SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB-A1
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
SOLAR ENERGY LIMITED
(formerly Salvage World, Inc. )
(originally Taurus Enterprises, Inc.)
Delaware 76-0418364
(Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
112 C Longview Drive, Los Alamos, New Mexico 87544
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (604) 257-3602
The following Securities are to be registered pursuant to Section 12(g) of the
Act:
Class-A Common Voting Equity Stock
13,135,911 Shares Issued and Outstanding
April 15, 2000
The EXHIBIT INDEX is located at page 22 of this Registration Statement
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PART I
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UNNUMBERED ITEM: INTRODUCTION
This registration statement is voluntarily filed pursuant to Section 12(g)
of the Securities Exchange Act of 1934, in order to comply with the requirements
of National Association of Securities Dealers for continued quotation on the
Over the Counter Bulletin Board, often called "OTCBB". The requirements are that
the financial statements and information about the Issuer be reported
periodically to the Commission and be and become information that the public can
access easily. This issuer wishes to report and provide disclosure voluntarily,
and will file periodic reports in the event.
ITEM 1. DESCRIPTION OF BUSINESS.
(A) ORGANIZATION AND HISTORY. Solar Energy Limited (the "Registrant" and
sometimes "we","us" or "our") was first incorporated in Delaware as Taurus
Enterprises, Inc. on January 5, 1994, and re-incorporated in Nevada on August
20, 1996 as Salvage World, Inc. On August 20, 1996. Taurus made its original
issuance of 25,000,000 share to founders in 1994, pursuant to Section 4(2) of
the Securities Act of 1933. During 1996, Salvage placed an additional 451,250
shares, pursuant to Regulation D, Rule 504, resulting in a total of 25,451,250
shares then issued and outstanding. On December 17, 1997, the Shareholders
approved a proposal to Reverse Split the Common Stock of the Corporation 20 to
1; with the provision that no Shareholder owning 100 shares or more shall be
reversed or reduced below 100 Shares. The 25,451,260 shares were reduced to
1,272,562, and the adjustment for small shareholders was 5,949 shares, for a
total post-reverse of 1,278,511. Also on December 17, 1997, shareholders
approved, and Management effected a Plan of Reorganization and Merger of Salvage
World, Inc. into Solar Energy Limited, a private Delaware Corporation, the
effect of which merger changed the name of this Corporation, moved its place of
incorporation from Nevada to Delaware and involved the acquisition of Hydro-Air
Technologies, Inc. ("HAT") to become a wholly-owned subsidiary of this Issuer,
Solar Energy Limited.
In accordance with our shareholders' approval, we acquired Hydro-Air
Technologies, Inc. ("HAT"), for stock equal to 40% of the total issued and
outstanding of the company, on a fully diluted basis (following the 20 to 1
Reverse Split, and the proposed issuance of such of the additional 10,000,000
Regulation D shares as might have been placed). The issuance to HAT is to
proceed in phases. The first phase issuance of 170,400 was made about April 15,
1998. The second phase issuance of 530,000 shares was made on October 23, 1998.
The amount of shares issued and possibly to be issued for HAT is summarized as
follows:
A. Issuance and Release of Solar stock. Solar and the HAT Shareholders
desired to create an orderly process for the issuance and progressive release of
common stock to or for the benefit of the HAT Shareholders.
1. HAT Shareholders. The HAT Shareholders were to receive subject to
this Reorganization Agreement, shares of Solar equal to 40% of the resulting
total issued and outstanding stock of Solar, on a fully-diluted basis, computed
following certain designated capital formation stages. However, the total number
of Solar shares which was to be issued to the HAT Shareholders to meet this
obligation was undeterminable at the time of the agreement.
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2. Initial Issuance. Upon consummation of the Merger, Solar was
authorized to issue and did issue to the HAT Shareholders 20% of 40% of the
outstanding Solar shares, as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
HAT Shareholder April 1998 October 1998 Total
- -------------------------------------------------------
Melvin L. Prueitt 16,359 50,880 67,239
David Jones 8,179 25,440 33,619
Stanley D. Prueitt 8,179 25,440 33,619
Leslie Speir 8,179 25,440 33,619
Dana Hansen and 3,408 10,600 14,008
Linda Hansen
Ara Lee Stevens 1,363 4,240 5,603
Baycove Investments, 34,080 106,000 140,080
Inc.
Hydro-Air Founders, 90,653 281,960 372,613
LLC
Total HAT 170,400 530,000 700,400
=======================================================
</TABLE>
3. Phased Release of Shares. The remaining 80% of 40% is to be issued
to the HAT Shareholders in phases based on the following formula: one share of
Solar stock for each $2.00 of earnings generated by HAT, as determined by
Generally Accepted Accounting Principles (GAAP). There have not been revenues to
date, so that no further issuances have been made to or for HAT.
There are certain internal agreements between the HAT Founders and
Shareholders (and not involving us) which are disclosed in Item 7 of this Part
I, Relationships and Transactions. These are arrangements by which the HAT group
agreed to manage the distribution, voting and private trading restrictions, as
between them.
Hydro-Air Technologies, Inc. (the Issuer's first wholly-owned subsidiary)
is a development stage company, founded by Dr. Melvin L. Prueitt, David Jones,
Stanley Prueitt and Leslie Speir, which company has developed certain
intellectual property rights with which they intend to generate commercially
viable electrical power using the energy of vaporization. The intellectual
property rights are called Hydro-Air Renewable Power System ("HARPS") and
include two U.S. Patents, one granted on September 3, 1996 (number 5,551,238)
and a second granted on July 28, 1998 (number 5784886). We regarded and regard
this acquisition HAT as an investment by us Issuer in future growth of demand
for HARPS. HAT has proposed other projects which are disclosed and discussed
under section (b) of this Item 1.
Also on December 17, 1997, shareholders approved the placement of up to
10,000,000 additional shares of common stock, at $0.10, pursuant to Regulation
D, Rule 504. A total of 7,800,000 shares were placed.
About July 23, 1998, we placed 125,000 restricted shares to three
knowledgeable investors.
About November 10, 1998, we placed a further 2,000,000 shares, in reliance
on Rule 504, to four accredited off-shore investors, at $0.01 per share. As
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before, these investors were known to management and affiliates before the
investment and had complete access, by virtue of that relationship to the kind
of information which registration would have provided.
Accordingly, a total of 9,800,000 shares were placed pursuant to Rule 504.
Renewable Energy Corporation ("RECO") (the Issuer's second wholly-owned
subsidiary) is also a development stage company. It was founded by Dr. Reed
Jensen. Dr. Jensen has developed certain intellectual property rights for a
process called Direct Solar Reduction of CO2 to Fuel and Feedstock, which rights
and process the Company intends to develop into a commercially viable system.
This process utilizes solar energy to directly reduce CO2 that would have been
released to the atmosphere while producing chemical feedstock, fuel and green
or environmentally friendly electricity. Management of the parent issuer regards
the acquisition of RECO as a long-term investment in the growing market for
renewable energy sources.
RECO was acquired 100% from its owner developer Dr. Reed Jensen, an
individual unrelated to us, for 350,000 escrowed shares of the common stock of
this Issuer, plus $20,000 cash. In addition to those share for direct
acquisition, 150,000 shares have been reserved un-issued for possible future
employee options. No options for the acquisition of these option shares has been
adopted.
On April 27, 1999, we places an additional 100,000 restricted securities,
at $1.00 per share, pursuant to section 4(2) to a single accredited investor.
On or about November 22, 1999, we placed an additional 800,000 shares to a
single accredited investor, at $0.18 per share.
The resulting total issued and outstanding 13,153,911 is further
illustrated in the following table:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Series # Taurus Salvage Solar Energy
Issuances (20 to 1)
- ------------------------------------------------------
1 4(2) 25,000,000 1,250,000
2 504 451,260 22,562
Subtotal 25,451,260 1,272,562
Adjustment (1) 5,949
Subtotal 5,949
Interim Total 1,278,511 1,278,511
3 504 7,800,000
4 4(2) 125,000
5 504 2,000,000
6 4(2) 100,000
6 4(2)/Rule 145 700,400
7 4(2)/Rule 145 350,000
8 Rule 4(2) 800,000
Total Issued 13,153,911
======================================================
</TABLE>
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(B) BUSINESS OF THE ISSUER. Solar Energy Limited is a public U.S. company
listed on the OTC Electronic Bulletin Board ("OTCBB") whose ticker symbol is
"XSEL". The Company's thrust is to explore and/or develop alternative energy
systems that are environmentally friendly in addition to being economically
viable and competitive. It is estimated that the world needs 50% more electrical
power in the next 25 years. It is calculated that, at the current use, there are
44 years of oil, 57 years of gas, 91 years of uranium and 564 years of coal
left. What is an alternative? Solar power in several forms. The sun discharges
on the earth enough energy each day to fill our global total energy requirements
for many years. We only need to tap a small portion of the sunlight. At the same
time the globe's second major problem, lack of water, could also be solved (it
is mainly a lack of inexpensive power to fuel desalination plants).
PROJECTS HAT:
1. HARPS. As a first project, XSEL purchased 100% of a private company
located in Los Alamos, New Mexico. This operating company, Hydro-Air
Technologies, Inc. ("HAT") has as its main assets certain technology, patents,
and intellectual property rights to the concept of producing electricity using
the energy of evaporation. One quart of water has about one-twentieth the energy
of a quart of gasoline. The process derived from this technology, called Hydro
Air Renewable Power Systems ("HARPS"), is an efficient and environmentally
friendly energy source.It uses only dry air and water (either fresh, ocean, or
waste water) to produce electricity while at the same time cleaning the air!
Initial internal computer driven studies conducted by the Company indicate that
electricity could be produced at one-third the current cost of electricity
generated by nuclear or fossil fuel plants. A working prototype is being built
in Los Alamos. Research and Development continues. No date for marketability has
been set. The HARPS units can be small enough for a house or large enough to
service a state. In theory, on a few hundred acres of land on the Baja,
California coast, enough electricity could be produced to service the needs of
Canada, the U.S. and Mexico. HAT was founded by and is headed by Dr. Melvin
Prueitt, a research scientist, author of three books and more than thirty
publications. One of his many achievements is that he was the first to determine
the temperature of a lightning bolt. He holds twelve patents and is listed in
Who's Who in America Index, Men of Achievement and Who's Who in the West. Most
of the team Dr. Prueitt assembled to assist in the project come from the Los
Alamos National Laboratory facilities, the research center managed by the
University of California for the Department of Energy of the U.S. government.
2. ACES - HAT has recently acquired the rights of a second project called
Air Conditioner Energy System ( ACES ). This project is similar in theory to
HARPS. The difference is that the ACES units are primarily for single family
residences. They are small, self-contained roof mounted units that produce
electricity with a unique bi-product - cold air. That is, they provide
electricity 24 hours a day whilst air conditioning a house. The theory also
relies on the heat of vaporization of water but is simpler than the HARPS.
Excess power can be sold to the utility company. Again, a model/prototype is to
be built with the same team from HAT. Research and Development continues. No
date for marketability has been set.
3. PHOTOVOLTAICS (THE CONVERSION OF LIGHT TO ELECTRICITY). Much work, time
and research dollars are being spent globally on this concept which is the
direct production of electricity by light passing through a photovoltaic medium.
We have already spent some time and funds on this concept but the field is
currently flooded with hundreds of companies exploring this potential. For now
we are focusing on investigating various new photovoltaic materials that are
both economical and have higher efficiencies than those now readily available.
4. DESALINATION PLANTS: SPAESS AND SUNSPRING: The main problem of
desalination plants is that the energy required per ton of water produced is
high. We have developed an energy collection system (patent pending) called
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SPAESS, which stands for Solar Power and Energy Storage System. The concept of
SPAESS is that it employs a large flexible earth coupled solar thermal collector
system. SPAESS collects energy during the daytime and stores it, for daytime and
nighttime use. SPAESS transfers heat to low boiling liquids to drive turbine
generators. The projected cost of energy per kilowatt, using SPAESS system is
projected by Dr. Prueitt to be less than any existing system currently in use.
These are projections only. As a result of the work done on SPAESS, we have
developed a unique (patent pending) system to produce low cost fresh water from
sea water. The name given for this system is SunSpring. It is an innovative
method of converting low temperature solar heated water to directly pump sea
water (rather than having to produce electricity to power a motor to drive a
high-pressure pump). SunSpring uses no electric motor. We have already tested
various components of SunSpring, and all tests have exceeded expectations, thus
far. This does not guaranty that the final assembled unit will be trouble free.
A full working prototype is expected to be in operation by the fall of 2000.
5. MECH. As a result of the research work on ACES and HARPS, we have
developed an engine that is one-third the size of a conventional internal
combustion engine for the same power, while being about 25% more efficient. MECH
is the name given for Motor, Expander, Compressor, Hydraulics. We have already
made a small working prototype and all tests currently exceed expectations. We
are currently exploring our options with MECH, while continuing to test and
refine the prototype. The main source of the increased efficiency is because
there is primarily rolling friction generated (instead of sliding friction in
conventional engines) as the MECH pistons rotate back and forth on rollers.
PROJECTS RECO:
DIRECT SOLAR REDUCTION OF CO2 (SOLAREC). We acquired 100% of the shares of
Renewable Energy Corporation (RECO) as of January 1, 1999 from Dr. Reed Jensen,
who joined our Board of Directors. "Solarec" is the concept name for the
patented process using only solar energy and CO2 obtained from the atmosphere to
produce a fuel (gasoline, diesel, etc.) with electricity and free oxygen
produced as by-products. Various components of the system have been successfully
tested to date and a full scale prototype is scheduled to be completed by June
2000. Dr. Jensen is the President of this subsidiary, RECO, as well as one of
our principal directors.
DEVELOPMENT TEAMS AND PROGRESS: Two separate teams have been organized and are
now in place. The HAT team is directed by Dr. Mel Prueitt. The RECO team is
directed by Dr. Reed Jensen. Four prototypes are in process of development:
SPAESS, SunSpring, MECH and RECO's solar reduction of CO2 (Solarec). It is
likely that each of these projects, if and when prototypes are operational and
successful, will be functional but not immediately commercial, cost effective or
aesthetically packaged or contained. It is therefore expected that related
spin-off projects will emerge from these technologies, until one or more
products be commercialized profitably. HARPS and ACES are progressing albeit
slowly. We are focusing on SPAESS, SunSpring, MECH and RECO's Solarec. We feel
that one the these latter four will be in commercial production earlier with
less capital requirement. However, much of the research and development work
already performed in HARPS and ACES has given rise to, and been used in these
latter four projects.
The success of the SPAESS and Solarec projects will dependent on the final
cost to produce the renewable electricity by the Issuer's developmental system,
as compared to other existing or competitive methods of producing electricity.
If the result is not cost-effective, the system will not be commercially viable.
Should SPAESS and Solarec prove able to produce electricity at better than $0.05
per kilowatt, the concept would be deemed proven and successful. Completion of
both the SPAESS and Solarec prototypes, and testing of them, is expected to
occur by fall of 2000.
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WORKING PROTOTYPES refer to assembled model systems which not only work, but
work at an acceptable level of performance. Preliminary prototypes or working
models may prove the scientific validity of a process before the system is
refined or redesigned to bring performance to an acceptable and possibly
commercial level. HARPS and ACES are presently deferred in favor of the other
projects, but not abandoned. The reason is that the development of these
projects has given rise to technologies and science suggestive of products
capable of more rapid development. We expect that working prototypes will be
demonstrated for MECH in May 2000. Solarec is scheduled tentatively for June
2000. SunSpring and SPAESS is scheduled for fall of 2000. RECO is scheduled for
June 2000.
We feel that it is too early and speculative to make projections about marketing
and sales at this point in time. The earliest possible pre-sales revenues, sales
of licenses and such, not expected before the year 2001.
FUTURE MARKETING. In all of our projects, the business plan is to produce a
working model/prototype that can be tested as to efficiency, cost of product,
etc. The decision whether to produce the units directly or whether to license
other companies the right to manufacture and distribute the unit is yet to be
decided. More likely, it will be a combination of some company owned plants
combined with territorial licenses to other qualified manufacturers. The market
for each of our projects (if successfully tested) is unlimited. The amount of
units to be sold will be dependent on our ability to raise sufficient working
capital for our own manufacturing plants and our ability to franchise or license
other facilities globally. It follows that the ability of the Company to raise
funds will be dependent on the performance of the prototypes currently in
development and production. No efforts have been made to date to identify other
companies to manufacture our products, or to identify probable or targeted
licensees. The Issuer has determined to await commercially viable prototype
readiness before addressing manufacturing and marketing issues. We are not ready
to address those issues.
Should we encounter new technologies with synergies to our existing work,
further acquisitions might well be considered. However, we have enough before us
at the present time, such that we are not looking for additional projects or
other acquisitions at this time. Neither our officers, directors, promoters or
their respective affiliates have had any discussions with (and there are no
present plans, proposals or arrangements with) any representatives of the owners
of any business or company regarding the possibility of any additional
acquisitions or mergers.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
- --------------------------------------------------------------------------------
(A) PLAN OF OPERATION: NEXT TWELVE MONTHS.
CASH REQUIREMENTS AND OF NEED FOR ADDITIONAL FUNDS, TWELVE MONTHS. This Issuer
has had no revenues since inception. It has been funded by its investors.
Virtually all of the funding/working capital raised to date has been allocated
for research and development of our several prototype projects. We have
minimally sufficient funds to continue for the next 12 months. Each of our
projects is partially or fully funded sufficiently for the next 12 months. Our
sophisticated investors will further fund any shortfall. Our minimally
sufficient funds are not deemed adequate for the optimal requirements of our
Corporation. Due to the large number of potentially viable projects, we are
exploring methods of maximizing our potential by additional capital formation.
We are looking at converting one or more of our projects into its own
subsidiary, and preparing one or more initial public offerings. In any such
program, we would either retain majority control of the resulting pubic company
or companies; or we would distribute the shares of the new company to our
shareholders, pro-rata, in connection with a registered public offering of
shares. We estimate that we need a million dollars optimally. We are also
exploring raising funds in an additional limited offering and/or private
placement to highly sophisticated accredited investors. We have not yet
determined what capital program is in the best interests of our shareholders.
GOING CONCERN. Note 2 of our Auditor's report states: "The Company has had
recurring operational losses for the past several years and is dependent upon
financing to continue operations. The financial statements do not include any
adjustments that might result from this uncertainty. It is management's plan to
raise sufficient funds to develop the next phase of HARPS and to begin to
manufacture and Market HARPS power system. The issues relating to this note are
discussed above and in the following paragraphs of this Item.
In summary, our circle of principal shareholders are committed to our
continued operations. We have reported that our activities are sufficiently
funded for the next twelve months. Any unexpected shortfall will be covered by
our principal shareholders as advances or additional internal placements. Beyond
our minimal requirements for the activities described in Item 1 and this Item,
both of this Part, we will seek additional capital for future needs and for the
expansion of our activities from development stage to operational stage.
(B) DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
(1) OPERATIONS AND RESULTS FOR THE PAST TWO FISCAL YEARS AND.
(2) FUTURE PROSPECTS.
HAT
Our business consists entirely of the activities of HAT and RECO. It
consists of scientific research and development of working prototypes of the
projects identified in Item 1 of this Part, Description of Business. HAT's
development team has made substantial progress in proving the viability of the
scientific and chemical processes which underlie HARPS and ACES. Full working
prototypes are not yet achieved. They are taking more time than originally
expected, for the reason that no existing turbines will work with the chemical
processes at low temperatures. It is therefore necessary for our HAT team to
develop a turbine generator of our own. As a result of HAT's work on HARPS and
ACES, the HAT team became aware of MECH, SPAESS and SunSpring, and has
re-allocated attention to these promising areas. Accordingly, management's
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decision to focus on one or more of the projects is based on its evaluation of
which can become commercially viable earliest. We are focusing on MECH,
SunSpring, Solarec and SPAESS.
RECO
The RECO team reports that RECO is well underway developing the Solarec
prototype. This last project is on schedule and under budget.
(C) MARKETING AND LICENSING ISSUES AND CRITERIA. No efforts have been made to
date to identify other companies to manufacture HARPS, ACES or RECO, or to
identify probable or targeted licensees. The Issuer has determined to await
commercially viable prototype readiness before addressing manufacturing and
marketing issues. We do not expect to achieve significant sales, if any, in the
next six to twelve months.
(D) REVERSE ACQUISITION: Our first wholly-owned subsidiary, Hydro-Air
Technologies, Inc. ("HAT"), was acquired in a transaction which is similar to a
reverse acquisition. A reverse acquisition is the acquisition of a private
company by a public company, by which the private company's shareholders
acquired control of the public company. Neither HAT nor its shareholders
acquired majority control of us. However, since we had no revenues or assets,
this acquisition is treated as a Reverse Merger for accounting purposes. This
Issuer is presently committed to the development of the business of its two
wholly-owned subsidiaries. While this Issuer is continuously interested in
opportunities for direct acquisition of other technologies which may have
synergy with its existing developmental projects, Solar Energy Limited may no
longer be used as a vehicle for a reverse acquisition. The acquisition of the
second subsidiary, Renewable Energy Corporation in April 1999, was a direct
acquisition. We are presently committed to the development of the business of
its two wholly-owned subsidiaries. While we are continuously interested in
opportunities for direct acquisition of other technologies which may have
synergy with its existing developmental projects, Solar Energy Limited may no
longer be used as a vehicle for a reverse acquisition
Expansion of our present office and lab is under consideration, and the
operating subsidiaries may employ more laboratory assistants in the near future
as justified. Purchases of additional laboratory equipment is also likely. While
no guarantee can be given as to when the company's operations will achieve
substantial profitability, a reasonable estimate is believed to be one to two
years of transition from its development stage to a true operational stage with
sales and distribution.
ENVIRONMENTAL ISSUES: HARPS and ACES use refrigerants; however, these newer
refrigerants are considered environmentally friendly, in contrast to older
substances. If seawater is used as the evaporation energy source, the salt
concentration in the water will be increased. In order to discharge this brine
into the ocean, it may need to be diluted by a significant quantity of seawater
before discharge. The same is true of desalination, using seawater, where the
energy required per ton of water is quite high. SunSpring is our project
designed to be an efficient osmosis desalination plant.
OTHER REGULATION. We do not yet know whether agency regulation or approval of
any of our projects will be required before they can be marketed. It is too
early in the process for us to determine that. It is reasonable to expect that
we will face such issues as to some or all of our products, when our projects
achieve the stage of being products, ready for manufacture and sale.
YEAR 2000 (Y2K) ISSUES. We have encountered no year 2000 computer problems of
our own, or in connection with any suppliers or correspondents. Management has
determined that no such problems or issues exist which affect us.
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ITEM 3. DESCRIPTION OF PROPERTY.
- --------------------------------------------------------------------------------
The Company's principal offices are located at 112 C Longview Drive, Los
Alamos, New Mexico, 87544. The facilities consist of a leased plant and
building of about 3,400 square feet, including offices and laboratory facilities
in which prototype development is on-going. The lease provides for rent of
$55,200 payable $2,300 per month. We pay for fire, flood and damage insurance of
the premises and for premises liability to third persons, in addition to normal
utilities. Our facilities are located minutes away for the prestigious Los
Alamos National Laboratory.
- --------------------------------------------------------------------------------
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- --------------------------------------------------------------------------------
To the best of Issuer's knowledge and belief the following disclosure
presents, as of the date of this Report, April 15, 2000, the total beneficial
security ownership of all Directors and Nominees, naming them, and by all
Officers and Directors as a group, without naming them, of Issuer, known to or
discoverable by Issuer, and the total security ownership of all persons,
entities and groups, known to or discoverable by Issuer, to be the beneficial
owner or owners of more than five percent of any voting class of Issuer's stock.
More than one person, entity or group could be beneficially interested in the
same securities, so that the total of all percentages may accordingly exceed one
hundred percent. Issuer has only one class of stock, issued and outstanding,
namely Common Voting Equity Shares.
In the following table, the total beneficial ownership of shares is shown.
All of the shares issued for the acquisition of HAT are shown as
owned/attributed to each of the HAT Founders. Please refer to Item 7 of this
part for more information about the internal share ownership relationships of
the HAT owners with respect to each other.
The Remainder of this Page is Intentionally left blank
Please see Table on next page
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<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address of Beneficial Share
Owner Ownership %
- ----------------------------------------------------------------
Dr. Melvin L. Prueitt (1) 700,400 5.33
146A Estagate Drive
Los Alamos, New Mexico, 87544
Chairman/Director
- ----------------------------------------------------------------
Joel S. Dumaresq 20,000 0.15
#5 4360 Agar Drive
Richmond BC Canada V7B 1A3
President/Director
- ----------------------------------------------------------------
Norman Wareham -0- 0.00
1177 West Hastings
Vancouver BC V6E 2K3
Secretary-Treasurer/Director
- ----------------------------------------------------------------
David M. Jones (1) 700,400 5.33
146A Estagate Drive
Los Alamos, New Mexico, 87544 Director
- ----------------------------------------------------------------
Dr. Reed Jensen. 350,000 2.66
146A Estagate Drive
Los Alamos, New Mexico, 87544 Director
================================================================
Officers and Directors as a Group 1,770,800 13.48
================================================================
Leslie Speir (1) 700,400 5.33
1177 West Hastings
Vancouver BC V6E 2K3 Director Subsidiary
- ----------------------------------------------------------------
Stanley Prueitt (1) 700,400 5.33
1177 West Hastings
Vancouver BC V6E 2K3 Director Subsidiary
- ----------------------------------------------------------------
Hydro-Air Founders (1) 700,400 5.33
1177 West Hastings
Vancouver BC V6E 2K3
- ----------------------------------------------------------------
Givigest Fiduciaria SA 800,000 6.09
Corso Elvezia 4
6900 Lugano Switzerland
- ----------------------------------------------------------------
Diane Poole (2) 940,000 7.16
1177 West Hastings
Vancouver BC V6E 2K3
- ----------------------------------------------------------------
Baycove Investments, Ltd. (2) 940,000 7.16
1177 West Hastings
Vancouver BC V6E 2K3
- ----------------------------------------------------------------
Baycove Capital Crop. (2) 940,000 7.16
1177 West Hastings
Vancouver BC V6E 2K3
- ----------------------------------------------------------------
Total Shares Issued and Outstanding 13,135,911 100.00
================================================================
</TABLE>
(1) The Founders of HAT are the interested persons in the Hydro-Air Founders. In
addition to displaying the actual shares of each, the total of all is shown as
attributed to each. Please see Item 7, Relationships and Transactions, for more
information and disclosure.
(2) Rene Poole is the managing Director of the two Baycove entities. Diane Poole
is Rene Poole's daughter. These shareholders report that they are a single group
of related shareholders.
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CHANGES IN CONTROL. There are no arrangements known to Registrant,
including any pledge by any persons, of securities of Registrant, which may at a
subsequent date result in a change of control of Registrant. Should we encounter
new technologies with synergies to our existing work, further acquisitions might
well be considered. However, we have enough before us at the present time, such
that we are not looking for additional projects or other acquisitions at this
time. Neither our officers, directors, promoters or their respective affiliates
have had any discussions with (and there are no present plans, proposals or
arrangements with) any representatives of the owners of any business or company
regarding the possibility of any additional acquisitions or mergers.
- --------------------------------------------------------------------------------
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
- --------------------------------------------------------------------------------
The following information is provided concerning the Management of Issuer,
including all current directors and officers, and positions with the Company.
All directors were elected at the last meeting of shareholders on August 7,
1998, and will hold office until the next annual meeting of shareholders and
until their successors have been elected and qualified. The officers are elected
by the Board of Directors at the first meeting after each annual meeting of
shareholders and hold office until their successors are elected. The date of the
next annual meeting of the Company has not yet been set. The management of the
Company is presently provided on a day-to-day basis by personnel of the Company.
The overall management of the Company is presently under the direction and
control of its officers and directors.
The Board of Directors of this Company, Solar Energy Limited, consists of,
Dr. Melvin L. Prueitt, Joel S. Dumaresq, Norman Wareham, David Jones and Dr.
Reed Jensen.
The Board of Directors of the subsidiary, Hydro-Air Technologies, Inc.,
consists of Dr. Prueitt and David Jones, Leslie Speir, and Stanley Prueitt.
The Board of Directors of the subsidiary, Renewable Energy Corporation,
consists of Dr. Reed Jensen.
Dr. Melvin L. Prueitt, 67, is the Chairman of the Board of Directors of
Solar Energy Limited, and President of our wholly-owned subsidiary, Hydro-Air
Technologies, Inc. Dr. Prueitt received his B.S. from the Brigham Young
University, his M.S. from the University of Arizona and his Ph.D. from the
University of New Mexico, all in physics. Following his graduation from the
University of Arizona, Dr. Prueitt joined the Los Alamos National Laboratory
where he remained until 1993. He has developed a method which combines dry air
and water under controlled conditions to release the energy of vaporization of
water. This method called HARPS (Hydro-Air Renewable Power System), uses the
energy developed thereby to drive a turbine and generator for the production of
electric power. HARPS produces no atmospheric pollutants, and, since it produces
large quantities of air, it can be used to clean particulates and some noxious
gases from polluted air by adding a wet scrubber to the exhaust air. Unlike
nuclear plants, it produces no radioactive materials that must be disposed of,
unlike coal-fired plants it requires no land-scarring strip mining, and unlike
oil-fired plants it does not contribute to the imbalance of foreign trade. Dr.
Prueitt, who holds 12 U.S. patents, was the first to determine the temperature
of lighting strokes. A prolific research scientist and writer, he has authored
three books and has been published in over 30 publications. He is listed in Who
s Who in the West, Who s Who in America Index, Men of Achievement, Dictionary of
International Biography and Contemporary Authors. Since Leaving Los Alamos
Laboratory, Dr. Prueitt has been one of the founders and the Chief Executive
Officer of Hydro Air Technologies, Inc.
12
<PAGE>
Joel S. Dumaresq, 36, is the President of Solar Energy Limited. He is also
CFO of Nifco Synergy, Inc. developing financial controls and systems for Expert
Software Developer with operations in Canada, the United States and Mexico, and
was instrumental in securing $27 million Class 12 Software financing for the
company. Mr. Dumaresq was President of Westair Aviation, Inc., responsible for
re-organizing and re-financing this air ambulance company. His experience with
corporate finance, institutional equity sales and investment brokerage spans the
past decade. From 1986 through 1995, he served in various capacities in the
investment banking industry. From 1995 through 1997, Mr. Dumaresq was president
of Westair Aviation a regional air service company. He is currently a director
of Wattage Monitor, Inc., and Booktech Corp, both of which are public
corporations.
Norman Wareham, 45, is the our Secretary-Treasurer and Chief Financial
Officer. He has a comprehensive background in implementing information systems
for public and private companies, with particular expertise in financial
management and tax planning. He was president of Global Financial Corporation in
the British West Indies, and has been a public accountant for 25 years, owning
two accounting firms. Mr. Wareham is currently on the board of directors and is
chief financial officer for several public companies, including the ZMAX
Corporation, and Cybernet Internet Services International, Inc. He is also
president of Wareham Management Ltd., a private company engaged in management
consulting for public and private companies.
David Jones, 53, is one of our Directors. He brings to the Company 17 years
of business experience resulting from starting and developing Jomar Systems,
Inc., which specialized in the design and manufacture of nuclear assay
equipment, and 32 years of systems development experience involving electronic
circuit design, mechanical apparatus design, application software and firmware
design, manufacturing and integration. In addition to publishing several
articles on nuclear instrumentation and methods, Mr. Jones holds a patent for
"Method & Apparatus for Controlling Multiple Motors". In 1992, David F. Jones
was awarded the "Excellence in Enterprise" award by the Los Alamos Economic
Development Corporation, the Los Alamos National Bank and the Los Alamos
National Laboratory. From 1996 and currently, he has been contracted to the Los
Alamos National Laboratory to provide project planning and procedure writing in
support of the Technical Safety Requirements (TSR) implementation at the
Plutonium and CMR facilities. Duties included establishing and maintaining a
work breakdown structure and resource loaded schedule for all TSR implementation
work and the writing of surveillance procedures at both facilities.
Dr. Reed Jensen, 63, is one of our Directors, and the sole Director of our
second subsidiary, Renewable Energy Corporation. From 1998 to present, he has
been engaged as a Program Manager for CO2 sequestration, at Los Alamos National
Laboratory ("LANL"). From 1995 to 1998, Dr. Jensen was Deputy Director for
Environmental Program Management, LANL. He was responsible for the establishment
of environmental stewardship at Los Alamos. From 1993 to 1995, he was engaged in
Research at LANL in Nuclear fuel cycle separations from molten salt media and
high temperature gas kinetics. From 1986 to 1993, he was Deputy Associate
Director with line management responsible for over 1000 chemistry and materials
employees including chemistry and materials divisions, at LANL centers and
program offices. From 1981 to 1986, he was Program manager and technical leader
for Isotope LANL Separation and Laser Programs. From 1974 to 1981, he was
Division Leader and Deputy responsible for quality of the technical work, and
Role Division Leader LANL engaged primarily in technical leadership. From 1972
to 1974, he was Group Leader, LANL Technical director of activities for about 50
13
<PAGE>
people, in developing giant pulse chemical lasers and inventing the nozzle
expansion/laser dissociation method for uranium isotope separation. From 1969 to
1972, he was a Staff Member, Geomagnetic field tracing with barium jets,
chemical, LANL kinetics and chemical lasers. From 1967 to 1969, he was Assistant
Professor of Chemical laser kinetics, Environmental science and Chemistry,
Brigham Young University. From 1966 to 1967, he was Staff Member, Weapons
explosives initiation and kinetics of LANL explosions, and engaged in CO2 laser
research. He was educated at the University of California at Berkeley, doing
Postdoctoral Studies in Laser Chemical Kinetics (1965-1966 school year); and
Brigham Young University, Provo, Utah, earning his Ph.D., 1965, in Physical
Chemistry and his B.A., 1960, in Chemistry and Mathematics. He enjoys a reading
knowledge of German and French, and is fluent in Spanish, by formal study and
residence in Hispanic countries. His awards include NIH Postdoctoral Fellow
(1965-1966), NDEA Graduate Fellow (1962-1965), Outstanding Thesis Award (1965),
Army Commendation Medal (for technical work, 1962), U.S. Department of Energy
Certificate of Appreciation (1989), American Academy of Environmental Engineers
Excellence in Environmental, Engineering Superior Achievement Award (1998).
Leslie Speir has been a Director of our Subsidiary, Hydro-Air Technologies,
for the past five years. He brings to that Company the solid technical
experience in systems design, and in heading up mechanical design teams. During
the past five years and currently, he has been a Senior Designer for the Process
Equipment Section, Merrick and Company, having participated in the Cold Vacuum
Drying Facility for the DOE Richland Operations Office, and he designed
equipment for the Pit-9 Waste Reclamation Characterization Facility. He enriches
the Company with specialized knowledge and experience in construction, operation
and maintenance of electro-mechanical and hydraulic systems, refrigeration
equipment, gas chromatographs, ultra high vacuum systems, and mass pectrometer
leak detectors, as well as engineering stress and dynamic drive train and basic
nuclear physics calculations and radiation exposure computations, heat flow
calculations and operation and maintenance of nuclear reactors including
pressurized water sodium cooled and gas cooled variation. He is also trained and
experienced in health physics surveying techniques and radiological hazards
control.
Stanley Prueitt is a Director of our Subsidiary, Hydro-Air Technologies,
and the son of its principal founder, Dr. Melvin L. Prueitt. He brings that
Company a range of business, management and personnel skills along with solid
experience in project controls and coordination. His executive experience
includes marketing, franchising, news director, and business start-up, and the
organization of public companies. He speaks, reads and writes Scandinavian
languages and is an experienced motivational speaker and conductor of public
seminars, and a very active member of the New Mexico Mounted Patrol. From 1995
until 2000, he worked full time on staff of Los Alamos National Laboratories,
and has devoted part-time to Hydro-Air Technologies.
Dr. Prueitt and Dr. Jensen are engaged in the affairs of our research and
development projects substantially full-time. Our other officers and directors
provide insubstantial time to our affairs, as needed, but have not been required
to devote more than minimal time to us, at the present time.
Dr. Melvin L. Prueitt, and Stanley Prueitt are father and son.
14
<PAGE>
- --------------------------------------------------------------------------------
ITEM 6. EXECUTIVE COMPENSATION.
- --------------------------------------------------------------------------------
The Officers and Directors of the Solar Energy Limited serve without
compensation at this time. No plan of compensation has been adopted or is under
consideration at this time. None of the Directors currently receives, or has
ever received, any salary from the Company in their capacities as such, and none
are expected to be compensated in their capacities as such. No officers are
expected to receive any compensation for their services. No officers or
directors are under an employment contract with the Company. Each Officer
presently devotes an insubstantial amount of time to the affairs of the Company.
The Company has no retirement, pension, profit sharing, or insurance or medical
reimbursement plans.
The Officers and Directors of HAT Operating subsidiary are compensated for
their time on an hourly wage basis. The only full-time person is Dr. Prueitt,
whose compensation is set at $35.00 per hour. Compensation is not specifically
for duties as Officers and Directors as such, but generally for participation in
all their activities of the Operating Subsidiary.
We issued a total of 700,400 shares to or for HAT. We are required to issue
to or for HAT one additional share for each $2.00 of earnings generated by HAT,
as determined by Generally Accepted Accounting Principles (GAAP) to a maximum of
3,502,000 additional investment shares. There have not been revenues to date, so
that no further issuances have been made to or for HAT. There is no indication
when or if these shares or any of them will be earned.
This discussion is complicated by those internal arrangements among the HAT
shareholders, and their Hydro-Air Founders LLC. The HAT Founders LLC is a kind
of trust arrangement for the shares issued to it and the shares which may become
issuable to it, when and if HAT produces earnings. Their Founders Agreement sets
up a formula for distribution in proportion to their continuing participation.
Please see Item 7, next following, for more information and for citation to the
appropriate exhibits provided with this filing. In order to determine how the
HAT founders would distribute their Founders Agreement shares, the computation
would include factors hours and other participation not yet ascertainable.
Since it is impossible to determine whether or whom shares may be issued in
the future, no tabular presentation of these multiple contingencies is
practicable, except to show the amount issued, that maximum amount which could
be issued, and the distribution by percentages of those shares, assuming the
maximum issuance, as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
HAT Shareholder Issued % If Issued
- ----------------------------------------------
Melvin L. Prueitt 67,239 10 350,200
David Jones 33,619 5 175,100
Stanley D. Prueitt 33,619 5 175,100
Leslie Speir 33,619 5 175,100
Dana Hansen and 14,008 2 70,040
Linda Hansen
Ara Lee Stevens 5,603 1 35,020
15
<PAGE>
Baycove Investments, 140,080 20 700,400
Inc.
Hydro-Air Founders, 372,613 53 1,856,060
LLC
Total HAT 700,400 100 3,502,000
==============================================
</TABLE>
It is important to understand that these relationships and agreements among
and between the HAT shareholders and the Hydro-Air Founders pre-existed our
acquisition of HAT and are internal matters to that subsidiary. Our obligation
to HAT is only to issue additional shares per formula if and when HAT generates
earnings to us.
- --------------------------------------------------------------------------------
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- --------------------------------------------------------------------------------
As previously mentioned, in Item 6, the founders of HAT are interested
persons in the Hydro-Air Founders, LLC, an entity created by the founders of HAT
to determine the ultimate and phased distribution of shares issued and to be
issued to HAT for its acquisition by this Issuer. Exhibit 6.3, the Founders
Agreement, sets forth the terms and basis for the calculations, and identifies
the individuals included in the class of Hydro-Air Founders.
Founders Agreement. Pursuant to that certain Founders Agreement, provided
-------------------
as Exhibit 6.3 to this filing, David F. Jones, Melvin L. Prueitt, Stanley
Prueitt, and Leslie Speir (individually referred to by name or as a "HAT
Shareholder," and collectively referred to as "HAT Shareholders") and Hydro-Air
Technologies, Inc., ("HAT") a New Mexico corporation (Corporation") agreed to a
plan of organization, management and funding for the HAT and for ownership of
their interest in the Solar Energy Limited. The sum and substance of this
agreement is that the Founders Shares , that is the shares issued to Hydro-Air
Founders, LLC, would be distributed to the Founders according to a formula keyed
to their future participation, measured by hours, and by specific kinds of
tasks. This Founders agreement is internal to the Founders of HAT and does not
further concern Solar Energy Limited, this registering corporation.
We issued a total of 700,400 shares to or for HAT. We are required to issue
to or for HAT one additional share for each $2.00 of earnings generated by HAT,
as determined by Generally Accepted Accounting Principles (GAAP) to a maximum of
3,502,000 additional investment shares. There have not been revenues to date, so
that no further issuances have been made to or for HAT. There is no indication
when or if these shares or any of them will be earned.
Voting Trust Agreement. The HAT shareholders also created a Voting Trust,
-------------------------
to hold and manage the shares covered by their Founders Agreement. The Voting
Trust Agreement is Exhibit 5 to this filing. This agreement is also internal to
the Founders and Shareholders of HAT, and does not further concern Solar Energy
Limited, this registering corporation.
Stock Restriction Agreement. The HAT shareholders also created a private
------------------------------
stock restriction agreement, provided as Exhibit 6.2 to this filing, to limit
the ability, as between the Founders and Shareholders, to resell the shares of
stock issued to them, in connection with the acquisition of HAT by Solar Energy
Limited, this registering corporation.
16
<PAGE>
The Founders Agreement, the Voting Agreement, and the Stock Restriction
Agreement precede our acquisition of HAT. We are not a party to these internal
agreements of the HAT Founders and Shareholders.
the remainder of this page left intentionally blank
17
<PAGE>
- --------------------------------------------------------------------------------
PART II
- --------------------------------------------------------------------------------
ITEM 1.
MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY
AND SHAREHOLDER MATTERS.
- --------------------------------------------------------------------------------
Market Information. The Common Stock of this Issuer is quoted Over the Counter
on the Bulletin Board ("OTCBB"). There was no substantial market activity before
December 1998. Based upon standard reporting sources, the following information
is provided:
<TABLE>
<CAPTION>
<S> <C> <C>
period high bid low bid
2nd 1999 1.7812 1.40
3rd 1999 1.75 0.25
4th 1999 0.75 0.375
1st 2000 0.9375 0.375
======== ======== =======
</TABLE>
The foregoing price information is based upon inter-dealer prices without
retail mark-up, mark-down or commissions and may not reflect actual
transactions.
Holders: There are approximately 198 shareholders of this Issuer.
Dividends: No cash dividends have been paid by the Company on its Common Stock
or other Stock and no such payment is anticipated in the foreseeable future.
- --------------------------------------------------------------------------------
ITEM 2. LEGAL PROCEEDINGS.
- --------------------------------------------------------------------------------
There are no legal, administrative or enforcement proceedings pending,
anticipated or suspected, to which this Issuer is a party or which is expected
to impact upon the Issuer or its Financial Statements.
- --------------------------------------------------------------------------------
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
- --------------------------------------------------------------------------------
None.
18
<PAGE>
- --------------------------------------------------------------------------------
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
- --------------------------------------------------------------------------------
Solar Energy Limited (the "Registrant" and sometimes "we","us" or "our")
was first incorporated in Delaware as Taurus Enterprises, Inc. on January 5,
1994, and re-incorporated in Nevada on August 20, 1996 as Salvage World, Inc. On
August 20, 1996. Taurus made its original issuance of 25,000,000 share to
founders in 1994, pursuant to Section 4(2) of the Securities Act of 1933. During
1996, Salvage placed an additional 451,250 shares, pursuant to Regulation D,
Rule 504, resulting in a total of 25,451,250 shares then issued and outstanding.
On December 17, 1997, the Shareholders approved a proposal to Reverse Split the
Common Stock of the Corporation 20 to 1; with the provision that no Shareholder
owning 100 shares or more shall be reversed or reduced below 100 Shares. The
25,451,260 shares were reduced to 1,272,562, and the adjustment for small
shareholders was 5,949 shares, for a total post-reverse of 1,278,511. Also on
December 17, 1997, shareholders approved, and Management effected a Plan of
Reorganization and Merger of Salvage World, Inc. into Solar Energy Limited, a
private Delaware Corporation, the effect of which merger changed the name of
this Corporation, moved its place of incorporation from Nevada to Delaware.
The following disclosure discusses sales of unregistered securities during
the three years preceding this filing of April 15, 2000. There were no
underwritings or underwriting discounts or commissions. No securities sold are
convertible or exchangeable into equity securities, nor warrants nor options
representing equity securities. All of the following issuances and placements
refer to our common stock. We have no other class or kind of securities.
On or about December 17, 1997, pursuant to shareholder approval, the
Issuer effected "a proposal to Reverse Split the Common Stock of the Corporation
20 to 1; with the provision that no Shareholder owning 100 shares or more shall
be reversed or reduced below 100 Shares". On that date there were 25,451,260
shares issued and outstanding. The Result was 1,278,511 post split shares,
following the appropriate stock-split adjustment of 5,949 shares.
Also on December 17, 1997, shareholders approved the placement of up to
10,000,000 additional shares of common stock, at $0.10, pursuant to Regulation
D, Rule 504. A total of 7,800,000 shares were placed. These shares were sold to
highly sophisticated investors with extensive knowledge of our affairs and
condition. They were sold for cash at $0.10 per share. These investors had
preexisting relationships with management and affiliate shareholders, and this
placement involved no public offering or solicitation.
About July 23, 1998, we placed 125,000 shares to three accredited
investors, with extensive knowledge of our company, and pre-existing relations
with management and our affiliates. The restricted shares were sold for cash, at
$1.00 per share, with principal reliance on section 4(2) of the Securities Act
of 1933.
About November 10, 1998, we placed a further 2,000,000 shares, in reliance
on Rule 504, to four accredited off-shore investors, at $0.01 per share. As
before, these investors were known to management and affiliates before the
investment and had complete access, by virtue of that relationship to the kind
of information which registration would have provided.
On April 27, 1999, we places an additional 100,000 restricted securities,
at $1.00 per share, pursuant to section 4(2) to a single accredited investor.
19
<PAGE>
On or about November 22, 1999, we placed an additional 800,000 shares to a
single accredited investor, off-shore, at $0.18 per share.
All of our investors enjoyed pre-existing relationships with us, our
management and/or our affiliates. We have engaged in no public solicitation or
offerings to strangers. All of our investors were either sophisticated or
accredited, and all of them were highly knowledgeable about us, and about our
affairs, our condition and our prospects for the future.
In addition to the investments so disclosed, we have made two acquisitions
for stock:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date Title Exemption Amount Cash
1/98-12/98 Common section 4(2); Rule 540,709 -0-
Stock 145
These shares were issued for the acquisition of Hydro-Air Technologies ( HAT ) to
- ----------------------------------------------------------------------------------
shareholders and founders of HAT. Pursuant to the acquisition agreement, the
shares were issued in phases, 170,400 in April, 1998, and 530,000 in October.
Please see Items 1, 6 and 7 of Part I for more information about the phasing of
these and possible future issuance to or for HAT, and for the relationship between
the shareholders of HAT, as individuals, and the Founders of HAT as a group.
==================================================================================
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date Title Exemption Amount Cash
5/99 Common section 4(2); Rule 350,000 -0-
Stock 145
These shares were issued for the acquisition to the shareholder founder of
- --------------------------------------------------------------------------------
Renewable Energy Corporation ("RECO"), the issuer's second wholly-owned
subsidiary, Pursuant to the acquisition agreement. Of the total agreed 500,000
shares, 350 thousand were issued and 150,000 were reserved for future employee
options. No employee option plan has been adopted or contemplated for adoption
yet. Pending the adoption of another plan, the Issuer intends generally that the
options if and when issued would be pursuant to section 4(2) of the Act.
================================================================================
</TABLE>
- --------------------------------------------------------------------------------
ITEM 5. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
- --------------------------------------------------------------------------------
The Certificate of Incorporation of this Issuer provides for the following
indemnity of Directors: that they "shall not be liable to either the corporation
or its stockholders for monetary damages for breach of fiduciary duty unless the
breach involves: (1) a directors duty of loyalty to the corporation or its
stockholders; (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (3) liability for unlawful
payments of dividends or unlawful stock purchases or redemption by the
corporation; or (4) a transaction from which the director derived an improper
personal benefit."
20
<PAGE>
- --------------------------------------------------------------------------------
PART F/S
- --------------------------------------------------------------------------------
(A) SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C>
12/31/99 12/31/98 12/31/97
============ =========== ===========
Total Assets $ 772,662 $ 435,696 $ 500
Revenues -0- -0- -0-
Operating Expenses 569,462 764,690 4,000
Net Earnings or (561,186) (759,446) (4,000)
(Loss)
Per Share Earnings (.045) (.147) (.003)
or (Loss)
Weighted Average 12,378,911 5,164,228 1,278,511
Common Shares
Outstanding
===========================================================
</TABLE>
(2) AUDITED FINANCIAL STATEMENTS are provided as:
Exhibit F1 hereto: Audited Financial Statements: Solar Energy Limited:
Consolidated:
December 31, 1999, 1998
21
<PAGE>
- --------------------------------------------------------------------------------
PART III
- --------------------------------------------------------------------------------
ITEM 1. INDEX TO EXHIBITS.
- --------------------------------------------------------------------------------
Exhibit Index
Each Exhibit is filed under an Exhibit Cover-page, and indexed by the
Exhibit Number, Description, and sequential page number of this Registration
Statement. Exhibit Table References Numbers refer to the number assigned each
category of documents by Part III of Form 1-A.
Exhibit Table Category / Description of Exhibit Page Number
Table
#
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
F-1 Audited Financial Statements: Solar Energy Limited: Consolidated: 24
December 31, 1999 and 1998
- --------------------------------------------------------------------------------
[2] ARTICLES/CERTIFICATES OF INCORPORATION, AND BY-LAWS
- --------------------------------------------------------------------------------
2.1 Certificate of Incorporation: Solar Energy Ltd. 37
2.2 By-Laws of Solar Energy Ltd. 39
2.3 Articles of Incorporation: Hydro-Air Technologies, Inc. 51
2.4 By-Laws: Hydro-Air Technologies, Inc. 55
2.5 Articles of Renewable Energy Corp 60
2.6 Reorganization, Salvage World and Solar Energy Limited 63
2.7 Merger of Salvage World and Taurus 68
- --------------------------------------------------------------------------------
[5] VOTING TRUST
- --------------------------------------------------------------------------------
5 Voting Trust Agreement: Internal to HAT 73
- --------------------------------------------------------------------------------
[6] MATERIAL CONTRACTS/ACQUISITION
- --------------------------------------------------------------------------------
6.1 First Amendment to Offer to Purchase and Plan of Internal Funding and
Share Release and Plan of Reorganization and Acquisition 77
6.2 Stock Restriction Agreement: Internal to HAT 88
6.3 Founders Agreement: Internal to HAT 94
6.3 Purchase Agreement for acquisition of Renewable Energy Corporation 101
================================================================================
22
<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, thereunto duly authorized.
Dated: April 15, 2000
/s/ /s/
Dr. Melvin L. Prueitt Joel S. Dumaresq
Chairman/Director President/Director
/s/ /s/
Norman Wareham David M. Jones
Secretary/Treasurer/Director Director
/S/
Dr. Reed Jensen
23
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT F-1
AUDITED FINANCIAL STATEMENTS:
SOLAR ENERGY LIMITED: CONSOLIDATED:
DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
24
<PAGE>
C O N T E N T S
Accountants Report 26
Consolidated Balance Sheets 27
Consolidated Statements of Operations 28
Consolidated Statements of Stockholders Equity 29
Consolidated Statements of Cash Flows 30
Notes to the Consolidated Financial Statements 31-35
25
<PAGE>
INDEPENDENT AUDITOR S REPORT
To the Board of Directors and Stockholders of
Solar Energy Limited
We have audited the accompanying consolidated balance sheets of Solar Energy
Limited (a Development Stage Company) as of December 31, 1999 and 1998 and the
related consolidated statements of operations, stockholders equity and cash
flows for the years ended December 31, 1999, 1998, 1997 and from inception on
January 5, 1994 through December 31, 1999. These financial statements are the
responsibility of the Company s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Solar Energy Limited
(a Development Stage Company) as of December 31, 1999 and 1998 and the results
of its operations and cash flows for the years ended December 31, 1999, 1998,
1997 and from inception on January 5, 1994 through December 31, 1999 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring operating losses and is
dependent upon financing to continue operations. These factors raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in the Note 2.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
_________/s/_________
Crouch, Bierwolf & Chisholm
Certified Public Accountants
Salt Lake City, Utah
March 7, 2000
26
<PAGE>
SOLAR ENERGY LIMITED
(formerly Salvage World, Inc.)
(a Development Stage Company)
Consolidated Balance Sheets
ASSETS
December 31,
1999 1998
- --------------------------------------------------------------------------------
Current assets
Cash $263,371 $286,627
Employee advance 0 213
Notes receivable (Note 9) 0 50,000
Total Current Assets 263,371 336,840
Property & Equipment (Note 5) 25,297 16,653
Other Assets
Organization costs (Note 1) 0 2,181
Patent Costs (Note 6) 33,549 9,808
Goodwill (Note 7) 445,908 66,677
Deposits 4,537 3,537
Total Other Assets 483,994 82,203
Total Assets $772,662 $435,696
================================================================================
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts payable 58,973 44,236
Accrued liabilities 16,183 15,154
Notes payable - related party (Note 8) 428,639 210,252
Total Current Liabilities 503,795 269,642
Stockholders Equity
Common Stock, authorized
50,000,000 shares of $.0001 par value,
issued and outstanding 13,153,911 and
11,903,911 shares respectively 1,315 1,190
Additional Paid in Capital 1,617,197 953,323
Deficit Accumulated During the
Development Stage (1,349,645) (788,459)
Total Stockholders Equity 268,867 166,054
Total Liabilities and Stockholders Equity $772,662 $435,696
================================================================================
The accompanying notes are an integral part of these financial statements
27
<PAGE>
SOLAR ENERGY LIMITED
(formerly Salvage World, Inc.)
(a Development Stage Company)
Consolidated Statements of Operations
Cumulative
For the years Total
ended December 31, Since
1999 1998 1997 Inception
- --------------------------------------------------------------------------------
Revenues: $ 0 $ 0 $ 0 $ 0
Expenses:
Amortization 67,981 19,866 500 89,847
Depreciation 6,516 0 0 6,516
Bank Charges 1,152 983 0 2,135
Bad Debt 0 225,000 0 225,000
Consulting 48,007 16,675 0 66,900
Filing Fees 0 0 0 235
Financial Services 4,512 0 3,500 16,552
Interest Expense 0 15,923 0 15,923
Legal and accounting 26,294 90,089 0 128,883
Office 4,459 3,072 0 7,531
Promotion 275 15,666 0 15,941
Notary 0 0 0 20
Research & Development 399,792 288,088 0 687,880
Travel 10,474 89,328 0 99,802
================================================================================
Total Expenses 569,462 764,690 4,000 1,363,165
Other Income (Expenses)
Interest Income 8,276 5,244 0 13,520
Net (Loss) $(561,186) $(759,446) $(4,000)$(1,349,645)
Net Loss Per Share $(.045) $(.147) $(.003) $(.358)
Weighted average shares
outstanding 12,378,911 5,164,228 1,278,511 3,766,694
================================================================================
The accompanying notes are an integral part of these financial statements
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SOLAR ENERGY LIMITED
(formerly Salvage World, Inc.)
(a Development Stage Company)
Consolidated Statement of Stockholders Equity
Deficit
Accumulated
Additional During the
Common Stock paid-in Development
Shares Amount capital Stage
- --------------------------------------------------------------------------------
Balance at beginning of development
stage-January 5, 1994 0 $ 0 $ 0 $ 0
Stock issued for
organization cost 1,250,000 125 2,375 0
Net loss December
31, 1994 0 0 0 (500)
Balance, December
31, 1994 1,250,000 125 2,375 (500)
Net loss December
31, 1995 0 0 0 (500)
Balance, December
31, 1995 1,250,000 125 2,375 (1,000)
Shares issued for
cash at $.10 13,000 1 25,999 0
Shares issued for
cash at $.00458 8,312 1 761 0
Shares issued for
cash at $.01 1,250 0 251 0
Stock split rounding
adjustment 5,949 1 (1) 0
Net loss December
31, 1996 0 0 0 (24,013)
Balance, December
31, 1996 1,278,511 128 29,385 (25,013)
Net loss December
31, 1997 0 0 0 (4,000)
Balance, December
31, 1997 1,278,511 128 29,385 (29,013)
Shares issued for acquisition of
Hydro-Air
Technologies, Inc. 700,400 70 (70) 0
Shares issued for cash at
$.10 per share 7,800,000 780 779,220 0
Shares issued for cash at
$1.00 per share 125,000 12 124,988 0
Shares issued for cash at
$.01 per share 2,000,000 200 19,800 0
Net loss for the year ended
December 31, 1998 0 0 0 (759,446)
Balance, December
31, 1998 11,903,911 1,190 953,323 (788,459)
Shares issued for cash at
$1.00 per share 100,000 10 99,990 0
Shares issued for acquisition of Renewable
Energy Corporation 350,000 35 419,965 0
Shares issued for cash at
$.18 per share 800,000 80 143,920 0
Net loss for the year ended
December 31, 1999 0 0 0 (561,186)
Balance, December
31, 1999 13,153,911 $1,315 $1,617,197 $(1,349,645)
================================================================================
The accompanying notes are an integral part of these financial statements
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SOLAR ENERGY LIMITED
(formerly Salvage World, Inc.)
(a Development Stage Company)
Consolidated Statement of Cash Flows
January 5,
1994
(inception
of the
development
For the years stage) to
ended December 31, December 31,
1999 1998 1997 1999
- --------------------------------------------------------------------------------
Cash Flows From Operating
Activities
Net loss $(561,186) $(759,446) $(4,000) $(1,349,645)
Adjustments to reconcile
net loss to net cash
provided by operations
(net of acquisition):
Amortization/Depreciation 74,497 21,968 500 98,465
Increase/Decrease in:
Employee advance 213 (176) 0 37
Accounts payable 14,321 34,770 0 49,091
Accrued expenses 1,029 15,154 0 16,183
Net Cash Flows Used In
Operating Activities (471,126) (687,730) (3,500) (1,185,869)
Cash Flows From Investment
Activities:
Cash acquired from subsidiary 42,733 204,956 0 247,689
Cash paid for patent costs (28,872) (3,917) 0 (32,789)
Cash paid for property &
equipment (17,378) (8,397) 0 (25,775)
Cash paid for deposits (1,000) (3,537) 0 (4,537)
Cash paid on notes receivable 0 (50,000) 0 (50,000)
Net Cash Provided by Investing
Activities (4,517) 139,105 0 134,588
Cash Flows From Financing
Activities:
Issued common stock for cash 244,000 925,000 0 1,196,013
Cash received on advance by
shareholders 318,387 410,252 0 728,639
Cash paid on debt financing (110,000) (500,000) 0 (610,000)
Net Cash Provided by Financing
Activities 452,387 835,252 0 1,314,652
Net increase (decrease) in cash (23,256) 286,627 (3,500) 263,371
Cash, beginning of year 286,627 0 3,500 0
Cash, end of year $263,371 $286,627 $ 0 $263,371
Supplemental Cash Flow Information
Cash Paid For:
Interest $ 0 $15,923 $ 0 $15,923
Taxes $ 0 $ 0 $ 0 $ 0
================================================================================
The accompanying notes are an integral part of these financial statements
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SOLAR ENERGY LIMITED
(formerly Salvage World, Inc.)
(a Development Stage Company)
Notes to The Consolidated Financial Statements
December 31, 1999 and 1998
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
Solar Energy Limited ( the Company ) was incorporated as Taurus
Enterprises, Inc. under the laws the State of Delaware on January 5, 1994.
The Company was organized primarily for the purpose of operating a used
automobile brokerage firm. The Company did not become operational and abandoned
its attempts to establish the brokerage operation.
In August of 1996 its shareholders decided to reactivate the Company, merge
the Company with Salvage World, Inc., a private company, change the name to
Salvage World, Inc. and reincorporate in the state of Nevada.
On December 17, 1997 the Company merged with Solar Energy Limited (Solar) a
Delaware corporation organized on July 24, 1997 and changed the name to Solar
Energy Limited. The surviving corporation is the Delaware corporation and the
authorized shares were changed to 50,000,000 par value $.0001. Solar s
headquarters are located in Los Alamos, New Mexico.
On January 1, 1998 the Company issued the initial 170,400 shares of stock
and on October 21, 1998 an additional 530,000 share were issued for the
acquisition of 100% of Hydro-Air Technologies, Inc. (Hydro) a New Mexico
corporation organized June 18, 1997. Hydro owns various rights to patented
intellectual property called Hydro-Air Renewable Power System ( HARPS ), and has
developed a prototype system to generate electricity from the evaporation of
water. Hydro s headquarters are located in Los Alamos, New Mexico. This
business combination was accounted using the purchase method.
In January 1999 the Company issued 350,000 shares of stock for the
acquisition of 100% of Renewable Energy Corporation (RECO) a New Mexico
corporation organized November 30, 1998. RECO owns various rights to patented
intellectual property associated with the solar recycling of CO2 to fuel. RECO
s headquarters are located in Los Alamos, New Mexico.
The Company is in the development stage according to Financial Accounting
Standards Board Statement No. 7 and is currently focusing its attention on
raising capital in order to pursue its goals.
b. Accounting Method
The Company recognizes income and expenses on the accrual basis of
accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on the
weighted average number of shares outstanding at the date of the financial
statements. Fully diluted earnings per share is not presented because it is
anti-dilutive.
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SOLAR ENERGY LIMITED
(formerly Salvage World, Inc.)
(a Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999 and 1998
NOTE 1 - Summary of Significant Accounting Policies (Continued)
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
e. Provision for Income Taxes
No provision for income taxes has been recorded due to net operating loss
carryforwards totaling approximately $1,349,645 that will be offset against
future taxable income. These NOL carryforwards begin to expire in the year
2009. 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.
Deferred tax assets and the valuation account is as follows at December 31,
1999 and 1998.
1999 1998
- --------------------------------------------------------------------------------
Deferred tax asset:
NOL carrryforward $458,880 $268,076
Valuation allowance (458,880) (268,076)
Total $ 0 $ 0
f. Organization Costs
The Company incurred $2,500 of organization costs in 1994. These
costs, which were paid by shareholders of the Company, were exchanged for
1,250,000 shares of common stock. Organization costs are being amortized on a
straight line method over a 60 month period. These costs will be recovered only
if, the Company is able to generate a positive cash flow from operations. Hydro
incurred costs of $3,116 for their organization. All organizational costs were
fully amortized during 1999 to conform with recently issued accounting
standards.
g. Use of estimates
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 involve extensive reliance on management s estimates. Actual
results could differ from those estimates.
h. Principles of Consolidation
The Consolidated Financial Statements include the accounts of Solar Energy
Limited and its wholly owned subsidiaries Hydro-Air Technologies, Inc. (1999
and 1998) and Renewable Energy Corporation (1999 only). All intercompany
accounts and transactions have been eliminated in the consolidation.
32
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SOLAR ENERGY LIMITED
(formerly Salvage World, Inc.)
(a Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999 and 1998
NOTE 2 - Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has had recurring
operating losses for the past several years and is dependent upon financing to
continue operations. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty. It is management s plan
to raise sufficient funds to develop the next phase of the HARPS Technology and
then begin to manufacture and market the HARPS Power system.
NOTE 3 - Development Stage Company
The Company is a development stage company as defined in Financial
Accounting Standards Board Statement No. 7. It is concentrating substantially
all of its efforts in raising capital and developing its business operations in
order to generate significant revenues.
NOTE 4 - Stockholders Equity Transactions
Pursuant to the plan or reorganization and merger agreement dated August
20, 1996, the Company merged Taurus Enterprises, Inc. (a public company) with
Salvage World, Inc. (a private company). The shareholders of Taurus returned
their stock and received stock in the new combined entity named Salvage World,
Inc. The Company changed the par value of its common stock from $.0001 to
$.001.
Pursuant to the merger agreement dated December 17, 1997, the Company
merged with Solar Energy Limited and the shareholders of Salvage received shares
in the new combined Solar entity. The Company then changed the par back to
$.0001 and the new authorized capital became 50,000,000. The Board then
authorized a 1 for 20 reverse stock split. These financial statements have been
retroactively restated to reflect the split.
The Company has issued 700,400 shares of stock to acquire 100% of the stock
of Hydro-Air Technologies. The acquisition agreement between the Company and
Hydro-Air Technologies provides an initial issuance of stock at the beginning of
phase one, and additional issuances throughout the development process to arrive
at no less than 4,000,000 shares or 40% of the outstanding stock. Because Hydro
had a negative equity position goodwill was recorded and no value was assigned
to the stock issued.
The Company issued 7,800,000 shares of common stock at $.10 and 2,000,000
shares of common stock at $.01 in an exempt 504 offering which raised $800,000
during 1998.
The Company also issued 125,000 shares of common stock for $125,000 in a
505 exempt offering.
During January 1999, the Company issued 350,000 shares of its common stock
to acquire 100% of the stock of Renewable Energy Corporation. The shares were
valued at $1.20 each net of a 40% discount due on their restricted nature based
on the trading value of the stock at the time.
During May 1999, the Company issued 100,000 shares of its common stock for
cash of $100,000.
During November 1999, the Company issued 800,000 shares of its common stock
for cash of $144,000.
33
<PAGE>
SOLAR ENERGY LIMITED
(formerly Salvage World, Inc.)
(a Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999 and 1998
NOTE 5 - Property & Equipment
Property and equipment consists of the following at December 31, 1999 and
1998:
1999 1998
- --------------------------------------------------------------------------------
Office Equipment & Furniture $26,496 $11,020
Tools 1,539 1,539
Auto 6,522 6,522
================================================================================
34,557 19,081
Accumulated Depreciation (9,260) (2,428)
Net Property & Equipment $25,297 $16,653
Depreciation expense for the years ended December 31, 1999 and 1998 is
$6,516 and $2,102, respectively.
NOTE 6 - Patent Costs
The Company has incurred legal costs in connection with the Patent process
which the Company has rights to, and has therefore capitalized those costs and
is amortizing them over a five year period. Amortization expense attributable
to patents during 1999 and 1998 was $7,312 and $778, respectively.
NOTE 7 - Goodwill
The Company recorded Goodwill in connection with the acquisition of Hydro,
due to the negative equity position of Hydro. A total of $83,346 was recorded
upon acquisition and is being amortized over a 5 year period. The realization
of this asset is contingent upon Hydro s ability to generate revenues from the
HARPS process.
The Company also recorded Goodwill in connection with the acquisition of
RECO due to the negative equity position of RECO. A total of $439,900 was
recorded upon acquisition and is being amortized over a ten year period. The
realization of this asset is contingent upon RECO s ability to generate revenues
from the Solar Energy process.
NOTE 8 - Notes Payable - Related Party
FCIC a shareholder of the Company advanced $300,000 to Hydro Air during
1997 and $200,000 to the Company during 1998 for phase one expense requirements.
$500,000 has been paid back, leaving a $0 balance due at December 31, 1998.
Cesare Bette, a shareholder, loaned the Company $100,000 during 1998 as a
short term working capital loan. The advance was repaid in February 1999.
Baycove Investments, Ltd., a shareholder, loaned the Company $308,387 and
$110,252 during 1999 and 1998, respectively. The loans are non-interest bearing
and due upon demand. The balance of these loans at December 31, 1999 and 1998
is $418,639 and $110,252, respectively
Reed Jensen, a shareholder, loaned the Company $20,000 during 1999. The
loan is non-interest bearing and due upon demand. The Company made payments of
$10,000 on the loan and the balance due at December 31 1999 is $10,000.
The accompanying notes are an integral part of these financial statements
34
<PAGE>
SOLAR ENERGY LIMITED
(formerly Salvage World, Inc.)
(a Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999 and 1998
NOTE 9 - Notes Receivable/Acquisition of RECO
Pursuant to a purchase agreement between the Company and Renewable Energy
Corporation (RECO) the Company advanced $50,000 during 1998 as an unsecured
loan. Upon the closing at January 31, 1999, $30,000 of the loan converted to
equity of RECO and the Company became 100% owners of the common stock. The
remaining $20,000 of the unsecured loan was advanced for startup costs and is
considered as a cost of the investment in RECO. According to the agreement, the
Company issued 350,000 shares to the shareholders of RECO. This business
combination was accounted for using the purchase method.
In addition, the agreement specifies a commitment by the Company to provide
working capital loans of $5,700,000 to it subsidiaries throughout various
phases of development.
NOTE 10 - Commitments
The founder of the HARPS technology has granted Hydro an exclusive license
to develop, manufacture and market the same. For the license Hydro is committed
to a 1% royalty on gross sales of the units and 1/2% royalty on the sale of the
electrical power generated by any power plants owned by Hydro.
The Company is committed to an operating lease for office space in Los
Almos, New Mexico that expires in August 2000. Future minimum lease payments
are as follows at December 31, 1999.
2000 $ 18,400
Total $ 18,400
= ======
NOTE 11 - Fair Value of Financial Instruments
Unless otherwise indicated, the fair values of all reported assets and
liabilities which represent financial instruments (none of which are held for
trading purposes) approximate the carrying values of such amounts.
Based on borrowing rates currently available to the Company for loans with
similar terms, the carrying value of notes payable approximate fair value.
35
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT 2.1
CERTIFICATE OF INCORPORATION: SOLAR ENERGY LTD.
- --------------------------------------------------------------------------------
36
<PAGE>
CERTIFICATE OF INCORPORATION
OF
Solar Energy Limited
FIRST, The name of this corporation is Solar Energy Limited.
SECOND: Its registered office in the State of Delaware is to be located at
1313 N. Market Street, Wilmington DE 19801-1151, County of New Castle. The
registered agent in charge thereof is The Company Corporation, address "same as
above."
THIRD: The nature of the business and, the objects and purposes proposed to
be transacted, promoted and carried on, are to do any or all the things herein
mentioned as fully and to the same extent as natural persons might or could do,
and in any part of the world, vis:
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The amount of the total authorized capital stock of this
corporation is divided into 50,000,000 shares of stock at .0001 par value.
FIFTH: The name and mailing address of the incorporator is as follows:
Regina Cephas, 131 N. Market St., Wilmington DE 19801-1151.
SIXTH: The Directors shall have power to make and to alter or amend the
By-Laws; to fix the amount to be reserved as working capital, and to authorize
and cause to be executed, mortgages and liens without limit as to the amount,
upon the property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them shall be open to the inspection of the
stockholder; and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation, except as conferred by the law of the
By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings and
keep the books, documents and papers of the Corporation outside of the State of
Delaware, at such places as may be from time to time designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
SEVENTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach involves: (1)
a director's duty of loyalty to the corporation of its stockholders; (2) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (3) liability for unlawful payments of dividends or unlawful
stoc k purchase or redemption by the corporation; or (4) a transaction from
which the director derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a corporation under the laws
of the State of Delaware, make, file and record this Certificate and do certify
that the facts herein are true; and I have accordingly hereunto set my hand.
DATED: July 24, 1997 /s/
Regina Cephas
37
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- --------------------------------------------------------------------------------
EXHIBIT 2.2
BY-LAWS OF SOLAR ENERGY LTD.
- --------------------------------------------------------------------------------
38
<PAGE>
- --------------------------------------------------------------------------------
BY-LAWS
OF
SOLAR ENERGY, INC.
- --------------------------------------------------------------------------------
ARTICLE I - OFFICES
1. REGISTERED OFFICE AND AGENT
The registered office of the corporation shall be maintained at
112C Longview Drive
Los Alamos, NM 87544
The registered office or the registered agent, or both, may be changed by
resolution of the board of directors, upon filing the statement required by law.
2. PRINCIPAL OFFICE
The principal office of the corporation shall be at
112C Longview Drive
Los Alamos, NM 87544
provided that the board of directors shall have power to change the location of
the principal office in its discretion.
3. OTHER OFFICES
The corporation may also maintain other offices at such places within or
without the State of Delaware as the board of directors may from time to time
appoint or as the business of the corporation may require.
ARTICLE II - SHAREHOLDERS
1. PLACE OF MEETING
All meetings of shareholders, both regular and special, shall be held
either at the principal office of the corporation in Delaware or at such other
places, either within or without the state, as shall be designated in the notice
of the meeting.
2. ANNUAL MEETING
The annual meeting of shareholders for the election of directors and for
the transaction of all other business which may come before the meeting shall be
held on the 15th day of April in each year (if not a legal holiday and, if a
legal holiday, then on the next business day following) at the hour specified in
the notice of meeting.
If the election of directors shall not be held on the day above designated
for the annual meeting, the board of directors shall cause the election to be
39
<PAGE>
held as soon thereafter as conveniently may be at a special meeting of the
shareholders called for the purpose of holding such election.
The annual meeting of shareholders may beheld for any other purpose in
addition to the election of directors which may be specified in a notice of such
meeting. The meeting may be called by resolution of the board of directors or by
a writing filed with the secretary signed either by a majority of the directors
or by shareholders owning a majority in amount of the entire capital stock of
the corporation issued and outstanding and entitled to vote at any such meeting.
3. NOTICE OF SHAREHOLDERS' MEETING
A 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) 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 person 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
share transfer books of the corporation, with postage thereon prepaid.
4. VOTING OF SHARES
Each outstanding share with voting privileges, regardless of class, shall
be entitled to one vote on each matter submitted to a 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 or by
law.
Treasury shares, shares of its own stock owned by another corporation the
majority of the voting stock of which is owned or controlled by this
corporation, and shares of its own stock held by this corporation in a fiduciary
capacity shall not be voted, directly or indirectly, at any meeting, and shall
not be counted in determining the total number of outstanding shares at any
given time.
A shareholder may vote either in person or by proxy executed in writing by
the shareholder or by his duly authorized attorney-in-fact. No proxy shall be
valid after eleven (11) months from the date of its execution unless otherwise
provided in the proxy. Each proxy shall be revocable unless expressly provided
therein to be irrevocable, and in no event shall it remain irrevocable for a
period of more than eleven (11) months.
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, or unless prohibited by the articles
of incorporation, to cumulate 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 by distributing such votes on the same principal among any number of such
candidates. Any shareholder who intends to cumulate his votes as herein
40
<PAGE>
authorized shall give written notice of such intention to the secretary of the
corporation on or before the day preceding the election at which such
shareholder intends to cumulate his votes.
5. CLOSING TRANSFER BOOKS AND FIXING 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 share transfer books shall be closed for a stated period not exceeding
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 by-laws
or in the absence of an applicable by-law the board of directors, may fix in
advance a date as the record date for any such determination of shareholders,
not later than fifty (50) days and, in case of a meeting of shareholders, not
earlier than ten (10) days prior to the date on which the particular action,
requiring such determination of shareholders is to be taken. If the share
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, except where the determination has been made through the closing of
share transfer books and the stated period of closing has expired.
6. QUORUM OF SHAREHOLDERS
Unless otherwise provided in the articles of incorporation, the holders of
a majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders, but in no event shall a
quorum consist of the holders of less than one-third (1/3) of the shares
entitled to vote and thus represented at such meeting. The vote of the holders
of a majority of the shares entitled to vote and thus represented at a meeting
at which a quorum is present shall be the act of the shareholders' meeting,
unless the vote of a greater number is required by law, the articles of
incorporation of the by-laws.
7. VOTING LISTS
The officer or agent having charge of the share transfer books for the
shares of the corporation shall make, at least ten (10) days before each meeting
of shareholders, a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten (10) days prior to such meeting, shall be kept on file at the registered
office of the corporation and shall be subject to inspection by any shareholder
at any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
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<PAGE>
inspection of any shareholder during the whole time of the meeting. The original
share transfer books shall be prima-facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote any
meeting of shareholders.
8. ACTION BY CONSENT OF SHAREHOLDERS
In lieu of a formal meeting, action may be taken by unanimous consent of
the shareholders.
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS
The business and affairs of the corporation shall be managed by a board of
directors. Directors need not be residents of the State of Delaware nor be
shareholders in the corporation.
2. NUMBER AND ELECTION OF DIRECTORS
The number of directors shall be 3 provided that the number may be
increased or decreased from time to time by an amendment to these by-laws, but
no decrease shall have the effect of shortening the term of any incumbent
director. At each annual election the shareholders shall elect directors to hold
office until the next succeeding annual meeting.
3. VACANCIES
Any vacancy occurring in the board of directors may be filled by the
affirmative vote of the remaining directors, though less than a quorum of the
board. 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 election at an annual
meeting or at a special meeting of shareholders called for that purpose.
4. QUORUM OF DIRECTORS
A majority of the board of directors shall constitute a quorum for the
transaction of business. The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the board of directors.
5. ANNUAL MEETING OF DIRECTORS
Within thirty days after each annual meeting of shareholders the board of
directors elected at such meeting shall hold an annual meeting at which they
shall elect officers and transact such other business as shall come before the
meeting.
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6. REGULAR MEETING OF DIRECTORS
A regular meeting of the board of directors may be held at such time as
shall be determined from time to time by resolution of the board of directors.
7. SPECIAL MEETINGS OF DIRECTORS
The secretary shall call a special meeting of the board of directors
whenever requested to do so by the president or by two directors. Such special
meeting shall be held at the time specified in the notice of meeting.
8. PLACE OF DIRECTORS' MEETINGS
All meetings of the board of directors (annual, regular or special) shall
be held either at the principal office of the corporation or at such other
place, either within or without the State of Delaware, as shall be specified in
the notice of meeting.
9. NOTICE OF DIRECTORS' MEETINGS
All meetings of the board of directors (annual, regular or special) shall
be held upon five (5) days' written notice stating the date, place and hour of
meeting delivered to each director either personally or by mail or at the
direction of the president or the secretary or the officer or person calling the
meeting.
In any case where all of the directors execute a waiver of notice of the
time and place of meeting, no notice thereof shall be required, and any such
meeting (whether annual, regular or special) shall be held at the time and at
the place (either within or without the State of Delaware) specified in the
waiver of notice. Neither the business to be transacted at, nor the purpose of,
any annual, regular or special meeting of the board of directors need be
specified in the notice or waiver of notice of such meeting.
10. COMPENSATION
Directors, as such, shall not receive any stated salary for their services,
but by resolution of the board of directors a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each annual, 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.
11. ACTION BY CONSENT OF DIRECTORS
In lieu of a formal meeting, action may be taken by unanimous written
consent of the directors.
ARTICLE IV - OFFICERS
1. OFFICERS ELECTION
The officers of the corporation shall consist of a president, one or more
vice-presidents, a secretary, and a treasurer. All such officers shall be
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elected at the annual meeting of the board of directors provided for in Article
III, Section 5. If any office is not filled at such annual meeting, it may be
filled at any subsequent regular or special meeting of the board. The board of
directors at such annual meeting, or at any subsequent regular or special
meeting may also elect or appoint such other officers and assistant officers and
agents as may be deemed necessary. Any two or more offices may be held by the
same person, except the offices of president and secretary.
All officers and assistant officers shall be elected to serve until the
next meeting of directors (following the next annual meeting of shareholders) or
until their successors are elected; provided, that any officer or assistant
officer elected or appointed by the board of directors may be removed with or
without cause at any regular or special meeting of the board whenever in the
judgment of the board of directors the best interests of the corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Any agent appointed shall serve for
such term, not longer than the next annual meeting of the board of directors, as
shall be specified, subject to like right of removal by the board of directors.
2. VACANCIES
If any office becomes vacant for any reason, the vacancy may be filled by
the board of directors.
3. POWER OF OFFICERS
Each officer shall have, subject to these by-laws, in addition to the
duties and powers specifically set forth herein, such powers and duties as are
commonly incident to this office and such duties and powers as the board of
directors shall from time to time designate. All officers shall perform their
duties subject to the directions and under the supervision of the board of
directors. The president may secure the fidelity of any and all officers by bond
or otherwise.
4. PRESIDENT
The president shall be the chief executive officer of the corporation. He
shall preside at all meetings of the directors and shareholders. He shall see
that all orders and resolutions of the board are carried out, subject however,
to the right of the directors to delegate specific powers, except such as may be
by statute exclusively conferred on the president, to any other officers of the
corporation.
He or any vice-president shall execute bonds, mortgages and other
instruments requiring a seal, in the name of the corporation, and, when
authorized by the board, he or any vice-president may affix the seal to any
instrument requiring the same, and the seal when so affixed shall be attested by
the signature of either the secretary or an assistant secretary. He or any
vice-president shall sign certificates of stock.
The President shall be ex-officio a member of all standing committees.
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He shall submit a report of the operations of the corporation for the year
to the directors at their meeting next preceding the annual meeting of the
shareholders and to the shareholders at their annual meeting.
5. VICE-PRESIDENTS
The vice-president shall, in the absence or disability of the president,
perform the duties and exercise the powers of the president, and they shall
perform such other duties as the board of directors shall prescribe.
6. THE SECRETARY AND ASSISTANT SECRETARIES
The secretary shall attend all meetings of the board and all meetings of
the shareholders and shall record all votes and the minutes of all proceedings
and shall perform like duties for the standing committees when required. He
shall give or cause to be given notice of all meetings of the shareholders and
all meetings of the board of directors and shall perform such other duties as
may be prescribed by the board. He shall keep in safe custody the seal of the
corporation, and when authorized by the board, affix the same to any instrument
requiring it, and when so affixed, it shall be attested by his signature or by
the signature of an assistant secretary.
The assistant secretary shall, in the absence or disability of the
secretary, perform the duties and exercise the powers of the secretary, and they
shall perform such other duties as the board of directors shall prescribe.
In the absence of the secretary or an assistant secretary, the minutes of
all meetings of the board and shareholders shall be recorded by such person as
shall be designated by the president or by the board of directors.
7. THE TREASURER AND ASSISTANT TREASURERS
The treasurer shall have the custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such depositories as
may be designated by the board of directors.
The treasurer shall disburse the funds of the corporation as may be ordered
by the board of directors, taking proper vouchers for such disbursements. He
shall keep and maintain the corporation's books of account and shall render to
the president and directors an account of all of his transactions as treasurer
and of the financial condition of the corporation and exhibit his books, records
and accounts to the president or directors at any time. He shall disburse funds
for capital expenditures as authorized by the board of directors and in
accordance with the orders of the president, and present to the president for
his attention any requests for disbursing funds if in the judgment of the
treasurer any such request is not property authorized. He shall perform such
other duties as may be directed by the board of directors or by the president.
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If required by the board of directors, he shall give the corporation a bond
in such sum and with such surety or sureties as shall be satisfactory to the
board for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
The assistant treasurers in the order of their seniority shall, in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer, and they shall perform such other duties as the board
of directors shall prescribe.
ARTICLE V - CERTIFICATES OF STOCK: TRANSFER. ETC.
1. CERTIFICATES OF STOCK
The certificates for shares of stock of the corporation shall be numbered
and shall be entered in the corporation as they are issued. They shall exhibit
the holder's name and number of shares and shall be signed by the president or a
vice-president and the secretary or an assistant secretary and shall be sealed
with the seal of the corporation or a facsimile thereof. If the corporation has
a transfer agent or a registrar, other than the corporation itself or an
employee of the corporation, the signatures of any such officer may be
facsimile. In case any officer or officers who shall have signed or whose
facsimile signature or signatures shall have been used on any such certificate
or certificates shall cease to be such officer or officers of the corporation,
whether because of death, resignation or otherwise, before said certificate may
nevertheless be issued by the corporation with the same effect as though the
person or persons who signed such certificates or whose facsimile signature or
signatures shall have been used thereon had been such officer or officers at the
date of its issuance. Certificates shall be in such form as shall in conformity
to law be prescribed from time to time by the board of directors.
The corporation may appoint from time to time transfer agents and
registrars, who shall perform their duties under the supervision of the
secretary.
2. TRANSFERS OF SHARES
Upon surrender to the corporation or the transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction upon its books.
3. REGISTERED SHAREHOLDERS
The corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and, accordingly shall
not be bound to recognize any equitable or other claim to or interest in such
share on the part of any other person, whether or not is shall have express or
other notice thereof, except as otherwise provided by law.
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4. ISSUANCE OF ADDITIONAL SHARES
The corporation shall be enabled to issue additional common shares or to
create additional classes of stock.
5. LOST CERTIFICATE
The board of directors may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to be lost. when
authorizing such issue of a new certificate or certificates, the board of
directors in its discretion and as a condition precedent to the issuance
thereof, may require the owner of such lost or destroyed certificate or
certificates or his legal representatives to advertise the same in such manner
as it shall require or to give the corporation a bond with surety and in form
satisfactory to the corporation (which bond shall also name the corporation's
transfer agents and registrars, if any, as obligees) in such sum as it may
direct as indemnity against any claim that may be made against the corporation
or other obligees with respect to the certificate alleged to have been lost or
destroyed, or to advertise and also give such bond.
ARTICLE VI - DIVIDEND
1. DECLARATION
The board of directors may declare at any annual, regular or special
meeting of the board and the corporation may pay, dividends on the outstanding
shares in cash, property or in the shares of the corporation to the extent
permitted by, and subject to the provisions of, the laws of the State of
Delaware.
2. RESERVES
Before payment of any dividend there may be set aside out of any funds of
the corporation available for dividends 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 shall
think conducive to the interest of the corporation, and the directors may
abolish any such reserve in the manner in which it was created.
ARTICLE VII - MISCELLANEOUS
1. INFORMAL ACTION
Any action required to be taken or which may be taken at a meeting of the
shareholders, directors or members of the executive committee, may be taken
without a meeting if a consent in writing setting forth the action so taken
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shall be signed by all of the shareholders, directors, or members of the
executive committee, as the case may be, entitled to vote with respect to the
subject matter thereof, and such consent shall have the same force and effect as
a unanimous vote of the shareholders, directors, or members of the executive
committee, as the case may be, at a meeting of said body.
2. SEAL
The corporate seal shall be circular in form and shall contain the name of
the corporation, the year of its incorporation and the name "DELAWARE". The seal
may be used by causing it or a facsimile to be impressed or affixed or in any
other manner reproduced. The corporate seal may be altered by order of the board
of directors at any time.
3. CHECKS
All checks or demands for money and notes of the corporation shall be
signed by such officer or officers or such other person or persons as the board
of directors may from time to time designate.
4. FISCAL YEAR
The fiscal year of the corporation shall be determined by resolution of the
Board of Directors.
5. DIRECTORS' ANNUAL STATEMENT
The board of directors shall present at each annual meeting of shareholders
a full and clear statement of the business and condition of the corporation.
6. CLOSE CORPORATIONS: MANAGEMENT BY SHAREHOLDERS
If the articles of incorporation of the corporation and each certificate
representing its issued and outstanding shares states that the business and
affairs of the corporation shall be managed by the shareholders of the
corporation rather than by a board of directors, then, whenever the context so
requires by the shareholders of the corporation shall be deemed the directors of
the corporation for purposes of applying any provision of these bylaws.
7. AMENDMENTS
These by-laws may be altered, amended or repealed in whole or in part by
the affirmative vote of the holders of a majority of the shares outstanding and
entitled to vote, but such power may be delegated by the shareholders to the
board of directors.
The above By-Laws approved and adopted by the Board of Directors on
December 15, 1998.
/s/
Joel S. Dumaresq, President
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EXHIBIT 2.3
ARTICLES OF INCORPORATION: HYDRO-AIR TECHNOLOGIES, INC.
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ARTICLES OF INCORPORATION
OF
HYDRO-AIR TECHNOLOGIES, INC.
The undersigned acting as an Incorporator of a corporation under the New
Mexico Business Corporation Act [53-11-1 to 53-18-12 NMSA 1978 (1993 Repl.)]
adopts the following Articles of Incorporation for the corporation:
ARTICLE I
Its corporation name will be Hydro-Air Technologies, Inc.
ARTICLE II
It is organized to provide research and development in the production of
power utilizing the heat vaporization of water and for every other purpose
permitted by the Business Corporation Act.
ARTICLE III
It will have authority to issue one class of 250,000 shares of no par value
common stock.
ARTICLE IV
Its initial registered office address will be 161 Cascabel, Los Alamos, NM
87544, and its initial registered agent at that address will be Melvin L.
Prueitt.
ARTICLE V
The names and addresses of the four Directors who will constitute its
initial Board of Directors and who have consented to serve as Directors until
the first annual meeting of shareholders or until their successors are elected
and qualify are:
Melvin L. Prueitt Stanley D. Prueitt
161 Cascabel 2848-A Walnut Street
Los Alamos NM 87544 Los Alamos NM 87544
David F. Jones Leslie G. Speir
131 San Ildefonso Road PO Box 4172
Los Alamos NM 87544 Fairview Station
Espanola NM 87533
ARTICLE VI
Each director who qualifies under Section 53-12-2(e) NMSA 1978 (1933
Repl.), as amended from time to time, shall not be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director of the Corporation.
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ARTICLE VII
The name and address of the Incorporator is:
Melvin L. Prueitt
161 Cascabel
Los Alamos NM 87544
DATED this 18th day of June, 1977.
/S/
Melvin L. Prueitt, Incorporator
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AFFIDAVIT OF ACCEPTANCE OF APPOINTMENT
BY INITIAL REGISTERED AGENT
I, Melvin L. Prueitt, being duly sworn, accept appointment by Hydro-Air
Technologies, Inc. as its Initial Registered Agent, pursuant to the Business
Corporation Act (53-12-3 NMSA 1978 (1993 Repl.)].
/S/
Melvin L. Prueitt, Incorporator
STATE OF NEW MEXICO
COUNTY OF LOS ALAMOS
On this 18th day of June, 1997, Melvin L. Prueitt personally appeared
before me, a Notary Public in and for the State and County aforesaid, and
acknowledged that he does hereby accept the appointment as the initial
Registered Agent of Hydro-Air Technologies, Inc., the corporation applying for
Certificate of Incorporation in the foregoing Articles of Incorporation.
(Seal)
/S/
Notary Public
My Commission Expire:
7-27-01
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EXHIBIT 2.4
BY-LAWS: HYDRO-AIR TECHNOLOGIES, INC.
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BYLAWS
OF
HYDRO-AIR TECHNOLOGIES, INC.
I
SHAREHOLDERS
A. MEETINGS: The Annual Meeting of Shareholders will be held on the
first day of June at the hour of 6:00 p.m. at the place fixed by the Board.
Special Meetings of Shareholders may be called by the President, the Board, of
the holders of thirty (30%) percent of the shares entitled to vote at the
meeting and will be held at the time and place fixed by the person calling the
Special Meeting. If the place of meeting is not fixed, the meeting will be held
at the registered office of the Corporation.
B. NOTICE: Written Notice stating the time, place, and, if a Special
Meeting, the purpose, will be delivered not less than ten, nor more than fifteen
days before the meeting date either personally or by mail at the direction of
the President, the Secretary, or the persons calling the meeting, to each
Shareholder of record entitled to vote at the meeting. If mailed, a Notice is
deemed delivered when deposited postage prepaid in the United States mail
addressed to the Shareholder at the address shown by the Corporation transfer
books.
C. QUORUM - VOTING: A majority of the shares entitled to vote
represented in person or by proxy will constitute a quorum at a meeting of
Shareholders. A quorum once attained continues until adjournment despite
voluntary withdrawal of enough shares to leave less than a quorum. If a quorum
is present, the affirmative vote of the majority of the shares represented at
the meeting and entitled to vote on the subject matter will be the act of the
Shareholders unless the vote of a greater number or class voting is required by
the Business Corporation Act.
II
Directors
A. NUMBER, TENURE, QUALIFICATION, ELECTION: The Board will consist of six
Directors who will be elected annually by the Shareholders at their Annual
Meeting to serve until their successors have been elected and qualified. A
Director need not be a Shareholder or a New Mexico resident. A Director may be
removed with or without cause by the Shareholders, or may resign. If there is
more than one Director, vacancies may be filled by a majority of the remaining
Directors though less than a quorum. If no Directors, remain, the Shareholders
shall elect new Directors. Newly created directorships may be filled by the
Directors for a term of office continuing only until the next election of
Directors by the Shareholders.
B. MEETINGS: An Annual Meeting of the Board will be held without notice
immediately following the Shareholders' Annual Meeting. Special Meetings of the
Board may be called by any Director or Officer and will be held at the time and
place fixed by the person calling the Special Meetings. Written Notice stating
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the time, place and purpose of the Special Meeting will be delivered either
personally, by mail, or by telegram at the direction of the person calling the
meeting, to each Director at least twenty-four (24) hours before the Special
Meeting time. If mailed, or telegraphed, a Notice is deemed delivered when
deposited, postage or charges prepaid, with the transmitting agency, addressed
to the Director.
C. QUORUM - ACTION: A majority of the number of Directors then in office
will constitute a quorum at Board Meetings. A quorum once attained continues
until adjournment despite voluntary withdrawal of enough Directors to leave less
than a quorum. The act of a majority of the Directors present at a meeting at
which a quorum is present will be the act of the Board. The Directors will
manage the business and affairs of the Corporation and may act only as a Board
with each Director having one vote. The Board of Directors, by resolution
adopted by a majority of the full Board, may designate from among its members
one or more committees each of which shall have and may exercise all the
authority of the Board to the extent provided by law.
III
Officers
A. NUMBER, TENURE, QUALIFICATION AND ELECTION: The officers of the
Corporation will be President, Vice President, Secretary and Treasurer, and such
other officers as the Board may decide, who will be elected annually by the
Board at its Annual Meeting to serve until their successors are elected and
qualified. Officers need not be Shareholders, or Directors, or New Mexico
residents. An officer may be removed with or without cause by the Board, or may
resign. Vacancies and newly created offices will be filled by the Board. One
person may hold more than one office, but no person may be both President and
Secretary. Officers will perform the duties, and will have the power and
authority, assigned by the Board, incident to the office, and provided in the
Bylaws.
B. PRESIDENT AND VICE PRESIDENT: The President, or the Vice President
during the absence, disability, or failure to act of the President, will be the
chief executive officer of the Corporation, will preside at all Corporation
meetings, and when authorized will execute and deliver documents in the name of
the Corporation.
C. SECRETARY AND ASSISTANTS: The Secretary, or any Assistant Secretary
during the absence, disability, or failure to act, of the Secretary, will keep
and have custody of, the record of Shareholders, the stock transfer books, and
the minutes of the proceedings of the Shareholders and Directors, will give all
Notices required, and when authorized will execute, attest, seal, and deliver
documents of the Corporation.
D. TREASURER AND ASSISTANTS: The Treasurer, or any Assistant Treasurer
during the absence, disability, or failure to act, of the Treasurer, will be
custodian of the property of, and will be responsible for keeping, correct and
complete books and records of account for the Corporation.
IV
ACTION WITHOUT A MEETING
Any action required or permitted to be taken at a meeting of Shareholders
or Directors may be taken without a meeting if a consent in writing setting
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forth the action so taken is signed by all of the Shareholders entitled to vote
with respect to the subject matter thereof, or by all the Directors, as the case
may be.
V
WAIVER OF NOTICE
Whenever any notice is required to be given to any Shareholder or Director,
a waiver thereof in writing signed by the person entitled to the notice is
equivalent to the giving of the notice. The attendance of a Shareholder in
person or by proxy, or of a Director, at a meeting constitutes a waiver of
notice of the meeting except when attendance is for the sole purpose of
objecting because the meeting is not lawfully called or convened.
VI
SEAL
The Board may adopt a corporate seal which the Corporation may use by
impressing or affixing it or a facsimile thereof, but the failure to have or
affix a corporate seal does not affect the validity of any instrument or any
action taken in reliance thereon or in pursuance thereof.
VII
SHARE CERTIFICATES AND TRANSFER
The Board will adopt a form of certificate to represent the shares of the
Corporation. Each Shareholder is entitled to a certificate, signed by the
President or Vice President, and the Secretary or an Assistant Secretary, and
representing the number of full and fractional fully paid shares owned by the
Shareholder. Share transfer and issuance will be done by the Secretary, or the
designee thereof, in the manner provided by the Business Corporation Act and
Uniform Commercial Code of New Mexico. The name and address of the Shareholder
to whom the certificate is issued, the number and class of shares represented,
and the date of original issue or from whom transferred shall be entered on the
record of Shareholders of the Corporation. The person or entity in whose name
shares stand on the record of Shareholders of the Corporation will be the
Shareholder and will be deemed by the Corporation to be the owner of the shares
for all purposes whether or not the Corporation has other knowledge. Shares will
be transferred only on the stock transfer books of the Corporation.
VIII
MONETARY MATTERS
A. FUNDS AND BORROWING: The depository for corporate funds, the persons
entitled to draw against these funds, the person entitled to borrow on behalf of
the Corporation, and the manner of accomplishing these matters will be
determined by the Board.
B. COMPENSATION: The compensation for the Directors and Officers will be
established by the Board. Compensation of employees will be established by the
President subject to review by the Board.
C. FISCAL YEAR: The fiscal year of the Corporation will be established by
the Board.
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IX
INTERESTED PARTIES
No transaction of the Corporation will be affected because a Shareholder,
Director, Officer or Employee of the Corporation is interested in the
transaction. Such interested parties will be counted for quorum purposes, and
may vote, when the Corporation considers the transaction. Such interested
parties will not be liable to the Corporation for the party's profits, or the
Corporation's losses, from the transaction.
X
AMENDMENTS
These Bylaws may be altered, amended, or repealed by the Board unless the
power to do so is reserved to the Shareholders by the Articles of Incorporation.
SECRETARY'S CERTIFICATE
I certify the foregoing to be the true copy of the Bylaws duly adopted by
the Corporation on the 15th day of July 1997.
/S/
Stanley D. Prueitt
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EXHIBIT 2.5
ARTICLES OF RENEWABLE ENERGY CORP.
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ARTICLES OF INCORPORATION
The undersigned acting as an Incorporator of a corporation under the New
Mexico Business Corporation Act adopts the following Articles of Incorporation
for the corporation.
ARTICLE I
Its corporate name will be Renewable Energy Corporation.
ARTICLE II
It is organized to develop advanced solar energy and solar fuels processes
and for every other purpose permitted by the Business Corporation Act.
ARTICLE III
It will have authority to issue one class of 100,000 shares of no par value
common.
ARTICLE IV
Its initial registered office address will be Suite 1000, 6555 Americas
Parkway, N.E., Albuquerque, New Mexico, and its initial registered agent at that
address will be Graham Browne.
ARTICLE V
The name and address of the two Directors who will constitute its initial
Board of Directors is:
Reed Jensen
121 La Vista
Los Alamos, New Mexico 87544
Nancy P. Jensen
121 La Vista
Los Alamos, New Mexico 87544
DATED: November 25, 1998.
/s/
GABRIEL M. PARRA
Suite 1000
6555 Americas Parkway, N.E.
Albuquerque, New Mexico
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ACCEPTANCE OF APPOINTMENT
AS REGISTERED AGENT
The undersigned, being duly sworn, accepts appointment as Registered Agent
pursuant to the Business Corporation Act for Renewable Energy Corporation, a New
Mexico corporation.
/s/
GRAHAM BROWNE
STATE OF NEW MEXICO
COUNTY OF BERNALILLO
Signed and sworn before me on November 25, 1998 by Graham Browne.
/s/ Victoria Wiley
Notary Public
My commission expires:
January 2, 2002
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EXHIBIT 2.6
REORGANIZATION, SALVAGE WORLD AND SOLAR ENERGY LIMITED CORP.
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61
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PLAN OF REORGANIZATION AND MERGER
BY WHICH
SALVAGE WORLD, INC.
(A NEVADA CORPORATION)
SHALL MERGE INTO AND BECOME
SOLAR ENERGY LIMITED
(A DELAWARE CORPORATION)
THIS PLAN OF REORGANIZATION AND MERGER is made and dated this day of
December 17, 1997, by and between the above referenced corporations, and shall
become effective on the Effective Date as defined herein.
I. THE INTERESTED PARTIES
A. THE PARTIES TO THIS PLAN OF MERGER
1. SALVAGE WORLD, INC. ( Salvage ), 774 Mays Blvd. #10, Incline Village NV
89451, a Nevada Corporation, was duly incorporated in Nevada on August 28, 1996.
2. SOLAR ENERGY LIMITED ( Solar ), 1177 W. Hastings, Vancouver BC V6E 2K3,
a Delaware Corporation, was duly incorporated in Delaware on July 24, 1997.
II. RECITALS
A. THE CAPITAL OF THE PARTIES:
1. THE CAPITAL OF SALVAGE consists of 100,000,000 shares of common voting
stock of $.001 par value authorized, of which no shares have been or are issued
or outstanding.
2. THE CAPITAL OF SOLAR consists of 50,000,000 shares of common voting
stock of $.0001 par value authorized, of which no shares have been issued or are
outstanding.
B. THE BACKGROUND FOR THE MERGER: Salvage desires to locate its Corporate
Situs in Delaware.
C. THE BOARDS OF DIRECTORS of both Corporations respectively have
determined that it is advisable and in the best interests of each of them and
both of them that they merge with and into the Delaware Corporation, in order to
change the domicile of the resulting Corporation to Nevada in accordance with
IRS 368(a)(1)(F), to adopt the name of the Delaware Corporation as the name of
the resulting and surviving Delaware Corporation, and to retain the operational
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history and continuity of the Nevada corporation, as may be permissible by law,
subject to such reporting and qualifying provisions as the law may require.
D. THE SHAREHOLDERS OF SALVAGE, the Nevada corporation, having met on
December 17, at a meeting of shareholders, duly called upon notice, approved the
merger, by affirmative vote 24,339,750, abstaining 2,500 votes, and against
12,500, there being a total issued and outstanding of 24,451,250, and 24,354,750
shares present and voting, this agreement was approved and adopted by the Board
of Directors of Salvage in a manner consistent with the laws of Nevada and the
constituent documents of the Salvage.
E. APPROVAL BY SOLAR, the Delaware corporation, there being no shares
issued or outstanding, immediately preceding the merger, or at any time before
the adoption of this agreement by the Board of Directors of Solar, this
agreement was approved by Solar pursuant to the second sentence of subsection
(f) of section 251 of the Delaware General Corporations Law.
III. PLAN OF MERGER
A. REORGANIZATION AND MERGER: The Delaware corporation and the Nevada
corporation are hereby reorganized and the Nevada corporation is hereby merged
with and into the Delaware corporation.
1. The Delaware Corporation: The former Salvage World, Inc., of Nevada will
become and thereafter be Solar Energy Limited, of Delaware. The Nevada
corporation will retain its corporate personality and status, and will continue
its corporate existence uninterrupted, in and through, and only in and through
the surviving Delaware corporation.
2. The Delaware Corporation: shall become and thereafter be the successor
Nevada corporation.
B. EFFECTIVE DATE: This Plan of Reorganization and Merger shall become
effective immediately upon approval and adoption by the parties hereto, in the
manner provided by the law of the places of incorporation and constituent
corporate documents, and the time of such effectiveness shall be called the
effective date hereof.
C. SURVIVING CORPORATION: The Delaware corporation shall survive the
merger herein contemplated and shall continue to be governed by the laws of
Delaware, and the separate corporate existence of the Nevada corporation shall
cease forthwith upon the effective date hereof.
Rights of Dissenting Shareholders: The Delaware corporation is the
entity responsible for the rights of dissenting shareholders whether pursuant to
the laws of Delaware, of Nevada or otherwise.
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a. Service of Process in Delaware: the Resulting Corporation may be
served with process in Delaware in any proceeding for the enforcement of the
rights of a dissenting shareholder, if any, pursuant to any extent required by
the laws thereof. The President of the Nevada corporation hereby irrevocably
appoints the Secretary of State of Delaware as agent to accept service of
process for the Nevada corporation with respect to any such proceeding to the
extent required by the laws thereof.
b. Agent for Mailing Process to the Nevada corporation: the Nevada
corporation hereby further complies with the laws of Delaware by designating a
person to whom process served upon the Secretary of that State may be forwarded
and mailed: William Stocker, Special Counsel, P.O. Box 4980, Laguna Beach CA
92652.
D. SURVIVING ARTICLES OF INCORPORATION: the Articles of Incorporation of
the surviving corporation as filed and/or last amended shall be the Articles of
Incorporation of the surviving corporation following the effective date hereof
unless and until such Articles be amended in accordance with the laws of
Delaware.
E. SURVIVING BY-LAWS: the By-Laws of the Surviving corporation shall
become and remain by the By-Laws of the Surviving Corporation until and unless
they be amended in accordance with the laws of Delaware.
F. CONVERSION OF OUTSTANDING STOCK: Forthwith upon the effective date
hereof, each and every issued and outstanding share of Salvage World, Inc.
common voting stock shall be converted into one share of Solar Energy Limited
The holders of certificates representing shares of the Nevada corporation may
surrender them to the transfer agent for common stock of the resulting
corporation, which is and shall be Madison Stock Transfer, 1813 East 24th
Street, Brooklyn NY 11229.
G. FURTHER ASSURANCE, GOOD FAITH AND FAIR DEALING: the Directors of each
Company shall and will execute and deliver any and all necessary documents,
acknowledgments and assurances and to do all things proper to confirm or
acknowledge any and all rights, titles and interests created or confirmed
herein; and both companies covenant hereby to deal fairly and good faith with
each other and each others shareholders.
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THIS PLAN OF REORGANIZATION AND MERGER is executed on behalf of each
Company by its duly authorized representatives, and attested to, pursuant to the
laws of its respective place of incorporation and in accordance with its
constituent documents.
SALVAGE WORLD, INC. SOLAR ENERGY LIMITED
(A NEVADA CORPORATION) (A DELAWARE CORPORATION)
by by
/s/ /s/
Donald J. Wells Joel M. Dumaresq
President President
/s/ /s/
Joseph A. Kane Norman Wareham
Secretary Secretary
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EXHIBIT 2.7
MERGER OF SALVAGE WORLD AND TAURUS
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ARTICLES AND PLAN OF MERGER
BY WHICH
TAURUS ENTERPRISES INC.
(A DELAWARE CORPORATION)
SHALL MERGE INTO AND BECOME
SALVAGE WORLD, INC.
(A NEVADA CORPORATION)
THESE ARTICLES AND PLAN OF MERGER are made effective and dated this day of
August 28, 1996, by and between the above referenced corporations, sometimes
referred to herein as "Taurus" and "Salvage" respectively.
I. THE INTERESTED PARTIES
A. THE PARTIES TO THIS PLAN OF MERGER
1. TAURUS ENTERPRISES INC. ( Taurus ), 3131 S.W. Freeway #46, Houston TX
77098, a Delaware Corporation, was duly incorporated in Delaware on January 5,
1994.
2. SALVAGE WORLD, INC. ( Salvage ), 774 Mays Blvd. #10, Incline Village NV
89451, a Nevada Corporation, was duly incorporated in Nevada on August 28, 1996.
II. RECITALS
A. THE CAPITAL OF THE PARTIES:
1. THE CAPITAL OF TAURUS consists of 100,000,000 shares of common voting
stock of $.0001 par value authorized, of which 25,285,000 shares are issued and
outstanding.
2. THE CAPITAL OF SALVAGE consists of 100,000,000 shares of common voting
stock of $.001 par value authorized, of which no shares have been or are issued
or outstanding.
B. THE BACKGROUND FOR THE MERGER: Taurus desires to locate its Corporate
Situs in Nevada, for the reason that its principal offices and principal place
of business is located in the western United States.
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C. THE BOARDS OF DIRECTORS of both Corporations respectively have
determined that it is advisable and in the best interests of each of them and
both of them that they merge with and into the Nevada Corporation, in order to
change the domicile of the resulting Corporation to Nevada in accordance with
IRS 368(a)(1)(F), to change the name of the resulting and surviving Nevada
corporation, and to retain the operational history and continuity of the
Delaware corporation, its Tax I.D. Number, its SEC Number and other
identification numbers and filing status's as may be permissible by law, subject
to such reporting and qualifying provisions as the law may require.
D. THE SHAREHOLDERS of the Delaware corporation, having voted 25,285,000
shares in favor and no shares against this Plan of Merger, and the Incorporator
and Initial Directors of the Nevada corporation, no stock having been issued,
have duly approved this Plan of Merger, each in the manner provided by the laws
of its own State or Territory, and its Constituent Documents.
III. PLAN OF MERGER
A. REORGANIZATION AND MERGER: The Delaware corporation and the Nevada
corporation are hereby reorganized and the Delaware corporation is hereby merged
with and into the Nevada corporation.
1. The Delaware Corporation: The former Taurus Enterprises Inc. of Delaware
will become and thereafter be Salvage World, Inc., of Nevada. The Delaware
corporation will retain its corporate personality and status, and will continue
its corporate existence uninterrupted, in and through, and only in and through
the Nevada corporation.
2. The Nevada Corporation: The new Nevada Corporation, formed or being
formed in Nevada, shall become and thereafter be the successor Nevada
corporation.
B. EFFECTIVE DATE: These Articles and Plan of Merger shall become
effective immediately upon approval and adoption by the parties hereto, in the
manner provided by the law of the place of incorporation and its constituent
corporate documents, and the time of such effectiveness shall be called the
effective date hereof.
C. SURVIVING CORPORATION: The Nevada corporation shall survive the merger
herein contemplated and shall continue to be governed by the laws of Nevada, and
the separate corporate existence of the Delaware corporation shall cease
forthwith upon the effective date hereof.
Rights of Dissenting Shareholders: The Nevada corporation is the entity
responsible for the rights of dissenting shareholders whether pursuant to the
laws of Delaware, of Nevada or otherwise.
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a. Service of Process in Delaware: the Resulting Corporation may be
served with process in Delaware in any proceeding for the enforcement of the
rights of a dissenting shareholder, if any, pursuant to any extent required by
the laws thereof. The President of the Nevada corporation hereby irrevocably
appoints the Secretary of State of Delaware as agent to accept service of
process for the Nevada corporation with respect to any such proceeding to the
extent required by the laws thereof.
b. Agent for Mailing Process to the Nevada corporation: the Nevada
corporation hereby further complies with the laws of Delaware by designating a
person to whom process served upon the Secretary of that State may be forwarded
and mailed: William Stocker, Corporate Counsel, P.O. Box 4980, Laguna Beach CA
92652.
D. SURVIVING ARTICLES OF INCORPORATION: the Articles of Incorporation of
the surviving corporation as filed and/or last amended shall be the Articles of
Incorporation of the surviving corporation following the effective date hereof
unless and until such Articles be amended in accordance with the laws of Nevada.
E. SURVIVING BY-LAWS: the By-Laws of the Nevada corporation shall become
and remain by the By-Laws of the Surviving Corporation until and unless they be
amended in accordance with the laws of Nevada.
F. CONVERSION OF OUTSTANDING STOCK: Forthwith upon the effective date
hereof, each and every issued and outstanding share of Taurus Enterprises Inc.
common voting stock shall be converted into one share of the Salvage World, Inc.
The holders of certificates representing shares of the Delaware corporation may
surrender them to the transfer agent for common stock of the resulting
corporation.
G. FURTHER ASSURANCE, GOOD FAITH AND FAIR DEALING: the Directors of each
Company shall and will execute and deliver any and all necessary documents,
acknowledgments and assurances and to do all things proper to confirm or
acknowledge any and all rights, titles and interests created or confirmed
herein; and both companies covenant hereby to deal fairly and good faith with
each other and each others shareholders.
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THIS ARTICLES AND PLAN OF MERGER is executed on behalf of each Company by
its duly authorized representatives, and attested to, pursuant to the laws of
its respective place of incorporation and in accordance with its constituent
documents.
SALVAGE WORLD, INC. SALVAGE WORLD, INC.
(A NEVADA CORPORATION) (A NEVADA CORPORATION)
by by
/s/ /s/
Joseph A. Kane Donald J. Wells
Secretary President
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EXHIBIT 5
VOTING TRUST AGREEMENT
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VOTING TRUST AGREEMENT
David F. Jones, Melvin L. Prueitt, Stanley Prueitt, and Leslie Speir
(individually "Shareholder" and collectively, "Shareholders"), and Melvin L.
Prueitt ("Voting Trustee") agree:
1. Recitals. Each Shareholder owns stock in Hydro- Air
Technologies, Inc., a New Mexico corporation ("Corporation"). Corporation is
issuing shares of Corporation to Voting Trustee ("Shares") so that the Shares
may be issued to the Shareholders or others as provided in Founders Agreement
dated the same date as this Voting Trust Agreement among the Shareholders and
the Corporation ("Founders Agreement") and to maintain the availability of the
Shares in the event the Corporation is acquired as set out in the Founders
Agreement. The Shareholders execute this Voting Trust Agreement ("Agreement") to
implement the Founders Agreement.
2. Book Entry. Upon receipt by Voting Trustee of the Shares, the
Voting Trustee will establish and maintain book entry records of the beneficial
ownership of the Shares in the Voting Trust established by this Agreement
("Voting Trust").
3. Removal of Shares From Voting Trust. Shares may be removed
from this Voting Trust when they are to be issued as Founder Shares or
Discretionary Shares pursuant to the Founders Agreement ("New Shares").
4. Exchange of Shares. In the event of the acquisition of the
Company by The Acquisition Company, the Voting Trustee will exchange the Shares
of the Corporation which are subject to this Voting Trust to The Acquisition
Company in exchange for equivalent Shares in The Acquisition Company Shares.
The Acquisition Company Shares will then be "Shares" subject to this Voting
Trust and the Founders Agreement.
5. Voting. At all meetings of shareholders of Corporation, and in
all proceedings affecting Corporation, the Voting Trustee will vote the Shares
registered in the Voting Trust name in such manner as the Shareholders direct.
The Voting Trustee will not be liable for the consequence of any vote cast or
action taken in good faith.
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6. Dividends. Shareholders will be entitled to receive from the
Voting Trustee payments equal to any cash dividends received by the Voting
Trustee on the Shares. If any dividends are declared in additional shares of the
Corporation, the Voting Trustee will retain such additional shares, which will
be deemed to have been deposited under the terms of this Agreement.
7. Termination. This Agreement will terminate upon the date all
of the Shares have been issued as Founder Shares or Discretionary Shares under
the Founders Agreement or may be terminated in writing prior to that date by the
Trustee. Upon termination, the Voting Trustee will deliver any Shares which
were not issued as Founder Shares or Discretionary Shares to the Shareholders as
provided in the Founders Agreement.
8. Transfer of Stock to Successor Voting Trustee. Los Alamos
National Bank is designated as successor Voting Trustee. If the Voting Trustee
becomes incapacitated or dies, the conservator or personal representative of the
Voting Trustee will take all necessary action to deliver all Shares owned by the
Voting Trust to the successor Voting Trustee to be held by the successor as if
the successor was the original Voting Trustee subject to the terms of this
Agreement.
9. Binding Effect. This Agreement will inure to the benefit of,
and be binding upon: (i) every person or entity who is the record, legal or
beneficial owner of Shares, whether by issue or transfer, including without
limitation any spouse, representative, transferee, owner, nominee, grantee,
successor and assign of the Shareholders, and (ii) the Voting Trustee, any
successor Voting Trustee and their successors, personal representatives, and
transferees, is governed by and construed in accordance with the laws of New
Mexico, is specifically enforceable and may be modified only in writing.
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DATED: 10/14, 1997.
SHAREHOLDERS:
/s/
DAVID F. JONES
/s/
MELVIN L. PRUEITT
/s/
STANLEY PRUEITT
/s/
LESLIE SPEIR
VOTING TRUSTEE:
/s/
MELVIN L. PRUEITT
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EXHIBIT 6.1
FIRST AMENDMENT TO OFFER TO PURCHASE AND PLAN OF INTERNAL FUNDING AND SHARE
RELEASE AND PLAN OF REORGANIZATION AND ACQUISITION
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FIRST AMENDMENT TO OFFER TO PURCHASE
AND
PLAN OF INTERNAL FUNDING AND SHARE RELEASE
AND
PLAN OF REORGANIZATION AND ACQUISITION
This First Amendment to Offer to Purchase and Plan of Internal Funding and Share
Release and Plan of Reorganization and Acquisition ("Reorganization Agreement")
is made and entered into by and between Solar Energy Limited, a Delaware
corporation ("Solar"), Hydro-Air Technologies, Inc, a New Mexico corporation
("HAT"), and Melvin L. Prueitt, David F. Jones, Stanley D. Prueitt, Baycove
Investments, Inc. ("FCIC"), Leslie Speir, Dana Hansen, Linda Hansen, Ara Lee
Stevens and Hydro-Air Founders LLC (collectively "HAT Shareholders"). This
Reorganization Agreement will also be executed by Solar Acquisition Corporation
("New Corporation"), a New Mexico corporation and a subsidiary of Solar once it
comes into existence.
I. RECITALS.
This Reorganization Agreement amends and supplements the Offer to Purchase
("Offer") entered into by First Capital Invest Corp., HAT and Melvin L. Prueitt,
David F. Jones, Stanley D. Prueitt, and Leslie Speir (collectively "Founders")
on July 5, 1997. Under the terms of the Offer, First Capital Invest Corp.
agreed to provide a public company ("Pubco") which would be the vehicle used to
acquire all of the assets, businesses and capital stock of HAT. Solar is the
public company that FCIC has now made available for purposes of consummating the
transactions contemplated by this Reorganization Agreement. The HAT
Shareholders want Solar, a public company, to acquire HAT in order to attract
the capital necessary for the development of HAT's HARPS technology. The boards
of directors of Solar and HAT have approved the acquisition of HAT by Solar
through the creation of New Corporation by Solar and the merger of New
Corporation into HAT ("Merger"). For federal income tax purposes, it is
intended that the Merger qualify as a reorganization within the meaning of
Section 368 of the Code.
II. DEFINITIONS.
A. Closing Date shall mean the date on which the parties hereto shall
close the transactions contemplated herein.
B. "Code shall mean the Internal Revenue Code of 1986, as amended.
C. Commission shall mean the Securities and Exchange Commission.
D. Effective Date shall mean the date this Reorganization Agreement
is executed.
E. Exchange Act shall mean the Securities Exchange Act of 1934, as
amended.
F. Previously Disclosed shall mean disclosed in writing prior to the
execution of the Offer.
G. "Rights shall mean warrants, options, rights, convertible
securities and other arrangements or commitments which obligate
an entity to issue or dispose of any of its capital stock.
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H. SEC Documents shall mean all reports and registration statements
filed, or required to be filed, by a party hereto pursuant to
the Securities Laws.
I. Securities Act shall mean the Securities Act of 1933, as amended.
J. Securities Laws shall mean the Securities Act; the Exchange Act;
the Investment Company Act of 1940, as amended; the Investment
Advisers Act of 1940, as amended; the Trust Indenture Act of 1939,
as amended; and the rules and regulations of the Commission
promulgated thereunder.
K. Other terms as defined in this Reorganization Agreement.
III. PLAN OF REORGANIZATION.
A. New Corporation.
1. Organization. Solar will cause New Corporation to be organized
under New Mexico law, authorized to issue 125,000 shares of no par value common,
and to carry on all business activities. Once formed New Corporation will adopt
and become bound by the terms of this Reorganization Agreement.
2. Funding. After organization of New Corporation, Solar will
transfer to New Corporation, $125.00 in exchange for 125,000 shares of New
Corporation stock ("New Corporation Stock").
B. Merger of New Corporation and HAT.
1. Merger. New Corporation will merge into HAT pursuant to the
terms of a Plan of Merger ("Plan of Merger") substantially in the form of
attached Exhibit A. The Plan of Merger, the Offer and this Reorganization
Agreement are the plan of reorganization required by the Code.
2. Surviving Corporation. Both Solar and HAT shall survive the
reorganization herein contemplated and shall continue to be governed by the laws
of their respective states of incorporation. New Corporation will be merged out
of existence.
3. Surviving Articles of Incorporation. The Articles of
Incorporation of Solar and HAT shall remain in full force and effect, unchanged.
4. Surviving By-Laws. The By-Laws of HAT and Solar shall remain
in full force and effect, unchanged.
C. Issuance and Release of Solar stock. Solar and the HAT Shareholders
desire to create an orderly process for the issuance and progressive release of
common stock to or for the benefit of the HAT Shareholders.
1. HAT Shareholders. The HAT Shareholders will receive subject to
this Reorganization Agreement, shares of Solar equal to 40% of the resulting
total issued and outstanding stock of Solar, on a fully-diluted basis, following
certain designated capital formation stages. However, the total number of Solar
shares which will be issued to the HAT Shareholders to meet this obligation is
undeterminable at this time.
2. Initial Issuance. Upon consummation of the Merger, Solar shall
issue to the HAT Shareholders 20% of 40% of the outstanding Solar shares.
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3. Phased Release of Shares. The remaining 80% of 40% will be
issued to the HAT Shareholders in phases based on the following formula: one
share of Solar stock for each $2.00 of earnings generated by HAT, as determined
by Generally Accepted Accounting Principles (GAAP) as provided in the offer.
4. New Investment Shares. The shares to be issued to or for the
benefit of the HAT Shareholders will be new investment shares of Solar, a new
and different security, to be held for investment and not for immediate resale,
in accordance with Rule 145 (Securities Act Regulations 230.145.) The principal
import of which Rule is that such new securities are and shall be deemed to be
Restricted Securities as defined in Rule 144(a).
5. Further Issuances. With respect to further issuances by Solar
to investors, Solar shall issue to the HAT Shareholders additional shares, equal
to 40% of such issuances actually issued to investors, such that the HAT
Shareholders will, if all phased shares are issued, receive and own 40% of
Solar. The additional issuances will be made to the HAT Shareholders in the
same percentages as provided in paragraphs 2 and 3. The parties anticipate that
the following placements will be made:
a. 10,000,000 at $0.10 (Series 3) shares to be offered and
issued pursuant to Rule 504;
b. 2,000,000 at $0.50 (Series 4) shares to be offered and
pursuant to Rule 505 or 506 of Regulation D; and, finally
c. Solar will employ its best efforts to place an additional
1,000,000 shares at not less than $2.00 per share.
6. Additional Compensation. The HAT Shareholders, other than
FCIC, will receive in proportion to their ownership of HAT shares at Closing
$500,000 when the prototype is deemed commercially viable by HAT under the
Offer.
IV. FUNDING OF HAT IN AMPLIFICATION OF THE OFFER:
A. Capital Formation and Earnings. HAT's technology will require
funding, in stages, from development to marketability, and will not immediately
generate earnings. However, if HAT's technology is successful earnings will be
generated, and will contribute to, and eventually obviate the need for
additional capital investment to expand capacity to meet demand.
B. Phases of Committed Funding.
1. Phase One. Phase One Internal Funding by Solar for HAT shall
be $500,000.00, of which $300,000.00 has been advanced previously and which
advance is acknowledged hereby. Phase One shall extend for a period of thirteen
months during which it shall be determined whether or not the technology works
and is marketable. If it shall be so determined, and only if it shall be so
determined, the Internal Funding shall proceed to Phase Two.
2. Phase Two. Phase Two Internal Funding by Solar for HAT shall
be $5,000,000.00.
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3. Phase Three. Phase Three Internal Funding shall be generated,
if at all, by earnings generated by HAT, and assumes that the profit center of
HAT shall have achieved substantial profitability.
4. No guaranty of success. No matter how promising and exciting
the technology and concepts of HAT are to the parties, there can be no guaranty
of success. Public tastes, market conditions, competition, war, natural disaster
or any number of unforeseeable events could disappoint expectations and cause
the parties to re-evaluate their positions.
5. Assumption. Solar hereby expressly agrees to assume all the
responsibilities and obligations of Pubco under the Offer, as well as Solar's
responsibilities and obligations under this Reorganization Agreement. In
addition, Baycove, Inc. expressly agrees to assume all of the responsibilities
and obligations of First Capital Invest Corp. under the Offer, as well as
Baycove's responsibilities and obligations under this Reorganization Agreement.
V. MANAGEMENT OF HAT AND SOLAR.
1. Separate Board of Directors. Solar and HAT shall maintain
separate Boards of Directors. The Board of Directors of Solar shall, during the
term of this agreement, consist of not less than six Directors, not less than
two of which shall be designated by the Board of Directors of HAT; or a greater
number of Directors divisible by three of which the Board of Directors of HAT
may designate one third of the total. The Board of Directors of Solar shall be
entitled to non-voting representation on the Board of Directors of HAT. Provided
that management complies with appropriate professional standards of conduct,
each Board shall separately manage its respective area of responsibility. The
existing Directors of Solar shall appoint additional Directors in conformity
with this provision, with all deliberate speed.
2. Officers. The Board of Directors of Solar and HAT shall elect
and appoint new officers as follows: Melvin L. Prueitt shall be the Chairman of
the Board of Solar. Melvin L. Prueitt shall be President and Chairman of the
Board of HAT. The HAT Board may designate such officers of HAT as it may see
fit, subject only to the duty of Solar to insure acceptable standards of
professional conduct and responsibility. The Board of Directors of Solar shall
exercise its sound discretion to recruit and/or elect the Chief Financial
Officer of Solar.
VI. CLOSING.
Closing of the transactions contemplated by this Reorganization Agreement will
be held contemporaneously at the various offices of HAT and Solar, on the first
business day following satisfaction of the conditions precedent set forth
herein. In connection with such Closing, HAT and New Corporation shall execute
articles of merger and shall cause such articles to be delivered to and filed
with the New Mexico State Corporation Commission. The Merger shall be effective
at the time and on the date specified in such articles of merger.
VII. REPRESENTATIONS AND WARRANTIES OF SOLAR.
Solar hereby represents and warrants to HAT, New Corporation and the HAT
Shareholders as follows:
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A. Capital Structure of Solar. The authorized capital stock of Solar
consists of 50,000,000 shares of common voting stock, $.0001 par value ( Solar
Common Stock ), of which 1,278,000 shares are issued and outstanding and no
shares are held in treasury. All outstanding shares of Solar Common Stock have
been duly issued and are validly outstanding, fully paid and nonassessable.
There are no Rights authorized, issued or outstanding with respect to the
capital stock of Solar. None of the shares of Solar's capital stock has been
issued in violation of the preemptive rights of any person.
B. Organization, Standing and Authority of Solar. Solar is a duly
organized corporation, validly existing and in good standing under the laws of
the State of Delaware with full corporate power and authority to carry on its
business as now conducted and is duly qualified to do business in the states of
the United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires such qualification and where
failure to so qualify would have a material adverse effect on the financial
condition, results of operations, business or prospects of Solar on a
consolidated basis.
C. Authorized and Effective Agreement.
1. Solar has all requisite corporate power and authority to enter
into and perform all of its obligations under this Reorganization Agreement.
The execution and delivery of this Reorganization Agreement, and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action in respect thereof on
the part of Solar.
2. This Reorganization Agreement constitutes a legal, valid and
binding obligations of Solar, enforceable against it in accordance with its
terms, subject as to enforceability, to bankruptcy, insolvency and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. Solar has filed all SEC Documents required by the Securities
Laws and such SEC Documents complied in all material respects with the
Securities Laws.
3. Neither the execution and delivery of this Reorganization
Agreement in the case of Solar, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by Solar with any of the
provisions hereof or thereof shall (i) conflict with or result in a breach of
any provision of the articles, charter, code of regulations or by-laws of Solar
or any Solar Subsidiary, (ii) constitute or result in a breach of any term,
condition or provision of, or constitute a default under, or give rise to any
right of termination, cancellation or acceleration with respect to, or result in
the creation of any lien, charge or encumbrance upon any property or asset of
Solar or any Solar Subsidiary pursuant to, any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation, or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to Solar
or any Solar Subsidiary.
VIII. REPRESENTATIONS AND WARRANTIES OF NEW CORPORATION.
New Corporation hereby represents and warrants to HAT and Solar as follows:
A. Capital Structure of New Corporation. The authorized capital stock
of New Corporation consists of 125,000 shares of common stock, no par value (
New Corporation Common Stock ), of which 125,000 shares are issued and
outstanding and no shares are held in treasury. All outstanding shares of New
Corporation Common Stock have been duly issued and are validly outstanding,
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fully paid and nonassessable. There are no Rights authorized, issued or
outstanding with respect to the capital stock of New Corporation except as
Previously Disclosed. None of the shares of New Corporation's capital stock has
been issued in violation of the preemptive rights of any person.
B. Organization, Standing and Authority of New Corporation. New
Corporation is a duly organized corporation, validly existing and in good
standing under the laws of the State of New Mexico with full corporate power and
authority to carry on its business.
C. No New Corporation Subsidiaries. New Corporation does not own,
directly or indirectly, any outstanding capital stock or other voting securities
of any corporation or other organization except for Solar.
D. Authorized and Effective Agreement.
1. New Corporation has all requisite corporate power and authority
to enter into and perform all of its obligations under this Reorganization
Agreement. The execution and delivery of this Reorganization Agreement and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action in respect thereof on
the part of New Corporation.
2. This Reorganization Agreement constitutes a legal, valid and
binding obligations of New Corporation, enforceable against it in accordance
with its terms, subject as to enforceability, to bankruptcy, insolvency and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
3. Neither the execution and delivery of this Reorganization
Agreement, in the case of New Corporation, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by New Corporation with any of
the provisions hereof or thereof shall (i) conflict with or result in a breach
of any provision of the articles, charter, code of regulations or by-laws of New
Corporation, (ii) constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of New
Corporation pursuant to, any note, bond, mortgage, indenture, license, agreement
or other instrument or obligation, or (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to New Corporation or any New
Corporation Subsidiary.
IX. REPRESENTATIONS AND WARRANTIES OF HAT.
HAT hereby represents and warrants to New Corporation and Solar as follows:
A. Capital Structure of HAT. The capital of HAT consists of 250,000
authorized shares of no par value common voting stock, of which 125,000 shares
are issued and outstanding. All outstanding shares of capital stock have been
duly issued and are validly outstanding, fully paid and nonassessable. The
shares of Common Stock to be issued in connection with the Merger have been duly
authorized and, when issued in accordance with the terms of this Reorganization
Agreement and will be validly issued, fully paid and nonassessable.
B. Organization, Standing and Authority of HAT. HAT is a duly
organized corporation, validly existing and in good standing under the laws of
the State of New Mexico, with full corporate power and authority to carry on its
business.
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C. Authorized and Effective Agreement.
1. HAT has all requisite corporate power and authority to enter
into and perform all of its obligations under this Reorganization Agreement.
Except as Previously Disclosed, the execution and delivery of this
Reorganization Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of HAT.
2. Except as Previously Disclosed, this Reorganization Agreement
constitutes a legal, valid and binding obligations of HAT, enforceable in
accordance with its respective terms subject, as to enforceability, to
bankruptcy, insolvency and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
3. Neither the execution and delivery of this Reorganization
Agreement nor consummation of the transactions contemplated hereby or thereby,
nor compliance by HAT with any of the provisions hereof or thereof shall (i)
conflict with or result in a breach of any provision of the articles or by-laws
of HAT, (ii) constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of HAT
pursuant to, any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation, or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to HAT.
X. COVENANTS.
A. Best Efforts. HAT and New Corporation shall each use its best
efforts in good faith to take or cause to be taken all action necessary or
desirable on its part so as to permit consummation of the Merger at the earliest
possible date.
B. Supplementation. The contents of the Offer are incorporated by
reference in this Reorganization Agreement.
XI. CONDITIONS PRECEDENT
A. Conditions Precedent of Solar, HAT and New Corporation. The
respective obligations of the parties to effect the Merger shall be subject to
satisfaction or waiver of the following conditions at or prior to the Closing
Date:
1. All corporate action necessary to authorize the execution,
delivery and performance of this Reorganization Agreement and consummation of
the transactions contemplated hereby and thereby shall have been duly and
validly taken.
2. The parties hereto shall have received all regulatory approvals
required or mutually deemed necessary in connection with the transactions
contemplated by this Reorganization Agreement, all notice periods and waiting
periods required after the granting of any such approvals shall have passed and
all conditions contained in any such approval required to have been satisfied
prior to consummation of such transactions shall have been satisfied.
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B. Conditions Precedent of Solar and New Corporation. The obligations
of Solar and New Corporation to effect the Merger shall be subject to
satisfaction of the following additional conditions:
1. The representations and warranties of HAT shall be true and
correct in all material respects as of the date of this Reorganization Agreement
and as of the Closing Date as though made on and as of the Closing Date (or on
the date when made in the case of any representation and warranty which
specifically relates to an earlier date), except as otherwise contemplated by
this Reorganization Agreement or consented to in writing by New Corporation and
Solar.
2. HAT shall have in all material respects performed all
obligations and complied with all covenants required by this Reorganization
Agreement.
C. Conditions Precedent of HAT. The obligations of HAT to effect the
Merger shall be subject to satisfaction of the following additional conditions:
1. The representations and warranties of Solar and New Corporation
shall be true and correct in all material respects as of the date of this
Reorganization Agreement and as of the Closing Date as though made on and as of
the Closing Date (or on the date when made in the case of any representation and
warranty which specifically relates to an earlier date), except as otherwise
contemplated by this Reorganization Agreement or consented to in writing by HAT.
2. Solar, New Corporation and their subsidiaries shall have in all
material respects performed all obligations and complied with all covenants
required by this Reorganization Agreement and the Agreement of Merger.
XII. TERMINATION, WAIVER AND AMENDMENT.
A. Termination. This Reorganization Agreement and the Agreement of
Merger may be terminated:
1. At any time on or prior to the Effective Date, by the mutual
consent in writing of the parties hereto.
2. At any time on or prior to the Closing Date, by HAT in writing,
if Solar, New Corporation or any Solar or New Corporation Subsidiary has, or by
Solar or New Corporation in writing, if HAT has, in any material respect,
breached (i) any covenant or agreement contained herein or in the Agreement of
Merger or (ii) any representation or warranty contained herein, and in either
case if such breach has not been cured by the earlier of 30 days after the date
on which written notice of such breach is given to the party committing such
breach or the Closing Date.
3. On the Closing Date, by any party hereto in writing, if any of
the conditions precedent set forth above with respect to such party have not
been satisfied or fulfilled.
B. Effect of Termination. In the event this Reorganization Agreement
and the Agreement of Merger are terminated, this Agreement and the Agreement of
Merger shall become void and have no effect, except that (i) the provisions
relating to confidentiality and expenses shall survive any such termination and
(ii) a termination shall not relieve the breaching party from liability for an
uncured willful breach of such covenant or agreement giving rise to such
termination.
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C. Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants in this Reorganization Agreement and
the Agreement of Merger or in any instrument delivered pursuant hereto or
thereto shall expire on, and be terminated and extinguished at, the Effective
Date other than covenants that by their terms are to survive or be performed
after the Effective Date, provided that no such representations, warranties or
covenants shall be deemed to be terminated or extinguished so as to deprive HAT,
Solar or New Corporation (or any director, officer or controlling person
thereof) of any defense in law or equity which otherwise would be available
against the claims of any person, including, without limitation, any shareholder
or former shareholder of either HAT, Solar or New Corporation, the aforesaid
representations, warranties and covenants being material inducements to the
consummation by HAT and New Corporation of the transactions contemplated herein.
D. Amendment or Supplement. This Reorganization Agreement may be
amended or supplemented at any time by mutual agreement of the parties hereto.
XIII. MISCELLANEOUS.
A. Expenses. Each party hereto shall bear and pay all costs and
expenses incurred by it in connection with the transactions contemplated in this
Reorganization Agreement, including fees and expenses of its own financial
consultants, accountants and counsel.
B. Entire Agreement. This Reorganization Agreement and the Agreement
of Merger contain the entire agreement between the parties with respect to the
transactions contemplated hereunder and thereunder and supersede all prior
arrangements or understandings with respect thereto, written or oral, other than
documents referred to herein or therein. The terms and conditions of this
Reorganization Agreement and the Agreement of Merger shall inure to the benefit
of and be binding upon the parties hereto and thereto and their respective
successors. Nothing in this Reorganization Agreement or the Agreement of Merger,
expressed or implied, is intended to confer upon any party, other than the
parties hereto and thereto, and their respective successors, any rights,
remedies, obligations or liabilities.
C. No Assignment. No party hereto may assign any of its rights or
obligations under this Reorganization Agreement to any other person.
D. Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by facsimile transmission or overnight express or by registered or
certified mail, postage prepaid, addressed to the parties.
E. Captions. The captions contained in this Reorganization Agreement
are for reference purposes only and are not part of this Reorganization
Agreement.
F. Counterparts. This Reorganization Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
G. Governing Law. This Reorganization Agreement shall be governed by
and construed in accordance with the laws of the State of New Mexico applicable
to agreements made and entirely to be performed within such jurisdiction, except
to the extent federal law may be applicable.
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H. Arbitration. The Parties to this agreement have no wish to engage
in costly or lengthy litigation with each other. Accordingly, any and all
disputes which the parties cannot resolve by agreement or mediation, shall be
submitted to binding arbitration under the rules and auspices of the American
Arbitration Association, as a further incentive to avoid disputes, each party
shall bear its own costs, with respect thereto, and with respect to any
proceedings in any court brought to enforce or overturn any arbitration award.
This provision is expressly intended to discourage litigation and to encourage
orderly, timely and economical resolution of any disputes which may occur.
I. Severability. If any provision of this Letter Agreement or the
application thereof to any person or situation shall be held invalid or
unenforceable, the remainder of the Agreement and the application of such
provision to other persons or situations shall not be effected thereby but shall
continue valid and enforceable to the fullest extent permitted by law.
J. Waiver. No waiver by any party of any occurrence or provision
hereof shall be deemed a waiver of any other occurrence or provision.
This Reorganization Agreement is executed on behalf of each party by its duly
authorized representatives, and attested to, pursuant to the laws of its
respective place of incorporation and in accordance with its constituent
documents.
HYDRO-AIR TECHNOLOGIES, INC. SOLAR ENERGY LIMITED
a New Mexico corporation a Delaware corporation
/s/ /s/
Melvin L. Prueitt, President Joel M. Dumaresq, President
HYDRO-AIR FOUNDERS, LLC BAYCOVE INVESTMENTS, INC.
a New Mexico limited liability co a Delaware corporation
/s/ Melvin L. Prueitt /s/ Irene Poole
Melvin L. Prueitt, Manager Irene Poole
/s/ Melvin L. Prueitt /s/ David F. Jones
Melvin L. Prueitt David F. Jones
/s/ Leslie Speir /s/ Stanley D. Prueitt
Leslie Speir Stanley D. Prueitt
/s/ Dana Hansen /s/ Linda Hansen
Dana Hansen Linda Hansen
/s/ Ara Lee Stevens
Ara Lee Stevens
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EXHIBIT 6.2
STOCK RESTRICTION AGREEMENT
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STOCK RESTRICTION AGREEMENT
David Jones, Melvin L. Prueitt, Stanley Prueitt and Leslie Speir
(individually, a "Named Shareholder" and collectively, "Named Shareholders") and
Hydro-Air Technologies, Inc. ("Corporation") agree:
1. Recitals: Named Shareholders are the record owners of shares
of stock of Corporation. Other persons or entities, such as the spouses or
heirs of Named Shareholders, may now or later have legal or beneficial interests
in such stock. The Corporation and Named Shareholders want to provide for
certain restrictions on such stock, whether owned by Named Shareholders or other
Shareholders of Corporation. This Stock Restriction Agreement ("Agreement") is
intended to provide the Corporation and Named Shareholders with certain rights
to require the sale of stock if a restriction is violated or if a Shareholder's
legal or employment status changes.
2. Definitions: In addition to the other definitions in this
Agreement, the following capitalized terms are defined as follows:
A. "Stock" means all shares of the Corporation (or any other
successor entity to the extent it represents the financial interest originally
derived from the HARPS Technology) now owned or later acquired by a Named
Shareholder or a Spouse of the Named Shareholder.
B. "Shareholder" means any record, legal or beneficial owner
of Stock, whether or not a signatory to this Agreement. If this Agreement
renders void an attempted transfer or encumbrance to a person or entity, that
person or entity is not a "Shareholder" for purposes of this Agreement.
C. "Spouse" means the person married to a Shareholder on the
date of giving Notice or the occurrence of an Event, whichever happens first.
D. "Divorce" means any settlement between a Named Shareholder
and Spouse of their property interest, by agreement or operation of law, as
provided in a legal separation or a dissolution of marriage.
E. "Bankruptcy" or "Bankrupt" means the filing of a petition
commencing a case under the Bankruptcy Code covering a Shareholder.
F. "Death" or "Deceased" means death as determined under the
New Mexico Probate Code, and includes a presumed death as determined under the
New Mexico Probate Code.
G. "Incapacity" or "Incapacitated" means the inability of a
Shareholder, in the opinion of a doctor chosen by the Corporation, to engage in
any substantial, gainful activity for Corporation by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or to be of long, continued and indefinite duration.
I. "Notice" means the notice given to Corporation in
connection with its right to require the sale of Stock as provided in this
Agreement.
J. "Obligation" means the obligations of a buyer to a seller
of Stock when a buyer buys Stock as provided in this Agreement.
K. "Permitted Encumbrance" means a security interest securing
an Obligation arising as provided in this Agreement.
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L. "Permitted Transfer" means (i) a transfer of record, legal
or beneficial ownership of Stock to a Named Shareholder by the Spouse of Named
Shareholder, and (ii) a transfer after compliance with this Agreement.
M. "Representative" means the personal representative,
trustee, heir, devisee, surviving joint tenant, or conservator of a Shareholder.
3. Restrictions: The following are restrictions that apply to
Stock:
A. No Shareholder may transfer Stock during the life of the
Shareholder except in a Permitted Transfer (the "Transfer Restriction").
B. No Stock may be encumbered except by a Permitted
Encumbrance (the "Encumbrance Restriction").
C. All Stock is subject to this Agreement.
D. A Named Shareholder will have sole authority to vote,
manage, control, dispose of, or encumber any Stock owned by the Named
Shareholder and the Spouse of the Named Shareholder.
4. Events: The following are events upon the occurrence of which
the right to require the sale of Stock as provided in this Agreement may be
exercised (individually "Event" and collectively "Events"):
A. The transfer of Stock in violation of the Transfer
Restriction.
B. The encumbrance of Stock in violation of the Encumbrance
Restriction, if the encumbrance is not removed within fifteen days after the
encumbrance attaches.
C. The Death, Bankruptcy or Incapacity of a Shareholder.
D. A Divorce as a result of which any record, legal or
beneficial ownership of Stock is retained or acquired by the Spouse of Named
Shareholder, if that Spouse is not also a Named Shareholder.
5. Notice: Upon the occurrence of an Event:
A. If the Event is (i) the Death, Bankruptcy or Incapacity of
the Spouse of a Named Shareholder, or (ii) a Divorce pursuant to which the
Spouse of a Named Shareholder retains or acquires Stock, that Named Shareholder
will have the sole right for sixty days after that Event to elect to acquire the
Stock of the Spouse as if the Spouse, or the Representative of the Spouse, gave
Notice on the date of the Event. If the Named Shareholder does not so acquire
the Stock of the Spouse, the Spouse or the Representative of the Spouse will
give Notice within sixty-five days after that Event covering all Stock owned by
the Spouse.
B. If the Event is any other Event, the Shareholder, or the
Representative of the Shareholder if the Shareholder is Deceased, Bankrupt or
Incapacitated, will give Notice within thirty days after the Event, covering all
Stock owned by the Shareholder and any Spouse of the Shareholder.
C. Notice will be given by personal service or by prepaid
registered or certified mail, return receipt requested, to Corporation at its
registered office and to each other Named Shareholder at the addresses shown on
the Shareholder records of Corporation. If Corporation or another Named
Shareholder knows of the occurrence of an Event that requires a Notice to be
given and that the person responsible for doing so has not given the appropriate
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Notice, Corporation or the other Named Shareholder may give the Notice on behalf
of the person responsible. The Notice is given when served or mailed, will
recite the Event for which Notice is being given, will state the mailing address
of the person giving the Notice, will recite all the terms of any proposed
transfer, and will constitute an irrevocable offer to sell all Stock covered by
the Notice.
6. Right to Buy: Corporation and the other Named Shareholders
will have, as the result of an Event, the right to buy Stock as follows:
A. Corporation will have thirty days from the date Notice is
given within which to elect to buy any or all of the offered Stock. The offeror
will not participate in any capacity in Corporation's decision whether or not to
elect to buy the offered Stock.
B. If Corporation does not elect within the thirty-day period
to buy all the offered Stock, then the Named Shareholders, other than the
offeror, will have an additional twenty days within which to elect to buy any
unbought offered Stock in the proportion of their then shareholdings in
Corporation.
C. If any Named Shareholder does not elect within the
twenty-day period to buy that Named Shareholder's portion of the unbought
offered Stock, then the remaining Named Shareholders, not including the offeror,
will have an additional ten days within which to elect to buy such portion in
the proportion of their then shareholdings in Corporation; if only one such
Named Shareholder wants to buy all or part of the unbought offered Stock, that
Named Shareholder may do so.
D. If Corporation or the Named Shareholders do not elect
within the sixty-day period to buy all the offered Stock, the unbought offered
Stock may either (i) be transferred in accordance with all the terms of any
proposed inter vivos transfer as recited in the Notice, if done within sixty
days after the expiration of the sixty-day period, (ii) be transferred by a
deceased Shareholder's estate to the distributee thereof, (iii) pass by
operation of law, or (iv) be retained, whether or not encumbered, as the case
may be; however, in any event, the unbought offered Stock will continue to be
subject to this Agreement.
E. An election to buy offered Stock may be made only by
giving written notification of that election to the offeror, by personal service
or by prepaid registered or certified mail, return receipt requested; the
election to buy is effective when the written notification is served or mailed.
The proportion of shareholdings of the purchasing Shareholder will be of the
class or series of Stock being offered, and each purchasing Shareholder's
shareholdings will include those of the purchasing Shareholder's Spouse unless
the Spouse is a purchasing Shareholder.
7. Purchase Price and Closing: The purchase price for any Stock
bought as provided in this Agreement by Corporation or a Shareholder as
appropriate will be the Value of the Stock as of either the day preceding the
date of the Event, or the date of giving Notice, whichever is earlier. The
initial Value for each share of Stock is $1.00 Hereafter, annually, at the time
of the Annual Meeting of Shareholders, and the Annual Meeting of Directors of
the Corporation, Corporation and any Named Shareholders will fix the Value for
each share of Stock, and as evidence of having fixed the Value, will execute a
Certificate of Value. If on the date a determination of Value is required
because of the happening of any of the contingencies giving rise to the purchase
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and sale of Stock, Corporation and any Named Shareholders have failed to fix the
Value for a period of more than one year, then the latest fixed Value will be
increased or decreased by the proportionate increase or decrease in the book
value of the Stock since the last Value was fixed, and the latest fixed Value as
adjusted will be the Value. If since the latest Value was fixed, Corporation
paid a Stock dividend on, split or combined its outstanding Stock, then the
latest fixed Value will be adjusted appropriately. The independent public
accountant then servicing the Corporation books will determine book value in
accordance with the method of accounting then being used by Corporation in
preparing its federal income tax return, and that determination will be
conclusive; in making the determination, goodwill, leases, contract rights, and
the like, will be valued in the aggregate at $1.00 unless a different figure has
been consistently shown on the Corporation books. Closing will be at 10:00 a.m.
at Corporation's registered office on the 20th banking day after the end of the
last period during which an election to buy unbought offered Stock may be made.
8. Payment of Purchase Price: At closing the seller of the Stock
will deliver certificates representing the Stock, properly endorsed for
registration of transfer, and the buyer will, at the option of the buyer, either
pay in cash the entire purchase price of the Stock sold to the buyer or pay a
down payment of 25% of the purchase price in cash and the balance in ten equal
semiannual installments beginning one hundred eighty days after closing. This
unpaid balance is the Obligation. The Obligation will be evidenced by a
negotiable promissory note which is accelerable upon default, prepayable without
penalty, and will provide for interest from closing on the unpaid balance
payable semiannually at 10% a year. While an Obligation is unpaid, Corporation
will give the seller reasonable access to the books, financial statements and
records of the Corporation. Corporation is the irrevocable attorney-in-fact for
the seller of Stock to execute any documents appropriate to evidence the
transaction.
9. Security: The seller of the Stock will have a security
interest in Stock sold to a buyer other than Corporation until the obligation of
the buyer is paid. After registration of transfer of the Stock sold to a buyer
other than Corporation, the certificates representing that Stock will be
delivered, endorsed in blank, to a mutually acceptable escrow agent who will
hold the Stock to perfect the security interest of the seller.
10. Subchapter S Election: If Corporation is or becomes an
"electing small business corporation" as provided in Subchapter S of the
Internal Revenue Code, each Shareholder will consent to the elective status
until Corporation and the owners of the majority of the outstanding shares of
Corporation agree to the contrary. No Shareholder may transfer any Stock in any
way that will cause Corporation to lose its status as an "electing small
business corporation." Before any valid transfer of any Stock as provided in
this Agreement, any undistributed Subchapter S earnings will be distributed to
all Shareholders according to their pretransfer pro rata share.
11. Legend: All certificates representing Stock will be marked
"Transfer and encumbrance of the securities represented by this Certificate are
restricted by an Agreement on file at the Corporation office." The restrictions
imposed by this Agreement are those of Corporation as issuer as well as those of
the Shareholders. Transfer or encumbrance of Stock without compliance with this
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Agreement is void. Corporation will not register a transfer of Stock without
proof of compliance with this Agreement. This Agreement is a stop transfer
order.
12. Binding Effect: Every person or entity who is the record,
legal or beneficial owner of Stock, whether by issue or transfer, including
without limitation any Spouse, Representative, transferees, donees, nominees,
grantees, successors and assigns of a Shareholder will be bound by and entitled
to the benefits of the terms of this Agreement. This Agreement supersedes any
other stock restriction agreement among the parties, is specifically
enforceable, constitutes the entire agreement of Corporation and Named
Shareholders with respect to its subject matter, is governed by and construed in
accordance with the laws of New Mexico and may be modified only in writing.
DATED: Oct. 14, 1997
NAMED SHAREHOLDERS:
/s/
David Jones
/s/
Melvin L. Prueitt
/s/
Stanley Prueitt
/s/
Leslie Speir
CORPORATION:
Hydro-Air Technologies, Inc.
ByMelvin L. Prueitt
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EXHIBIT 6.3
FOUNDERS AGREEMENT
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FOUNDERS AGREEMENT
David F. Jones, Melvin L. Prueitt, Stanley Prueitt, and Leslie Speir
(individually referred to by name or as a "Shareholder," and collectively
referred to as "Shareholders") and Hydro-Air Technologies, Inc., a New Mexico
corporation (Corporation") agree:
. Recital: The Shareholders have incorporated the Corporation to operate a
business which will develop an invention which will produce electrical energy
from chemical processes ("HARPS Technology"). The Corporation has signed an
agreement with First Capital Invest Corp. ("First Capital") by which First
Capital may invest in the Corporation to exploit the HARPS Technology ("Offer To
Purchase"). The Offer To Purchase also provides for possible acquisition of the
Shareholder s interest in the Corporation by a separate company the
("Acquisition Company") in exchange for shares of the Acquisition Company. The
Shareholders have agreed to a plan of organization, management and funding for
the Corporation and for ownership of their interest in the Corporation or in the
Acquisition Company which they hereby reduce to writing.
. Definitions: The following words have the following meanings when used in
this Agreement:
. Company: "Company" means either (i) Corporation or (ii) the
Acquisition Company or any other successor entity to the extent it represents
the financial interest originally derived from the HARPS Technology.
. Company Shares: "Company Shares" means the units of ownership of the
Company.
. Founder: "Founder" means individually and "Founders" means
collectively David F. Jones, Melvin L. Prueitt, Stanley Prueitt and Leslie Speir
and any other person designated as a Founder by the unanimous consent of the
then Founders. The Founders are all Shareholders.
. Founder Shares: Founder Shares means Company Shares issued or
awarded to Founders as Founder Shares.
. Discretionary Shares: Discretionary Shares means Company Shares
issued or awarded as Discretionary Shares to non-Founders by the Founders.
. Investor: Investor means anyone (including a Founder) who makes a
monetary investment in the Corporation.
. Investor Shares: Investor Shares means Company Shares issued to
Investors as Investor Shares.
. W: W means the fraction of full-time work. W is calculated by
taking the total number of authorized hours, as determined by the Board, that
are worked for the Company during the year and dividing by 2,000 (40 hours per
week times 50 weeks, allowing 2 weeks for vacation). The W calculation is based
on the number of authorized hours worked whether or not a salary was paid for
the time worked. W can not exceed 1.0, even if the individual works more than
2,000 hours in a given year. The year, for the purpose of calculating hours
worked begins July 8, 1997, since that is the date notification was given of the
first financial investment.
. Phase 1: Phase 1. means the engineering research and development
that determines the feasibility and practicality of producing HARPS power
plants. This is expected to include the design and fabrication of a prototype
HARPS unit and testing it.
. Phase 2: Phase 2" means the design and fabrication of commercially
viable HARPS units. Commercially viable will be determined by the sale and
support of HARPS units.
. Proportionately Shared: Proportionately Shared means the sharing of
awarded Founders Shares among the Founders proportional to the Founder s
individual contribution to a milestone as determined by the Founders. For the
purpose of the division of an award, each Founder will rank the contribution of
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each of the other Founders. Subsequent to this ranking, all rankings will be
linearly combined to determine the portion awarded to each Founder.
III. Stock Issuance: It is intended that 100,000 Company Shares be
distributed in a manner that will reward individuals that achieve defined
objectives that are beneficial to the Corporation. The following delineates the
method by which Company Shares have or will be issued:
A. The Corporation has initially issued and delivered 2,500 Founder
Shares to each Founder.
B. Dana and Linda Hansen will jointly be issued 2,500 Discretionary
Shares, as compensation for exerting considerable effort over an extended period
of time in an attempt to provide investors for the Corporation.
C. Founders who actively and whole-heartedly (as determined by the
Founders) working for the success of the Company for the first four years:
3,000 Founder Shares per year multiplied by W.
D. The Founder who provides the initial contact(s) that lead to Phase 1
Investment of up to $500,000: 600 Founder Shares per each $100,000 of
investment. (The Founder who provides the initial contact, may share this award
with other Founders or individuals who aid in the procurement of the investment,
in any way he sees fit.) This investment is a singular opportunity and is
closed after the above stated amount of money is received by the Company from a
Board approved investor, unless specifically opened again by the Board.
Investments may be received in stages if all is not needed at once, as
determined by the Board. If a Founder receives an investment sales commission
from the investor, he shall not receive an award of Founder Shares for bringing
in the investment. If the Founder wishes to invest in the Corporation, he
receives both the Founder Shares and the Investor Shares.
E. The Founder who provides the initial contact(s) that lead to Phase 2
Investments of up to $5,000,000: 600 Founder Shares per each $1,000,000 of
investment. (The Founder who provides the initial contact, may share this award
with other Founders or individuals who helped, in any way he sees fit.) This
investment is a singular opportunity and is closed after the above stated amount
of money is received by the Company from a Board approved investor, unless
specifically opened again by the Board. Investments may be received in stages
if all is not needed at once, as determined by the Board. The amount of shares
awarded to the Founder(s) will be based on the amount of money actually
invested, not the amount committed by the investor. If a Founder receives an
investment sales commission from the investor, he shall not receive an award of
Founder Shares for bringing in the investment. If the Founder wishes to invest
in the Corporation, he receives both the Founder Shares and the Investor Shares.
F. Founders who write proposals that result in government grants that
are subsequently awarded and accepted by the Board: 1,000 Founder Shares per
each $100,000. If more than one Founder participates in the submittal of the
successful proposal(s), the Founder Shares awarded will be Proportionately
Shared. This item also applies to procuring grants from companies or other
organizations. Total awards for all grants is limited to 5,000 Founder Shares
unless specifically extended by the Board. The Board will examine all grants
carefully before acceptance to assure that no serious restrictions or other
negative impacts on the Company are involved in the grant.
G. For Melvin L. Prueitt exclusively licensing the HARPS invention to
the Corporation: 8,000 Founder Shares; 2,000 upon signing a license agreement
and 2,000 at the end of each of the following three (3) years from the date of
initial signing.
H. For Founders contribution to the design and construction of the
first successful brine concentrator (prototype): 3,500 Founder Shares. This
award is intended to be Proportionately Shared among the Founders.
I. For Founders contribution to the design and fabrication of the first
successful power unit (heater, boiler, turbine, and condenser) (prototype):
3,500 Founder Shares. This award is intended to be Proportionately Shared among
the Founders.
J. For Founders contribution to the design and fabrication of the first
commercial HARPS unit: 4,000 Founder Shares. This award is intended to be
Proportionately Shared among the Founders.
K. For Founders contribution to activities in support of the Phase 1
(prototype HARPS production) design and fabrication effort including company
management, project management, procurement, bookkeeping/accounting, legal, and
human resources activities: 2,000 Founder Shares. This award is intended to be
Proportionately Shared among the Founders.
L. For Founders contribution to activities in support of the Phase 2
(commercial HARPS production) design and fabrication effort including company
management, project management, procurement, bookkeeping/accounting, legal, and
human resources activities: 2,000 Founder Shares. This award is intended to be
Proportionately Shared among the Founders.
M. For Founders contribution to marketing the first commercial HARPS
unit in the United States: 3,000 Founder Shares. This award is intended to be
Proportionately Shared among the Founders.
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N. For Founders contribution to marketing the first commercial HARPS
unit in a country other than the United States: 2,000 Founder Shares. This
award is intended to be Proportionately Shared among the Founders.
O. For introduction, by a Founder, of a new product that is accepted by
the Board and is subsequently manufactured and marketed by the Company: 3,000
Founder Shares. This award may, at the discretion of the Founders, be
Proportionately Shared among the Founders.
P. For introduction, by a Founder, of a patentable invention that
contributes to the success of the HARPS technology and that is accepted by the
Board. (This award may be applicable even if the Board chooses not to apply for
a patent for the invention, at the discretion of the Founders.): Up to 2,000
Founder Shares. This award may, at the discretion of the Founders, be
Proportionately Shared among the Founders. For the purpose of determining the
number of shares to be awarded, each Founder will rank the number of shares
appropriate for the value of the invention to the Company. Subsequent to this
ranking, all rankings will be linearly combined to determine the number of
shares awarded.
Q. Before any investments or grants are received, Founders may pay for
Board approved business and research expenses (but not salaries or patent
application costs for the first U.S. patent on HARPS technology) on a voluntary
basis. Expenses which are incurred before any investments are received by the
Corporation, such as incorporation expenses, legal fees, the purchase of
equipment, rental of space, and other operating expenses shall be shared by the
Founders on a voluntary basis. Each Founder shall be awarded 1 Founder Share
for each $5 of money supplied for Board approved expenses. A Founder may supply
more than his share of expenses only if other Founders do not supply their
share, and then only in equal shares with the remaining Founders. These
expenses may be reimbursed to the Founders after investments or grants have been
received, if the Founder so wishes, but the corresponding Founder Shares must be
relinquished to the Company. (Some grants to not allow reimbursement of
previous expenses.)
R. At the end of four years, if there are any remaining undistributed
Founder Shares or Discretionary Shares, they shall be distributed among the
Founders in amounts proportional to the number of Shares that each Founder
possesses at that time, and/or, at the discretion of the Founders, to other
deserving individuals. If the Corporation is purchased by another company, the
remaining shares may be divided at that time, at the discretion of the Founders.
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S. Phase 1 investments of $500,000 shall entitle the investors to 20%
of the Corporation. (100% of the Founder Shares and Discretionary Shares will
total 80% of the Corporation.) If the Corporation is not purchased by The
Acquisition Company prior to Phase 2, investments of $5,000,000 shall entitle
the investors to an additional 20% of the Corporation. (100% of the Founder
Shares and Discretionary Shares will total 60% of the Corporation.) Smaller
investments would entitle the investors to a proportionately smaller fraction of
the Corporation.
IV. Record of Services Provided: Each Founder is expected to keep a daily
log of hours spent on the project. The log shall include a note on the type of
activity and the results obtained. A copy of the log shall be sent to the
Corporation monthly, unless specific exemption is issued by the Board. It is
expected that only authorized hours that produce results beneficial to the
Corporation will be reported for this purpose. If the Board comes to the
conclusion that a particular Founder's efforts are not producing sufficiently
beneficial results for the Corporation, the Board may ask the individual to
curtail that activity. The Founder may continue with the activity unless the
Board determines that it negatively effects the Corporation in any way
including, but not limited to, utilization of resources or impairment of other
authorized activities. No shares will be awarded for such unauthorized
activities.
V. Compensation: Compensation for hours worked by Founders will be as
follows:
A. Before any investments are received by the Corporation, the Founders
shall work without any hourly compensation.
B. After some or all of the Phase 1 investment has been made, the
Founders shall work at $35 per hour. If funding is not sufficient, the Board
shall determine what work is most important to be accomplished and halt payment
for all other activities. Founders may bring to the attention of the Board
tasks that should be considered as necessary for Corporation operation and
success.
C. After the acquisition of sufficient funding through investments,
grants, or sales, salaries may be raised at the discretion of the Board, which
shall determine salaries based on the perceived value of the individuals to the
Company.
D. Melvin Prueitt will receive a 1% royalty on gross sales of HARPS
power plants and 0.5% on electric power sold from Company owned power plants.
VI. Management: At all times the Shareholders will vote their Company Shares
so that, unless there is unanimous agreement of the Shareholders to the
contrary:
A. The Articles of Incorporation and Bylaws of the Corporation will not
be amended.
B. No Company Shares will be issued by the Corporation except as
provided in this Agreement.
C. Each Founder may designate one person as a Director and these
Directors will be elected for a period of four years or as long as he remains an
active employee of the Company, which ever time period is shorter. The
Corporation will take the action agreed upon by the majority of the Directors.
Each Director will have an equal vote on any Board action. David F. Jones,
Melvin L. Prueitt, Stanley Prueitt, and Leslie Speir are the initial designated
Directors of the Corporation and have been so elected.
D. The Shareholders have caused the Directors to elect, consistent with
their obligations under law, the following persons to the following Corporation
offices, so long as these persons are ready, willing and able to serve in the
designated positions:
Name Office
- --------------------------------------------------------------------------------
Melvin L. Prueitt President and Chairman of the Board
David F. Jones Vice President of Operations
Stanley Prueitt Vice President of Business and Marketing
Leslie Speir Vice President of Engineering
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E. The books of the Corporation will be maintained in accordance with
the method required for federal income tax return reporting applied on a basis
consistent with prior periods and will be subjected to audit at Corporation s
expense upon demand by any Shareholder. Each Shareholder will have access at
any reasonable time to Corporation s books and records.
F. The employment agreements between the Corporation and each of the
Founders will not be changed without unanimous approval by the Board.
G. If the Directors are deadlocked and cannot reach a decision, Melvin
L. Prueitt will nominate and the Shareholders will elect another Director to
break the deadlock.
H. The Corporation will not, except in the ordinary course of business,
(i) borrow money, (ii) transfer all or substantially all of its assets, or (iii)
loan money or assets.
VII. Restrictions: The Corporation and Shareholders will execute a Stock
Restriction Agreement in the form attached as Exhibit 1. The restrictions
imposed by this Stock Restriction Agreement are those of the Corporation as well
as those of the Shareholders. All certificates representing Company Shares will
be marked "Voting, transfer and encumbrance of the securities represented by
this certificate are restricted by the terms of agreements on file at the
Corporation office."
VIII. Voting Trust: The Shareholders and Melvin L. Prueitt, as Voting
Trustee will execute a Voting Trust Agreement in the form agreed to by them
creating a Voting Trust ("Voting Trust"). Corporation will issue and deposit in
the Voting Trust the shares not previously issued which are to be awarded as
Founders Shares or Discretionary Shares. The Voting Trustee will hold the
shares deposited in the Voting Trust ("Voting Trust Shares") and issue such
shares as Founder Shares or Discretionary Shares, and if The Acquisition Company
is to acquire the shares of the Corporation, exchange Corporation shares for The
Acquisition Company shares and hold the Acquisition Company Shares for issuance
as Founder Shares or Discretionary Shares.
IX. Acquisition: If the Corporation is acquired by The Acquisition Company
or any other entity, the non-cash consideration paid for the acquisition of
other than Investor Shares will be allocated among the holders of Founder
Shares, Discretionary Shares, and Voting Trust Shares in proportion to their
then holdings of Founder Shares, Discretionary Shares, and Voting Trust Shares.
The Voting Trust Shares will be issued in accordance with the provisions of the
Voting Trust herein. The cash consideration paid for the acquisition will be
allocated among the owners of the Founders Shares in proportion to their
ownership of Founders Shares.
X. Documentation: This is a binding document setting out the parties intent.
The contribution of capital, issuance or award of Company Shares and other
actions may have occurred before all document giving effect to this Agreement
have been signed. The parties will use their best efforts in good faith to
agree on the matters dealt with herein where future determination is required
and will sign any document and take any action required to accomplish this
intent.
XI. Binding Effect: Every person or entity who is the record, legal or
beneficial owner of Company Shares, whether by issue or transfer, including
without limitation the spouse, heirs, surviving joint tenants, executors,
administrators, trustee, personal representatives, transferees, donees,
nominees, grantees, successors, and assigns will be bound by and entitled to the
benefits of the terms of this Agreement. This agreement is specifically
enforceable, constitutes the entire agreement of the parties with respect to its
subject matter, is governed by and construed in accordance with the laws of New
Mexico and may be modified only in writing by the unanimous agreement of all
parties hereto. A Shareholder will have sole authority to vote, manage,
control, dispose of or encumber any Company Shares owned by the Shareholder and
any spouse of the Shareholder.
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DATED: Oct. 14, 1997.
SHAREHOLDERS:
/s/
DAVID F. JONES
/s/
MELVIN L. PRUEITT
/s/
STANLEY PRUEITT
/s/
LESLIE SPEIR
CORPORATION: HYDRO-AIR TECHNOLOGIES, INC.,
a New Mexico corporation
By:Melvin L. Prueitt
/s/
Melvin L. Prueitt,
President
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- --------------------------------------------------------------------------------
EXHIBIT 6.3
PURCHASE AGREEMENT
BETWEEN
SOLAR ENERGY LIMITED AND DR. REED J. JENSEN
- --------------------------------------------------------------------------------
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PURCHASE AGREEMENT
BETWEEN:
SOLAR ENERGY LIMITED ("XSEL") as Purchaser. XSEL is a public company listed on
the NASDAQ OTC Electronic Bulletin Board.
(hereinafter referred to as XSEL or Purchaser)
AND:
DR. REED J. JENSEN, ("RJJ") as Vendor. RJJ is a Resident of New Mexico, U.S.A.
(hereinafter referred to as RJJ or Vendor)
RJJ has generated certain intellectual property rights ("IPR"), (some of which
are embodied in a patent application and are being pursued by the U.S.
Department of Energy, ("DOE"). The four inventors responsible for these rights
are Reed J. Jensen, John I. Lyman, Robert D. Guettler and Jopseh King. The
blanket name to be used to describe the process covered by these IPR is Solar
Recycle of C02 to Fuel, ("SRCF").
This Agreement outlines the terms and conditions whereby XSEL offers to retain
RJJ and purchase from him his interest in the IPR pertaining to using solar
energy to manufacture/produce methanol, gasoline and/or diesel fuel from carbon
dioxide. Also included in this Agreement is RJJ's full range of
technical/mechanical options and skills needed to develop the required
technologies and bring them into full commercial production of electricity and
fuels.
TERMS AND CONDITIONS:
1. A new private company, ("Newco") will be formed by RJJ with the
assistance of XSEL. Initially, all the shares of Newco to be owned by RJJ and
RJJ to be the sole director of Newco.
2. On Closing, there will be three Directors of Newco; two of which are to
be appointed by RJJ (of which one is to be RJJ personally) and one to be
appointed by XSEL. On Closing, 100% of the shares of Newco are to be acquired by
XSEL according to the terms outlined in this Agreement.
3. This Agreement shall be executed in Los Alamos, New Mexico on August 7,
1998 with Closing scheduled for December 7, 1998 (or sooner as mutually agreed
upon by XSEL and RJJ).
4. On Closing, RJJ will deliver to Newco all of his IPR to the subject
process for the production of electricity and fuel from C02 as described in
Schedule A attached hereto and forming a part of this Agreement.
5. On Closing, XSEL to acquire 100% of the shares of Newco from RJJ for the
following consideration:
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a) $20,000 as follows:
$10,000 by certified cheque (made payable to RJJ in favour of Newco)
on ratification of this Agreement and the balance of $10,000 to be paid to RJJ
on closing.
b) 350,000 common shares of XSEL to be placed in escrow and released as
outlined as follows:
i) 100,000 shares upon successful completion of Phase III
ii) 50,000 shares upon successful completion of Phase IV
iii) 200,000 shares to be released at the rate of one share per
$2.00 of cash flow generated by Newco.
The definition of "successful completion" and of "cash flow" are as
outlined in Schedule B following.
c) RJJ will receive a royalty of 0.5% of the gross cash flow derived
from the SRCF process. It is assumed that the U.S. DOE will also receive a
royalty which is estimated by RJJ to be 0.3% or less; alternatively 1% to 4% of
net profit.
6. Conditions Precedent and Representation required on Closing of the
Purchaser:
a) that they are legally entitled to enter into this Agreement
b) that they will provide working capital to Newco on a timely basis as
outlined in Schedule B attached hereto and forming a part of this Agreement.
Schedule B contains two development plan schemes (one for forty-eight months and
another for an accelerated forty-two months) showing the major procurement and
operating funds required in order to develop and construct a working pilot plant
producing electricity and fuel from C02 using solar energy. XSEL to decide by
September 30, 1998 whether to proceed with the Accelerated Program or the
Baseline Program.
Commitment must be made to fund total Phases as integral blocks.
Phases I and II are essentially completed utilizing Government funding. A
minimum commitment of $2,400,000 is needed for an accelerated Phase III and
$1,500,000 for the baseline Phase III (with Phases IV and V viewed as separate
blocks-see Schedule D).
c) In addition, a minimum of 150,000 XSEL common shares will be put in
escrow by the Purchaser and will be distributed accordingly by RJJ to key
employees of Newco as follows: 75,000 for use immediately after Closing and
75,000 for use after the completion of Phase III for distribution during Phases
IV through V. Assessments to be made at the end of each Phase.
7. Conditions Precedent and Representations required of the Vendor:
a) that he is legally entitled to enter into this Agreement
b) that RJJ will enter into an exclusive consulting/management contract
(including confidentiality clause) based upon the terms outlined in Schedule C
attached hereto and forming part of this Agreement. Compensation, royalties,
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stock options, hours of work, etc., to be mutually agreed upon and such Contract
to be executed prior to Closing.
c) that RJJ, if requested by XSEL to become one of its Directors, shall
accept the appointment
d) that RJJ will undertake to negotiate the acquisition of the
University of California's and DOE's exclusive licenses which pertain to the
SRCF process and IPR.
8. Miscellaneous General Conditions:
a) Time is of the essence and this Agreement is governed by the laws of
New Mexico and the U.S.A.
b) On execution, this will be a binding Agreement but both parties
agree that additional documentation will be necessary to correctly define this
Agreement and both parties are in accordance to execute such additional
documentation on a timely basis. In particular, those documents conforming to
the Security Exchange Commission's regulations and those pertinent to minimizing
present and future income tax considerations will be included.
c) It is understood that the cost estimates for the various Phases are
today's best estimate by RJJ and are not based on bids nor detailed drawings.
Cost reductions will be motivated by compensation structure (bonus) as outlined
in Schedule C herein. However, possible cost growth increases cannot be
interpreted as bad faith or malfeasance but will become part of the business
viability assessment.
d) If, at any time, XSEL does not provide the requisite resources
delineated in Schedule B herein, all of Newco's IPR as outlined in Schedule A
herein revert to RJJ.
e) It is understood that all IPR conveyed to Newco by RJJ are to be
delivered free and clear of all liabilities other than the royalties as outlined
in Schedule C and possible residual conditions imposed by the U.S. DOE and/or
the University of California pertaining to their licensing packages.
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9. This Agreement is open for acceptance by both Parties until August 7,
1998 (the effective date of this Agreement once ratified).
SIGNED THIS 7th DAY OF AUGUST 1998 IN THE CITY OF LOS ALAMOS, NEW MEXICO,
U.S.A.
SOLAR ENERGY LIMITED
/s/ /s/
Dr. Melvin L. Prueitt Joel Dumaresq
Chairman President
/s/ /s/
Witness: William Stocker Witness: William Stocker
ACKNOWLEDGED AND AGREED THIS 7th DAY OF AUGUST 1998 IN THE CITY OF LOS ALAMOS,
NEW MEXICO, U.S.A.
By:/s/ /s/
Dr. Reed J. Jensen Witness: William Stocker
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