FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Great Basin Water Company
(Name of Small Business Issuer in its charter)
Nevada 86-0889096
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification
number)
2950 E. Flamingo Rd., Suite F
Las Vegas, Nevada 89121
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: (702) 734-1223
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered: n/a
Name of exchange on which each class is to be registered: n/a
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001 per share
<PAGE> 1
TABLE OF CONTENTS
Page No.
Part I
Item 1. Description of Business 3
Item 2. Management's Discussion and Analysis
Or Plan of Operation 10
Item 3. Description of Property 13
Item 4. Security Ownership of Certain
Beneficial Owners and Management 14
Item 5. Directors, Executive Officers,
Promoters and Control Persons 16
Item 6. Executive Compensation 18
Item 7. Certain Relationships and Related
Transactions 19
Item 8. Description of Securities 20
Part II
Item 1. Market for Common Equity and Related
Stockholder Matters 21
Item 2. Legal Proceedings 21
Item 3. Changes In and Disagreements with
Accountants 22
Item 4. Recent Sales of Unregistered
Securities 22
Item 5. Indemnification of Directors and
Officers 23
Part F/S 23
Part III
Item 1. Index to Exhibits 36
Item 2. Description of Exhibits 36
Signatures 36
<PAGE> 2
PART I
ITEM 1. DESCRIPTION OF BUSINESS
General
- -------
Great Basin Water Company (the "Registrant" or the
"Company") was incorporated on August 27, 1997 under the laws of
the state of Nevada. On November 1, 1998, the Company purchased
all of the outstanding shares of Shadow Ridge Water Company
("Shadow Ridge"), an Arizona corporation, by issuing 1,000,000
shares of common stock of the Company, valued at $2.00 per share.
In February of 1999, the Company acquired four water wells with
pumps and 2,733.35 acre feet of water in Arizona in exchange for
the payment of 7,500 shares of Preferred Series B Stock, valued
at $100.00 per share, and the annual payment, commencing November
1, 2000, of $60,000 cash. On July 12, 1999, the Company acquired
100% of HDB Telemetry Corporation, a Nevada corporation ("HDB
Telemetry"), by issuing 100,000 shares of common stock, valued at
$2.00 per share. Also on July 12, 1999, the Company acquired 20%
of HDB Telemetry Systems, a Canadian corporation ("HDB Telemetry-
Canada"), by issuing 20,000 shares of common stock valued at
$2.00 per share.
Business of the Registrant
- --------------------------
The Company is a holding company in the business of
acquiring new or existing water companies and utility-related
products. The Company aims to centralize any acquired utility
organization to better service its end-users and to capitalize
new water utility corporations in need of capitalization for the
expansion and/or construction of new systems to service the
demands of developers and builders. In addition, new products
that serve utility companies may also become a target of
acquisition by the Company. While the Company does not engage in
providing utility services directly, it serves as a holding
company for other companies it acquires that may provide such
services.
The main goal of the Company is to acquire certified
companies that provide public water utility service and waste
treatment services to identified portions of Arizona, California,
Nevada and Utah. Management intends to locate companies with
respectable operating histories that do not suffer from water
quality problems.
<PAGE> 3
While the Company intends to centralize the business
organization of the companies it acquires, it will also utilize
traditional distribution methods for water and waste treatment in
areas that are targeted for explosive growth in America's
Southwest.
Competitive business conditions are somewhat thwarted
because of the semi-monopolistic nature of utilities. While
considered natural monopolies, the acquisition of existing water
companies and the capitalization of new construction of other
water companies acquired, will eventually lead to the limits of
holding companies with utilities. Once the total monthly revenue
of all the Company's subsidiaries combined reach or exceed
$5,000,000 per month, new restrictions from the State of Arizona
and possibly other states would affect the further acquisition of
additional utilities.
All of the water in the utilities in the Company's current
subsidiaries is ground water (pump well) distribution. The amount
of acre feet that can be pumped is allocated in the Certificate
of Convenience and Necessity awarded by the State for that
particular water system.
The availability of water is proven in each instance where
demands for utility service (water and waste) is requested.
Developers and builders must submit a request for an assurance of
service prior to receiving any building or construction permits.
As each is examined, the availability of water to service such
demands is reviewed by hydrologists and a decision is made to
service from existing infrastructural designs and existing pump
wells, or to develop additional pump well capacity. Current
hydrological reports indicate vast quantities of ground water in
the alluvial basins in the area of Arizona where the Company is
active.
The dependence on customers for water is a known demand
factored by unit into the Certificate of Necessity and the 100
year water plan so the matter of few or many customers is
centrally organized into the overall plan of combined customer
demand.
Franchises for water and waste treatment services on two
townships in Mohave County, Arizona are owned by Shadow Ridge.
All services are approved by the Arizona Department of
Environmental Quality, the Corporate Commission of the State of
Arizona, Mohave County Arizona, Department of Engineering and the
water is tested weekly for quality by an approved chemical
laboratory.
<PAGE> 4
Each governmental approval is on an "as needed" basis for
each subsidiary corporation. There are not any approvals required
at this time that has not been obtained. The effect of
governmental approvals for service and operational requirements
are not any different than normal operating procedures.
The Company has not expended any time or money on research
and development. The Company relies on manufacturing corporations
for equipment and components. Costs and effects of compliance
with environmental laws have been approximately $5,000, mainly
for biological and endangered species surveys and control in
compliance with Federal laws.
The Company currently has two full-time employees. Darryl E.
Schuttloffel is the President/CEO and works full time for the
Company implementing the business plan. He is an officer and
director of the Corporation. Ray E. Warren is the Chairman of the
Board of Directors and devotes approximately twenty hours per
week to implementing the business plan. Mr. Thomas R. Warren is a
director as well as the CFO of the Company and devotes
approximately 20 hours per week to the Company's affairs.
SHADOW RIDGE
- ------------
The Company purchased 2,733.35 acre feet of agricultural
water in the Mesquite, Nevada area. The Mesquite, Nevada area,
which is called the Arizona Strip, is embarking on a building and
housing boom for subdivisions and rural communities. The
Company's subsidiary, Shadow Ridge, will service water in these
communities. This Arizona Strip section of land is situated
northwest of the Grand Canyon and is not accessible from the rest
of the State of Arizona. In order to get there, one must travel
through the state of Nevada or the state of Utah. Indeed, Mohave
County, in which most of the Arizona Strip is located, is larger
than five of the smaller eastern states, is largely unsettled and
is desert. Golf courses and country clubs are planned for this
area as well as planned communities of 2,000 homes.
The acquisition of Shadow Ridge was the first of the utility
companies purchased by the Company. Shadow Ridge was a start-up
company that owns franchises on over 7,000 acres of real estate
in the Arizona Strip. The first 18.25 miles of water and waste
treatment mains have been engineered and construction is
scheduled to start in March 2000. The system will currently serve
two developers that have requested service, but it is engineered
to serve a total of seven square miles of property that should
attract other future developers as well.
<PAGE> 5
Even though this utility is located directly across the
Virgin River from Mesquite, Nevada, one of the fastest growing
cities in Nevada, a market analysis was conducted on the utility
by Tamsen Market Research and Analysis for the developers
regarding the proposed residential and utility development. The
site is situated approximately 3.5 miles southeast of Mesquite,
Nevada and is currently barren property.
Research consisted of a site area reconnaissance, local
records review, available news articles and interviews with local
governmental and industry professionals. Their assessment has
revealed the following information in connection with the
development of the property for residential utilization and the
operation of a supporting utility.
1. Mesquite Nevada is the fastest growing city in Nevada
(currently the fastest growing small city in the entire
United States) with other nearby Nevada cities in second
and third place.
2. The current population is approximately 15,000 and is
expected to double in the next three years with the city
of Mesquite eventually supporting 30,000 to 35,000
people.
3. During the past ten years the area population has
increased 400%+.
4. The economy is well diversified and not tied to any
particular employer, creating a wide variance of
opportunities and expectations.
5. Completion of the recent casinos during the past five
years has put a strain on the existing supply of housing
lots.
6. The average home in Mesquite is a 1,500 square foot
ranch home priced between $95,000 and $140,000.
7. Certain unique building methods permitted in the area
can help provide more affordable housing.
8. Lot prices are high ($50,000-$80,000) due to a lot
shortage.
9. About thirty-two (32) new subdivisions have recently
been developed during the last three years. Several of
these developments have been pre-sold.
10. The prices of Mesquite residential building lots are
climbing and lots are hard to come by. There are still a
few in-fill lots scattered throughout the older parts of
the city, but even these are selling at premium prices.
It is the opinion of the study that with proper management
and marketing, there is no reason that the ongoing successful
home building boom which is going on in Mesquite, Nevada cannot
be duplicated in the Arizona side across the Virgin River from
<PAGE> 6
Mesquite. The Mohave County Plan for that area estimates that a
population in that part of Arizona could reach 80,000 in the next
twenty years. Shadow Ridge has positioned itself to be the
utility of choice for all that area and management of the Company
sees it as one of the leading subsidiaries of the Company's
future.
The earnings from Shadow Ridge will not grow in direct
proportion to their customer growth. In most business, such a
relationship is natural. Management cannot expect that from this
Company because the customer growth for Shadow Ridge will be
rapid, for at least seven years. In addition, that relationship
does not hold true for this corporation. To put it in short and
simple terms, the expenses associated with the rapid growth will
outpace the revenues received from the new customers.
The assets of the Company will, however, grow in direct
proportion to developer activities. While we are responsible for
the waste treatment facilities, the wells, storage tanks and some
of the main transmission lines, the developer is responsible for
some of the main transmission lines, all the laterals and all the
service units. Upon completion of the developers responsibility
for the transmission and distribution systems, they are inspected
by Company personnel and then accepted from the developer. They
then become the assets of the Company.
In order to alleviate such a financial impact upon any of
our utility companies, that is only followed by earnings from a
slower customer growth than retail businesses experience, "impact
fees" are placed upon the developers that provide a return of
investment into the Company and alleviate the initial financial
impact and creates a return of investment that is comparable to
growth. Such fees charged to the developers range from $3,000.00
per unit to $6,000.00 per unit for residential developments.
It is reasonable to assume that the water and waste
treatment facilities for the area in the Arizona Strip serviced
by Shadow Ridge, will cost approximately $1.2 Million. Shadow
Ridge has an agreement with the developers wherein the developers
will pay to Shadow Ridge, $3,000.00 per unit on the first 475
homes in Phase I. The developers then would pay back as the homes
are built a total of $1,425,000 against the cost of the $1.2
Million and turn over to Shadow Ridge, assets of the
infrastructure of approximately $2.9 Million. There are three
developers with a total of 2,000 homes in the plans. There are,
of course, no guarantees that such numbers will be achieved.
<PAGE> 7
REMOTE CONTROL OF WATER AND UTILITY METERS
- ------------------------------------------
The Company's entry into high tech utilities started with
the acquisition of HDB Telemetry and the acquisition of 20% of
HDB Telemtry-Canada. The remote control of water meters availing
the ability to monitor, control and bill water clients via
satellite/computer interlinks is what management believes to be
the way of the future.
Shadow Ridge is commencing to supply water to large housing
projects. In addition, with the planned acquisition of additional
utility companies, management feels that the building,
construction and expansion of the Company's utility company
subsidiaries should be with the latest technology which H.D.B.
Telemetry can supply, not only to the Company's subsidiaries but
to all utility companies.
That means a cost effective means of collecting water and
utility meter billing data and processing of the collected data.
Such a telemetry system is not only cost effective in systems
management, but allows ease of expansion in the system with
future acquisitions of other water companies.
In October, 1994, ORBCOMM was granted a USA commercial
license for the transmission of data to Low Earth Orbit (LEO)
Satellites. In October, 1998, ORBCOMM had completed placing 28
LEO satellites into orbit. In June, 1998, Houston Technologies
Inc. had secured a retail distributorship for the ORBCOMM SYSTEM
By December, 1998, Houston Technologies Inc. had effective one
way communication established through the system and by January
1999, effective two way communication was established giving the
ability to receive messaging/alarms and respond to them, all via
satellite. The micro processor developed by Houston Technology
gives the system full SCADA capabilities. Houston Technology
merged with H.D.B. Telemetry of Canada and started the H.D.B.
Telemetry System Corporation in the United States.
Electronic Water Meters with a data output port and a built-
in solenoid are installed at each dwelling on the oncoming water
or utility lines. A four pair line is run from the water or
utility meter to the outside of the dwelling and trenched into a
satellite communicator which is placed in a central location to
accommodate 20 homes. The micro processor within the communicator
would be programmed to extract data from the utility or water
meter on command or on a set frequency and then transfer the data
to the main or central office.
<PAGE> 8
The data would then be automatically rolled into the billing
software with limited possibility of corruption. Clerical staff
would only be required to print billing. Meters would be able to
be polled on demand from the central office for data. Water or
any utility could be turned off or on from the office without
having to enter onto the customer's property. This communication
system can also be used to control golf course irrigation and is
presently designed for installation into a twenty seven hole golf
course in Arizona.
All of the utility companies associated with the Company
will be utilizing the new type meters and H.D.B. Telemetry is
expected to begin international distribution in the first quarter
of 2000.
COMPETITION
- -----------
The Company is aware that there are other holding companies
attempting to acquire independent water companies for
consolidation. However, the Company is not intimate with any of
these corporations. Citizens Utilities has attempted to purchase
the same independent water companies that the Company has and
five of the companies targeted by us have decided to accept our
acquisition offers. The share of the market that the Company can
achieve is estimated at 30% because of the marketing plan
implemented to identify independent companies considering take-
overs, the consolidation plans and the corporate representation
by legal representatives; however, the water and waste treatment
business is intensely competitive. The Company will be at a
disadvantage with some other companies which may have larger
staffing and greater financial and operational resources.
In the utility equipment businesses, in which H.D.B.
Telemetry is engaged, the marketing plan being developed by
H.D.B. Telemetry is to acquire national and international
distributors for the water meters and software package that is
monitored by satellite. In the related fields, H.D.B. Telemetry
is entering into the petroleum market that will allow petroleum
companies to monitor pumping, pressure, distribution and flow via
the Orsbcomm Satellite system. These systems are being custom
designed by H.D.B. Telemetry and during the year 2000, the
marketing will continue with custom designed systems for the
petroleum industry and the establishment of distributors in the
water and waste portion of the business plan.
<PAGE> 9
DEPENDENCE UPON ONE OR A FEW MAJOR CUSTOMERS
- --------------------------------------------
Although the Company currently has no revenue, if it does
not make further acquisitions of operating water utility
companies, it will be dependent upon the development activities
of the Shadow Ridge water project for future revenue. Likewise,
HDB Telemetry is dependent upon the Company's activities and
acquisitions of water utility companies for its future revenues,
unless and until HDB Telemetry seeks unrelated, third-party
customers for revenue.
Item 2. Management's Discussion and Analysis or Plan of
Operation
This registration statement includes, without limitation,
certain statements containing the words "believes",
"anticipates", "estimates", "could", "should", "plans to" and "it
is reasonable to assume", and words and phrases of a similar
nature which constitute "forward-looking statements" meaning
actual results could differ from projected or expected results.
In particular, the statements herein regarding the Company's
expansion and acquisition plans and methods; the stabilization of
business and its affect on revenues and expenses; the length of
time the proceeds from the Company's stock and cash acquisition
plans and the cash flow from operations acquired and planned
could and would fund its planned operations and acquisitions; the
complete effect to the Company's operations if lack of agreement
or cooperation with those third party investors on which the
company relies, the effect of the name recognition associated
with the utility industry in acquiring future and planned water
and waste treatment companies or the effects on the operations of
the Company if the Company were to lose the services of any of
its officers or directors or the management anticipated to be
acquired in the acquisitions; the role consolidation has in the
acquisition of the companies that is anticipated and the effects
on rate limitations levied by the Corporate Commissions or the
Utility Commissions, and the possible effect of misinterpretation
of new policies or lack of awareness could have on operations,
are forward looking statements. These forward-looking statements
reflect management's current expectations and are inherently
uncertain and dependent upon investor relations for the
acquisitions. The Company's actual results may differ
significantly from management's expectations.
<PAGE> 10
INTRODUCTION
- ------------
The Company is a holding company with two operating
subsidiaries: Shadow Ridge and H.D.B. Telemetry. Shadow Ridge
holds franchises for water and waste treatment utility services
on approximately 7,000 acres of land in the State of Arizona. It
has requests for Assurance of Service from three developers that
are currently awaiting their preliminary approval prior to
starting construction on the first phase of 435 homes within the
franchise area of Shadow Ridge.
H.D.B. Telemetry is a "start up" company that has developed
utility meters that can be read by satellite on OrbsComm and
through the system can transfer the data from Satellite directly
to the software billings with limited possibility of corruption.
There have not been any revenues from either subsidiary and
revenues are not expected from either until the third quarter of
2000.
The Company is designed to serve as a utility holding
company that would acquire and operate water utility companies
and waste treatment systems, first in Northwest Arizona and
eventually throughout the Southwestern United States. The Company
has negotiated agreements to acquire three operating water
utility companies in the region of Northwestern Arizona and are
expected to close on the acquisitions in the first quarter of
2000. The acquisitions, if and when completed, are expected to
produce for the Company an immediate increase in annual revenues
of approximately $600,000.00 per year.
Management's vision for the Company is to build a
substantial regional utility company through a strategic program
of acquiring water rights, service franchises and existing water
companies along the paths of predicted growth throughout the
desert regions of the Pacific Southwest. In this way, the
Corporation can systematically build equity, increase earnings
and maximize share value through the consolidation of the
companies acquired.
"New-build" systems as in the case of Shadow Ridge, will
utilize the latest in hi-tech plastic pipe, pumps and delivery
systems, which allow the smaller companies to become more
profitable and less expensive. Packaged waste treatment plants
are planned in all of the systems in which Shadow Ridge has been
petitioned for service. In the "new-build" systems, the assets of
the corporation grow in direct proportion to developer
activities. While the company is responsible for the waste
<PAGE> 11
treatment facility, wells, storage facilities and some of the
main transmission lines, the developer is responsible for the
mains, lateral's and service units. Upon completion of the
infrastructure (transmission and distribution system), the
developer deeds the infrastructure to the Company for ownership
and of course the utility assumes the maintenance after proper
inspection. Hence earnings from new-build systems do not grow in
direct proportion to the customer growth. This cost is off-set
through impact fees and tap fees paid by the developer which then
in turn, pays for the build out cost and the costs associated
with the assurance of continued service.
The featured direction of the Company is to acquire existing
water and waste treatment companies. The fundamental feature of
these investor owned water companies is that each is structured
in the holding company, servicing its customers through one or
more subsidiary companies, usually, but not necessarily, wholly
owned subsidiaries. The management of the Company's affairs is
centralized within its executive management team and its Board of
Directors. As of December 31, 1999, the Company's net
shareholders equity was $2,551,723 or $0.48 per share. Net
shareholder's equity (also called "book value") per share
represented the amount of the total assets of the Company from
its audited balance sheet, reduced by the amount of its total
liabilities, divided by the total number of shares of Common
Stock issued and outstanding.
To ensure the continued operations to effect the business
plan for the year 2000, the Chairman of the Board and the
President of the Corporation have assigned proceeds from their
personal bonds in the amount of $592,050.00 which will be
sufficient to move the corporation into the acquisition phases of
the business plan. It is reasonable to assume that such funds
shall be sufficient and the total may not be required.
Relationships with investment groups have enabled the
corporation to move into the acquisition phases of the business
plan and three companies that have agreed to acquisition terms
are in the review process. It is anticipated that all three
companies shall pass the reviews and be acquired by the
Corporation. The Company anticipates that all three of these
shall pass the reviews and the acquisitions could be completed,
if at all, by the end of May of the year 2000. The Company also
anticipates that it might acquire a minimum of two water or
utility-related corporations in 2000.
<PAGE> 12
Because of the anticipated acquisition of these three (or
more) companies, it is expected that the Company would add a
minimum of three additional employees by May, 2000. Consolidation
efforts would probably reduce the number of employees of the
companies that might be acquired, by approximately six personnel.
Year 2000
- ---------
Neither the Company, nor its subsidiaries, has had any
negative effects from the year 2000 date change and management
does not expect any material issues to arise in the future in
this regard. The year 2000 was not considered a problem or a
threat to the Company or any of our subsidiaries. All the
programs were checked by the technicians from H.D.B. Telemetry
and were all considered Y2K compliant, including all the software
designs of H.D.B. Telemetry.
ITEM 3. DESCRIPTION OF PROPERTY
The Company leases approximately 2000 square feet of office
space at 2950 E. Flamingo Rd., Suite F, Las Vegas, NV 89121 for
its corporate offices. The monthly payment on this space is
$500 and the lease expires on January 1, 2002. The use of this
space is expected to be sufficient for the Company's needs until
approximately 2002.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of
February 25, 2000, with respect to the beneficial ownership of
the common stock by each officer and director of the Company,
each person (or group of persons whose shares are required to be
aggregated) known to the Company to be the beneficial owner of
more than five percent (5%) of the common stock, and all such
directors and executive officers of the Company as a group.
Unless otherwise noted, the persons named below have sole voting
and investment power with respect to the shares shown as
beneficially owned by them.
Title of Name and Address Amount & Nature Percent of
Class of Beneficial Owner of Beneficial Owner Class
- ---------------------------------------------------------------
Common Ray Warren<F2> 95,000 2%
2138 Abarth Street
Las Vegas, NV 89122
<PAGE> 13
Common Darryl E. Schuttloffel 1,317,520 25%
<F1> <F2>
2808 Tumble Brook
Las Vegas, NV 89134
Common Norman Bebell<F2> 27,000 1%
9050 Union Turnpike
Apartment 3M
Glendale, NY 11385
Common Antony Brazenas<F2> 142,000<F3> 3%
315 Douglas Road
Canmore, Alberta
Canada T1W 1K2
Common Ronald L. Drake<F1><F2> 81,250 2%
2950 E. Flamingo Rd.
Suite F
Las Vegas, NV 89121
Common Scott B. Grams<F2> 207,000 2%
805 Souris Avenue
Weyburn, Saskatchewan
Canada S4H 085
Common Thomas R. Warren<F1><F2> 450,000 9%
3541 Summer Estates Circle
Salt Lake City, UT 84121
Common Intermountain Management 1,074,032<F4> 20%
Associates
2950 E. Flamingo Rd.
Suite F
Las Vegas, NV 89121
Common Officers and Directors 3,466,802 66%
Of the Company as a
Group (9 Persons)
- -----------------------------------------------------------------
<F1> An officer of the Company.
<F2> A director of the Company.
<F3> 40,000 shares are held in the name of 599743 Sask LTD which
is owned in part by Antony Brazenas, and 2,000 shares are
held in Mr. Brazenas wife's name.
<F4> Intermountain Management is owned and controlled by both Ray
E. Warren and Thomas R. Warren, both of whom are directors
of the Company.
<PAGE> 14
CHANGES IN CONTROL
The Company has no arrangements which might result in a
change in control of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
The following table sets forth the directors and executive
officers of the Company, their ages, and all positions with the
Company.
Name Age Positions
- ---------------------------------------------------------------
Ray E. Warren 74 Chairman of the Board
Darryl E. Schuttloffel 62 Director, President and CEO
Thomas R. Warren 52 Director and Chief Financial
Officer
Ronald L. Drake 55 Director and Secretary
Jay Johnson Taylor 80 Director
Norman Bebell 74 Director
Antony Brazenas 59 Director
Scott B. Grams 33 Director
Alex Peluffo 39 Director
Ray E. Warren, Chairman of the Board, has worked a lifetime
in business and finance. He has been self employed for over 50
years. He is currently a self-employed business consultant,
operating under the name Investment Associates, giving strategic
planning and operational direction to large and small companies
in a variety of industries. Mr. Warren was an owner and executive
officer of a regional stock brokerage firm, Warren & Brown
Associates from 1980 to 1990, where his responsibilities included
capital formation and securities underwriting for small and large
companies as well as compliance with federal and state
regulations, and has acquired considerable expertise in the field
of mortgage banking, under the name Salt Lake Mortgage, in which
he has been engaged for the last six years. He will serve as a
Director until the year 2000.
Darryl E. Schuttloffel, President/CEO/Director, contributes
to the Company more than forty years experience in
entrepreneurship, business development, management, marketing and
finance. Following a distinguished career in the television and
motion picture industry as a producer (CKS Media, 1974-1978)
(Tiffany Productions, 1978-1984) (Mark VII Ltd Productions 1984-
1990), he went into marketing and syndication (Lense Productions
and Syndications, President, 1990-1993). That career included the
production of the long-running television show, "The American
<PAGE> 15
Investor." In 1993, Mr. Schuttloffel went into mortgage banking
with The Investors Financial Network where he was Senior Loan
Officer, (1993-1996). In 1996, he recognized the need for water
in the West and in the area of development in the Arizona Strip
and filed for franchises on water on two townships. He then
formed The Shadow Ridge Water Company where he was President from
its inception, 1996 to 1998, when it was acquired by the Company.
Mr. Schuttloffel has served as President and CEO of the Company
since November 1998 and has been appointed to serve through the
end of the year 2000.
Thomas R. Warren, Chief Financial Officer and Director,
brings to the enterprise a strong background in corporate
finance, executive-level management, and the securities industry,
as well as a level of energy that has enabled him to successfully
manage multiple enterprises throughout his thirty-year-plus
business career. Following his education in Business Management
and Marketing at the University of Utah, Mr. Warren became
licensed in Life, Accident and Health insurance, and remains
licensed in Utah and Nevada. From 1980 to 1992, Mr. Warren was a
principal in a stock brokerage firm and was responsible for all
areas of the firm's operations. He has operated a stock transfer
agency, Silver State Registrar and Transfer, for the last 15
years. Mr. Warren has been in the home mortgage business for the
last six years as the branch manager for the Las Vegas office of
Salt Lake Mortgage. He joined the Board of Directors in 1999. He
will serve until December, 2000.
Ronald L. Drake, Secretary and Director, provides to the
Company expertise in several key disciplines. As a U. S. Treasury
Enrolled Agent since 1994, Mr. Drake owns and operates an
accounting firm, Tax Planners, that specializes in income tax
preparation, serving large and small businesses. His formal
schooling includes securities, insurance and financial planning
(Denver School of Certified Financial). Before retiring as
Captain from a distinguished 25 year career with the Clark County
(Nevada) Fire Department, Mr. Drake had primary responsibility
for recruiting, personnel, training, reporting and equipment
accounting. Mr. Drake has been a Director since the inception of
the Corporation and will serve through December, 2000.
Jay Johnson Taylor, Director, retired as Colonel for the
U.S. Air Force's Strategic Air Command Headquarters, where he
served as Director of Plans. Transitioning easily to the business
world, Mr. Taylor soon distinguished himself as Vice President of
Marketing for the Woodmoor Corporation, a Colorado-based real
estate developer. He held this position from 1967 to 1973. Mr.
Taylor helped to plan and market developments ranging from
residential communities in the Colorado ski areas, to a resort
<PAGE> 16
development near Guaymas, Mexico, to a shopping center at Golden,
Colorado. From 1976 to 1980 he was President of Vida del Mar
resort in Manzanilla. From 1980 to 1997, Mr. Taylor served as
Vice President of Finco International, an import and export
company in Ogden, Utah, dealing mainly with Porcelain products.
Mr. Taylor was elected to the Board in 1999 and will serve
through December 2000.
Norman Bebell, Director, resides in New York and has been a
multifaceted technical and creative factor in the film and
television industry for over thirty years. He has headed up the
following corporations: Continental Film Laboratory of New York,
Bebell and Bebell Color Laboratories, Marquis Film Distributors,
Films for Educators, and Cineffects Visuals. Mr. Bebell teaches
the film business at a private school and since 1994 has been a
consultant to Lab Link and other film companies in New York. Mr.
Bebell will serve the Board of Directors through the year 2000.
Antony Brazenas, Director, is from Weyburn, Saskatchewan and
is a Municipality Chancillor with the government and is involved
in the ranching business as well as the petroleum business with
JAC Petroleum Corporation. He has also been in the hospitality
business as a hotelier. Mr. Brazenas also serves on the board of
directors of H.D.B. Telemetry-Canada and has been a director of
many businesses in Canada and the United States as well as a
consultant to those companies. Since 1965, Mr. Brazenas has been
the Secretary/Treasurer for Tonorose Farms Ltd., the Secretary/
Treasurer of Jo Amerts Petroleum Corporation, and the Secretary/
Treasurer for Saskatchewan Ltd 599743 since 1989. In 1975 he was
elected to the board of directors of the Lucky Seven Farms Ltd
and still serves in that capacity. In 1987 he was elected to the
Board of Directors of Troika Petroleum Corporation, and still
serves in that capacity. He was elected to the Board of Directors
of this corporation in 1998 and will serve through the year 2000.
Scott B. Grams, Director, is in the hospitality and travel
business in Saskatchewan Canada where he is a partner in the
family-owned tour bus and travel tour business, Stage Coach Tours
and Chargers, since 1994. Mr. Grams has served on the board of
directors since 1998 and consults with other businesses in the
travel and hospitality industry. Mr. Grams will serve the Board
of Directors until the end of 2000.
Alex Peluffo, Director, is currently employed in a
management position with The Paris Hotel in Las Vegas, Nevada.
From 1991 to 1996, he was Food and Beverage Manager at the Four
Seasons and Stratosphere Hotels in Las Vegas, Nevada and prior to
that was Food and Beverage Manager at the Ritz Carlton, in San
Francisco, California, from 1991 to 1996. He is also a director
<PAGE> 17
in the Town Square LLC since 1998, the Shadow Ridge LLC since
1998 and is also managing a commercial development north of Las
Vegas, Nevada, called "The Arizona Town Square." Mr. Peluffo is
also a consultant to other corporations in the gaming and hotel
industry.
The Chairman of the Board of Directors, Mr. Ray E. Warren,
and the Chief Financial Officer of the Corporation, Mr. Thomas R.
Warren, are father and son. None of the directors, officers,
control persons or promoters have had, in the last five years:
i. Any voluntary or involuntary bankruptcy with any other
company, general partnership or executive officership within the
past two years.
ii. Any conviction in a criminal proceeding or being subjected
to a pending criminal proceedings.
iii. been the subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoined,
barred, suspended or otherwise limited in their involvement in
any type of business, securities or banking activities.
iv. Been found by a court of competent jurisdiction (in a civil
action), the SEC or the Commodity Futures Trading Commission to
have violated a federal or state securities or commodities law,
and the judgment has not been reversed, suspended or vacated.
ITEM 6. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
SUMMARY COMPENSATION TABLE<F1>
Name and Annual Compensation
Principal Position Year Salary
- --------------------------------------------------------------
Darryl 1999 $3,000
Schuttloffel 1998 $3,000
President 1997 $ -0-
<F1> All columns which are not applicable have been removed.
OPTIONS/SAR GRANTS
There were no stock options or stock appreciation rights
granted to the chief executive officer during the last fiscal
year.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR END
OPTION/SAR VALUE TABLE
Not applicable.
<PAGE> 18
LONG TERM INCENTIVE PLANS
There are no long term incentive plans in effect and
therefore no awards have been given to any executive officer in
the past year.
COMPENSATION OF DIRECTORS
The Company pays no fees to members of the Company's Board
of Directors for the performance of their duties as directors.
The Company has not established committees of the Board of
Directors.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN
CONTROL ARRANGEMENTS
The Company does not have any employment contracts with any
of its officers.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Darryl E. Schuttloffel, the President and a director of the
Company, was issued 1,500,000 shares by the Company for $1,000
cash and services valued at $500 at the organization of the
Company. These shares were valued at the par value of $.001 per
share.
Ray E. Warren, Chairman of the Board of Directors, was
issued 1,500,000 shares by the Company for $1,000 cash and
services valued at $500 at the organization of the Company. These
shares were valued at the par value of $.001 per share.
Darryl Schuttloffel, an officer, director and affiliate of
the Company, gifted to Antony Brazenas 100,000 shares, which were
valued at $25,000, for services as a director.
Darryl Schuttloffel, an officer, director and affiliate of
the Company, gifted to Scott B. Grams, 100,000 shares, which were
valued at $25,000, for services as a director.
Thomas R. Warren, an officer and director of the Company,
was issued 50,000 shares of common stock for services rendered as
the Company's Transfer Agent. These shares were valued at $2.00
per share.
All other shares owned by the Company's officers and
directors were purchased by the respective individuals in the
Company's offering, on the open market or in an exchange during
the acquisition of Shadow Ridge, upon the same terms as any other
investor.
<PAGE> 19
Mr. Schuttloffel has notes to the corporation for a total of
$218,000. One note for $26,947 was due in December, 1998. The
remaining notes are due in December, 2000. Mr. Schuttloffel does
intend to collect on the notes until profits are available to the
Company. On the assignment of $592,000 worth of notes to the
Company, the Company intends to utilize the monies to acquire
companies with cash flow, which will be then paid back to Mr.
Schuttloffel and Mr. Warren as the profits avail. Due date on the
note for the assignments of $592,000 is December, 2010.
The Company utilizes the services of Silver State Transfer
Agency as its transfer agent and Registrar. Silver State is
operated by Thomas R. Warren, an officer and director of the
Company.
Other than as described above, there have been no material
transactions in the past two years or proposed transactions to
which the Company has been or proposed to be a party in which any
officer, director, nominee for officer or director, or security
holder of more than 5% of the Company's outstanding securities is
involved.
The Company has no promoters other than its executive
officers and directors. There have been no transactions, other
than as described above, which have benefitted or will benefit
its executive officers and directors either directly or
indirectly.
ITEM 8. DESCRIPTION OF SECURITIES
The Company is presently authorized to issue 25,000,000
shares of common stock, $.001 par value per share. The Company
presently has 5,242,572 shares of common stock outstanding. The
shareholders of the Company do not have a preemptive right to
acquire the Company's unissued shares. There are no provisions,
other than the articles and by-laws of the Company and the
Nevada Revised Statutes, that govern the voting of the Company's
shares. The Company has not to date paid any dividends on its
common stock. There are no provisions, other than as may be set
forth in the Nevada Revised Statutes, that prohibit or limit the
payment of dividends. There are no provisions in the Company's
articles or by-laws that would delay, defer or prevent a change
in control of the Company.
<PAGE> 20
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company is voluntarily filing this Registration
Statement on Form 10-SB in order to re-establish its listing on
the OTC Bulletin Board, which now requires all listed companies
to be registered with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934 and to be current in its required
filings once so registered.
There are no outstanding options, warrants to purchase, or
securities convertible into common equity of the Company
outstanding. The Company has not agreed to register any shares of
its common stock for any shareholder. There are presently
4,768,572 shares of restricted common stock which may be sold
in reliance upon Rule 144 of the Securities Act of 1933, now or
at some time in the future.
STOCKHOLDERS
The are approximately 126 shareholders of record for the
Company's common stock.
DIVIDENDS
To date, the Company has not paid any dividends on its
common stock. The payment of dividends, if any, in the future is
within the discretion of the Board of Directors and will depend
upon the Company's earnings, its capital requirements and
financial condition, and other relevant factors. There are no
provisions in the Company's articles of incorporation or by-laws
that prevent or restrict the payment of dividends. Dividend
payments, if any, would be subject to the provisions of the
Nevada Revised Statutes as well.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Company has been threatened. To the best of
management's knowledge, none of the Company's officers,
directors, or beneficial owners of 5% or more of the Company's
outstanding securities is a party adverse to the Company nor do
any of the foregoing individuals have a material interest adverse
to the Company.
<PAGE> 21
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has used the same auditor since inception has
had no disagreements with its auditor.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
There were three individuals in Canada to whom the Company
sold 2,340 shares of investment stock that were issued under the
Securities Act of 1933, as amended (the "Securities Act"), in
reliance upon exemptions from registration provided by Sections
3(b) and 4(6) of the Securities Act and Rule 504 of Regulation D
thereunder and the meaning of rule 501 to accredited. These
investors were accredited.
The Shadow Ridge Water Company was purchased with a share
for share exchange and the Company issued 1,000,000 shares of
stock under Section 4(2) of the Securities Act, at a value of
$2.00 per share on November 1, 1998. There were thirty five
shareholders of The Shadow Ridge Water Company that received the
distribution.
H.D.B. Telemetry Corporation - Nevada was purchased for
100,000 shares of restricted stock under Section 4(2) of the
Securities Act, and the shares were issued at the par value of
$.001 per share. The stock was issued to two individuals in
Canada and two companies in Canada.
Twenty percent of H.D.B. Telemetry Ltd (Canada) was
purchased for 25,000 shares of restricted stock issued under
Section 4(2) of the Securities Act, which shares were issued at
par value to two individuals in Canada and two companies in
Canada.
There were 500,000 shares issued in an offering made
pursuant to Regulation D, Rule 504 at $.15 per share for a total
of $75,000 that was purchased by a total of 49 individuals (of
which 26 were Canadian) and two Canadian Companies. The offering
was completed in August of 1998.
The Company issued for services, 1,680,000 shares of stock
to eleven people. The stock was issued for services rendered to
the Company from inception to December, 1998 and were issued at
the par value of $.001 per share. Such stock was issued for
services under Section 4(2) of the Securities Act.
<PAGE> 22
Darryl E. Schuttloffel and Ray E. Warren, the two
incorporators, were issued 1,000,000 shares each at par value
of $.001 per share, for which each paid $1,000. These shares were
purchased under Section 4(2) of the Securities Act of 1933.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws provide that the Company will indemnify
its directors and executive officers and may indemnify its other
officers, employees and agents to the fullest extent permitted by
Nevada law. The Company is also empowered under its Bylaws to
enter into indemnification agreements with its directors and
officers and to purchase insurance on behalf of any person it is
required or permitted to indemnify.
In addition, the Company's Articles provide that the
Company's directors will not be personally liable to the Company
or any of its stockholders for damages for breach of the
director's fiduciary duty as a director or officer involving any
act or omission of any such director or officer. Each director
will continue to be subject to liability for breach of the
director's fiduciary duties to the Company for acts or omissions
that involve intentional misconduct, fraud or a knowing violation
of law, or the payment of dividends in violation of Nevada
corporate law. This provision also does not affect a director's
responsibilities under any other laws, such as the federal
securities laws.
PART F/S
<PAGE> 23
Great Basin Water Company
Financial Statements
For the period beginning January 1, 1999
and ending December 31, 1999
<PAGE> 24
Great Basin Water Company
Financial Statements
For the years ended December 31, 1998 and December 31, 1999
TABLE OF CONTENTS
Page
Independent Auditor's Report 1
Balance Sheet - Assets 2
Balance Sheet - Liabilities and Stockholders' Equity 3
Statement of Cash Flows 4
Income Statement 5
Statement of Capital Account 6
Statement of Retained Earnings 7
Summary of Significant Accounting Policies 8
<PAGE> 25
Russell G. Nay, CPA
4278 Apex Drive
Las Vegas, Nevada 89147
Telephone: (702) 227-8380
The Board of Directors
Great Basin Water Company
INDEPENDENT AUDITOR'S REPORT
I have audited the accompanying consolidated balance sheet of
Great Basin Water Company as of December 31, 1999 and December
31, 1998, and the related income statement, cash flows and
stockholders' equity for the periods then ended. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these consolidated
financial statements based on my audit.
I conducted my audit in accordance with generally accepted
auditing standards. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. I believe that my
audit provides a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Great Basin Water Company as of December 31, 1999 and
December 31, 1998, and the results of its income, cash flows, and
stockholders' equity for the periods then ended in conformity
with generally accepted accounting principles.
/s/ RUSSELL G. NAY
Las Vegas, Nevada
January 30, 2000
(1)
<PAGE> 26
Great Basin Water Company
A Development Company
Consolidated Balance Sheet
For the period beginning January 1, 1999
and ending December 31, 1999
Year Ended
-------------------------
Assets 12/31/99 12/31/98
-------------------------
Current Assets
------------------------------
Cash $ 1,633 $ 4,799
Accounts Receivable 2,300 2,000
Land Escrow 5,000 5,000
Loan to Sunset Gold Enterprises 2,000 2,000
-------------------------
Total Current Assets $10,933 $13,799
-------------------------
Fixed Assets
------------------------------
Furniture & Fixtures $ 9,918 $ 6,480
Computer Equipment 8,118 2,623
Jeep Cherokee 5,000 5,000
Accumulated Depreciation (5,458) (1,804)
Well #2, 14 Inch Well 75,000 0
Well #3, 14 Inch Well 75,000 0
Well #4, 12 Inch Well 75,000 0
Well #5, 12 Inch Well 75,000 0
Value of 2,733.35 Acre Feet of
Water from Wells 2, 3, 4, 5 450,000 0
Land--Well #1 55,000 55,000
Land for Waste Treatment Plant 80,000 0
Access Road And Improvements 218,769 218,769
-------------------------
Total Fixed Assets $ 1,121,347 $ 286,068
-------------------------
Other Assets
-----------------------------
Receivable--Sterling Investments,
Ltd. $ 592,050 $ 0
Investment in Shadow Ridge 1,657,819 1,657,819
Investment in HDB Telemetry
Systems 200,000 0
Investment in HDB Telemetry
Systems - Canada (20%) 40,285 0
-------------------------
Total Other Assets $ 2,490,154 $ 1,657,819
-------------------------
Total Assets $ 3,622,434 $ 1,957,686
-------------------------
The accompanying Summary of Significant Accounting Policies are
an integral part of these financial statements.
(2)
<PAGE> 27
Great Basin Water Company
A Development Company
Consolidated Balance Sheet (cont.)
For the period beginning January 1, 1999
and ending December 31, 1999
Year Ended
-------------------------
Liabilities and Stockholders' Equity 12/31/99 12/31/98
-------------------------
Current Liabilities
------------------------------
Accounts Payable $ 350 $ 350
Payable to Shareholder 69,643 0
Employee Payable 257 0
Other Taxes Payable 25 0
Payroll Liabilities 6,000 0
Payroll Taxes Payable 3,570 0
-------------------------
Total Current Liabilities $ 79,845 $ 350
-------------------------
Long-Term Liabilities
------------------------------
Note Payable to Town Square $ 16,000 $ 0
Note Payable to Shareholders 592,050 0
Note Payable to Derral Christensen 49,401 55,000
Note on Land for Waste Treatment
Plant 80,000 0
Notes Payable to Shareholder 218,157 215,335
-------------------------
Total Long-Term Liabilities $ 1,035,453 $ 270,685
-------------------------
Equity
-----------------------------
8% Preferred Series B Stock,
$100 Par Value, 7,500 shares
authorized, issued and
outstanding $ 750,000 $ 0
Common Stock, $.001 par value,
25,000,000 Shares authorized,
2,620,000 Shares issued 2,620 5,184
Common Stock, Restricted
$.001 per share, 1,000,000
Shares issued $1,000 Total
par value, $1,753,951 Add'l.
Paid in Capital 1,754,951 1,754,951
Paid in Capital in excess of
par value 301,190 60,025
Retained Earnings (257,038) (133,159)
-------------------------
Total Stockholders' Equity $ 2,551,723 $ 1,687,001
-------------------------
Total Liabilitites & Stockholders'
Equity $ 3,587,176 $ 1,957,686
-------------------------
The accompanying Summary of Significant Accounting Policies are
an integral part of these financial statements.
(3)
<PAGE> 28
Great Basin Water Company
A Development Company
Consolidated Income Statement
For the period beginning January 1, 1999
and ending December 31, 1999
Year Ended
-------------------------
12/31/99 12/31/98
-------------------------
Income
Interest Income $ 0 $ 0
Expenses:
Advertising & Promotional Expense 440 672
Bank Charges 559 349
Insurance 1,009 877
Licenses, Permits & Fees 380 2,208
Office Expense 2,069 6,791
Other Expenses 16,458 17,939
Outside Services 8,835 25,924
Payroll Expense 30,414 10,420
Payroll Taxes 5,186 2,580
Postage & Delivery 2,520 791
Professional Fees 20,933 36,090
Rent 11,230 6,973
Repairs & Maintenance 0 952
Telephone 7,557 2,593
Travel & Entertainment 12,635 15,772
Utilities 0 24
Depreciation Expense 3,654 1,804
-------------------------
Total Expenses $ 123,879 $ 132,759
-------------------------
Income from Operations Before Income
Taxes ($ 123,879) ($ 132,759)
-------------------------
Income Taxes on Operations 0 0
-------------------------
Net Income/(Loss) ($ 123,879) ($ 132,759)
-------------------------
The accompanying Summary of Significant Accounting Policies are
an integral part of these financial statements.
(4)
<PAGE> 29
Great Basin Water Company
A Development Company
Consolidated Statement of Cash Flows
For the Years Ended December 31, 1998 and December 31, 1999
Year Ended
-------------------------
12/31/99 12/31/98
-------------------------
Cash Flows From Operating Activities
Net Income $ (123,879) $ (132,759)
Non-cash Items included in
Net Income: Depreciation 3,654 1,804
----------- -----------
Net Cash Flows Provided by Operating
Activities $ (120,225) $ (130,955)
Cash Flows From Investing Activities
Investment in Subsidiaries $ 0 $(1,936,588)
Increase in Accounts Payable 113,138 350
Purchase of Assets for Cash (7,438) (13,653)
Increase in Receivables (300) (4,000)
----------- -----------
Net Cash Flows Provided by Investing
Activities $ 105,400 $(1,953,891)
Cash Flows From Financing Activities
Loan From Shareholder $ 2,822 $ 215,335
Long-Term Loans 10,401 55,000
Common Stock (1,564) 5,134
Additional Paid in Capital 0 1,613,026
----------- -----------
Net Cash Flows Provided by Financing
Activities $ 11,659 $ 2,088,495
----------- -----------
Net Change in Cash Flows $ (3,166) $ 3,649
=========== ===========
Cash At The Beginning of The Period $ 4,799 $ 1,150
=========== ===========
Cash At The End Of The Period $ 1,633 $ 4,799
=========== ===========
The accompanying Summary of Significant Accounting Policies are
an integral part of these financial statements.
(5)
<PAGE> 30
Great Basin Water Company
A Development Company
Consolidated Statement of Stockholders' Equity
From Inception Through the Period Ending December 31, 1999
<TABLE>
<CAPTION>
$0.001 Additional $100 Additional
par Paid In par Paid In
Shares Value Capital Value Capital Total
==========================================================================
<S> <C> <C> <C> <C> <C> <C>
Issuance of Common
Stock for cash on
September 16, 1997 3,683,713 $ 3,684 $ 3,684
Issuance of Common
Stock in Public Offering
January 1998 500,000 500 $ 74,500 $ 75,000
Issuance of Restricted
Stock, for Shadow
Ridge Water Co. 1,000,000 1,000 1,753,951 $ 1,754,951
Issuance of Preferred
Stock for Four Water
Wells in February 1999 $ 750,000 $ 285 $ 750,285
Stock Issuance For
HDB Telemetry Systems
July 12, 1999 100,000 100 199,900 $ 200,000
Stock Issuance For 20%
HDB Telemetry Systems,
Canada July 12, 1999 20,000 20 39,980 $ 40,000
Additional Capital
Paid-In 0
Stock Retired in
June 1999.
1,683,713 Shares (1,683,713) (1,684) (1,684)
Stock Issuance Costs (13,475) (13,475)
==========================================================================
Balance at
December 31, 1999 3,620,000 $ 3,620 $2,054,856 $ 750,000 $ 285 $ 2,808,761
==========================================================================
</TABLE>
The accompanying Summary of Significant Accounting Policies are
an integral part of these financial statements.
(6)
<PAGE> 31
Great Basin Water Company
A Development Company
Statement of Retained Earnings
For the Years Ended December 31, 1998 and December 31, 1999
Year Ended
-------------------------
12/31/99 12/31/98
-------------------------
Balance of Retained Earnings at
December 31, 1998 $ (133,159) $ (400)
Current Period Activity (123,879) (132,759)
Dividends and Distributions 0 0
============= ==========
Balance of Retained Earnings at
December 31, 1999 $ (257,038) $ (133,159)
============= ==========
The accompanying Summary of Significant Accounting Policies are
an integral part of these financial statements.
(7)
<PAGE> 32
Great Basin Water Company
A Development Company
Summary of Significant Accounting Policies
For the period beginning January 1, 1999
and ending December 31, 1999
1. Organization of the Company
Great Basin Water Company, (the "Company") was incorporated
on August 27, 1997, under the laws of the State of Nevada.
The Company was organized to facilitate the dispersion of
water to areas with limited population.
The Company is currently a publicly traded company.
2. Stock Transactions
The Company issued 500,000 shares of stock in an offering in
January 1998. The majority of the proceeds received in this
offering were utilized to cover operations of the Company,
and to pay certain obligations of Shadow Ridge Water Company,
a wholly owned subsidiary.
Shadow Ridge Water Company was acquired November 1, 1998.
The Company issued 1,000,000 shares of restricted common
stock, with a par value of $0.001 per share. The value of
the stock at that time is estimated to be approximately $2.00
per share, for a total of $2,000,000. This amount is
reflected on the Consolidated Balance Sheet under Investment
in Shadow Ridge, Access Road and Improvements, and under
Restricted Stock. Management has determined the value of the
stock as of the acquisition date, but expects this estimate
to be conservative.
The Company retired 1,683,713 shares of stock in June of
1999. These were all shares from the first issuance of stock
at the Company's inception.
3. Land and Well Acquisitions
In February of 1999, the Company acquired four water wells
with pumps and 2,733.35 acre feet of water in in exchange for
7,500 shares of Preferred Stock. (See Statement of Capital
Accounts). The wells and pumps have a rated capacity of
approximately 1,850,000 gallons per day, more than adequate
to to supply developments for which the Company has provided
Assurances of Service. Groundwater acquired was valued at
approximately $166.00 per acre foot.
(8)
<PAGE> 33
Great Basin Water Company
A Development Company
Summary of Significant Accounting Policies (cont.)
For the period beginning January 1, 1999
and ending December 31, 1999
3. Land and Well Acquisitions (Cont.)
The Investment in Shadow Ridge is net of the access road and
improvements. The access road is 3.04 miles in length, and
184 feet wide. Book value includes the costs associated with
surveying, engineering, and mapping of 7.5 miles of mains and
laterals for water and waste treatment. The book value also
includes the costs of aquisition of three separate franchises
from Mohave County, Arizona.
A parcel of land was purchased for $55,000 and holds Well #1.
A parcel of land was acquired on which it is planned that a
waste treatment plant will be constructed.
4. Accounts and Notes Payable
The Shareholder payable on the Balance Sheet represents
operating expenses of the Company which were paid by the
shareholder and will be reimbursed to him.
The Notes Payable to Shareholder represent outstanding notes
which were made with Shadow Ridge prior to the acquisition,
and are now the obligation of the Company.
A note payable in the amount of $55,000 was issued to Derral
Christensen for the land which holds Well #1.
A note in the amount of $80,000 was given in exchange for the
land where the water treatement plant will be contructed.
5. Investments
On July 12, 1999 the Company acquired 100% of HDB Telemetry
Systems in exchange for 100,000 shares of stock valued at
$2.00 per share.
On July 12, 1999 the Company acquired 20% of HDB Telemetry
Systems Canada in exchange for 20,000 shares of stock valued
at $2.00 per share.
(9)
<PAGE> 34
Great Basin Water Company
A Development Company
Summary of Significant Accounting Policies (cont.)
For the period beginning January 1, 1999
and ending December 31, 1999
5. Investments (Cont.)
In December 1999, two of the major shareholders assigned to
the Company a note and all associated income therefore. This
assignment of income is a loan to the Company, and is
expected to be paid back at such time as the Company is able.
6. Depreciable Assets
The Company is depreciating assets on the straight-line basis
over the appropriate lives for those assets.
(10)
<PAGE> 35
PART III
ITEMS 1 AND 2. INDEX TO EXHIBITS AND DESCRIPTION
Exhibit
Number Description
- ------- -----------------------------------------------------
2.0 Stock Purchase Agreement, Shadow Ridge
2.1 Water Shares Purchase Agreement
2.2 Stock Purchase Agreement, HDB Telemetry-Canada
2.3 Stock Purchase Agreement HDB Telemetry - Nevada
3.0 Articles of Incorporation
3.1 By-laws
10.0 Lease of Wells and Equipment
21.0 Subsidiaries
27.0 Financial Data Schedule
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant has caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly
authorized.
GREAT BASIN WATER COMPANY
(Registrant)
Date: March 13, 2000 By:/s/ DARRYL SCHUTTLOFFEL
--------------------------------
Darryl Schuttloffel
President, CEO and duly
authorized officer
<PAGE> 36
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 1st day of November
1998, between The Shadow Ridge Water Company, 615 Thunderbird
Drive, Prescott, Arizona, 136303. hereinafter referred to as the
"Seller" and The Great Basin Water Company, 312 West Mesquite
Blvd., Suite 112, Mesquite, Nevada, 89024, and/or assigns and/or
nominees, hereinafter collectively referred to as the "Purchaser"
(the term "Purchaser" shall extend to in the first instance the
original Purchaser named herein and also the assigns of such
Purchaser.);
WITNESSETH:
WHEREAS, the Seller is the record owner and holder of the issued
and outstanding shares of the capital stock of The Shadow Ridge
Water Company, hereinafter referred to as the "Corporation", an
Arizona corporation; which Corporation has issued capital stock
of One Million Shares (1,000,000) of $0.001 par value common
stock, and
WHEREAS, the Purchaser desires to purchase all of the issued and
outstanding capital stock of the Corporation (referred to as the
"Corporation's stock), and the Seller desires to sell or cause to
be sold all of the Corporations stock, upon the terms and subject
to the conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, and in order to
consummate the purchase and the sale of the Corporation's stock
aforementioned, it is hereby agreed as follows:
1. PURCHASE AND SALE: CLOSING.
a. Purchase and Sale of Corporation's Stock. Subject to the
terms and conditions hereinafter set forth, at the closing
of the transaction contemplated hereby, the Seller shall
sell, convey and transfer or cause to be sold, conveyed or
transferred, all of the Corporation's Stock and deliver to
the purchaser certificates
representing such stock, and the Purchaser shall purchase
from the Seller the Corporation's Stock in consideration of
the purchase Agreement. The certificates representing the
Corporation's Stock shall be duly endorsed for transfer or
accompanied by appropriate stock transfer powers duly
executed in blank, in either case with signatures guaranteed
in the customary fashion, and shall have all the necessary
documentary transfer tax stamps affixed thereto at the
expense of the Seller.
1
<PAGE>
b. Procedures for Closing. The Closing of the transactions
contemplated by this Agreement (the Closing), shall be held
at the offices of the The Great Basin Water Company, on the
1st day of November, 1998, at 1:00 P.M. or such other place,
date and time as the parties hereto may otherwise agree
(such date to be referred to in this Agreement as the
Closing Date), so long as the closing is within one year of
the date of the agreement. After such time, the controlling
corporation shall be the purchaser, The Great Basin Water
Company, and is to be governed under the laws of the State
of Nevada.
2. AMOUNT AND PAYMENT OF PURCHASE PRICE. The total consideration
and method of payment thereof are fully set out in Exhibit "A"
attached hereto and made a part hereof by this reference.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
warrants and represents:
a. Organization and Standing. Corporation is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Arizona and has the corporate power
and authority to carry on its business as it is now being
conducted. A true and correct copy of:
i. the certificate of Incorporation and all amendments
thereto to date certified by the Secretary of State of
the Sate of Arizona, and
ii. the Bylaws as now in effect, will be delivered by
Seller to the Purchaser prior to the Closing Date. The
Corporations minute boot%s will be made available to
the Purchaser and its representatives at any reasonable
time or times prior to the Closing for inspection and
will be complete and correct as of the date of any such
inspection.
b. Capitalization. The authorized capital stock of the
Corporation consists of One Million Shares of $0.001 par
value common stock.
c . Restrictions on Stock.
i. Neither the Corporation nor Seller is a party to any
agreement, written or oral, creating rights in respect
to the Corporations Stock in any third person or
relating to the voting of the Corporations Stock.
2
<PAGE>
ii. Seller is the lawful owner of all the Corporation's
Stock, free and clear of all security interests, liens,
encumbrances, equities and other charges.
iii. There are no existing warrants, purchase
agreements, redemption options, stock agreements,
restrictions of any nature, calls, or rights to
subscribe of any character relating to the Capital
stock of the Corporation, nor are there any securities
convertible into such stock.
d. Subsidiaries.- The Corporation has no subsidiaries.
e. Authority Relative to this Agreement. Except as
otherwise stated herein the Seller has full power and
authority to execute this Agreement and carry out the
transactions contemplated by it and no further action is
necessary by the Seller to make this Agreement valid and
binding upon Seller and enforceable against it in accordance
with the terms hereof, or to carry out the actions
contemplated hereby. The execution, delivery and
performance of this Agreement by the Seller will not:
i. Constitute a breach or a violation of the
Corporation's Certificate of Incorporation,
By-Laws or of any law, agreement, indenture, deed of
trust, mortgage, loan agreement or other instrument to
which it is a party, or by-which it is bound;
ii. constitute a violation of any order, judgement or
decree to which it is a party or by which its assets or
properties are bound or affected; or
iii. result in encumbrance upon stated herein.
the creation of any lien, charge or its assets or
properties, except as
f. Financial Statements. Seller is furnishing financial
statements of the Corporation as an inducement to Purchaser
to purchase the Corporation's Stock and accordingly, Seller
warrants and represents the financial operating history or
condition of the Corporation as indicated by the financial
statements turned over to Purchaser. Moreover, Seller
warrants and represents that at closing the Corporation and
the Corporation's stock will not be subject to any liability
save and except those specifically enumerated in Exhibit "B"
attached hereto and made a part hereof.
3
<PAGE>
To the extent that liabilities are discovered by Purchaser,
after closing which relate to events prior to closing,
Seller shall be responsible to forthwith pay such
liabilites, including income tax liabilities in cash within
fifteen (15) days thereof, or alternatively, if Seller
objects to such liabilities in good faith, litigate the
issue and indemnify and save harmless Purchaser from any
claim for such income tax liability. This indemnification as
it relates -to income tax liabilities of the Corporation
shall terminate on the tenth (10th) day after the expiration
of the applicable period of limitations on assessments and
collections applicable to such taxes under the Internal
Revenue Code. Moreover, the aforementioned indemnity shall
not apply to any tax liability which may occur by reasons of
actions taken by the Purchaser including, but not limited
to, the liquidation of the Corporation.
g. Tax Matters. The Corporation has timely prepared and
filed all federal, state and local tax returns and reports
as are and have been required to be filed and all taxes
shown thereon to be due have been paid in full.
h. Litigation. The Corporation is not a party to any
litigation, proceeding or administrative investigation and
to the best knowledge of the Seller none is pending
against the Corporation or its properties.
i. Properties. The Corporation has good and sellable title
to all of its properties and assets which are those
properties and assets set out in Exhibit "C" attached hereto
and made a part hereof. At closing, such properties and
assets will be subject to no mortgage, pledge, lien,
conditional sales agreement, security agreement,
encumbrance or charge, secured or unsecured, except for real
estate mortgages or taxes and tangible personal properety
taxes which shall be prorated as of the date of closing, or
those specifically set out in Exhibit "B".
J. Compliance with Applicable Laws. None of the
Corporation's Actions are prohibited by or have violated or
will violate any law in effect on the date of this Agreement
or on the date of closing. None of the actions of the
Corporation shall conflict with or result in
any breach of any of the provisions of, or constitute a
default under, or result in the creation of any lien,
security interest, charge or encumnbrance upon the capital
stock of the Corporation, or upon any of the assets of the
Corporation, under the provisions of the Certificate of
Incorporation or Bylaws or any indenture, mortgage, lease,
loan agreement or other agreement to which the Corporation
and/or the Seller is a party or by which the capital stock
or properties and
4
<PAGE>
assets of the Corporation are bound to affect it.
The Corporation is in compliance with all applicable laws,
including, but not limited to, corporate laws, zoning
regulations, requirements of the Corporation Commission of
the State of Arizona, the Department of Environmental
Quality of the State of Arizona, state occupational laws and
regulations, internal revenue laws, and any and all other
laws which may effect the operation or liability of the
Buyers herein.
k. Documents for Review. The Corporation's documents
enumerated in Exhibit "D", attached hereto and made a part
hereof, are true, authentic, and correct copies of the
originals, or, if appropriate, the originals themselves, and
no alterations or modifications thereof have been made.
4. PRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER.
Seller and Purchaser hereby represent and warrant that there has
been no act or omission by Seller, Purchaser or the
Corporation which would give rise to any valid claim against any
of the parties hereto for a brokerage commission, finder's fee,
or other like payment in connection with the transaction
contemplated hereby.
5. TRANSACTIONS PRIOR TO THE CLOSING. Seller hereby covenants the
following:
a. Conduct of Corporation's Business Until Closing.. Except
as Purchaser may otherwise consent in writing prior to the
Closing Date, Seller will not enter into any transaction
take any action or fail to take any action which would
result in, or could be reasonably expected to result in or
cause, any of the representations and warranties of Seller
contained in this Agreement, to be not true on the Closing
Date.
b. Resignations. Seller will deliver to Purchaser prior to
the Closing Date the resignation of each director and
officer of the Corporation, each such resignation to be
effective on the Closing Date.
C. Satisfactions. Seller will deliver to Purchaser prior to
the Closing Date a satisfaction of any mortgage and lien
holder of the Corporation's Property, satisfactory
in form and substance to the Purchaser and his counsel
indicating that the then outstanding unpaid principal
balance of any promissory note secured thereby has been paid
in full prior to or simultaneously with the Closing (if
any), except mortgages for real property, which the
purchaser shall assume.
5
<PAGE>
d. Advice of Changes. Between the date hereof and the
Closing Date, Seller will promptly advise Purchaser in
writing of any fact which, if existing or known at the date
hereof, would have been required to be set fourth herein or
disclosed pursuant to this Agreement, or which would
represent a material fact the disclosure of which would be
relevant to the Purchaser.
6. EXPENSES. Each of the parties hereto shall pay its own expense
in connection with this Agreement and the transactions
contemplated hereby, including the fees and expenses of its
counsel and its certified public accountants and other experts.
7. GENERAL.
a. Survival of Representations and Warranties. Each of the
parties to this Agreement covenants and agrees that the
Seller's representations, warranties, covenants and
statements and agreements contained in this Agreement and
the exhibits heretof, and in any documents delivered by
Seller to Purchaser in connection herewith, shall survive
the Closing Date and terminate on the Second anniversary of
such date, except, as set forth in this Agreement, the
exhibits hereto or in the documents and papers delivered by
Seller to Purchaser in connection herewith, there are no
other agreements, representations, warranties or covenants
by or among the parties hereto with respect to the subject
matter hereof.
b. Waivers. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party
shall be deemed to constitute a waiver by the party taking
such action or compliance with any representation, warranty,
covenant or agreement contained herein, therein and in any
documents delivered in connection herewith or therewith. The
waiver by any party hereto of a breach of any provisions of
this agreement shall not operate or be construed as a waiver
of any subsequent breach.
C. Notices. All notices, requests, demands and other
communications which are required or may be given under this
Agreement shall be in writing and shall be deemed to have
been duly given if delivered or mailed, first class mail,
postage prepaid.
To Seller
The Shadow Ridge Water Company
Post Office Box 1721
Mesquite, Nevada, 89024
6
<PAGE>
To Purchaser
The Great Basin Water Company
312 West Mesquite Blvd., Suite 112
Mesquite, Nevada, 89024
or to such other address as such party shall have specified
by notice in writing to the other party.
d. Entire Agreement. This Agreement (including the exhibits
hereto and all documents and papers delivered by Seller
pursuant hereto and any written amendments hereof executed
by the parties hereto) constitutes the entire Agreement and
supersedes all prior agreements and understandings, oral and
written, between the parties hereto with respect to the
subject matter hereof.
e. Sections and Other Headings. The Section and other
headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or
interpretation of this Agreement.
f. Governing Law. This agreement, and all transactions
contemplated hereby, shall be governed by, construed and
enforced in accordance with the laws of the State of Nevada.
The parties herein waive trail by jury and agree to Submit
to the personal jurisdiction and venue of a court of subject
matter jurisdiction located in Clark County, State of
Nevada. In the event that litigation results from or arises
out of this Agreement or the performance thereof, the
parties agree to reimburse the prevailing party's
reasonable attorney's fees, Court costs, and all other
expenses whether or not taxable by the court as costs, in
addition to any other relief to which the prevailing party
may be entitled. In such event, no action shall be
entertained by said court or any court of competent
jurisdiction if filed more than one year subsequent to the
date the cause(s) of action actually accrued regardless of
whether damages were otherwise as of said time calculable.
g. Conditions Precedent. The Conditions Precedent to the
enforcability of this Agreement are outlined in Exhibit "E'"
attached hereto and made a part hereof. In the event that
said Conditions Precent are not fulfilled by -the
appropriate dates thereof, this Agreement shall be deemed
null and void to the Purchaser forthwith.
h. Treasury Stock. It is understood and agreed by the
Purchaser that none of the consideration furnished by the
Purchaser hereunder, shall be for treasury stock and such
7
<PAGE>
consideration, subject to the terms hereof, shall be the
sole property of the Seller.
i. Contractual Procedures. Unless specifically disallowed by
law, should litigation arise hereunder, service of process
therefor may be obtained through certified (nail, return
receipt requested; the parties hereto waiving any and all
rights they may have to object to the method by which
service was perfected.
IN WITNESS WHEREOF, this Agreement has been executed by each of
the individual parties hereto and signed by an officer thereuntc,
duly authorized and attested under the Corporate seal by the
Secretary of the corporate party hereto, all on the date first
above written.
Signed, sealed and delivered in the presence of:
[CORPORATE SEAL]
Purchaser
By:/s/Ray E. Warren
/s/Parry P. Warren It's Chairman of the Board of Directors
Witness Attest:/s/Ronald L. Drake
It's Secretary
Witness
/s/Mary M. Charboneau Seller
Witness
By:/s/Darryl E.Schuttloffel
It's President
/s/Mary M. Charboneau Attest:/s/Charles L. Hackelman
Witness It's Secretary
8
<PAGE>
EXHIBIT "A"
AMOUNT AND PAYMENT OF PURCHASE PRICE
A. Consideration - As total consideration for the purchase
and sale of the Corporations Stock, pursuant to this
Agreement, the Purchaser shall pay to the Seller One Share
of Investment Stock for each Share of the Stock received
from the Seller (the Sum), such total consideration to be
referred to in this Agreement as the "Purchase Price".
b Payment. The Purchase Price shall be paid as follows;
i. One Million (1,000,000) shares of Stock of the Great
Basin Water Company valued at Two Dollars per share, or
total value of Two Million Dollars ($2,00.000.00) to be
delivered to the Seller within Sixty Days from the
final execution of this agreement.
iii. Check of Purchaser in the sum of the equal amount
of accounts payable to be delivered to Seller within
thirty days of the final closing and upon Purchasers
further Board of Directors Acceptance of the books and
records of the Corporation, which payment by the
Purchaser shall address the closing held on the thirty
days after the final closing which is adequate time for
the receipt of any bills and to insure that the
Corporations liabilities have been fully satisfied and
Liquidated by the Seller.
C. In the event that the Purchaser, after a complete review
of the Corporation's books, records, financial statements,
sales tax receipts, bank statements, check books, and any
other document required by Purchaser to verify the standing,
status or performance of the Corporation, does not approve
said purchase, then, in that event, all deposits paid to
that date shall be returned to Purchaser with no further
liability, responsibility or obligation.
9
<PAGE>
WATER SHARES PURCHASE AGREEMENT
"THIS AGREEMENT is made and entered into this 5th day of March
1999, between The MELVIN HUGHES, Post Office Box 152, Mesquite,
Nevada, 89024, hereinafter referred to as the "Seller" and The
Great Basin Water Company, Post Office Box 1721, Mesquite,
Nevada, S9024, and/or assigns and/or nominees, hereinafter
collectively referred to as the "Purchaser" (the term
"Purchaser'' shall extend to in the first instance the original
Purchaser named herein and also the assigns of such Purchaser.);
WITNESSETH:
WHEREAS, the Seller is the record owner and holder of the claimed
water shares of the water rights on parcels 01-53521, all in pump
well registrations under wells number 604107, (a 14 inch well),
604106, (a 14 inch well), 604105, (a 14 inch well) and 604108,
(a 16 inch well), (2,733.35 acre feet in total), all in pump well
shares (Arizona), and;
WHEREAS, the Purchaser desires to purchase all of the water
shares from the pump wells, and the Seller desires to sell or
cause to be sold all of the pump well shares, upon the terms and
subject to the conditions hereinafter set forth;
NOW THEREFORE, in consideration of- the mutual covenants and
agreements contained in this Agreement, and in order to
consummate the purchase and the sale of the water shares
aforementioned, it is hereby agreed as follows:
1. PURCHASE AND SALE: CLOSING
a. Purchase and Sale of Sellers Pump Well Accounts.
Subject to the terms and conditions hereinafter set forth,
at the closing of the transaction contemplated hereby, the
Seller shall sell convey and transfer or cause to be sold,
conveyed or transferred, all of the Water Shares (2,733.35
acre feet) and deliver to the purchaser certificates, Or
reports representing shares, and the Purchaser shall
purchase from the Seller the Water Shares in consideration
of the purchase Agreement. The certificates representing the
Water Shares for the total, (2,733.35 pump well shares)
1
<PAGE>
shall be duly endorsed for transfer or accompanied by
appropriate water share transfer powers duly executed in
blank, in either case with signatures guaranteed in the
customary fashion, and shall have all the necessary
documentary transfer tax stamps affixed thereto at the
expense of the Seller.
Procedures for Closing. The Closing of the transactions
contemplated by this Agreement (the Closing), shall be held
at the offices of the The Great Basin Water Company, on the
16th day of March, 1999, at 1:00 P.M. or such other place,
date and time as the parties hereto may otherwise agree
(such date to be referred to in this Agreement as the
Closing Date), so long as the closing is within one year of
the date of the agreement. After such time, the controlling
corporation shall be the purchaser, The Great Basin Water
Company, and is to be governed under the laws of the State
of Nevada.
2. AMOUNT AND PAYMENT OF PURCHASE PRICE. The total
consideration and method of payment thereof are fully set out in
Exhibit "A" attached hereto and made a part hereof by this
reference.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
warrants and representS:
a. Organization AND Standing. Corporation is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Nevada and has the corporate power
and authority to carry on its business as it is now being
conducted. A true and correct copy of:
i. the certificate of Incorporation and" all amendments
thereto to date certified by the Secretary of State of
the Sate of Nevada, and
ii. the Bylaws as now in effect,
will be delivered by Seller to the Purchaser prior to the
Closing Date. The Corporations minute books will be made
available to the Purchaser and its representatives at any
reasonable time or times prior to the Closing for inspection
and will be complete and correct as of the date of any such
inspection.
b. Capitalization. The authorized capital accounts of the
Corporation consists of Twenty Four Million Shares Common
Stock of $0.001 par value common stock, and One Million
Shares of Preferred Stock at $0.10 par value.
2
<PAGE>
C. Restrictions on Stock.
i. Neither the Corporation nor Seller is a party to any
agreement, written or oral, creating rights in respect
to the Corporations Accounts any third person or
relating to the voting of the Corporations Accounts.
ii. Seller is the lawful owner of all the Corporation's
Accounts, free and clear of all security interests,
liens, encumbrances, equities and other charges.
iii. There are no existing warrants, options, stock
purchase agreements, redemption agreements,
restrictions of any nature, calls, or rights to
subscribe of any character relating to the Capital
accounts of the Corporation, nor are there any
securities convertible into such accounts.
d. Subsidiaries.. The Corporation has The Shadow Ridge
Water Company as a wholly owned subsidiary.
e. Authority Relative to this Agreement. Except as
otherwise stated herein the Seller has full power and
authority to execute this Agreement and carry out the
transactions contemplated by it and no further action is
necessary by the Seller to make this Agreement valid and
binding upon Seller and enforceable against it in accordance
with the terms hereof, or to carry out the actions
contemplated hereby. The execution, delivery and performance
of this Agreement by the Seller will not:
i. Constitute a breach or a violation of the
Corporation's Certificate of Incorporation,
By-Laws or of any law, agreement, indenture, deed of
trust, mortgage, loan agreement or other instrument to
which it is a party, or by which it is bound;
ii. constitute a violation of any order, judgement or
decree to which it is a party or by which its assets or
properties are bound or affected; or
iii. result in the creation of any lien, charge or
encumbrance upon its assets or properties, except as
stated herein.
f. Financial Statements. Seller is furnishing financial
statements to the Corporation which illustrates pricing of
water shares in the immediate area as an inducement to
Purchaser to purchase the Corporation's Accounts and
accordingly.
3
<PAGE>
Seller warrants and represents the operational (operating)
history or condition of the pump wells as indicated by the
operating statements turned over to Purchaser. Moreover,
Seller warrants and represents that at closing the Corporation
and the Corporation's accounts will not be subject to any
liability save and except those specifically enumerated in
Exhibit "B" attached hereto and made a part hereof.
To the extent that liabilities are discovered by Purchaser, after
closing which relate to events prior to closing, Seller shall be
responsible to forthwith pay such liabilities, including income
tax liabilities in cash within fifteen (15) days thereof, or
alternatively, if Seller objects to such liabilities in good
faith, litigate the issue and indemnify and save harmless
Purchaser from any claim for such income tax liability. This
indemnification as it relates to income tax liabilities of
the Corporation shall terminate on-the tenth (10th) day after the
expiration of the applicable period of limitations on assessments
and collections applicable to such taxes under the Internal
Revenue Code. Moreover, the aforementioned indemnity shall not
apply to any tax liability which may occur by reasons of actions
taken by the Purchaser including, but not limited to, the
liquidation of the Corporation.
g. Tax Matters. The Corporation has timely prepared and filed all
federal, state and local tax returns and reports as are and have
been required to be filed and all taxes shown thereon to be due
have been paid in full.
h. Litigation. The Corporation is not a party to any litigation,
proceeding or administrative investigation and to the best
knowledge of the Seller none is pending against the Corporation
or its properties.
i. Properties. The Seller has good and sellable title to all of
its properties and assets which are those properties and assets
set out in Exhibit "C" attached hereto and made a part hereof. At
closing, such properties and assets will be subject to no
mortgage, pledge, lien, conditional sales agreement, security
agreement, encumbrance or charge, secured or unsecured, except
for real estate mortgages or taxes and tangible personal
properety taxes which shall be prorated as of the date of
closing, or those specifically set out in Exhibit "B".
j. compliance with Applicable Law. None of the Corporation's
Actions are prohibited by or have violated or will violate any
law in effect on the date of this Agreement or on the date of
closing. None of the actions of the
4
<PAGE>
k. Documents for Review. The Corporation's documents
enumerated in Exhibit "D", attached hereto and made a
part hereof, are true, authentic, and correct copies of
the originals, or, if appropriate, the originals
themselves, and no alterations or modifications thereof
have been made.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER.
Seller and Purchaser hereby represent and warrant that there has
been no act or omission by Seller, Purchaser or the Corporation
which would give rise to any valid claim against any of the
parties hereto for a brokerage commission, finders fee or other
like payment in connection with the transaction contemplated
hereby.
5. TRANSACTIONS PRIOR TO THE CLOSING. Seller hereby covenants the
following:
a. Conduct of Corporations Business Until Closing. Except
as Purchaser may otherwise consent in writing prior to the
Closing Date, Seller will not enter into any transaction,
take any action or fail to take any action which would
result in, or could be reasonably expected to result in or
cause, any of the representations and warranties of Seller
contained in this Agreement, to be not true on the Closing
Date, but may continue to provide water to any agricultural
demand under present or negotiated contracts for such
purposes.
b. Resignations. Seller will deliver to Purchaser prior to
the Closing Date the registration statements of each well as
registered from the Department of Water Resources, State of
Arizona, each such registration being duly affixed with file
numbers.
c . Satisfactions. Seller will deliver to Purchaser prior
to the Closing Date a satisfaction of any mortgage and lien
holder of the Corporation's Property, satisfactory in form
and substance to the Purchaser and his counsel indicating
that the then outstanding unpaid principal balance of any
promissory note secured thereby has been paid in full prior
to or simultaneously with the Closing (if any), except
mortgages for real property, which the purchaser shall
assume.
d. Advice of Changes. Between the date hereof and the
Closing Date, Seller will promptly advise Purchaser in
writing of any fact which, if existing or known at the date
hereof, would have been required to be set forth herein or
disclosed pursuant to this Agreement, or which would
5
<PAGE>
represent a material fact the disclosure of which would be
relevant to the Purchaser.
6. EXPENSES. Each of the parties hereto shall pay its own
expense in connection with this Agreement and the transactions
contemplated hereby, including the fees and expenses of its
counsel and its certified public accountants and other experts.
7. GENERAL.
a. Survival of Representations and Warranties. Each of
parties to this Agreement covenants and agrees that Seller's
representations, warranties, covenants statements and
agreements contained in this Agreement the exhibits heretof,
and in any documents delivered Seller to Purchaser in
connection herewith, shall survive the Closing Date and
terminate on the Second anniversary of such date, except, as
set forth in this Agreement, the exhibits hereto or in the
documents and papers delivered by Seller to Purchaser in
connection herewith, there are no other agreements,
representations, warranties or covenants -by or among the
parties hereto with respect to the subject matter hereof.
b. Waivers. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party
shall be deemed to constitute a waiver by the party taking
such action or compliance with any representation, warranty,
covenant or agreement contained herein, therein and in any
documents delivered in connection herewith or therewith. The
waiver by any party hereto of a breach of any provisions of
this agreement shall not operate or be construed as a waiver
of any subsequent breach.
C. Notices. All notices, requests, demands and other
communications which are required or may be given under this
Agreement shall be in writing and shall be deemed to have
been duly given if delivered or mailed, first class mail,
postage prepaid.
To Seller
Melvin Hughes
Post Office Box 152
Mesquite, Nevada, 89024
6
<PAGE>
To Purchaser
The Great Basin Water Company
Post Office Box 1721
Mesquite, Nevada, 89024
or to such other address as such party shall have specified
by notice in writing to the other party.
d. Entire Agreement. This Agreement (including the exhibits
hereto and all documents and papers delivered by Seller
pursuant hereto and any written amendments hereof executed
by the parties hereto) constitutes the entire Agreement and
supersedes all prior agreements and understandings, oral and
written, between the
parties hereto with respect to the subject matter hereof.
e. Sections and Other Headings. The Section and other
headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or
interpretation of this Agreement.
f. Governing Law. This agreement, and all transactions
contemplated hereby, shall be governed by, construed and
enforced in accordance with the laws of the State of Nevada.
The parties herein waive trail by jury and agree to submit
to the personal jurisdiction and venue of a court of subject
matter jurisdiction located in Clark County, State of
Nevada. In the event that litigation results from or arises
out of this Agreement or the performance thereof, the
parties agree to reimburse the prevailing party's reasonable
attorney's fees,
court costs, and all other expenses whether or not taxable
by the court as costs, in addition to any other relief to
which the prevailing party may be entitled. In such event,
no action shall be entertained by said court or any court of
competent jurisdiction if filed more than one year
subsequent to the date the cause(s) of action actually
accrued regardless of whether damages were otherwise as of
said time calculable.
g. Conditions Precedent. The Conditions Precedent to the
enforcability of this Agreement are outlined in Exhibit "E"
attached hereto-and made a part hereof. In the event that
said Conditions Precent are not fulfilled by the appropriate
dates thereof, this Agreement shall be deemed null and void
to the Purchaser forthwith.
h. Treasury Stock. It is understood and agreed by the
Purchaser that none of the consideration furnished by
Purchaser hereunder, shall be for any other pump well water
shares other than such listed and such well equipment
applied thereon.
7
<PAGE>
consideration, subject to the terms hereof, shall be the
sole property of the Seller.
i. Contractual Procedures. Unless specifically disallowed by
law, should litigation arise hereunder, service of process
therefor may be obtained through certified mail, return
receipt requested; the parties hereto waiving any and all
rights they may have to object to the method by which
service was perfected
.
IN WITNESS WHEREOF, this Agreement has been executed by each of
the individual parties hereto and signed by an officer thereuntc
duly authorized and attested under the Corporate seal by the
Secretary of the corporate party hereto, all on the date first
above written.
Signed, sealed and delivered in the presence of:
(Corporate Seal)
Purchaser
Witness By: /s/ SIGNATURE OF CHAIRMAN
It's Chairman of the Board of Directors
Attest:
Witness It's Secretary
Seller
Witness
By:/s/ SIGNATURE
/s/SIGNATURE
Witness
Attest:
8
8
<PAGE>
EXHIBIT "A"
AMOUNT AND PAYMENT OF PURCHASE PRICE
A. Consideration. As total consideration for the purchase and
sale of the "pump well water", pursuant to this Agreement, the
Purchaser shall pay to the Seller, Seven Thousand Five Hundred
(7,500) Shares of Preferred Series "B" Stock (Preferred) valued
at $100.00 a share which shall pay interest-in the amount of
Eight Percent per annum, ($60,000.00 in United States Dollars)
due and payable on the First Day of November of each year
commencing in the year 2,000, for the total shares of pump well
water (2,733.35 acre feet) received from the Seller (the Sum),
such total consideration to be referred to in this Agreement as
the "Purchase Price".
b Payment. The Purchase Price shall be paid as follows:
i. Seven Thousand Five Hundred shares of Stock (Preferred
Series "B") of the Great Basin Water Company valued at One
Hundred Dollars per share, or total value of Seven Hundred
Fifty Thousand Dollars ($750,000.00) to be delivered to the
Seller within Sixty Days from the final execution of this
agreement.
ii. A check to the Purchaser in the amount of $607000.00
(dividends) to be paid pior to the First day of November
each year and on which the first payment shall be due and
payable on or before One November, 2,000, and thereafter.
iii. Check of Purchaser accounts payable to be days of the
final closing and upon Purchasers further in the sum of the
equal amount delivered to Seller within of thirty Board of
Directors Acceptance of the books and records of the
Corporation, which payment by the Purchaser shall address
the closing held on the thirty days after the final closing
which is adequate time for the receipt of any bills and to
insure that the Corporations liabilities have been fully
satisfied and Liquidated by the Seller.
C. In the event that the Purchaser, after a complete review of
the Water Recorded books, records, financial statements, sales
tax receipts, bank statements, check books, and any other
document required by Purchaser to verify the standing, status of
performance of the water shares, does not approve said purchase,
then, in that event, all deposits paid to that date shall be
returned to Purchaser with no further liability, responsibility
or obligation.
9
<PAGE>
EXHIBIT "B"
LIABILITIES OF WATER SHARES
See attached financial statement.
10
<PAGE>
EXHIBIT "C"
PROPERTIES AND RECORDS OF THE WATER SHARES
See attached statement.
11
<PAGE>
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 12th day of July,
1999, between Seller One (1), a natural person, Seller Two, (2),
a natural person, and Seller Three, a natural person, jointly and
severally, individually and in their respective capacities (is
officers, directors or shareholders of HDB Telemetry Systems,
Moose Jaw Saskatachawan, Canada, A Canadian Corporation,
hereinafter referred to as the "Seller" and The Great Basin Water
Company, Mountain View Executive Center, 2921 North Tenaya Way,
Las Vegas, Nevada, 89024, hereinafter referred to as the
"Purchaser".
WITNESSETH
WHEREAS, the Seller represents and warrants that it is the sole
and complete record owner and holder of the issued and
outstanding shares of the capital stock of The HDB Telemetry
Systems, Inc., hereinafter referred to as the"Corporation, " a
Nevada Corporation; which corporation has issued and recorded in
it's ledger such capital stock to stockholders, and,
WHEREAS, the Purchaser desires to purchase Twenty Per Cent (20%)
of tile issued and outstanding capital stock of the Corporation,
(referred to as the "Corporation Stock") and the Seller desires
to sell or cause to be sold, all the Corporation Stock, upon tile
terms and subject to the conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, and in order to consumate
the purchase and the sale of the Corporation Stock
aforementioned, it is hereby agreed as follows:
1. PURCHASE AND SALE; CLOSING.
A. Purchase and sale of the Corporations Stock: Subject to
tile terms and conditions hereinafter set forth, at the closing
of the transaction contemplated hereby, the Seller shall sell,
convey and transfer or cause to be sold, conveyed or transferred,
Twenty Per Cent (20%) of the Corporation's Stock and deliver to
the Purchaser certificates representing such stock, and the
Purchaser shall purchase from the Seller, the Corporations Stock
in consideration of the purchase agreement. Seller shall insure
that the certificates representing the Corporation's Stock shall
be duly endorsed for transfer or accompanied by appropriate stock
transfer powers duly executed in blank-, in either case with
signatures guaranteed in the customary fashion, and shall have
tile necessary documentary transfer tax stamps affixed thereto at
the expense of the seller.
B. Procledures for Closing: The closing of the transactions
contemplated by this Agreement (the closing), shall be held at
the offices of The Great Basin Water Company, on or before the
29th day of July, 1999, at 1:00 P.M. or at such other place, date
and time as the parties hereto may and otherwise agree (such
closing date to be referred to in this
<PAGE>
agreement as the closing date), so long as the closing is within
Sixty (60) days of the
date of this agreement.
2. AMOUNT AND PAYMENT OF PURCHASE PRICE. The total consideration
and method of payment thereof are fully set out in Exhibit "A"
attached hereto and made a part hereof by this reference.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
warrants and represents:
A. Organization and Standing: Corporation is a corporation
duly organized, validly existing and in good standing under the
laws of Canada, and has the corporate power and authority to
carry on its business as it is now being conducted. A true and
correct copy of.
i. The certificate of incorporation and all amendments
thereto to date, certified by the appropriate governmental
officials, and;
ii. The bylaws as now in effect.
which all will be delivered by seller to the purchaser prior to
the closing date. The Corporation's minute books and stock ledger
will be made available to the purchaser and its representatives
at any reasonable time or times prior to the closing for
inspection and will be complete and correct as of the date of any
such inspection.
B. Capitalization: The authorized capital stock of the
Corporation consists of 1,000 shares of $1.00 par value common
stock.
C. Restrictions on Stock:
i. Neither the Corporation nor Seller is a party to any
agreement, written or oral, creating rights in respect to the
Corporations Stock in any third person or relating to the voting
of the Corporation Stock.
ii. Seller is the lawful owner of all the Corporations
Stock, free and clear of all security interests, liens,
encumbrances, equititites and other charges.
iii. There are no existing warrants, options, stock
purchase agreements, redemption agreements, restrictions of any
nature, calls, or rights to subscribe of any character relating
to the Capital stock of the Corporation, nor are there any
securities convertible into such stock.
2
<PAGE>
iv: The Stock is fully paid and non-assessable.
D. Subsidiaries: The Corporation, The HDB Telemetry Systems,
Inc., does not have any subsidiaries.
E. Authority Relative to this Agreement: Except as otherwise
stated herein, the Seller has full power and authority to execute
this Agreement and carry out the transactions contemplated by it
and no further action is necessary by the seller to make
this agreement valid and binding upon seller and enforceable
against it in accordance with the terms hereof, or to carry out
the actions contemplated hereby. The execution, delivery
and performance of this agreement by the Seller will not:
i. Constitute a breach or a violation of the
Corporation's Certificate of Incorporation, By-Laws or of any
law, agreement, indenture, deed of trust, mortgage, loan
agreement, or other instrument to which it is a party or by which
it is bound, or;
ii. Constitute a violation of any order, judgement or
decree to which it is a party or by which its assets or
properties are bound or affected; or,
iii. Result in the creation or acceleration of any
lien, charge or encumbrance upon its assets or properties, except
as stated herein.
iv. Cause the termination or diminution of any right,
interest benefit, indemnification or other thing of value to the
Corporation.
F. Financial Statements: Seller is furnishing financial
statements of the Corporation as an inducement to purchaser to
purchase the Corporation's Stock and accordingly, Seller
warrants and represents the financial operating history or
condition of the Corporation as indicated by the financial
statements turned over to the Purchaser. Moreover, Seller
warrants and represents that at closing, tile Corporation and
tile Corporation's Stock will not be subject to any liability
save and except those specifically enumerated in Exhibit "B"
attached hereto and made a part hereof by this reference.
3
<PAGE>
G. Tax Matters: The Corporation has timely prepared and
filed all required tax returns and reports as are and have been
required to be filed and all taxes shown thereon to be due have
been paid in full.
H. Litigation: The Corporation is not a party to any
litigation, proceeding or administrative investigation and to the
best knowledge of the Seller, none is pending against the
Corporation or its properties.
I. Properties: The Corporation has good and sellable title
to all of its properties and assets which are those properties
and assets set out in Exhibit "C" attached hereto and made a part
hereof by this reference. At closing, such properties and assets
will be subject to no mortgage, pledge, lien, conditional sales
agreement, security agreement, encumbrance or charge, secured or
unsecured, except for those fisted, and except for real estate
mortgages, equipment loans or leases, real estate taxes and
tangible personal property taxes which shall be prorated as of
the date of closing, or those specifically sct out in Exhibit
"B".
J. Compliance with Applicable Laws: None of the
Corporation's actions are prohibited by or have violated or will
violate any law in effect on the date of this agreement or oil
the date of closing. None of the actions of the Corporation shall
conflict with or result in any breach of any of the provisions
of, or constitute a default under, or result in the creation of
any lien, security interest, charge or encumbrance upon the
capital stock of the Corporation, or upon any of the assets of
the Corporation, under the provisions of the Certificate of
Incorporation or bylaws or any indenture, mortgage, lease, loan
agreement or other agreement to which the Corporation and/or the
Seller is a party or by which the capital stock or properties and
assets of the Corporation are bound to affect it.
The Corporation is in compliance with all applicable laws,
including but not limited to, corporate laws, zoning regulations,
requirements of the Corporate Commission of Canada, occupational
laws and regulations, internal revenue laws, liability, indemnity
or other insurance coverage, and any and all other laws which may
affect the operation or liability of the buyers herein.
4
<PAGE>
K. Documents for review: The Corporation's documents
enumerated in Exhibit "D", attached hereto and made a part hereof
by this reference, are true authentic, and correct copies of the
originals, or, if appropriate, the originals themselves, and no
alterations or modifications thereof have been made.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND PURCHASER:
Seller and Purchaser hereby represent and warrant that there has
been no act or omission by Seller, Purchaser or the Corporation
which would give rise to any valid claim against any of the
parties hereto for a brokerage commission, finder's fee or other
like payment
in connection with the transaction contemplated hereby.
5. TRANSACTIONS PRIOR TO THE CLOSING: Seller hereby covenants the
following:
A. Conduct of Corporations Business Until Closing: Except as
purchaser may otherwise consent in writing prior to the closing
date, Seller will not enter into any transactions, take any
action or fail to take any action which would result in, or could
be reasonably expected to result in or cause, any of the
representations and warranties of Seller contained in this
Agreement, to be not true on the Closing Date.
B. Resignations: Not required.
C. Satisfactions: Does not apply.
D. Advice of Changes: Between the date hereof and the
closing date, seller will promptly advise purchaser in writing of
any fact, which, if existing or known at the date hereof, would
have been required to be set forth herein, or disclosed pursuant
to this Agreement, or which would represent a material fact, the
disclosure of which, would be relevent to the purchaser.
5
<PAGE>
6. EXPENSES: Each of the parties hereto shall pay its own expense
in connection with this Agreement and the transactions
contemplated hereby, including fees and expenses of its
counsel and its certified public accounts and other experts.
7.GENERAL:
A. Survival of Representations and Warranties: Each of the
parties to this agreement covenants and agrees that the Seller's
representations, warranties covenants and statements and
agreements contained in this agreement and the exhibits hereto,
of and in, and any documents delivered by Seller to Purchaser in
connection herewith, shall survive the closing date and terminate
on the second anniversary of such date, except, as set
forth in this agreement, the exhibits hereto, or in the
documents and papers delivered by Seller to Purchaser in
connection herewith, there are no other agreements,
representations, warranties or covenants by or among the parties
hereto with respect to the subject matter hereof
B. Waivers: No action taken pursuant to this agreement,
including any investigation by or on behalf of any party shall be
deemed to constitute a waiver by the party taking such action or
compliance with any representations, warranty, covenant or
agreement contained herein, therein, and hi any documents
delivered in connection herewith or therewith. The waiver by any
party hereto of a breach of any provisions of this agreement
shall not operate or be construed as a waiver of any subsequent
breach.
C. Notices: All notices, requests, demands and other
communications which are required or may be given under this
agreement, shall be in writing, and shall be deemed to
have been duly given if delivered of mailed, first class mail,
postage prepaid to the Seller: The HDB Telemetry Systems Inc. To
509-12 High St E. Moose-Jaw SK S6H0B9 and to Purchaser, The Great
Basin Water Company, Mountain View Executive Center, 2921 North
Tenaya Way, Las Vegas, Nevada, 89128, or to such other address as
such party shall have specified by notice in writing to the other
party.
D. Entire Agreement: This agreement(including the exhibits
hereto and all documents and papers delivered by Seller pursuant
hereto and any written amendments hereof, executed by the parties
hereto) constitute the entire agreement and supersedes all prior
agreements and understandings, oral and written, between the
parties hereto with respect to the subject matter hereof.
E. Sections and Other Headings: The Section and other
headings contained in this agreement are for reference purposes
only and shall not affect the meaning or interpretation of this
agreement.
6
<PAGE>
F. Governing Law: This agreement and all transactions
contemplated hereby, shall be governed by, construed and enforced
in accordance with the laws of the State of Nevada. The parties
herein waive trial by jury and agree to submit to tile personal
jurisdiction and venue of a court of subject matter jurisdiction
located in Clark County, State of Nevada. In the event that the
litigation results from or arises out of this agreement or
the performance thereof, the parties agree to reimburse the
prevailings party's reasonable attorney fees, court costs, and
all other expenses whether or not taxable by the court as
costs, in addition to any other relief to which the prevailing
party may be entitled. In such event, no action shall be
entertained by said court or any court of competent
jurisdiction if filed more than one year subsequent to the date
of tile case(s) of action acutally accrued regardless of whether
damages were otherwise as of said time calculable.
G. Conditions Precedent. The Conditions Precedent to the
enforcability of this Agreement are outlined in Exhibit "E"
attached hereto and made a part hereof by this reference. In the
event that said conditions precedent are not
fulfilled by the appropriate dates thereof, this agreement shall
be deemed null and void to the Purchaser forthwith.
H. Treasury Stock: It is understood and agreed by the
Purchaser that none of the consideration furnished by the
Purchaser to the Seller hereunder, shall be for treasury
stock, and such consideration, subject to the terms hereof, shall
be applied for the acquisition of the shares that are the sole
property of the Seller.
I. Contractual Procedures. Unless specifically disallowed by
law, should litigation arise hereunder, service of process
therefor may be obtained through certified mail, return receipt
requested; the parties hereto waiving any and all rights they may
have to object to the method by which service was perfected.
J. Realization of Purpose: Seller agrees that Purchaser's
intention and purpose in purchasing the Corporation Stock is to
continue the operation of the Corporation's business as a going
concern, and that its consideration hereunder is based upon said
going concern value. Accordingly, Seller, agrees to undertake to
perform such actions, execute such documents and supply such
information to Purchaser for such period of time not to exceed 3
years following the execution of this Agreement, as may be
reasonable and necessary to effectuate said Purpose.
7
<PAGE>
IN WITNESS WHEREOF, this agreement has been executed by each of
the individual parties hereto and signed by an officer thereunto
duly authorized and attested under the Corporate Seal by the
Secretary of the Corporate party hereto, all on the date first
above written.
Signed, Sealed and Delivered in the presence of:
[SEAL AS FOLLOWS: HDB TELEMETRY SYSTEMS INC.]
Witness
Date
5/Aug/99
/s/SIGNATURE OF SECRETARY
The HDB Telemetry Systems Inc.,
It's Secretary
Date
4 Aug 99
/s/ SIGNATURE OF PRESIDENT
The HDB Telemetry Systems, Inc.,
It's President Date
13 July 99
/s/ JAY J. TAYLOR
The Great Basin Water Company
It's Secretary Date
13 July 99
/s/ SIGNATURE OF PRESIDENT
The Great Basin Water Company
It's President Date
Witness Date
Witness Date
Exhibits A through E Attached
8
<PAGE>
EXHIBIT "A"
AMOUNT AND PAYMENT OF PURCHASE PRICE
1. CONSIDERATION: As total consideration for the purchase and
sale of the Corporations Stock, pursuant to this Agreement, the
purchaser shall pay to the seller, Twenty Five Thousand Shares
(25,000) shares of common stock, for the Twenty Per Cent (20%) of
the issued and outstanding stock, illustrated in the stock
register and received from the seller,(the sum). Such total
consideration to be referred to in this agreement as the
"Purchase Price."
2. PAYMENT: The purchase price shall be paid as follows:
A. A Certificate or Certificates representing Twenty Five
Thousand, (25,000) shares of Common Stock of the Great Basin
Water Company, par value, ($00.001) per share, delivered
to the Seller on closing of this Agreement.
B. Not Required
3. DEPOSITS: In the event that the Purchaser, after a complete
review of the Corporation's Books, records, financial statements,
sales tax receipts, bank statements, check books and any other
document required by Purchaser to verify the standing, status or
performance of the Corporation, does not approve said purchase,
then, in that event, all deposits paid to that date shall be
returned to purchaser with no further liability, responsibility
or obligations.
9
<PAGE>
EXHIBIT "C"
PROPERTIES AND ASSETS OF THE CORPORATION
10
<PAGE>
EXHIBIT "E"
CONDITIONS PRECEDENT
Seller agrees that the intent of the Purchaser in purchasing the
Corporation Stock is to continually assist to capitalize and to
operate and maintain the operation of The HDB Telemetry Systems
Inc., Company as an on-going operation.
Purchaser and Seller agree that the operation and licensing of
the Company require specialties in personnel professions and
abilities, and in that such concern of the Seller and the
Purchaser to operate and maintain the operation of The Company,
based upon the professional ability required in such operation,
Seller agrees and in its capacity as Officer and Director of such
Corporation, to undertake to perform such actions, and execute
such managerial duties and staff such operations in a
satisfactory manner for a period of time during the negotiations
and transisition and for a period of time not to exceed Three
Years following the execution of this agreement, as may be
reasonable and necessary to effectuate said purpose. In addition,
as such Management requirements as the Officer and Directors of
The Company, Inc., and operator, Seller is willing to and does
accept an individual appointed by The Great Basin Water Company
to serve as a Director to The Company alter the stock
acquisition, and a position of a Director of The Great Basin
Water Company and as a consultant on Operations thereto.
13
<PAGE>
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 12th day of July,
1999, between Seller One (1), a natural person, Seller Two, (2),
a natural person, and Seller Three, a natural person, jointly and
severally, individually and in their respective capacities as
officers, directors or shareholders of HDB Telemetry Systems,
2921 North Tenaya Way, Suite 208, Las Vegas, Nevada, 89134, A
Nevada Corporation, hereinafter referred to as the "Seller" and
The Great Basin Water Company, Post Office Box 1721, Mesquite,
Nevada, 89024, hereinafter referred to as the "Purchaser".
WITNESSETH
WHEREAS, the Seller represents and warrants that it is the sole
and complete record owner and holder of the issued and
outstanding shares of the capital stock of The HDB Telemetry
Systems, Inc., hereinafter referred to as the "Corporation, " a
Nevada Corporation; which corporation has issued and recorded in
it's ledger such capital stock to stockholders, and,
WHEREAS, the Purchaser desires to purchase all of the issued and
outstanding capital stock of the Corporation, (referred to as the
"Corporation Stock") and the Seller desires to sell or cause to
be sold, all the Corporation Stock, upon the terms and subject to
the conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, and in order to
consurnate the purchase and the sale of the Corporation Stock
aforementioned, it is hereby agreed as follows:
1. PURCHASE AND SALE; CLOSING.
A. Purchase and sole of the Corporations Stock: Subject to
the terms and conditions hereinafter set forth, at the closing of
the transaction contemplated hereby, the Seller shall sell,
convey and transfer or cause to be sold, conveyed or transferred,
all of the Corporation's Stock and deliver to the Purchaser
certificates representing such stock, and the Purchaser shall
purchase from the Seller, the Corporations Stock in consideration
of the purchase agreement. Seller shall insure that the
certificates representing the Corporation's Stock shall be duly
endorsed for transfer or accompanied by appropriate stock
transfer powers duly executed in blank, in either case with
signatures guaranteed in the customary fashion, and shall have
the necessary documentary transfer tax stamps affixed thereto at
the expense of the seller.
B. Procledures for Closing: The closing of the transactions
contemplated by this Agreement (the closing), shall be held at
the offices of The Great Basin Water Company, on or before
the 29th day of July, 1999, at 1:00 P.M. or at such other place,
date and time as the parties hereto may and otherwise agree (such
closing date to be referred to in this
<PAGE>
agreement as the closing date), so long as the closing is within
Sixty (60) days of the date of this agreement.
2. AMOUNT AND PAYMENT OF PURCHASE PRICE. The total consideration
and method of payment thereof are fully set out in Exhibit "A"
attached hereto and made a part hereof by this reference.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
warrants and represents:
A. Organization and Standing: Corporation is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Nevada, and has the corporate power and
authority to carry on its business as it is now being conducted.
A true and correct copy of:
i. The certificate of incorporation and all amendments
thereto to date, certified by the Secretary of the State of
Nevada, and;
ii. The bylaws as now in effect.
which all will be delivered by seller to the purchaser prior to
the closing date. The Corporation's minute books and stock ledger
will be made available to the purchaser and its representatives
at any reasonable time or times prior to the closing for
inspection and will be complete and correct as of the date of any
such inspection.
B. Capitalization: The authorized capital stock of the
Corporation consists of 100,000 shares of $00.001 par value
common stock.
C. Restrictions on Stock:
i. Neither the Corporation nor Seller is a party to any
agreement, written or oral, creating rights in respect to the
Corporations Stock in any third person or relating to
the voting of the Corporation Stock.
ii. Seller is the lawful owner of all the Corporations
Stock, free and clear of all security interests, liens,
encumbrances, equititites and other charges.
iii. There are no existing warrants, options, stock
purchase agreements, redemption agreements, restrictions of any
nature, calls, or rights to subscribe of any character
relating to the Capital stock of the Corporation, nor are there
any securities convertible into such stock.
2
<PAGE>
iv: The Stock is fully paid and non-assessable.
D. Subsidiaries: The Corporation, The HDB Telemetry Systems,
Inc., does not have any subsidiaries.
E. Authority Relative to this Agreement: Except as otherwise
stated herein, the Seller has full power and authority to execute
this Agreement and carry out the transactions contemplated by it
and no further action is necessary by the seller to make this
agreement valid and binding upon seller and enforceable against
it in accordance with the terms hereof, or to carry out the
actions contemplated hereby. Tile execution, delivery and
performance of this agreement by the Seller will not:
i. Constitute a breach or a violation of the
Corporation's Certificate of Incorporation, By-Laws or of any
law, agreement, indenture, deed of trust, mortgage, loan
agreement, or other instrument to which it is a party or by which
it is bound, or;
ii. Constitute a violation of any order, judgement or
decree to which it is a party or by which its assets or
properties are bound or affected; or,
iii. Result in the creation or acceleration of any
lien, charge or encumbrance upon its assets or properties, except
as stated herein.
iv. Cause the termination or diminution of any right,
interest, benefit, indemnification or other thing of value to the
Corporation.
F. Financial Statements: Seller is furnishing financial
statements of the Corporation as an inducement to purchaser to
purchase the Corporation's Stock and accordingly, Seller
warrants and represents the financial operating history or
condition of the Corporation as indicated by the financial
statements turned over to the Purchaser. Moreover, Seller
warrants and represents that at closing, the Corporation and the
Corporation's Stock will not be subject to any liability save and
except those specifically enumerated in Exhibit "B" attached
hereto and made a part hereof by this reference.
To tile extent that liabilities are discovered by purchaser,
after closing, which related to events prior to closing, Seller
shall be responsible to forthwith pay such liabilities,
including income tax liabilities in cash within forty-five (45)
days thereof, or alternatively, if seller objects to such
liabilities in good faith, litigate the issue and indemnify and
save harmless purchaser from any claim for such income tax
liabiality. This indemnification as it relates to income tax
liabilities of the Corporation shall terminate
on the tenth (1Oth) day after tile expiration of the applicable
period of limitations on assessments and collections
3
<PAGE>
applicable to such taxes under the Internal Revenue Code.
Moreover, the aforementioned indemnity shall not apply to any tax
liability which may occur by reasons of actions taken by the
purchaser, including, but not limited to, the liquidation
of the Corporation.
G. Tax Matters: The Corporation has timely prepared and
filed all federal, state and local tax returns and reports as are
and have been required to be filed and all taxes shown
thereon to be due have been paid in full.
H. Litigation: The Corporation is not a party to any
litigation, proceeding or administrative investigation and to the
best knowledge of the Seller, none is pending against the
Corporation or its properties.
I. Properties: The Corporation has good and sellable title
to all of its properties and assets which are those properties
and assets set out in Exhibit"C" attached hereto and
made a part hereof by this reference. At closing, such properties
and assets will be subject to no mortgage, pledge, lien,
conditional sales agreement, security agreement, encumbrance or
charge, secured or unsecured, except for real estate mortgages,
equipment loans or leases, real estate taxes and tangible
personal property taxes which shall be prorated as of the date of
closing, or those specifically set out in Exhibit "B".
J. Compliance with Applicable Laws: None of the
Corporation's actions are prohibited by or have violated or will
violate any law in effect on the date of this agreement or on the
date of closing. None of the actions of the Corporation shall
conflict with or result in any breach of any of the provisions
of, or constitute a default under, or result in the creation of
any lien, security interest, charge or encumbrance upon the
capital stock of the Corporation, or upon any of the assets of
the Corporation, under the provisions of the Certificate of
Incorporation or bylaws or any indenture, mortgage, lease, loan
agreement or other agreement to which the Corporation and/or the
Seller is a party or by which the capital stock or properties and
assets of the Corporation are bound to affect it.
The Corporation is in compliance with all applicable laws,
including but not limited to, corporate laws, zoning regulations,
requirements of the Corporate Commission of the State
of Nevada, state occupational laws and regulations, internal
revenue laws, liability, indemnity or other insurance coverage,
and any and all other laws which may affect the operation or
liability of the buyers herein.
4
<PAGE>
K. Documents for review: The Corporation's documents
enumerated in Exhibit "D", attached hereto and made a part here
of by this reference, are true authentic, and correct copies of
the originals, or, if appropriate, the originals themselves, and
no alterations or modifications thereof have been made.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND PURCHASER:
Seller and Purchaser hereby represent and warrant that there has
been no act or omission by Seller, Purchaser or the Corporation
which would give rise to any valid claim against any of the
parties hereto for a brokerage commission, finder's fee or other
like payment in connection with the transaction contemplated
hereby.
5. TRANSACTIONS PRIOR TO THE CLOSING: Seller hereby covenants the
following:
A. Conduct of Corporation's Business Until Closing: Except
as purchaser may otherwise consent In writing prior to the
closing date, Seller will not enter into any transactions, take
any action or fail to take any action which would result in, or
could be reasonably expected to result in or cause, any of the
representations and warranties of Seller contained in this
Agreement, to be not true on the Closing Date.
B. Resignations: Not required.
C. Satisfactions: Seller will deliver to purchaser prior to
the closing date, a satisfaction of any mortgage and lien holder
of the Corporation's Property, satisfactory in form and substance
to the Purchaser and his counsel indicating that the then
outstanding unpaid balance of any promissory note securied
thereby has been paid in full to or simultaneously with the
closing (if any), except real property mortgages or well or
infrastructure construction loans, which the Purchaser shall
assume and any other liens or mortgages agreed upon by Seller and
Purchaser and so listed in the exhibits.
D. Advice of Changes: Between the date hereof and the
closing date, seller will promptly advise purchaser in writing of
any fact, which, if existing or known at the date hereof,
would have been required to be set forth herein, or disclosed
pursuant to this Agreement, or which would represent a material
fact, the disclosure of which, would be relevent to the
purchaser.
5
<PAGE>
6. EXPENSES: Each of tile parties hereto shall pay its own
expense in connection with this Agreement and the transactions
contemplated hereby, including fees and expenses of its
counsel and its certified public accounts and other experts.
7.GENERAL:
A. Survival of Representations and Warranties: Each of the
parties to this agreement covenants and agrees that the Seller's
representations, warranties covenants and statements and
agreements contained in this agreement and the exhibits hereto,
of and in, and any documents delivered by Seller to Purchaser in
connection herewith, shall survive the closing date and
terminate on the second anniversary of such date, except, as set
forth in this agreement, the exhibits hereto, or in the documents
and papers delivered by Seller to Purchaser in connection
herewith, there are no other agreements, representations,
warranties or covenants by or among the parties hereto with
respect to the subject matter hereof.
B. Waivers: No action taken pursuant to this agreement,
including any investigation by or on behalf of any party shall be
deemed to constitute a waiver by the party taking such action or
compliance with any representations, warranty, covenant or
agreement contained herein, therein, and in any documents
delivered in connection herewith or therewith. The waiver by any
party hereto of a breach of any provisions of this agreement
shall not operate or be construed as a waiver of any subsequent
breach.
C. Notices: All notices, requests, demands and other
communications which are required or may be given under this
agreement, shall be in writing, and shall be deemed to have been
duly given if delivered of mailed, first class mail, postage
prepaid to the Seller: The HDB Telemetry Systems Inc., The
Mountain View Exectuvie Center, 2921 North Tenaya Way, Las Vegas,
Nevada, 89128, and to Purchaser, The Great Basin Water Company,
Post Office Box 1721, Mesquite, Nevada, 89024, or to such other
address as such party shall have specified by notice in writing
to the other party.
D. Entire Agreement. This agreement(including the exhibits
hereto and all documents and papers delivered by Seller pursuant
hereto and any written amendments hereof, executed by the parties
hereto) constitute the entire agreement and supersedes all prior
agreements and understandings, oral and written, between the
parties hereto with respect to the subject matter hereof.
E. Sections and Other Headings: The Section and other
headings contained in this agreement are for reference purposes
only and shall not affect the meaning or interpretation of this
agreement.
6
<PAGE>
F. Governing Law: This agreement and all transactions
contemplated hereby, shall be governed by, construed and enforced
in accordance with the laws of the State of Nevada. The parties
herein waive trial by Jury and agree to submit to the personal
jurisdiction and venue of a court of subject matter jurisdiction
located in Clark County, State of Nevada. In the event that the
litigation results from or arises out of this agreement or the
performance thereof, the parties agree to reimburse the
prevailings party's reasonable attorney fees, court costs, and
all other expenses whether or not taxable by the court as costs,
in addition to any other relief to which the prevailing party may
be entitled. In such event, no action shall be entertained by
said court or any court of competent jurisdiction if filed more
than one year subsequent to the date of the case(s) of action
acutally accrued regardless of whether damages were otherwise as
of said time calculable.
G. Conditions Precedent. The Conditions Precedent to the
enforcability of this Agreement are outlined in Exhibit "E"
attached hereto and made a part hereof by this reference. In
the event that said conditions precedent are not fulfilled by the
appropriate dates thereof, this agreement shall be deemed null
and void to the Purchaser forthwith.
H. Treasury Stock: It is understood and agreed by the
Purchaser that none of the consideration furnished by the
Purchaser to the Seller hereunder, shall be for treasury
stock, and such consideration, subject to the terms hereof, shall
be applied for the acquisition of the shares that are the sole
property of the Seller.
I. Contractual Procedures. Unless specifically disallowed by
law, should litigation arise hereunder, service of process
therefor may be obtained through certified mail, return receipt
requested; the parties hereto waiving any and all rights they may
have to object to the method by which service was perfected.
J. Realization of Purpose: Seller agrees that Purchaser's
intention and purpose in purchasing the Corporation Stock is to
continue the operation of the Corporation's business as a going
concern, and that its consideration hereunder is based upon said
going concern value. Accordingly, Seller, in its capacity as
former Officer, Director or Shareholder, agrees to undertake to
perform such actions, execute such documents and supply such
information to Purchaser for such period of time not to exceed 30
days following the execution of this Agreement, as may be
reasonable and necessary to effectuate said Purpose.
7
<PAGE>
IN WITNESS WHEREOF, this agreement has been executed by each of
the individual parties hereto and signed by an officer thereunto
duly authorized and attested under the Corporate Seal by the
Secretary of the Corporate party hereto, all on the date first
above written.
Signed Sealed and Delivered in the presence of:
[CORPORATE SEAL AS FOLLOWS: HDB TELEMETRY SYSTEMS, INC. ]
Witness
Date
/S/SIGNATURE OF THE
SECRETARY 5/Aug/99
The HDB Telemetry Systems Inc.,
It's Secretary
Date
/S/SIGNATURE OF THE
PRESIDENT 04 Aug 99
The HDB Telemetry Systems, Inc.,
It's President
Date
/S/SIGNATURE OF THE
SECRETARY 13 July 99
The Great Water Basin Company
It's Secretary
Date
/S/SIGNATURE OF THE
PRESIDENT 13 July 99
The Great Water Basin Company
It's President
Witness
Witness
Exhibits A through E Attached
8
<PAGE>
EXHIBIT "A"
AMOUNT AND PAYMENT OF PURCHASE PRICE
1. CONSIDERATION: As total consideration for the purchase and
sale of the Corporations Stock, pursuant to this Agreement, the
purchaser shall pay to the seller, One Hundred Thousand Shares
(100,000) shares of common stock, for the issued and outstanding
stock, illustrated in the stock register and received from the
seller, (the sum). Such total consideration to be referred to in
this agreement as the "Purchase Price."
2. PAYMENT: The purchase price shall be paid as follows:
A. A Certificate or Certificates representing One Hundred
Thousand, (100,000) shares of Common Stock of the Great Basin
Water Company, par value, ($00.001) per share, delivered
to the Seller on closing of this Agreement.
B. Not Required
3. DEPOSITS: In the event that the Purchaser, after a complete
review of the Corporation's Books, records, financial statements,
sales tax receipts, bank statements, check books and any other
document required by Purchaser to verify tile standing, status or
performance of the Corporation, does not approve said purchase,
then, in that event, all deposits paid to that date shall be
returned to purchaser with no further liability, responsibility
or obligations.
9
<PAGE>
EXHIBIT "B"
LIABILITIES OF THE CORPORATION
10
<PAGE>
EXHIBIT "C"
PROPERTIES AND ASSETS OF THE CORPORATION
11
<PAGE>
EXHIBIT "E"
CONDITIONS PRECEDENT
Seller agrees that the intent of the Purchaser in purchasing the
Corporation Stock is to continue to operate and maintain the
operation of The HDB Telemetry Systems Inc., Company
as an on-going operation.
Purchaser and Seller agree that the operation and licensing of
the Distribution Company require specialties in personnel
professions and abilities, and in that such concern of
the Seller and the Purchaser to operate and maintain the
operation of The Company, based upon the professional ability
required in such operation, Seller agrees and in its capacity as
former Officer and Director of such Corporation, to undertake to
perform such actions, and execute such managerial duties and
staff such operations in a satisfactory manner for a period of
time during the negotiations and transisition and for a period of
time not to exceed One Year following the execution of this
agreement, as may be reasonable and necessary to effectuate said
purpose.
In addition, as such Management requirements as the former
Officer and Directors of The Company, Inc., and operator, Seller
is willing to and does accept the positions as President and
Operating Staff of The Company after the stock acquisition, and
the position of a Director of The Great Basin Water Company and
as a consultant on Operations thereto.
13
<PAGE>
[file stamped as follows: FILED IN THE OFFICE OF THE SECRETARY OF STATE OF
THE STATE OF NEVADA, AUG 27 1997 No. C 18364-97, DEAN HELLER. SECRETARY OF
STATE]
ARTICLES OF INCORPORATION
OF
GREAT BASIN WATER COMPANY
* * * *
I, the undersigned, for the purpose of forming a corporation under the
general corporation laws of the State of Nevada, to do business within and
without the State of Nevada, do make and file these Articles of
Incorporation hereby declaring and certifying that the facts stated are
true:
ARTICLE I
NAME
The name of the corporation is:
GREAT BASIN WATER COMPANY
ARTICLE II
RESIDENT AGENT & REGISTERED OFFICE
Section 2.01 Resident agent. The name and address of the resident
agent for service of process is Lee Walker, 1729 Arrowhead St., No. Las
Vegas, NV 89030.
Section 2.02 Registered office. The address of its registered office
is 1729 Arrowhead Street, North Las Vegas, Nevada 89030.
Section 2.03 Other of offices. The corporation may also maintain
offices for the transaction of any business at such other places within or
without the State of Nevada as it may from time to time determine.
Corporate business of every kind and nature may be conducted, and meetings
of the directors and stockholders held outside the State of Nevada with the
same effect as if in the State of Nevada.
ARTICLE III
SHARES OF STOCK
The amount of the total authorized capital stock of
.....
ARTS. OF INC. 1
<PAGE>
the corporation is Two Thousand five hundred (25,000,000,) Shares with a
par value of $0.001 per share.
All such stock shall be designated as Common Stock. The Common Stock
may be issued from time to time without action by the stockholders. The
Common Stock may be issued for such consideration as may be fixed by the
Board of Directors from time to time.
The Board of Directors may issue such shares of Common Stock in one or
more series, at such price and in such numbers of each series with such
voting powers, designations, preferences and rights or qualifications or
restrictions thereof as shall be stated in the resolution or resolutions
adopted by them.
ARTICLE IV
DIRECTORS
Section 4.01 Governing Board. The members of the governing board of
the corporation shall be styled as directors.
Section 4.02 Initial Board of Directors. The initial Board of
Directors shall consist of three members. The names and addresses of the
initial members of the Board of Directors are as follows:
Darryl E. Schuttloffel Parry Warren Ron Drake
P.O. Box 1721 2950 E. Flamingo 2950 E. Flamingo
Mesquite, NV 89024 Las Vegas, NV 89121 Las Vegas, NV 89121
These individuals shall serve as directors until their successor(s)
shall have been elected and qualified.
Section 4.03 Change in Number of Directors. The number of specific or
total directors may be increased or decreased by a duly adopted amendment
to the By-Laws of the corporation.
.....
.....
ARTS. OF INC. 2
<PAGE>
ARTICLE V
INCORPORATOR
The name and address of the incorporator is, Darryl E. Shuttloffel,
Mesquite, Nevada 89024.
ARTICLE VI
DIRECTORS' AND OFFICERS' LIABILITY
A director or officer of the corporation shall not be personally
liable to the corporation or its stockholders for damages for breach of
fiduciary duty as a director or officer, but this article shall not
eliminate or limit the liability of a director or officer for (i) acts or
ommissions which involve intentional misconduct, fraud or a knowing
violation of law or (ii) the payment of distributions in violation of NRS
78.300. Any repeal or modification of this Article by the stockholders of
the Corporation shall be prospective only, and shall not adversely affect
any limitation on the personal liability or a director or officer of the
corporation for acts or ommissions prior to such repeal or modification.
ARTICLE VII
INDEMNITY
Every person who was or is a party to, or is threatened to be made a
party to, or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he,
or a person of whom he is the legal representative, is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise,
shall be indemnified and held harmless to the fullest extent legally
permissible under the laws of the state of Nevada from time to time against
all expenses, liability and loss, (including attorneys' fees, judgments,
fines and amounts paid or to be paid in settlement)
ARTS. OF INC. 3
<PAGE>
reasonably incurred or suffered by him in connection therewith. Such right
of indemnification shall be a contract right which may be enforced in any
manner desired by such person. The expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding must
be paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent jurisdiction that he
is entitled to be indemnified by the corporation. Such right shall not be
exclusive of any other right which such directors, officers or
representatives may have or hereafter acquire, and, without limiting the
generality of such statement, they shall be entitled to their respective
rights of indemnification under any By-Law agreement, vote of stockholder,
provision of law or otherwise, as well as their rights under this Article.
Without limiting the application of the foregoing, the Board of
Directors may adopt by-laws from time to time with respect to
indemnification, to provide at all times the fullest indemnification
permitted by the laws of the State of Nevada, and may cause the corporation
to purchase and maintain insurance on behalf of any person who is or was a
director or officer of the corporation, or is or was serving at the request
of the corporation as director or officer of another corporation, or as a
representative in a partnership, joint venture, trust or other enterprises
against any liability asserted against such person and incurred in any such
capacity or arising out of such status, whether or not the corporation
would have the power to indemnify such person.
The indemnification provided in this Article shall continue as to a
person who has ceased to be a director, officer, employee or agent, and
shall inure to the benefit of the heirs, executors and administrators of
such person.
ARTS. OF INC. 4
<PAGE>
ARTICLE VIII
AMENDMENTS
This corporation reserves the right to amend, alter, change, or repeal
any provision contained in these Articles of Incorporation or its By-Laws,
in the manner now or hereafter prescribed by statute or by these Articles
of Incorporation or said By-Laws, and all rights conferred upon the
stockholders are granted subject to this reservation.
ARTICLE IX
POWERS OF DIRECTORS
In furtherance, and not in limitation of the powers conferred by
statute, the Board of Directors is expressely authorized:
(1) Subject to the By-Laws, in any, adopted by the stockholders, to
make, alter or repeal the By-Laws of the corporation.
(2) To authorize and cause to be executed mortgages and liens, with or
without limit as to amount, upon real or personal property of the
corporation;
(3) To authorize the guaranty by the corporation of securities,
evidences of indebtedness and obligations of other persons, corporations
and business entities;
(4) To set apart out of any of the funds of the corporation available
for dividends a reserve for any purpose and to abolish any such reserve;
and
(5) By resolution adopted by a majority of the whole board, to
designate one or more committees, each committee to consist of one or more
of the directors of the corporation, which, to the extent provided in the
resolution or in the By-Laws of the corporation, shall have and may
exercise the powers of the Board of Directors in the management of the
business affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it.
.....
ARTS. OF INC. 5
<PAGE>
Such committee or committees shall have such name or names as may be stated
in the By-Laws of the corporation or as may be determined from time to time
by resolution adopted by the Board of Directors.
All corporate powers of the corporation shall be exercised by the
Board of Directors except as otherwise provided herein or by law.
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of
August, 1997.
/s/ DARRYL E. SHUTTLLOFFEL
--------------------------
Darryl E. Shuttlloffel
Incorporator
ACKNOWLEDGMENT
STATE OF NEVADA )
) ss
COUNTY OF CLARK )
On this 22nd day of August, 1997, personally appeared before me, a
Notary Public, Darryl E. Shuttloffel, who acknowledged to me that he
executed the foregoing document.
/s/ RONALD L. DRAKE
NOTARY PUBLIC
[NOTARY PUBLIC County of Clark-State of Nevada RONALD L DRAKE
My Appointment expires May 5. 1999]
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
In the matter of GREAT BASIN WATER COMPANY, I, Lee Walker, 1729
Arrowhead St., No. Las Vegas, Nevada 89030, hereby accept the appointment
as Resident Agent of the above-entitled corporation in accordance with NRS
78.090.
IN WITNESS WHEREOF I have affixed my signature this 22nd day of
August, 1997.
By: /s/LEE WALKER
Lee Walker, Resident Agent
ARTS. OF INC. 6
BYLAWS OF THE GREAT BASIN WATER COMPANY
ARTICLE I - OFFICES
The principal offices of the Corporation shall be located at 312 West
Mesquite Blvd., Suite 112, Mesquite, Nevada, 89027, and the office address
may be changed from time to time by the board of Directors. The Corporation
may also maintain offices at such other places within or without the United
States as the Board of Directors, may, from time to time, determine.
ARTICLE II - MEETINGS OF STOCKHOLDERS
SECTION 1 - ANNUAL MEETINGS:
The annual meeting of the stockholders of the Corporation shall be held
within six (6) months after the close of the fiscal year of the
Corporation, which is established as the 31st of December of each year, for
the purposes of electing directors, and transacting such other business as
may properly come before the meeting.
SECTION 2 - SPECIAL MEETINGS:
Special meetings of the stockholders may be called at any time by the Board
of Directors or by the President, and shall be called by the President or
the Secretary at the written request of the holders of twenty-five percent
(25%) of the shares then outstanding and entitled to vote thereat, or as
otherwise required by law.
SECTION 3 -PLACE OF MEETINGS:
All meetings of stockholders shall be held at the principal office of the
Corporation, or at such other places as shall be designated in the notices
or waivers of notice of such meetings.
SECTION 4 - NOTICE OF MEETINGS:
(a) Except as otherwise provided by statute, written notice of each meeting
of stockholders, whether annual or special, stating the time when and the
place where it is to be held, shall be served either personally or by mail,
not less than ten or more than sixty days before the meeting, upon each
stockholder of record entitled to vote at such meeting, and to any other
stockholder to whom the giving of notice may be required by law. Notice of
a special meeting shall also state the purpose or purposes for which the
meeting is called, and shall indicate that it Is being issued by, or at the
direction of, the person or persons calling the meeting. If at any meeting,
action is proposed to be taken that would, if taken, entitle stockholders
to receive payment for their shares pursuant to statute, the notice of such
meeting shall include a statement of that purpose and to that effect. If
mailed, such notice shall be directed to each such stockholder at the
address as it appears on the transfer agency records or the records of
<PAGE>
the stockholders of the Corporation, unless he shall have previously filed
with the Secretary of the Corporation a written request that notices
intended for him to be mailed to some other address, in which case, it
shall be mailed to the address designated in such request.
(b) Notice of any meeting need not be given to any person who may become a
stockholder of record after the mailing of such notice and prior to the
meeting,, or to any stockholder who attends such meeting, in person or by
proxy, or submits a signed waiver of notice either before or after such a
meeting. Notice of any adjourned meeting of stockholders need not be given,
unless otherwise required by statute.
SECTION-5 - QUORUM
(a) Except as otherwise provided herein, or by statute, or in the
Certificate of Incorporations (such certificate and any amendments thereof
being hereinafter collectively referred to as the "Certificate of
Incorporation"), at all meetings of stockholders of the Corporation, the
presence at the commencement of such meetings in person or by proxy of
stockholders holding of record 51% of the total number of shares of the
Corporation then issued and outstanding and entitled to vote, shall be
necessary and sufficient to constitute a quorum for the transaction of any
business. The withdrawal of any stockholder after the commencement of a
meeting shall have no effect on the existence of a quorum, after a quorum
has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
stockholders, the stockholder, by a majority of the votes cast by the
holders of shares entitled to vote thereat, may adjourn the meeting. At any
such adjourned meeting at which a quorum is present, any business may be
transacted at the meeting as originally called if a quorum had been
present.
SECTION 6 - VOTING:
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action, other than the election of directors,
to be taken by vote of the stockholders, shall be authorized by a majority
of votes cast at a meeting of stockholders by the holders of shares
entitled to vote thereat.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of stockholders, each holder of record of
stock of the Corporation entitled to vote thereat, shall be entitled one
vote for each share of stock registered in his name on the books of the
Corporation.
(c) Each stockholder entitled to vote or to express consent or dissent
without a meeting, may do so by proxy; provided, however, that the
instrument authorizing such proxy to act shall have been executed in
writing by the stockholder himself or by his attorney-in-fact thereunto
duly authorized in writing. No Proxy shall be valid after the expiration of
eleven (11) months from the date of its execution, unless the person
executing it shall have
2
<PAGE>
specified therein the length of time it is to continue in force. Such
instrument shall be exhibited to the Secretary, at the meeting and shall be
filed with the minutes of the meeting.
(d) Any action, except election of directors, which may be taken by a vote
of stockholders at a meeting, may be taken without a meeting if authorized
by a written consent of shareholders holding at least a majority of the
voting power; provided that if a greater proportion of voting power is
required by such action at a meeting, then such greater proportion of
written consents shall be required.
ARTICLE III-- BOARD OF DIRECTORS
SECTION 1 NUMBER, ELECTION AND TERM OF OFFICE:
(a) The number of the directors of the corporation shall not be less than 1
nor more than 9, unless and until otherwise determined by vote of a
majority of the entire Board of Directors. The number of Directors shall
not be less than-three (3)stockholders, in which event the number of
directors shall not be less than the number of stockholders or the minimum
permitted by statute.
(b) Except as may be otherwise provided herein or in the Certificate of
Incorporation by way of cumulative voting rights the members of the Board
of-Directors of the Corporation, who need not be stockholders, shall be
elected by a majority of the votes cast at a meeting of stockholders, by
the holders of shares of stock present in person or by proxy, entitled to
vote, in the election.
(c) Each director shall hold office until the annual meeting of the
stockholders next succeeding his election, and until his successor is
elected and qualified, or until his prior death, resignation or removal.
SECTION 2 - DUTIES AND POWERS
The Board of Directors shall be responsible for the control and management
of the affairs, property and interests of the Corporation and may exercise
all powers of the Corporation, except as are in the Certificate of
Incorporation or by statute expressly conferred upon or reserved to the
stockholders.
SECTION 3 ANNUAL AND REGULAR MEETINGS; NOTICE
(a) Regular annual meeting of the Board of Directors shall be held
immediately following the annual meeting of the stockholders, at the place
of such annual meeting of stockholders.
(b) The Board of Directors, from time to time, may provide by resolution
for the holding of other regular meetings of the Board of Directors, and
may fix the time and place thereof.
3
<PAGE>
(c) Notice of any regular meeting of the Board of Directors shall not be
required to be given and, if given, need not specify the purpose of the
meeting; provided, however, that in case the Board of Directors shall fix
or change the time or place of any regular meeting, notice of such action
shall be given to each director who shall not have been present at the
meeting at which such change was made within the time limited, and in the
manner set forth in Paragraph (b) Section 4 of this Article III, with
respect to special meetings, unless such notice shall be waived in the
manner set forth in Paragraph (c) of such Section 4.
SECTION 4 - SPECIAL MEETING; NOTICE:
(a) Special meetings of the Board of Directors shall be held whenever
called by the President or by one of the directors, at such time and place
as may be specified in the respective notices or waivers of notice thereof.
(b) Except as otherwise required by statute, notice of special meetings
shall be mailed directly to each director, addressed to him at his
residence or usual place of business, at least four (4) days before the day
on which the meeting is to be held, or shall be sent to him at such place
by telegram, radio or cable, or shall be delivered to him personally or
given to him orally, not later than the day before the day on which the
meeting is to be held. A notice, or waiver of notice except as required by
Section 8 or this Article III, need not specify the purpose of the meeting.
(c) Notice of any special Meeting shall not be required to be given to any
director who shall attend such meeting without protesting prior thereto or
at its commencement, the lack of notice to him or who submits a signed
waiver of notice, whether before or after the meeting. Notice of any
adjourned meeting shall not be required to be given.
SECTION 5 - CHAIRMAN:
At all meetings of the Board of Directors, the Chairman of the Board, if
any and if present, shall preside. If there shall be no Chairman, or he
shall be absent, then the Vice Chairman shall preside, and in his absence,
a Chairman chosen by the directors shall preside.
SECTION 6 - QUORUM AND ADJOURNMENTS:
(A) At all meetings of the Board of Directors, the presence of a majority
of the entire Board shall be necessary and sufficient to constitute a
quorum for the transaction of business, except as otherwise provided by
law, by the Certificate of Incorporation, or by these Bylaws.
(B) A majority of the directors, present at the time and place of any
regular or special meeting, although less than a quorum, may adjourn the
same from time to time without notice, until a quorum shall be present.
4
<PAGE>
SECTION 7 - MANNER OF ACTING:
(a) At all meetings of the Board of Directors, each director present shall
have one vote, irrespective of the number of shares of stock, if any, which
he may hold.
(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or by these Bylaws, the action of a majority of the
directors present at any meeting at which a quorum is present shall be the
act of the Board of Directors.
(c) Unless otherwise required by amendment to the Articles of Incorporation
or statute, any action required or permitted to be taken at any meeting of
the Board of Directors or any Committee thereof may be taken without a
meeting if a written consent thereto is signed by all the members of the
Board or Committee. Such written consent shall be filed with the minutes of
the proceedings of the Board or Committee.
(d) Unless otherwise prohibited by Amendments to the Articles of
Incorporation or statute, members of the Board of Directors or of any
Committee of the Board of Directors may participate in a meeting of such
Board or Committee by means of a conference telephone network or a similar
communications method by which all persons participating in the meeting can
hear each other. Such participation is constituted presence of all of the
participating persons at such meeting, and each person participating in the
meeting shall sign the minutes thereof, which may be signed in
counterparts.
SECTION 8 - VACANCIES:
Any vacancy in the Board of Directors, occurring by reason of an increase
in the number of directors, or by reason of the death resignation,
disqualification, removal (unless vacancy created by the removal of a
director by the stockholders shall be filled by the stockholders at the
meeting at which the removal was effected) or inability to act of any
director, or otherwise, shall be filled for the unexpired portion of the
term by a majority vote of the remaining directors, though less than a
quorum, at any regular meeting or special meeting of the Board of Directors
called for that purpose.
SECTION 9 - RESIGNATION:
Any director may resign at any time by giving written notice to the Board
of Directors, the President or the Secretary of the Corporation. Unless
otherwise specified in such written notice such resignation shall take
effect upon receipt thereof by the Board of Directors or such officer, and
the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 10 - REMOVAL:
Any director may be removed with or without cause at any time by the
affirmative vote of stockholders holding of record in the aggregate at
least a majority of the outstanding shares of stock
5
<PAGE>
of the Corporation at a special meeting of the stockho1ders called for that
purpose, and may be removed for cause by action of the board.
SECTION 11- SALARY:
No stated salary shall be paid to directors, as such 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 regular or
special meeting of the Board; provided, however, that nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefore.
SECTION 12 - CONTRACTS:
(a) No contract or other transaction between this Corporation and any other
corporation shall be impaired, affected or invalidated, nor shall any
director be liable in any way by reason of the fact that one or more
directors of this Corporation is or are interested in, or is a director or
officer, or are directors or officers of such other corporations, provided
that such facts are disclosed or made known to the Board of Directors,
prior to their authorizing such transaction.
(b) Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of this Corporation, and no
directors shall be liable in any way by reason of such interest, provided
that the fact of such interest be disclosed or made known to the Board of
Directors prior to their authorization of such contract or transaction, and
provided that the Board of Directors shall authorize, approve or ratify
such contract or transaction by the vote (not counting the vote of any such
Director) of a majority of a quorum, notwithstanding the presence of any
such director at the meeting at which such action is taken. Such director
or directors may be counted in determining the presence of a quorum at such
meeting. This Section shall not be construed to impair, invalidate or in
any way affect any contract or other transactions which would otherwise be
valid under the law (common, statutory or otherwise( applicable thereto.
SECTION 13 - COMMITTEES:
The Board of Directors, by resolution adopted by a majority of the entire
Board, may from time to time designate from among its members an executive
committee and such other committees, and alternate members thereof, as they
may deem desirable, with such powers and authority (to the extent permitted
by law) as may be provided in such resolution. Each such committee shall
serve at the pleasure of the Board.
6
<PAGE>
ARTICLE IV - OFFICERS
SECTION 1 - NUMBER, QUALIFICATIONS, ELECTION AND TERM OF OFFICE:
(a) The officers of the Corporation shall consist of a President, and a
Secretary-Treasurer, and such other officers, including a Chairman of the
Board of Directors6rectors, and one or more Vice Presidents, as the Board
of Directors may from time to time deem advisable. Any officer other than
the Chairman or Vice Chairman of the Board of Directors may be, but is not
required to be a director of the Corporation. Any tow or more offices may
be held by the same person.
(b) The officers of the Corporation shall be elected by the Board of
Directors at the regular annual meeting of the Board following the annual
meeting of stockholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have
been elected and qualified or until his death, resignation or removal.
SECTION 2 - RESIGNATION:
Any officer may resign at any time by giving written notice of such
resignation to the Board of Directors, or to the President or the Secretary
of the Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt thereof by the Board of
Directors or by such officer, and the acceptance of such resignation shall
not be necessary to make it effective.
SECTION 3 - REMOVAL:
Any officer may be removed, either with or without cause, and a successor
elected by a majority vote of the Board of Directors at any time.
SECTION 4 - VACANCIES:
A vacancy in any office by reason of death, resignation, inability to act,
disqualification or any other cause, may at any time be filled for the
unexpired portion of the term by a majority vote of the Board of Directors.
SECTION 5 - DUTIES OF OFFICERS:
Officers of the Corporation shall, unless otherwise provided by the Board
of Directors, each have such powers and duties as generally pertain to
their respective offices as well as such powers and duties as may be set
forth in these Bylaws, or may from time to time be specifically conferred
or imposed by the Board of Directors. The President shall be the chief
executive officer of the Corporation.
7
<PAGE>
SECTION 6 - SURETIES AND BONDS:
In case the Board of Directors shall so require any officer, employee or
agent of the Corporation shall execute to the Corporation a bond in such
sum, and with such surety or sureties as the Board of Directors may direct,
conditioned upon the faithful performance of his duties to the Corporation,
including responsibility for negligence for the accounting for all
property, funds or securities of the Corporation which may come into his
hands.
SECTION 7 - SHARES OF STOCK OF OTHER CORPORATIONS:
Whenever the Corporation is the holder of shares of stock of any other
corporation, any right or power of the Corporation as such stockholder
(including the attendance, acting and voting at stockholders' meetings and
execution of waivers, consents, proxies or other instruments) may be
exercised on behalf of the Corporation by the President, any Vice President
or such other person as the Board of Directors may authorize.
ARTICLE V -SHARES OF STOCK
SECTION 1 - CERTIFICATE OF STOCK:
(a) The certificates representing shares of the Corporation's stock shall
be in such form as shall be adopted by the Board of Directors, and shall
be numbered and registered in the order issued. The certificates shall bear
the following: the Corporate Seal, the holder's name, the number of shares
of stock and the signatures of: (1) the Chairman of the Board, the
President or a Vice President and (2) the Secretary-Treasurer, any
Assistant Secretary or Assistant Treasurer.
(b) No certificate representing shares of stock shall be issued until the
full amount of consideration therefore has been paid, except as otherwise
permitted by law.
(c) To the extent permitted by law, the Board of Directors may authorize
the issuance of certificates for fractions of a share of stock which shall
entitle the holder to exercise voting rights, receive dividends and
participate in liquidating distributions, in proportion to the fractional
holdings; or it may authorize the payment in cash of the fair value of
fractions of a share of stock as of the time when those entitled to receive
such fractions are determined; or it may authorize the issuance, subject to
such conditions as may be permitted by law, of scrip in registered or
bearer form over the signature of an officer or agent of the Corporation,
exchangeable as therein provided for full shares of stock, but such scrip
shall not entitle the holder to any rights of a stockholder, except as
therein provided.
SECTION 2 - LOST OR DESTROYED CERTIFICATES:
The holder of any certificate representing shares of stock of the
Corporation shall immediately notify the Corporation of any loss or
destruction of the certificate representing the same. The
Corporation may issue a new certificate in the place of any
8
<PAGE>
certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction as the
Board of Directors in its discretion may require, the Board of Directors
may, in its discretion, require the owner of the lost or destroyed
certificate, or his legal representative, to give the Corporation a bond in
such sum as the Board may direct, and with such surety or sureties as may
be satisfactory to the Board, to indemnify the Corporation against any
claims, loss, liability or damage it may suffer on account of the issuance
of the new certificate. A new certificate may be issued without requiring
any such evidence or bond when, in the judgment of the Board of Directors,
it is proper to do so.
SECTION 3 - TRANSFER OF SHARES:
(a) Transfer of shares of stock of the Corporation shall be made on the
stock ledger of the Corporation only by the holder of record thereof, in
person or by his duly authorized attorney, upon surrender for cancellation
of the certificate or certificates representing such shares of stock with
an assignment or power of transfer endorsed thereon or delivered therewith,
duly executed, with such proof of the authenticity of the signature and of
authority to transfer and of payment of taxes as the Corporation or its
agents may require.
(b) The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the absolute owner thereof for all purposes
and, accordingly, shall not be bound to recognize any legal, equitable or
other claim to, or interest in, such share or shares of stock on the part
of any other person, whether or not it shall have express or other notice
thereof, except as otherwise expressly provided by law.
SECTION 4 - RECORD DATE:
In lieu of closing the stock ledger of the Corporation, the Board of
Directors may fix, in advance, a date not exceeding sixty (60) days, nor
less than ten (10) days, as the record date for the determination of
stockholders entitled to receive notice of, or to vote at, any meeting of
stockholders, or to consent to any proposal without a meeting, or for the
purpose of determining stockholders entitled to receive payment of any
dividends or allotment of any rights, or for the purpose of any other
action. If no record date is fixed, the record date for the determination
of stockholders entitled to notice of, or to vote at, a meeting of
stockholders shall be at the close of business on the day next preceding
the day on which the notice is given, or if no notice is given, the day
preceding the day on which the meeting is held. The record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the resolution of the directors relating
thereto is adopted. When a determination of stockholders of record entitled
to notice of, or to vote at, any meeting of stockholders has been made, as
provided for herein, such determination shall apply to any adjournment
thereof, unless the directors fix a new record date for the adjourned
meeting.
9
<PAGE>
ARTICLE VI - DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of any
funds available therefore, as often, in such amount, and at such time or
times as the Board of Directors may determine.
ARTICLE VII - FISCAL YEAR
The fiscal year of the Corporation shall be January 1 to December 31, and
may be changed by the Board of Directors from time to time subject to
applicable law.
ARTICLE VIII - CORPORATE SEAL
The corporate seal shall be in such form as shall be approved from time to
time by the Board of Directors.
ARTICLE IX - INDEMNITY
(a) Any person made a party to any action, suit or proceeding, by reason of
the fact that he, his testator or interstate representative is or was a
director, officer or employee of the Corporation or of any corporation in
which he served as such at the request of the Corporation shall be
indemnified by the Corporation against the reasonable expenses, including
attorneys' fees, actually and necessarily incurred by him in connection
with the defense of such action, suit or proceedings, or in connection with
any appeal therein, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding or in connection with any
appeal therein that such officer, director or employee is liable for gross
negligence or misconduct in the performance of his duties.
(b) The foregoing right of indemnification shall not be deemed exclusive of
any other rights to which any officer or director or employee may be
entitled apart from the provisions of this section.
(c) The amount of indemnity to which any officer or any director may be
entitled shall be fixed by the Board of Directors, except that in any case
in which there is no disinterested majority of the Board available, the
amount shall be fixed by arbitration pursuant to the then existing rules of
the American Arbitration Association.
10
<PAGE>
ARTICLE X - AMENDMENTS
SECTION l - BY STOCKHOLDERS:
All bylaws of the Corporation shall be subject to alteration or repeal, and
new bylaws may be made,by the affirmative vote of stockholders holding of
record in the aggregate at least a majority of the outstanding shares of
stock entitled to vote in the election of directors at any annual or
special meeting of stockholders, provided that the notice or waiver of
notice of such meeting shall have summarized or set forth in full therein,
the proposed amendment.
SECTION 2 - BY DIRECTORS:
The Board of Directors shall have power to make adopt, alter, amend and
repeal, from time to time, bylaws of the Corporation, provided, however,
that the stockholders entitled to vote with respect thereto as in this
Article X above-provided may alter, amend or repeal bylaws made by the
Board of Directors, except that the Board of Directors shall have no power
to change the quorum for meetings of stockholders or of the Board of
Directors or to change any provisions of the bylaws with respect to the
removal of directors or the filling of vacancies in the Board resulting
from the removal by the stockholders. In any bylaw regulating an impending
election of directors is adopted, amended or repealed by the Board of
Directors, there shall be set forth in the notice of the next meeting of
stockholders for the election of Directors, the bylaws so adopted, amended
or repealed, together with a concise statement of the changes made.
11
LEASE OF WELLS AND EQUIPMENT
This Lease is made and entered into this 1st Day of April, 1999,
by and between The Great Basin Water Company, with its principal
offices at 2921 North Tenaya Way, Suite 218, Las Vegas, Nevada,
89128, (hereinafter referred to as Owner) and The Shadow Ridge
Water Company, 340 North Mesquite Blvd., Suite 112, Post Office
Box 1721, Mesquite, Nevada, 89024 (hereinafter referred to as
lessee).
WITNESSETH:
1. DESCRIPTION OF WELLS AND WATER SUPPLY: Owner hereby leases to
the Lessee, and Lessee hereby leases from the Owner, for the term
and according to the covenants and conditions contained herein,
all those certain wells and water together with the improvements
and equipment thereon, further described as those wells under the
registrations Numbers 604106, 604107, 604108, and 604105, as
registered in the State of Arizona, along with the 2,733 acre
feet of water granted on 27 September, 1993, Re: Lease no
01-53521 under claims number 224, 225 and 263 with the State of
Arizona.
2. TERM: The term of this lease shall be Ninety Nine Years,
commencing on the I" Day of April, 1999, and ending on 3 1' day
of March, 2098. Providing that Lessee is not in default
hereunder, the Lessee shall have first right of renewal for an
indefinite term.
3. MINIMUM ANNUAL BASE LEASE: The minimum annual Base Lease shall
be Seventy Five Thousand Dollars ($75,000.00), payable to the
owner on the first day of October of each year in the term of the
lease starting with the first day of October, 2000. In addition
to the minimum annual base lease agreed to be paid to the Owner
at the time and in the manner specified above, an amount equal to
Ten Percent (10%) of the gross sales, made in, upon or from the
wells during each calendar year of portion thereof the term of
this lease, less the cost of repair, replacement or general
maintenance of the equipment attached to any of the wells which
are directly involved in the operation of the wells. Such
payments will be due within thirty days (30) following the end of
each calendar quarter. Together with the payment, Lessee shall
furnish Owner with a written statement setting forth the total
Gross Sales made in, upon, through or from the wells referred to
in this lease.
4. ZONING, DISCLAIMER OF WARRANTIES AND CONDITION OF EQUIPMENT:
Owner makes no warranties or presentations of any kind concerning
the condition of the equipment or its fitness for the use
intended by the Lessee, or as to its zoning and/or State of
Arizona requirements, and hereby disclaims any personal knowledge
with respect thereto. Lessee accepts all equipment and wells
leased herein "As Is", in its present condition without any
warranty of the Owner whatsoever.
<PAGE>
5. TAXES, ASSESSMENTS, UTILITIES AND INSURANCE. It is expressly
understood and agreed that this is a triple net lease.
A. Taxes: Lessee, at Lessee's sole cost, shall, as due, make
all payments of property taxes, assessments, and governmental
charges, on both real and personal property, during the entire
term thereof This shall include any taxes accrued during the term
hereof, even though they are not billed until after the
expiration of this Lease. All taxes, assessments, and
governmental charges due from the Lessee, shall be payable to the
Owner in equal quarterly payments, with the regular payments
beginning on the commencement date of this Lease and continuing
on the first day of each month for the balance of the term,
and shall be based upon the prior year's assessments but shall be
subject to adjustment for the actual amount due for the current
year. Any additional sums owed by Lessee to the Owner because of
such adjustment shall be due with the next succeeding quarterly's
minimum base rental payments.
For the purpose of this section, Property taxes shall mean real
property taxes, personal property taxes, occupancy taxes,
assessments upon the property and the improvements which may be
imposed by any governmental authority or agency, and any tax on
or measured by the revenues sold or marketed, imposed wholly or
partly in lieu thereof, but shall not include any net income,
franchise, capital stock, estate or inheritance taxes, except as
hereinafter provided.
B. Utilities: Lessee shall pay directly to the applicable
company the cost of all utilities consumed on the Premises,
including but not limited to power, electricity, gas, water,
garbage disposal, sewer services and telephone.
C. Insurance. Lessee shall at is sole cost, agrees that it
will procure and keep in full force throughout the term
hereof, at a minimum, the following types and amounts of
insurance.
i. Public Liability: Personal Injury in the amount of
$1,000,000.00 per person, and $1,000,000.00 per occurrence;
Property Damage in the amount of $500,000.00 per occurrence.
ii. Casualty: Fire and Extended coverage for 100% of
the replacement cost of the buildings, leasehold improvements and
equipment, fixtures and casings, excluding foundation and
excavation costs.
6. INDEMNIFICATION OF OWNER: It is understood and agreed that the
Lessee releases the Owner from, and indemnities Owner against,
all claims, demands, charges, liens, causes of action and
proceedings, of every kind and nature, connected with the person
or property of the Lessee arising directly from the use of the
leased premises and equipment or any public sidewalk or path or
trail, by anyone other than an agent or representative of the
Owner.
<PAGE >
7. MAINTENANCE: Lessee shall keep the interior and exterior of
the equipment, including the immediate real property area, and
all building systems, including, but not limited to, electrical,
plumbing, heating and cooling systems, in good working order,
repair and condition at the sole cost of the Lessee and expense
through the term of this lease.
8. Lessee may not assign this lease in whole or in part, or
sublet the premises, or wells without first obtaining the prior
written consent of the Owner, which consent shall not be
unreasonably withheld.
9. TRANSFER OF INTEREST IN CORPORATION: In that the Lessee is a
Corporation, then, when either the responsible operational
officer of the Lessee shall be replaced by another person as the
responsible operational officer; or there shall be a cumulative
transfer of over fifty (50%) percent of equity interest in the
Lessee within any two (2) year period, then such transfer shall
constitute an assignment as set our herein above.
10. DEFAULT: The occurrence of any of the following shall
constitute a default and material breach of this Lease:
A. The abandonment of the leased property by the Lessee.
B. A failure of the Lessee to pay the rent, including
percentage rentals, additional rent or to make any other payment
required to be made by the Lessee hereunder on the date o
such payment is due and owing:
C. The making of the Lessee any general assignment for the
benefit o creditors; the filing by or against or of a petition
for reorganization or arrangement under any law relating to
bankruptcy, unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days; the
appointment of a trustee or receiver to take possession of
substantially all of the Lessee's assets located on the leased
wells, or the Lessee's interest in this Lease, where possession
is no restored to the Lessee within thirty (30) days; or the
attachment, execution or other judicial seizure of substantially
all of the Lessee's assets located at the leased wells sites, or;
D. The failure of the Lessee to comply with any of the
terms, covenants or conditions of this lease.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this lease on
the day and year first written above. Individuals signing on
behalf of a principal warrant that they have the authority to
bind their principals.
Signed, Sealed and delivered in the presence of:
OWNER
/s/MARY M.CHARBONEAU /s/ SIGNATURE OF PRESIDENT
Witness Pres. CEO
The Great Basin Water Co.
LESSEE
/s/MARY M. CHARBONEAU /s/Jay J. TAYLOR
Witness
Exhibit A
Legal Description
The following attached documents describe the acre feet of water,
the well information and identification number with all locations
listed.
1. Water Share Purchase Agreement
2. Water Application Grant dtd 27 Sep 93, Arizona State Land
Department
3. Well Registration # 604106
4. Well Registration # 604107
5. Well Registration # 604108
6. Well Registration # 604105
SUBSIDIARIES OF THE REGISTRANT
1. Shadow Ridge Water Company, an Arizona corporation
100%
2. HDB Telemetry Systems, a Nevada corporation
100%
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE PERIOD ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,633
<SECURITIES> 0
<RECEIVABLES> 2,300
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,933
<PP&E> 23,036
<DEPRECIATION> 5,488
<TOTAL-ASSETS> 3,622,434
<CURRENT-LIABILITIES> 79,845
<BONDS> 0
0
750,000
<COMMON> 3,620
<OTHER-SE> 1,798,103
<TOTAL-LIABILITY-AND-EQUITY> 3,587,176
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 123,879
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (123,879)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (123,879)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
