of separate dedicated networks. This reduces implementation and
running costs, increases capacity, extends capabilities and increases
flexibility. This is a fundamentally different approach application from
installation of separate networks.
Existing wiring can be either replaced or enhanced by integrating advanced
networking with the customers' legacy systems. EuroTelecom does not own or
develop hardware or software. The Company is a service business and has access
to some of the best proven technologies. EuroTelecom does not provide long
distance telecommunications but does have strong strategic relationships with
the major satellite and landline suppliers and is able to negotiate favourable
terms for customers.
EuroTelecom offers its' customers consulting services in the creative use of
e-linking in technology-enabled business re-engineering. The Company is able to
design and manage the procurement, installation, configuration and application
of a network suited to the particular needs of customers. After installation,
the Company provides technical support or managed services.
By pioneering this new holistic, integrated approach to the use of e-linking for
business efficiency the Company helps its' customers make the best use of
advanced technology.
The Company currently has two main subsidiary companies, EuroTelecom Corporation
Limited, and RTC Inc. EuroTelecom Corporation limited has two operating
divisions, defense and commercial, and four subsidiary companies: Easy/IP
Limited, Objectiveplan Limited, Chunlan Limited, and Universal Communication
Solutions Limited.
Internet users can find additional information from The Company's Web site at
http://www.eurotelecom.co.uk. The Web site is not part of this Form 10-SB.
THE MARKET
EuroTelecom views the leisure, entertainment and retail industries as an
exciting growth market. The same principles apply to other sectors: - defense,
health care, government, financial services, utilities, oil and gas production.
There is significant potential in the defense, education, training and health
care industries. The market is growing rapidly. Telecommunications worldwide is
a trillion-dollar industry and has been growing year by year at over 20%. The
Company estimates that the local site-networking sector in Europe alone will be
a several billion dollar market by the year 2002.
EuroTelecom has strategically designed the company to be one of a few companies
that offers a totally integrated, turn-key approach to advanced information
technology application.
<PAGE>
BUSINESS DEVELOPMENT
The Company is a successor by merger to ATNN, Inc., which was incorporated in
the State of Utah in 1984. ATNN, Inc. operated various businesses until 1994,
when it ceased operations and became a development stage company.
The Company is building a group of companies engaged in e-linking and
information technology applications. The Company's UK activities are organized
through a wholly owned intermediate holding company, EuroTelecom Corporation
Limited.
The core business of EuroTelecom, has from the start been the delivery of
e-linking systems to its clients. The Company is now active in the following
markets:
o Defense, Security, Central & Local Government
o Retail, Sport, Entertainment and Leisure o Banking and Financial
Institutions
o Oil and Gas
In November 1998 the Commercial Systems Division of EuroTelecom Corporation was
established to provide Close Circuit Television (CCTV) Central Monitoring in
South Yorkshire, United Kingdom (UK). Business has grown rapidly and the
Division is expanding its services to provide total CCTV systems, service and
maintenance, asset tracking systems and on-site security guard services.
Since its inception, the Company through is business development team in
EuroTelecom Corporation Limited, has continued to develop its interests in the
Retail, Sports, Entertainment & Leisure markets. The sales cycle of such large
projects is long however, and a number of projects are expected to come to
fruition during the fourth quarter of 1999.
As part of the Company strategy for growth a number of businesses have been
acquired:
o RTC Inc.
o Easy/IP Limited
o Universal Communication Solutions Limited
o Objectiveplan Limited
o Chunlan Limited
SUBSIDIARY COMPANIES
EUROTELECOM CORPORATION LIMITED
EuroTelecom Corporation Limited was formed on April 12, 1996, and consists of
two operating divisions, Defense and Commercial. EuroTelecom Corporation Limited
is the Management Company for all EuroTelecom UK subsidiary companies.
EASY/IP LIMITED
Easy/IP was founded on June 12, 1995, and acquired by the Company in April 1999.
Easy/IP Limited is a fast growing distribution company in the field of TCP/IP
applications in all industry sectors, providing leading edge solutions for
today's exacting networking requirements. The Company is a specialist supplier
of software and hardware in the computer connectivity market, with a customer
base of over 350 prime United Kingdom resellers.
Market pressures, as well as the requirements of other EuroTelecom Group
companies, are already influencing this situation. The next year will see
Easy/IP moving into several new market areas and becoming the prime source of
professional Information Technology (IT) products for the Group.
Easy/IP is looking to broaden its connectivity range to incorporate more
terminal emulation, Internet and Intranet products, as well as a range of router
hardware. Another new area will be Intranet security, an exponentially growing
business. Allied to this will be a new range of security audit products,
developed originally for the USAF, which have been released to the commercial
market place. To address these new markets, Easy/IP is set to double its
tele-sales force and to create a high-level corporate sales division. This will
necessitate expanding both support and administration operations.
<PAGE>
UNIVERSAL COMMUNICATION SOLUTIONS LIMITED (UCS)
UCS is a company specifically formed by EuroTelecom to take advantage of the
Offshore Oil Communication Industry. Formed in February 1999 UCS began
operations in July 1999 when it recruited a team of people with over 15 years
experience in the Industry. The team is considered to be one of the most
experienced "Telecommunications Systems Houses" in the world of Offshore
Industry. The management and control of multi-million dollar telecommunications
projects are a regular feature of its' activities. UCS provides total
communications systems for the offshore Oil & Gas industry.
UCS has undertaken projects which cover the complete range of Telecommunication
systems used by this industry, including:
o Tropospheric Scatter Links
o Line of Sight Microwave Radio
o CCTV, and Safety Surveillance
o Single Channel VHF & UHF Systems o Aeronautical & Marine Communications
Stations
o HF Voice
o Telex
o Multiplexing Equipment and associate peripheral & terminal equipment.
UCS is the first company in the EuroTelecom Group to achieve internationally
recognised Quality Assurance accreditation of ISO 9001. The UCS Quality Manager
responsible for this success is now working with each EuroTelecom division to
help them achieve ISO accreditation.
UCS has recently been awarded contracts in the Middle East worth in excess of
$500,000 and has more business under development.
OBJECTIVEPLAN LIMITED
Objectiveplan is a company specifically formed by EuroTelecom on May 11, 1999 to
provide integrated Command & Control (C2) systems software and hardware into the
Retail, Sports and Leisure market. Objectiveplan was formed by recruiting a team
of specialists in these specific skills and who had product ownership. The
team's products provide the essential man machine interface (MMI) to the various
subsystems within the e-linking solutions.
Objectiveplan have recently completed and released a Beta version of a facial
recognition system. Used in conjunction with standard CCTV surveillance systems
the facial recognition system enables identification and notification to
monitoring station locations.
This product has attracted significant interest from shopping mall operators,
police and security service companies.
CHUNLAN LIMITED
Chunlan was formed by EuroTelecom on Feb 3, 1998 and began operations in August
1999 to provide environmental control systems.
RTC INC.
RTC Inc. was founded in 1990 and is incorporated in the state of Maryland and
acquired by the Company in August 1999. It operates as a full service technical
marketing, sales and consulting firm specialising in electronic communication
hardware and software.
<PAGE>
RTC Inc. provides marketing to aggressive high technology companies wishing to
expand their market share to develop new business with the Department of Defense
(DoD), the Intelligence Agencies and commercial companies in the Maryland,
Virginia and Washington DC area. RTC Inc. has two divisions; Special Projects
and Fiber Optic Telecommunications.
SPECIAL PROJECTS
This division deals primarily with the DoD and the Intelligence community. It
provides the customer with capabilities in signal collection, identification,
analysis and distribution for command control of assets in remote and local
areas. This niche market provides a stable business base.
FIBER OPTIC, TELECOMMUNICATIONS AND SIGNAL DISTRIBUTION
This division deals with both the government organizations and the commercial
business sectors involved in signal distribution. It provides high-speed fiber
optic communication systems, test equipment and system integration capabilities
for this massively expanding market. RTC Inc. is positioning itself to take full
advantage of the growth potential.
RTC Inc. maintains offices in Norfolk, VA. Springfield, VA. Laurel MD and
Severna Park, MD to serve this customer base.
RTC Inc. is quickly developing into a system integrator as its customer base
demands a wider range of products and services.
SALES FORCE
EuroTelecom employs over 20 sales professionals who are trained to provide
customers with sales and customer service relating to all EuroTelecom services.
The sales force includes specialized professionals who focus on sales of the
varying technologies offered through the EuroTelecom Group. Ongoing sales
training helps the sales force to better understand their customer's businesses
in order to develop innovative, application-specific solutions to each
customer's needs.
SIGNIFICANT CUSTOMERS
EuroTelecom customers include UK and US Defense departments, banks, financial
institutions, the oil and gas industry, retail mall, and resort developers. Such
customers include the UK Ministry of Defense, Army and Air Force and GCHQ; the
National Security Agency in the US and the Nigerian Armed Forces. Within the UK
Retail Sports and Leisure market the Company has worked with Chelsfield plc, the
developer and operator of the West Midlands based Merry Hill shopping mall. The
Company is currently negotiating contracts with a large developer of a planned
mall in the north of England In the Middle East the Company has been awarded a
contract by Qtel, the national telecommunications agency, and is in negotiations
with the national Oil Company QGPC (Quatar General Petroleum Company) for two
further contracts.
COMPETITION
EuroTelecom has carefully surveyed the market competition and has concluded that
there is no current evidence to indicate significant competition to its
integrated model of complete, unified services. Most of the companies capable of
competing, (BT, Energis, Cable & Wireless and some of the system integrators)
are too large and committed to specific technologies which are barriers
preventing them from entering into direct competition. The Company will maintain
its competitive advantage by maintaining a close watch on the potential
competition and through the carefully planned introductions of value added
services.
<PAGE>
TRENDS
Global deregulation of telecommunications, the resulting increased competition
and the rapid development and application of new technologies have stimulated a
growing demand for advanced telecommunications services. Corporate customers in
commerce and industry: financial services, entertainment and leisure industries,
manufacturing, public utilities and other sectors have become aware of the power
of advanced information and communications technology to bring competitive
advantage by:
o Extending their markets.
o Reducing costs.
o Speeding products to market.
o Improving standards of customer service.
o Developing new and innovative ways to approach the market.
In particular there will be a huge growth in the requirement for integrated
networking infrastructures, particularly by the entertainment and leisure
industries. The single, managed, infrastructure that can be provided by The
Company offers major business opportunities as well as substantial cost
reductions to the site developer and to the businesses on a site. The Company
can design and install networks that will handle multi-media large screen
displays, site administration, security and access controls, CCTV monitoring,
"intelligent building" controls, fire and intruder alarms, advance computer
networking and internet access.
In addition to the impact that high-speed integrated networks is having on
private industry, Governments are also seeing networked information systems as a
way to help reduce costs, improve public service and devolve and decentralise
the functions of government. The military is continually expanding the use of
advanced telecommunications in operational, command and control and
administrative roles. There is an ongoing revolution in the approach to
education and training through the use of Advanced Learning Technologies through
distant learning.
The Company has the skills and the technology to serve these expanding markets
by providing advanced, integrated e-linking corporate networks, either by the
development of a completely new networking infrastructure or by the integration
of advance e-linking services with existing networks. These e-linking networks
can be partitioned into separate, discrete private, secure communities as
required by military security standards.
The Company has access to proven cost effective technologies and has experience
in practical, business related implementation in a wide variety of applications.
As well as normal information systems and Internet access, EuroTelecom e-linking
systems support e-commerce, cash-point dispensers, retail card systems, "smart
cards" for cash-less transactions, information kiosks, video-walls and distance
training. Where a host of separately designed and installed networks are
normally used, EuroTelecom can provide services over a single integrated
e-linking system.
Furthermore, the Company offers an approach to networking that is highly
adaptive and that will facilitate further change and innovation. The e-linking
network can be expanded and new applications can be added but there will rarely
be a need for wholesale replacement of the network.
ANTICIPATED ACQUISITIONS
EuroTelecom has maintained a belief that rapid growth should be achieved through
merger and acquisition. The Company has acquired a number of businesses to date
in line with this strategy. Other acquisitions have been identified which will
strengthen the Company, both in its ability to deliver products and services and
to widen the available services offered.
The Company will continue to grow by acquiring successful and innovative
companies that own a proven, advanced technology or that can offer services as a
systems integrator or relevant telecommunications services.
<PAGE>
EMPLOYEES
The Company currently has a total of 86 full time staff. Additionally, on an as
required basis, the Company employs a varying number of independent contractors.
None of the Company's employees is represented by a labor union with respect to
his or her employment by the Company. EuroTelecom has experienced no organized
work stoppages and maintains an excellent relationship with its employees.
EuroTelecom believes that its future success will also depend to a significant
extent upon its ability to attract, train and retain highly skilled technical,
management, sales, marketing and consulting personnel. Competition for such
personnel in the industry is intense. There can be no assurance that the Company
will be successful in attracting or retaining such personnel, and the failure to
attract or retain such personnel could have a material adverse effect on the
Company business or results of operations.
MANAGEMENT TEAM
The Company's senior management team has the depth of experience, extensive
market knowledge and management ability to successfully implement the
technologies and rapid growth that is planned.
DR. JOHN SPACKMAN, Chairman, served for 32 years in the British Army during
which time he held many technical and computing appointments including chief of
the division of SHAPE. He retired as a Brigadier General in charge of the Army's
logistics stores systems. As an under-secretary in the Department of Health and
Social Security, he was responsible for the modernization and integration of the
UK's social security, unemployment, National Insurance and pensions systems
which is one of the world's largest IT systems. Other positions: Director of
Information Systems for British Telecom, first Director of the European
Telecommunications Informatics Services Organisation, Director of Information
Systems to Government of Make and Chairman of a number of advanced networking
companies. Additionally, John also operates as an independent consultant in
telecommunications and strategic information systems. John has a PhD in Physics
and an MSc in Management Science. He is a Chartered Engineer, a Governor of the
International Council for Computers and Communication, a Liveryman of the
Worshipful Company of Information Technologists and a Fellow of the British
Computer Society.
PHIL DERRY President and Chief Executive Officer. Phil has over 32 years of
experience within the telecommunications industry. He is well known throughout
the industry. Background experience includes successfully building separate
businesses, (Marlborough Communications Limited and Electronic Marketing
Solutions Limited). The latter was successfully sold to Intelect Communications
Inc. a NASDAQ quoted public company. Previous early employment included TCI Inc,
and Plessey Communications & Avionics. Before joining the communications
industry, Phil had a successful career in HM Forces, Royal Corps of Signals. He
has a very strong background in the operational knowledge of communication
systems, which has been the basis of his successful sales career.
DAVE WALTON Chief Operating Officer. Dave has 31 years of experience within the
telecommunications industry that began with the UK General Post Office as a
telecommunications engineer. Dave worked for British Gas, EmirTel in the United
Arab Emirates and two US companies, Teledyne Geotech and Amarada Hess. As a
senior project manager for Costain Telecom Systems Limited, Dave delivered the
Morecambe Bay offshore Phase 1 Stage 2-field control and communications project
ahead of time and in budget. His career continued with BT where he was promoted
through various jobs to become the Bid Director responsible for all BT vertical
market sectors for large multi million dollar contracts. His last position with
BT was as a Director of GSL Limited, a consortium Group of 4 companies. David
was responsible for the total IT and Telecoms infrastructure bid which included
an ongoing 25-year, facilities management of the infrastructure.
ANDY KRAWCHUK Vice President of Marketing. In 1985, Triple Five Corporation
hired Andy to consult with the entertainment and leisure applications for the
West Edmonton shopping mall in Canada. This is the world's largest shopping and
entertainment mall. Andy moved to UK in 1988 to continue building and developing
the mall programs and worked on the Meadowhall Center in Sheffield. He continued
with similar work in Germany with CENTRO in Oberhaussen. During the past three
years, Andy has taken a position as Vice President with the Company and is
presently introducing the Company's multi-media technology in the design,
installation and management of major retail, leisure, sports and business
centers throughout Europe.
RAY MAY Vice President US Operation. Ray is CEO of RTC Inc. He has been the
President of RTC Inc., since 1990. Before this he was Director of Marketing and
VP for Sales with Watkins Johnson, Scientific Communications and Aiken Advanced
Systems. Ray is a graduate of John Hopkins University. He has over 30 years of
practical and sales engineering experience with Government Agencies, DoD and the
Telecommunications community. Ray has also been very successful marketing
internationally and he holds special clearances with principal US Government
Agencies.
<PAGE>
BANKING ARRANGEMENTS
The Company has a banking relationship with National Westminster Bank plc of
Mansfield for a line of credit in the amount of $560,000. The Company also
intends to rely upon future equity offerings to finance its operations and
acquisitions.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.
RESULTS OF OPERATIONS
<TABLE>
The following table sets forth certain operating information regarding
EuroTelecom: There are no comparative figures for the 6 months ended 30 June
1998.
YEAR ENDED YEAR ENDED 6 MONTHS ENDED
DECEMBER 31 1998 DECEMBER 31 1997 JUNE 30 1999
-------------------------- ------------------------- -------------------------
<S> <C> <C> <C>
Revenues................................ $64,000 $1,212,352 $1,379,720
Cost of Goods Sold...................... $- $777,742 $804,512
Net Earnings (Loss)..................... $(1,420,310) $(642,849) $(670,005)
Net Earnings (Loss) Per Share........... $(.191) $(.128) $(.075)
</TABLE>
<TABLE>
The following summary table presents comparative cash flows of EuroTelecom for
the year ended December 31, 1998, and the year ended December 31, 1997.
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31 1998 DECEMBER 31 1997
-------------------------- ---------------------------
<S> <C> <C>
Net cash used in operating activities....... $(330,153) $(49,659)
Net cash used in investing activities....... $(33,425) $(239,162)
Net cash provided by financing activities... $228,285 $348,981
</TABLE>
At December 31, 1998, EuroTelecom had cash balances totalling $421.
The decrease in the assets of EuroTelecom from $1,026,128 at December 31, 1997
to $195,465 (a decrease of 81%) at December 31, 1998, resulted primarily from
the discontinued operation of a subsidiary company Eurotelecom Secure Networks
Limited.
The increase in the liabilities of EuroTelecom from $1,179,933 at December 31,
1997 to $1,284,460 (an increase of 8.8%) resulted primarily from the increase in
its business operations, number of employees, and the purchase of equipment,
furniture and fixtures. During fiscal 1998, shareholders' equity decreased from
$(153,805) to $(1,088,995) (a decrease of 608%). This decrease is primarily
attributable to the development of the company.
<PAGE>
The total revenues of EuroTelecom decreased from $1,212,352 during fiscal 1997
to $64,000 during fiscal 1998 (a decrease of 95%), following the subsidiary's
discontinued operations. The Company's cost of goods decreased from $777,742
during fiscal 1997 to $nil during fiscal 1998; and decreased gross profit to
$64,000 during fiscal 1998 from $434,610 during fiscal 1997.
Operating expenses increased from $1,008,355 in fiscal 1997 to $1,137,997 in
fiscal 1998 (an increase of 12.8%), arising primarily from increases in general
and administrative expenses and other support costs related to its level of
operations.
During fiscal 1998, EuroTelecom realized an operating loss from continuous
operations of ($1,128,387) compared to a loss of $(642,849) during fiscal 1997.
CAPITAL EXPENDITURES
EuroTelecom has incurred capital expenditures for equipment and office furniture
used in its operations. Capital expenditures during the year ended December 31,
1998, totalled $33,425.
CAPITAL RESOURCES
EuroTelecom's capital resources have been provided primarily by capital
contributions from its stockholders and through an offering of its Common Stock
under Rule 504 of Regulation D under the Securities Act of 1933 which realized
$1,000,000.
LIQUIDITY
The ability of the Company to satisfy its obligations depend in part upon its
ability to reach a profitable level of operations and securing short and
long-term financing for development of its commercial and residential products.
There is no assurance that short and long term financing can be obtained to
fulfill EuroTelecom's capital needs. Without the short or long term financing,
EuroTelecom will attempt to sell additional common stock to meet its current and
future capital needs.
ITEM 3. DESCRIPTION OF PROPERTY.
CORPORATE OFFICE
Eurotelecom currently leases its corporate offices located at Mexborough
Business Centre, College Road, Mexborough, Yorkshire. The lease agreement is for
a one year term and covers approximately 2,000 square feet. The monthly payments
are $720.
Eurotelecom also leases offices located as follows:-
1. Ollerton Road, Tuxford, Nottinghamshire.
Lease term 1 year from 3 February 1999
Square footage 1594 square feet
Monthly payments (pound)583 per month
2. 53 South Denes Road, Great Yarmouth, Norfolk.
Lease term 1 year from 31 May 1999
Square footage 800 square feet
Monthly payments (pound)475 per month.
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The total number of shares of Common Stock of EuroTelecom beneficially owned by
each of the officers and directors, and all of such directors and officers as a
group, and their percentage ownership of the outstanding Common Stock of
EuroTelecom as of July 15, 1999, are as follows:
<TABLE>
<CAPTION>
PER CENT
OF COMMON
MANAGEMENT SHAREHOLDERS (1) SHARES BENEFICIALLY OWNED STOCK
- --------------------------------------- -------------------------- --------------------------
<S> <C> <C>
Philip Shaun Derry................... 946,820 6.5%
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
Robert Iain Hay...................... 171,700 1.2%
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
Andrew Krawchuk...................... 51,000 0.35%
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
Ian Stuart Reay...................... 110,000 0.76%
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
Peter Drake.......................... 931,820 6.4%
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
John Spackman........................ 50,000 0.35%
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
Ray May.............................. 250,000 1.73%
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
</TABLE>
(1) Except as otherwise noted, it is believed by EuroTelecom that all persons
have full voting and investment power with respect to the shares indicated.
Under the rules of the Securities and Exchange Commission, a person (or group of
persons) is deemed to be a "beneficial owner" of a security if he or she,
directly or indirectly, has or shares the power to vote or to direct the voting
of such security, or the power to dispose of or to direct the disposition of
such security. Accordingly, more than one person may be deemed to be a
beneficial owner of the same security. A person is also deemed to be a
beneficial owner of any security which that person has the right to acquire
within 60 days, such as options or warrants to purchase the Common Stock of
EuroTelecom.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of EuroTelecom's Common Stock by each shareholder who beneficially
owns more than five percent (5%) of EuroTelecom's Common Stock, the number of
shares beneficially owned by each and the percent of outstanding Common Stock so
owned of record as of July 15 1999. It is believed by EuroTelecom that all
persons listed have sole voting and investment power with respect to their
shares, except as otherwise indicated.
<TABLE>
<CAPTION>
PER CENT OF
NAME AND ADDRESS OF TITLE OF SHARES OUTSTANDING
BENEFICIAL OWNER CLASS BENEFICIALLY OWNED COMMON STOCK
- --------------------------------------- -------------------- -------------------- ---------------------
<S> <C> <C> <C>
Philip Shaun Derry Common Stock 946,820 6.5%
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
Peter Drake Common Stock 931.820 6.4%
Mexborough Business Centre
College Road
Mexborough
Yorkshire
United Kingdom
S64 9JP
Peter Hinchliff Common Stock 931,820 6.4%
31 High View Road
Surrey
Scribe Investments SA Common Stock 2,475,000 17.1%
2 Serjeants Inn
London
Westbury Investments SA Common Stock 2,475,000 17.1%
2 Serjeants Inn
London
</TABLE>
(1) Except as otherwise noted, it is believed by EuroTelecom that all persons
have full voting and investment power with respect to the shares indicated.
Under the rules of the Securities and Exchange Commission, a person (or group of
persons) is deemed to be a "beneficial owner" of a security if he or she,
directly or indirectly, has or shares the power to vote or to direct the voting
of such security, or the power to dispose of or to direct the disposition of
such security. Accordingly, more than one person may be deemed to be a
beneficial owner of the same security. A person is also deemed to be a
beneficial owner of any security which that person has the right to acquire
within 60 days, such as options or warrants to purchase the Common Stock of
EuroTelecom.
<PAGE>
WARRANTS
223,600 Warrants were issued in 1997 at an exercise price of $2.00 per share.
The exercise date is December 31, 1999.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Board of Directors:
NAME AGE POSITION
Philip Shaun Derry 52 President and C.E.O.
John Spackman 67 Chairman
Andrew Krawchuk 53 Vice President Marketing
There is no family relationship between or among the above directors and
officers. EuroTelecom's success will depend largely on the efforts and abilities
of EuroTelecom's senior management. In particular, EuroTelecom is dependent upon
Philip Shaun Derry, Chief Executive Officer. The loss of services of senior
management could have a substantial adverse effect on EuroTelecom.
ITEM 6. EXECUTIVE COMPENSATION.
No executive officer or director of EuroTelecom received compensation in excess
of $100,000 during its fiscal year ended December 31, 1998.
EuroTelecom does not have a pension plan, a profit sharing plan, or similar
plans for the benefit of its officers, directors or employees. However,
EuroTelecom reserves the right to establish any such plans in the future.
Directors of EuroTelecom who do not serve as officers thereof are not currently
compensated by EuroTelecom for meeting attendance or otherwise, but are entitled
to reimbursement for their travel expenses. EuroTelecom does not pay additional
amounts for committee participation or special assignments of the Board of
Directors.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There were no related party transactions in the fiscal year 1998 or 1997.
<PAGE>
ITEM 8. DESCRIPTION OF SECURITIES.
EuroTelecom is authorised to issue 20,000,000 shares of Common Stock, $0.01 par
value. At July 15 1999, there were 14,488,102 shares of Common Stock issued and
outstanding.
There were 546 stockholders of record of the Common Stock of EuroTelecom as of
July 15 1994.
EuroTelecom is authorised to issue 5,000,000 shares of Preferred Stock, $0.01
par value. There are no shares of Preferred Stock issued and
outstanding.
COMMON STOCK
Holders of Common Stock are entitled to receive ratably such dividends as may be
declared by the Board of Directors, out of funds legally available, without any
preference. Holders of Common Stock are entitled to one vote per share.
Cumulative voting is not allowed for purposes of the election of directors.
Thus, the holders of more than 50% of the shares voting for directors can elect
all directors. The holders of the Common Stock of EuroTelecom have no preemptive
rights to purchase new issues of the securities of EuroTelecom. There are no
redemption or conversion features attached to the Common Stock.
At the present time, EuroTelecom does not intend to pay any dividends on its
Common Stock. Upon liquidation or dissolution of EuroTelecom, holders of Common
Stock are entitled to receive pro rata, either in cash or in kind, all of the
assets of EuroTelecom after payment of debts.
DELAWARE CORPORATE LAW AND CERTAIN BY-LAW PROVISIONS
EuroTelecom is a Delaware corporation, and may become subject to the
anti-takeover provisions of the Delaware General Corporation Law (the "Delaware
Law"). In general, Delaware Law prevents take-over offers to acquire equity
securities of a Delaware corporation if the offeror would become a beneficial
owner of more than 20% of any class of outstanding equity securities, and other
similar provisions, subject to certain exceptions such as the written approval
of the board of directors. The existence of these provisions would be expected
to have an anti-takeover effect, including attempts that might result in a
premium over the market price for the shares of Common Stock held by
stockholders.
Article II, Section 5 of EuroTelecom's By-Laws provides that only EuroTelecom's
President, Secretary, a majority of the members of EuroTelecom's Board of
Directors or at the written request of the holders of at least 50% of the
outstanding voting power may call a special meeting of stockholders. These
provisions of the By-Laws could discourage potential acquisition proposals and
could delay or prevent a change in controlof EuroTelecom. Such provisions also
may have the effect of preventing changes in the management of EuroTelecom.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar f or the Common Stock of EuroTelecom is Olde
Monmouth Stock Transfer Co. Inc, Memorial Parkway, Suite 101, Atlantic
Highlands, NJ 07716.
REPORTS TO STOCKHOLDERS
EuroTelecom will furnish its shareholders with annual reports containing the
financial statements of EuroTelecom examined by independent certified public
accountants. EuroTelecom presently intends to issue unaudited quarterly reports
and may distribute other reports to the stockholders as it deems appropriate.
Eurotelecom has mended its fiscal year end from December 31 to June 30. The six
months to June 30 1999 are currently being audited.
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
GENERAL
The Common Stock of EuroTelecom is traded on the Electronic Bulletin Board
over-the-counter market (OTCBB), and is quoted under the symbol EUTC.
MARKET PRICE
When the trading price of EuroTelecom's Common Stock is below $5.00 per share,
the Common Stock is considered to be "penny stocks" that are subject to rules
promulgated by the Securities and Exchange Commission (Rule 15g-1 through 15g-9)
under the Securities Exchange Act of 1934. These rules impose significant
requirements on brokers under these circumstances, including: (a) delivering to
customers the Commission's standardised risk disclosure document; (b) providing
to customers current bid and offers; (c) disclosing to customers the
brokers-dealer and sales representatives compensation; and (d) providing to
customers monthly account statements.
The following table sets forth the range of high and low closing bid prices per
share of the Common Stock of EuroTelecom as reported by National Quotation
Bureau, L.L.C. for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED HIGH LOW
31 DECEMBER 1998 BID (1) BID (1)
- ----------------------------- -------------------------- --------------------------
<S> <C> <C>
1st Quarter................. $0.50 $0.37
2nd Quarter................. $2.50 $2.25
3rd Quarter................. $0.94 $0.75
4th Quarter................. $0.28 $0.28
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED HIGH LOW
31 DECEMBER 1999 BID (1) BID (1)
- ----------------------------- -------------------------- --------------------------
<S> <C> <C>
1st Quarter (1)............. $1.72 $1.50
2nd Quarter ................ $2.06 $1.75
3rd Quarter ................ $2.56 $2.28
</TABLE>
<PAGE>
(1) EuroTelecom is unaware of the factors which resulted in the significant
fluctuations in the prices per share during the periods being presented,
although it is aware that there is a thin market for the Common Stock, that
there are frequently few shares being traded and that any sales activity
significantly impacts the market.
The closing bid and ask prices of the Common Stock of EuroTelecom on August 31
1999, were $17/8 and $2.00 respectively.
DIVIDENDS
EuroTelecom has not paid any dividends on its Common Stock and does not expect
to do so in the foreseeable future. EuroTelecom intends to apply its earnings,
if any, in expanding its operations and related activities.
The payment of cash dividends in the future will be at the discretion of the
Board of Directors and will depend upon such factors as earnings levels, capital
requirements, EuroTelecom's financial condition and other factors deemed
relevant to the Board of Directors. In addition, EuroTelecom's ability to pay
dividends may become limited under future loan agreements of EuroTelecom which
may restrict or prohibit the payment of dividends.
ITEM 2. LEGAL PROCEEDINGS.
There are currently no legal proceedings which Eurotelecom is involved in.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the period 1997 through 1999, the Company issued shares to the
following persons as compensation for services:
YEAR NAME NUMBER OF SHARES
- ---- ---- ----------------
1997 Basic Capital Corp 34,500
Olympic Capital Corp 161,000
Target Mall.Com 84,077
Type Investment Holdings 161,000
Wing Capital 292,900
1998 Capital York 250,000
Type Investment Holdings 220,080
Olympic Capital 105,814
Target Mall.Com 74,126
Ray May 294,000*
John Banas 250,000
P Taylor 30,000**
1999 D Edwards 250,000**
G Maud 120,000**
D Newett 120,000**
J Millthorpe 10,000**
D Hutton 10,000**
* Includes cash purchase of 44,000 shares at $1.00 per share.
** Non-U.S. residents. Offerings also exempt from registration
under Regulation S issued by the Securities and Exchange
Commission
<PAGE>
These securities were issued in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933 as amended.
The above mentioned individuals and entities were sophisticated investors who
were knowledgeable about the Company's operations and financial condition; they
were able to evaluate the risks and merits of receipt of the shares, and they
each agreed to accept the shares as compensation.
During 1997, the Company issued 3,998,860 shares in a stock for stock
acquisition of the shares of capital stock of Eurotelecom , Inc. These
securities were issued in reliance on the exemption from registration provided
by Section 4(2) of the Securities Act of 1933 as amended. The purchaser and its
shareholders were sophisticated investors who were knowledgeable about the
Company's operations and financial condition; they were able to evaluate the
risks and merits of receipt of the shares, and they each agreed to accept the
shares as compensation.
During 1997, the Company offered and sold 223,600 shares of the
Company's Common Stock to persons and entities who were not citizens or
residents of the United States of America in offerings exempt from registration
under Regulation S issued by the Securities and Exchange Commission at a per
share cash offer price of not less than $1.00.
During 1997 and 1998 the Company issued 1,710,286 shares at a price of
not less than $.25 per share, with the requirements that (i) share offers and
sales be made either to "accredited investors," as that quoted term is defined
in Rule 215, as amended (the "Act"), and/or up to a maximum of 35 non-accredited
investors each of whom, in the judgment of the Company's representatives, is
determined to have such knowledge and experience in high risk equity investments
and other financial matter as to be capable of evaluating the relative risks and
merits of an investment in the shares, as well as the economic worth and
liquidity to be able to sustain a complete loss of his investment in the shares;
(ii) each such offer and sale be undertaken only in accordance with the
transactional exemption from registration afforded by Rule 504 of Regulation D,
as promulgated under Section 3(b) of the Act; and (iii) there was no minimum
number of shares which may be acquired by any qualified purchaser. Of such
shares, 250,000 were sold for services rendered.
During 1998 and 1999 the Company issued 246,000 shares as bonus
payments to employees. These securities were issued in reliance on the exemption
from registration provided by Section 4(2) of the Securities Act of 1933 as
amended. In addition these shares were issued to persons who were not citizens
or residents of the United States of America in offerings exempt from
registration under Regulation S issued by the Securities and Exchange Commission
During 1999, the Company issued 200,000 shares in an asset acquisition
of all of the assets of RTC, Inc. These securities were issued in reliance on
the exemption from registration provided by Section 4(2) of the Securities Act
of 1933 as amended. The purchaser is a sophisticated investor who was
knowledgeable about the Company's operations and financial condition; he was
able to evaluate the risks and merits of receipt of the shares, and he and RTC,
Inc. agreed to accept the shares as payment.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 9 of the Certificate of Incorporation of the Company provides that to
the to the fullest extent permitted by the Delaware General Corporation Law, a
director of the Corporation shall not be personally liable to the Corporation or
its stockholders for monetary damage for breach of fiduciary duty as a director.
Section 7.1 of the Bylaws of the Company provides, in essence, that with regard
to non-derivative claims, the Company shall indemnify any person who was or is a
party or is threatened to be made a party to any pending or threatened suit or
proceeding, civil criminal or otherwise, by reason of the fact that he is or was
a director, officer, employee, trustee or agent of the Company or was serving at
the request of the Company as director, officer, employee, trustee or agent of
another entity, against all expenses incurred by him, including but not limited
to legal fees, judgements and penalties and amounts paid in settlement actually
and reasonably incurred, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the Company, or with
respect to a criminal proceeding, had no reasonable cause to believe his conduct
was unlawful.
Section 7.2 of the By-laws provides, in essence, that with regard to derivative
suits, the Company shall indemnify any person who was or is a party or is
threatened to be made a party to any pending or threatened suit or proceeding in
the right of the Company, to procure a judgement in its favor by reason of the
fact that he is or was an agent of the Company, against all expenses, including
attorneys fees, actually and reasonably incurred by hm, in connection with the
defense, settlement or appeal of such action, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company, except that no indemnification shall be made if such persons shall
have been adjudged liable to the Company unless and to the extent that the
Delaware Court of Chancery or the court in which such action was brought shall
determine that, despite such adjudication, such person is fairly and reasonably
entitled to be indemnified.
<PAGE>
The Eleventh Article of the Articles of Incorporation of the Company provides
that the Company shall, to the fullest extent permitted by the provisions of
Sections 145 of the General Corporation Law of Delaware, as the same may be
amended and supplemented, indemnify any and all persons whom it shall have power
to indemnify under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section, and the
indemnification provided for shall not be deemed exclusive of any other rights
to which those indemnified may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 6.10 of the Bylaws of the Company provides that the Company shall
indemnify all of its offers and directors, past, present and future, against any
and all expenses incurred by them, including but not limited to legal fees,
judgments and penalties which may be incurred, rendered or levied in any legal
action brought against any or all of them for or on account of any act or
omissions alleged to have been committed while acting within the scope of their
duties as officers or directors of the Company.
PART III
ITEM 1. INDEX TO EXHIBITS.
EXHIBIT
3(i) Eurotelecom Communications Inc. and Subsidiaries
- Consolidated Financial Statements - December 31 1998
3(ii) Eurotelecom Communications Inc and Subsidiaries - Draft Consolidated
Financial Statements - June 30, 1999.
3(iii) Share Sale Agreement
- Shareholders of Easy IP Ltd and Eurotelecom Corporation Limited
3(iv) Service Agreement
- Stuart Reay
3(v) By-laws of American Telemedia Network Inc.
3(vi) Agreement and Plan of Merger of ATN Inc and American Telemedia Network
Inc.
3(vii) Agreement of Sale of RTC Inc to Eurotelecom Communications Inc.
3(viii) By Laws of ATN Inc
3(ix) Certificate of Amendment of Certificate of Incorporation of Wing
Systems Inc.
3(x) Certificate of Incorporation of American Telemedia Network Inc
3(xi) Certificate of Incorporation of Wing Systems Inc.
3(xii) Corporate Records of Wing Systems Inc.
3(xiii) Employment Agreement Ray May and Eurotelecom Communication Inc.
3(xiv) Minutes of Special Meeting of Stockholders of American Telemedia Network
Inc.
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, hereunto duly authorized.
EuroTelecom Communications Inc.
Date: September 1999
By: /s/ PHILIP SHAUN DERRY
Philip Shaun Derry
Director, Chief Executive Officer,
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the inclusion in this Form 10-SB Registration Statement of our
report date August 8 1999 on our audit of the financial statements of
EuroTelecom Communications, Inc. We also consent to the reference to our firm
under the caption "Experts".
Crouch Bierwolf & Chisholm
Certified Public Accountants
Salt Lake City, Utah
EXHIBIT 3(i)
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1998
<PAGE>
C O N T E N T S
Accountants' Report ......................................................... 3
Consolidated Balance Sheets ................................................. 4
Consolidated Statements of Operations ....................................... 6
Consolidated Statements of Stockholders' Equity.............................. 7
Consolidated Statements of Cash Flows ....................................... 8
Notes to the Consolidated Financial Statements .............................. 9
2
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Eurotelecom Communications Inc. and subsidiaries:
We have audited the accompanying consolidated balance sheets of Eurotelecom
Communications Inc. and subsidiaries (formerly ATNN, Inc.)as of December 31,
1998 and 1997 and the related consolidated statements of operations,
consolidated stockholders' equity and consolidated cash flows for years ended
December 31, 1998, 1997, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Eurotelecom
Communications Inc. and subsidiaries as of December 31, 1998 and 1997 and the
results of its operations and cash flows for the years ended December 31, 1998,
1997, and 1996 in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 4, the
Company's recurring operating losses and lack of working capital raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to those matters are also described in Note 4. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Crouch Bierwolf & Chisholm
Crouch Bierwolf & Chisholm
Certified Public Accountants
Salt Lake City, Utah
August 8, 1999
3
<PAGE>
<TABLE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
ASSETS
------
<CAPTION>
DECEMBER, 31 DECEMBER, 31
1998 1997
-------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 421 $ 69,810
Accounts receivable - 442,187
Inventory - 76,637
Prepaid expenses 54,794 342,878
Other current assets 42,010 29,802
-------------- --------------
Total current assets 97,225 961,314
PROPERTY, PLANT AND EQUIPMENT, NET 53,643 20,218
INVESTMENTS AT COST 44,597 44,596
-------------- --------------
TOTAL ASSETS $ 195,465 $ 1,026,128
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- --------------
<S> <C> <C>
CURRENT LIABILITIES:
Bank Overdraft $ 65,904 $ -
Accounts payable - related party - 56,000
Accounts payable 210,488 492,876
Accrued expenses 47,234 253,918
Accrued income and other taxes 37,625 329,139
Current maturities of long-term obligations 524,627 48,000
-------------- --------------
Total current liabilities 885,878 1,179,933
-------------- --------------
LONG TERM LIABILITIES:
Notes Payable (Note 3) 923,209 48,000
Less: Current maturities of long-term debt (524,627) (48,000)
-------------- --------------
Total long term liabilities 398,582 -
-------------- --------------
TOTAL LIABILITIES 1,284,460 1,179,933
-------------- --------------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $0.01 par value, 20,000,000 authorized
shares; 6,519,016 and 5,036,616 issued and
outstanding, at December 31, 1998 and December
31, 1997, respectively 65,191 50,367
Additional paid-in capital 20,726,382 20,204,886
Less: subscription receivable (91,214) (40,014)
Accumulated deficit (21,789,354) (20,369,044)
-------------- --------------
Total stockholders' equity (deficit) (1,088,995) (153,805)
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 195,465 $ 1,026,128
============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
<TABLE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
Consolidated Statements of Operations
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1998 1997 1996
-------------------- -------------------- -----------------
<S> <C> <C> <C>
REVENUES $ 64,000 $ 1,212,352 $ -
COST OF SALES - 777,742 -
-------------------- -------------------- -----------------
GROSS PROFIT 64,000 434,610 -
-------------------- -------------------- -----------------
GENERAL & ADMINISTRATIVE
EXPENSES 1,137,997 1,008,355 1,205
-------------------- -------------------- -----------------
OPERATING LOSS (1,073,997) (573,745) (1,205)
-------------------- -------------------- -----------------
OTHER INCOME AND (EXPENSES)
Forgiveness of debt 4,136
Profit/(Loss) on investment - (44,800) -
Interest expense (54,290) (24,304) -
-------------------- -------------------- -----------------
Total other income and expenses (54,290) (69,104) 4,136
-------------------- -------------------- -----------------
INCOME (LOSS) BEFORE INCOME TAXES $ (1,128,287) $ (642,849) $ 2,931
-------------------- -------------------- -----------------
PROVISION FOR INCOME TAXES 100 - 100
-------------------- -------------------- -----------------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS $ (1,128,387) $ (642,849) $ 2,831
-------------------- -------------------- -----------------
DISCONTINUED OPERATIONS (291,923) - -
-------------------- -------------------- -----------------
NET INCOME (LOSS) $ (1,420,310) $ (642,849) $ 2,831
==================== ==================== =================
NET INCOME (LOSS) PER COMMON SHARE FROM
CONTINUING OPERATIONS $ (0.195) $ (0.128) $ 0.039
NET LOSS PER COMMON SHARE FROM
DISCONTINUED OPERATIONS $ (0.051) $ - $ -
-------------------- -------------------- -----------------
TOTAL NET INCOME (LOSS) PER COMMON SHARE $ (0.246) $ (0.128) $ 0.039
==================== ==================== =================
FULLY DILUTED TOTAL NET INCOME (LOSS) PER
COMMON SHARE $ (0.191) $ (0.128) $ 0.039
==================== ==================== =================
WEIGHTED AVERAGE OF COMMON SHARES 5,777,816 5,036,616 72,320
==================== ==================== =================
FULLY DILUTED WEIGHTED AVERAGE OF
COMMON SHARES 7,427,816 5,036,616 72,370
==================== ==================== =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
<TABLE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
From January 1, 1997 through December 31, 1998
<CAPTION>
Common Stock Retained
------------------------------- Paid-In Earnings Subscription
Shares Amount Capital (Deficit) Receivable
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance January 1, 1997 76,356 $ 764 $ 19,601,257 $ (19,559,517) $ -
Shares issued for services 570 5 662 - -
Reverse stock split 117.05941 to 1 - - - - -
Shares issued to round up fractions 253 3 (3) - -
Free trading stock for services 734,477 7,345 256,126 - -
Free trading stock for cash 223,600 2,236 336,869 - -
Restricted shares issued for cash 2,500 25 9,975 - -
Eurotelecom Inc. (net of cancellations)
-restricted shares in a
stock-for-stock acquisition 3,998,860 39,989 - - -
Less: Stock subscription - - - - (40,014)
Cash issued to acquire public shell - - - (166,678) -
Net loss for period ended
December 31, 1997 (642,849) -
-------------- -------------- -------------- -------------- --------------
Balance December 31, 1997 5,036,616 50,367 20,204,886 (20,369,044) (40,014)
Shares issued during 1998:
Consulting services 1,280,000 12,800 457,200 - -
Employee bonuses 151,200 1,512 13,608 - -
Subscription agreement 51,200 512 50,688 - (51,200)
Net loss for period ended
December 31, 1998 - - - (1,420,310) -
-------------- -------------- -------------- -------------- --------------
Balance December 31, 1998 6,519,016 $ 65,191 $ 20,726,382 $ (21,789,354) $ (91,214)
============== ============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
<TABLE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<CAPTION>
December 31,
------------------------------------------------------------
1998 1997 1996
----------------- ----------------- -----------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ (1,420,310) $ (642,849) $ 2,831
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 22,606 7,670 -
Loss on discontinued operations 291,923 - -
Stock issued for services 470,000 264,137 -
Changes in current assets And liabilities:
Receivables 442,187 (409,233) -
Inventories 76,637 (76,637) -
Other current assets 275,876 (372,680) -
Accrued expenses (206,684) 583,057 -
Accounts payable (282,388) 548,876 (4,136)
Other - 48,000 -
----------------- ----------------- -----------------
Net Cash Provided
(Used) by Operating Activities (330,153) (49,659) (1,305)
----------------- ----------------- -----------------
Cash Flows from Investing Activities
Equipment (33,425) (27,888) -
Purchase shell - - -
Investments - (44,596) -
----------------- ----------------- -----------------
Net Cash Provided
(Used) by Investing Activities (33,425) (239,162) -
----------------- ----------------- -----------------
Cash Flows from Financing Activities
Proceeds from issuance of debt,
Net of repayments 228,285 - -
Proceeds from issuance of common
Stock, net of costs - 348,981 -
----------------- ----------------- -----------------
Net Cash Provided
(Used) by Financing Activities 228,285 348,981 -
----------------- ----------------- -----------------
Increase (decrease) in Cash (135,293) 60,160 (1,305)
Cash and Cash Equivalents
at Beginning of Period 69,810 9,650 10,955
----------------- ----------------- -----------------
Cash and Cash Equivalents
at End of Period $ (65,483) $ 69,810 $ 9,650
================= ================= =================
Supplemental Cash Flow Information:
Cash paid for interest $ 4,736 $ 24,310 $ -
Cash paid for income taxes $ - $ - $ 100
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements presented are those of Eurotelecom
Communications, Inc. (formerly ATNN, Inc.) and its subsidiaries (the
Company).
ATN Inc. was incorporated under the laws of the State of Utah in
1984. The principal business of the Company through November 1988 was
to sell point-of-purchase advertising services to national and local
advertisers using Ad Centers located in shopping malls across the
United States. In November 1988, ATNN, Inc. discontinued its
advertising business and purchased a truck stop business located in
Brooks, Oregon which was comprised of a convenience store, a fast
food restaurant, and fueling facilities for trucks and passenger
cars. In September 1989, the Company acquired all of the outstanding
common stock of Meadow Valley Constructors (MVC), a privately held
interstate bridge construction company, located in Phoenix, Arizona.
On July 13, 1990, the Company entered into a rescission agreement
with the former stockholders of MVC.
The Company continued in the truck stop business until August of 1993
when the Company conveyed the truck shop business to American
Telemedia Network, Inc. (ATN) in lieu of foreclosure. ATN assumed
possession of the assets and related liabilities.
On August 1, 1997 the Company consummated a reverse merger pursuant
to an agreement dated July 10, 1997. The principle elements of the
reverse merger were as follows:
(a) a 1 for 117.05941 reverse split of the Company's 11,705,941
shares, leaving 100,000 common shares outstanding;
(b) the issuance of 5,865,000 post-reverse split shares to the
shareholders of Eurotelecom Inc. (Eurotelecom Inc. was
incorporated in the State of Delaware on December 19, 1996
under the name Wing Systems Inc. and changed its name to
Eurotelecom Inc. on January 31, 1997);
(c) the issuance of 734,477 net post-reverse split shares to
consultants in consideration of services rendered in
connection with the transaction.
The Company changed its name to Eurotelecom Communications Inc. on
August 11, 1997.
The Company is seeking to build a group of companies engaged in
telecommunications and related activities. The Company's UK
activities are organized through a wholly owned intermediate holding
company, Eurotelecom Corporation Limited.
9
<PAGE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
b. Subsidiary Activity
On September 16, 1997 a wholly owned subsidiary, Eurotelecom Secure
Networks Limited (Secure Networks), was incorporated in the UK to
provide certain internet technology and communication products and
services, and other related services. On February 24, 1999, Secure
Networks ceased trading and was placed into voluntary liquidation. As
a result, the assets and liabilities of Secure Networks have been
removed from the consolidated balance sheet and recorded as
discontinued operations on the consolidated statement of operations.
Eurotelecom Corporation Limited had no activity during 1998 and
served as a holding company for UK operations.
c. Basis of Presentation
The consolidated financial statements present the consolidated
financial position of the Company and its subsidiary Eurotelecom
Corporation Limited. Secure Networks activity is recorded as
discontinued operations in the consolidated financial statements
since it ceased operations on February 24, 1999. All significant
inter-company accounts and balances have been eliminated.
d. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, bank accounts and
temporary investments with original maturities of 90 days or less at
the date of purchase.
e. Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and revenues and expenses during the
reporting period. In these financial statements, assets, liabilities
and earnings involve reliance on management's estimates. Actual
results could differ from those estimates.
f. Provision for Income Taxes
The Company accounts for income taxes based on the provisions of
Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes (SAFS 109). Under SFAS 109, the liability method is used
for accounting for income taxes, and deferred tax assets and
liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities.
10
<PAGE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
No provision for income taxes have been recorded due to net operating
loss carryforwards totaling approximately $20,000,000 that will be
offset against future taxable income. These NOL carryforwards begin
to expire in the year 1999. No tax benefit has been reported in the
financial statements because the Company believes there is a 50% or
greater chance the carryforward will expire unused.
<TABLE>
<CAPTION>
1998 1997
---------------- ----------------
<S> <C> <C>
Tax Assets:
NOL Carryforwards $ 7,408,300 $ 7,010,300
Valuation Allowance (7,408,300) (7,010,300)
---------------- ----------------
Total $ - $ -
================ ================
</TABLE>
g. Recognition of Revenue and Expenses
The Company recognizes income and expenses on the accrual basis of
accounting.
h. Foreign Currencies
Transactions in foreign currencies are recorded using the rate of
exchange at the date of the transaction. Assets and liabilities are
translated using the exchange rate at the balance sheet date.
i. Inventories
Inventories are stated at lower of cost or market using the First-in,
First-out method.
j. Property, Plant and Equipment
Property, Plant and Equipment is stated at cost. Major renewals and
betterments are capitalized while expenditures for maintenance and
repairs are charged to operations as incurred. Depreciation is
computed on the straight-line method over the estimated useful life
up to five years. Equipment at December 31, 1998 and 1997 consist of
computers and machinery (net) $53,643 and $20,218, respectively.
Depreciation expense was $22,606 and $7,670 for 1998 and 1997,
respectively.
k. Net Income (Loss) Per Share
The computable of net income/(loss) per share is based on the
weighted average number of shares outstanding during the period.
Fully diluted income (loss) per share is based on the weighted
average number of shares outstanding plus the weighted average number
of shares that could have been converted from debt during the period.
11
<PAGE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUBSEQUENT EVENTS
The Company acquired several companies subsequent to the year end.
On August 6, 1999 the Company acquired RTC Inc. (RTC), which provides marketing
services to progressive high technology companies wishing to expand business
through planned growth strategies and strategic alliances that have access to
internet technology in the private and public sectors. The Company issued
250,000 restricted shares of the Company's common stock. This results in RTC
being a wholly owned subsidiary of the Company.
The Company acquired a software development company, Easy IP Limited, effective
April 19, 1999. The Company paid $96,000 in cash and issued a $96,000 note with
2 equal payments of $48,000 due in October 1999 and April 2000. In addition, the
Company issued Easy IP Limited 200,000 shares of the Company's restricted common
stock. This results in Easy IP Limited being a wholly owned subsidiary of the
Company.
Additional notes payable of $440,000 were made available to the Company, and
these, along with the note payable of $360,000 were converted into 5,500,000
shares of restricted common stock on July 1, 1999.
The notes payable of $260,000 and $250,000 were repaid in April and June 1999
for $260,000 and $151,000 respectively. The amounts were paid in full and final
settlement of the notes, including any accrued interest. The resulting gain from
this transaction will be recorded in 1999.
12
<PAGE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
NOTE 3 - NOTES PAYABLE
The Company has the following notes payable:
<CAPTION>
1998 1997
---------------- -----------------
<S> <C> <C>
Note in the original amount of $510,000, bears interest
at 10%, payable in two payments ($260,000 due on
March 31, 1999 and $250,000 due on July 31, 1999),
secured by 1,863,640 shares of common stock. $ 510,000 -
Convertible note in the original amount of $360,000,
bears interest at 10%, due on May 31, 2000, unsecured. 360,000 -
Note payable related to the purchase of a vehicle
originating in June 1998, bearing interest at 17.8% for
a term of 36 months. This note has a balloon payment
of $10,000 due in June 2001. 53,208 -
Loan from a third party, due on demand, no stated
interest rate, unsecured. - 48,000
Less current portion (524,627) (48,000)
---------------- -----------------
Total long term notes payable $ 398,581 $ -
---------------- -----------------
</TABLE>
Maturities of notes payable at December 31, 1998 are as follows:
Year Ended
December 31,
1999 $ 524,627
2000 9,142
2001 369,142
2002 20,297
Thereafter -
-----------
$ 923,208
===========
13
<PAGE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming
that the company will continue as going concern. The Company has incurred
operating losses for the year ended December 31, 1998 and in earlier years and
is dependent upon financing to continue operations. The financial statements do
not include any adjustments relating to recoverability and classification of
reported asset amounts or the amounts and classification of liabilities that
might result from the outcome of the uncertainty.
The Company is building a group of companies engaged in telecommunications and
related activities.
NOTE 5 - FAIR VALUES OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial instruments is
made in accordance with the requirements of SFAS No. 107, A Disclosure about
Fair Value of Financial Instruments. The carrying amounts and fair value of the
Company's financial instruments at December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
------------------------- --------------------------
Carrying Fair Carrying Fair
Amounts Values Amounts Values
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 421 $ 421 $ 69,800 $ 69,800
Accounts receivable - - 442,187 442,187
</TABLE>
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments.
Cash and Cash Equivalents
- -------------------------
The carrying amounts reported on the balance sheet for cash and cash equivalents
approximate their fair value.
Accounts Receivable
- -------------------
The fair values of accounts receivable are based upon the interest rate the
Company would receive on market rates available for savings and investments.
Accounts are evaluated and doubtful accounts are specifically written-off.
14
<PAGE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - STOCK TRANSACTIONS
During 1998, the Company issued 900,000 and 151,200 restricted shares of common
stock for consulting services and employment bonuses, respectively. In addition,
380,000 shares of unrestricted common stock were issued for consulting services
and 51,200 shares were issued for a stock subscription receivable. All
restricted shares were valued at $.01 per share while the unrestricted shares
were issued at $1 per share.
NOTE 7 - OPTIONS
The Company issued options to purchase common stock at $2 per share exercisable
before 31 December 1999.
15
EXHIBIT 3(ii)
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
Draft Consolidated Financial Statements
June 30, 1999
<PAGE>
<TABLE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
Draft Consolidated Balance Sheets
ASSETS
------
<CAPTION>
JUNE, 30 DECEMBER, 31
1999 1998
$ $
-------------------- -----------------
<S> <C> <C>
INTANGIBLE ASSETS:
Goodwill 92,811 -
CURRENT ASSETS:
Cash and cash equivalents - 421
Accounts receivable 954,841 -
Inventory 427,104 -
Prepaid expenses 28,202 54,794
Other current assets 188,026 42,010
-------------------- -----------------
Total current assets 1,598,173 97,225
PROPERTY, PLANT AND EQUIPMENT, NET 92,024 53,643
INVESTMENTS AT COST 44,597 44,597
-------------------- -----------------
TOTAL ASSETS 1,827,605 195,465
==================== =================
</TABLE>
<PAGE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
Draft Consolidated Balance Sheets
(continued)
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
$ $
-------------------- -----------------
<S> <C> <C>
CURRENT LIABILITIES:
Bank Overdraft 380,662 65,904
Accounts payable 763,357 210,488
Accrued expenses 148,770 47,234
Accrued income and other taxes 316,294 37,625
Current maturities of long-term obligations 470,627 524,627
-------------------- -----------------
Total current liabilities 2,079,710 885,878
-------------------- -----------------
LONG TERM LIABILITIES:
Notes Payable 941,891 923,209
Less: Current maturities of long-term debt (470,627) (524,627)
-------------------- -----------------
Total long term liabilities 471,264 398,582
-------------------- -----------------
TOTAL LIABILITIES 2,550,974 1,284,460
-------------------- -----------------
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $0.01 par value, 20,000,000 authorized
shares; 6,519,016 and 5,036,616 issued and outstanding,
at December 31, 1998 and December 31, 1997, respectively 89,772 65,191
Additional paid-in capital 21,778,006 20,726,382
Less: subscription receivable (131,787) (91,214)
Accumulated deficit (22,459,360) (21,789,354)
-------------------- -----------------
Total stockholders' equity (deficit) (723,369) (1,088,995)
-------------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 1,827,605 195,465
==================== =================
</TABLE>
<PAGE>
<TABLE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
Draft Consolidated Statements of Operations
<CAPTION>
FOR THE PERIODS ENDED
JUNE 30, DECEMBER 31, DECEMBER 31,
1999 1998 1997
-------------------- -------------------- -----------------
$ $ $
<S> <C> <C> <C>
REVENUES 1,379,720 64,000 1,212,352
COST OF SALES 804,512 - 777,742
-------------------- -------------------- -----------------
GROSS PROFIT 575,208 64,000 434,610
-------------------- -------------------- -----------------
GENERAL & ADMINISTRATIVE
EXPENSES 1,233,943 1,137,997 1,008,355
-------------------- -------------------- -----------------
OPERATING LOSS (658,735) (1,073,997) (573,745)
-------------------- -------------------- -----------------
OTHER INCOME AND (EXPENSES)
Profit on extinguishment of debt 145,667 - -
Profit/(Loss) on investment - - (44,800)
Interest expense (34,423) (54,290) (24,304)
-------------------- -------------------- -----------------
Total other income and expenses 111,244 (54,290) (69,104)
-------------------- -------------------- -----------------
INCOME (LOSS) BEFORE INCOME TAXES (547,491) (1,128,287) (642,849)
-------------------- -------------------- -----------------
PROVISION FOR INCOME TAXES 100 100 -
-------------------- -------------------- -----------------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS (547,591) (1,128,387) (642,849)
-------------------- -------------------- -----------------
DISCONTINUED OPERATIONS (122,414) (291,923) -
-------------------- -------------------- -----------------
NET INCOME (LOSS) (670,005) (1,420,310) (642,849)
==================== ==================== =================
NET INCOME (LOSS) PER COMMON SHARE FROM
CONTINUING OPERATIONS $ (0.071) $ (0.195) $ (0.128)
</TABLE>
<PAGE>
<TABLE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
Draft Consolidated Statements of Stockholders' Equity
From January 1, 1997 through June 30, 1999
<CAPTION>
Common Stock Retained
------------------------------- Paid-In Earnings Subscription
Shares Amount Capital (Deficit) Receivable
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance January 1, 1997 76,356 $ 764 $ 19,601,257 $ (19,559,517) $ -
Shares issued for services 570 5 662 - -
Reverse stock split 117.05941 to 1 - - - - -
Shares issued to round up fractions 253 3 (3) - -
Free trading stock for services 734,477 7,345 256,126 - -
Free trading stock for cash 223,600 2,236 336,869 - -
Restricted shares issued for cash 2,500 25 9,975 - -
Eurotelecom Inc. (net of cancellations)
-restricted shares in a
stock-for-stock acquisition 3,998,860 39,989 - - -
Less: Stock subscription - - - - (40,014)
Cash issued to acquire public shell - - - (166,678) -
Net loss for period ended
December 31, 1997 (642,849) -
-------------- -------------- -------------- -------------- --------------
Balance December 31, 1997 5,036,616 50,367 20,204,886 (20,369,044) (40,014)
Shares issued during 1998:
Consulting services 1,280,000 12,800 457,200 - -
Employee bonuses 151,200 1,512 13,608 - -
Subscription agreement 51,200 512 50,688 - (51,200)
Net loss for period ended
December 31, 1998 - - - (1,420,310) -
-------------- -------------- -------------- -------------- --------------
Balance December 31, 1998 6,519,016 $ 65,191 $ 20,726,382 $ (21,789,354) $ (91,214)
============== ============== ============== ============== ==============
</TABLE>
<PAGE>
<TABLE>
EUROTELECOM COMMUNICATIONS INC. AND SUBSIDIARIES
Draft Consolidated Statements of Stockholders' Equity
From January 1, 1997 through June 30, 1999
<CAPTION>
<S> <C> <C> <C> <C> <C>
Balance December 31, 1998 b/fwd 6,519,016 65,191 20,726,382 (21,789,354) (91,214)
Shares issued during the period;
Consulting services 508,000 5,080 132,215 - -
Employee bonuses 346,000 3,460 9,504 - -
On acquisition of subsidiary 200,000 2,000 19,800 - -
Share sale proceeds 1,341,666 13,417 863,360 - -
Subscription agreement 64,420 624 40,168 - (40,573)
Net loss for the period ended
June 30, 1999 - - - (670,005) -
Balance June 30, 1999 8,977,102 $ 89,772 $ 21,778,006 $ (22,459,360) $ (131,787)
============== ============== ============== ============== ==============
</TABLE>
EXHIBIT 3(iii)
DATED 1999
----------------------------
(1) IAN STUART REAY
JAYNE ELIZABETH HOLMES
(2) EUROTELECOM CORPORATION LIMITED
____________________
SHARE SALE AGREEMENT
____________________
<PAGE>
HARTLEY LINFOOT & WHITLAM
SOLICITORS
3 ST PETER'S CLOSE
SHEFFIELD
S1 2EJ
<PAGE>
SHARE SALE AGREEMENT
DATE: 1999
PARTIES:
1. "The Vendors": the persons whose names and addresses are set out in
columns 1 and 2 of Schedule 1
2. "The Purchaser": EUROTELECOM CORPORATION LIMITED (CRN 3184949) whose
registered office is at Britannia House, British Fields, Ollerton Road,
Tuxford, Newark, Nottinghamshire, DN22 0PQ
1 RECITALS
1.1 The company short details of which are set out in Schedule 2 ("the
Company") is a private company limited by shares and at the date of
this Agreement has an authorised share capital of (pound)5,000 divided
into 5,000 Ordinary Shares of (pound)1 each all of which have been
issued are fully paid or credited as fully paid and are registered in
the names of the Vendors
1.2 The Vendors beneficially own the Shares in the numbers set out against
their names in the 3rd column of Schedule 1 and have the right to sell
or procure the sale of them free from all liens charges or incumbrances
1.3 The Vendors have agreed with the Purchaser to sell to it the Shares on
the terms but subject to the conditions of this agreement
OPERATIVE PROVISIONS:
2 INTERPRETATION
2.1 In this Agreement the following words and expressions have the
following meanings:
<PAGE>
"Agreed Form" means in relation to any
document the draft of that document
which is either annexed to this
Agreement or which has been
initialled by the Vendors'
Solicitors and the Purchaser's
Solicitors for the purposes of
identification
"CAA 1990" the Capital Allowances Act 1990
"Companies Act" Companies Act 1985
"the Completion Date" means the date of actual completion
of the matters provided for in
clause 5 and "Completion" shall be
construed accordingly
"the Computer System" means any computer systems products
or software or any equipment and
systems incorporating such computer
systems products or software used
by the Company
"Consideration Shares" means 200,000 restricted shares of
Euro Telecom Communications Inc to
be allotted and issued credited as
fully paid to the Vendors as
consideration for the Shares.
"Deed of Covenant" a deed in the form set out in
Schedule 4
"Disclosure Letter" the disclosure letter (with the
attachments referred to in it) of
the same date as this Agreement from
the Warrantor to the Purchaser
"Employees" means the Warrantor, Mark
Weatherill, Emma Duncan and Jennifer
Benson
"FA" Finance Act
"FRS" a Financial Reporting Standard
issued by The Accounting Standards
Board Limited or an SSAP
"ICTA" Income and Corporation Taxes Act
1988
<PAGE>
"Intellectual Property" means patents, trade marks,
registered designs, applications for
any of the foregoing, copyright,
design rights and analogous rights,
trade and business names, rights in
confidential information howsoever
arising and any right or interest in
any of the foregoing;
"Know-How" means inventions, discoveries,
improvements, processes, formulae,
techniques, designs, specifications,
drawings, technical information,
methods, test reports, component
lists, manuals, instructions,
catalogues and information relating
to customers and suppliers, in so
far as any of the foregoing is
confidential and relates to the
business of the Company and whether
or not it is written or unwritten;
"Last Accounts" the audited balance sheet as at the
Last Accounts Date and the audited
profit and loss account for the year
ended on the Last Accounts Date of
the Company and the directors'
report and notes "Last Accounts
Date" 31st March 1998 (being the
date to which the Last Accounts have
been prepared)
"Loan Agreement" means a loan agreement between the
Company and the Warrantor in the
Agreed Form
"the Property" means the leasehold property short
particulars of which are contained
in Schedule 3
"the Purchaser's Hartley Linfoot and Whitlam of 3 St
Solicitors" Peter's Close Sheffield S1 2EJ
"Service Agreements" means the service and employment
agreements in Agreed Form between
the Company (1) and the Employees
(2)
"the Shares" the 5,000 Ordinary Shares of
(pound)1 each in the share capital
of the Company comprising the whole
of the issued and allotted share
capital of the Company
<PAGE>
"SSAP" any Statement of Standard Accounting
Practice
"Taxation" all forms of taxation duties imposts
and levies whatsoever and wherever
or whenever imposed
"TCGA" the Taxation of Chargeable Gains Act
1992
"VATA" the Value Added Tax Act 1994
"the Vendors' Solicitors" means Richmonds of Richmond House,
White Rose Way, Doncaster DN4 5JH
"Warranties" the warranties and representations
by the Warrantor contained in clause
6 and Schedules 5 and 6
"Warrantor" means Ian Stuart Reay of 9 Bankside,
Ordsall, Retford, DN22 7UW
2.2 All references in this Agreement to a statutory provision shall be
construed as including references to:
2.2.1 any statutory modification consolidation or re-enactment
(whether before or after the date of this Agreement) for the
time being in force; and
2.2.2 all statutory instruments or orders made pursuant to a
statutory provision; and
2.2.3 any statutory provisions of which a statutory provision is a
consolidation re-enactment or modification
2.3 Any reference in this Agreement to the "Vendors" includes their
respective personal representatives
2.4 Clause headings in this Agreement are for ease of reference only and do
not affect the construction of any provision
<PAGE>
2.5 Expressions in the singular shall include the plural and vice versa and
to any gender includes the other genders and vice versa and references
to persons shall include corporations and vice versa
2.6 References to recitals clauses and schedules are references to recitals
and clauses of and schedules to this Agreement
2.7 The Schedules form part of this Agreement
2.8 The expression "the Purchaser" shall include its nominees, successors
in title and permitted assigns.
3. SALE AND PURCHASE OF SHARES
3.1 Subject to the terms of this Agreement:
3.1.1 each of the Vendors shall sell with full title guarantee and
3.1.2 the Purchaser (relying on the representations warranties
undertakings and indemnities by the Vendors in this Agreement)
shall purchase
the Shares free from all claims and encumbrances and with all attached
or accrued rights as at the Completion Date for the consideration
detailed in clause 4
3.2 Each of the Vendors waives any rights of pre-emption conferred on them
by the articles of association of the Company or otherwise over those
of the Shares agreed to be sold by the other Vendors
3.3 The Purchaser shall not be obliged to complete the purchase of any of
the Shares unless the purchase of all of the Shares is completed
simultaneously
4. PURCHASE CONSIDERATION
4.1 The purchase consideration for the Shares shall be satisfied by the
allotment to the Vendors of the Consideration Shares and by the payment
by the Purchaser to the Vendors of the sums of:
<PAGE>
4.1.1 $96,000 on the Completion date
4.1.2 $48,000 on October 1999 and
4.1.3 (pound)48,000 on April 2000
all such sums being paid by bankers draft or telegraphic transfer to
the Vendor's Solicitors or by such other means as agreed by the
parties, and apportioned between the Vendors in the proportions set
opposite their names in column 4 of Schedule 1
5. COMPLETION
5.1 Completion of the purchase of the Shares shall take place at the
offices of the Vendors' Solicitors immediately after the signing of
this Agreement
5.2 The Vendors shall deliver to the Purchaser:
5.2.1 duly completed and signed transfers in favour of the Purchaser
or as it may direct of the Shares together with the relative
share certificates and such waivers consents or other
documents as may be required to pass good title in the Shares
to the Purchaser
5.2.2 the undated draft lease to the Property to be made between
Dasco Overseas Engineering Limited (1) and the Company (2)
("the Lease")
5.2.3 the Deed of Covenant duly executed by the Warrantor
5.2.4 the resignation of Jayne Elizabeth Holmes as secretary of the
Company with a written acknowledgement (which shall be
executed as a deed in the Agreed Form) that she has no claim
whatever against the Company whether in respect of
compensation for loss of office damages pensions loans or
otherwise
5.2.5 a written acknowledgement executed as a deed in the Agreed
Form from the Warrantor who is to continue as a director after
the date of Completion that he has no claim whatever against
the Company other than in respect of his directors loan
account
<PAGE>
5.2.6 certificates from the Company's bankers certifying the current
account balance of the Company at the close of business on the
last business day preceding Completion
5.2.7 appropriate forms to amend the mandates given by the Company
to its bankers
5.2.8 appropriate certified minutes of the Company authorising
execution of this Agreement, and any other ancillary
documentation in the Agreed Form
5.2.9 the Disclosure Letter
5.2.10 duly executed duplicates of the Service Agreements
5.2.11 the Certificate of Incorporation, any certificate(s) of
incorporation on change of name, the common seal and the
statutory books and registers (all entered up to date) of the
Company
5.3 The Vendors will procure that a board meeting of the Company shall be
held at which:
5.3.1 such persons as the Purchaser may nominate shall be appointed
as directors and the secretary of the Company
5.3.2 there shall be submitted and accepted the resignation of the
secretary referred to in clause 5.2.4
5.3.3 the transfers of the Shares (subject to stamping) shall be
approved for registration
5.3.4 the existing bank mandates given by the Company shall be
cancelled
5.3.5 the registered office of the Company shall be changed as the
Purchaser may direct
5.4 The Purchaser shall:
5.4.1 procure that the Consideration Shares are transferred to the
Vendors
<PAGE>
5.4.2 deliver to the Vendors a Memorandum of Deposit of the Shares
in the Agreed Form as security for the payments due under
Clause 4
6. WARRANTIES BY THE WARRANTOR
6.1 The Warrantor warrants to the Purchaser that save as stated in the
Disclosure Letter the Warranties set out in Schedules 5 and 6 are true
and accurate in all respects and that the contents of the Disclosure
Letter and of all accompanying documents are true and accurate in all
respects and fully clearly and accurately disclose every matter to
which they relate
6.2 Each of the Warranties is without prejudice to any other warranty or
undertaking and except where expressly stated no clause contained in
this Agreement governs or limits the extent or application of any other
clause
6.3 The rights and remedies of the Purchaser in respect of any breach of
the Warranties shall not be affected by Completion or by any failure to
exercise or delay in exercising any right or remedy
6.4 The Warranties shall be deemed to be given as at the date of this
Agreement and to be repeated immediately before Completion and to
relate to the facts then existing
6.5 This clause and the Warranties and the Deed of Covenant are subject to
the provisions of Schedule 7 which shall apply to limit and regulate
the rights of the parties under this Agreement and the Deed of
Covenant. In the case of any conflict or inconsistency the provisions
of Schedule 7 shall prevail
6.6 Any of the Warranties which are qualified by the expression "to the
best of the knowledge information and belief of the Warrantor" or "so
far as the Warrantor is aware" or any similar expression shall be
deemed to qualify the Warranty to relate only to matters of which the
Warrantor had actual personal knowledge and does not extend to any
matters which he may be deemed to know or to imply that the Warrantor
has made any special or specific enquiries into the subject matter of
the Warranties
7. NON-COMPETITION
7.1 The Warrantor covenants with the Purchaser that (save with the consent
in writing of the Purchaser):
<PAGE>
7.1.1 he will not use or procure or cause or (so far as the
Warrantor is able) permit the use of any name or names
identical or similar to or including the words "Easy I P" or
any colourable imitation thereof in connection with any
activity whatsoever;
7.1.2 he will not during the period of 1 year from Completion either
solely or jointly with or as manager agent or consultant of
any other person or body (corporate or unincorporated) carry
on or be engaged or concerned or interested directly or
indirectly within the United Kingdom in the business carried
on by the Company as carried on at Completion
7.1.3 he will in respect of goods or services of the nature
presently provided in the business carried on at the date of
this Agreement by the Company for a period of 1 year from
Completion solicit (either on its or their own account or as
the employee or manager agent consultant to employee of any
other person) the custom of any person who is or was within a
period of 12 months prior to Completion a customer of the
Company in relation to its respective businesses or have any
dealings with any such person
7.1.4 he will keep confidential and not disclose or make use of any
financial or other confidential information or Know-How
relating to the said business including but not limited to any
such confidential information about current or future affairs
or plans or about customers or other persons with whom the
Warrantor or the Company has or has had dealings or are or
have been concerned in relation to the business of the Company
7.1.5 he will not during the period of 1 year from Completion induce
or seek to induce away from the Company with a view to
engaging them in any competing business any current manager
employee consultant or representative employed or engaged by
it or them and for the purpose of this clause "current
director manager employee consultant or representative" shall
mean any person who is currently employed by the Company at
the time of Completion including all such persons who have
given notice to terminate their employment (whether or not in
accordance with the terms of their employment) and all such
persons who should have given such notice but failed to do so
before leaving their employment
7.1.6 he will not during the period of 1 year from Completion own
beneficially or otherwise or be interested in the share
capital of any company engaged in providing services of the
nature presently provided by the business of the Company
(other than the Purchaser or Eurotelecom Communications Inc.)
<PAGE>
PROVIDED that nothing contained in this clause shall prevent the
Warrantor from at any time holding for investment purposes only any
class of securities for the time being listed or dealt in on any stock
exchange where its interest does not exceed 1% of all the issued
securities of that class
7.2 The Warrantor confirms that the covenants contained in clause 7.1 are
no greater than is reasonable or necessary for the protection of the
interests of the Purchaser and further that such covenants shall be
deemed to be entire separate severable and separately enforceable in
the widest sense from the other parts of clause 7.1 so that each
covenant shall be deemed to be a separate covenant notwithstanding the
fact that it appears in the same clause sub-clause or sentence as any
other covenant or is imposed by the introduction of a word or phrase
conjunctively with or disjunctively from or alternatively to other
words or phrases
8 NOTICES
8.1 Any notice to be given for the purposes of this Agreement shall either
be delivered personally or sent by first class recorded delivery post
Datapost or telefax (facsimile transfer)
8.2 The address for service of the Vendors shall be the address set out in
this Agreement or such other address as the Vendors may from time to
time notify for the purpose of this Clause
8.3 The address for service of the Company and the Purchaser shall be their
respective registered offices for the time being
8.4 A notice shall be deemed to have been served as follows:
8.4.1 if personally delivered at the time of delivery
8.4.2 if sent by recorded delivery post at the expiration of 48
hours after the same was delivered into the custody of the
postal authorities
8.4.3 if sent by Datapost at the expiration of 24 hours after the
same was delivered into the custody of the postal authorities
and
<PAGE>
8.4.4 if sent by telefax (facsimile transfer) at the expiration of
12 hours after despatch
8.5 In proving such service it shall be sufficient to prove that personal
delivery was made or that the envelope containing such notice was
properly addressed and delivered into the custody of the postal
authorities as a pre-paid recorded delivery letter or Datapost letter
or that the telefax (facsimile transfer) was properly addressed and
despatched
9 GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in all respects in
accordance with English law and the parties irrevocably agree that the
Courts of England and Wales shall have exclusive jurisdiction in
respect of any dispute suit action arbitration or proceedings which may
arise out of or in connection with this agreement.
10 PUBLICITY
No announcement or other disclosure concerning the sale and purchase of
the Shares or any ancillary matter shall be made before or after
Completion by the Warrantor (whether to the press employees customers
or suppliers) save in the Agreed Form between the parties or otherwise
as required by law or by the Council of the Stock Exchange
11 GENERAL
11.1 None of the rights or obligations under or pursuant to this Agreement
may be assigned or transferred to any other person without the written
consent of all the parties
11.2 This Agreement and the Schedules and other documents referred to herein
contains the whole agreement between the parties relating to the
transactions provided for in this Agreement and supersede all previous
agreements (if any) between such parties in respect of such matters
each of the parties to this Agreement acknowledges that in agreeing to
enter into this Agreement it has not relied on any representations or
warranties except for those contained in this Agreement
11.4 No failure or delay by the Warrantor or Purchaser in exercising any
claim remedy right power or privilege under this agreement shall
operate as a waiver nor shall any single or partial exercise of any
claim remedy right power or privilege preclude any further exercise
thereof or exercise of any other claim right power or privilege
<PAGE>
IN WITNESS whereof this Agreement has been duly executed as follows:-
<PAGE>
<TABLE>
SCHEDULE 1
VENDORS' HOLDINGS AND CONSIDERATION
<CAPTION>
COLUMN 1 COLUMN 2 COLUMN 3 COLUMN 4 COLUMN 5
HOLDING OF NUMBER OF
NAME ADDRESS SHARES CONSIDERATION SHARES CASH CONSIDERATION
<S> <C> <C> <C> <C>
Ian Stuart Reay 9 Bank Side 2750 110,000 $105,600
Ordsall
Retford
Nottinghamshire
DN22 7UW
Jayne Elizabeth 9 Bank Side 2250 90,000 $86,400
Holmes Ordsall
Retford
Nottinghamshire
DN22 7UW
</TABLE>
<PAGE>
SCHEDULE 2
THE COMPANY
Name: Easy I P Limited
Registered Number: 3069875
Date of Incorporation: 19 June 1995
Registered Office: Britannia House
British Fields
Ollerton Road
Newark
NG22 0FQ
Directors: Ian Stuart Reay
Secretary: Jayne Elizabeth Holmes
Auditors: Bland & Co
70 Balby Road
Balby
Doncaster
DN4 0JL
Accounting Reference Date: 31 March
Share capital: authorised: 5000
issued: 5000
Bankers:
<PAGE>
SCHEDULE 3
THE PROPERTY
LEASEHOLD
---------
Office Premises at Ollerton Road, Tuxford, Newark, Nottinghamshire described
in the Lease.
<PAGE>
SCHEDULE 4
DEED OF COVENANT
DATED: 1999
- ------
PARTIES:
- --------
1. "COVENANTOR": Ian Stuart Reay of 9 Bankside, Ordsall, Retford, DN22 7UW
2. "PURCHASER": Eurotelecom Corporation Limited CRN: 3184949 whose
registered office is at Britannia House, British Fields, Ollerton Road,
Tuxford, Newark, NG22 0PQ
RECITAL
- -------
This deed is entered into in accordance with an agreement ("the Agreement") made
between the Covenantor (1), Jayne Elizabeth Holmes (2) and the Purchaser (3)
relating to the sale of the whole of the ordinary share capital of Easy I P
Limited ("the Company")
OPERATIVE PROVISIONS:
- ---------------------
1. DEFINITIONS
In this deed:-
<PAGE>
1.1 the same meaning is given to words and expressions defined in
the Agreement except where otherwise provided or expressly
defined below;
1.2 "TAXATION" means all forms of taxation, duties and levies
whatsoever and whenever imposed, whether by governmental or
other authority and whether of the United Kingdom or
elsewhere, and (without limitation) includes:-
1.2.1 income tax, corporation tax, capital gains tax,
inheritance tax, stamp duty, rates, value added tax,
customs and other import duties and national
insurance contributions and any payment whatsoever
which the Company may be or become bound to make to
any person as a result of any enactment relating to
taxation and any other taxes, duties or levies
supplementing or replacing any of the above;
1.2.2 all costs, charges, interest, fines, penalties and
expenses incidental, or relating, to any Taxation;
1.3 "RELIEF" includes any relief, allowance, exemption, set-off or
deduction in computing, or against, profits, income or gains
of any description or from any source, or credit against
Taxation;
1.4 "LIABILITY TO TAXATION" means any liability of the Company to
make a payment in respect of Taxation but does not include:-
1.4.1 the loss, counteracting or clawing back of any Relief
which would otherwise have been available to the
Company;
1.4.2 the nullifying, cancellation or set-off of a right to
repayment of Taxation which would otherwise have been
available to the Company;
Provided however that, if the loss, counteracting or clawing
back of any Relief referred to in clause 1.4.1, or the
nullifying, cancellation or set-off of a right to repayment as
referred to in clause 1.4.2 results in the Company suffering a
liability to make a payment in respect of Taxation, then the
liability shall itself be a Liability to Taxation for the
purposes of this deed;
1.5 "CLAIM FOR TAXATION" includes any notice, demand, assessment,
letter or other document issued, or action taken, by or on
behalf of the Inland Revenue or Customs and Excise authorities
or any other statutory or governmental authority or body
whatsoever in any part of the world, whereby it appears that
the Company is, or may be subject to a Liability to Taxation;
<PAGE>
1.6 "FINAL DETERMINATION" means, in relation to a Claim for
Taxation where there is an appeal against that assessment:-
1.6.1 an Agreement under TMA s54 or any legislative
provision corresponding to that section; or
1.6.2 a decision of a court or tribunal from which either
no appeal lies or in respect of which no appeal is
made within the prescribed time limit.
2. COVENANTS
2.1 Subject as provided below, the Covenantor covenants with the
Purchaser to pay to the Purchaser an amount equal to:-
2.1.1 any Liability to Taxation;
2.1.2 any settlement of a Claim for Taxation; and
2.1.3 the costs incurred by the Company in relation to any
demands, actions, proceedings and claims in respect
of any such Liability to Taxation or Claim for
Taxation.
2.2 The covenant in clause 2.1 shall apply only where the
Liability to Taxation or the Claim for Taxation:-
2.2.1 results from or is made wholly or partly in respect
of or in consequence of any acts, omissions or
transactions whatsoever of the Company, or of the
Covenantor, occurring or entered into on or before
the date of this deed; or
2.2.2 results from, or is calculated by reference to, any
actual or deemed income, profits or gains earned,
received or accrued, or deemed to have been earned,
received or accrued on or before that date; or
<PAGE>
2.2.3 results from, or is calculated by reference to, any
dividend or distribution paid or made, or deemed to
have been paid or made, before that date.
2.3 If the Purchaser is satisfied that any payment due from the
Covenantor will be, or has been, subject to a Liability to
Taxation, it shall be entitled to receive from the Covenantor
on demand such amount as will ensure that the net receipt,
after Taxation, to the Purchaser in respect of the payment is
the same as it would have been were the payment not subject to
Taxation in the hands of the Purchaser.
3. EXCLUSIONS
3.1 The covenant in clause 2.1 shall not apply to any Liability to
Taxation or Claim for Taxation:-
3.1.1 to the extent that an appropriate provision or
reserve was made in the Last Accounts or any earlier
accounts of the Company;
3.1.2 for which the Company is, or may become, liable
wholly or primarily as a result of transactions in
the ordinary course of its business (but not
including the sale of any fixed assets or land held
for development) after the date of the Last Accounts
3.1.3 to the extent that the Liability or Claim arises as a
result only of the appropriate provision or reserve
in the Last Accounts being insufficient by reason of
any increase in rates of Taxation made after the date
of the Agreement.
3.2 This Deed is subject to the provisions of Schedule 7 of the
Agreement which shall apply to limit and regulate the rights
of the parties under this Deed
4. MITIGATION
4.1 When the Covenantor has satisfied an obligation under this
deed to pay the Purchaser in respect of a Liability to
Taxation and the Company has (whether by operation of law,
contract or otherwise) a right of reimbursement (including by
way of indemnity) against any other person or persons in
respect of the Liability to Taxation, the Purchaser shall (so
far as it reasonably can) procure that the Company shall take
all reasonable steps to enforce the right, and shall give
credit to the Covenantor for any sum recovered by the Company
(net of Taxation) by reason of the right, or shall so far as
possible, at the request and expense of the Covenantor,
procure the Company to assign the right to the Covenantor, in
such form as they shall reasonable require.
<PAGE>
5. CONDUCT OF CLAIMS
5.1 The Purchaser shall notify the Covenantor in writing of any
Claim for Taxation which comes to its notice, whereby it
appears that the Covenantor is, or may become, liable to pay
the Purchaser under this deed. Where a time limit for appeal
applies to the Claim, the notification shall be given as soon
as reasonably possible after the date on which the Claim comes
to the notice of the Purchaser but, where no time limit
applies or the period to which the limit relates has not
commenced, the notification shall be given within fifty six
days of that date.
5.2 The Purchaser shall give such information and assistance in
connection with the affairs of the Company as the Covenantor
may reasonably request in relation to any Claim for Taxation.
5.3 Subject to clause 5.4 the Purchaser shall (so far as it
reasonably can) procure the Company, at the expense of the
Covenantor to take such action to contest any Claim for
Taxation to which this deed applies as the Covenantor may
reasonably require.
5.4 The Covenantor shall at the request of the Company, provide,
to the reasonable satisfaction of the Company, security or
indemnities, or both, in respect of all the costs and expenses
of disputing any Claim for Taxation to which this deed
applies.
6. DATES FOR AND QUANTUM OF PAYMENTS
6.1 This clause shall apply solely for determining the date on
which any payments or repayment shall be made by or to the
Covenantor pursuant to this deed and (where expressly
provided) the amounts of the payments or repayments.
6.2 Subject to the provisions of Schedule 7 of the Agreement the
Covenantor shall make payment to the Purchaser to the extent
that, and on the date on which, the Company discharges or is
deemed to discharge a Liability to Taxation in respect of
which the Purchaser is entitled to be paid under this deed.
<PAGE>
6.3 The Purchaser shall make a repayment to the Covenantor to the
extent that, and on the date on which, the Company receives
any repayment of any amount paid in respect of any Liability
to Taxation pursuant to clause 6.2. Any repayment to the
Covenantor pursuant to this clause 6.3 shall not prejudice the
rights of the Purchaser against the Covenantor in the event
that a further Liability to Taxation is imposed upon the
Company, whether in respect of matters to which the repayment
relate or otherwise.
6.4 For the purposes of clause 6.2, the Company shall be deemed to
discharge a Liability to Taxation:-
6.4.1 on the date on which the Company pays any Liability
to Taxation; or
6.4.2 on the date on which any Liability to Taxation would
have fallen due but for Reliefs, rights of repayment,
or other rights or claims of a similar nature to
which clause 4.1. applies.
6.5 For the purpose of clause 6.3, the Company shall be deemed to
receive a repayment:-
6.5.1 on the date on which the Company received a repayment
of Taxation to which clause 6.3 applies;
6.5.2 if and when the Company would have received a
repayment but for a Liability to Taxation in respect
of which the Purchaser is not entitled to be paid
under this deed;
6.5.3 if and when the Company would have received a
repayment had the Liability to Taxation been
discharged by a payment of Taxation; or
6.5.4 if and when the Company is able to obtain the benefit
of a reduction in its Liability to Taxation as a
result of the right to repayment.
6.6 Subject to the provisions of Schedule 7 of the Agreement upon
Final Determination of a relevant Claim for Taxation the
Covenantor shall promptly pay to the Purchaser such amount, or
further amount in addition to any sums already paid under this
deed, as is required to cover the full liability of the
Covenantor under this deed.
<PAGE>
7. GENERAL
7.1 This deed shall be binding on the Covenantor and, where
relevant, his successors.
7.2 The benefit of this deed may be assigned to any person to whom
the Shares are transferred which is within the same group of
the Purchaser.
7.3 The provisions of the Agreement relating to notices shall
apply to any notice to be given under, or in connection with,
this deed.
7.4 The construction, validity and performance of this deed shall
be governed by the laws of England.
DELIVERED as a deed on the date of this document
<PAGE>
SCHEDULE 5
WARRANTIES
ACCURACY OF INFORMATION
- -----------------------
1.1 So far as the Warrantor is aware all information relating to the
business, activities, affairs, assets or liabilities of the Company
provided to the Purchaser or any of its employees, officers, agents or
advisers by the Warrantor in the course of the negotiations leading to
the execution of this Agreement was when given and is now true and
accurate in all material respects
1.2 So far as the Warrantor is aware there is no information relating to
the Company which renders any of the information referred to in
paragraph 1.1 above misleading
1.3 The information contained in Schedules 1,2 and 3 and in the Disclosure
Letter is true and accurate in all respects and is not misleading
1.4 There are no facts or circumstances known to the Warrantor and not
disclosed to the Purchaser in relation to the assets, business or
financial condition of the Company which in the opinion of the
Warrantor if disclosed, might reasonably be expected to affect the
decision of the Purchaser to enter into this Agreement
CONSTITUTION OF THE COMPANY
- ---------------------------
2.1 The Warrantor has no notice that the statutory books and minute books
of the Company have not been properly kept or that they contain
inaccurate and incomplete records of the matters which should be dealt
with in those books and no notice or allegation that any of them is
incorrect or should be rectified has been received by the Warrantor
2.2 The number of Shares set opposite the respective names of the Vendors
in column 3 of Schedule 1 are beneficially owned by him, are free from
all liens, charges and encumbrances or interests in favour of or claims
made by or which could be made by any other person, are fully paid and
together represent the entire allotted and issued share capital of the
Company
<PAGE>
2.3 The copy of the memorandum and articles of association of the Company
annexed to the Disclosure Letter is true and complete and has embodied
in it or annexed to it a copy of every such resolution or Agreement as
is referred to in section 380(1) of the Companies Act and sets out in
full the rights and restrictions attaching to the share capital of the
Company
2.4 So far as the Warrantor is aware no person has the right (whether
exercisable now or in the future and whether contingent or not) to call
for the issue or transfer of any share or loan capital of the Company
under any option or other Agreement or otherwise howsoever
2.5 The Warrantor is not aware of any current notice that the Company has
not properly and punctually made all returns which it is required to
make to the Registrar of Companies, to any other governmental or
regulatory body and to any local authority
2.6 The Warrantor has no notice that due compliance has not been made with
all the provisions of the Companies Act in connection with the
formation of the Company, the allotment, issue, purchase and redemption
of shares, debentures and other securities in the Company, the
reduction of the authorised and issued share capital of the Company,
any amendment to the memorandum or articles of association of the
Company and the passing of resolutions and the payment of dividends by
the Company
2.7 So far as the Warrantor is aware the Company has at all times conducted
its business intra vires, has not entered into any transaction ultra
vires the Company or outside of the authority or powers of the
directors of the Company and is not in breach of the provisions of the
Articles
CAPACITY AND INTERESTS
- ----------------------
3.1 The Vendors have the requisite power and authority to enter into and
perform this Agreement and the Warrantor has the requisite power and
authority to enter into and perform the Deed of Covenant
3.2 The execution and delivery of and the performance by the Vendors and
the Warrantor of their respective obligations under this Agreement and
the Deed of Covenant will not so far as the Warrantor is aware:-
3.2.1 result in a breach of, or constitute a default under, any
Agreement, instrument or arrangement to which the Warrantor or
the Company is a party or by which the Warrantor or the
Company is bound; or
<PAGE>
3.2.2 result in a breach of any order, judgment or decree of any
court or governmental agency to which the Warrantor or the
Company is a party or by which the Warrantor or the Company is
bound; or
3.2.3 result in a breach of the rules or requirements of any
professional body or trade association of which the Warrantor
is a member or by which the Warrantor is bound
3.3 With the exception of the Warrantor's loan account no indebtedness
(actual or contingent) is outstanding from and no contract or
arrangement exists between the Company and the Warrantor or any
director of the Company or any person connected with any the Warrantor
or director
3.4 Except as disclosed neither the Warrantor or person connected with the
Warrantor has any interest, direct or indirect, in any business which
competes or has competed or is in the future likely to compete with any
business now carried on by the Company nor does he intend to acquire
any such interest
3.5 Except in relation to his loan account the Warrantor is not entitled to
any claim of any nature against the Company, or any of its officers,
employees, principal customers or suppliers and the Warrantor has not
assigned to any third party the benefit of any such claim to which he
was previously entitled
ACCOUNTS
- --------
4.1 So far as the Warrantor is aware the last Accounts:
4.1.1 have been prepared in accordance with generally accepted
accounting practice in the United Kingdom, comply with the
requirements of the Companies Act and of all relevant FRS's
4.1.2 are complete and accurate in all respects, properly show all
assets and liabilities (whether actual or contingent) of the
Company as at the Last Accounts Date and
4.1.3 show a true and fair view of the state of affairs and the
financial position of the Company as at and for the financial
year ended on the Last Accounts Date and of the profits or
losses of the Company for the financial year ended on the Last
Accounts Date
<PAGE>
4.2 Without prejudice to the generality of the foregoing the Warrantor has
no notice that in the Last Accounts:-
4.2.1 depreciation of the fixed assets of the Company has not been
made at a rate sufficient to write down the value of such
assets to nil not later than the end of their useful working
lives and no fixed asset has attributed to it a value
exceeding its current market value at the Last Accounts Date;
4.2.2 except as disclosed the value attributed to stock and work-in-
progress does not exceed the lower of cost and net realisable
value at the Last Accounts Date. For the purposes of
ascertaining the net realisable value of stock at the Last
Accounts Date, unsaleable, defective, redundant and excessive
stock and stock which had been returned or rejected by a
customer or did not comply with the specification relating
thereto and all stock which had at the Last Accounts Date been
held for three months or longer has been written down to nil;
4.2.3 no proper provision or reserve (as appropriate) has been made
for all bad and doubtful debts, all liabilities and
obligations (actual, contingent or disputed) and all capital
commitments;
4.2.4 no provision or reserve (as appropriate) has been made for all
Taxation liable to be assessed on the Company or for which the
Company is accountable (whether primarily or otherwise) in
respect of income, profits or gains earned, accrued or
received on or before the Last Accounts Date or deemed to have
been or treated as earned, accrued or received for Taxation
purposes and/or for any event on or before the Last Accounts
Date, including distributions made down to the Last Accounts
Date or provided for in the Last Accounts; and
4.2.5 no full and proper provision or reserve (as appropriate) in
accordance with generally accepted accounting practice in the
United Kingdom and all relevant FRS's has been made in the
Last Accounts for all deferred Taxation of the Company
4.3 So far as the Warrantor is aware the bases and policies of accounting
of the Company adopted for the purpose of preparing the Last Accounts
are, subject to paragraph 4.1 above, the same as those adopted for the
purpose of preparing the audited accounts of the Company for the three
preceding accounting periods and none of the audited accounts of the
Company for the last five accounting periods were qualified by the
auditors
<PAGE>
4.4 The Warrantor has no notice that the books of account and other
accounting records of the Company have been kept on anything other than
a consistent basis, are in its possession, made up to date and contain
the information required by law and generally accepted accounting
principles
4.5 The accounting reference date of the Company is and has at all times
been that stated in Schedule 2
BUSINESS SINCE THE LAST ACCOUNTS DATE
- -------------------------------------
5.1 Since the Last Accounts Date in the opinion of the Warrantor and except
as disclosed:-
5.1.1 the Company has carried on its business in the ordinary and
usual course without any interruption in the nature, scope or
manner of its business;
5.1.2 other from for seasonal trends there has been no material
adverse change in the trading position or prospects of the
Company;
5.1.3 the Company has not acquired or agreed to acquire any asset
for a consideration which is higher than market value at the
time of acquisition and has not disposed of or agreed to
dispose of any asset for a consideration which is lower than
market value or book value, whichever is the higher, at the
time of disposal;
5.1.4 the Company has not assumed or incurred any material
liabilities (including contingent liabilities) otherwise than
in the ordinary and usual course of business;
5.1.5 except in the ordinary course of business the Company has not
assumed or incurred any liability or entered into any
commitment, involving expenditure in excess of (pound)10,000;
5.1.6 no distribution of capital or income has been declared, made
or paid in respect of any share in the capital of the Company
<PAGE>
BORROWINGS AND BANK FACILITIES
- ------------------------------
6. The Company has no overdraft facility with its bankers and has no other
loan facilities
GUARANTEES AND INDEMNITIES
- --------------------------
7. So far as the Warrantor is aware and except as indicated there is not
outstanding any guarantee, indemnity or security given by or for the
benefit of the Company
DEBTORS
- -------
8.1 Each debt now owed to the Company is not subject to any counter-claim
or set-off, except to the extent of any provision or reserve in the
Last Accounts or in any previous audited accounts of the Company or in
the subsequent management accounts of the Company and no amount
included in the Last Accounts as owing to the Company at the Last
Accounts Date has been realised for an amount less than the value at
which it was included in the Last Accounts or has been released (in
whole or in part) or so far as the Warrantor is aware is, irrecoverable
in whole or in part
8.2 The Company has not granted credit terms exceeding thirty days
CUSTOMERS AND SUPPLIERS
- -----------------------
9.1 No material customer or supplier of or to the Company has during the
last twelve months ceased or indicated an intention to cease (or to
reduce significantly the volume of) trading with the Company
9.2 The Last Accounts include full and proper provision for all costs and
charges payable by the Company as at the Last Accounts Date and no cost
or expense will arise relative to any period up to the Last Accounts
Date which is not provided for in the Last Accounts
9.3 The Company has no written Standard terms of business
OWNERSHIP AND CONDITION OF ASSETS
- ---------------------------------
10.1 Except for assets disposed of by the Company in the ordinary course of
trading and goods supplied subject to retention of title, the Company
is the owner of and has good and marketable title to all fixed assets
included in the Last Accounts and all assets which have been acquired
<PAGE>
by the Company since the Last Accounts Date, all of which assets are in
the Company's possession and under its control and subject as aforesaid
there is not now outstanding any charge, option, lien, pledge or
encumbrance (or agreement to grant any such over the whole or any part
of the undertaking, property or assets of the Company nor any right to
acquire such save for those items the subject of the hire purchase,
leasing or rental agreements referred to in the Disclosure Letter
10.2 The Warrantor has no notice that any plant and machinery (including
fixed plant and machinery), vehicles and office equipment used by the
Company in connection with its business are in other than good repair
and condition and are capable of being efficiently and properly used in
connection with the business of the Company and so far as the Warrantor
is aware none is dangerous, inefficient, obsolete or in need of renewal
or replacement
10.3 The schedule of plant and machinery a copy of which is annexed to the
Disclosure Letter sets out a complete and accurate record of the plant
and machinery and vehicles owned or used by the Company
10.4 The Company's stock is in good and marketable condition, is capable of
being sold by the Company in the ordinary course of its business
without any rebate, discount or allowances (other than normal rebates,
discounts or allowances granted to customers)
10.5 There are no maintenance contracts in force and effect in respect of
all the Company's assets
INSURANCE
- ---------
11.1 Except as shown in the Disclosure Letter all the assets of the Company
which are of an insurable nature are at the date of this Agreement
insured to their full market value against fire and other risks
normally insured against by companies carrying on similar businesses or
owning property of a similar nature and the Company is now adequately
covered against accident, third party liability, injury, damage and
other risks normally covered by insurance by such companies. In respect
of all such insurances:-
11.1.1 all premiums have been duly paid to date;
11.1.2 all the policies are in force and have not been avoided;
<PAGE>
11.1.3 there are no special or unusual terms or restrictions and the
premiums payable are not in excess of the normal rates; and
11.1.4 So far as the Warrantor is aware no claim is outstanding and
the Warrantor has no notice of any circumstances that exist
which may give rise to any claim
GRANTS
- ------
12. So far as the Warrantor is aware the Company has not applied for any
investment grant, employment subsidy or other similar payment and no
such grant, subsidy or payment paid or due to be paid to the Company is
liable to be refunded or withheld in whole or in part in consequence of
any action or omission of the Company
COMPLIANCE WITH LAWS
- --------------------
13. Except as disclosed the Warrantor has no notice that the Company or its
officers or employees in the course of their respective duties to the
Company have done or omitted to do anything in breach of the law of the
United Kingdom or of any foreign country in which the Company conducts
business
LICENCES AND CONSENTS
- ---------------------
14. The Warrantor has no notice that any licences, consents, approvals,
permissions, permits and authorities (public and private) necessary or
desirable for the carrying on of the business of the Company
effectively in the places and in the manner in which such business is
now carried on have not been obtained and all such licences, consents,
approvals, permissions, permits and authorities are valid and
subsisting and, so far as the Warrantor is aware there is no reason why
and no facts or circumstances which would be likely to give rise to any
reason why any of them should be suspended, cancelled or revoked or not
renewed
<PAGE>
LITIGATION
- ----------
15 So far as the Warrantor is aware and except as disclosed:-
15.1 The Company is not engaged in any litigation or arbitration proceedings
and no litigation or arbitration proceedings are pending or threatened
by or against the Company, nor are there any facts or circumstances
known to the Warrantor which may give rise to any litigation or
arbitration proceedings being commenced by or against the Company
15.2 Neither the Company nor any of its officers is being prosecuted for any
criminal offence, there are no such prosecutions pending or threatened
and there are no facts or circumstances which may give rise to any such
prosecution
15.3 No litigation or arbitration proceedings commenced by or against the
Company or which have been threatened to be so commenced have been
settled or compromised during the period of five years ending on the
date of this Agreement in respect of amounts exceeding in aggregate
(pound)1,000
15.4 The Company is not subject to any order or judgment given by any court,
governmental agency or other regulatory body and is not a party to any
undertaking or assurance given to any court, governmental agency or
other regulatory body which is still in force nor are there any facts
or circumstances known to the Warrantor which may result in the Company
becoming subject to any such order or judgment or being required to be
a party to any such undertaking or assurance
15.5 There have been no investigations of, or disciplinary proceedings made
against, the Company or any of its officers or employees, no such
investigations or disciplinary proceedings are currently pending or
threatened and there are no facts or circumstances known to the
Warrantor which may give rise to such investigations or proceedings
COMPETITION LAW MATTERS
- -----------------------
16 So far as the Warrantor is aware and except as disclosed:
16.1 the Company is not and has not been a party to any agreement as defined
in the Restrictive Trade Practices Act 1976 ("the RTPA") which has been
furnished to the Director General of Fair Trading as provided for in
the RTPA or which is or was subject to registration pursuant to the
RTPA and which has not been so furnished
<PAGE>
16.2 The Company has not been and is not a party to any agreement or
concerted practice which infringes Article 85 of the EEC Treaty and is
not in contravention of any regulation or other enactment made under
Article 87 of the EEC Treaty
16.3 No action, practice or course of conduct now or previously done or
carried on by the Company and no Agreement to which the Company is or
was a party or any part of any such agreement:-
16.3.1 is or has been the subject of any investigation or reference
under the Competition Act 1980; or
16.3.2 is or was unlawful by virtue of the Resale Prices Act 1976; or
16.3.3 is or was an abuse of a dominant position under Article 86 of
the EEC Treaty
16.4 The Warrantor has not at any time received, nor has the Warrantor any
grounds for believing that the Company has received or that the
Warrantor or the Company may receive, any process, notice,
communication or any formal or informal request for information with
reference to any actual or proposed agreement, arrangement, concerted
practice, trading policy or practice, course of conduct or activity of
the Company from the Director General of Fair Trading, the Monopolies
and Mergers Commission, the Secretary of State for Trade and Industry,
the commission of the European Communities, the Restrictive Practices
Court or from any other person or body (wherever situated) whose task
it is to investigate, report or decide upon matters relating to
monopolies, mergers or anti-competitive agreements or practices nor has
anything done or to be done or proposed to be done by the Company been
the subject of any report, decision, order, judgment or injunction
made, taken or obtained by any of such persons or bodies, nor has the
Company given or been the subject of any undertakings or assurances
given (directly or indirectly) to any such persons or bodies
16.5 The Company has not been party to any Agreement, practice or
arrangement which, in whole or in part, contravenes the provisions of
the Trade Descriptions Acts 1968 or the Consumer Credit Act 1974
TRADING AND CONTRACTUAL ARRANGEMENTS
- ------------------------------------
17 So far as the Warrantor is aware and except as disclosed:-
<PAGE>
17.1 The Company is not and never has been a party to:-
17.1.1 any partnership, joint venture, European Economic Interest
Group or consortium arrangement or agreement or any agreement
for sharing commissions or other income;
17.1.2 any agreement or arrangement which is liable to be terminated
by another party or under which rights of any person are
liable to arise or be affected as a result of any change in
the control, management or shareholders of the Company;
17.1.3 any agreement or arrangement of a loss making nature (this is
to say, now known to be likely to result in a loss on
completion of performance);
17.1.4 any agreement containing covenants limiting or excluding its
right to do business and/or to compete in any area or in any
field or with any person, firm or company;
17.1.5 any agreement or arrangement of an unusual or abnormal nature
or entered into otherwise than on an arm's length basis in the
ordinary and usual course of the Company's business;
17.1.6 any agreement or arrangement which cannot readily be fulfilled
or performed by the Company in accordance with its terms
without undue or unusual expenditure or effort;
17.1.7 any agreement or arrangement suffering from any invalidity or
in respect of which there are grounds for determination,
rescission, avoidance or repudiation by any other party; or
17.1.8 any agreement or arrangement which involves payment by
reference to fluctuations in the index of retail prices or any
other index, or in the rate of exchange for any currency
17.2 No offer, tender or the like given or made by the Company on or before
the date of this Agreement and still outstanding is capable of giving
rise to a contract merely by a unilateral act of another person
17.3 The Company has received no notice that any products manufactured sold
or supplied by it are, or were or will become in any material respect
faulty or defective or do not comply in any material respect with any
warranties or representations expressly or impliedly made by the
Company or with all applicable regulations standards and requirements
<PAGE>
17.4 The Company is not a member of any trade business or similar
association
TITLE DEEDS
- -----------
18. So far as the Warrantor is aware and except as disclosed all documents
which in any way affect the right, title or interest of the Company in
or to any of its property, undertakings or assets and all agreements to
which the Company is a party are in the possession of the Company and
are properly stamped
POWERS OF ATTORNEY
- ------------------
19. So far as the Warrantor is aware the Company has not given a power of
attorney and no person has any authority (express, implied or
ostensible) which is still outstanding or effective to enter into any
contract or commitment or to do anything on its behalf other than any
authority to employees to enter into routine trading contracts in the
normal course of their duties and to executive directors
INSOLVENCY
- ----------
20. The Warrantor has not notice that:
20.1 a receiver or administrative receiver has been appointed of the whole
or any part of the assets or undertaking of the Company
20.2 an administration order has been made in relation to the Company or a
petition for such an order has been presented
20.3 a proposal for a voluntary arrangement between the Company and its
creditors (or any class of them) has been made to or is in the
contemplation of the Company
20.4 a petition has been presented, or order has been made or resolution has
been passed for the winding-up of the Company
<PAGE>
20.5 the Company has stopped payment to its creditors or is it insolvent or
unable to pay its debts as and when they fall due
20.6 an unsatisfied judgment is outstanding against the Company
OFFICERS AND EMPLOYEES
- ----------------------
21.1 Those persons named as such in Schedule 2 are the only directors and
the secretary of the Company and the particulars set out in Schedule 2
are true and complete
21.2 No person is or (so far as the Warrantor is aware) has been a shadow
director of the Company
21.3 The particulars shown in the schedule of employees annexed to the
Disclosure Letter list all the employees of the Company, are true and
accurate and show in relation to each employee and officer:-
21.3.1 all cash remuneration payable (including accrued holiday pay);
21.3.2 details of all benefits receivable otherwise than in cash; and
21.3.3 details of any profit sharing, incentive and bonus
arrangements in which he participates (whether or not such
arrangements are legally binding on the Company)
21.4 Except as disclosed no change in the remuneration, benefits and
arrangements shown in the schedule of employees is due or expected
within six months from the date of this Agreement and no request for
any such change has been received
21.5 There is not outstanding any contract of service between the Company
and any of its directors, officers or employees which is not terminable
by the Company without damages or compensation (other than any
compensation payable by statute) on three month's notice given at any
time
21.6 No employee of the Company has given notice to the Warrantor
terminating his contract of employment or is under notice of dismissal
and no amount due to or in respect of any employee or former employee
of the Company is in arrear and unpaid other than his salary for the
month current at the date of this Agreement
<PAGE>
21.7 There are no agreements or other arrangements (whether or not legally
binding) between the Company and any trade union or other body
representing employees
21.8 There is no dispute between the Company and any trade union or other
organisation formed for a similar purpose existing, pending or
threatened and there is no collective bargaining Agreement or other
arrangement (whether binding or not) to which the Company is a party
21.9 The Warrantor has no notice that the Company has at any time not
complied with all its obligations under statute and otherwise
concerning the health and safety at work of its employees and the
Warrantor has no notice that there are any claims capable of arising or
threatened or pending by any employee or third party in respect of any
accident or injury which are not fully covered by insurance
21.10 So far as the Warrantor is aware the Company is not under any legal
liability to pay pensions, gratuities, superannuation allowances or the
like to any of its past or present directors, officers or employees or
their dependants nor is it in the habit of making ex gratia or
voluntary payments by way of superannuation allowance or pension and
except as disclosed there are no pension schemes or arrangements for
payment of pensions or death benefits or similar arrangements in
operation or contemplated in relation to the Company and no associated
costs or expenses will arise by reference to any pension scheme or
arrangements at any time operated by the Company
INTELLECTUAL PROPERTY RIGHTS
- ----------------------------
22.1 The Company owns no intellectual property rights
22.2 Other than rights to re-sell computer software and hardware products no
licence, permission or other right has been granted to the Company by
any third party in respect of any intellectual property, including for
the avoidance of doubt any intellectual property in computer software
and hardware
22.3 So far as the Warrantor is aware the Know-How has not been disclosed to
any person in whole or in part (other than to employees of the Company
and the Purchaser and its advisers and associates) and there is no
claim that has been made by any person alleging that the Know-How has
been disclosed to the Company in circumstances amounting to a breach of
confidence
<PAGE>
22.4 The Warrantor has no notice that any of the processes, products or
activities of the business of the Company infringes any right of any
other person relating to intellectual property or involves the
unlicensed use of information confidential to any person or gives rise
to a liability for any royalty or similar payment
22.5 The Company does not trade under any name other than its full corporate
name
23 ENVIRONMENTAL MATTERS
23.1 The Warrantor has no notice that the Company is in breach of the terms
and conditions of Environmental Laws to which it is subject
23.2 The Company has not applied for and obtained any Environmental Permits
23.3 The Warrantor has received no notice that the operation of the business
of the Company or any asset owned or used by the Company involves the
use of, or the release or discharge into the Environment of, or
contains, any dangerous, radioactive, toxic or hazardous substance or
article prescribed or specified under any Environmental Laws to which
the Company is subject as being prohibited or restricted or that
release or discharge of any such substance or article exceeds or has
exceeded any allowable or permissible quotas or limits prescribed or
specified under any Environmental Laws to which the Company is subject
23.4 The Warrantor has not notice that there is any asset now owned or used
by the Company which contains any dangerous, radioactive, toxic or
hazardous substance or article or any waste or other pollutant or
contaminant
23.5 The Warrantor has not notice that there is any civil, criminal or
administrative action, claim, investigation or other proceedings
threatened against the Company under the Environmental Laws to make
good, repair, re-instate or clean up any land or other asset now owned,
occupied or used by the Company or of any act, omission, event or
circumstances giving rise or likely to give rise in the future to any
such action, claim, investigation, proceedings or suit or any such
liability or of other liabilities under any Environmental Laws to which
the Company is subject
23.6 So far as the Warrantor is aware no protest, boycott, demonstration,
adverse publicity campaign or other action is being conducted or
threatened by any non-governmental organisation or pressure group in
relation to the Company or its business, products, operations or
activities
<PAGE>
23.7 DEFINITIONS
For the purposes of the Warranties in paragraphs 23.1 to 23.6:
"Environment" means any land, including, without limitation, surface
land and subsurface strata, sea bed or river bed under any water as
defined below and any natural or man-made structures; water, including,
without limitation, coastal and inland waters, surface waters and
ground waters and water in drains and sewers; and air, including,
without limitation, air within buildings and other natural or man-made
structures above or below ground;
"Environmental Laws" means all or any applicable law (whether civil,
criminal or administrative), common law, statute, statutory instrument,
treaty, regulation, directive, decision, by-law, circular, code, order,
notice, demand, decree, injunction, resolution or judgment of any
government, quasi-government, supranational, federal, state or local
government, statutory or regulatory body, court, agency or association,
or any other person or body in any jurisdiction with regard to the
pollution or protection of the Environment or harm to or the protection
of human health or the health of animals or plants including, without
limitation, laws relating to public and workers' health and safety,
emissions, discharges or releases of chemicals, genetically modified
organisms, noise or any other pollutants or contaminants, or
industrial, radioactive, dangerous, toxic or hazardous substances, or
wastes (whether in solid, semi-solid or liquid form or in the form of a
gas or vapour into the Environment or otherwise relating to the
manufacture, processing, use, treatment, storage, distribution,
disposal, transport or handling of such substances or wastes;
"Environmental Permits" means all or any permits, licences, covenants,
approvals, certificates, qualifications, specifications, resignations
and other authorisations, and the filing of all notifications, reports
and assessments required under any Environmental laws for the operation
of the business or the occupation or use of any of the Properties
24 PROPERTY WARRANTIES
24.1 TITLE
24.1.1 The Property comprises all the property owned, occupied or
otherwise used in connection with the business of the Company
24.1.2 The Property is occupied or otherwise used by the Company in
connection with its businesses under the terms of the Lease
<PAGE>
24.1.3 The information contained in Schedule 4 and the Lease is true
and accurate in all respects
24.2 ENCUMBRANCES
The Company's interest in the Property is:
24.2.1 free from any mortgage, debenture, charge, rent charge, lien
or other encumbrance securing the repayment of monies or other
obligation or liability of the Company
24.2.2 not subject to any outgoings, other than general rates, water
rates, and insurance premiums and, in the case of leasehold
properties, rent and service charges
24.2.3 not subject to any restrictive covenants, stipulations,
easements, profits a prendre, wayleaves, licences, grants,
restrictions, overriding interests or other such rights vested
in third parties
24.2.4 are not subject to any option, right of pre-emption or right
of first refusal
24.3 LEASEHOLD PROPERTIES
24.3.1 The Company has paid the rent and observed and performed the
covenants on the part of the tenant and the conditions
contained in the Lease and the last demand (or receipts for
rent if issued) was unqualified, and the Lease is valid and in
full force
24.3.2 No licences, consents and approvals from the landlords have
been obtained
24.3.3 There is no rent review under the Lease currently in progress
24.3.4 The Warrantor has received no notice of any outstanding and
unobserved or unperformed obligation necessary to comply with
any notice or other requirement given by the landlord under
the Lease
<PAGE>
24.3.5 Except as disclosed by the Lease there is no obligation to
reinstate the Property by removing or dismantling any
alteration made to it by the Company
24.4 TENANCIES
24.4.1 The Property is held subject to and with the benefit of the
rights of occupation as set out in the Disclosure Letter and
none other
<PAGE>
SCHEDULE 6
WARRANTIES RELATING TO TAXATION
1 GENERAL
So far as the Warrantor is aware:-
1.1 The Company has made all returns it is required by law to make. All
returns, claims for reliefs and allowances, applications and
computations have been properly and punctually submitted by the Company
to all relevant Taxation authorities (whether of the United Kingdom or
elsewhere) and such returns, claims, applications and computations are
complete, true and accurate, give full disclosure of all material facts
and circumstances and are not the subject of any question or dispute
nor are likely to become the subject of any question or dispute with
any such taxation authority
1.2 The Company is and always has been resident only in the United Kingdom
for taxation purposes. The Company is not liable to Taxation in any
jurisdiction other than the United Kingdom
1.3 There are no circumstances which could adversely affect the entitlement
of the Company to relief from, credit for or right of set-off against,
Taxation
1.4 All payments by the Company to any person which ought to have been made
under deduction of Taxation have been so made and the Company has (if
required by law to do so) accounted to the relevant taxation authority
for the Taxation so deducted
1.5 The Company has not entered into any of the transactions specified in
section 765 ICTA (migration etc of companies)
1.6 The Company is not liable as agent or lessee for any Taxation liability
of another person
1.7 No Taxation authority has agreed to operate any special arrangement
(being an arrangement which is not based on a strict and detailed
application of the relevant legislation or on generally published
statements of practice or generally published extra-statutory
concessions) in relation to the Company's affairs
<PAGE>
1.8 There has not been any transaction, arrangement, event or omission
occurring after the Last Accounts Date:-
1.8.1 which has caused or will cause any expenditure (including any
payment of Taxation) incurred or deemed to have been incurred
for Taxation purposes by the Company not to qualify for all or
part of any relief, allowance, credit or deduction for
Taxation purposes which might be expected by the Purchaser to
be available to the Company; or
1.8.2 which has given rise or will give rise: (a) to income or gains
being deemed to arise to, or supplies being deemed to be made
by, the Company for Taxation purposes, or (b) to any Taxation
otherwise being assessable or chargeable on the Company when
the relevant income or gains do not in fact accrue to or the
relevant supplies are not in fact made by, the Company
1.9 There are set out in the Disclosure Letter with express reference to
this warranty full details of all matters relating to Taxation in
respect of which the Company (whether alone or jointly with any other
person) has or at Completion will have an outstanding entitlement or
obligation:-
1.9.1 to make any claim (including a supplementary claim) for relief
from Taxation;
1.9.2 to make any election for one type of relief, or one basis,
system or method of Taxation as opposed to another;
1.9.3 to make any appeal (including a further appeal) against an
assessment to Taxation;
1.9.4 to make any application for the postponement of payment of
Taxation; or
1.9.5 to submit any return or provide particulars or information to
any Taxation authority
1.10 No income has arisen in a territory outside the United Kingdom in
respect of which any claim under section 584 ICTA (unremittable
overseas income) has been made or is available to the Company
<PAGE>
1.11 The Company has complied with all notices served on it by any taxation
authority and no such notice remains outstanding
1.12 The Company has duly and punctually paid all Taxation which it has
become liable to pay and it has never paid or become liable to pay any
penalty, fine or surcharge in connection with Taxation
1.13 The transactions contemplated by this Agreement are carried out for
bona fide commercial reasons and as far as the Vendors are concerned
such transactions do not have as their main object, or one of their
main objects, the obtaining of a tax advantage
1.14 Except as disclosed there are no facts or circumstances presently in
existence such that on or after Completion the Vendors would be liable
to the Company or the Purchaser under the terms of the Deed of Covenant
1.15 The Vendors have no knowledge that a charge to tax will arise on the
Company or the Purchaser merely as a result of entering into or
Completion of this Agreement
1.16 The Company has not had, and will not prior to Completion have, an
associated company within the meaning of Section 13 ICTA
2. DISTRIBUTIONS
So far as the Warrantor is aware:
2.1 The Company has not since the Last Accounts Date made or agreed to make
any distributions within the meaning of section 209 ICTA
2.2 The Company has not been concerned in any exempt distribution within
sections 213 to 218 ICTA (demergers) within the period of five years
preceding Completion
2.3 The Company has not issued any security (as defined in section 254(1)
ICTA) outstanding on Completion in circumstances such that any interest
or other payment payable in respect of it constitutes a distribution
under section 209 ICTA
<PAGE>
2.4 The Company has not made any repayment of share capital to which
section 210(1) ICTA (bonus issue following repayment of share capital)
might apply
2.5 The Company has not issued any share capital or securities as paid up
other than by receipt of new consideration within the meaning of
section 254 ICTA
3. CAPITAL ALLOWANCE
So far as the Warrantor is aware:
3.1 The aggregate book value of each of the assets of the Company, on which
an entitlement to industrial building allowances or other allowances in
respect of capital expenditure has arisen under the CAA 1990, in or
adopted for the purposes of the Last Accounts does not exceed the
aggregate residue of expenditure or written-down value attributable to
such assets for the purposes of CAA 1990 and the aggregate book value
of plant and machinery allocated to a pool of plant and machinery on
which an entitlement to capital allowance has arisen under Part II CAA
1990 (machinery and plant) does not exceed the written-down value of
the qualifying expenditure in respect of each such pool under the CAA
1990
3.2 All expenditure incurred by the Company or which it may incur under any
subsisting commitment for the provision of machinery or plant has
qualified or will qualify (if not deductible as a trading expense of a
trade carried on by the Company) for writing down allowances under Part
II CAA 1990 (machinery and plant)
3.3 Since the Last Accounts Date nothing has happened as a result of which
there may be made against the Company a balancing charge under the CAA
1990; or any disposal value may be brought into account under section
24 CAA 1990 (writing down allowances and balancing requirements); or
there may be any recovery of excess relief within sections 46 or 47 CAA
1990 (recovery of excess relief); or a relevant event occurs within the
meaning of section 138 CAA 1990 (scientific research)
3.4 There is not, and there are no circumstances which could give rise to,
any dispute between the Company and any other person as to the
entitlement to capital allowances under sections 51 to 59 CAA 1990
(fixtures)
3.5 The Company has not made any election under section 37 CAA 1990 (short
life assets) nor has been taken to have made an election under
sub-section (8) (c) of that section
<PAGE>
4. CAPITAL GAINS
So far as the Warrantor is aware:
4.1 The book value in or adopted for the purposes of the Last Accounts as
the value of each of the assets of the Company on the disposal of which
a chargeable gain or allowable loss could arise does not exceed the
amount deductible under section 38 TCGA (expenditure: general)
(excluding any indexation allowance) in respect of each such asset
4.2 The Company neither has an interest in nor has issued any deep discount
security, deep gain security or qualifying convertible security as
defined by paragraph 1(1) of Schedule 4 ICTA (deep discount
securities), paragraph 1 of Schedule 11, FA 1989 (deep gain securities)
or paragraph 2 of Schedule 8, FA 1990 (convertible securities)
respectively
4.3 No debt owed to the Company would on its disposal give rise to a
chargeable gain by reason of section 251 TCGA (disposals otherwise than
as original creditor)
4.4 The Company does not have any interest in qualifying corporate bond to
which Sections 116 and 117 TCGA (reorganisations, conversions,
reconstructions etc.) apply
4.5 No benefit under any policy of assurance has been acquired by the
Company which would on its disposal give rise to a chargeable gain by
reason of section 210 TCGA (disposals otherwise than as original
beneficial owner)
4.6 The Company does not have an interest in any assets which are wasting
assets within section 44 TCGA (wasting assets) and which do not qualify
for capital allowances
4.7 The Company has not made nor is entitled to make any claims under any
of sections 152, 153, 165, 172, 175, 242, 243 or 247 TCGA insofar as
such claims affect or would affect the chargeable gain or allowable
loss which would arise on a disposal by the Company of any of its
assets
4.8 The Company has not made nor is it entitled to make any claims or
election under either of section 24 TCGA (assets lost or destroyed) or
section 161 (3) or 161 (4) TCGA (appropriations to or from stock). The
Company has not, since the Last Accounts Date, appropriated any asset
forming part of its trading stock for any other purpose
<PAGE>
4.9 The Company has not since the Last Accounts Date disposed of or
acquired any asset in circumstances such that the provisions of section
17 TCGA (disposals and acquisitions treated as made at market value)
could apply
4.10 The Company has not since the Last Accounts Date been a party to any
depreciatory transactions for the purpose of section 176 TCGA
(transactions in a group) or which could be treated as a depreciatory
transaction under section 177 TCGA (dividend stripping)
4.11 The Company has not since the Last Accounts Date been a party to any
value shifting arrangements under any of sections 29 to 34 TCGA (value
shifting)
4.12 The Company has not made nor is entitled to make any claims under
sections 48 or 280 TCGA (consideration due after time of disposal) to
pay by instalments tax on chargeable gains
4.13 No election has been made under section 35 TCGA (assets held on 31
March 1982) in respect of the assets of the Company
5. GROUPS OF COMPANIES
So far as the Warrantor is aware:
5.1 The Company is not and has never been treated for the purposes of
section 43 VATA (groups of companies) as a member of a group
5.2 The Company is not and never has been a 51 per cent subsidiary of any
person within the meaning of section 838 ICTA (subsidiaries) nor has or
has ever had a 51 per cent subsidiary as so defined
5.3 No tax-free benefit has ever been conferred either upon the Company or
upon any person connected with the Company within the meaning of
section 30 - 34 TCGA (value shifting). No scheme or arrangement has
been effected under which such a tax-free benefit will be so conferred
5.4 None of the Company's assets and no relevant asset has been materially
reduced in value within the meaning of section 30 TCGA (value
shifting). No scheme or arrangement has been effected under which there
will be such a reduction in value.
<PAGE>
6. VALUE ADDED TAX
So far as the Warrantor is aware:
6.1 The Company is a registered and taxable person for the purposes of VATA
and has complied with and observed in all respects the terms of all
legislation, regulations, orders, provisions, directions, conditions
and notices relating to value added tax. The Company has maintained and
obtained accounts, appropriate or requisite for the purposes of value
added tax which are complete, correct and up-to-date
6.2 The Company:-
6.2.1 is not nor in the two years prior to Completion has been, in
arrears with any payments or returns or notifications under
the legislation, regulations, orders, provisions, directions,
conditions or notices relating to value added tax, or liable
to any forfeiture or penalty or interest or surcharge or to
the operation of any penalty, interest or surcharge provisions
contained in the same;
6.2.2 has not been required by H.M. Commissioners of Customs and
Excise to give security;
6.2.3 is not, and has not agreed to become, an agent, manager or
factor for the purposes of section 47 VATA (agents etc.) of
any person who is not resident in the United Kingdom;
6.2.4 has not made, and will not make prior to Completion, any
supplies that are exempt supplies; and
6.2.5 has not made any election under paragraph 2 (1) of Schedule
10, VATA (election to waive exemption) in respect of land in
which the Company now has any interest
6.3 The Company has not since the Last Accounts Date been, and will not
prior to Completion be, treated for Taxation purposes as having made
any supply of goods or services for the purposes of value added tax
where no supply has in fact been made by the Company, including without
limitation, deemed supplies under any of the following provisions:
section 8 VATA (supplies received from abroad); section 44 VATA
(supplies to groups); paragraph 6, Schedule 10, VATA (developers of
certain non-residential buildings); Value Added Tax (Cars) Order 1989
(self supply of motor cars); paragraph 14; or paragraph 3, Value Added
Tax (Self Supply of Construction Services) Order 1989 (self supply of
construction services)
<PAGE>
6.4 The Company does not use any schemes made under any of the following
regulations: Value Added Tax (Supplies by Retailers) Regulations 1972
(special schemes for retailers); 523 VATA (cash accounting scheme); or
Value Added Tax (Annual Accounting) Regulations 1988 (annual accounting
scheme)
6.5 The Company is not for the purposes of paragraph 5(5) of Schedule 10,
VATA (developers of certain non-residential buildings etc.) the
developer of any building or work in respect of which the Company has
not made an election under paragraph 2(1) of that Schedule
6.6 The Company has not in the two years prior to Completion received a
surcharge liability notice under section 59 VATA (default surcharge) or
a penalty liability notice under section 64A VATA (persistent
misdeclarations)
7. CLOSE COMPANIES
7.1 The Company is a close Company
7.2 The Warrantor has not notice that the Company has failed in respect of
each accounting period ended on or before the Last Accounts Date but
within seven years prior to Completion to give full and accurate
disclosure to the Inland Revenue of all material facts and
circumstances
7.3 So far as the Warrantor is aware no apportionment under section 423
ICTA (appointment of undistributed income) has been made or threatened
against the Company, nor are there any circumstances that could give
rise to such an apportionment
7.4 So far as the Warrantor is aware the Company is not, nor has ever been,
liable to taxation under the provisions of sections 418 to 422 or
paragraph 10 of Schedule 19, ICTA (close companies)
7.5 So far as the Warrantor is aware the Company has never made any
transfer of the kind described in section 125 TCGA (transfer of assets
at undervalue)
7.6 So far as the Warrantor is aware the Company has never made any
transfer of value within the meaning of the Inheritance Tax Act 1984
<PAGE>
7.7 Neither the assets owned by nor the shares of the Company are subject
to an outstanding Inland Revenue charge as defined in section 237
Inheritance Tax Act 1984
7.8 No circumstances exist, or but for section 204 (6) Inheritance Tax Act
1984 would exist, such that a power of sale could be exercised in
relation to any assets or shares of the Company pursuant to section 212
Inheritance Tax Act 1984 (contingent liability of transferee for unpaid
capital transfer tax or inheritance tax)
8. ANTI-AVOIDANCE
So far as the Warrantor is aware:
8.1 No transaction has been entered into or event occurred since the Last
Accounts Date in consequence of which the Company could be liable to
Taxation and/or a penalty or fine or to denial of a relief, exemption
or deduction pursuant to any of sections 34 to 37; 703 to 709; 729 to
738; ;747 to 767; 770 to 774; or 776 to 787 of ICTA or schedule 10
paragraph 14 (47)b TCGA
8.2 The Company has not carried out or been engaged in any transaction or
arrangement such that the law provides that there may be substituted
for the amount or value of the actual consideration given or received
(or to be given or received) by the Company any different amount or
value for Taxation purposes
8.3 In the three years prior to Completion there has not been a major
change in the nature or conduct of any trade or business carried on by
the Company such that could affect the ability of the Company to
utilise after Completion advance corporation tax or trading losses
under any of sections 245, 245A or 768 ICTA
8.4 No application has been made relating to the Company under the
provisions of any of:-
section 139 (5) TCGA (company reconstruction or amalgamation);
section 215 ICTA (demergers);
section 225 ICTA (purchase of own shares);
section 707 ICTA (transactions in securities);
section 765 ICTA (migration of companies);
section 776 (11) ICTA (transactions in land);
section 38 TCGA (reconstructions or amalgamations);
<PAGE>
the Inland Revenue press releases of 16th July 1984 relating to
controlled foreign companies or of 9th May 1990 relating to Employee
Share Ownership Plans (or any subsequent amendment or revision of such
press releases)
9. EMPLOYEES
So far as the Warrantor is aware:
9.1 The Company has received no notifications or notices under section 166
ICTA (benefits in kind: notices of nil liability)
9.2 The Company does not operate any scheme approved under section 202 ICTA
(charities: payroll deduction scheme) or registered under Chapter III
of Part V ICTA (profit-related pay)
9.3 No officer or employee of the Company participates in any scheme
approved under Schedule 9 ICTA (approved share option and profit
sharing schemes) or is a beneficiary or potential beneficiary of a
qualifying employee share ownership trust as defined in Schedule 5 FA
1989 (employee share ownership trusts)
9.4 Since the Last Accounts Date the Company has not received any payment
to which section 601 to 603 ICTA applies (pension scheme surpluses:
payments to employers)
9.5 All sums payable under the existing arrangements for remunerating
officers and employees and rewarding persons rendering services to the
Company are deductible for the purposes of section 74 or 75 ICTA
(deductions)
10. STAMP DUTIES
So far as the Warrantor is aware:
10.1 There is no instrument which is necessary to establish the Company's
title to any right or asset which is liable to stamp duty in the United
Kingdom or elsewhere but which has not been duly stamped or which would
attract stamp duty if brought within the relevant jurisdiction
10.2 The Company has complied in all respects with the provisions of Part
IV, FA 1986 (stamp duty reserve tax) and with any regulations made
under the same and the Company is not and will not become liable to pay
stamp duty reserve tax by reference to any Agreement which fell within
the terms of section 87(1) of that Act
<PAGE>
11. NATIONAL INSURANCE
So far as the Warrantor is aware:
The Company has paid all national insurance contributions for which it
is liable and has kept proper books and records relating to the same
and has not been a party to any schemes or arrangement to avoid any
liability to account for primary or secondary national insurance
contributions.
<PAGE>
SCHEDULE 7
WARRANTOR PROTECTION PROVISIONS
A. LIMITATION OF LIABILITY UNDER THE WARRANTIES AND DEED OF COVENANT
1. Notwithstanding anything to the contrary contained in clause 6 of this
Agreement and the Deed of Covenant the Warranties and the covenants
contained in the Deed of Covenant shall be qualified by the provisions
of the Schedule and in the event of any inconsistency between the
provisions of this Schedule and the provisions of clause 6 or Schedule
5 and or of the Deed of Covenant the provisions of this Schedule shall
prevail
2. The Warrantor shall not be liable in respect of any claim under the
Warranties or the covenants contained in the Deed of Covenant to the
extent that the matter or matters giving rise to such claim are
disclosed in the Disclosure Letter and/or within the actual or
constructive knowledge of the Purchaser its agents or advisers
3. The liability of the Warrantor in respect of any breach of the
Warranties and of the covenants contained in the Deed of Covenant shall
be limited as follows:
3.1 The aggregate maximum liability of the Warrantor in respect of
all and any claims under the Warranties and under the Deed of
Covenant shall in no event exceed(pound)120,000
3.2 The Warrantor shall not be liable in respect of any claim
under the Warranties or under the Deed of Covenant where the
amount of such claim does not exceed(pound)500
3.3 The Warrantor shall not be liable in respect of all and any
claims made by the Purchaser under the Warranties or under the
Deed of Covenant unless and until the aggregate cumulative
liability of the Warrantor in respect of all and any such
claims (ignoring for those purposes all and any claims in
respect of which the Warrantor does not have any liability
pursuant to the provisions of cause 3.2 above) exceeds
(pound)5,000 in which event the Warrantor shall be liable only
for the excess
4. The Warrantor shall not be liable in respect of any claim under the
Warranties or under the Deed of Covenant unless it shall have been made
in the case of the Deed of Covenant before the expiry of 6 years from
the date of the Last Accounts and in the case of all other Warranties
before the expiry of 2 years from Completion
<PAGE>
5. No claim under the warranties or under the Deed of Covenant shall be
deemed to have been made unless notice of such claim has been made in
writing to the Warrantor specifying in reasonable detail the event of
default to which the claim relates and the nature of the breach and the
amount claimed
6. Any claim in respect of which notice shall be given in accordance with
clause 5 above shall be deemed to have been irrevocably withdrawn and
lapsed (not having been previously satisfied settled or withdrawn) if
proceedings in respect of such claim have not been issued and served on
the Warrantor not later than the expiry of the period of 12 months
after the date of such notice
7. Where the Purchaser and/or the Company is or is likely to be entitled
to recover from some other person any sum in respect of any matter
giving rise to a claim for breach of the Warranties or under the Deed
of Covenant then the Purchaser shall procure that reasonable steps are
taken to enforce such recovery and if any sum is so recovered then
either the amount payable by the Warrantor in respect of that claim
shall be reduced by an amount equal to the sum so recovered (less the
reasonable costs and expenses of recovering it and any taxation payable
by the Purchaser or the Company as a result of its receipt) or (if an
amount shall already have been paid by the Warrantor in respect of that
claim) there shall be repaid to the Warrantor an amount equal to the
amount so recovered (less the reasonable costs and expenses of its
recovery and any taxation payable by the Purchaser or the Company as a
result of its receipt) or (if less) the amount of such payment
8. Without prejudice to the generality of clause 7 above the provisions of
clause 7 shall apply:
8.1 where the Company is entitled to recover from its insurers any
sum in respect of any matter giving rise to a claim under the
Warranties or the Deed of Covenant
8.2 to the extent that the Warrantor is liable to the Purchaser
under the Warranties or under the Deed of Covenant by reason
of an obligation of the Company to pay advance corporation tax
and the Company obtains the benefit or reduction in liability
to mainstream corporation tax by reason of such payment then
the Purchaser shall procure that the Company shall make all
such claims and elections as will result in such benefit or
reduction obtained as soon as reasonably possible
9. The Warrantor shall have no liability (or such liability shall be
reduced) in respect of any claim for breach of any of the Warranties or
in respect of a claim under the Deed of Covenant
9.1 if and to the extent that provision or reserve for or in
respect of the liability or other matter giving rise to such
claim has been made in the Last Accounts of the Company or in
previous audited accounts of the Company or in subsequent
management accounts
<PAGE>
9.2 if and to the extent any liability of the Company included in
its Last Accounts or in previous audited accounts of the
Company or in subsequent management accounts of the Company
has been discharged or satisfied below the amount attributed
to it or included in respect of it in those audited accounts
9.3 if and to the extent any contingency or other matters provided
against in the Last Accounts of the company has in the event
been over-provided for
9.4 if and to the extent that any breach of the Warranties or
liability under the Deed of Covenant occurs as a result of or
is otherwise attributable to the Purchaser or the Company
disclaiming any part of the benefit of capital or other
allowance against taxation claims or proposed to be claimed on
or before the date of the Agreement
9.5 if and to the extent that such claim is attributable to any
voluntary act or omission of or transaction or arrangement
carried out by the Purchaser or the Company, after Completion
otherwise than in the ordinary course of business
9.6 if and to the extent that such claim would not have arisen or
would have been reduced or eliminated but for the failure or
omission on the part of the Purchaser of the Company to make
any claim election surrender or disclaimer or give notice or
consent or to do any other thing under the provisions of any
enactment or regulation relating to taxation after Completion
the making giving or doing of which was taken into account in
computing the provision for taxation in the Last Accounts or
in previous audited accounts of the Company or in subsequent
management accounts
9.7 if and to the extent that such claim relates to a liability
for Taxation which would not have arisen but for any winding
up or cessation after Completion of any trade or business
carried on by the Company
9.8 if and to the extent such claim would not have arisen but for
a change in the nature of the business of and/or accounting
policy or practice of the Company after Completion
10. The amount of any claim for breach of the Warranties or under the deed
of Covenant shall take into account the amount of any relief from
Taxation arising by virtue of the loss or damage in respect of which
the claim was made
11. Nothing in this Schedule shall derogate from the Purchaser's obligation
to mitigate any loss which it suffers in consequence of a breach of the
Warranties or in respect of which a claim may be made under the Deed of
Covenant
<PAGE>
12. For the avoidance of doubt the Purchaser shall not be entitled to
recover damages in respect of any claim for breach of the Warranties
and/or of the covenants contained in the Deed of Covenant where to do
so would involve recovery more than once in respect of the same loss or
damage
13. The Purchaser shall as soon as it or the Company becomes aware of any
matter or event ("the Matter") which might give rise to a claim under
the Warranties or the Deed of Covenant immediately give notice in
writing to the Warrantor of the Matter
14. The Purchaser shall provide and shall procure that the Company will
provide to the Warrantor and the Warrantor's professional advisers
reasonable access to premises and personnel and to any relevant assets
documents and records within their power possession or control for the
purpose of investigating the Matter and enabling the Warrantor to take
such action as referred to in Clause 15 below and shall allow the
Warrantor and his advisers to take copies of any relevant documents or
records at the cost of the Warrantor
15. The Purchaser shall and shall procure that the Company will allow the
Warrantor (using professional advisers nominated by the Warrantor) to
take such action and institute and conduct such proceedings on behalf
of the Purchaser or the Company as the Warrantor may reasonably request
to dispute resist appeal compromise defend remedy or mitigate the
Matter or to enforce against any third party the rights of the Company
in relation to the Matter. The Warrantor shall fully indemnify the
Purchaser and the Company against all reasonable costs and expenses
incurred as a result of any action taken by the Warrantor pursuant to
this sub-clause
16. The Purchaser shall not and shall procure that the Company shall not
admit liability in respect of or compromise or settle the Matter
without the prior written consent of the Warrantor (such consent not to
be reasonably withheld or delayed)
17. The Warranties and the covenants in the Deed of Covenant are given on
the basis of the Company continuing to carry on business after
Completion as a going concern
B ACCESS
1. The Purchaser will after Completion give to the Warrantor and his
representatives reasonable facilities to inspect all of the books and
records relating to the Company as are delivered to the Purchaser under
this Agreement and (at the Warrantor's cost) to take copies and
extracts from them at all reasonable times and on reasonable advance
notice within the period of 3 years from and after Completion
<PAGE>
SIGNED by )
IAN STUART REAY )
in the presence of:- )
SIGNED BY )
JAYNE ELIZABETH HOLMES )
in the presence of )
SIGNED by )
on behalf of )
EUROTELECOM CORPORATION LIMITED )
in the presence of )
EXHIBIT 3(iv)
SERVICE AGREEMENT
-----------------
DATE:- 1999
PARTIES:-
(1) (Company Registration Number [ ])
whose registered office is at [
] ("the Company")
(2) IAN STUART REAY of 9 Bank Side, Ordsall, Retford, Nottinghamshire, DN22
7UW ("the Executive")
TERMS:-
- -------
1. DEFINITIONS
1.1 In this Agreement the following expressions (whether with or
without the definite article) have the following meanings:-
"Act" the Companies Act 1985 (as amended
by the Companies Act 1989)
"Agreement" this agreement.
"Appointment" the appointment of the Executive
particulars of which are set out in
Clause 2.
<PAGE>
"Associated Company" in relation to a company means any
company in which that Company or any
holding Company of it is directly or
indirectly beneficially interested
in ten per cent or more of the
relevant company's issued ordinary
share capital
"Commencement Date" the [ ]
"Company" shall include an Associated Company
or any member of the Group unless
otherwise stated
"Directors" the directors of the Company from
time to time.
"Employment Act" the Employment Rights Act 1996
"Group" means the Company and all companies
which are for the time being either
a holding company of the company or
a subsidiary or associated company
of either the company or any such
holding company
"Parties" the parties to this Agreement.
"Subsidiary Company" shall have the meanings ascribed in
"Holding Company" the and Companies Act 1985 or any
statutory modification or
re-enactment thereof.
1.2 Words denoting the singular include the plural and vice versa;
and words denoting any gender include all genders.
<PAGE>
1.3 References to any statute are to that statute as amended or
re-enacted and to any regulation or order made under them.
1.4 References to Clauses and the Schedule are to clauses and the
schedule of or to this Agreement.
1.5 The Schedule forms part of this Agreement for all purposes.
2. THE APPOINTMENT
2.1 The Company shall employ the Executive and the Executive shall
serve the Company as Managing Director or in such other
capacity as the Company may from time to time direct.
2.2 Subject to the provisions for termination contained in this
Agreement, the Appointment shall be for a period of three
years commencing on the Commencement Date and shall continue
until terminated on or after that date by not less than three
calendar month's notice in writing by one party to the other
(and in the case of termination by the Company, the Company
has the option to make payment in lieu of notice).
2.3 Notwithstanding any other provision of this Agreement the
Company shall during the period of any notice given pursuant
to Clause 2.2 be under no obligation to assign to the
Executive any powers or to provide any work for the Executive
and the Company may at any time or from time to time suspend
the Executive from the performance of his duties and/or
exclude him from the premises of the Company and require the
Executive to stay away from any employees, officers, customers
and clients of the Company but the Executive's salary and
other entitlements under this Agreement shall not cease to be
payable by reason only of that suspension or exclusion (unless
and until this Appointment is terminated under the provisions
of Clause 7).
<PAGE>
3. DUTIES
3.1 The Executive shall during the Appointment:-
3.1.1 devote the whole of his time attention and ability to
the duties of his office, and shall diligently
perform such duties and exercise such powers as the
Board may from time to time properly assign to him in
his capacity as Managing Director or in connection
with the business of the Company subject to such
reasonable directions and restrictions as the Board
(or managing Director of the Company) may from time
to time give or impose;
3.1.2 well and faithfully serve the Company and use his
best endeavours to promote develop and extend the
business and interests of the Company;
3.1.3 give to the Board, or such persons as it shall
nominate, such information regarding the affairs of
the Company as it shall require;
3.1.4 at all times conform to the reasonable directions of
the Board;
3.1.5 undertake such travel inside or outside the United
Kingdom as may be required for the proper performance
of his duties, but he shall not be obliged to reside
outside the United Kingdom.
3.2 If and whenever it may be necessary for the proper discharge
of his duties the Executive shall perform such hours of work
outside his normal working hours (as set out in clause 14 of
the Schedule)
3.3 The Company may from time to time vary the type and nature of
the work to be carried out by the Executive and the status and
responsibilities connected therewith (provided that his
remuneration and benefits are not thereby altered).
3.4 The Company may from time to time appoint any other person or
persons to act jointly with the Executive in the Appointment.
<PAGE>
3.5 The location at which the Executive shall perform his duties
shall be that specified in Clause 15 of the Schedule.
4. RESTRICTIONS
4.1 During the appointment, the Executive shall devote the whole
of his time, attention and abilities during normal working
hours to the business and affairs of the Company, unless
prevented by Incapacity (as defined in Clause 8.1) from doing
so, and shall not during the Appointment directly or
indirectly enter into, or be concerned or interested in, any
other trade or business (or occupation) whatsoever which
competes with the business of the Company except with the
prior written consent of the Board, but such consent may be
given subject to the terms or conditions which the Board may
require, any breach of which shall be deemed to be a breach of
the terms of this Agreement.
4.2 In this Clause the expression "occupation" shall include
membership of Parliament or of a local authority council or
any other public or private work (whether for profit or
otherwise) which, in the reasonable opinion of the Company,
may hinder or otherwise interfere with the performance by the
Executive of his duties under this Agreement.
4.3 The Executive shall not without the prior consent of the
Group's Managing Director
4.3.1 enter into any commitment, contract or arrangement
otherwise than in the normal course of business or
outside the scope of his normal duties, or of an
unusual, onerous or long-term nature;
4.3.2 engage any person on behalf of any member of the
Company on terms that he will receive remuneration of
an annual rate in excess of $16,000 or the
termination of whose employment will require more
than one month's notice;
<PAGE>
4.3.3 dismiss any employee of the Company without giving
proper notice or without following the normal
disciplinary procedure, and in any such case he shall
immediately report the dismissal and the reason for
it to the Board;
4.4 The Executive shall at all times during the Appointment keep
confidential and shall not (except as authorised or required
by his duties) use or disclose to any person, firm or company
any of the trade secrets, designs, copyrights, confidential
operations, processes, or dealings or any information
concerning the organisation, business, finances, transactions
or affairs of the Company, its suppliers, and customers both
current and those who were suppliers or customers during the
previous two years (and the Executive acknowledges that the
names and requirements of and all other details concerning its
suppliers and customers are confidential) which may already
have come or which may after the Commencement Date come to his
knowledge during the Appointment. The Executive further
acknowledges that all documents concerning any of the above
matters are confidential, whether or not they are so marked.
4.5 All notes, memoranda, records and writing made by the
Executive relating to the business of the Company are and
shall remain the property of the Company and shall upon
request be delivered by him to the Company forthwith.
5. REMUNERATION
5.1 During the Appointment the Company shall pay to the Executive
a salary of $64,000 per annum, which accrues rateably from day
to day and is payable by equal instalments in arrears on the
last working day of every calendar month (or such other date
as the Company may determine) by credit transfer to the
Executive's bank account.
<PAGE>
5.2 The Company shall pay 10% of the said salary direct to a
personal pension provider nominated by the Executive
5.3 The Executive's salary may be reviewed at the discretion of
the Company annually. Any revision to the salary resulting
from such a review shall be effective from the date of any
such review, and each such revision shall thereafter have
effect as if it were specifically provided for as a term of
this Agreement and the figure of (pound)40,000 in Clause 5.1
shall thereafter be deemed to have been amended accordingly.
6. BENEFITS
6.1 CAR
During such period as the Executive shall be the holder of a
valid UK driving licence the Company shall provide and
maintain (including the costs of taxing and insurance) for the
[sole] business use of the Executive and [private use by the
Executive and his spouse] a car of a type to be decided upon
by the Board in its absolute discretion.The Company shall pay
for all the running costs, including without limitation
maintenance, repairs, oil and petrol apart from oil and petrol
consumed in private use.
6.1.1 The Executive shall:-
6.1.1.1 comply with all reasonable directions from
time to time given by the Company with
regard to motor vehicles provided by the
Company for the use of its staff;
6.1.1.2 take good care of the car and ensure that
the provisions and conditions of any
insurance policy relating to it are
observed;
6.1.1.3 comply at all times with road traffic
legislation;
<PAGE>
6.1.1.4 return the car and its keys to the Company
at its registered office (or any other place
the Company may reasonably nominate)
immediately upon termination of the
appointment (howsoever arising), or at any
other reasonable time if so requested for
the purpose of inspection.
6.1.2 It is the responsibility of the Executive at the
expense of the Company to maintain the car in good
running order and in a clean and tidy condition and
to keep adequate records in relation to such business
use in such form and detail as may be necessary to
satisfy any queries in relation to the car which may
be raised by the Inland Revenue in connection with
the Executive's tax affairs, and the Executive is
responsible for the payment of any taxes that may be
assessed on him for the use of such car. For the
purpose of calculating the value to the Executive of
the benefit of using the car for his private
purposes, the Inland Revenue Scales will be used.
6.2 MOBILE TELEPHONE
The Company shall provide and maintain for the use of the
Executive a mobile telephone. The Company shall pay for [the
line rental and all business and reasonable private calls].
6.3 EXPENSES
6.3.1 The Company shall by way of reimbursement pay or
procure to be paid to the Executive all reasonable
travelling hotel and other expenses properly incurred
by him in or about the performance of his duties
under this Agreement subject to the Executive
complying with such guidelines or regulations issued
by the Company in this respect.
<PAGE>
6.3.2 The Executive shall provide reasonable evidence of
the expenditure in respect of which he claims
reimbursement.
6.4 MEDICAL INSURANCE
The Company shall provide membership of [ ] for the Executive
and his spouse and children and make contributions for him at
a suitable level for treatment and accommodation in line with
Company policy from time to time. If the Executive is not
accepted at standard rates of premium then the Executive shall
be responsible for any increased premium.
6.5 HOLIDAYS
6.5.1 The Executive shall, in addition to normal bank and
public holidays, be entitled to 25 working days paid
holiday in every calendar year, to be taken at such
time or times as shall be convenient to the Company.
6.5.2 In the event that the Appointment is terminated
(other than by the Company for gross misconduct)
before the Executive has taken his holiday
entitlement accrued at the date of termination the
Executive shall receive a sum of money equal to his
salary for the holiday entitlement accrued but not
taken. The entitlement of the Executive to pay in
lieu of unused holiday shall be calculated rateably
on the basis described in Clause 6.4.2.
6.5.3 The Executive has no entitlement to any further
period of holiday with or without remuneration unless
expressly agreed by the Board and holiday not taken
in one year may only be carried forward to the next
year with the prior written consent of the Company.
<PAGE>
6.6 BENEFITS
Any benefits provided by the Company to the Executive or to
his family which are not expressly referred to in this
Agreement are ex-gratia and at the entire discretion of the
Company and shall not form part of the Executive's terms of
employment.
7. TERMINATION OF APPOINTMENT
7.1 The Appointment may be terminated by the Company at any time
after the Commencement Date immediately without payment of any
compensation, redundancy payment, damages or remuneration for
subsequent periods payable by virtue of common law or statute,
by serving written notice on the Executive in any one or more
of the following circumstances if the Executive shall:
7.1.1 refuse to accept any change in his executive
responsibilities duties or status as determined from
time to time by the Board (provided that no reduction
in remuneration on benefits results therefrom);
7.1.2 be guilty of any gross default or misconduct or
wilful neglect in the discharge of his duties under
this Agreement;
7.1.3 be guilty of any serious or persistent breach (after
warning) or non-observance of any of the material
provisions of this Agreement or directions of the
Board;
7.1.4 become bankrupt or make any arrangement or
composition with his creditors;
7.1.5 becomes of unsound mind, or becomes a patient for any
purpose of any statute relating to mental health;
<PAGE>
7.1.6 be convicted of any arrestable criminal offence
(other than a motoring offence for which no custodial
sentence is made upon him);
7.1.7 carry out any course of action or omission which in
the reasonable opinion of the Board may seriously
damage the interests of the Company.
7.2 The termination by the Company of the Appointment is without
prejudice to any claim which the Company may have for damages
arising from breach of this Agreement by the Executive.
7.3 In order to investigate a complaint against the Executive of
misconduct, the Company is entitled to suspend the Executive
on full pay for so long as may be necessary to carry out a
proper investigation and disciplinary hearing.
7.4 Upon the termination of the Appointment for whatever reason,
the Executive shall immediately deliver to the Company or to
its order all books, documents, papers (including copies),
materials, credit cards, keys and other property of or
relating to the business of the Company then in his possession
or which are or were last under his power or control.
7.5 In addition to the provisions of this Agreement the Executive
shall also comply with the Company's disciplinary procedures
from time to time and such other reasonable requirements of
the Company as are applicable to him.
8. ILLNESS
8.1 If the Executive shall at any time be prevented by ill health
or accident ("Incapacity") from performing his duties under
this Agreement, he shall if so required furnish the board with
evidence satisfactory to them of such Incapacity.
<PAGE>
8.2 The Executive shall continue to be paid in full during absence
due to Incapacity (such payment to be inclusive of any
statutory sick pay or social security benefits to which he may
be entitled) for a total of up to [ ] weeks (whether
consecutive or not) in any 12 consecutive calendar months of
employment.
8.3 Thereafter the Executive shall continue to be paid salary at
the discretion of the Company but if the Incapacity continues
for a longer period than [ ] months in total or if the
Executive is so incapacitated at different times for more than
[ ] working days in any period of 52 consecutive weeks, and
the Appointment may be terminated at the option of the Company
by the giving of the minimum period of notice required by
statute at that time.
8.4 If the Incapacity is or appears to be occasioned by actionable
negligence of a third party in respect of which damages are or
may be recoverable the Executive shall immediately notify the
Board of that fact and of any claim compromise settlement or
judgment made or awarded in connection with it and shall give
to the Board all particulars the board may reasonably require
and shall if required by the Board refund to the Company that
part of any damages recovered relating to loss of earnings for
the period of the Incapacity as the Board may reasonably
determine provided that the amount be refunded does not exceed
the amount of damages or compensation recovered by him less
any costs borne by the Executive in connection with the
recovery of such damages or compensation and does not exceed
the total remuneration paid to him by the Company by way of
salary in respect of the period of the Incapacity, less any
sums refunded to the Company by any third party.
8.5 The Executive shall in the event of Incapacity provide on
request such evidence of Incapacity as the Company may require
in line with Company policy from time to time and shall not
receive any part of his salary as is attributable to statutory
<PAGE>
sick pay unless he complies with the requirements for
certification, and the Company shall deduct from salary due to
him any sums in respect of statutory sick pay as are paid to
the Executive or would have been so payable had he complied
with the provisions of this Clause.
8.6 In the case of prolonged or frequent absence the Company may
request the Executive to co-operate in providing medical
evidence or undergoing a medical examination arranged by the
Company with a view to establishing likely future fitness for
work and if such co-operation or evidence is not forthcoming
or is unsatisfactory, the Company may terminate this Agreement
on one week's notice whether or not any of the periods
mentioned in Clauses 8.2 and 8.3 have been exceeded.
9. PROVISIONS AFTER TERMINATION
9.1 The Executive agrees that he shall not at any time after the
termination of this Agreement, either personally or by his
agent, directly or indirectly:-
9.1.1 represent himself as being in any way connected with
or interested in the business of the Company;
9.1.2 use or disclose to any person, firm or company any
information of a confidential nature (whether or not,
being a document, it was marked as confidential and
including, without limitation, the trade secrets,
processes, designs or secret business methods of the
Company, lists and particulars of the Company's
customers, and any information concerning the
organisation, businesses finances, transactions, or
affairs of the Company) directly or indirectly
relating to the affairs of the Company or to any
customer or supplier of the Company (both current and
those who were suppliers or customers during the
previous two years) which may have been acquired by
him in the course of or incidental to his employment
by the Company for his own benefit or for the benefit
of others or to the detriment of the Company or such
customer or supplier. The Executive acknowledges that
the names and requirements of and all other details
concerning the suppliers and customers of the Company
<PAGE>
are confidential. This restriction shall continue to
apply after termination of the Appointment for the
period of 12 months but shall cease to apply to
information or knowledge which may come into the
public domain otherwise than through unauthorised
disclosure by the Executive or any other person.
9.2 The Executive agrees that after the termination of this
Appointment (whether lawful or not) he shall not on his own
account or jointly with or as agent for any other person firm
or company either directly or indirectly, whether as director,
employee, shareholder, consultant or otherwise, carry on or be
engaged or concerned or interested in the carrying on within a
radius of 25 miles from his place of work during the
Appointment the business of reselling and distribution of
computer software or any other business similar to that
carried on by the Company in which the Executive shall have
been concerned at the date of such termination.
9.3 The Executive shall not after the termination of the
Appointment (whether lawful or not) directly or indirectly and
whether on his own behalf or on behalf of any other business,
concern, person, partnership, firm, company or other body
which is wholly or partly in competition with the business
carried on by the Company:
9.3.1 canvass, solicit or approach or cause to be canvassed
or solicited or approached for orders in respect of
any services provided or any goods dealt in by the
Company in respect of the provision or sale of which
the Executive was engaged during the last 12 months
of his employment with the Company, any person who at
the date of the termination of the Appointment was
negotiating with the Company for the supply of
services or goods or within 12 months prior to such
date is or was a client or customer of the Company or
was in the habit of dealing with the Company and with
whom the Executive shall have dealt;
9.3.2 interfere or seek to interfere or take such steps as
may interfere with the continuance of supplies to the
Company (or the terms relating to such supplies) from
any suppliers who have been supplying components
materials or services to the Company at any time
during the last 12 months of the Appointment;
<PAGE>
9.3.3 solicit or entice or endeavour to solicit or entice
away from the Company or offer or cause to be offered
any employment to any person employed by the Company
in a technical capacity at the date of such
termination for whom the Executive is responsible.
9.3.4 deal with any person or persons who or which at any
time during the period of 12 months prior to
termination of the Appointment have been in the habit
of dealing under contract with the Company.
9.4 The restrictions contained in Clauses 9.2 and 9.3 shall apply
for a period of 12 months, if the Appointment is terminated
(for whatever reason) within 12 months of the Commencement
Date, and thereafter shall apply for a period of 6 months from
the termination of the Appointment (howsoever caused).
9.5 The restrictions contained in this Clause 9 are separate and
severable and enforceable accordingly and considered
reasonable by the Parties (the Executive acknowledging the
legitimate need for the Company to protect its business
interests) but in the event that any such restriction shall be
found or held to be void in circumstances where it would be
valid if some part thereof were deleted or the period or
distance of application reduced, then the Parties agree that
such restriction shall apply with such modification as may be
necessary to make it valid and effective.
9.6 The decision of the Board as to whether or not any particular
business is such a similar business as to fall within the
provisions of this Clause shall be final and conclusive and
binding on the Executive.
<PAGE>
10. DEDUCTIONS
The Company has the right to deduct from the Executive's pay, any sums
which the Executive may owe the Company including, without limitation,
any overpayments or loans made to the Executive by the Company, or
losses (including any loss resulting from damage or loss of the
Executive's Company car) suffered by the Company as a result of the
Executive's negligence or breach of Company rules.
11. POSITIVE WORK ENVIRONMENT
In order that the Company may maintain a positive work environment for
all employees, the Executive is required not to engage in or permit any
fellow employee to engage in any sexual, racial or other harassment of
or unlawful discrimination against any person (whether or not a Company
employee) during the Appointment in line with the Company policy on sex
and race discrimination from time to time. The Company is an equal
opportunities employer.
12. SAFETY POLICY STATEMENT
The Company operates a health and safety policy, a copy of which has
been given to the Executive. The Executive is required to ensure that
he adheres to the requirements of this policy (as amended from time to
time).
13. CHANGES TO THE CONTRACT
13.1 The Company reserves the right to make reasonable changes to
any of the terms of this Agreement.
13.2 The Executive shall be notified of minor changes of detail by
way of written notice, and only such changes take effect from
the date of the notice.
13.3 The Executive shall be given not less than one month's written
notice of any significant changes, and is entitled to consult
with the Company on the terms of such changes. The changes
will be deemed to be accepted by the Executive unless the
Company is notified in writing of any objections before the
expiry of the notice period.
<PAGE>
14. OTHER AGREEMENTS
The Executive acknowledges and warrants that this Agreement supersedes
any earlier agreement as to service and there are no other agreements,
whether written oral or implied, between the Company and the Executive
relating to the employment of the Executive other than those set out in
this Agreement.
15. GENERAL
15.1 All communications between the Parties with respect to any of
the provisions of this Agreement shall be sent to the
addresses set out in this Agreement, or to such other
addresses as may be notified by the Parties for the purpose of
this Clause, by pre-paid registered or recorded delivery post
or facsimile transmission or other electronic means of written
communication, with confirmation by letter given by the close
of business on the next following business day. Any
communication to the Company shall be marked "For the
attention of the Company Secretary".
15.2 Communications which are sent or despatched as set out below
shall be deemed to have been received by the addressee as
follows:-
by post - 2 business days after despatch;
facsimile transmission or other electronic means of written
communication - on the business day next following the day on
which the communication was sent.
15.3 In proving service by post it shall only be necessary to prove
that the communication was contained in an envelope which was
duly addressed, stamped and posted by registered or recorded
delivery post. In proving service by facsimile transmission or
other electronic means of written communication, proof of
service will be accepted on proof of posting of the
confirmatory letter.
<PAGE>
15.4 For the purpose of Clauses 15.1 and 15.2 a "business day"
means a day on which the clearing banks in the City of London
are open for business and "business hours" means between the
hours of 09.00 and 18.00 local time.
15.5 The Schedule contains the particulars of the terms of
employment of the Executive required by the Employment Act.
15.6 The construction, validity and performance of this Agreement
is governed by the laws of England and the Parties agree to
submit to the sole and exclusive jurisdiction of the English
Courts.
EXECUTED AS A DEED by the Parties or their duly authorised representatives on
the date set out at the head of this Agreement.
<PAGE>
THE SCHEDULE
------------
1. NAME OF COMPANY
---------------
Easy I P Limited
2. NAME OF EXECUTIVE
-----------------
Ian Stuart Reay
3. PERIOD OF EMPLOYMENT
--------------------
A period of employment with a previous employer does not, for the
purpose of the Employment Act, form part of the continuous period of
service of the Executive with the Company. For the purpose of the
Employment Act, the date upon which the Executive's continuous period
of service began is [ ]
4. COMMENCEMENT DATE
-----------------
5. JOB TITLE
---------
Managing Director
6. NOTICE PERIOD
-------------
See Clause 2.2
7. REMUNERATION
------------
See Clause 5.1
<PAGE>
8. INTERVALS OF REMUNERATION
-------------------------
Monthly
9. HOLIDAYS
--------
The Executive is, in addition to statutory holidays, entitled to 25
working days holiday every calendar year and a rateable proportion for
a part of a calendar year as calculated in accordance with Clause 6.4,
all such days' holiday to be taken at such time or times as shall be
convenient to the Company. On the termination of the Appointment, the
entitlement of the Executive to holiday pay shall be calculated
rateably on the above basis.
10. SICK PAY
--------
Subject to Clause 8, there are no terms and conditions relating to
incapacity for work due to sickness or injury. Any entitlement to
payment during absence from work in other circumstances is at the
discretion of the Board.
11. PENSIONS
--------
A contracting-out certificate under the Social Security Pensions Act
1975 is [not] in force in respect of the Appointment.
There is no company pension scheme in which the Executive will
participate by virtue of the Appointment.
12. GRIEVANCE PROCEDURE
-------------------
The Executive should refer any grievance about the Appointment, or
about any decision relating to him, to the Board by giving written
notice. The reference will be dealt with by a majority present at the
relevant Board Meeting whose decision shall be final.
13. DISCIPLINARY RULES
------------------
There are no disciplinary rules relating to the Appointment other than
those expressly stated.
<PAGE>
14. TERMS AND CONDITIONS RELATING TO HOURS OF WORK
----------------------------------------------
The hours of work of the Executive shall be such hours as may be
requisite for the proper discharge of his duties in respect of this
Appointment.
15. PLACE OF WORK
-------------
[ ]
SIGNED AS A DEED by )
LIMITED )
- ---------------------------------------
acting by a director and its )
secretary or by two directors )
Director
Secretary/Director
SIGNED AS A DEED by )
IAN STUART REAY )
- ---------------
in the presence of:- )
<PAGE>
GRIEVANCE AND DISCIPLINARY PROCEDURES
1. GRIEVANCE PROCEDURE
1.1 If you have any grievance relating to your employment you
should raise the matter initially with the Board of Directors
you may be required to put any such grievance in writing.
1.2 Having enquired into your grievance the Board of Directors
will discuss it with you and will then notify you of its
decision.
1.3 If the decision of the Board of Directors is not acceptable
you may then refer the matter in writing to the Group Board of
Directors whose decision will be final and binding.
1.4 When stating grievances you may be accompanied by a fellow
employee of your choice.
1.5 If you believe that you are being sexually or racially
harassed or the victim of some other form of harassment or
unlawful discrimination, you should report any incident(s) to
the Board of Directors who will investigate and resolve the
matter quickly and in confidence.
2. DISCIPLINARY PROCEDURES
2.1 The purpose of the disciplinary procedures is to ensure that
the Company behaves fairly towards all its employees in
investigating and dealing with alleged instances of
unacceptable conduct or performance. Accordingly, the Company
reserves the right to depart from the precise requirements of
its disciplinary procedure specified below where it is
expedient to do so and where the resulting treatment of the
employee is no less fair. The procedure will only apply to
employees who have successfully completed their probationary
periods.
2.2 All cases of disciplinary action under these procedures will
be recorded and placed in the Company's records. A copy of the
Company's relevant record will be supplied at your request.
2.3 Offences under the Company's disciplinary procedures fall into
3 categories namely:
misconduct
gross misconduct
incapability
2.4 The following steps will be taken, as appropriate, in all
cases of disciplinary action:
<PAGE>
2.4.1 INVESTIGATION: No action will be taken before a
proper investigation has been undertaken by the
Company relating to the circumstances of the matter
complained of. If appropriate, the Company may by
written notice suspend you for a specified period
during which time such an investigation will be
undertaken. If you are so suspended your contract of
employment will be deemed to continue together with
all your rights under your contract including the
payment of salary, but during the period of
suspension you will not be entitled to access to any
of the Company's premises except at the prior request
or with the prior consent of the Company and subject
to such conditions as the Company may impose. The
decision to suspend you will be notified to you by
the Board of Directors and confirmed in writing.
2.4.2 DISCIPLINARY HEARINGS: If the Company decides to hold
a disciplinary hearing relating to the matter
complained of, you will be given details of the
complaint against you at least three working days
before any such disciplinary hearing. At any
disciplinary hearing you will be given an opportunity
to state your case. You may also be accompanied by a
fellow employee of your choice. No disciplinary
penalty will be imposed without a disciplinary
hearing.
2.4.3 APPEALS: You have a right of appeal at any stage of
the disciplinary procedures to the Group Board of
Directors. You should inform the Group Board of
Directors in writing of your wish to appeal within
five working days of the date of the decision which
forms the subject of your appeal.
The Group Board of Directors will conduct an appeal
hearing as soon as possible thereafter at which you
will be given an opportunity to state your case and
will be entitled to be accompanied by a fellow
employee of your choice.
The decision of the Group Board of Directors will be
notified to you in writing and will be final and
binding.
2.5 MISCONDUCT
2.5.1 The following offences are examples of misconduct:
Bad time keeping
Unauthorised absence
Minor damage to Company property
Minor breach of Company rules
Failure to observe Company procedures
Abusive behaviour
Sexual or racial harassment
These offices are not exclusive or exhaustive and
offences of a similar nature will be dealt with under
this procedure.
2.5.2 The following procedure will apply in cases of
alleged misconduct:
<PAGE>
FIRST WARNING: This will be given by the Board of
Directors and may be oral or written according to the
circumstances. In either event, you will be advised
that the warning constitutes the first formal stage
of this procedure. If the warning is verbal, a note
that such a warning has been given will be placed in
the Company's records.
FINAL WARNING: this will be given by the Board of
Directors and confirmed to you in writing. This
warning will state that, if you commit a further
offence of misconduct during the period specified in
it, your employment will be terminated.
DISMISSAL: The decision to dismiss you will not be
taken without reference to the Group Board of
Directors and will be notified to you in writing.
2.6 GROSS /MISCONDUCT
2.6.1 The following offences are examples of gross misconduct:
Theft or unauthorised possession of any property or
facilities belonging to the Company or any employee
Serious damage to Company property
Falsification of reports, accounts, expense claims or
self-certification forms
Refusal to carry out duties or reasonable
instructions
Intoxication by reason of drink or drugs
Having alcoholic drink or illegal drugs in your
possession, custody or control on the Company's
premises
Serious breach of Company rules
Violent, dangerous or intimidatory conduct
Sexual, racial or other harassment of a fellow
employee
These examples are not exhaustive or exclusive and
offences of a similar nature will be dealt with under
this procedure.
<PAGE>
2.6.2 Gross misconduct will result in immediate dismissal
without notice or pay in lieu of notice. The decision
to dismiss will not be taken without reference to the
Group Board of Directors Dismissal will be notified
to you in writing.
2.7 INCAPABILITY
2.7.1 The following are examples of incapability:
Poor performance
Incompetence
Unsuitability
Lack of application
These examples are not exhaustive or exclusive and
instances of a similar nature will be dealt with
under this procedure.
2.7.2 The following procedure will apply in cases of
incapability:
FIRST WARNING: this will be given by the Board of
Directors and will be confirmed to you in writing.
This warning will specify the improvement required
and will state that your work will be reviewed at the
end of a period of one month after the date of the
warning
FINAL WARNING: this will be given by the Board of
Directors and confirmed to you in writing. This
warning will state that unless your work improves
within a period of one month after the date of the
warning your employment will be terminated.
DISMISSAL: The decision to dismiss you will not be
taken without reference to the Group Board of
Directors Dismissal will be notified to you in
writing.
2.8 UNSATISFACTORY SICKNESS RECORD
2.8.1 The following are examples of unsatisfactory
attendance: long-term absence due to injury or
sickness; frequent short-term absence due to minor
ailments
2.8.2 In appropriate circumstances, the Company may require
you to be:
<PAGE>
(a) examined by an independent medical
practitioner of its choosing. In this event,
you agree to co-operate with such a request
and to permit the medical practitioner to
discuss with the Company the findings of his
examination and his prognosis for your
future recovery; and/or
(b) interviewed by a representative of the
Company (at your home, if necessary) if
there is a possibility, in the Company's
opinion, that your absence is wholly or
partly due to a personal or domestic
difficulty or there are other circumstances
with which the Company might be able to
assist you.
The findings of the medical practitioner and/or the
Company's representative will be taken into account
when the Company considers the kind of action, if
any, which it will take against you in respect of
your absence from work.
2.8.3 If appropriate, after such examination/interview, you
may be given a first warning by which will be
confirmed to you in writing. This warning will
specify a period, the length of which (usually,
between one and six months) will depend upon your
particular health or welfare difficulties:
(i) over which your attendance will be monitored
by the Company and a specified measure of
improvement will be required of you; or
(ii) at the end of which you will be expected to
have returned to work.
2.8.4 If appropriate at the end of such period, you may be
required to undergo another examination and/or
interview the results of which the Company will take
into account when it considers the kind of action, if
any, which it is appropriate to take against you.
2.8.5 Such action may include:
(a) the removal or reduction in your entitlement
to Company holiday; and/or
(b) the issue of a final warning by the Board of
Directors which will be confirmed to you in
writing and will specify a further period
over which your attendance will be monitored
and the level of improvement expected of you
during such period. This warning will state
that failure to show the necessary
improvement within the specified period will
result in your dismissal; or
(c) your dismissal on notice if concludes,
following your medical examination, that you
are not likely to be fit to return to work
in the foreseeable future and that, in all
the circumstances, the needs of its business
render it impracticable to await further
your return to health or fitness.
<PAGE>
2.8.6 The decision to dismiss you will not be taken without
reference to the Group Board of Directors and will be
notified to you in writing.
2.9 Subject to satisfactory performance and conduct any warning
under these procedures will be removed from the Company's
records after two years.
EXHIBIT 3(v)
BY-LAWS
OF
AMERICAN TELEMEDIA NETWORK. INC.
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE AND AGENT
The registered office of the Company shall be located at Corporation Trust
Center, 1209 Orange Street, City of Wilmington, County of New Castle, State of
Delaware 19801. The name of the registered agent of the Company at such location
shall be The Corporation Trust Company.
1.2 OTHER OFFICES
The Board of Directors may at any time establish other offices at any place
within or without the State of Delaware as the business of the Company may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place within or without the State
of Delaware as may be designated by the Board of Directors. In the absence of
any such designation. stockholders meetings shall be held at the registered
office of the Company.
2.2 ANNUAL MEETINGS
The annual meeting of stockholders shall be held each year on a date and at a
time designated by the Board of Directors. Such annual meetings shall be held
for the purpose of electing directors and for the transaction of such other
business as may properly come before the meeting.
2.3 SPECIAL MEETINGS
Special meetings of the stockholders may be called at any time for any purpose
by the board of directors, the Chairman of the Board, the President, or by the
holders of record of at least one-third of the issued and outstanding shares of
stock entitled to vote thereat.
<PAGE>
2.4 NOTICE OF STOCKHOLDER'S MEETINGS
All notices of meetings of stockholders shall be in writing and shall be sent or
otherwise given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting. The
notice shall specify the place, date, and hour of the meeting, and, in the case
of a special meeting, the purpose or purposes for which the meeting is called.
Notice of any meeting of stockholders, if mailed, is given when deposited in the
United States mail, postage prepaid, directed to the stockholder at his address
as it appears on the records of the Company. An affidavit of the Secretary or an
Assistant Secretary or of the transfer agent of the Company that the notice has
been given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein.
2.5 WAIVER OF NOTICE
Whenever notice is required to be given to any stockholder under any provision
of the General Corporation Law of Delaware or of the Certificate of
Incorporation or these By-Laws, a written waiver thereof, signed by the
stockholder entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a stockholder at a meeting
shall constitute a waiver of notice of such meeting, except when such
stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at.
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice unless so required by the Certificate
of Incorporation or these By-laws.
2.6 QUORUM AND REQUIRED VOTE
Except as otherwise required by statute or by the Certificate of Incorporation,
the holders of a majority of the stock issued and outstanding and entitled to
vote, whether present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business. If,
however, such quorum is not present or represented at any meeting of the
stockholders, then the stockholders of a majority of the shares entitled to vote
thereat, present in person or represented in proxy, or the Chairman of the
meeting shall have power to adjourn the meeting to another time and place in
accordance with Section 2.7 below. Except as otherwise required by statute or by
the Certificate of Incorporation, the affirmative vote of a majority of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the subject matter shall be the act of the stockholders. Where a
separate vote by class is required, a majority of the shares of such class
present in person or represented by proxy shall constitute a quorum of such
class, and the affirmative vote of a majority of shares in such class present in
person or represented by proxy at the meeting shall be the act of such class,
except as otherwise required by statute or by the Certificate of Incorporation.
2.7 ADJOURNED MEETINGS
When a meeting is adjourned to another time or place, notice need not be given
of the adjourned meeting if the time and place thereof are announced at the
meeting at which the adjournment is taken. At the adjourned meeting, the Company
may transact any business that might have been transacted at the original
meeting. If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
<PAGE>
2.8 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required to be taken at any annual or special meeting of stockholders
of a corporation, or any action that may be taken at any annual or special
meeting of such stockholders may be taken without a meeting, without prior
notice, and without a vote, if a consent in writing, setting forth the action so
taken, is signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted.
Prompt notice of the taking of the corporate action without a meting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. If the action which is consented to is such as would have
required the filing of a certificate under any Section of the General
Corporation Law of Delaware, if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such Section shall state, in
lieu of any statement required by such Section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
2.9 RECORD DATE FOR STOCKHOLDER NOTICES AND ACTIONS
In order that the Company may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the Board of Directors does not so fix a record date:
(i) the record date for determining stockholders entitled to notice of or to
vote at a meeting of stockholders shall be at the close of business on the day
next preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held; and
(ii) the record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is necessary, shall be the day on which the first written consent
is expressed; and
(iii) the record date for determining stockholders for any other purpose shall
be at the close of business on the day on which the Board of Directors adopts
the resolution relating thereto.
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A determination of stockholders of record entitled to notice of or to vote at a
meting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
2.10 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the Secretary of the Company, but no such proxy
shall be voted or acted upon after three (3) years from its date, unless the
proxy provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the stockholder or the
stockholders attorney-in-fact. The revocability of a proxy that states on its
face that it is irrevocable shall be governed by the provisions of section 212
Cc) of the General Corporation Law of Delaware.
2.11 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation shall prepare
and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such 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 least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the entire time
thereof, and may be inspected by the stockholder who is present.
2.12 ELECTION OF DIRECTORS
The election of directors does not need to be by written ballot.
2.13 CONDUCT OF MEETINGS
Meetings of the stockholders shall be presided over by the Chairman of the
Board, if any, or, in his absence, by the President, if present, or, in the
absence of both, by a Vice President or, if none of the foregoing is in office
and present and acting, by a Chairman to be chosen by a majority of the shares
entitled to vote who are present, in person or by proxy. The Secretary of the
Company, or in his absence, an Assistant Secretary, shall act as Secretary of
every meeting, but if neither the Secretary nor an Assistant Secretary is
present, the Chairman of the meeting shall appoint a Secretary of the meeting.
The order of business at all meetings of the stockholders shall be determined by
the Chairman of the meeting.
2.14 APPOINTMENT OF INSPECTORS
The Board of Directors, in advance of any meeting, may, but need not, appoint
one or more inspectors, who need not be stockholders to act at the meeting or
any adjournment thereof. If an inspector or inspectors have not been previously
appointed, the Chairman of the meeting may, and upon the request of any
shareholder or proxy shall, appoint one or more inspectors at the meeting. In
<PAGE>
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made at the meeting by the Chairman. The
inspectors, if any, shall determine the number of shares of stock outstanding
and the voting power-of each, the shares of stock represented at the meting, the
existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots or consents, determine when the polls shall close, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the Chairman of the meeting or any stockholder,
the inspector or inspectors, if any, shall make a report in writing of any
challenge, question, or matter determined by him or them and execute a
certificate of any fact found by him or them.
ARTICLE III
DIRECTORS
3.1
Subject to the provisions of the General Corporation Law of Delaware and any
limitations in the Certificate of Incorporation, the business and affairs of the
Company shall be managed and all corporate powers shall be exercised by or under
the direction of the Board of Directors.
3.2 NUMBER OF DIRECTORS
The authorized number of directors shall be fixed at eight (8) and may be
changed by the Board of Directors from time to time. No reduction of the
authorized number of directors shall have the effect of removing any director
before that director's term of office expires, unless such director earlier
resigns or is removed from office.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE
Except as provided in Section 3.5 below, directors shall be elected at each
annual meeting of stockholders. Directors need not be stockholders. Each
director shall hold office until his successor is elected and qualified or until
his earlier resignation or removal.
3.4 RESIGNATION OR RENEWAL
A director may resign at any time by written notice to the Company. Such
resignation shall take effect as of the date of receipt of such notice or at any
later time specified in such notice; and, unless otherwise specified in such
notice, the acceptance of resignation shall not be necessary to make it
effective. Any director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of the shares then entitled to vote
at an election of directors. Whenever the holders of any class or series are
entitled to elect one or more directors, this provision shall apply in respect
to the removal without cause of a director so elected, to the vote of the
holders of the outstanding shares of that class or series and not to the vote of
the outstanding shares as a whole.
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3.5 VACANCIES
Vacancies and newly created directorships may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director, or by the stockholders. Whenever the holders of any class or classes
of stock or series thereof are entitled to elect one or more directors by the
provisions of the Certificate of Incorporation, vacancies and newly created
directorships of such class or classes or series may be filled by a majority of
the directors elected by such class or classes or series thereof then in office,
or by a sole remaining director so elected, or by the stockholders of such class
or series of stock.
If at any time, the Company shall have no directors in office, then any officer
or any stockholder or an executor, administrator, trustee or guardian of a
stockholder, or other fiduciary entrusted with like responsibility for the
person or estate of a stockholder, may call a special meeting of stockholders in
accordance with the provisions of these By--laws, or may apply to the Court of
Chancery for a decree summarily ordering an election as provided in Section 211
of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created directorship, the
directors then in office constitute less than a majority of the whole board (as
constituted immediately prior to any such increase) then the Court of Chancery
may, upon application of any stockholder or stockholders holding at least ten
(10) percent of the total number of the shares at the time outstanding having
the right to vote for such directors, summarily order an election to be held to
fill any such vacancies or newly created directorships, or to replace the
directors chosen by the directors then in office as aforesaid, which election
shall be governed by the provisions of Section 211 of the General Corporation
Law of Delaware as far as applicable.
3.6 COMPENSATION
The Board of Directors shall have the authority to fix the compensation of
directors.
ARTICLE IV
MEETINGS OF DIRECTORS
4.1 PLACE OF MEETINGS
The Board of Directors of the Company may hold its meetings either within or
without the State of Delaware.
4.2 REGULAR MEETINGS
Regular meetings of the Board of Directors may be held at such time and at such
place as shall from time to time be determined by the Board of Directors and
publicized among all the directors. A notice of each regular meeting need not be
given.
<PAGE>
4.3 SPECIAL MEETINGS
Special meetings of the Board of Directors for any purpose may be called at any
time by the Chairman of the Board, the President, any Vice President, the
Secretary or any two (2) directors. Notice of the time and place of special
meetings shall be delivered personally or by telephone to each director or sent
by first--class mail or telegram, charges prepaid, addressed to each director at
that directors address as it is shown on the records of the Company. If the
notice is mailed, it shall be deposited in the United States mail at least four
(4) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone or by telegram, it shall be delivered
personally or by telephone or to the telegraph company at least forty-eight (48)
hours before the time of the holding of the meeting. Any oral notice given
personally or by telephone may be communicated either to the director or to a
person at the office of the director who the person giving the notice has reason
to believe will promptly communicate it to the director. The notice need not
specify the purpose of the meeting.
4.4 QUORUM AND REQUIRED VOTE
At all meetings of the Board of Directors, a majority of the authorized number
of directors shall constitute a quorum for the transaction of business (except
that, when only one director is authorized, one director shall constitute a
quorum) and the act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the Board of Directors, except as
may be otherwise specifically provided by law or by the Certificate of
Incorporation or these By--laws. If a quorum is not present at any meeting of
the Board of Directors, then the directors present thereat may adjourn the
meeting to another time and place without notice other than announcement at the
meeting, until a quorum is present.
4.5 MEETINGS BY TELEPHONE
Members of the Board of Directors, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors, or any
committee, by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear and talk to
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
4.6 WAIVER OF NOTICE
Whenever notice is required to be given to any director under any provision of
the General Corporation Law of Delaware or of the Certificate of Incorporation
or these By--laws, a written waiver thereof, signed by the director entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except when such director attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the directors need be specified in any written
waiver of notice.
4.7 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken at any meeting of the Board of
Directors may be taken without a meeting if all members of the Board of
Directors consent thereto in writing and such document is filed with the minutes
of proceedings of the Board of Directors.
<PAGE>
ARTICLE V
COMMITTEES OF DIRECTORS
5.1 ESTABLISHMENT AND AUTHORITY
The Board of Directors may, by resolution passed by a majority of the whole
board, designate one or more committees, with each committee to consist of one
or more of the directors of the Company. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board of Directors shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
Company, and may authorize the seal of the Company to be affixed to all papers
that may require it: but no such committee shall have the power or authority to
(i) amend the Certificate of Incorporation (except that a committee may, to the
extent authorized in the resolution or resolutions providing for the issuance of
shares of stock adopted by the Board of Directors as provided in Section 151(a)
of the General Corporations Law of Delaware, fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the Company or the conversion into,
or the exchange of such shares for, shares of any other class or classes or any
other series of the same or any other class or classes of stock of the Company
or fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series), (ii) adopt an agreement of merger or
consolidation under Sections 251 or 252 of the General Corporation Law of
Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all
or substantially all of the Company's property and assets, (iv) recommend to the
stockholders a dissolution of the Company or a revocation of a dissolution, or
(v) amend the By--laws of the Company: and, unless the board resolution
establishing the committee, the By--laws, or the Certificate of Incorporation
expressly so provide, no such committee shall have the power or authority to
declare a dividend, to authorize the issuance of stock, or to adopt a
certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
5.2 MEETINGS AND ACTIONS OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and taken in
accordance with, the provision, of Article IV of these By-laws, with such
changes in the context of those By-laws as are necessary to substitute the
committee and its members for the Board of Directors and its members: provided,
however that notice of regular and special meetings of committees shall also be
given to all alternate members, who shall have the right to attend all meetings
of the committee. Each committee may adopt rules for the governance of such
committee not inconsistent with the provisions of these By-laws or any
resolution of the Board of Directors.
<PAGE>
ARTICLE VI
OFFICERS
6.1 ELECTION OF OFFICERS
The officers of the Company shall be appointed by the Board of Directors and
shall serve subject to its direction and control. The officers of the Company
shall be a President, one or more Vice Presidents, a Secretary, and a Chief
Financial Officer. The Company may also have, at the discretion of the Board of
Directors, a Chairman of the Board, a Chief Executive Officer, a Treasurer,
Assistant Secretaries, Assistant Treasurers, and any such other officers as may
be determined by the Board of Directors. Any Vice President or other Assistant
officer shall exercise all the powers of the officer to which they are an
assistant. Any number of offices may be held by the same person.
6.2 TERM OF OFFICE AND COMPENSATION
The term of office and the compensation of each officer and the manner and time
of the payment of such compensation shall be determined by the Board of
Directors from time to time in its sole discretion, subject to the rights, if
any, of such officer under contract of employment with the Company. The
appointment of any officer shall not of itself create any contractual right of
employment. Each officer shall hold his office until his successor is elected
and qualified or until his earlier resignation or removal.
6.3 RESIGNATION OR REMOVAL
Any officer may resign at any time by giving written notice to the Company. Such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified in such notice, and, unless otherwise specified in such
notice, the acceptance of the resignation shall not be necessary to make it
effective. Any officer may be removed, either with or without cause, by the
Board of Directors or by any officer to whom such power of removal may be
delegated by the Board of Directors.
6.4 VACANCIES
Any vacancy occurring in any office of the Company by death, resignation,
removal, or otherwise shall be filled by the Board of Directors.
6.5 CHAIRMAN OF THE BOARD
The Chairman of the Board, if such an officer be elected, shall, if present,
preside at meetings of the Board of Directors and exercise and perform such
other powers and duties as may from time to time be assigned to him by the Board
of Directors.
6.6 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the Board of
Directors to the Chairman of the Board or the Chief Executive Officer, if there
be such an officer, the President shall have general supervision, direction, and
control of the business and the officers of the Company. He shall preside at all
meetings of the shareholders and, in the absence or nonexistence of a Chairman
of the Board, at all meetings of the Board of Directors. He shall have the
general powers and duties of management usually vested in the office of
President of a corporation and shall have such other powers and duties as may be
prescribed by the Board of Directors.
<PAGE>
6.7 VICE PRESIDENT
The titles, powers, and duties of the Vice President or Vice Presidents shall be
as prescribed by the Board of Directors. In the absence or disability of the
President, the Vice President, if any, in order of their rank as fixed by the
Board of Directors or, if not ranked, a Vice President designated by the Board
of Directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
President. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them by the Board of
Directors, the President, the Chairman of the Board, if any, and the Chief
Executive Officer, if any.
6.8 SECRETARY
The Secretary shall keep or cause to be kept, at the principal executive office
of the Company or such other place as the Board of Directors may direct, a book
of minutes of all meetings and actions of directors, committees of directors,
and stockholders. The minutes shall show the time and place of each meeting,
whether regular or special (and, if special, how authorized and the notice
given), the names of those present at directors' meetings or committee meetings,
the number of shares present or represented at stockholders' meetings, and the
proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal executive office
of the Company or at the office of the company' a transfer agent or registrar,
as determined by resolution of the Board of Directors, a share register, or a
duplicate share register, showing the names of all stockholders and their
addresses, the number and classes of shares held by each, the number and date of
certificates evidencing such shares, and the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all meetings of the
stockholders and of the Board of Directors required to be given by statute or by
these By--laws. He shall keep the seal of the Company, if one be adopted, in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors, the President, the Chairman of the
Board, if any, and the Chief Executive Officer, if any.
6.9 CHIEF FINANCIAL OFFICER
The Chief Financial Officer shall keep and maintain, or cause to be kept and
maintained, adequate and correct books and records of accounts of the properties
and business transactions of the Company, including accounts of its assets,
liabilities, receipts, disbursement, gains, losses, capital, retained earnings,
and shares.
The Chief Financial Officer shall deposit all money and other valuables in the
name and to the credit of the Company with such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the Company
as may be ordered by the Board of Directors, shall render to the President and
directors, whenever they request it, an account of all of his transactions as
Chief Financial Officer and of the financial condition of the Company, and shall
have such other powers and perform such other duties as may be prescribed by the
Board of Directors, the president, the Chairman of the Board, if any, and the
Chief Executive Officer, if any.
<PAGE>
6.10 APPROVAL OF LOANS TO OFFICERS
The Company may lend money to, or guarantee any obligation of, or otherwise
assist any officer or other employee of the Company or of its subsidiary,
including any officer or employee who is a director of the Company or its
subsidiary, whenever, in the judgment of the directors, such loan, guaranty or
assistance may reasonably be expected to benefit the Company. The loan, guaranty
or other assistance may be with or without interest and may be unsecured, or
secured in such manner as the Board of Directors shall approve, including,
without limitation, a pledge of shares of stock of the Company. Nothing in this
Section shall be deemed to deny, limit or restrict the powers of guaranty or
warranty of the Company at common law or under any statute.
6.11 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
>From time to time, the Board of Directors shall determine by resolution which
person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the Company, and which person or persons may enter
into any contract or execute any instrument in the name of and on behalf of the
Company. Such authority may be general or confined to specific instances. Unless
so authorized or ratified by the Board of Directors or within the agency power
of an officer, no officer, agent or employee shall have any power or authority
to bind the Company by any contract or engagement or to pledge its credit or to
render it liable for any purpose or for any amount.
ARTICLE VII
INDEMNIFICATION OF AGENTS
7.1 STANDARD IN NON-DERIVATIVE PROCEEDINGS
The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
and whether external or internal to the Company (other than a judicial action by
or in the right of the Company) by reason of the fact that he is or was a
director, officer, employee, trustee, or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee, trustee,
or agent of another corporation, partnership, joint venture, trust or other
enterprise (all such persons are hereafter referred to as "Agent"), against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding, or any appeal therein if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nob contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
<PAGE>
7.2 STANDARD IN DERIVATIVE SUITS
The Company shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed judicial action or suit
by or in the right of the Company to procure a judgment in its favor by reason
of the fact that he is or was an Agent of the Company against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense, settlement, or appeal of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
7.3 INDEMNIFICATION OF SUCCESSFUL PARTY
Notwithstanding the other provisions of this Article, to the extent that an
Agent of the Company has been successful on the merits or otherwise, including
without limitation the dismissal of an action without prejudice or the
settlement of an action without admission of liability, in defense of any
action, suit, or proceeding referred to in Sections 7.1 and 7.2 above, or in
defense of any claim, issue, or matter therein, or an appeal from any such
action, suit, proceeding, claim, or matter, such Agent shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
7.4 CONDITIONS OF INDEMNIFICATION
Any indemnification under Sections 7.1 and 7.2 of this Article (unless ordered
by a court) shall be made by the Company only as authorized in the specific case
upon a determination that indemnification of the Agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Sections 7.1 and 7.2 of this Article. Such determination shall be made (1) by
the Board of Directors by a majority vote of a quorum consisting surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued. For purposes of this Article, references to
"other enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the Company" shall
include any service as a director, officer. employee, trustee, or agent of the.
Company which imposes duties on, or involves services by, such director,
officer, employee, trustee, or agent with respect to an employee benefit plan,
its participants or beneficiaries: and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Company" as referred to in this
Section.
<PAGE>
7.9 CONTINUING RIGHT
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
7.10 SAVINGS CLAUSE
If this Article or any portion thereof shall be invalidated by any court of
competent jurisdiction, the remaining provisions hereof shall nevertheless
remain in full force and effect and the Company shall indemnify each Agent
hereunder to the full extent permitted by any remaining portion of this Article
that shall not have been invalidated or by any other applicable law.
7.11 SPECIAL LIMITATIONS ON LIABILITY OF DIRECTORS
No director of the Company shall be personally liable to the Company or its
stockholders for monetary damages arising out of or resulting from any breach of
his fiduciary duty as a director in connection with any act or omission
occurring subsequent to the effective date of this provision as part of the
Certificate of Incorporation of the Company: provided that this provision shall
not in any case eliminate or limit any such liability of a director arising out
of or resulting from (a) a breach by such director of his duty of loyalty to the
Company or to its stockholders, (b) any act or omission of such director not in
good faith or which involves intentional misconduct or a knowing violation of
law, (c) any payment of a dividend on or any purchase or redemption of the
capital stock of the company or other transaction in violation of Section 174 of
the General Corporation Law of Delaware, or (d) any transaction from which such
director derived an improper personal benefit.
ARTICLE VIII
RECORDS AND INSPECTION RIGHTS
8.1 MAINTENANCE OF RECORDS
The Company shall, either at its principal executive office or at such place or
places as designated by the Board of Directors, keep a record of its
shareholders, listing their names and addresses and the number and class of
shares held by each shareholder, a stock ledger, copies of the Certificate of
Incorporation, as amended, a copy of these By-laws, as amended minute books,
accounting books, and other records. Any records maintained by the Company in
the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time.
8.2 INSPECTION BY STOCKHOLDERS
Any stockholder of record, in person or by attorney or other agent, shall, upon
written demand under oath stating the purpose thereof, have the right during the
usual hours for business to inspect for any proper purpose the Companys stock
ledger, a list of its stockholders, and its other books and records and to make
copies of extracts therefrom. A proper purpose shall mean a purpose reasonably
related to such persons interest as a stockholder. In every instance where an
attorney or other agent is the person who seeks the right to inspection, the
demand under oath shall be accompanied by a power of attorney or such other
writing that authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Company at its
registered office in Delaware or at its principal place of business.
<PAGE>
8.3 INSPECTION BY DIRECTORS
Any director shall have the right to examine the company's stock ledger, a list
of its stockholders, and its other books and records for a purpose reasonably
related to his position as a director. The Court of Chancery is hereby vested
with the exclusive jurisdiction to determine whether a director is entitled to
the inspection sought. The Court may similarly order the Company to permit the
director to inspect any and all to make copies or extracts therefrom. The Court
may, in its discretion, prescribe any limitations or conditions with reference
to the inspection, or award such other and further relief as the Court may deem
just and proper.
ARTICLE IX
SUNDRY PROVISIONS
9.1 SHARES HELD BY THE COMPANY
Shares of stock of other companies which stand in the name of this Company may
be voted or represented and all rights incident thereto may be exercised on
behalf of this Company by any officer of the Company who has been authorized to
do so by resolution of the Board of Directors.
9.2 STOCK CERTIFICATES
The shares of a corporation shall be represented by certificates, provided that
the Board of Directors of the Company may provide by resolution or resolutions
that some or all of any or all classes or series of its stock shall be
uncertificated shares. Any such resolution shall not apply to shares represented
by a certificate until such certificate is surrendered to the Company.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock represented by certificates and upon request every holder
of uncertificated shares shall be entitled to have a certificate signed by, or
in the name of the company by the Chairman or Vice Chairman of the Board of
Directors, or the President, or Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary or such
corporation representing the number of shares registered in certificate form.
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate has ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the Company
with the same effect as if he were such officer, transfer agent or registrar at
the date of issue.
9.3 LEGENDS ON CERTIFICATES
If the Company is authorized to issue more than one class of stock or more than
one series of any class, then the powers, the designations, the preferences, and
the 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 Company shall issue to represent such
<PAGE>
class or series of stock: provided, however, that, except as otherwise provided
in section 202 of the General Corporation Law of Delaware, in lieu of the
foregoing requirements there may be set forth on the face or back of the
certificate that the Company shall issue to represent such class or series of
stock a statement that the Company will furnish without charge to each
stockholder who so requests the powers, the designations, the preferences, and
the 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.
9.4 LOST CERTIFICATES
The Company may issue a new certificate of stock or uncertificated share in the
place of any certificate theretofore issued by it, alleged to have been lost,
stolen or destroyed, and the Company may require the owner of the lost, stolen
or destroyed certificate, or his legal representative, to give the Company a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
9.5 CORPORATE SEAL
The corporate seal, if any, shall be in such form as the Board of Directors
shall prescribe. The corporate seal may be affixed originally or may be
reproduced in any manner. Duplicate seals may be kept as required.
9.6 STOCK TRANSFER AGREEMENTS
The Company shall have power to enter into and perform any agreement with any
number of shareholders of any one or more classes of stock of the Company to
restrict the transfer of shares of stock of the company of any one or more
classes owned by such stockholders in any manner not prohibited by the General
Corporation Law of Delaware.
9.7 REGISTERED STOCKHOLDERS
The Company shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive dividends and to vote
as such owner, shall be entitled to hold liable for calls and assessments the
person registered on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of another person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of Delaware.
ARTICLE X
CONSTRUCTION OF BY-LAWS
10.1 BY-LAW PROVISIONS ADDITIONAL AND SUPPLEMENTED TO PROVISIONS OF LAW
<PAGE>
All restrictions, limitations, requirements and other provisions of these
By-laws shall be construed, insofar as possible, as supplemental and additional
to all provisions of law applicable to the subject matter thereof and shall be
fully complied with in addition to the said provisions of law unless such
compliance shall be illegal.
10.2 BY-LAW PROVISIONS CONTRARY TO OR INCONSISTENT WITH PROVISIONS OF LAW
Any article, section, subsection, subdivision, sentence, clause or phrase of
these By-laws which shall be contrary to or inconsistent with any applicable
provision of law shall not apply so long as said provisions of law shall remain
in effect, but such result shall not affect the validity or applicability of any
other portion of these By-laws, it being hereby declared that these By-laws, and
each article, section, subsection, subdivision, sentence, clause or phrase
thereof, would have been adopted irrespective of the fact that any one or more
articles, sections, subsections, subdivisions, sentences, clauses or phrases is
or are illegal.
ARTICLE XI
AMENDMENTS
These By-laws may be amended or repealed by the Board of Directors or by the
stockholders: provided that the determination of the stockholders shall be
controlling and may not be subsequently reversed or altered except by the
subsequent action of the stockholders.
EXHIBIT 3(vi)
AGREEMENT AND PLAN OF MERGER OF ATN. INC., A UTAH CORPORATION, AND
AMERICAN TELEMEDIA NETWORK, INC., A DELAWARE CORPORATION
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 25, 1987 (the "Agreement")
is between ATN, Inc., a Utah corporation ("ATN Utah") and American Telemedia
Network, Inc., a Delaware corporation ("ATN Delaware"). ATN Utah and ATN
Delaware are sometimes referred to herein as the "Constituent Corporations."
RECITALS:
A. ATN Utah is a a corporation duly organized and existing under the laws of
the State of Utah and has an authorized capital of 30,000,000 shares,
comprising 10,000,000 shares of undesignated Preferred Stock, having no par
value, issuable in one or more series, of which no shares are issued and
outstanding, and 20,000,000 shares of Common Stock, having no par value,
6,911,917 shares of which are issued and outstanding.
B. ATN Delaware is a corporation duly organized and existing under the laws of
the State of Delaware and has an authorized capital of 30,000,000 shares, of
which 10,000,000 shares are undesignated Preferred Stock, $.01 par value,
issuable in one or more series, of which no shares are issued and
outstanding, and 20,000,000 shares of Common Stock, having no par value, 100
shares of which are issued and outstanding and are held by ATN Utah.
C. The Board of Directors of ATN Utah has determined that, for the purpose of
effecting the reincorporation of ATN Utah in the State of Delaware, it is
advisable that ATN Utah merge with and into ATN Delaware upon the terms and
conditions herein provided.
D. The respective Boards of Directors of ATN Utah and ATN Delaware have
approved this Agreement and the Boards of Directors of ATN Utah and ATN
Delaware have directed that this Agreement be submitted to a vote of their
shareholders. NOW THEREFORE, in consideration of the mutual agreements and
covenants set forth herein, ATN hereby agree, subject to the terms and
conditions hereinafter set forth, as follows:
<PAGE>
I
MERGER
1.1 MERGER
In accordance with the provisions of this Agreement, the Delaware General
Corporation Law and the Utah Business Corporation Act, ATN Utah shall be merged
with and into ATN Delaware (the "Merger") and ATN Delaware shall be, and is
herein sometimes referred to as, the "Surviving Corporation," and the name of
the Surviving Corporation shall be "American Telemedia Network, Inc."
1.2 FILING AND EFFECTIVENESS
The Merger shall become effective when the following actions shall have been
completed:
a) This Agreement and the Merger shall have been adopted and approved by the
stockholders of each Constituent Corporation in accordance with the
requirements of the Delaware General Corporation Law and the Utah Business
Corporation Act;
b) All of the conditions precedent to the consummation of the Merger specified
in this Agreement shall have been satisfied or duly waived by the party
entitled to satisfaction thereof;
c) An executed Certificate of Merger or an executed counterpart of this
Agreement shall have been filed with the Secretary of State of the State of
Delaware; and
d) An executed Certificate of Merger meeting the requirements of the Utah
Business Corporation Act shall have been filed with the Division of
Corporations and Commercial Code of the State of Utah. The date and time
when the Merger shall become effective, as aforesaid, is herein called the
"Effective Date of Merger."
1.3 - CERTIFICATE OF INCORPORATION
The Certificate of Incorporation of ATN Delaware as in effect immediately prior
to the Effective Date of Merger shall continue in full force and effect as the
Certificate of Incorporation of the Surviving Corporation until duly amended in
accordance with the provisions thereof and applicable law.
<PAGE>
1.4 - BY-LAWS
The By-Laws of ATN Delaware as in effect immediately prior to the Effective Date
of Merger shall continue in full force and effect as the By-Laws of the
Surviving Corporation until duly amended in accordance with the provisions
thereof and applicable law.
1.5 - DIRECTORS AND OFFICERS
The directors and officers of ATN Delaware immediately prior to the Effective
Date of Merger shall be the directors and officers of the Surviving Corporation
until their successors shall have been elected and qualified or until otherwise
provided by law, the Certificate of Incorporation of the Surviving Corporation,
by or the By-Laws of the Surviving Corporation.
1.6 - EFFECT OF MERGER
Upon the Effective Date of Merger, the separate existence of ATN Utah shall
cease and ATN Delaware, as the Surviving Corporation, (i) shall continue to
possess all of its assets, rights, powers and property as constituted
immediately prior to the Effective Date of Merger, shall be subject to all
actions previously taken by the ATN Utah Board of Directors and shall succeed,
without other transfer, to all of the assets, rights, powers and property of ATN
Utah in the manner of and as more fully set forth in Section 259 of the Delaware
General Corporation Law, and (ii) shall continue to be subject to all of its
debts, liabilities and obligations as constituted immediately prior to the
Effective Date of Merger and shall succeed, without other transfer, to all of
the debts, liabilities and obligations of ATN Utah in the same manner as if ATN
Delaware had itself incurred them, all as more fully provided under the
applicable provisions of the Delaware General Corporation Law and the Utah
Business Corporation Act.
II
MANNER OF CONVERSION OF STOCK
2.1 - ATN UTAH COMMON STOCK
Upon the Effective Date of Merger, each share of Common Stock, without par
value, of ATN Utah issued and outstanding immediately prior thereto shall, by
virtue of the Merger and without any action by the holder of such shares or any
other person, be converted into and exchanged for one fully paid and
nonassessable share of Common Stock, $.01 par value, of ATN Delaware, the
Surviving Corporation.
<PAGE>
2.2 - OPTIONS, WARRANTS, STOCK PURCHASE RIGHTS, AND OTHER CONVERTIBLE SECURITIES
Upon the Effective date of Merger, the Surviving Corporation shall assume and
continue the 1985 Incentive and Non-Qualified Stock Option Plan of ATN Utah. In
addition, each outstanding and unexercised option, warrant, and right to
purchase ATN Utah's Common Stock shall become an option, warrant, and right to
purchase the Surviving Corporations Common Stock on the basis of one share of
the Surviving Corporation's Common Stock for each share of ATN Utah's Common
Stock issuable pursuant to any such option, warrant, or stock purchase right, on
the same terms and conditions and at an exercise price per share equal to the
exercise price applicable to any such ATN Utah option, warrant, or right at the
Effective Date of Merger.
A number of shares of the Surviving Corporation's Common Stock shall be reserved
for issuance upon the exercise of options, warrants, and stock purchase rights
equal to the number of shares of ATN Utah Common Stock so reserved immediately
prior to the Effective Date of Merger.
2.3 - ATN DELAWARE COMMON STOCK
Upon the Effective Date of Merger, each share of Common Stock, $.01 par value,
of ATN Delaware issued and outstanding immediately prior thereto shall, by
virtue of the Merger and without any action by the holder of such shares or any
other person, be cancelled and returned to the status of authorized but unissued
shares.
2.4 - EXCHANGE OF CERTIFICATES
After the Effective Date of Merger, each holder of an outstanding certificate
representing shares of ATN Utah Common Stock may at such shareholder's option
surrender the same for cancellation to the American Stock Transfer Company, as
exchange agent (the "Exchange Agent"), and each such holder shall be entitled to
receive in exchange therefor a certificate or certificates representing the
number of shares of the Surviving Corporation's Common Stock into which the
surrendered shares were converted as herein provided. Until so surrendered, each
outstanding certificate theretofore representing shares of ATN Utah Common Stock
shall be deemed for all purposes to represent the number of shares of the
Surviving Corporation's Common Stock into which such shares of ATN Utah Common
Stock were converted in the Merger.
The registered owner on the books and records of the Surviving Corporation or
the Exchange Agent of any such outstanding certificate shall, until such
certificate shall have been surrendered for transfer or conversion or otherwise
accounted for to the Surviving Corporation or the Exchange Agent, have and be
entitled to exercise any voting and other rights with respect to and to receive
dividends and other distributions upon the shares of the Surviving Corporation
represented by such outstanding certificate as provided above.
Each certificate representing Common Stock of the Surviving Corporation so
issued in the Merger shall bear the same legends, if any, with respect to the
restrictions on transferability as the certificates of ATN Utah so converted and
given in exchange therefor, unless otherwise determined by the Board of
Directors of the Surviving Corporation in compliance with applicable laws.
<PAGE>
If any certificate for shares of ATN Delaware stock is to be issued in a name
other than that in which the certificate surrendered in exchange therefor is
registered, it shall be a condition of issuance thereof that the certificate so
surrendered shall be properly endorsed and otherwise in proper form for
transfer, that such transfer otherwise be proper and that the person requesting
such transfer pay to the Exchange Agent any transfer or other taxes payable by
reason of the issuance of such new certificate in a name other than that of the
registered holder of the certificate surrendered or establish to the
satisfaction of ATN Delaware that such tax has been paid or is not payable.
III
GENERAL
3.3 - COVENANTS OF ATN DELAWARE
ATN Delaware covenants and agrees that it will, on or before the Effective Date
of Merger:
a) Qualify to do business as a foreign corporation in the State of Utah and in
connection therewith establish a registered office and a registered agent as
required by the Utah Business Corporation Act.
b) File any and all documents with the tax authority of the State of Utah
necessary to the assumption by ATN Delaware of all the Utah state tax
liabilities of ATN Utah.
c) Take such other actions as may be required by the Utah Business Corporation
Act.
3.2 - ABANDONMENT
At any time before the Effective Date of Merger, this Agreement may be
terminated and the Merger may be abandoned for any reason whatsoever by the
Board of Directors of either ATN Utah or ATN Delaware or both, notwithstanding
the approval of this Agreement by the shareholders of ATN Utah or the
shareholders of ATN Delaware.
3.3 - AMENDMENT
The Boards of Directors of the Constituent Corporations may amend this Agreement
at any time prior to the filing of this Agreement (or a certificate in lieu
thereof) with the Secretary of State of the State of Delaware, provided that an
amendment made subsequent to the adoption of the agreement by the stockholders
of either Constituent Corporation shall not: (1) alter or change the amount or
kind of shares, securities, cash, property and/or rights to be received in
exchange for or on conversion of all or any of the shares of any class or series
thereof of such Constituent Corporation, (2) alter or change any term of the
Certificate of Incorporation of the Surviving Corporation to be effected by the
merger or consolidation, or (3) alter or change any of the terms and condition
of this Agreement if such alteration or change would adversely affect the
holders of any class or series thereof of such Constituent Corporation.
<PAGE>
3.4 - REGISTERED OFFICE
The registered office of the Surviving Corporation in the State of Delaware is
located at Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware
19801, and The Corporation Trust Company is the registered agent of the
Surviving Corporation at such address.
3.5 - AGREEMENT
Executed copies of this Agreement will be on file at the principal place of
business of the Surviving Corporation at 890 Quail Valley Drive, Provo, Utah
84604, and copies thereof will be furnished to any shareholder of each
Constituent Corporation upon request and without cost.
3.6 - GOVERNING LAW
This Agreement shall in all respects be construed, interpreted and enforced in
accordance with and governed by the laws of the State of Delaware, and, so far
as applicable, the merger provisions of the Utah Business Corporation Act.
3.7 - COUNTERPARTS
In order to facilitate the filing and recording of this Agreement, the same may
be executed in any number of counterparts, each of which shall be deemed to be
an original.
IN WITNESS WHEREOF, this Agreement, having first been approved by resolution of
the Boards of Directors of ATN Utah and ATN Delaware, is hereby executed on
behalf of each of such two corporations and attested by their respective
officers thereunto duly authorized.
AMERICAN TELEMEDIA NETWORK, INC. ATN, INC.,
a Delaware corporation A Utah corporation
By /s/ Kraig T Higginson By /s/ Earl K Cook
Kraig T Higginson, Earl K Cook
PRESIDENT CHAIRMAN OF THE BOARD OF DIRECTORS
ATTEST:
/s/ R Thomas Bailey
R Thomas Bailey
SECRETARY
EXHIBIT 3(vii)
AGREEMENT OF SALE
AGREEMENT OF SALE, made as Aug 6 1999, between Ray May, having an address at 738
McCann Road, Savcrna Park, MD 21146, ("Seller"), and Eurotelecom Communications,
Inc., a Delaware corporation, having an address at Mexborough Business Centre,
College Road, Mexborough, South Yorkshire England, S64 9P, ("Purchaser").
WHEREAS, Purchaser desires to acquire, and Seller desires to sell, the shares or
stock of RTC, Inc., upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the covenants and agreements hereafter set
forth, and other valuable consideration, the receipt and sufficiency of which
hereby are acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO SELL
Seller agrees to sell, transfer and deliver to Purchaser, and Purchaser agrees
to purchase, upon the terms and conditions hereinafter set forth, all of shares
of the capital stock of RTC, Inc., a corporation organized under the laws of
Maryland (the "Corporation"), said 1,000 shares constituting all of the
authorized and issued shares of the Corporation (the "Shares").
2. THE ASSETS OF THE CORPORATION
It is the understanding of the parties that the Corporation is the owner of the
following assets (the "Assets"):
a) the inventory of merchandise, parts and supplies of the business (the
"Merchandise");
b) the equipment described in Exhibit A-1 hereto (the "Equipment");
c) the vehicles described in Exhibit A-2 hereto (the "Vehicles");
d) the furniture, fixtures and improvements described in Exhibit A-3
hereto (the "Improvements");
e) the leases described in exhibit A-4 hereto (the "Leases");
f) the accounts receivable of the business outstanding on the closing date
(the "Accounts Receivable");
g) the copyrights described in Exhibit A-5 hereto (the "Copyrights");
h) the patents and rights described in Exhibit A-6 hereto (the "Patents");
<PAGE>
i) the contracts and agreement described in Exhibit A-7 hereto (the
"Contracts");
j) the books and records of the business;
k) all right, title and interest of Seller in the name RTC, Inc. and any
variants thereof (the "Name"); and
l) the goodwill of the business (the "Goodwill")
3. PURCHASE PRICE
Purchase price to be paid by Purchaser is 250,000 shares of common stock or the
Purchaser payable at the closing.
4. THE CLOSING.
The "closing" means the settlement of the obligations of Seller and Purchaser to
each other under this agreement, including the payment of the purchase price to
Seller as provided in Article I hereof and the delivery of the closing documents
provided for in Article I hereof. The closing shall be held at the offices of
Kenneth B. Falk, 843 Rahway Avenue, Woodbridge, NJ 07095, or at such other time
and place as maybe determined by the parties at 10A.M. on or about August 18
1999 (the "closing date")
5. CLOSING DOCUMENT
At the closing Seller shall execute and deliver to Purchaser;
(a) the certificate or certificates for the Shares, duly endorsed so as to
effectively transfer ownership of the Shares to Purchaser, together with all
appropriate Federal and State transfer tax stamps affixed
(b) letters of resignation from each director and officer of the Corporation,
effective as of the closing hereunder
(c) the Certificate of Incorporation or other organizational documents of the
Corporation, and the Bylaws. minute book, stock certificate book, and seal of
the Corporation; the Leases; any bills, vouchers, records showing the ownership
of the furniture, furnishings, equipment, other property used in the operation
of' the Corporation; and all other books of account, records and contracts of
the Corporation
(d) such other instruments as may be necessary or proper to transfer to
Purchaser all other ownership interests in the Corporation to be transferred
under this agreement
Sellor shall advise Purchaser of, and cause to be delivered to Purchaser, all
trade secrets and proprietary information pertaining to the business.
<PAGE>
6. CREDITORS
Seller represents, to the best of sellers knowledge and belief, that the
Schedule of Creditors, annexed hereto as Exhibit B, sets forth the names and
business addresses of all of the creditors of the Corporation, as of the date
shown thereon, and the amounts owed to each of the creditors, and also the names
and business addresses of all persons who are known to Seller to assert claims
against the Corporation even though such claims are disputed and the amounts of
such disputed claims.
7. REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to
Purchaser as follows:
a) Seller has full power and authority to carry out and perform his
undertakings and obligations as provided herein.
b) No action, approval, consent or authorization of any governmental authority
is necessary for Seller to consummate the transactions contemplated hereby.
c) The Corporation is a corporation duly organized in 1990 under the laws
of the State of Maryland, and the Corporation is validly existing and
has not been dissolved,
d) Seller is the owner of the Shares, and the Shares are all of the issued and
outstanding shares of stock of the Corporation. All of the Shares have no
par value, are fully paid and non-assessable, have not been assigned,
pledged or hypothecated, and are free of all liens, claims and encumbrances.
e) The Corporation is the owner of all of the Assets enumerated in Article 2
hereof, free of all liens, claims and encumbrances, except as may be set
forth herein.
f) There are no violations of any law or governmental rule or regulation
pending against Seller, the Shares or the Corporation.
g) The Corporation Schedule of Creditor set forth in Exhibit B is true and
complete in all material respects.
h) There are no judgments, liens, suits, actions ot proceedings pending against
Seller, the Shares or the Corporation.
i) The Corporation has not entered into, and is not subject to, any: (i)
written contract or agreement for the employment of any employee of the
business; (ii) contract with any labor union or guild; (iii) pension,
profit-sharing, retirement, bonus, insurance, or similar plan with respect
to any employee of the business; or (iv) similar contract or agreement
affecting or relating to the Corporation,
j) The Leases are in full force and effect and without any default by the
Corporation thereunder. All copies of the Leases provided by Seller to
Purchaser are true and complete copies of the original Leases.
k) The Contracts are in full force and effect and without any default by the
Corporation thereunder. All copies of the Contracts provided by Seller to
Purchaser arc true and complete copies of the original Contracts.
<PAGE>
l) The Corporation has filed each tax return, including without limitation all
income, excise, property, gain, sales, franchise and license tax returns,
required to be filed by the Corporation prior to the date hereof. Each such
return is true, complete and correct, and the Corporation has paid all
taxes, assessments and charges of any governmental authority required to be
paid by it and has created reserves or made provision for all taxes accrued
but not yet payable. No government is now asserting, or to Seller's
knowledge threatening to assert, any deficiency or assessment for additional
taxes or any interest, penalties or fines with respect to the Corporation.
m) The financial statements, balance sheets and other information pertaining to
the Corporation set forth In Exhibit C hereto are true, correct and complete
as of the dates and for the periods set forth therein; have been prepared in
accordance with generally accepted accounting principles consistently
applied; and fairly represent the financial position of the Corporation at
such dates and for such periods. The Corporation had at said dates no
liabilities or obligations of any kind, contingent or otherwise, not
reflected in Exhibit C. Except as shown in Exhibit C, the Corporation owns
outright each asset or item of property reflected therein, free of all
liens, claims and encumbrances. Since said dates and periods, there has been
no material adverse change in the financial condition, assets or liabilities
of the Corporation.
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
a) Purchaser is a corporation duly organized and validly existing under the
laws of Delaware, and is duty qualified to do business in New Jersey.
Purchaser has full power and authority to carry out and perform its
undertakings and obligations as provided herein. The execution and delivery
by Purchaser of this agreement and the consummation of the transactions
contemplated herein have been duty authorized by the Board of Directors of
Purchaser and will not conflict with or breach any provision of the
Certificate of Incorporation or Bylaws of Purchaser.
b) No action, approval, consent or authorization of any governmental authority
is necessary for Purchaser to consummate the transactions contemplated
hereby.
9. NO OTHER REPRESENTATIONS
Purchaser acknowledges that neither Seller nor any representative or agent of
Seller has made any representation or warranty (expressed or implied) regarding
the Corporation, or any matter or thing affecting or relating to this agreement,
except as specifically set forth in this agreement. Seller shall not be liable
or bound in any manner by any oral or written statement, representation,
warranty, agreement or information pertaining to the Corporation or this
agreement furnished by any broker, agent or other person, unless specifically
set forth in this agreement
10. CONDUCT OF THE BUSINESS
Seller, until the closing, shall:
a) conduct the business in the normal, useful and regular manner;
b) use his best efforts to preserve the business and the goodwill of the
customers and suppliers of the business and others having relations with
Seller; and;
<PAGE>
c) give Purchaser and its duly designated representatives reasonable access to
the premises of the Corporation and the books and records of the
Corporation, and furnish to Purchaser such data and information pertaining
to the Corporation as Purchaser from time to time reasonably may request.
Unless and until the closing shall take place, Purchaser shall hold in
confidence all information obtained in connection with this agreement, and, if
for any reason the closing shall not take place, Purchaser shall return to
Seller all documents received hereunder,
11. CONDITIONS TO CLOSING
The obligations of the parties to close hereunder are subject to the following
conditions:
a) All of the terms, covenants and conditions to be complied with or performed
by the either party under- this agreement on or before the closing shall
have been complied with or performed in all material respects.
b) All representations or warranties of the other party herein are true in all
material respects as of the closing date.
c) On the closing date, there shall be no liens or encumbrances against the
Corporation, except as may be provided for herein.
If Purchaser shall be entitled to decline to close the transactions contemplated
by this agreement, but Purchaser nevertheless shall elect to close, Purchaser
shall be deemed to have waived all claims of any nature arising from the failure
of Seller to comply with the conditions or other provisions of this agreement of
which Purchaser shall have actual knowledge at the closing.
12. INDEMNIFICATION
Each party hereto shall indemnify and hold the other party harmless from and
against all liability, claim, loss, damage or expense, including reasonable
attorneys' fees, incurred or required to be paid by such other party by reason
of any breach or failure of observance or performance of any representation,
warranty or covenant or other provision alibis agreement by such party.
13. EMPLOYMENT DURING TRANSITION PERIOD
In order to provide for an orderly transfer of the operations of the business,
Ray May shall continue to be employed by the Corporation for a period of 3 years
following the closing for the compensation set forth in a separate employment
agreement between the Corporation and Ray May, a copy of which is attached
hereto as Exhibit D.
14. COVENANT NOT TO COMPETE
The Seller shall deliver an agreement by Ray May not to establish, open, be
engaged in, nor in any manner whatsoever become interested, directly or
indirectly, either as employee, owner, partner, agent, shareholder, director,
officer, or otherwise, in any business, trade or occupation similar to the
business sold hereunder, for a period of 5 years from the closing date, within
the following area: Pennsylvania, Delaware, North and South Carolina, Maryland.
Virginia, Washington, D.C.
<PAGE>
15. SECURITIES ACT.
A. The Seller represents that he understands that the Shares will be issued
without registration under the Securities Act of 1933, as amended (the
"Act") in reliance upon the private offering exemption contained under
Section 4(2) and 3 (a) of the Act as promulgated by the Securities Exchange
Commission, and that such reliance is based, in part, on the information
herein supplied. For the foregoing reasons, and to induce the Purchaser to
issue and deliver such Shares of Common Stock to the Seller, the Seller
represents and warrants that the information stated in this section 16 is
true, accurate and complete to the best of my knowledge and belief, and the
Seller agrees to notify and supply corrective information to the Purchaser
promptly, if, prior to the closing, any or such information becomes
inaccurate or incomplete.
B. The Seller is aware that no federal or state agency has made any findings or
determination as to the fairness for public or private investment, nor any
recommendation or endorsement, of the Shares as an investment.
C. The Seller is the sole party in interest as a purchaser of the Shares.
D. The Seller recognizes the speculative nature and risks of loss associated
with the Purchaser and confirms that the Shares constitute an investment
which is suitable and consistent with his investment program and that his
financial position enables him to bear the risks of this investment.
E. The Seller is aware that there is no public market for the Shares and, that
it will not be possible to readily liquidate his/her investment.
F. The Seller is acquiring the Shares for investment solely for his/her own
account and not with a view to, or for resale in connection with, any
distribution of such Shares of Common Stock within the meaning of the
Securities Act of 1933, as amended, and the Rules and Regulations
promulgated thereunder (the "Act"). The Seller is aware and agrees that a
restrictive legend will be placed on the certificate for the shares setting
forth this restriction on the sale of the Shares.
G. The Seller is aware and furthermore acknowledges being informed that the
shares have not been registered under the Securities Act of 1933 ("Act") by
reason of a specific exemption thereunder and that the Shares must be held
indefinitely unless they are subsequently registered under the Act or an
exemption from such registration is available and they are disposed of
pursuant to such exemption. In connection therewith, the Seller has been
advised that no party has undertaken an obligation to the undersigned to
cause the Shares to be registered or otherwise exempted under the Act.
H. The Seller further agrees that he will not resell any of the Shares
purchased herein prior to one (1) year from the date of purchase, and
thereafter only in compliance with the registration requirements of the Act
or an available exemption therefrom.
I. The Seller represents and agrees tat he has had sufficient opportunity to
make inquiries of the Purchaser respecting the Shares and the Purchaser, and
that any information so requested has been made available to his
satisfaction, and he has had the opportunity to verify such information. The
undersigned further agrees and represent that he has knowledge and
experience in business and financial matters, and with respect to
investments generally and, in particular, investments generally comparable
to the offering, so as to enable him to utilize such information to evaluate
the risks of this investment and to make an informed investment decision.
<PAGE>
16. BROKERAGE
The parties hereto represent and warrant to each other that they have not dealt
with any broker or finder in Connection with this agreement or the transactions
contemplated hereby, and no broker or any other person is entitled to receive
any brokerage commission, finder's fee or similar compensation in connection
with this agreement or the transactions contemplated hereby. Each of the parties
shall indemnify and hold the other harmless from and against all liability,
claim, loss, damage or expense, including reasonable attorneys' fees, pertaining
to any broker, finder or other person with whom such party has dealt
17. ARBRITRATION
Any dispute or controversy arising between the parties hereto regarding any
term, covenant or condition of this agreement or the breach thereof shall, upon
written demand or any party hereto, be submitted to and determined by
arbitration before the American Arbitration Association, in Somerset. New
Jersey, by a panel of three arbitrators, in accordance with the rules of the
Association then in effect. Any awarded rendered shall be made by means of a
written opinion explaining the arbitrators' reasons for the award. The
arbitrators may not amend or vary any provision of this agreement. Judgment upon
the award rendered by the arbitrators may be entered in any court of competent
jurisdiction, which court shall have the power to review such award for
compliance with this agreement.
18. NOTICES
All notices, demands and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been properly given if
delivered by hand or by Federal Express courier or by registered or certified
mail, return receipt requested, with postage prepaid, to Seller or Purchaser, as
the case may be, at their addresses first above written, or at such other
addresses as they may designate by notice given hereunder.
19. SURVIVAL.
The representations, warranties and covenant contained herein shall survive the
delivery of the Bill of Sale and shall continue in full force and effect after
the closing, except to the extent waived in writing.
20. FURTHER ASSURANCES
In connection with the transactions contemplated by this agreement, the parties
agree to execute and deliver such further instruments, and to take such further
actions, as may be reasonably necessary or proper to effectuate and carry out
the transactions contemplated in this agreement.
21. ENTIRE AGREEMENT
This agreement contains all of the terms agreed upon between Seller and
Purchaser with respect to the subject matter hereof. This agreement has been
entered into after full investigation. All prior oral or written statements,
representations, promises, understandings and agreements of Seller and Purchaser
are merged into and superseded by this agreement, which alone fully and
completely expresses their agreement.
22. CHANGES MUST BE IN WRITING
No delay or omission by either Seller or Purchaser in exercising any right shall
operate as a waiver of such right or any other right, This agreement may not be
altered, amended, changed, modified, waived or terminated in any respect or
particular unless the same shall be in writing signed by the party to be bound.
No waiver by any party of any breach hereunder shall be deemed a waiver of any
other or subsequent breach.
<PAGE>
23. CAPTIONS AND EXHIBITS
The captions in this agreement are for convenience only and are not to be
considered in construing this agreement. The Exhibits annexed to this agreement
are an integral part of this agreement, and where there is any reference to this
agreement it shall be deemed to include said Exhibits.
24. GOVERNING LAW
This agreement shall be governed by and construed in accordance with the laws of
the State of Maryland. If any provisions of this agreement shall be
unenforceable or invalid, such unenforceable or invalidity shall not affect the
remaining provisions of this agreement.
25. BINDING EFFECT
This agreement shall not be considered an offer or an acceptance of an offer by
Seller, and shall not be binding upon Seller until executed and delivered by
both Seller and Purchaser. Upon such execution and delivery, this agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and permitted assigns.
IN WITNESS WHEREOF, the parties have executed this agreement as of the date
above written.
/s/ Ray May
-------------------------------------
Ray May
EUROTELECOM COMMUNICATIONS INC
By:
-------------------------------------
President
<PAGE>
EXHIBIT A-1
EQUIPMENT
Computers
Dell
HP
Toshiba
Fax Phone
HP
Printer
Cannon
Cell Phone
Spirit
<PAGE>
EXHIBIT A-2
VEHICLES
<PAGE>
EXHIBIT A-3
IMPROVEMENTS
<PAGE>
EXHIBIT A-4
THE LEASES
<PAGE>
EXHIBIT A-5
COPYRIGHTS
<PAGE>
EXHIBIT A-6
PATENTS
<PAGE>
EXHIBIT A-7
CONTRACTS
<PAGE>
EXHIBIT B
SCHEDULE OF CONTRACTS
<PAGE>
EXHIBIT C
FINANCIAL STATEMENTS OF THE CORPORATION
EXHIBIT 3(viii)
ARTICLES OF INCORPORATION
OF
ATN INC
WE, THE UNDERSIGNED natural persons of the age of twenty--one years or more,
acting as incorporators of a corporation under the Utah Business Corporation
Act, adopt the following Articles of Incorporation for such corporation.
ARTICLE 1
NAME
The name of this corporation is ATN, INC.
ARTICLE II
DURATION
The duration of this corporation is perpetual.
ARTICLE III
PURPOSE
The purpose or purposes for which this corporation is organized are:
a) To engage in the business of television production, sales and advertising.
b) To acquire by purchase, exchange, gift, bequest, subscription or otherwise,
and to hold, own, mortgage, pledge, hypothecate, sell, assign, transfer,
exchange or otherwise dispose of or deal in or with its Own Corporation
securities or stock or other securities, including without limitation, any
shares of stock, bonds, debentures, notes, mortgages, or other obligations,
and any certificates. receipts or other instruments representing rights or
interest therein or any property or assets created or issued by any person,
or subdivision, agencies or instrumentalities thereof; to make payment
therefor in any lawful manner or to issue in exchange therefor its own
securities or to use its unrestricted and unreserved earned surplus for the
purchase of its own shares, and to exercise as owner or holder of any
securities, any and all rights, powers and privileges in respect thereof.
<PAGE>
c) To do each and everything necessary, suitable or proper for the
accomplishment of any of the purposes or the attainment of any one or more
of the subjects herein enumerated, or which may, at any time, appear
conducive to or expedient for protection or benefit of this corporation, and
to do said acts as fully and to the same extent as natural persons might, or
could do, in any part of the world as principals, agents, partners, trustees
or otherwise, either alone or in conjunction with any other person,
association or corporation.
d) The foregoing clauses shall be construed both as purposes and powers and
shall not be held to limit or restrict in any manner the general powers of
the corporation, and the enjoyment and exercise thereof, as conferred by the
laws of the State of Utah; and it is the intention that the purposes and
powers specified in each of the paragraphs of this Article III shall be
regarded as independent purposes and powers.
ARTICLE IV
STOCK
The aggregate number of shares which this corporation shall have authority to
issue is 100,000 shares of no par value stock. All stock of the corporation
shall be of the same class, common and shall have the same rights and
preferences. Fully paid stock of this corporation shall not be liable to any
further call or assessment.
ARTICLE V
AMENDMENT
These Articles of Incorporation may be amended by the affirmative vote of a
majority of the shares entitled to vote on each such amendment.
ARTICLE VI
SHAREHOLDER RIGHTS
The authorized and treasury stock of this corporation may be issued at such
time, upon such terms and conditions and for such consideration as the Board of
Directors shall determine. Shareholders shall have pre-emptive rights to acquire
unissued shares of the stock of this corporation.
At each election of Directors, every shareholder entitled to vote at such
election shall have the right to accumulate his votes by giving one candidate as
many votes as the number of such Directors multiplied by the number of his
shares shall equal, or be distributing such votes on the same principle among
any number of such candidates.
<PAGE>
ARTICLE VII
CAPITALIZATION
This corporation will not commence business until consideration of a value of at
least ONE THOUSAND ($1,000.00) DOLLARS has been received for the issuance of
shares.
ARTICLE VIII
INITIAL OFFICE AND AGENT
The address of this corporation's initial registered office and the name of its
original registered agent at such address is:
William L. Waite, III.
1420 East 800 North
Orem, Utah 84059
ARTICLE IX
DIRECTORS
The number of Directors constituting the initial Board of Directors of this
corporation is three (3) . The names and addresses of persons who are to serve
as Directors until the first annual meeting of stockholders, or until their
successors are elected and qualify, are:
Kraig T. Higginson
10 South State Street
Lindon, Utah 84062
David W West
10 South State Street
Lindon, Utah 84062
William L. Waite, III
1420 East 800 North
Orem, Utah 84059
<PAGE>
ARTICLE X
INCORPORATORS
The names and addresses of each Incorporator are:
Kraig T. Higginson
10 South State Street
Lindon, Utah 84062
David W. West
10 South State Street
Lindon, Utah 84062
William L. Waite, III
1420 East 800 North
Orem, Utah 84059
ARTICLE XI
COMMON DIRECTORS - TRANSACTIONS BETWEEN CORPORATION
No contract or other transaction between this corporation and one or more of
its Directors or any other corporation, firm, association or entity in which one
or more of its Directors are Directors or officers or are financially
interested, shall be either void or voidable because of such relationship or
interest, or because such Director or Directors are present at the meeting of
the Board of Directors, or a committee thereof which authorizes, approves or
ratifies such contract or transaction, or because his or their votes are counted
for such purposes if: (a) the fact of such relationship or interest is disclosed
or known to the Board of Directors or committee which authorizes, approves or
ratifies the contract or transaction by vote or consent sufficient for the
purpose without counting the votes or consents of such interested Director; or
(b) the fact of such relationship or interest is disclosed or known to the
shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or (c) the contract or
transaction is fair and reasonable to the corporation.
Common or interested Directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or committee thereof which
authorizes, approves or ratifies such contract or transaction.
<PAGE>
Dated this 10 day of April 1984
-----------------------------------
Kraig T Higginson
-----------------------------------
David W West
-----------------------------------
William l Waite, III
STATE OF UTAH
as
COUNTY OF UTAH
I, Patricia Jean Bliss a Notary public, hereby certify that on the 12th. day of
April 1984, Kraig T. Higginson, David W. West, and William L. Waite, III,
personally appeared before me who, being by me 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.
SIGNED AND DATED the day and year first above written.
-----------------------------------
NOTARY PUBLIC
Residing at:
-----------------------------------
My Commission Expires:
12-17-85
- ---------------------------------------
<PAGE>
BY LAWS
OF
ATN INC
APPROVED BY RESOLUTION OF THE
BOARD OF DIRECTORS DATED JANUARY 26, 1987.
ARTICLE I
---------
OFFICES
-------
SECTION 1.01. - LOCATION OF OFFICES
The Corporation may maintain such offices, within or without the State of Utah,
as the Board of Directors may from time to time designate.
SECTION 1.02 - PRINCIPAL OFFICE
The address of the principal office of the Corporation shall be 890 Quail Valley
Drive, Provo, Utah 84604. The address of the principal office may be changed by
the Board of Directors at any time..
ARTICLE II
----------
SHAREHOLDERS
------------
SECTION 2.01 - ANNUAL MEETING
The annual meeting of the shareholders shall be held each year on a date and at
a time designated by the Board of Directors. In the absence of such designation,
the annual meeting of shareholders shall be held on the first Wednesday in May
of each year at such time as is provided for in the notice of the meeting,
provided that, whenever such date falls on a legal holiday, the meeting shall be
held on the next succeeding business day. At the meeting, directors shall be
elected and any other proper business may be transacted. If the election of
directors shall not be held on the day designated herein for the annual meeting
of the shareholders, or at any adjournment thereof, the Board of Directors shall
cause the election to be held at a special meeting of the shareholders as soon
thereafter as may be convenient.
SECTION 2.02 - SPECIAL MEETINGS
Special meetings of the shareholders may be called at any time by the Chairman
of the Board, the President, by any Vice-President or by the Board of Directors
and shall be immediately called by the President, or in his absence or
<PAGE>
disability, by a Vice-President, or by the Secretary, upon the written request
of the holders of not less than one-tenth of all the shares entitled to vote at
the meeting such written request to state the purpose, or purposes, of the
meeting and to be delivered to the President, such Vice-President or the
Secretary. In case of failure to call such meeting within twenty (20) days after
such request, such shareholder or shareholders may call the same. (16-10-26)*
SECTION 2.03 - PLACE OF MEETING
The Board of Directors may designate any place, either within or without the
State of Utah, as the place of meeting for any annual meeting or for any special
meeting called by the Board of Directors. A waiver of notice, signed by all
shareholders entitled to vote at a meeting may designate any place, either
within or without the State of Utah, as the place for the holding of such
meeting. If no designation is made, or if a special meeting be otherwise called,
the place of meeting shall be at the principal office of the Corporation.
SECTION 2.04 - NOTICE OF MEETINGS.
Written or printed notice stating the place, day and hour of the meeting, and in
case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than ten (10) nor more than fifty (50) days
before the date of the meeting, either personally or by mail, by or at the
direction of the President, Secretary or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
stock transfer books of the Corporation, with postage prepaid. A waiver of
notice, in writing, signed by all of the shareholders, shall be the equivalent
to giving such notice as set forth above.
(16-10-27)
SECTION 2.05 - CLOSING OF STOCK TRANSFER BOOKS
For the purpose of determining shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or shareholders entitled
to receive payment of any dividend or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
period not to exceed, in any case, fifty (50) days. If the stock transfer books
are closed for the purpose of determining shareholders entitled to notice of or
to vote at a meeting of shareholders, such books shall be closed for at least
ten (10) days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than fifty (50) days and, in case of a meeting of shareholders, not less
than ten (10) days prior to the date on which the particular action requiring
such determination of shareholders is to be taken. If the stock transfer books
are not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.
(16-10-28)
*(CITATIONS IN PARENTHESES ARE TO THE UTAH CODE ANNOTATED, AS AMENDED. THESE
CITATIONS ARE FOR REFERENCE ONLY AND SHALL NOT CONSTITUTE A PART OF THESE
BYLAWS).
<PAGE>
SECTION 2.06 - VOTING LIST
The officer or agent having charge of the stock transfer books for shares of the
Corporation shall make a complete list of the shareholders entitled to vote at
each meeting of the shareholders of the Corporation or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each, which list shall be produced and kept open at the time and place
of the meeting and shall be subject to the inspection of any shareholder, for
any purpose germane to the meeting, during the whole time of the meeting. The
original stock transfer books shall be prima facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders. (16-10-29)
SECTION 2.7 - QUORUM
A majority of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. If less than a majority of the outstanding shares is represented
at a meeting, a majority of the shares so represented may adjourn the meeting
from time to time without further notice. If a quorum is present, the
affirmative vote of a majority of the shares represented at the meeting and
entitled to vote on the subject matter shall constitute the act of the
shareholders, unless the vote of a greater number of shares or voting by classes
is required by Utah law, the Articles of Incorporation of the Corporation, or
these Bylaws. (16-10-30)
SECTION 2.08 - PROXIES
At all meetings of shareholders, a shareholder may vote by proxy executed in
writing by the shareholder or by his duly authorized attorney-in-fact. Such
proxy shall be filed with the Secretary of the Corporation before or at the time
of the meeting. No proxy shall be valid after eleven (11) months from the date
of its execution, unless otherwise provided in the proxy. (16-10-31)
SECTION 2.09 - VOTING SHARES
Each outstanding share, regardless of class, shall be entitled to one vote on
each matter submitted to vote at a meeting of shareholders, except to the extent
that the voting rights of the shares of any class or classes are limited or
denied by the Articles of Incorporation of this Corporation as permitted by the
Utah Business Corporation Act. (16-10-31)
SECTION 2.10 - VOTING OF SHARES BY CERTAIN HOLDERS.
Neither treasury shares nor shares held by another corporation, if a majority of
the shares entitled to vote for the election of directors of such other
corporation is held by the corporation, shall be voted at any meeting or counted
in determining the total number of outstanding shares at any given time. At each
election for directors, every shareholder entitled to vote at such election
shall have the right to vote, in person or by proxy, the number of shares owned
by him for as many persons as there are directors to be elected and for whose
election he has a right to vote.
Shares standing in the name of another corporation, domestic or foreign, may be
voted by such officer, agent or proxy as the Bylaws of such corporation may
prescribe, or, in the absence of such provision, as the board of directors of
such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be voted
by him, either in person or by proxy, without transfer of such shares into his
name. Shares standing in the name of a trustee may be voted by him, either in
person or by proxy, but no trustee shall be entitled to vote shares held by him
without a transfer of such shares into his name.
<PAGE>
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority so to do be contained in
an appropriate order of the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such shares
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
On and after the date on which written notice of redemption of redeemable shares
has been mailed to the holders thereof and a sum sufficient to redeem such
shares has been deposited with a bank or trust company with irrevocable
instruction and authority to pay the redemption price to the holders thereof
upon surrender of certificates therefor, such shares shall not be entitled to
vote on any matter and shall not be deemed to be outstanding shares (16-10-31)
SECTION 2.11 - SHAREHOLDER ACTION BY CONSENT
Any action required to be taken at a meeting of the shareholders, or any other
action which may be taken at a meeting of the shareholders. may be taken without
a meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof. (16-10-138)
SECTION 2.12 - EXAMINATION BY SHAREHOLDERS OF BOOKS AND RECORDS
Any person who is a shareholder of record, upon written demand stating the
purpose thereof, shall have the right to examine, in person, or by agent or
attorney, at any reasonable time or times, for any proper purpose, the
Corporation's books and records of account, minutes, and record of shareholders
and to make extracts therefrom. A proper purpose shall mean a purpose reasonably
related to such person's interest as a shareholder. Upon the written request of
any shareholder, the Corporation shall mail to such shareholder its most recent
annual or quarterly financial statements showing in reasonable detail its assets
and liabilities and the results of its operations. (16-10-47)
ARTICLE III
-----------
BOARD OF DIRECTORS
------------------
SECTION 3.01 - GENERAL POWERS
The property, affairs and business of the Corporation shall be managed by the
Board of Directors. The Board of Directors may exercise all the powers of the
Corporation whether derived from law or the Articles of Incorporation, except
such powers as are by statute, by the Articles of Incorporation or by these
Bylaws, vested solely in the shareholders of the Corporation.
<PAGE>
SECTION 3.02 - NUMBER, TENURE AND QUALIFICATIONS
The exact number of directors shall be specified from time to time by resolution
of the Board of Directors, but shall not be less than three (3). Each director
shall hold office until the next annual meeting of the shareholders and until
his successor shall have been elected and shall qualify. Directors need not be
residents of the State of Utah or shareholders of the Corporation. (16-10-34)
SECTION 3.03 - REGULAR MEETINGS
The Board of Directors may provide by resolution the time and place, either
within or without the State of Utah, for the holding of regular meetings without
notice other than such resolution. (16-10-40)
SECTION 3.04 - SPECIAL MEETINGS .
Special meetings of the Board of Directors may be called by or at the request of
the President, Vice--President or any two directors. The person or persons
authorized to call special meetings of the Board of Directors may fix any place,
either within or without the State of Utah, as the place for holding any special
meeting of the Board of Directors.
SECTION 3.05 - NOTICE
Notice of the time and place of any special meeting shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the Corporation. If the notice is mailed, it
shall be deposited in the United States mail, at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the meeting begins.
Any oral notice given personally or by telephone may be communicated either to
the director or to a person at the office of the director who the person giving
notice has reason to believe will promptly communicate it to the director. Any
director may waive notice of any meeting. Neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the Board of Directors
needs to be specified in the notice or waiver of notice of such meeting.
SECTION 3.06 - QUORUM
A majority of the number of directors shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if less
than a majority is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice (16-10-38)
SECTION 3.07 - MANNER OF ACTING
The act of a majority of the directors present at a meeting at which a quorum is
present shall, unless the act of a greater number of directors is required by
the Articles of Incorporation of the Corporation or these Bylaws, be the act of
the Board of Directors. (16-10-38)
SECTION 3.08 - VACANCIES AND NEWLY CREATED DIRECTORSHIPS
Any vacancy occurring in the Board of Directors may be filled by the affirmative
vote of a majority of the remaining directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors shall be filled by the Board of Directors unless otherwise provided in
the Articles of Incorporation, such appointment to be until the next annual
meeting or a special meeting of the shareholders called for the purpose of
electing a director to the office so created. Any directorship to be filled by
reason of the removal of one or more directors by the shareholders may be filled
by election by the shareholders at the meeting at which the director or
directors are removed. (16-10-36)
<PAGE>
SECTION 3.09 - COMMITTEES
The Board of Directors, by resolution adopted by the majority of the number of
directors, may designate a committee or committees consisting of not less than
two directors which committee or committees, to the extent provided in such
resolution or in the Articles of Incorporation or these Bylaws, shall have and
may exercise all the authority so provided. (16-10-39)
SECTION 3.10 - COMPENSATION
By resolution of the Board of Directors, the directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors, and
may be paid a fixed sum for attendance at each meeting of the Board of Directors
or a stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
SECTION 3.11 - PRESUMPTION OF ASSENT
A director of the Corporation who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting, unless he shall file his written dissent to such action
with the person acting as the Secretary of the meeting before the adjournment
thereof, or shall forward such dissent by registered or certified mail to the
Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action. (16-10-44)
SECTION 3.12 - RESIGNATIONS
A director may resign at any time by delivering a written resignation to either
the Chairman of the Board of Directors, the President, a Vice-President, or the
Secretary or Assistant Secretary, if any. Unless otherwise provided in the
resignation, the resignation shall become effective on its delivery to an
officer or director of the Corporation.
SECTION 3.13 - ACTION OF THE BOARD OF DIRECTORS BY CONSENT
Any action required to be taken at a meeting of the directors of the Corporation
or any other action which may be taken at a meeting of the directors or of a
connittee, may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the directors, or all of the
members of the committee, as the case may be. Such consent shall have the same
legal effect as a unanimous vote of all the directors or members of the
committee (16-10-40)
SECTION 3.14 - MEETINGS BY TELEPHONE CONFERENCE CALL
Members of the Board of Directors, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors or committee
by means of conference telephone or similar communications equipment by which
all persons participating in the meeting can hear each other. Participation in
such a meeting shall constitute presence in person at such meeting. (16-10-40)
<PAGE>
SECTION 3.15 - REMOVAL OF DIRECTORS
At a shareholders' meeting called expressly for that purpose, directors may be
removed in the manner provided in this section, unless otherwise provided by the
Articles of Incorporation. One or more directors or the entire Board of
Directors may be removed, with or without cause, by a vote of the holders of the
majority of the shares then entitled to vote at an election of directors. If at
the time ofany shareholders' meeting called for such purpose the shareholders
are entitled to cumulate their votes for directors and if less than the entire
Board is to be removed, no one of the directors may be removed if the votes of a
sufficient number of shares are cast against his removal which, if then
cumulatively voted at an election of the entire Board of Directors, or, if there
be classes of directors, at an election of the class of directors of which he is
a part, would be sufficient to elect him. Whenever the holders of the shares of
any class are entitled to elect one or more directors by the provisions of the
Articles of Incorporation, the provisions of this section shall apply, in
respect of the removal of a director or a director so elected, to the vote of
the holders of the outstanding shares of that class and not to the vote of the
outstanding shares as a whole. (16-10-37)
ARTICLE IV
----------
OFFICERS
--------
SECTION 4.01 - NUMBER
The officers of the Corporation shall be a President, one or more
Vice--Presidents, as shall be determined by resolution of the Board of
Directors, a Secretary, a Treasurer and such other officers as may be appointed
by the Board of Directors. The Board of Directors may elect, but shall not be
required to elect, a Chairman of the Board. The Board of Directors also may
appoint a General Manager. (16-10-45)
SECTION 4.02 - ELECTION, TERM OF OFFICE AND QUALIFICATIONS
The officers shall be chosen by the Board of Directors annually at its annual
meeting. If the election of officers shall not be held at such meeting, such
election shall be held as soon thereafter at any regular or special meeting of
the Board of Directors as is convenient. Each officer shall hold office until
his successor shall have been duly elected and qualified or until his death or
until his resignation or removal in the manner provided in these Bylaws. Any one
person may hold any two or more of such offices, except the offices of President
and Secretary shall not be held by the same person. No person holding two or
more offices shall act in or execute any instrument in the capacity of more than
one office. The Chairman of the Board, if any, shall be and remain a director of
the Corporation during the term of his office. No other office must be filled by
a director. (16-10-45)
SECTION 4.03 - SUBORDINATE OFFICERS ETC.
The Board of Directors from time to time may appoint such other officers or
agents as it may deem advisable, each of whom shall have such title, hold office
for such period, have such authority, and perform such duties as the Board of
Directors from time to time may determine The Board of Directors from time to
time may delegate to any officer or agent the power to appoint any such
subordinate officer or agents and to prescribe their respective titles, terms of
office, authorities, and duties. Subordinate officers need not be shareholders
or directors.
<PAGE>
SECTION 4.04 - RESIGNATIONS
Any officer may resign at any time by delivering a written resignation to the
Board of Directors, the President, or the Secretary. Unless otherwise specified
therein, such resignation shall take effect upon delivery.
SECTION 4.05 - REMOVAL
Any officer or agent elected or appointed by the Board of Directors may be
removed by the Board of Directors whenever in its judgment the best interests of
the Corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Any
subordinate officer or agent appointed by an officer or agent in accordance with
the provisions of Section 4.03 hereof may also be removed, for the reasons set
forth above by any officer upon whom such power of removal shall have been
conferred by the Board of Directors. (16-10-46)
SECTION 4.06 - VACANCIES AND NEWLY CREATED OFFICES
A vacancy in any office by reason of death, resignation, removal,
disqualification, the creation of a new office or otherwise, may be filled by
the Board of Directors at any regular or special meeting.
SECTION 4.07 - THE CHAIRMAN OF THE BOARD
The Chairman of the Board shall have the following powers and duties:
(a) He shall preside at all shareholders' meetings.
(b) He shall preside at all meetings of the Board of Directors.
(c) He shall be a member of the Executive Committee, if any.
SECTION 4.08 - THE PRESIDENT
The President shall have the following powers and duties:
a) If no General Manager has been appointed, he shall be the chief executive
officer of the Corporation, and, subject to the directions of the Board of
Directors, shall in general supervise and control all of the business,
affairs, and property of the Corporation, including supervising its
officers, employees and agents.
b) If no Chairman of the Board has been chosen, or if such officer is absent or
disabled, he shall, when present, preside at meetings of the shareholders
and Board of Directors.
c) He shall be a member of the Executive Committee, if any.
<PAGE>
e) He shall cause to be kept correct books of account of all the business and
transactions of the Corporation and shall exhibit such books to any
directors upon request during business hours.
f) He shall be empowered from time to time to require from all officers or
agents of the Corporation reports or statements giving such information as
he may desire with respect to any and all financial transactions of the
Corporation.
g) He shall perform all duties incident to tim office of Treasurer and such
other duties as are given to him by these Bylaws or as from time to time may
be assigned to him by the Board of Directors or the President.
SECTION 4.12 - ASSISTANT SECRETARIES AND TREASURERS
The Assistant Secretaries, when authorized by the Board of Directors, may sign
with the President or a Vice-President, certificates for shares of the
Corporation, the issuance of which shall have been authorised by a resolution of
the Board of Directors. The Assistant Secretaries and Assistant Treasurers, in
general, shall perform such duties as shall be assigned to them by the Secretary
or the Treasurer, respectively, or by the President or the Board of Directors.
SECTION 4.13 - GENERAL MANAGER
The Board of Directors may employ and appoint a General Manager who may be one
of the officers or directors of the Corporation. The General Manager, if any,
shall have the following powers and duties:
a) He shall be the chief executive officer of the Corporation and, subject to
the directions of the Board of Directors, shall have general charge of the
business affairs and property of the Corporation and general supervision
over its officers, employees, and agents.
b) He shall have the exclusive management of the business of the Corporation
and of all of its dealings, but at all times subject to the control of the
Board of Directors.
c) Subject to the approval of the Board of Directors or the Executive
Committee, if any, he shall employ all employees of the Corporation, or
delegate such employment to subordinate officers, or division chiefs, and
shall have authority to discharge any person so employed.
d) He shall make a report to the President and the Board of Directors
quarterly, or more often if required to do so, setting forth the results of
the operations under his charge. together with suggestions looking to the
improvement and betterment of the condition of the Corporation, and he shall
perform such other duties as the Board of Directors shall require.
SECTION 4.14 - SALARIES
The salaries or other compensation. of the officers of the Corporation shall be
fixed from time to time by the Board of Directors except that the Board of
Directors may delegate to any person or group of persons the power to fix the
salaries or other compensation of any subordinate officers or agents appointed
in accordance with the provisions of Section 4.03 hereof. No officer shall be
prevented from receiving any such salary or compensation by reason of the fact
that he is also a director of the Corporation.
<PAGE>
SECTION 4.15 - SURETY BONDS
In case the Board of Directors shall so require, any officer or agent of the
Corporation shall provide the Corporation with a bond, in such sums and with
such surety or sureties as the Board of Directors may direct, conditioned upon
the faithful performance of his duties to the Corporation, including
responsibility for negligence and for the accounting of all property, monies, or
securities of the Corporation which may come under his responsibility.
ARTICLE V
---------
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY
--------------------------------------------
AND DEPOSIT OF CORPORATE FUNDS
------------------------------
SECTION 5.01 - INSTRUMENTS
The Board of Directors may authorize any officer, agent, or agents, to enter
into any contract or execute and deliver any instrument in the name of, and on
behalf of, the Corporation, and such authority may be general or confined to
specific instances.
SECTION 5.02 - LOANS
No loan or advance shall be contracted on behalf of the Corporation, no
negotiable paper or other evidence of its obligation under any loan or advance
shall be issued in its name, and no property of the Corporation shall be
mortgaged, pledged, hypothecated, transferred, or conveyed as security for the
payment of any loan, advance, indebtedness, or liability of the Corporation,
unless and except as authorized by the Board of Directors. Any such
authorization may be general or confined to specific instances.
SECTION 5.03 - DEPOSITS
All monies of the Corporation not otherwise employed shall be deposited from
time to time to its credit in such banks or trust companies or with such bankers
or other depositories as the Board of Directors may select, or as from time to
time may be selected by any officer or agent authorized so to do by the Board of
Directors.
SECTION 5.04 - CHECKS, DRAFTS ETC.
All checks, drafts. acceptances, notes, endorsements, and, subject to the
provisions of these Bylaws, evidences of indebtedness of the Corporation shall
be signed by such officer or officers or such agent or agents of the Corporation
and in such manner as the Board of Directors from time to time may determine.
Endorsements for deposit to the credit of the Corporation in any of its duly
authorized depositories shall be in such manner as the Board of Directors from
time to time may determine.
<PAGE>
SECTION 5.05 - BONDS AND DEBENTURES
Every bond or debenture issued by the Corporation shall be evidenced by an
appropriate instrument which shall be signed by the President or a
Vice--President and by the Secretary and sealed with the seal of the
Corporation. The seal may be a facsimile, engraved or printed. Where such bond
or debenture is authenticated with the manual signature of an authorized officer
of the Corporation or other trustee designated by the indenture of trust or
other agreement under which such security is issued, the signature of any of the
Corporations officers named thereon may be a facsimile. In case any officer who
signed, or whose facsimile signature has been used on any such bond or
debenture, shall cease to be an officer of the Corporation for any reason before
the same has been delivered by the Corporation, such bond or debenture may
nevertheless be adopted by the Corporation and issued and delivered as though
the person who signed it or whose facsimile signature has been used thereon had
not ceased to be such officer.
SECTION 5.06 - SALE, TRANSFER ETC., OF SECURITIES
Sales, transfers, endorsements, and assignments of shares of stocks, bonds, and
other securities owned by or standing in the name of the Corporation and the
execution and delivery on behalf of the Corporation of any and all instruments
in writing incident to any such sale, transfer, endorsement, or assignment,
shall be effected by the President, or by any Vice--President, together with the
Secretary, or by any officer or agent thereunto authorized by the Board of
Directors.
SECTION 5.07 PROXIES
Proxies to vote with respect to shares of stock of other corporations owned by
or standing in the name of the corporation shall be executed and delivered on
behalf of the Corporation by the President or any vice--President and the
Secretary of the Corporation or by any officer or agent thereunto authorized by
the Board of Directors.
ARTICLE VI
----------
CAPITAL STOCK
-------------
SECTION 6.01
STOCK CERTIFICATES. The shares of the Corporation shall be represented by
certificates signed by the president or a Vice-President and the Secretary of
the Corporation, and may be sealed with the seal of the Corporation or a
facsimile thereof. The signatures of the President or Vice-President and the
Secretary upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent, or registered by a registrar, other than the
Corporation itself or an employee of the Corporation. In case any officer who
has signed or whose facsimile signature has been placed upon such certificate
shall have ceased to be such officer before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer at
the date of its issue.
Every certificate representing shares issued by the Corporation which is
authorized to issue shares of more than one class shall set forth upon the face
or back of the certificate, or shall state that the Corporation will furnish to
any shareholder upon request and without charge a full statement of the
designations, preferences, limitations and relative rights of the shares of each
class authorized to be issued and, if the Corporation is authorized to issue any
preferred or special class in series, the variations in the relative rights and
preferences between the shares of each such series so far as the same have been
fixed and determined and the authority of the Board of Directors to fix and
determine the relative rights and preferences of subsequent series.
<PAGE>
Each certificate representing shares shall state upon the face thereof:
a) The state in which the Corporation is organized.
b) The name of the person to whom the certificate is issued.
c) The number and class of shares, and the designation of the series, if any,
which such certificate represents.
d) The par value of each share represented by such certificate, or a statement
that the shares are without par value.
No certificate shall be issued for any share until such share is fully paid.
There shall be entered upon the stock transfer books of the Corporation at the
time of issuance of each share, the number of the certificate issued, the name
and address of the person owning the shares represented thereby, the number and
kind, class or series of such shares, and the date of issuance thereof. Every
certificate exchanged or returned to the Corporation shall be marked "Cancelled"
with the date of cancellation. (16-0-21)
SECTION 6.02 - TRANSFER OF STOCK
Transfers of stock shall be made only upon the stock transfer books of the
Corporation kept of an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 6.07 of this Article VI, an
outstanding certificate for the number of shares involved shall be surrendered
for cancellation before a new certificate is issued therefor. Except as provided
by law, the Corporation and transfer agents and registrars, if any, shall be
entitled to treat the holder of record of any share or shares of stock as the
absolute owner thereof for all purposes, and accordingly shall not be bound to
recognize any legal, equitable or other claim to or interest in such share or
shares on the part of any other person whether or not it or they shall have
express or other notice thereof.
SECTION 6.03 - REGULATIONS
Subject to the provisions of this Article VI and of the Articles of
Incorporation, the Board of Directors may make such rules and regulations as
they may deem expedient concerning the issuance, transfer, redemption, and
registration of certificates for shares of the stock of the Corporation.
SECTION 6.04 - MAINTENANCE OF STOCK TRANSFER BOOK AND SHAREHOLDER RECORD
Except as otherwise provided in Section 6.02 of this Article VI, a stock
transfer book (or books where more than one kind, class or series of stock is
outstanding) and a shareholder record shall be kept at the principal place of
business of the Corporation in Provo, Utah. The stock transfer book shall
contain, in alphabetical order, the names of the original shareholders of the
Corporation, their addresses, their interest, the amount paid on their shares of
stock, and all transfers and transferees thereof and the number and class of the
shares held by each. The shareholder record shall contain, in alphabetical
order, a record of the Corporations shareholders, giving the names and addresses
of all shareholders and the number and class of the shares held by each. The
stock transfer book and shareholder record shall at all reasonable hours be
subject to inspection by persons entitled by law to inspect the same. (16-10-47)
<PAGE>
SECTION 6.05 TRANSFER AGENTS AND REGISTRARS
The Board of Directors may appoint one or more transfer agents and one or more
registrars with respect to the certificates representing shares of stock of the
Corporation, and may require all such certificates to bear the signature of
either or both. The Board of Directors may from time to time define the
respective duties of such transfer agents and registrars.
SECTION 6.06 - CLOSING OF STOCK TRANSFER BOOKS AND FIXING OF RECORD DATE
For the purpose of determining shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors may provide that the stock
transfer books be closed for a period not to exceed, in any case, fifty (50)
days.
If the stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for, at least ten (10) days immediately preceding such
meeting.
In lieu of closing the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than fifty (50) days, and in case of a
meeting of shareholders, not less than ten (10) days prior to the date on which
the particular action, requiring such determination of shareholders, is to be
taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholder: entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof. (16-10-28)
SECTION 6.07 - LOST OR DESTROYED CERTIFICATES
In the event of the loss, or destruction of any certificate of stock, another
may be issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.
<PAGE>
ARTICLE VII
-----------
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
----------------------------------------
SECTION 7.01 - HOW CONSTITUTED
The Board of Directors, by resolution adopted by the majority of the number of
directors, may designate an Executive Committee and such other committees as the
Board of Directors may deem appropriate, each of which committees shall consist
of two or more directors. Members of the Executive Committee and of any such
other committee shall be designated annually at the annual meeting of the Board
of Directors; provided, however, that at any time the Board of Directors may
abolish or reconstitute the Executive Committee or any such other committee.
Each member of the Executive Committee and of any such other committee shall
hold office until his successor shall have been designated or until his
resignation or removal in the manner provided in these Bylaws. (16-10-39)
SECTION 7.02 - POWERS
During the intervals between meetings of the Board of Directors, the Executive
Committee shall have and may exercise all powers of the Board of Directors in
the management of the business and affairs of the Corporation, except for the
power to fill vacancies in the Board of Directors or to amend these Bylaws and
except for such powers as by law may not be delegated by the Board of Directors
to an Executive Committee.
SECTION 7.03 - PROCEEDINGS
The Executive Committee, and such other committees as may be designated
hereunder by the Board of Directors, may fix its own presiding and recording
officer or officers, and may meet at such place or places, at such time or times
and upon such notice (or without notice) as it shall determine from time to
time. It shall keep a record of its proceedings and shall report such
proceedings to the Board of Directors at the meeting of the Board of Directors
next following.
SECTION 7.04 - QUORUM AND MANNER OF ACTING
At all meetings of the Executive Committee, and of such other committees as may
be designated hereunder by the Board of Directors, the presence of members
constituting two-thirds of the total authorized membership of the committee
shall be necessary and sufficient to constitute a quorum for the transaction of
business, and the act of two-thirds of the members present at any meeting at
which a quorum is present shall be the act of such committee. The members of the
Executive Committee, and of such other committees as may be designated hereunder
by the Board of Directors, shall act only as a committee and the individual
members thereof shall have no powers as such.
SECTION 7.05 - TELEPHONE CONFERENCE CALL COMMITTEES
Members of the Executive Committee, and of such other committees as may be
designated hereunder by the Board of Directors, may participate in a meeting of
the committee by means of conference telephone or similar communication
equipment by means of which all persons participating in the meeting can hear
each other. Participation in such a meeting shall constitute presence in person
at such a meeting.
Action may be taken by any committee without a meeting if all members thereof
consent in writing, and the writing or writings are filed with the minutes of
the proceedings of such committee.
<PAGE>
SECTION 7.06 - RESIGNATIONS
Any member of the Executive Committee, and of such other committees as may be
designated hereunder by the Board of Directors, may resign at any time by
delivering a written resignation to either the Chairman of the Board, if any,
the president, the Secretary, or Assistant Secretary, if any, or to the
presiding officer of the committee of which he is a member, if any shall have
been appointed and shall be in office. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
SECTION 7.07 - REMOVAL
The Board of Directors may at any time remove any member of the Executive
Committee or of any other committee designated by it hereunder either with or
without cause.
SECTION 7.08 - VACANCIES
If any vacancy shall occur in the Executive Committee or of any other committee
designated by the Board of Directors hereunder, by reason of disqualification,
death, resignation, removal, or otherwise, the remaining members shall, until
the filling of such vacancy, constitute the then total authorized membership of
the committee and, provided that two or more members are remaining, shall
continue to act. Such vacancy may be filled at any meeting of the Board of
Directors.
SECTION 7.09 - COMPENSATION
The Board of Directors may allow a fixed sum and expenses of attendance to any
member of the Executive Committee or of any other committee designated by it
hereunder who is not an active salaried employee of the Corporation for
attendance at each meeting of such committee.
ARTICLE VIII
------------
INDEMNIFICATION
---------------
SECTION 8.01 - INDEMNIFICATION OF THIRD PARTY ACTIONS
The Corporation shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee, or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorney's
fees), judgements, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe that his conduct was unlawful.
The termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation. and with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
(16-10-4)
<PAGE>
SECTION 8.02 - INDEMNIFICATION OF CORPORATE ACTIONS
The Corporation shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the majority vote of a quorum of the Board of
Directors and upon receipt of an undertaking by or on behalf of the director,
officer, employee, or agent to repay such amount or amounts unless it ultimately
be determined that he is to be indemnified by the Corporation as authorized by
this Article VIII. (16-10-4)
SECTION 8.06 - SCOPE OF INDEMNIFICATION
The indemnification authorized by this Article VIII shall apply to all present
and future directors, officers, employees, and agents of the Corporation and
shall continue as to such persons who cease to be directors, officers,
employees, or agents of the Corporation and shall inure to the benefit of the
heirs, executors, and administrators of all such persons and shall be in
addition to all other indemnification permitted by law. (16-10-4)
SECTION 8.07 - INSURANCE
The Corporation may purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee, or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, or other
enterprise against any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against any such liability
under the provisions of this Article VIII or the laws of the State of Utah, as
the same may hereafter be amended or modified. (16-10-4)
ARTICLE IX
----------
FISCAL YEAR
-----------
The fiscal year of the Corporation shall be fixed by resolution of the Board of
Directors.
ARTICLE X
---------
DIVIDENDS
---------
The Board of Directors may from time to time declare, and the Corporation may
pay, dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
ARTICLE XI
----------
AMENDMENTS
----------
These Bylaws may be amended by the Board of Directors at any meeting or by the
shareholders at any meeting
EXHIBIT 3(ix)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
WING SYSTEMS INC
Wing Systems Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of at the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting duly
convened and held adopted the following resolution:
RESOLVED that the Certificate of Incorporation of the Corporation be amended by
changing the Article thereof (numbered "FIRST" so that, as amended, said Article
shall be and read as follows:
FIRST: The name of the corporation is EuroTelecom inc.'
SECOND: That the said amendment has been consented and authorized by the holders
of a majority of the issued and outstanding stock entitled to vote by a written
consent given in accordance with the provisions of Section 228 of the General
Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Sections 242 and 228 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be signed by
its President this 31st day of January A.D. 1997.
-------------------------------------------------
PRESIDENT
EXHIBIT 3(x)
CERTIFICATE OF INCORPORATION
OF
AMERICAN TELEMEDIA NETWORK INC.
1. The name of the corporation is American Telemedia Network. Inc. (the
"Corporation")
2. The address of the Corporation's registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle, zip code 19801. The name of its registered agent at such
address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted by the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
4(a) The Corporation is authorized to issue two classes of shares to be
designed, respectively, "Preferred Stock" and "Common Stock" The number of
shares of Preferred Stock authorized to be issued is 10 million (10,000,000) and
the number of shares of Common Stock authorized to be issued is twenty million
(20.000,000). The Preferred Stock and the Common Stock shall each have a par
value of $.01 per share. The aggregate par value of all shares of Preferred
Stock is $100,000 and the aggregate par value of all shares of Caisson Stock is
$200,000.
(b) The Board of Directors is authorized, subject to limitations prescribed by
law and the provisions of this Article 4, to provide for the issuance of the
shares of Preferred Stock in one or more series, and by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time
to time the number of shares to be included in each such series. and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof.
The authority of the Board with respect to each series shall include, but not be
limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate on the shares of that series, whether dividends shall be
cumulative, and, if so, from which date or dates, and the relative rights of
priority, if any, of payment of dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to the voting
rights provided by law, and, if so, the terms of such voting rights;
<PAGE>
(d) Whether that series shall have conversion privileges, and if so, the terms
and conditions of such conversion, including provision for adjustment of the
conversion rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable, and, if so,
the terms and conditions of such redemption, including the date or date upon or
after which they shall be redeemable, and the amount per share payable in case
of redemption, which amount may vary under different conditions and at different
redemption dates:
(f) Whether that series shall have a sinking fund for the redemption or purchase
of shares of that series, and, if so, the terms and amount of such sinking fund;
(g) The rights of the shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the corporation, and the
relative rights of priority, if any, OF payment of shares of that series;
(h) Any other relative or participating rights, preferences and limitations of
that series;
(i) If no shares of any series of Preferred Stock are outstanding, the
elimination of the designation, powers, preferences, and rights of such shares,
in which event such shares shall return to their status as authorized but
undesignated Preferred Stock.
5. The name and mailing address of the incorporator are as follows:
Ronald S. Poelman, Esq.
Leboeuf, Lamb, Leiby & MacRae
136 South Main, Suite 1000
Salt Lake City, Utah 84101
6. In. furtherance and not in limitation of the powers conferred by statute, the
Board of Directors is expressly authorized to make, alter, amend or repeal the
By-Laws of the Corporation, including the authority to change the number of
members of the Board of Directors.
7. The number of directors which will constitute the whole Board of Directors of
the Corporation shall be as determined by the Board of Directors and as
specified in the By-Laws of the Corporation.
8. Meetings of stockholders may be held within or without the State of Delaware,
as the By-Laws may provide. The books of the Corporation may be kept (subject to
any provision contained in the statutes) outside the State of Delaware at such
place or places as may be designated from time to time by the Board of Directors
or in the By--Laws of the Corporation.
<PAGE>
9. To the fullest extent permitted by the Delaware General Corporation Law as
the same exists or as may hereafter be amended, a director of the Corporation
shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. Neither any
amendment nor repeal of this Article II, nor the adoption of any provision of
this Certification of Incorporation inconsistent with this Article II, shall
eliminate or reduce the effect off this Article II in respect of any matter
occurring, or any cause of action, suit or claim that, but for this Article II,
would accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision.
10. The initial Board of Directors shall consist of the following persons:
Earl K Cook John G. Puente
Kraig T Higginson O Gene Gabbard
R. Thomas Bailey Sidney S. Kahn
James R. Cook W. Ian Laird
11. The election of directors need not be by written ballot.
12. The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose
of forming a corporation pursuant to the General Corporation law of the State of
Delaware, do make this certificate, hereby declaring and certifying, under
penalties of perjury, that this is my act and deed and the facts herein stated
are true, and accordingly have hereunto set my hand this 28th. day of May 1987.
/s/ Ronald S Poelman
----------------------------------
RONALD S POELMAN, ESQ.
INCORPORATOR
CERTIFICATE OF INCORPORATION
OF
WING SYSTEMS INC.
FIRST: The name of the Corporation is Wing Systems Inc.
SECOND: Its registered office in the State of Delaware is to be located at 30
Old Rudnick Lane. in the City of Dover, County of Kent. The Registered Agent in
charge thereof is CorpAmerica. Inc., 30 Old Rudnick Lane, Dover. Delaware 19901.
THIRD: The purpose of the corporation it to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The total number of share of stock with which this corporation is
authorized to issue is Twenty Five Million (25,000,000) shares at a Par Value of
$.001 for a total authorized capital of Twenty-Five Thousand Dollars
($25,000.00).
FIFTH: The name and mailing address of the incorporator is as follows:
CorpAmerica. Inc.
30 Old Rudnick Lane
Dover. DE l9901
SIXTH: The Board of Directors shall have the power to adopt, amend or repeal the
by-laws
SEVENTH: No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Nothwithstanding the foregoing sentence, a director
shall be liable to the extent provided by applicable law, (i) for breach of the
directors duty of loyalty to the Corporation or its stockholders (ii) for acts
or omissions not in good faith of law (iii) pursuant to Section 174 of the
Delaware General Corporation Law or (iv) for any transaction from which the
director derived an improper personal benefit. No amendment to or repeal of this
Article Seventh shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment.
<PAGE>
I, THE UNDERSIGNED, for the purpose of forming a corporation under the laws of
the State of Delaware. do make, file and record this Certificate and do certify
that the facts herein stated are true, and I have accordingly hereunto set my
hand this 19th day of December, 1996.
CorpAmerica, Inc.
By: /s/ Barbara O. Frebert
----------------------------------------
Barbara O. Frebert, Assistant Secretary
EXHIBIT 3(xii)
CORPORATE RECORDS OF WING SYSTEMS INC.
ARTICLE I - OFFICES
SECTION 1
The registered office of the Corporation in the State of Delaware shall be at
1050 South State. Street,. Dover, Delaware 19901
The registered agent in charge thereof shall be Corp. America Inc.
SECTION 2
The corporation may also have offices at such other places as the Board of
Directors may from time to time appoint or the business of the corporation may
require
ARTICLE II
SEAL
SECTION 1
The corporate seal shall have inscribed thereon the name of the Corporation, the
year of its organization and the words "Corporate Seal, Delaware"
ARTICLE III
STOCKHOLDERS' MEETINGS
SECTION 1
Meetings of stockholders shall be held at the registered office of the
corporation in this state or at such place, either within or without this state,
as may be selected from time to time by the Board of Directors.
SECTION 2 - ANNUAL MEETINGS
The annual meeting of the stockholders shall be held on the 30th day of December
in each year if not a legal holiday, and if a legal holiday, then on the next
secular day following at 11 o'clock a.m., when they shall elect a Board of
Directors and transact such other business as may properly be brought before the
meeting. If the annual meeting for election of directors is not held on the date
designated therefor, the directors shall cause the meeting to be held as soon
thereafter as convenient
SECTION 3 - ELECTION OF DIRECTORS
Elections of the directors of the corporation will be by written ballot.
<PAGE>
SECTION 4 - SPECIAL MEETINGS
Special meetings of the stock-holders may be called at any time by the President
or the Board of Directors or stockholders entitled to cast votes at the
particular meeting. At any time, upon written request of any person or persons
who have duly called a special meeting, it shall be the duty of the secretary to
fix the date of the meeting, to be held not more than sixty days after receipt
of the request, and to give due notice thereof . If the Secretary shall neglect
or refuse to fix the date of the meeting and give notice thereof, the person or
persons calling the meeting may do so.
Business transacted at all special meetings shall be confined to the objects
stated in the call and matters germane thereto, unless as stockholders entitled
to vote are present and consent.
Written notice of a special meeting of stockholders stating the time and place
and object thereof, shall be given to each stockholder entitled to vote thereat
at least 14 days before such meeting, unless a greater period of notice is
required by statute in a particular case.
SECTION 5 - QUORUM
A majority of the outstanding shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
stockholders. If less than a majority of the outstanding shares entitled to vote
is represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned meeting
at which a quorum shall be present or represented. any business may be
transacted which might have been transacted at the meeting as originally
noticed. The stockholders present at a duly organized meeting may continue to
transact business until adjournment notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
SECTION 6 - PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy, but no such proxy
shall be voted or acted upon after three years from its date, unless the proxy
provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is irrevocable
and if and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable proxy regardless of whether the interest with which it is
coupled is an interest in the stock itself or an interest in the corporation
generally. All proxies shall be filed with the Secretary of the meeting before
being voted upon.
SECTION 7 - NOTICE OF MEETINGS
Whenever stockholders are required or permitted to take any action at a meeting,
a written notice of the meeting shall be given which shall state the place, date
and hour of the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called.
Unless otherwise provided by law, written notice of any meeting shall be given
not less than ten or more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting.
SECTION 8 - CONSENT IN LIEU OF MEETINGS
Any action required to be taken at any annual or special meeting of stockholders
of a corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
<PAGE>
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
SECTION 9 - LIST OF STOCKHOLDERS
The officer who has charge of the stock ledger of the corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. No share of stock upon
which any instalment is due and unpaid shall be voted at any meeting. The 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 least 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
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
ARTICLE IV
DIRECTORS
SECTION 1
The business and affairs of this corporation shall be managed by its Board of
Directors. three in number. The directors need not be residents of this state or
stockholders in the corporation. They shall be elected by the stockholders at
the annual meeting of stockholders of the corporation, and each director shall
be elected for the term of one year, and until his successor shall be elected
and shall qualify or until his earlier resignation or removal.
SECTION 2 - REGULAR MEETINGS
Regular meetings of the Board shall be held without notice at the registered
office of the corporation, or at such other time and place as shall be
determined by the Board.
SECTION 3 - SPECIAL MEETINGS
Special Meetings of the Board may be called by the President on 14 days notice
to each director, either personally or by mail or by telegram: special meetings
shall be called by the President or Secretary in like manner and on like notice
on the written request of a majority of the directors.
SECTION 4 - QUORUM
A majority of the total number of directors shall constitute a quorum for the
transaction of business.
SECTION 5 - CONSENT IN LIEU OF 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 all
members of the board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee. The Board of Directors may hold its meetings and have
an office or offices outside of this state.
<PAGE>
SECTION 6 - CONFERENCE TELEPHONE
One or more directors may participate in a meeting of the Board, of a committee
of the Board or of the stockholders, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, participation in this manner shall constitute
presence in person at such meeting.
SECTION 7 - COMPENSATION
Directors, as such, shall not receive any stated salary for their services, but
by resolution of the Board, a fixed sum and expenses of attendance, if any, may
be allowed for attendance at each regular or special meeting of the Board
PROVIDED, that nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
SECTION 8 - REMOVAL
Any director or the entire Board of Directors may be remove, with or without
cause, by the holders of a majority of the shares then entitled to vole at an
election of directors, except that when cumulative voting is permitted, if less
than the entire Board is to be removed, no director may be removed without cause
if the votes cast against his removal would be sufficient to elect him if then
cumulatively voted at an election of the entire Board of Directors, or, if there
be classes of directors, at an election of the class of directors of which he is
a part.
ARTICLE V
OFFICERS
SECTION 1
The executive officers of the corporation shall be chosen by the directors and
shall be a President, Secretary and Treasurer. The Board of Directors may also
choose a Chairman, one or more Vice Presidents and such other officers as it
shall deem necessary Any number of offices may be held by the same person.
SECTION 2 - SALARIES
Salaries of all officers and agents of the Corporation Shall be fixed by the
Board of Directors.
SECTION 3 - TERM OF OFFICE
The officers of the corporation shall hold office for one year and until their
successors are chosen and have qualified. Any officer or agent elected or
appointed by the Board may be removed by the Board of Directors whenever, in its
judgment, the best interest of the corporation will be served thereby.
SECTION 4 - PRESIDENT
The President shall be the chief executive officer of the corporation: he shall
preside at all meetings of the stockholders and directors: he shall have general
and active management of the business of the corporation, shall see that all
orders and resolutions of the Board are carried into effect, subject, however,
to the right of the directors to delegate any specific powers, except such as
may be by statute exclusively conferred on the President, to any other officer
or officers of the corporation. He shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation. He shall be
EX-OFFICIO a member of all committees, and shall have the general power and
duties of supervision and management usually vested in the office of President
of a corporation.
<PAGE>
SECTION 6 - SECRETARY
The Secretary shall attend all sessions of the Board and all meetings of the
stockholders and act as clerk thereof, and record all the votes of the
corporation and the minutes of all its transactions in a book to be kept for
that purpose, and shall perform like duties for all committees of the Board of
Directors when required. He shall give or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors or President
and under whose supervision he shall be. He shall keep in safe custody the
corporate seal of the corporation, and when authorized by the Board, at affix
the same to any instrument requiring it.
SECTION 6 - TREASURER
The Treasurer shall have custody of the corporate funds and securities and shall
keep full and accurate accounts of receipts and disbursements in books belonging
to the corporation, and shall keep the moneys of the corporation in a separate
account to the credit of the corporation. He shall disburse the funds of the
corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the President and directors, at the regular
meetings of the Board, or whenever they may require it, an account of all his
transactions as Treasurer, and of the financial condition of the corporation.
ARTICLE VI
VACANCIES
SECTION 1
Any vacancy occurring in any office of the corporation by death, resignation,
removal or otherwise, shall be filled by the Board of Directors. Vacancies and
newly created directorships resulting from an increase in the authorized number
of directors may be filled by a majority of the directors then in office,
although less than a quorum or by a sole remaining director. If at any time, by
reason of death or resignation or other cause, the corporation should have no
directors in office, then any officer or any stockholder or an executor.
administrator, trustee or guardian of a stockholder. Of other fiduciary
entrusted with like responsibility for the person or estate of a stockholder,
may call a special meeting of stockholders in accordance with the provisions of
these By-Laws.
SECTION 2 - RESIGNATION EFFECTIVE AT FUTURE DATE
When one or more directors shall resign from the Board, effective at a future
date, a majority of the directors then in office, including those who have so
resigned, shall have power to fill such vacancy or vacancies, the vote thereon
to take effect when such resignation or resignations shall become effective
ARTICLE VII
CORPORATE RECORDS
SECTION 1
Any stockholder of record, in person or by attorney or other agent shall, upon
written demand under oath stating the purpose thereof, have the right during the
usual hours for business to inspect for any proper purpose the corporation's
stock ledger, a list of its shareholders and its other books and records, and to
make copies or extracts therefrom. A proper purpose shall mean a purpose
reasonably related to such person's interest as a shareholder. In every instance
where an attorney or other agent shall be the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
<PAGE>
such other writing which authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in this state or at its principal place of
business.
ARTICLE VII
STOCK CERTIFICATES, DIVIDEND, ETC
SECTION 1
The stock certificates of the corporation shall be numbered and registered in
the share ledger and transfer books of the corporation as they are issued. They
shall bear the corporate seal and shall be signed by the President and
Secretary.
SECTION 2 - TRANSFERS
Transfers of shares shall be made on the books of the corporation upon surrender
of the certificates therefor, endorsed by the person named in the certificate or
by attorney, lawfully constituted in writing. No transfer shall be made which is
inconsistent with law.
SECTION 3 - LOST CERTIFICATE
The corporation may issue a new certificate of stock in the place of any
certificate signed by it, alleged to have been lost, stolen or destroyed. and
the corporation may require the owner of the lost, stolen or destroyed
certificate, or his legal representative, to give the corporation a bond
sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
SECTION 4 - RECORD DATE
In order that the corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
nor less than ten days before the date of such meeting, nor more than sixty days
prior to any other action.
If no record date is fixed:
(a) The record date for determining stockholders entitled to notice of or to
vote at a meeting of stockholders shall be at the close of business on the day
next preceding the day on which notice is given, if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held.
(b) The record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is necessary, shall be the day on which the first written consent
is expressed.
(c) The record date for determining stockholders for any other purpose shall be
at the close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
<PAGE>
(d) A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 5 - DIVIDENDS
The Board of Directors may declare and pay dividends upon the outstanding shares
of the corporation, from time to time and to such extent am they deem advisable,
in the manner and upon the terms and conditions provided by statute and the
Certificate of Incorporation.
SECTION 6 - RESERVES
Before payment of any dividend there may be set aside out of the net profits of
the corporation such sum or sums as the directors, from time to time, in their
absolute discretion, think proper as a reserve fund to meet contingencies, or
for equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the directors shalt think conducive to
the interests of the corporation, and the directors may abolish any such reserve
in the manner it which it was created.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 1 - CHECKS
All checks or demands for money and notes of the corporation shall be signed by
such officer or officers as the Board of Directors may from time to time
designate.
SECTION 2 - FISCAL YEAR
The fiscal year shall begin on the first day of January
the Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment), against all expense, liability and loss (including attorneys fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators, provided, however, that except
as provided in paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by di. Corporation the expenses incurred in
defending any such proceeding in advance of its disposition: provided, however,
that, if the Delaware General Corporation Law requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a director
or officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer), to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is not entitled to
be indemnification under this Section or otherwise. The Corporation may, by
action of its Board of Directors, provide indemnification to employees and
agents of the Corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
<PAGE>
(b) RIGHT OF CLAIMANT TO BRING SUIT: If a written claim under paragraph (a) of
this Section has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense prosecuting such claim. It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required understanding, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware Corporation law for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard or conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(c) Notwithstanding any limitation to the contrary contained in sub-paragraphs
(a) and (b) of this section, the corporation shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented , indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matters referred to in
or covered by said section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any By-law, agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
(d) INSURANCE: The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another Corporation, partnership. joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
ARTICLE XII
AMENDMENTS
SECTION 1
These By-Laws may be amended or repealed by the vote of stockholders entitled to
cast at least a majority of the votes which all stockholders are entitled to
cast thereon, at any regular or special meeting of the stockholders, duty
convened after notice to the stockholders of that purpose.
EXHIBIT 3(xiii)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, effective 6 August l999, is between RTC, Inc., a Maryland
corporation, with offices at 738 McCann Rd., Severna Park, MD 21146 (the
"Company") and Ray U. May, having an address at 738 McCann Rd., Severna Park, MD
21146 (the "Executive").
1. TERMS OF EMPLOYMENT
The term of this Agreement shall commence on the effective date of this
Agreement and end on the earlier (i) the anniversary of the effective date
or(ii) the date upon which the Executive's employment is terminated in
accordance with Section 4.
2. POSITION
Duties, and Responsibilities.
a) Position - The Company agrees to employ the Executive as it President and
Chief Executive Officer and the Executive agrees to accept such employment
with the Company, subject to the terms and conditions of this Agreement. The
Executive shall devote his full business time and attention to rendering the
services to the Company customarily incident to the position of President
and Chief Executive Officer and to such other services as may be reasonably
requested by the Board of Directors of the Company.
b) Other Activities - The Executive agrees to devote his full business time and
attention to the business and affairs of the Company, and to the extent
necessary to discharge the responsibilities assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform such
responsibilities faithfully. It is expressly understood and agreed that
during the term of this Agreement the Executive will not be employed by,
retained by, or represent in any capacity any other person, firm or company
engaged in business of a similar nature or in competition with the Company
without the prior written consent of the Company.
3. SALARY, OTHER BENEFITS: EXPENSES.
a) Salary - In consideration of the services to be rendered under this
Agreement, the Executive shall be paid an annual base salary ("Annual Base
Salary") of one hundred twenty five thousand dollars ($125,000). The Annual
Base Salary shall be payable monthly. The Company shall have the right, but
not the duty, to review the Annual Base Salary periodically.
b) Benefits - The Company will provide the Executive with the right to
participate in and to receive benefits from all present and future benefit
plans, practices, policies and programs (including without limitation,
medical, prescription drugs, dental, disability, salary continuance,
employee life, group life. accidental death and travel accident insurance
plans and programs) as are approved by the Board of Directors and are
available to comparable executives of the Company; in addition, as he
becomes eligible, the Company will provide the Executive with the right to
participate in all retirement plans, practices and programs, and all similar
benefits, made available generally to comparable executives of the Company.
The Executive shall be entitled to 4 weeks annual vacation and to sick leave
as determined in accordance with Company policy. The amount and extent of
benefits to which the Executive is entitled shall be governed by each
specific benefit plan offered by the Company, as it may be amended from time
to time.
c) Expenses - The Company shall promptly reimburse the Executive for reasonable
travel and other business expenses incurred by the Executive in the
performance of his duties hereunder in accordance with the Company's general
policies, as they may be amended from time to time during the course of this
agreement.
<PAGE>
4. TERMINATION OF EMPLOYMENT
a) By Death - The Executive's employment shall terminate automatically upon his
death. The company shall pay to the Executive's beneficiaries or state, as
appropriate, the salary to which he is entitled pursuant to Section 3(a) as
of the date of his death. After the payments called for in this Section 4(a)
are made, the Company's obligations hereunder shall terminate. This section
shall not affect entitlement of the Executive's estate or beneficiaries to
death benefits under any benefit plan of the Company.
b) By Disability - The Company may terminate the Executive's employment at any
time without notice and without liability if the Executive suffers any
physical or mental disability that renders him totally disabled under the
terms and provisions of any disability plan or program sponsored or
maintained by the Company, or, in the absence of such plan or program, that
in the Company's reasonable judgment would prevent the Executive from
performing his duties under this Agreement with reasonable accommodation for
a period of 120 consecutive days. The Company shall pay the salary to which
the Executive is entitled pursuant to Section 3(a) through the date of
termination. After the payments called for in this Section 4(b) are made,
the Company's obligations hereunder shall terminate. This Section shall not
affect the Executive's right to disability insurance proceeds, if
applicable.
c) By Company For Cause - The Company may terminate the Executive's employment
for cause (as defined below) at any time without notice and without
liability. The Company shall pay the Executive the salary to which he is
entitled pursuant to Section 3(a) through the date of termination, and
thereafter the Company's obligations hereunder shall terminate. Termination
shall be for cause if:
(i) the Executive neglects significant duties he is required to perform or
violates material Company policy, and, after being warned, continues to
neglect such duties or continues to violate the specified Company policy;
(ii) the Executive commits a material act of dishonesty, fraud,
misrepresentation or other act of moral turpitude;
(iii) the Executive exhibits gross negligence in the course of employment;
(iv) the Executive fails to obey a lawful direction of the President or the
Board of Directors without good cause;
(v) the Executive is convicted of any misdemeanor involving moral turpitude;
(vi) the Executive is convicted of a felony.
d) By the Executive or the Company At Will
(i) Termination by the Company. The Company may, at any time, terminate the
Executive's employment without cause. If the Executive's employment is
terminated during the term of this Agreement by the Company at will and not
for cause (as defined in Section 4(c)) the Executive shall be entitled to
receive the Annual Base Salary less the compensation paid to him by a
subsequent employer for any remaining period of the Agreement. Nothing in
this Section 4(d)(i) shall prevent the Company from exercising its right
under Section 4(c) to terminate the Executive's employment for cause.
<PAGE>
(ii) Termination by the Executive under Other Circumstances. If
Section4(d)(ii) does not apply, the Executive may, upon giving thirty (30)
days' written notice to the Company, terminate his employment for any
reason. If the Executive terminates his employment pursuant to this Section
4(d)(ii), the Company shall pay the Executive the salary to which he is
entitled pursuant to Section 3(a) through the end of the notice period, and
thereafter the Company's obligations hereunder shall terminate.
e) Termination Obligations.
(i) The Executive hereby acknowledges and agrees that all personal property
and equipment furnished to or prepared by the Executive in the course of or
incident to his employment, belongs to the Company and shall, if physically
returnable, be promptly returned to the Company upon request of the Company
upon termination of his employment. "Personal property" includes, without
limitation, all books, manuals, records, reports, notes, contracts, lists,
blueprints, and other documents, or materials, or copies thereof and
Proprietary Information (as defined below). Following termination, the
Executive will not retain any written or other tangible material containing
any Proprietary Information.
(ii) Upon termination of his employment, the Executive shall be deemed to
have resigned from all offices and directorships then held with the Company,
and will execute a letter of resignation if requested by the Company.
5. POST TERMINATION OBLIGATIONS.
a) Proprietary Information Defined - "Proprietary Information" is all
information and any idea in whatever form, tangible or intangible,
pertaining in any manner to the business of the Company, or to its clients,
consultants, or business associates, including all intangible property used
in the Company's business, whether owned by the Company as of the date of
this Agreement or developed thereafter, unless: (i) the information is or
becomes publicly known through lawful means; (ii) the information was
rightfully in the Executive's possession or part of his general knowledge
prior to his employment by the Company; or (iii) the information is
disclosed to the Executive without confidential or proprietary restriction
by a third party who rightfully possesses the information (without
confidential or proprietary restriction) and did not learn of it, directly
or indirectly, from the Company.
b) General Restrictions on Use of Proprietary Information - The Executive
agrees that all Proprietary Information is property of the Company and he
agrees to hold all Proprietary information in strict confidence and trust
for the sole benefit of the Company and not to, directly or indirectly,
disclose, use, copy, publish, summarize, or remove from Company's premises
any Proprietary Information (or remove from the premises any other property
of the Company), except (i) during his employment to the extent necessary to
carry out the Executive's responsibilities under this Agreement, and (ii)
after termination of his employment as specifically authorized in writing by
the Company's Board.
<PAGE>
c) Non-Solicitation and Non-Raiding - To forestall the disclosure or use of
Proprietary Information in breach of Section 5, and in consideration of this
Agreement, Executive agrees that for a period of two years after termination
of his employment, he shall not, for himself or any third party, directly or
indirectly (i) divert or attempt to divert from the Company any business of
any kind in which it is engaged, including, without limitation, the
solicitation of its customers as to products which are directly competitive
with products sold by the Company at the time of the Executive's
termination, or interfere with any of its suppliers or customers, or (ii)
solicit for employment any person employed by the Company during the period
or such person's employment and for a period of one year after the
termination of such person's employment with the Company.
d) Contacts with the Press - Following termination, the Executive will continue
to abide by the Company's policy that prohibits discussing any aspect of
Company business with representatives of the press without first obtaining
the permission of the Company's President or its Board.
e) Non-Compete - For a period of two years following termination, the Executive
will not directly or indirectly, whether or not for compensation, and
whether or not as an employee (i) engage in or have any financial interest
in any business competing with the Company, or (ii) solicit or induce on
behalf of any business competing with the business of the Company, any
customer of the Company.
6. SUCCESSORS
a) This Agreement is personal to the Executive and without the prior written
consent of the Company shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's legal
representatives to the extent provided elsewhere in this Agreement.
b) This Agreement shall inure to the benefit of the Company and its successors
and assigns.
c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken
place. As used in, this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
7. NOTICES
All notices or other communications required or permitted hereunder shall be
made in writing and shall be deemed to have been duly given if delivered by hand
or mailed, postage prepaid, by certified or registered mail, return receipt
requested, and addressed as follows:
To the Company:
RTC, Inc
738 McCann Rd,
Severna Park, MD 21146
Attn: President
With a Copy to:
Eurotelecom Communications, Inc
To the Executive:
Ray U. May
738 McCann Rd.,
Severna Park, MD 21146
<PAGE>
Notice of change of address shall be effective only when given in accordance
with this section.
8. ENTIRE AGREEMENT.
The terms of this Agreement are intended by the parties to be the final
expression of their agreement with respect to the employment of Executive by the
Company and may not be contradicted by evidence of any prior or contemporaneous
agreement. The parties further intend that this Agreement shall constitute the
complete and exclusive statement of their terms and that no extrinsic evidence
whatsoever may be introduced in any judicial, administrative, or other legal
proceeding involving this Agreement. This Agreement supersedes any prior
agreements, written or oral, between the Company and the Executive concerning
the terms of Executive's employment.
9. AMENDMENTS. WAIVERS.
This Agreement may not be modified, amended, or terminated except by an
instrument in writing, signed by the Executive and by a duly authorized officer
of the Company other than Executive, By an instrument in writing similarly
executed, either party may waive compliance by the other party with any
provision of this Agreement that such other party was or is obligated to comply
with or perform provided, however, that such waiver shall not operate as a
waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, or power provided herein or by law or in equity.
10. SEVERABILITY: ENFORCEMENT.
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforce ability of any other provisions of this
Agreement. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect..
11. GOVERNING LAW
This Agreement shall be governed by and constructed in accordance- with the laws
of the State of Maryland.
12. VOLUNTARY EXECUTION.
Executive acknowledges (a) that he has consulted with or has had the opportunity
to consult with independent counsel of his own choice concerning this Agreement
and has been advised to do so by the Company, and (b) that he has read and
understands this Agreement, is fully aware of its legal effect, and has entered
into it freely based on his own judgment.
13. ARBITRATION.
Any controversy between the Executive, his heirs or estate and the Company or
any office; director, or employee of the Company arising from, related to, or
having and connections with this Agreement or with the Executive's employment
by, or other association with, the Company, whether based on tort, contract,
statutory, equitable, or other theories, shall be resolved by arbitration on
accordance with the then-current employment arbitration rules, if available, or
otherwise the commercial arbitration rules of the American Arbitration
Association, and judgment on the award rendered by the arbitrator may be entered
by any court having jurisdiction thereof. The location of the arbitration shall
be the State of New Jersey.
<PAGE>
14. WITHHOLDINGS
The Company may withhold from any amounts payable under this Agreement such
Federal, state, local or foreign taxes as may be required to be withheld
pursuant to any applicable law or regulations.
The parties have duty executed the Agreement as of the effective date which
appears at the beginning of this Agreement.
RTC, Inc.
By
-----------------------------------
/s/ Ray U May
-----------------------------------
Ray U May
EXHIBIT 3(xiv)
MINUTES OF SPECIAL MEETING
OF
STOCKHOLDERS
OF
AMERICAN TELEMEDIA NETWORK, INC.
A special meeting of the stockholders of American Telemedia Network, Inc. (the
"Company"), was held at 10:00 a.m., December 21, 1989, at its corporate office
in Provo, Utah.
Earl K. Cook. President and Chief Executive Officer presided and called the
meeting to order and R. Thomas Bailey acted as Secretary for the meeting.
Mr. Bailey reported that he had an accurate list of the stockholders of record
of the Company at the close of business on October 26, 1989, the record date for
this special meeting of stockholders and a Certificate of Mailing of the notice
of meeting had been filed in the records of the Company. He also reported that a
quorum was present at the meeting.
Mr. Cook reported that Wilma Meador had been appointed to act as the Inspector
of Elections for the meeting and had been sworn to carry out her duties.
The first item of business was a motion made by R. Thomas Bailey, and seconded
by Bob Rogers. as follows:
1. RESOLVED, that the Company's Certificate of Incorporation be and hereby is
amended to change the Company's name to ATNN, Inc.
RESOLVED FURTHER, that the appropriate officers of the Company be, and they
hereby are, authorized and directed to prepare, execute and deliver and file all
documents which they deem necessary, appropriate or required to carry out the
intent of this resolution,
<PAGE>
The second motion was made by Mr. I Kraig Higginson and seconded by Bob Rogers,
as follows:
2. RESOLVED, that the Company's 1987 Incentive Plan (the "Incentive Plan") be
and hereby is amended to (i) increase the number of shares of the Company's
no par value common stock reserved thereunder by 250,000 shares; (ii) expand
the group of persons eligible to receive awards under the Incentive Plan to
include members of the Company's Board of Directors who are not also
employees of the Company; and (iii) provide that the committee appointed by
the Company's Board of Directors to administer the Incentive Plan shall be
eligible for awards thereunder.
RESOLVED FURTHER, that the appropriate officers of the Company be, and they
hereby are, authorized and directed to prepare, execute and deliver and file
all documents which they deem necessary, appropriate or required to carry
out the intent of this resolution.
Mr. Cook called for other business or motions to come before the meeting, and
there being no further business, the business meeting was adjourned. Mr. Cook
then showed a video on the Company's latest acquisition, Meadow Valley
Contractor's, Inc. and a question and answer session followed.
Mr. Cook then asked the Secretary for a vote tally on the motions and the
Secretary reported as follows:
FOR AGAINST ABSTAIN
--- ------- -------
Motion 1 4,268,782 13,649 1,500
Motion 2 4,226,092 49,239 8,600
There being no further business to come before the meeting, the Chairman
declared the meeting adjourned.
/s/ R Thomas Bailey
----------------------------------------
R THOMAS BAILEY, SECRETARY
<PAGE>
ACQUISITION AGREEMENT
---------------------
AGREEMENT dated July 10, 1997 (the "Agreement"), by between and among ATNN.
INC., a company incorporated under the laws of the State of Delaware
(hereinafter referred to as "ATNN"), the persons listed on Exhibit .... Attached
hereto and made a part hereof, being all of the shareholders and executive
officers of ATNN (hereinafter referred to as "MANAGEMENT"); EUROTELECOM, INC., a
company incorporated under the laws of the state of Delaware (hereinafter
referred to as "ETI"); and the persons listed on Exhibit "A" attached hereto and
made a part hereof, (hereinafter referred to as the "SELLERS").
WHEREAS the SELLERS own a total of 6,900,000 shares of common stock, $.001 par
value, of ETI, said shares being 100% of the issued and outstanding common stock
of ETI; and
WHEREAS, the SELLERS desire to sell and ATNN desires to purchase one hundred
(100%) per cent of such shares;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereby agree a
follows:
1. PURCHASE AND SALE. The SELLERS hereby agree to sell, transfer, assign and
convey to ATNN and ATNN hereby agrees to purchase and acquire from the
SELLERS, a total of 6,900,000 shares of Common Stock of ETI, which equals
one hundred per cent (100%) per cent of all of ETI's currently issued and
outstanding common stock (the "ETI Common Shares"), in a tax-free stock-for
stock acquisition.
2. PURCHASE PRICE. The aggregate purchase price to be paid by ATNN for the ETI
Common Shares shall be 5,865,000 post-reverse split shares of ATNN no par
value voting common stock, (The "ATNN Common Shares"). The ATNN Common
Shares will be issued to the individual SELLERS in accordance with Exhibit
"A-1" attached hereto.
3. WARRANTIES, REPRESENTATIONS AND COVENANTS OF ETI AND ETI PRINCIPALS. In
order to induce ATNN to enter into this Agreement and to complete the
transaction contemplated hereby, ETI and its principal executive officers
(hereinafter referred to as the "ETI PRINCIPALS"), jointly and severally
warrant and represent to ATNN that:
<PAGE>
(a) ORGANIZATION AND STANDING. ETI is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware, is
qualified to do business as a foreign corporation in every other state or
jurisdiction in which it operates to the extent required by the laws of
such states and jurisdiction, 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
ETI's Certificate of Incorporation, amendments thereto and all current
By-laws of ETI. No changes thereto will be made in any of the Exhibit "B"
documents before the Closing. ETI has no subsidiaries or any investments or
ownership interests in any corporation, partnership, joint venture or other
business enterprise which is material to its business.
(b) CAPITALIZATION. As of the closing Date, ETI's entire authorized equity
capital consists of 25,000,000 shares of Common Stock $.001 par value, of
which 6,900,000 shares of Common Stock will be outstanding as of the
closing. 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 ETI or the
SELLERS are bound, calling for the issuance of any additional shares of
common stock or any other voting or equity security, except as set forth in
Exhibit "ETI-S", attached hereto. The 6,900,000 issued and outstanding ETI
Common Shares to be transferred by the SELLERS constitutes one hundred
(100%) per cent of the currently issued and outstanding shares of Common
Stock of ETI, which includes, inter alia that same percentage of ETI'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. After becoming management of ATNN, ETI's management
will not further reverse split ATNN's common stock for at least 12 months.
(c) OWNERSHIP OF ETI SHARES. Each SELLER warrants and represents, severally
that as of the date hereof, such SELLER is the sole owner of the ETI Common
Shares listed by his or her name on Exhibit "A-1", free and clear of all
liens, encumbrances, and restrictions whatsoever, except that the ETI
Common Shares so listed have not been registered under the Securities
Action of 1933, as amended (the "33 Act"), or any applicable State
Securities laws. By SELLERS' transfer of the ETI Common Shares to ATNN
pursuant to this Agreement, ATNN will thereby acquire 100% of the
outstanding capital stock of ETI, free and clear of all liens, encumbrances
and restrictions of any nature whatsoever, except by reason of the fact
that the ETI Common Shares will not have been registered under the '33 Act,
or an applicable State securities laws.
(d) TAXES. ETI 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 ETI. ETI's income tax returns have
never been audited by any authority empowered to do so.
<PAGE>
(e) PENDING ACTIONS. There are no material legal actions, lawsuits, proceedings
or investigations, either administrative or judicial, pending or
threatened, against or affecting ETI, or against the ETI PRINCIPALS that
arise out of their operation of ETI, except as described in Exhibit "C"
attached hereto. ETI is not knowingly in material 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 services,
the '33 Act, the Securities Exchange Act of 1934, as amended (the "34
Act"), the Rules and Regulations of the U.S. Securities and Exchange
Commission ("SEC"), or the Securities Laws and Regulations of any state or
nation.
(f) GOVERNMENTAL REGULATION. ETI holds the licenses and regulations set forth
on Exhibit "D" hereto from the jurisdictions set forth therein, which
licenses and registrations are all of the licenses and registrations
necessary to permit ETI to conduct its current business. All of such
licenses and registrations are in full force and effect, and there are no
proceedings, hearings or other actions pending that may affect the validity
or continuation of any of them. No approval of any other 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 jeapordize the validity
or continuation of any of them.
(g) OWNERSHIP OF ASSETS. Except as set forth in Exhibit "E" attached hereto,
ETI has good, marketable title, without any items 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, certificates of deposit, stocks, bonds, and
other securities good will, customer lists, its corporate name and all
variants thereof, trademarks and trade names, copyrights ad 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 ETI 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 ETI disposed of any such asset since the date of the most
recent balance sheet described in Section 3(c) of this Agreement.
(h) NO INTEREST IN SUPPLIERS, CUSTOMERS, LANDLORDS OR COMPETITORS. Neither the
ETI PRINCIPALS nor any member of their families have any material interest
of any nature whatever in any supplier, customer, landlord or competitor of
ETI/
<PAGE>
(i) NO DEBT OWED BY ETI TO ETI PRINCIPALS. Except as set forth in Exhibit "F"
attached hereto, ETI does not owe any money, securities or property to
either the ETI PRINCIPALS or any member of their families or to any company
controlled by such a person, directly or indirectly. To the extent that ETI
may have any undisclosed liability to pay any sum or property to any such
person or entity or any member of their families such liability is hereby
forever irrevocably released and discharged.
(j) CORPORATE RECORDS. All of ETI's books and records, including, without
limitation, its books of account, corporate records, minute book, stock
certificates 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.
(k) NO MISLEADING STATEMENTS OR OMISSIONS. Neither this Agreement nor any
financial statement, exhibit, schedule or document attached hereto or
presented to ATNN 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 THIS AGREEMENT. All corporate and other proceedings required to
be taken by the SELLERS and by ETI 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 ETI and constitutes the valid and
binding obligation of each of them, enforceable in accordance with its
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. 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, ETI'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 ETI or the
SELLERS is a party or is bound or may be affected, nor will such execution,
delivery and carrying out violate any law, rule or regulation or any order,
writ, injunction or decree, or any court, regulatory agency or other
governmental body; and the business now conducted by ETI can continue to be
conducted after completion of the transaction contemplated hereby, with ETI
as a wholly-owned subsidiary of ATNN.
(m) CONSENTS AND APPROVALS; COMPLIANCE WITH LAWS. Neither ETI nor the SELLERS
are required to make any filing with, or obtain the consent or approval of,
any person or entity as a condition to the consummation of the transactions
contemplated by this Agreement. The business of ETI has been operated in
material compliance with all laws, rules, and regulations applicable to its
business, including, without limitation, those related to securities
matters, trade matters, environmental matters, public health and safety,
and labor and employment.
<PAGE>
(n) ACCESS TO BOOKS AND RECORDS. ATNN will have full and free access to ETI's
books during the course of this transaction prior to Closing, during
regular business hours, on reasonable notice.
(o) ETI FINANCIAL STATEMENTS. Before the Closing, ETI's audited financial
statements as of and for the period from inception to December 31, 1996,
and ETI's unaudited financial statements as of and for the three months
ended March 31, 1997, will be provided to ATNN and will be annexed hereto
as Exhibit "G", the ETI financial statements will accurately describe ETI's
financial positions as of the dates thereof. The ETI financial statements
will have been prepared in accordance with generally accepted accounting
principles in the United States ("GAAP") (or as permitted by regulations
S-X, S-B, and/or the rules promulgated under the '33 Act and the '34 Act)
and for the period from inception to December 31 1996 audited by
independent certified public accountants with SEC experience.
(p) ETI's CORPORATE SUMMARY. ETI's Business Plan, dated June, 1997 (attached
hereto as Exhibit "L") accurately describes ETI's business, assets,
proposed operations and management as of the date thereof, since the date
of the Corporate Plan, there has been no material adverse change in the
Business Plan and no material adverse change in ETI; provided that no
warranties or representations are made as to any financial projections.
4. WARRANTIES, REPRESENTATIONS AND COVENANTS OF ATNN AND MANAGEMENT OF ATNN
("MANAGEMENT"). In order to induce the SELLERS and ETI to enter into this
Agreement and to complete the transaction contemplated hereby, ATNN and
MANAGEMENT jointly and severally warrant, represent and covenant to ETI and
SELLERS that:
(a) ORGANIZATION AND STANDING. ATNN by the closing will be a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, will be qualified to do business as a foreign
corporation in every other state and jurisdiction in which it operates to
the extent required by the laws of such states or jurisdictions and will
have full power and authority to carry on its business as now conducted and
to own and operate its assets, properties and business. ATNN has no
subsidiaries or any other investments or ownership interests in any
corporation, partnership, joint venture or other business enterprise.
(b) CAPITALIZATION. ATNN's entire authorized equity capital consists of
20,000,000 shares of voting common stock, par value $0.01, and 10,000,000
shares of preferred stock, $.01 par value. As of the Closing, after giving
effect to (i) the proposed one-for-117,05941 reverse split of ATNN's
11,705,941 currently outstanding shares into 100,000 shares; and (ii) the
issuance of 5,865,000 post-reverse split shares to the SELLERS as described
in Section 2 herein; (iii) the cancellation of 23,077 post reverse split
shares issued to one entity; and (iv) the issuance of 958,077 post-reverse
split shares to the consultants described in Section 12 hereof, ATNN will
<PAGE>
have authorized 20,000,000 hares of Common Stock, par value $0.01 and
10,000,000 shares of preferred stock, $.01 par value; and will have issued
and outstanding 6,900,000 shares of voting common stock, par
value(pound)0.01 and no shares of preferred stock issued. Upon issuance,
all of the ATNN Common Stock will be validly issued, fully paid and
non-assessable. The relative rights and preferences of ATNN's equity
securities are set forth on the Certificate of Incorporation, as amended
and ATNN's By-laws (Exhibit "H" hereto). There are no other voting or
equity securities authorised or issued, nor any authorized or issued
securities convertible into voting stock, an no outstanding subscriptions,
warrants, calls, options, rights, commitments or agreements by which ATNN
is bound, calling for the issuance of any additional shares of common stock
or any other voting or equity security. The By-laws of ATNN 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 ATNN. Cumulative voting
is not provided for by the By-laws or Certificate of Incorporation of ATNN.
Accordingly, as of the Closing the 5,865,000 shares being issued to an
acquired by the SELLERS will constitute 85% of the 6,900,000 shares of ATNN
which will then be issued and outstanding (including all consulting fees),
which includes, inter alia, that same percentage of ATNN's voting power
(subject to the provisions regarding cumulative rights), 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 ATNN's issuance of the ATNN Common Shares to the
SELLERS pursuant to this Agreement, the SELLERS will thereby acquire good,
absolute marketable title thereto, free an clear of all liens, encumbrances
and restrictions of any nature whatsoever, except by reason of the fact
that such ATNN shares will not have been registered under the '33 Act, or
any applicable state securities laws.
(d) SIGNIFICANT AGREEMENTS. ATNN is not and will not at Closing be bound by any
of the following:
i. Employment, advisory, or consulting contract (except as described in
Section 12 herein);
ii. Plan providing for employee benefits of any nature;
iii. Lease with respect to any property or equipment;
iv. Contract or commitment for any current expenditure;
v. Contract or commitment pursuant to which it has been assumed,
guaranteed, endorsed, or otherwise become liable for any obligation of
any other such person, firm or organization.;
vi. Contract, agreement, understanding, commitment or arrangement, other
than in the normal course of business, not set forth in this Agreement
or an Exhibit hereto;
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.
<PAGE>
(e) TAXES ATNN 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 had paid all taxes as shown on such
returns. All of such returns are true and complete. ATNN's income tax
returns have never been audited by any authority empowered to do so.
(f) ABSENCE OF LIABILITIES. To the best of management's knowledge as of the
Closing Date ATNN will have no liabilities of any kind or nature, fixed or
contingent, except for the costs, including legal and accounting fees and
other expenses, in connection with this transaction, for which ATNN agrees
to be responsible and to pay in full at or before the Closing.
(g) NO PENDING ACTIONS. To the best of management's knowledge, there are no
legal actions, lawsuits, proceedings or investigations, either
administrative or judicial, pending or threatened, against or affecting
ATNN, or against any of the ATNN MANAGEMENT and arising out of their
operation of ATNN. ATNN has been in compliance with, and has not received
notice of violation of any law, ordinance or regulation of any kind
whatever, including, but not limited to, to the '33 Act, the '34 Act, the
Rules and Regulations of the SEC, or the Securities Laws and Regulations of
any state. ATNN is not an investment company as defined in, or otherwise
subject to regulation under, the Investment Company Act of 1940. ATNN is
not required to file reports pursuant to either Section 13 or Section 15(d)
of the '34 Act.
(h) CORPORATE RECORDS. All of ATNN'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 respect since its
date of incorporation; all of said books and records will be made available
for inspection by ETI's authorized representatives prior to the closing as
provided by Section 4(1) herein, and will be delivered to ATNN'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 ETI 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 THIS AGREEMENT. All corporate and other proceedings required to
be taken by ATNN in order to enter into and to carry out this Agreement
will have been duly and properly taken at or before the Closing. This
Agreement has been duly executed by ATNN, and constitutes a valid and
binding obligation of ATNN enforceable in accordance with its terms. The
execution and delivery of this Agreement and the carrying of its purposes
will not result in the breach of any of the terms or conditions of, or
constitute a default under or violate, ATNN's Certificate of Incorporation
or By-laws, or any agreement, lease, mortgage, bond, indenture, license or
other document or undertaking, oral or written, to which ATNN is a party or
is bound or may be affected, nor will such execution, delivery and carrying
out violate any law, rule or regulation or any order, writ, injunction or
decree of any court, regulatory agency or other governmental body.
<PAGE>
(k) CONSENTS AND APPROVALS; COMPLIANCE WITH LAWS. Except for the notices to be
filed as described in Section 7(a)(v) herein, neither ATNN nor MANAGEMENT
is required to make any filing with, or obtain the consent or approval of,
any person or entity as a condition to the consummation of the transactions
contemplated by this agreement. The business of ATNN has been operated in
compliance with all laws, rules, and regulations applicable to its
business, including, without limitation, those related to securities
matters, trade matters, environmental matters, public heath and safety, and
labor and employment.
(l) ACCESS TO BOOKS AND RECORDS. ETI and SELLERS will have full and free access
to ATNN's books and records during the course of this transaction prior to
and at the Closing, on reasonable notice.
(m) ATNN FINANCIAL STATEMENTS. At or before the closing, ATNN and MANAGEMENT
will provide ETI with ATNN's audited financial statements for the fiscal
year ended December 31 1996, which will be audited in accordance with GAAP
by independent certified public accountants with SEC experience, and which
comply with applicable Federal securities laws and regulations including
Regulation S-X, together with unaudited financial statements for the
quarter ended March 31 1997. There will have been no material change in the
business, assets or condition (financial or otherwise) of ATNN since the
date of such financial statements to the closing.
(n) ATNN FINANCIAL CONDITION. As of the Closing, ATNN will have no assets or
liabilities.
(o) DIRECTORS' AND SHAREHOLDERS' APPROVAL. As of the closing ATNN's Board of
Directors and Shareholders, by meeting or consent, shall have properly
authorized the matters described in section 7(a)(vi) herein.
(p) THE ATNN SHARES. All of the ATNN Common Shares issued to SELLERS shall be
validly issued, fully-paid non assessable shares of ATNN Common Stock, with
full voting rights, dividend rights, and right to receive the proceeds of
liquidation, if any, as set forth in ATNN's Certificate of Incorporation.
(q) TRADING OF ATNN STOCK. ATNN's common stock is now and as of the Closing
will be traded on the OTC Bulletin Board (Symbol: ATNN); no further action
must be taken before the Closing for continued trading on the Bulletin
Board except for the filing of the notice described in Section 7(a)(iv)
5. TERM: INDEMNIFICATION. All representations, warranties, covenants and
agreements made herein and in the exhibits attached hereto shall survive
the execution and delivery of this Agreement and payment pursuant thereto.
MANAGEMENT and ETI MANAGEMENT ("management") of both parties to the
agreement hereby agree, jointly and severally, to indemnify, defend and
hold harmless ATNN, ETI and the SELLERS from and against any damage, loss
liability, or expense (including, without limitation, reasonable expenses
of investigation and reasonable attorney's fees) arising out of any
material breach of any representation, warrant, covenant, or agreement made
by ETI MANAGEMENT or management in this Agreement.
6. RESTRICTED SHARES: LEGEND All of the ATNN Common Shares issued to SELLERS
hereunder will be "restricted securities" as defined in Rule 144 under the
'33 Act; and each stock certificate issued to SELLERS hereunder will bear
the usual restrictive legend to such effect. Appropriate Stop Transfer
instructions will be given to ATNN's stock transfer agent.
<PAGE>
7. CONDITIONS PRECEDENT TO CLOSING. (a) The obligations of ETI and the SELLERS
under this Agreement shall be and are subject to fulfilment, prior to or at
the closing, of each of the following conditions:
i. That ATNN's and MANAGEMENT'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, and MANAGEMENT
will deliver an executed certification confirming the foregoing;
ii. That ATNN and MANAGEMENT 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 the
Closing.
iii. That ATNN's directors and shareholders, by proper and sufficient vote
taken either by consent or at a meeting duly and properly called and
held, shall have properly approved all of the matters required to be
approved by ATNN's directors and shareholders, respectively;
iv. That ATNN shall have filed the notice of the reverse split required by
Rule 10b-17 under that Act, and shall have sent notice to its
stockholders of the transactions contemplated herein; and
v. That ATNN shall have filed the Form D contemplated by Section 12
herein and shall have provided ETI and the CONSULTANTS (as defined in
Section 12 herein) with a legal opinion that the shares issued to
CONSULTANTS by virtue of the filing of Form D, are freely tradeable
without having been registered under the '33 Act; and
vi. That ATNN's Board of Directors, by proper and sufficient vote, shall
have approved this Agreement and the transactions contemplated hereby;
approved the contemplated reverse split of ATNN's outstanding Common
Stock without changing either the authorized shares or the par value;
approved of the change of ATNN's corporate name to a name selected by
ETI; approved by the resignation of all of ATNN's current directors
and the election of up to three designees of ETI to serve as directors
in place of ATNN's current directors; and will have approved such
other changes as are consistent with this Agreement and approved by
ETI and ATNN; and
(b) The obligations of ATNN and MANAGEMENT UNDER THIS Agreement shall
be and are subject to fulfillment, prior to or at the Closing of
each of the following conditions:
i. That ETI'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
ETI PRINCIPALS shall deliver an executed certification confirming
the foregoing;
ii. That ETI and ETI PRINCIPALS 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; and
<PAGE>
iii. That ETI'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 part if;
i. Any provision of this Agreement applicable to a party shall be
materially untrue or fail to be accomplished on or before July 31
1997.
ii. Any legal proceeding shall have been instituted or shall be imminently
threatening to delay, restrain or prevent the consummation of this
Agreement.
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.
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.
11. CLOSING. The Closing of the transactions contemplated by this Agreement
("Closing") shall take place at the office of John B Lowy, P.C. attorneys
for Olympic Capital Group, Inc., at 1.00 p.m. on the first business day
after the latter of the approval of SELLERS owning at least 80% of ETI's
Common Stock of the shareholders of ATNN approving this Agreement and the
matters referred to in Section 7(a)(vi) herein, or such other date as the
parties hereto shall mutually agree upon. At the Closing, all the documents
and items referred to herein shall be exchanged.
12. FEES AND COMMISSIONS. (a) Except as described in this Section 12, no
broker, finder, or other person or entity is entitled to any fee or
commission from ATNN or ETI for services rendered on behalf of ATNN or ETI
in connection with the transactions contemplated by this Agreement. As
compensation for it services in initiating this transaction and ongoing
consulting services to ATNN and ETI, ATNN agrees to issue to the
individuals listed in Schedule 504 attached hereto, which includes Wing
Capital Ltd ("WCL") and designees, Olympic Capital Group, Inc. ("OCG") and
its designees and Type Investment Holdings Limited, and its designees
("Type") (collectively, the "CONSULTANTS"), including their designees, a
total of 958,077 post-reverse split shares, as follows: to WCL and
designees - 517,500 shares; to OCG and designees - 161,000 shares; to Type
and designees - 161,000 shares; to Basic Capital Corp. - 34,500 shares; and
84,077 to Targetmall.com LLC and designees. All of these 958,077 shares
shall be issued at Closing under SEC Rule 504 pursuant to the Consulting
Agreements attached hereto as Exhibit 504. (b) At the Closing, ATNN's
attorney will provide a legal opinion that upon the filing of an
appropriate Form D, the shares being issued to CONSULTANTS may be issued
with no restrictions on transfer under the '33 Act.
<PAGE>
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware.
14. 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 part hereto.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals as of the
date and year above first written.
ATTN, INC.
By:
-------------------------------------
-------------------------------------
MANAGEMENT:
- ----------------------------- ---------------------------
- ----------------------------- ---------------------------
EUROTELECOM, INC.
By:
-------------------------------------
-------------------------------------
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<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
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0
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