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U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
Basic Technologies, Inc.
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(Name of Small Business Issuer in its charter)
Colorado 84-1446622
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1026 West Main Street, #208
Lewisville, Texas 75067
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (972) 436-3789
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None
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Securities to be registered under Section 12(g) of the Act:
Common Stock, $.00001 par value
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(Title of class)
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ITEM 1. DESCRIPTION OF BUSINESS.
(a) BUSINESS DEVELOPMENT.
Basic Technologies, Inc. (the "Company"), was organized under the laws
of the State of Colorado on January 21, 1998. The Company, a development-stage
enterprise, was organized for the purpose of pursuing and completing a business
combination with Yankee Development Corporation ("Yankee Development"), a Texas
corporation engaged in the business of the acquisition and development of oil
and gas ventures and related interests. The Company's executive offices are
presently located at 1026 West Main Street, Suite #208, Lewisville, Texas 75067,
and its telephone and facsimile numbers are (972) 436-3789 and (972) 219-1832,
respectively.
The Company received gross proceeds in the amount of $25,000 from the
sale of a total of 25,000 shares of common stock, $.00001 par value per share
(the "Common Stock"), in an offering conducted during the period from March to
April 7, 1998, pursuant to Section 3(b) of the Securities Act of 1933, as
amended (the "Act"), and Rule 504 of Regulation D promulgated thereunder.
On April 23, 1998, the Company issued and sold, pursuant to that
certain Acquisition Agreement and Closing Memorandum dated April 23, 1998, an
aggregate of 5,305,625 newly-issued, restricted shares, constituting
approximately 90% of the then outstanding shares, of the Company's Common Stock
in consideration of the exchange therefor of all 1,000 outstanding shares of
common stock, no par value per share, of Yankee Development owned of record and
beneficially by the Shelton Voting Trust. Immediately following the "reverse
acquisition" transaction, the Shelton Voting Trust, the former owner of Yankee
Development, controlled approximately 90% of the outstanding shares of Common
Stock of the Company and Yankee Development became a wholly-owned subsidiary of
the Company. The transaction was accounted for under the purchase of assets,
rather than the pooling of interests, method of accounting. Mr. Bryan L. Walker,
the President, Chief Executive Officer and Chairman of the Board of Directors of
the Company and the President and a director of Yankee Development and Simpco,
Inc. ("Simpco"), also a 100%-owned subsidiary of the Company, is the trustee of
the Shelton Voting Trust. (See Part I, Item 7. "Certain Relationships and
Related Transactions" and Part II, Item 4. "Recent Sales of Unregistered
Securities.")
On October 16, 1998, the Company, together with Simpco, which was then
unaffiliated with the Company, organized P & A Remediation, LLC ("P & A
Remediation"), a Texas limited liability company owned 99% and 1% by the Company
and Simpco, respectively, for the purpose of engaging in the business of
plugging oil wells, conducting environmental remediation of oil fields and
salvaging the construction materials, pipe, steel tubulars and used oil field
equipment for resale on the secondary market.
The Company, effective as of January 15, 1999, issued and sold, in
accordance with that certain Acquisition Agreement and Closing Memorandum dated
effective January 15, 1999, a total of 850,000 newly-issued, restricted shares
of Common Stock in consideration of the exchange therefor of all 10,000
outstanding shares of common stock, no par value per share, of Simpco. Prior to
its acquisition by the Company effective as of January 15, 1999, Simpco was
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engaged in the oil well plugging, remediation and salvage activities now
conducted by P & A Remediation. Since its acquisition by the Company, Simpco has
acted solely in the capacity of the owner and lessor to P & A Remediation, as
the lessee, of the used oil field equipment owned by Simpco effective as of
January 15, 1999, and subsequently acquired from unaffiliated third parties.
As of the date hereof, the Company is conducting negotiations for the
acquisition of certain assets owned by Cyber City Honolulu, Inc., a regional
Internet service provider and computer consulting firm operating from Honolulu,
Hawaii. As of the date hereof, negotiations have not been consummated.
See (b) "Business of Issuer" immediately below for a description of the
Company's current operations conducted through its subsidiaries, Yankee
Development and Simpco, and PAR, and future proposed activities.
(b) BUSINESS OF ISSUER.
GENERAL
The Company serves as a holding company for two wholly-owned
subsidiaries, including Yankee Development and Simpco, Texas corporations, and
owns 99% of the outstanding membership interests in P & A Remediation, a Texas
limited liability company. Yankee Development owns a working interest in proven,
developed oil reserves on 2,300 acres in Tom Green County, Texas. Through P & A
Remediation, the Company performs environmental remediation and salvage
operations for the oil industry and markets and sells construction materials,
pipe, steel tubulars and used oil field equipment obtained from salvage
operations or acquired for resale on the secondary market. Simpco owns certain
reconditioned oil field equipment and vehicles that are leased to P & A
Remediation for use in conducting oil field plugging, remediation and salvage
activities.
Company management has determined not to produce Yankee Development's
proven, developed oil and gas reserves until such time in the future that the
price of crude oil increases to and stabilizes at a level such that further
development and production becomes more commercially viable. Until this time, if
ever, the Company intends to focus upon expanding P & A Remediation's
environmental remediation and salvage business in the private sector and, in
addition, to include the State of Texas' Railroad Commission and/or other
government customers. Management believes that the Company can continue to
exploit the numerous opportunities available because of the continued economic
downturn in the oil and gas industry to expand P & A Remediation's business and,
additionally, acquire companies engaged in one or more aspects of the plugging,
remediation and salvage business and obtain producing and/or developed oil
and/or gas properties. These opportunities include, but are not limited to, (i)
the availability of producing wells and field equipment at low prices; (ii) the
availability for minimal compensation of a pool of highly-trained field and
supervisory personnel because of industry layoffs; and (iii) increased
environmental remediation and salvage business attributable to the increasing
number of wells desired to be plugged, or required to be plugged at public
expense because of abandonment, by operators because of the depressed price of
crude oil, or because of environmental hazards. Additionally, the Company plans
to diversify its operations through the acquisition of companies engaged in
businesses unrelated to the oil and gas business. Except for Cyber City
Honolulu,
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Inc., a Honolulu, Hawaii-based, regional Internet service provider and computer
consulting firm, the Company is not presently engaged in negotiations for the
acquisition of any companies operating in industries unrelated to the Company's
business.
The Company owns a tract of land containing five acres in Young County,
Texas, on which a metal building is situated that was purchased from a
non-affiliate on March 19, 1999, for a total purchase price of $12,500. The
property is subject to that certain Promissory Note Secured by Deed of Trust
dated March 19, 1999, in the principal amount of $11,500, bearing interest at
the rate of 10% per annum and payable in installments of approximately $245 per
month commencing on May 1, 1999, and terminating on April 1, 2004.
The Company leases, in addition to its executive offices, two
facilities used as oil field salvage yards, one of which is located on
approximately five acres north of Ballinger, Texas, and the other of which is
located in Olney, Texas, on approximately five and one-half acres. The Olney
lessor is unaffiliated with the Company. The Company rents the Ballinger
facility on a month-to-month basis at a rate of $450 per month and the Olney
facility at a monthly rental of $550 pursuant to a renewable lease with a
purchase option. The Company's executive offices are leased from an affiliate on
a month-to-month basis at the rate of $250 per month.
Mr. Bryan L. Walker, the President, Chief Executive Officer and
Chairman of the Board of Directors of the Company and the President and a
director of Yankee Development and Simpco, has approximately fifteen years of
experience since 1984 as a consultant to various independent oil companies in
the State of Texas.
YANKEE DEVELOPMENT CORPORATION
General. Yankee Development Corporation is a Texas corporation
organized on December 31, 1997. The corporation was acquired by the Company in a
reverse acquisition transaction consummated on April 23, 1998, pursuant to which
an aggregate of 5,305,626 newly-issued, restricted shares, constituting
approximately 90% of the then outstanding shares, of the Company's Common Stock
were issued to the Shelton Voting Trust in consideration and exchange for all
1,000 outstanding shares of common stock of Yankee Development. Immediately
following the transaction, Yankee Development became a wholly-owned subsidiary
of the Company and the Shelton Voting Trust, the former owner of Yankee
Development, controlled approximately 90% of the Company's issued and
outstanding shares of Common Stock. The transaction was accounted for under the
purchase of assets, rather than the pooling of interests, method of accounting.
Yankee Development owns a working interest in proven, developed oil
reserves on 2,300 acres in western Texas known as the Yankee (Canyon Sand) Field
Unit, MA., RRC No. 03215, of Tom Green County, Texas, as set forth in that
certain Unit Agreement as recorded in Volume 405, Page 609 of the Deed Records
of Tom Green County, Texas. The value of $3,711,000 assigned to the reserves at
the time of their acquisition in April 1998 represents the discounted net
present value of net revenues, and was calculated based upon the then market
price of $15.00 per each of 880,000 recoverable barrels of oil, less development
and operating costs, discounted at a rate of 10%. The current market price of
crude oil is approximately $20.00 per barrel. These proved, developed oil
reserves are Yankee Development's only significant assets. Management
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has decided to delay additional development and production of Yankee
Development's oil reserves until such time, if ever, as the price of crude oil
increases to and stabilizes at a price that enables these operations to be
conducted on a commercially viable basis. Yankee Development, since inception,
has generated no revenues from the production of oil. No assurance can be given
that Yankee Development will generate any revenues or achieve profitability from
the production of the proven, developed reserves owned as of the date hereof or
from oil and/or gas properties, if any, acquired in the future.
Competition. With respect to Yankee Development's proposed acquisition
of additional developed oil and/or gas properties, there are a large number of
operators engaged in the exploration for and production of oil and gas and a
correspondingly high degree of competition exists for desirable oil and gas
prospects. Because of Yankee Development's operating history, limited to the
company's acquisition of proven, developed oil reserves in western Texas to be
further developed and produced in the future, Yankee Development may be at a
severe competitive disadvantage in its ability to purchase prospects. The oil
and gas industry is dominated by a number of large companies having financial
resources far in excess of Yankee Development's resources. The principal means
of competition for the acquisition of oil and gas leases are the payment of
bonuses at the time of acquisition of leases and property, the payment of
royalties from production, the amount of annual rental payments and the nature
of requirements for exploration and production. Companies with greater financial
resources, larger staffs, more sophisticated equipment and more extensive
experience will be in a better position than Yankee Development to compete for
oil and gas leases and properties. Additionally, the marketing of oil and gas,
if any, found and produced by the company will be affected by a number of
factors that are beyond Yankee Development's control, the exact nature of which
cannot be accurately predicted. These factors include, but are not limited to,
crude oil imports, the availability of adequate pipeline and other
transportation facilities, the marketing of competitive fuels and other matters
affecting the availability of a ready market, such as fluctuating supply and
demand. In recent years, crude oil and natural gas prices have declined because
of, among other factors, an oversupply in the world markets and decreased
demand.
Regulation. The exploration for and production of oil and gas is
generally subject to regulation by state regulatory authorities. In some states,
the production of oil and gas is regulated by conservation laws and regulations,
which set allowable rates of production, regulate the spacing of wells and thus
control the number of wells that can be drilled in a given area and otherwise
control the conduct of oil and gas operations. Further, Yankee Development's
future drilling and production operations, if any, will be subject to state,
Federal and local environmental protection regulations that may necessitate
significant capital outlays that would materially affect the financial position
and business operations of the company. Despite the retention of qualified
engineers and operators, Yankee Development may be adversely affected by
pollution and environmental laws that protect against waste, conserve natural
resources and prevent pollution and damage to the environment, enacted by
Federal, state and local agencies in jurisdictions in which the company
operates. If any penalties or prohibitions were imposed on Yankee Development
for violating such regulations, the company's operations could be adversely
affected. Additionally, the production of oil and gas is subject to Federal
regulation with regard to the imposition of land use controls, the amount of oil
imported into the United States from other countries, taxation and other
matters, that is complex and continuously changing. Legislation adopted by
Congress in some respects emphasizes decreasing demand for, rather than
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increasing the supply of, oil and gas. Yankee Development cannot predict the
nature and terms of any energy legislation that may be enacted by Congress in
the future nor can the company be assured that any such legislation would not
have an adverse affect upon its business. In addition, foreign countries
establish prices and production quotas for petroleum products from time to time
with the intent of reducing global oversupply and maintaining or increasing
certain price levels. Management is unable to predict the effect, if any, such
actions would have on the amount of, or the prices received for, oil and/or gas,
if any, produced and sold from Yankee Development's wells..
P & A REMEDIATION, LLC
General. P & A Remediation, LLC, is a Texas limited liability company
organized on October 16, 1998, by the Company and Simpco, which own 99% and 1%,
respectively, of the outstanding membership interests in the company. Prior to
the acquisition of Simpco by the Company effective as of January 15, 1999, P & A
Remediation was managed as a joint venture, with the Company contributing
working capital and personnel and Simpco contributing management expertise and
equipment. Since the acquisition of Simpco, most of Simpco's management members
have become full-time employees of P & A Remediation. Further, P & A Remediation
leases the oil field equipment used in its business operations from Simpco or
unaffiliated third parties.
P & A Remediation's environmental remediation and salvage business
involves the plugging of oil wells and the remediation and clean-up of oil
fields in accordance with government rules and regulations applicable to the
environment, and the salvage or purchase for resale on the secondary market of
construction materials, pipe, steel tubulars and used and reconditioned oil
field equipment. To the extent practicable, P & A Remediation performs its
services, including testing, threading and reworking of steel pipe recovered
from the field, at the oil field salvage yards leased by the Company in
Ballinger and Olney, Texas. Although P & A Remediation desires to expand its
customer base to include governmental agencies such as the State of Texas'
Railroad Commission, the company's customers are presently limited to private
and publicly-held oil and/or gas companies which are operators of oil wells and
fields requiring P & A Remediation's plugging, remediation and/or salvage
services. The company's operations are presently limited to the north central
and central west regions of Texas. Since the commencement of business operations
by P & A Remediation in April 1999, the company's activities, including the
plugging of approximately 57 wells, have generated gross revenues from services
and sales totaling $171,000. Aggregate gross revenues of $18,500 generated
during the approximate six-month period from the date of the company's inception
in October 1998 through March 1999, are attributable to resales by the company
of used and reconditioned oil field equipment purchased for resale.
P & A Remediation employs two types of contractual arrangements, i.e.,
cash and salvage, in connection with its oil well plugging and remediation
operations. Contractual arrangements are often verbal in nature and may be
turnkey on specific oil wells or leases (groups of wells). Under the salvage
type of contract, the Company receives as its compensation pipe and/or used oil
well equipment mutually agreed upon by the parties. Revenue is recognized, and
the pipe and/or equipment are included in inventory, based upon the applicable
wholesale market prices of the items or the prices at which the items are
purchasable for resale on the open market. These
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inventory items, whether received by P & A Remediation as consideration for the
performance of plugging and/or remediation services or purchased outright for
purposes of resale, are resold to customers including, primarily, oil and
construction companies. Typical cash payment arrangements for plugging a well
involve a payment in the amount of a percentage of the total estimated cost of
the job at the time that equipment is moved on site, with final payment due upon
completion of the work and delivery of the certification document (RRC Form W-3)
required to be filed with the Texas Railroad Commission. P & A Remediation has
experienced no bad debts to date. Management attributes this to the fact that
the company, only upon the receipt of final payment, delivers the cementing
affidavits required to be filed by the operator with the Texas regulatory
authority indicating that the well was properly plugged in accordance with
applicable state regulations and specifications. The direct gross profit on the
industry jobs presently being performed by P & A Remediation, is generally
approximately 35.7%. The gross profit margin on the same job, if performed for a
government agency, could increase to 55.8%. Payment would typically be received
thirty days from the date of completion of the well(s) and all contract
requirements, thus requiring the maintenance of additional working capital. P &
A Remediation is generally required to pay suppliers and subcontractors for
pipe, equipment and other supplies and threading, refurbishing and other
services on a cash on demand, or "COD," basis. Accordingly, should P & A
Remediation be successful in expanding its customer base to include government
agencies, of which there is no assurance, its working capital ($26,516 as of May
31, 1999) may not be adequate to enable the company to continue in operation
without the receipt of additional funding.
The primary government customer targeted by P & A Remediation is the
State of Texas' Oil Well Plugging and Cleanup Fund (the "Cleanup Fund") because
of the continuously increasing number of oil wells being added to the State of
Texas' inventory of wells requiring state-funded remediation. The Cleanup Fund,
which was enacted by Texas Senate Bill 1103 in 1991, created new sources of
revenue and authorized the Railroad Commission of the State of Texas to use the
funds for the purpose of plugging abandoned or environmentally undesirable oil
and gas wells. The Railroad Commission District Office prepares bid contracts,
referred to as extended service contracts, which typically group twenty to forty
abandoned and plug-ordered wells that are available for bid by the Company and
others. Company management believes that the abandoned and inactive wells that
are candidates for state-funded plugging number in the tens of thousands as of
the date hereof. This calculation is based upon management's belief that there
are, on average, ten oil or gas wells, known as "stripper wells," producing, on
average, less than ten barrels of oil per day, per each of 12,500 operators
registered with the Railroad Commission listed in the Commission's inventory of
wells requiring state-funded remediation. Further, wells are added continuously
at the rate of 250 per month in an order of priority based on the perceived risk
to human health and the environment. Based upon the unstable $20.00 price per
barrel of oil at the wellhead and the industry average production cost to the
operator in excess of $13.00 per barrel, many operators of stripper wells have
voluntarily decided to shut-in or abandon their wells. The recent month's
increase in world oil prices may be an aberration in the market, and many
operators are waiting for longer term stability before making decisions on
reopening wells.
In addition to oil well plugging and clean-up operations, P & A
Remediation serves as a reseller of construction equipment, steel pipe and
tubulars and select used and reconditioned oil field equipment. These items are
either obtained from the company's salvage operations or purchased outright for
resale on the secondary market. P & A Remediation is currently resuming
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remediation work on a Conoco, Inc., 58-mile salvage project that involves the
recovery of at least 150,000 feet of three and one-half to six inch structural
pipe which the Company intends to resell for construction and other
applications. Management believes, without assurance, that the price obtainable
for the recovered pipe will range from $.80 to $1.50 per foot and that P & A
Remediation will incur costs of approximately $.30 per foot to gather and remove
the pipe and additional expense to straighten, clean and/or ready the pipe for
resale. The number of individuals employed by PAR has increased from four in
November 1998 to approximately twenty two as of the date hereof.
Competition. While P & A Remediation has numerous competitors
conducting plugging and pipe salvage operations in the north central and central
west regions of Texas where it presently competes and a small number of very
capable oil well service and cementing businesses in various locations
throughout the southwestern United States, the environmental remediation and
salvage business is highly fragmented in general. That is, the business is
characterized by a large number of companies which specialize in only one or a
few, but not all, of the individual job service requirements; thus requiring an
operator, at increased cost, to retain the services of a number of companies in
order to complete the job of plugging a well. Further, management perceives many
of its competitors to be undercapitalized. Accordingly, P & A Remediation's
business plan involves the acquisition of related businesses and additional
equipment and personnel so as to be capable of performing for the customer, on a
turnkey basis and at reasonable cost, all of the individual job service
requirements involved in the plugging of a single well. Company management
believes that, should P & A Remediation achieve its desired level of vertical
integration, which could not be assured, the company would have a significant
competitive advantage over its competitors. Achievement of this goal, however,
depends upon the receipt by the Company of significant additional funding
required to consummate the acquisition of, and operate, the acquired companies.
Regulation. The oil well plugging and remediation operations of P& A
Remediation in the State of Texas are subject to regulation by the Oil and Gas
Division of the Railroad Commission of the State of Texas (the "Railroad
Commission"). As early as 1899, the State of Texas has had laws requiring oil
wells to be constructed with wrought iron or steel casing and to be plugged upon
abandonment for the purpose of isolating oil and gas from fresh water
formations. While the purpose of these early laws was to protect oil and gas
fields from contamination by fresh water, the laws have been retained today for
the opposite purpose, i.e., the protection of the environment from contamination
by oil, gas and their byproducts. The Railroad Commission's Oil and Gas Division
was created by statute in 1919 to regulate oil and gas exploration and
production operations in the state's numerous oil and gas fields. In the 1960's,
the Railroad Commission undertook the plugging, using limited state funds
appropriated from general revenues, of certain wells abandoned by a Railroad
Commission-registered operator because of insolvency, negligence or otherwise.
In 1983, a new state-funded well plugging fund was established and, in 1991,
additional authority and funding was obtained by the Railroad Commission to
address the growing problem of abandoned oil fields. In 1992, the rules for
plugging wells were amended, including the enactment of more stringent
requirements for monitoring and testing older, inactive wells having greater
potential for damaging the environment. Per the Railroad Commission state
plugging director in March 1998, the Railroad Commission's plugging fund had a
backlog of in excess of 1,800 wells requiring plugging and was engaged in the
review of seventy contaminated oil fields as candidates for state-funded
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remediation. Company management believes that the abandoned and inactive wells
that are candidates for state-funded plugging number in the tens of thousands as
of the date hereof. This calculation is based upon management's belief that
there are, on average, ten oil or gas wells listed in the Railroad Commission's
inventory of wells requiring state-funded remediation per each of 12,500
operators registered with the Railroad Commission. Further, wells are added
continuously at the rate of 250 per month in an order of priority based on the
perceived risk to human health and the environment.
SIMPCO, INC.
Simpco, a Texas corporation, was acquired by the Company in a
transaction effective as of January 15, 1999, as a result of which the Company
issued and sold a total of 850,000 newly-issued, restricted shares of Common
Stock in consideration of the exchange therefor of 100% of Simpco's outstanding
shares of common stock. Simpco was engaged in oil and gas remediation operations
prior to the effective date of its acquisition by the Company on January 15,
1999. Since that date, Simpco has ceased all ongoing operations except as the
owner and lessor to P & A Remediation, also a wholly-owned subsidiary of the
Company, as the lessee, of the used oil field and construction equipment,
including, but not limited to, pulling machines, trucks, trailers, bulldozers,
wireline vehicles and specialty machined tools, valued at approximately $960,000
as of the effective date on January 15, 1999, of the Company's acquisition of
Simpco. Simpco's outstanding indebtedness, in the amount of approximately
$110,000 on the effective date (January 15, 1999) of the company's acquisition,
has not been materially reduced as of the date hereof.
In addition to the equipment owned by Simpco on the date of its
acquisition by the Company, Simpco leases P & A Remediation other such items of
oil field and construction equipment acquired by the Company from unaffiliated
third parties and assigned to Simpco subsequent to January 15, 1999. These items
include a double triple workover rig, a cementing system, a water truck, a
bulldozer, a wireline truck and specialty equipment necessary to cement oil
wells leased by the Company from Mr. Rodney W. Simpson (the uncle of Mr. Richard
Simpson, a 9.4% shareholder of the Company) for a period of five years through
March 17, 2004, pursuant to that certain Equipment Lease Agreement dated April
15, 1999. The lease provides for the payment of rental in the amount of $1,093
per month through March 17, 2002, and monthly rental payments in the amount of
$818 commencing April 17, 2002, through March 17, 2004. Upon termination, or the
earlier pay-off, of the lease, Simpco has the option to purchase the equipment
for the sum of $10.00.
In addition to the above-described equipment, Simpco purchased a 1996
Ford truck from an unaffiliated person under an installment contract dated May
14, 1999, for the purchase price of approximately $19,596. The contract requires
the payment of a total of $15,775 in monthly installments over a period of three
years commencing June 25, 1999, at an interest rate of 10% per annum.
Additionally, Simpco received from the Company by assignment a 1995 and a 1996
Ford truck, each of which was purchased from an unaffiliated person under an
installment contract. The purchase prices of the 1995 and 1996 Ford were
approximately $17,995 and $15,700, respectively. The contract for the purchase
of the 1995 Ford requires the Company's payment of a total of $15,000 in monthly
installments over a period of three years commencing May 19, 1999, at an
interest rate of 16.5% per annum. Under the contract for the purchase of the
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1996 Ford, the Company is required to pay the balance of the installment
payments totaling $22,849 over a three-year period.
EMPLOYEES AND CONSULTANTS
As of the date hereof, the Company has twenty-four full-time employees,
of whom five are engaged in administration, eighteen are engaged in operations,
and one of is engaged in marketing and sales. Of said employees, Messrs. Brian
L. Walker and Richard C. Smith have been employed by the Company without cash
compensation through the date hereof. See "Executive Compensation" below for a
description of the salaries authorized to be paid to Messrs. Walker and Richard
C. Smith for their services as employees of the Company during the fiscal year
ending June 30, 2000, and a description of the equity ownership interests in the
Company of all of its executive officers and directors, including Messrs. Walker
and Richard C. Smith. None of the Company's employees are represented by a labor
union. The Company has never had a strike or lockout and considers its employee
relations to be good.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Plan of Operation
The Company serves as the holding company for two wholly-owned
subsidiaries, including Yankee Development and Simpco, and owns 99% of the
outstanding membership interests in P & A Remediation. Simpco owns the balance
of one per cent of the outstanding membership interests in PAR. For the period
from inception (January 21, 1998) through May 31, 1999, the Company had $100,868
in total revenues and $36,375 in gross profit on sales, respectively, and
operating expenses aggregating $109,982. As a result, the Company had a net
operating loss and net loss in the amount of $(73,419) and $(56,399),
respectively ($.01 per share). The Company's revenues are limited, as of the
date hereof, to those generated by P & A Remediation from oil well plugging,
remediation and salvage operations, and no revenues have been realized from oil
or gas production. P & A Remediation proposes to increase its oil well plugging,
remediation and salvage business in its current regions of operation in Texas
and expand such operations to the States of Oklahoma and New Mexico. Management
does not foresee Yankee Development's conducting additional development
operations on its existing properties or exploring for oil and gas elsewhere
unless oil and gas prices increase significantly, which increase is sustained
for a significant period of time. The Company intends to pursue available
opportunities in the oil and gas business, including the acquisition of
additional proven, developed reserves, equipment and personnel, and to expand
its business through the acquisition of businesses related and unrelated to the
oil and gas business. If the Company is unable to generate sufficient revenue
from operations, management intends to explore all available alternatives for
debt and/or equity financing, including but not limited to private and public
securities offerings.
Financial Condition, Capital Resources and Liquidity
At May 31, 1999, the Company had assets totaling $5,053,305, including
current assets in the amount of $183,719, fixed assets, including land, building
and equipment (less accumulated depreciation) in the amount of $1,156,931 and
$3,712,655 in other assets (primarily proved,
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developed oil reserves). Since the Company's inception, it has received $27,250
in cash contributed as consideration for the issuance of shares of Common Stock.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company has four locations, including (i) its leased executive
offices located at 1026 West Main Street, #208, Lewisville, Texas 75067; (ii) a
five-acre tract of land located in Young County, Texas, on which a metal
building is situated; (iii) a leased building situated on five acres north of
Ballinger, Texas, used by Simpco prior to its acquisition by the Company; and
(iv) a leased facility, including a building located on five and one-half acres,
in Olney, Texas. The Ballinger and Olney facilities are presently used by P & A
Remediation for its oil well plugging, remediation and salvage operations. The
Company anticipates that these facilities will be adequate for its foreseeable
future needs.
The executive offices of the Company are comprised of approximately 300
square feet of space in the DFW Metroplex located in Lewisville, Texas,
approximately ten miles north of the Dallas/Fort Worth International Airport.
The space has been rented from an affiliate of the Company on a month-to-month
basis at the rate of $250 per month since July 1, 1999.
The Company owns a tract of land containing five acres located within
the Texas Emmigration and Land Company Survey No. 178, Abstract No. 425, in
Young County, Texas, immediately north of State Highway No. 79. A fenced-in,
metal building, comprised of approximately 1,600 square feet in sound structural
and functional condition, is situated on the property. The acreage and facility
were purchased by the Company from a non-affiliate on March 19, 1999, for a
total purchase price of $12,500. The property is subject to that certain
Promissory Note Secured by Deed of Trust dated March 19, 1999, in the principal
amount of $11,500, payable in installments of approximately $245 per month
commencing on May 1, 1999, and terminating on April 1, 2004. The note bears
interest at the rate of 10% per annum. In the opinion of management of the
Company, the facilities are adequately covered by insurance. P & A Remediation
presently uses the land and building for storing equipment.
The Company leases a yard comprised of approximately five acres and
office building situated thereon located one to two miles north of Ballinger,
Texas, on U.S. Highway 83 (also known as 11816 U.S. Highway North). The Company
uses the acreage and facilities for remediation and salvage activities. The
property is leased from Mr. Richard Simpson, an affiliate of the Company, for
annual rent in the amount of $5,400 payable in monthly installments of $450 to
Mr. Steve Simpson or other assignee of Mr. Richard Simpson. Although the lease
term expires on October 31, 1999, Company management believes, without
assurance, that it will be possible to renew the lease on terms acceptable to
management because Mr. Richard Simpson, the lessor, is an affiliate of the
Company.
The Company leases the house and lots on approximately five and
one-half acres located at 505 Knox Street, Olney, Texas, which it uses as an
oilfield salvage yard. The yard is leased from a non-affiliate for a period of
one year through November 30, 1999, at an annual rent of
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<PAGE> 12
$6,600 payable in monthly installment of $550 each. The lease is renewable for a
period of one year; at the expiration of which year the Company has the option
to purchase the property. The Company intends to renew the lease on the Olney
yard for the additional one-year period provided. Management believes that the
terms for renewal are comparable to those available for the lease of comparable
facilities in the surrounding Olney area.
The Company's current investment policy with respect to real estate is
to purchase in fee simple 100% of the interest in a particular real property
that is expected to be useful to the Company as a site on which to conduct
business operations. Accordingly, the Company's primary purpose for investing in
real estate is not the realization of capital gain or income, although it is
possible that such benefits may be realized. There are no limitations on the
percentage of assets which may be invested in any one investment, or type of
investment, and such policy may be changed without a vote of the Company's
shareholders.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the
ownership of the Company's Common Stock as of October 12, 1999, by each
shareholder known by the Company to be the beneficial owner of more than 5% of
its outstanding shares of Common Stock, each director and all executive officers
and directors as a group. Under the General Rules and Regulations of the
Securities and Exchange Commission (the "Commission"), a person is deemed to be
the beneficial owner of a security if such person has or shares the power to
vote or direct the voting, or dispose or direct the disposition, of such
security. Accordingly, more than one person may be deemed to be a beneficial
owner of the same securities. Unless otherwise indicated by footnote, each of
the shareholders named in the table has sole voting and investment power with
respect to the shares of Common Stock beneficially owned.
<TABLE>
<CAPTION>
Shares Percentage
Beneficially of
Beneficial Owner Owned(1) Class(1)
- --------------------------------------- ------------ ----------
<S> <C> <C>
Bryan L. Walker (2) 5,505,625(5) 81.2%
8505 Freeport Parkway North, Suite #141
Irving, Texas 75063
Laura N. Walker (3) 5,505,625(6) 81.2%
8505 Freeport Parkway North, Suite #141
Irving, Texas 75063
Shelton Voting Trust 5,305,625(7) 78.3%
8505 Freeport Parkway North, Suite #141
Irving, Texas 75063
Richard Simpson 637,500(8) 9.4%
P.O. Box 4881
County Road 261
Zephyr, Texas 76890
</TABLE>
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<PAGE> 13
<TABLE>
<S> <C> <C>
Richard C. Smith (2) 206,000(9) 2.4%
1026 West Main Street, Suite #208
Lewisville, Texas 75067
Derek T. Smith (4) 15,000 (10)
14608 Lakecrest Drive
Addison, Texas 75244
All executive officers and directors 5,583,625 82.4%
as a group (four persons)
</TABLE>
- ----------
(1) Represents the number of shares of Common Stock owned of record and
beneficially by each named person or group, expressed as a percentage of
6,780,625 shares of the Company's Common Stock issued and outstanding as of
October 12, 1999.
(2) Executive officer and member of the Board of Directors of the
Company, Yankee Development and Simpco.
(3) Executive officer and member of the Board of Directors of the
Company and Simpco; executive officer of Yankee Development.
(4) Executive officer of the Company.
(5) Includes 5,305,625 shares of Common Stock owned of record by the
Shelton Voting Trust, of which Mr. Walker is the trustee, and 100,000 shares of
Common Stock owned of record by each of Mr. Walker and Ms. Laura N. Walker, Mr.
Walker's spouse.
(6) Includes 5,305,625 shares of Common Stock owned of record by the
Shelton Voting Trust, of which Mr. Walker is the trustee, and 100,000 shares of
Common Stock owned of record by each of Mr. Walker and Ms. Walker.
(7) Because Mr. Walker is the trustee of the Shelton Voting Trust,
beneficial ownership of the shares of Common Stock owned of record by the trust
is attributable to him and Ms. Walker, his spouse, under the applicable General
Rules and Regulations of the Commission.
(8) Includes 212,500 shares of Common Stock owned of record by each of
the Simpco Trust #1, the Simpco Trust #2 and the Simpco Trust #3 (collectively,
the "Simpco Trusts" and, individually, a "Simpco Trust"), of which Mr. Simpson
is the trustee.
(9) Includes 100,000 shares, and 33,000 shares, of Common Stock owned
of record by the Basic Realty Trust and the Nelson Family Trust, respectively,
of which Mr. Smith is the trustee, and 30,000 shares of Common Stock owned of
record by Ms. Margie Moreno Smith, Mr. Smith's spouse.
(10) Less than one per cent.
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<PAGE> 14
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
EXECUTIVE OFFICERS AND DIRECTORS
Set forth below are the names, ages, positions with the Company, Yankee
Development, Simpco and P & A Remediation and business experience of the
executive officers and directors of the Company, Yankee Development and Simpco
and the sole Manager of P & A Remediation.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Bryan L. Walker(1) 45 President, Chief Executive Officer and
Chairman of the Board of Directors of the
Company; President and Director of Yankee
Development and Simpco
Richard C. Smith(1)(2) 54 Treasurer, Chief Financial Officer and
Director of the Company; Treasurer and
Director of Yankee Development and Simpco
Derek T. Smith(1) 33 Vice President of the Company
Laura N. Walker(1) 42 Secretary and Director of the Company;
Secretary of Yankee Development; Vice
President, Secretary and Director of Simpco
</TABLE>
- ----------
(1) The above-named persons may be deemed to be "promoters" and
"parents" of the Company, as those terms are defined under the General Rules and
Regulations promulgated under the Securities Act of 1933, as amended.
(2) Mr. Smith holds, in addition to the positions with each of the
above-named corporations indicated in the above table, the office of Manager of
P & A Remediation, a Texas limited liability company 99%-owned by the Company.
Mr. Smith occupies this office until the next annual meeting of P & A
Remediation's members and until his successor has been elected, unless he sooner
resigns or is removed.
All directors hold office until the next annual meeting of the
Company's shareholders and until their respective successors have been elected
and qualify. Officers serve at the pleasure of the Board of Directors. Messrs.
Walker, Richard C. Smith and Derek T. Smith and Ms. Walker are expected to
devote approximately 90%, approximately 40%, approximately 5% and approximately
10%, respectively, of their time to the business of the Company.
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<PAGE> 15
FAMILY RELATIONSHIPS
Mr. Bryan L. Walker, President, Chief Executive Officer and Chairman of
the Board of Directors of the Company and President and a director of Yankee
Development and Simpco, is the spouse of Ms. Laura N. Walker, Secretary and a
director of the Company, Secretary of Yankee Development and Vice President,
Secretary and a director of Simpco. Mr. Richard C. Smith, Treasurer, Chief
Financial Officer and a director of the Company and Treasurer and a director of
Yankee Development and Simpco, is the father of Mr. Derek T. Smith, the
Company's Vice President.
BUSINESS EXPERIENCE
Bryan L. Walker has served as the President/Chief Executive Officer and
the Chairman of the Board of Directors of the Company since August 14, 1998, and
June 10, 1998, respectively. He served in the positions of Vice President and
director of the Company from June 7, 1998, through August 14, 1998, and June 10,
1998, respectively. Mr. Walker has served as a director and the President of
Yankee Development since January 7 and August 14, 1998, respectively. From
January 7 through August 14, 1998, he served in the position of Vice President
of Yankee Development. Since January 18, 1999, Mr. Walker has served in the
positions of President and a director of Simpco. He has been self-employed as a
business/management consultant in the oil business serving independent oil
production companies since 1984. Mr. Walker has co-owned, together with his
spouse, Ms. Walker, an executive officer and director of the Company, Yankee
Development and Simpco, since May 1997, Hawaiian Travel, Inc., a travel
consulting firm affiliated with the Company having offices in Irving, Texas. He
received a Bachelor of Business Administration degree from Southern Methodist
University, Dallas, Texas, in 1976.
Richard C. Smith has served as the Treasurer and a director of the
Company since June 7, 1998, and as the Company's Chief Financial Officer since
August 14, 1998. Since January 7, 1998, he has served in the positions of
Treasurer and director of Yankee Development. Mr. Smith served, from January 7
through August 14, 1998, as the Secretary of Yankee Development. He has served,
since January 18, 1999, as the Treasurer and a director of Simpco. Mr. Smith has
twenty-eight years of experience in public accounting. He has owned and operated
a public accounting practice in Lewisville, Texas, since March 1998, as a
professional corporation under the name of Richard C. Smith, CPA, P.C., and,
during the period from February 1971 through February 1998, prior to that time,
as a sole proprietor. He was employed by Atlantic Richfield Oil Company as a
staff accountant from June 1967 through February 1969 and by Mark III
Manufacturing Corp., a privately-held manufacturing company located in Roanoke,
Texas, as a controller from March 1969 through January 1971. Mr. Smith received
a Bachelor of Business of Administration degree in accounting from the
University of North Texas in 1967.
Derek T. Smith has served, since August 14, 1998, in the office of Vice
President of the Company. He served as the President of the Company during the
period from June 7 through August 14, 1998. Since August 1996, Mr. Smith has
been employed by CSC Consulting Group, a division of Computer Sciences
Corporation, a public company located in El Segundo, California. From August
1994 through July 1996, he was employed as a senior consultant by Hogan Systems,
Inc., a publicly-held consulting company with offices in Dallas, Texas, that was
acquired by Computer Sciences Corporation in August 1996. Mr. Smith was
employed, from January through July 1994, by the U.S. Small Business
Administration as a senior loan officer, disaster relief. From October 1988
through May 1992, he was employed in the position of market
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<PAGE> 16
cost analyst by Electronic Data Systems, Dallas, Texas, a publicly-held company.
Mr. Smith received a Bachelor of Business Administration degree in finance from
The University of Texas at Austin in 1988 and a Masters of Business
Administration degree in strategic management, marketing and international
business from the University of Georgia in 1993.
Laura N. Walker has served as the Secretary of the Company since August
14, 1998, and as a director of BTI since June 7, 1998. Since August 14, 1998,
she has served as the Secretary of Yankee Development. Ms. Walker has served in
the positions of Vice President, Secretary and director of Simpco since January
18, 1998. Together with her spouse, Mr. Walker, an executive officer and
director of the Company, Yankee Development and Simpco, Ms. Walker has co-owned,
since May 1997, Hawaiian Travel, Inc., a travel consulting firm with offices in
Irving, Texas, which is an affiliate of the Company.
ITEM 6. EXECUTIVE COMPENSATION
No cash compensation, and, except for Mr. Walker's use of a Company
automobile since January 8, 1999, 10% of which usage is estimated to be
personal, no non-cash compensation, has been awarded to, earned by or paid to
any Company executive officer or director for all services performed in all
capacities for the Company during the approximate one year and nine-month period
from the date of the Company's inception on January 21, 1998, through the date
hereof. However, the Company's Board of Directors has approved the payment of a
base salary in the amount of $36,000 (excluding bonuses) to Mr. Walker, the
President, Chief Executive Officer and Chairman of the Board of Directors of the
Company, and a base salary (excluding bonuses) in the amount of $30,000 to Mr.
Richard C. Smith, the Treasurer and a director of the Company during the current
fiscal year ending June 30, 2000. As of the date hereof, payment of these
approved salaries has not yet commenced. It is anticipated that at such time, if
ever, as the Company's financial position permits, the executive officers and/or
directors of the Company will receive appropriate compensation, in addition to
reasonable salaries, such as bonuses, coverage under medical and/or life
insurance benefits plans and participation in stock options and/or other profit
sharing or pension plans, for services as executive officers of the Company and
may receive fees for their attendance at meetings of the Board of Directors of
the Company. As of the date hereof, the Company does not provide officers with
pension, stock appreciation rights, long-term incentive or other plans and has
no intention of implementing any such plans for the foreseeable future. Further,
to date, no cash or no non-cash compensation has been awarded to, earned by or
paid to any executive officer or director of Yankee Development or Simpco,
wholly-owned subsidiary corporations of the Company, or to Mr. Richard C. Smith,
Manager of PAR, a 99%-owned Texas limited liability company, for services
performed in all capacities for said companies.
COMPENSATION OF DIRECTORS
The Company has no standard arrangements for compensating the directors
of the Company, who also serve as the directors of Yankee Development and
Simpco, for their attendance at meetings of the Board of Directors.
16
<PAGE> 17
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On or about January 21, 1998, the Company issued and sold 200,000
shares, 200,000 shares, 170,000 shares, and 30,000 shares, of Common Stock to
Messrs. James L. Speir, James Howe and John Bradley and Ms. Janine Kreuter,
respectively (a total of 600,000 shares of Common Stock), in consideration for
cash paid by each individual in the amount of $.00375 per share (a total of
$2,250). On or about April 16, 1998, a total of 510,000 shares of Common Stock
owned collectively by Messrs. Speir, Howe and Bradley and Ms. Kreuter were
transferred to a total of fourteen residents of the State of Texas, including
Mr. Byan L. and Ms. Laura N. Walker and Messrs. Richard C. and Derek T. Smith,
the current members of management of the Company, Yankee Development, P & A
Remediation and/or Simpco, two trusts of which Mr. Richard C. Smith serves as
trustee and certain immediate family members of the foregoing, including
Mesdames Margie Moreno-Smith, Catherine E. Smith, and Angela D. McClure, Mr.
Richard C. Smith's spouse, mother and daughter, respectively. (See Part II, Item
4. "Recent Sales of Unregistered Securities.")
On April 23, 1998, the Company issued and sold 5,305,625 shares of
Common Stock to the Shelton Voting Trust in consideration for the sale and
transfer to the Company of all 1,000 outstanding shares of common stock of
Yankee Development. Mr. Walker, the President, Chief Executive Officer and
Chairman of the Board of Directors of the Company and Yankee Development and the
President and a director of Simpco and the beneficial owner of approximately
81.2% of the outstanding shares of the Company's Common Stock, is the trustee of
the Shelton Voting Trust. (See Part II, Item 4. "Recent Sales of Unregistered
Securities.")
P & A Remediation, a wholly-owned subsidiary of the Company, entered
into that certain Short Form of Lease dated November 1, 1998, with Mr. Richard
Simpson, as lessor, pursuant to which P & A Remediation has leased the oil well
plugging yard and office location used by Simpco prior to its acquisition by the
Company. The acreage and facilities, located north of Ballinger, Texas, are
leased from Mr. Richard Simpson, beneficial owner of approximately 9.4% of the
Company's outstanding shares of Common Stock, for a term of one year through
October 31, 1999. The lease provides for annual rent in the amount of $5,400
payable in monthly installments of $450 to Mr. Steven Simpson, Mr. Richard
Simpson's brother, or other assignee as directed by Mr. Richard Simpson.
Since January 8, 1999, Mr. Walker has had the use of a Company
automobile, a 1995 Jeep Cherokee, 10% of his usage of which is estimated to be
personal.
On January 8, 1999, the Company acquired a 1995 Jeep from Ms. Walker,
the Secretary and a director of the Company and Yankee Development and the Vice
President, Secretary and a director of Simpco, in consideration for the
assumption by the Company of a promissory note in the principal amount of
$10,500, secured by a certificate of deposit owned by Ms. Walker, payable to a
bank in connection with the purchase. The note, which bears interest at the rate
of 7.85% per annum, is due on February 15, 2002.
The Company issued and sold, on January 15, 1999, 212,500 shares of
Common Stock to each of the Simpco Trust #1, the Simpco Trust #2 and the Simpco
Trust #3 (an aggregate of 637,500 shares of Common Stock) in consideration and
exchange for the sale and transfer to the Company by each trust of 2,500 shares
of common stock, collectively constituting 75% of the
17
<PAGE> 18
outstanding shares of common stock, of Simpco. As a result of this transaction,
ownership by the Simpco Trusts of approximately 9.4% of the outstanding shares
of the Company's Common Stock is attributable to Mr. Richard Simpson, trustee of
the Simpco Trusts. (See Part II, Item 4. "Recent Sales of Unregistered
Securities.")
Certain executive officers, directors and controlling shareholders of
the Company, including Messrs. Bryan L. Walker and Richard C. Smith and Ms.
Laura N. Walker, have made cash advances on open account to the Company
aggregating $78,701 during the period from June 1, 1998, through May 31, 1999.
These advances have been classified as long-term debt in the Company's financial
statements.
ITEM 8. DESCRIPTION OF SECURITIES.
Description of Capital Stock
The Company's authorized capital stock consists of 100,000,000 shares
of Common Stock, $.00001 par value per share, and 10,000,000 shares of Preferred
Stock, $.00001 par value per share.
Description of Common Stock
All shares of Common Stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of Common Stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as
fully-paid and nonassessable shares. Cumulative voting in the election of
directors is not permitted; which means that the holders of a majority of the
issued and outstanding shares of Common Stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose and, in such event, the holders of the remaining shares of Common
Stock will not be able to elect any directors. In the event of liquidation of
the Company, each shareholder is entitled to receive a proportionate share of
the Company's assets available for distribution to shareholders after the
payment of liabilities and after distribution in full of preferential amounts,
if any, to be distributed to holders of the Preferred Stock. All shares of the
Company's Common Stock issued and outstanding are fully-paid and nonassessable.
Dividend Policy. Holders of shares of Common Stock are entitled to
share pro rata in dividends and distributions with respect to the Common Stock
when, as and if declared by the Board of Directors out of funds legally
available therefor, after requirements with respect to preferential dividends
on, and other matters relating to, the Preferred Stock, if any, have been met.
The Company has not paid any dividends on its Common Stock and intends to retain
earnings, if any, to finance the development and expansion of its business.
Future dividend policy is subject to the discretion of the Board of Directors
and will depend upon a number of factors, including future earnings, capital
requirements and the financial condition of the Company.
18
<PAGE> 19
Transfer Agent and Registrar. The Transfer Agent and Registrar for the
Company's Common Stock is Corporate Stock Transfer, Inc., 370 Seventeenth
Street, Suite #2350, Denver, Colorado 80202.
Description of Preferred Stock
Shares of Preferred Stock may be issued from time to time in one or
more series as may be determined by the Board of Directors. The voting powers
and preferences, the relative rights of each such series and the qualifications,
limitations and restrictions thereof shall be established by the Board of
Directors, except that no holder of Preferred Stock shall have preemptive
rights. The Company has no shares of Preferred Stock outstanding, and the Board
of Directors has no plan to issue any shares of Preferred Stock for the
foreseeable future unless the issuance thereof shall be in the best interests of
the Company.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
(a) MARKET INFORMATION.
There has been no established public trading market for the Common
Stock since the Company's inception on January 21, 1998.
(b) HOLDERS.
As of October 12, 1999, the Company had 59 shareholders of record of
its 6,780,625 issued and outstanding shares of Common Stock, $.00001 par value
per share.
(c) DIVIDENDS.
The Company has never paid or declared any dividends on its Common
Stock and does not anticipate paying cash dividends in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS.
Neither the Company nor any of its subsidiaries, including Yankee
Development, P & A Remediation and Simpco, know of any legal proceedings to
which any of the foregoing companies are parties or to which the property of any
of such companies is the subject which are pending, threatened or contemplated,
or any unsatisfied judgments against the Company or any of its subsidiaries.
19
<PAGE> 20
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
David S. Hall, P.C., 1660 South Stemmons, Suite #420, Lewisville, Texas
75067, reported upon the Company's financial statements for the period from
inception (January 21, 1998) to June 30, 1998, and has been appointed as the
Company's independent accountant for the fiscal year ending June 30, 1999. There
has been no change in the Company's independent accountant during the period
commencing with the Company's retention of David S. Hall, P.C., through the date
hereof.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On or about January 21, 1998, the Company issued and sold 200,000
shares, 200,000 shares, 170,000 shares, and 30,000 shares, of Common Stock,
$.00001 par value per share, to Messrs. James L. Speir, James Howe and John
Bradley and Ms. Janine Kreuter, respectively (a total of 600,000 shares of
Common Stock), in consideration for cash paid by each individual in the amount
of $750, $750, $637.50 and 112.50, respectively (a total of $2,250 at the rate
of $.00375 per share). The Company claimed the exemptions from registration, in
connection with each of the transactions described in this paragraph whereby the
Company issued and sold shares of its Common Stock in consideration for cash,
afforded by Section 4(2) of the Securities Act of 1933, as amended (the "Act"),
and Section 11-51-308(1)(p) of the Colorado Securities Act, as amended (the
"Colorado Act"). To make the exemptions available, the Company relied upon the
fact that the issuance and sale of the shares by the Company did not constitute
a public securities offering together with the fact that, at the time of the
sales, Mr. Speir and Ms. Kreuter were executive officers and directors of the
Company and Messrs. Speir, Howe and Bradley and Ms. Kreuter were accredited
investors. On or about April 16, 1998, a total of 510,000 shares of Common Stock
owned collectively by Messrs. Speir, Howe and Bradley and Ms. Kreuter were
transferred to a total of fourteen residents of the State of Texas, including
the current executive officers and directors of the Company, two trusts of which
the Company's Treasurer serves as trustee and certain immediate family members
of the foregoing. (See Part I, Item 7. "Certain Relationships and Related
Transactions.")
From March to April 7, 1998, the Company issued and sold an aggregate
of 25,000 shares of Common Stock to a total of thirty-five persons, including
twenty-six residents of the State of Colorado, five residents of the State of
Arizona and four residents of the State of Texas, in consideration for the total
sum of $25,000 in cash. No underwriter was employed in connection with the
offering and sale of the shares. The Company claimed the exemptions from
registration in connection with the offering provided under Section 3(b) of the
Act and Rule 504 of Regulation D promulgated thereunder and Section
11-51-308(1)(p) of the Colorado Act. The facts relied upon by the Company to
make the exemptions available include the following: (i) the aggregate offering
price for the offering of the shares of Common Stock did not exceed $1,000,000,
less the aggregate offering price for all securities sold within the twelve
months before the start of and during the offering of the shares in reliance on
any exemption under Section 3(b), or in violation of Section 5(a), of the Act;
(ii) the required number of manually executed originals and true copies of Form
D, accompanied, in connection with the Colorado notification of exemption, with
the appropriate exemption fee, were duly and timely filed with the
20
<PAGE> 21
U.S. Securities and Exchange Commission and the Colorado Division of Securities;
(iii) no general solicitation or advertising was conducted by the Company in
connection with the offering of any of the shares; and (iv) the fact that the
Company has not been since its inception (a) subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended; (b) an "investment company" within the meaning the Investment Company
Act of 1940, as amended; or (c) a development stage company that either has no
specific business plan or purpose or has indicated that its business plan is to
engage in a merger or acquisition with an unidentified company or companies, or
other entity or person.
In April 1998, the Company issued and sold 5,305,625 shares of Common
Stock to the Shelton Voting Trust in consideration and exchange for the sale and
transfer to the Company of 1,000 shares of common stock, no par value per share,
constituting all of the outstanding common stock, of Yankee Development. The
Company relied, in connection with the "reverse acquisition" transaction, upon
the exemption from registration provided by Section 4(2) of the Act for sales of
securities by an issuer not constituting a public securities offering together
with the fact that, at the time of the consummation of the transaction, the
Shelton Voting Trust had a net worth in excess of $700,000 and Mr. Bryan L.
Walker, the trustee of the trust, was an executive officer, director and
controlling shareholder of the Company. (See Part I, Item 7. "Certain
Relationships and Related Transactions.")
The Company issued and sold, on January 15, 1999, 212,500 shares of
Common Stock to each of Mr. Randy K. Dusek, the Simpco Trust #1, the Simpco
Trust #2 and the Simpco Trust #3 (an aggregate of 850,000 shares of Common
Stock) in consideration and exchange for the sale and transfer by each said
person to the Company of 2,500 shares of common stock, no par value per share,
collectively constituting all 10,000 outstanding shares of common stock, of
Simpco. The Company claimed the exemption from registration in connection with
the transaction, involving the exchange of shares of the Company's Common Stock
for shares of Simpco common stock, provided under Section 4(2) of the Act. The
facts relied upon by the Company to make the exemption available include the
following: (i) the transaction did not constitute a public securities offering
by the Company; (ii) Mr. Dusek was an accredited investor at the time of the
transaction; and (iii) each Simpco Trust that received shares of the Company's
Common Stock had a net worth in excess of $250,000 at the time of the
consummation of the transaction. (See Part I, Item 7. "Certain Relationships and
Related Transactions.")
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article IX of the Company's Articles of Incorporation contains
provisions providing for the indemnification of directors and officers of the
Company as follows:
The corporation shall indemnify, to the fullest extent
permitted by applicable law in effect from time to time, any person,
and the estate and personal representative of any such person, against
all liability and expense (including attorneys' fees) incurred by
reason of the fact that such person is or was a director or officer of
the Corporation or, while serving as a director or officer of the
Corporation, is or was serving at the request of the Corporation as a
director, officer, partner, trustee, employee, fiduciary, or agent of,
or in any similar
21
<PAGE> 22
managerial or fiduciary position of, another domestic or foreign
corporation or other individual or entity or of an employee benefit
plan. The Corporation shall also indemnify any person who is serving or
has served the Corporation as director, officer, employee, fiduciary,
or agent, and that person's estate and personal representative, to the
extent and in the manner provided in any bylaw, resolution of the
shareholders or directors, contract, or otherwise, so long as such
provision is legally permissible.
Article VIII, Section 8.3 of the Regulations and Operating Agreement of
P & A Remediation, LLC, contains provisions providing for the indemnification of
certain persons as follows:
Indemnification By Company. The Limited Liability Company may
indemnify any person who was or is a party defendant or is threatened
to be made a party defendant to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the Limited
Liability Company) by reason of the fact that he is or was a Member of
the Company, Officer, employee or agent of the Company, or is or was
serving at the request of the Company, against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit or proceeding if the Members determine that he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
best interest of the Limited Liability Company, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not in itself create a
presumption that the person did or did not act in good faith and in a
manner which he reasonably believed to be in the best interest of the
Limited Liability Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
At present, there is no pending litigation or proceeding involving a
director or executive officer of the Company, Yankee Development or Simpco or
the Manager of PAR as to which indemnification is being sought.
PART F/S
The Financial Statements of Basic Technologies, Inc., required by
Regulation S-B commence on page F-1 hereof in response to Part F/S of this
Registration Statement on Form 10-SB and are incorporated herein by this
reference.
22
<PAGE> 23
BASIC TECHNOLOGIES, INC.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30,1998
<PAGE> 24
DAVID S. HALL P.C.
CERTIFIED PUBLIC ACCOUNTANT
1660 S. STEMMONS, SUITE 420
LEWISVILLE TX 75067
(214) 315-1315
FAX (214) 420-0038
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Basic Technologies, Inc.:
We have audited the accompanying balance sheet of Basic Technologies, Inc. (a
Corporation) as of June 30, 1998 and the related statements of income, retained
earnings and cash flows for the period from inception (January 21, 1998) to June
30, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Basic Technologies, Inc. as of
June 30, 1998, and the results of its operations and its cash flows for the
initial period then ended in conformity with generally accepted accounting
principles.
/s/ DAVID S. HALL, P.C.
LEWISVILLE, TEXAS
DECEMBER 18, 1998
<PAGE> 25
BASIC TECHNOLOGIES, INC.
Balance Sheet
June 30, 1998
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 25,212
-----------
TOTAL CURRENT ASSETS 25,212
OTHER ASSETS
Organization Costs 2,250
Accumulated Amortization (188)
Investment in Yankee Development Corporation 3,711,000
-----------
TOTAL OTHER ASSETS 3,713,062
-----------
TOTAL ASSETS $ 3,738,274
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES $ 0
STOCKHOLDERS' EQUITY
Common Stock, $.00001 par value, 100,000,000 shares
authorized and 5,930,625 issued and outstanding 59
Preferred Stock, $.00001 par value, 10,000,000 shares
authorized and no shares issued and outstanding 0
Paid in Capital 3,738,191
Retained Earnings 24
-----------
TOTAL STOCKHOLDERS' EQUITY 3,738,274
-----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,738,274
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 26
BASIC TECHNOLOGIES, INC.
Statement of Income
For the period ended June 30, 1998
<TABLE>
<S> <C>
REVENUES
Interest Income $212
----
TOTAL REVENUES 212
EXPENSES
Amortization 188
----
TOTAL EXPENSES 188
----
NET INCOME $ 24
Beginning Retained Earnings 0
----
ENDING RETAINED EARNINGS $ 24
====
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 27
BASIC TECHNOLOGIES, INC.
Statement of Cash Flows
For the period Ended June 30, 1998
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 24
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization 188
NET CASH PROVIDED BY
OPERATING ACTIVITIES 212
NET CASH USED BY INVESTING ACTIVITIES
NET CASH USED BY
INVESTING ACTIVITIES 0
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock 25,000
------------
NET CASH USED BY
FINANCING ACTIVITIES 25,000
------------
NET INCREASE IN CASH 25,212
CASH AT BEGINNING OF YEAR 0
------------
CASH AT END OF YEAR $ 25,212
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 28
BASIC TECHNOLOGIES, INC.
Statement of Changes in Stockholders' Equity
For the period ended June 30, 1998
<TABLE>
<CAPTION>
Additional
Common Paid In Retained
Stock Capital Earnings Total
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 21,1998 $ 0 $ 0 $ 0 $ 0
Issuance of Common Stock
Sale of 600,000 shares 6 2,244 2,250
Sale of 25,000 shares 25,000 25,000
Acquisition of Wholly Owned
Subsidiary (Sale of
5,305,625 shares) 53 3,710,947 3,711,000
Net income to June 30, 1998 24 24
------------- ------------- ------------- -------------
BALANCE, JUNE 30, 1998 $ 59 $ 3,738,191 $ 24 $ 3,738,274
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 29
BASIC TECHNOLOGIES, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Activities and Basis of Accounting
The Company, a Corporation, is engaged in the acquisition and development
of oil and gas ventures and related interests, with its corporate
headquarters located in Lewisville, Texas. The Company incorporated in the
state of Colorado on January 21, 1998. The accompanying financial
statements have been prepared on the accrual basis of accounting in
accordance with generally accepted accounting principles.
Cash
For purposes of the statement of cash flows, the Company considers all
short-term securities purchased with a maturity of three months or less to
be cash equivalents.
Income Taxes
Income from the corporation is taxed at regular corporate rates per the
Internal Revenue Code.
Investments
On April 23, 1998, the Company issued 5,305,625 restricted common shares in
exchange for 100% of Yankee Development Corporation. Upon consummation of
the transaction, the former owners of Yankee Development Corporation
controlled approximately 90% of the issued and outstanding shares of Basic
Technologies, Inc. and Yankee Development Corporation became a wholly owned
subsidiary of Basic Technologies, Inc.
Intangibles
Amortization of Organization Costs is calculated over 60 months.
<PAGE> 30
Fiscal Year
The Company has established a fiscal year end of June 30, 1998. These
financial statements cover the first interim period January 21, 1998 to
June 30, 1998.
Common Stock
The Company's common stock is stated at par value ($.00001) and the paid in
capital represents the difference between the fair value of the assets
received and the common stock at par value.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
NOTE 2-INVESTMENT IN WHOLLY OWNED SUBSIDIARY
On April 23, 1998, the Company issued 5,305,625 restricted common shares in
exchange for 100% of Yankee Development Corporation. Upon consummation of the
transaction, the former owners of Yankee Development Corporation controlled
approximately 90% of the issued and outstanding shares of Basic Technologies,
Inc. and Yankee Development Corporation became a wholly owned subsidiary of
Basic Technologies, Inc.
The transaction was consummated as a purchase of assets, rather than a pooling
of interests. The valuation assigned to the purchase of Yankee Development
Corporation is based on the underlying net assets, which consist of working
interests in proven oil and gas reserves discounted to net present value of net
revenues less development and operating costs. The discount applied was 10%. The
oil and gas reserves are the only substantial assets in the subsidiary company.
Cost of Acquiring Yankee Development Shares $3,711,000
The period for which results of operations of the acquired wholly owned
subsidiary are included is from inception of the incorporation of Basic
Technologies, Inc. (January 21, 1998) to June 30, 1998.
<PAGE> 31
NOTE 3 - SUBSEQUENT EVENTS
In October 1998, the Company formed a Limited Liability Company (P & A
Remediation, LLC) with Simpco, Inc. with the intention of developing
environmental remediation in oil and gas fields. The Company owns 99% of the
interest in P & A Remediation, LLC and intends on investing $20,000 for the
start up of this operation.
The valuation of the oil and gas reserves is based on the market price of oil.
At the time of the valuation, the price used was $15/bbl. Since the balance
sheet date, the price of oil has dropped and at the issuance of the report is
around $11/bbl. If the price of oil remains at this level, the valuation of the
reserves would be reduced by $530,000.
<PAGE> 32
BASIC TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
May 31, 1999
NOTE 1 - NATURE OF ACTIVITIES
The Company, through its subsidiaries, is engaged in environmental
remediation and recovery of oil and gas properties in Texas, and
development of oil and gas ventures and related interests, with its
corporate headquarters located in Lewisville, Texas. The Company
incorporated in the state of Colorado on January 21, 1998; its fiscal
year end is June 30.
NOTE 2 - CONSOLIDATION
The Company was formed as a parent holding company, to operate through
subsidiaries. The financial statements consolidate the activities of the
parent along with:
- Yankee Development Corp., a Texas corporation
- P & A Remediation, LLC, a Texas limited liability company
- Simpco, Inc., a Texas corporation
All significant intercompany transactions and balances have been
eliminated.
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
- Basis of Accounting
The accompanying financial statements have been prepared on the
accrual basis of accounting in accordance with generally accepted
accounting principles.
- Intangibles
Amortization of Organization Costs is calculated over 60 months.
- Common Stock
The Company's common stock is stated at par value ($.00001) and the
paid in capital represents the difference between the fair value of
the net assets received and the common stock at par value.
- Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
- Cash
Balances represent cash and cash equivalents. There are no
restrictions on any balances.
- Accounts Receivable
Due to the short period of Company operations and lack of bad debts,
management has made no provisions for bad debts. There are no
significant concentrations of credit risk.
<PAGE> 33
- Inventories
Inventories are shown at cost, using the first-in, first-out method.
In addition to direct purchases, inventory is acquired through the
performance of services (See note about revenues.)
- Property, Plant and Equipment
a. These assets are carried at acquisition cost. Depreciation is
provided using the straight line method over the estimated economic
lives of the assets, which range from 20 years for buildings to
three to ten years for all other assets.
b. The Company rebuilt and upgraded certain newly-acquired used
operating equipment prior to putting them into service. All costs,
including payroll, were capitalized.
- Stockholder Payables
Represent balances of open advances made by shareholders. There are no
current provisions for interest charges or specific repayment
schedules.
- Revenues
a. Service Revenues
Services for oil-well plugging are provided using two types of
contracts: cash and salvage. Under the salvage type, the Company
receives as its compensation specified used oil well equipment or
pipe. Revenue is recognized and the items taken into inventory
based upon the relevant wholesale market prices, or the prices at
which the Company could buy the items for resale on the open
market.
b. Sales Revenues
Inventory, whether acquired by purchase or through services, is
resold to oil and construction customers.
c. No revenues have been earned from oil and gas production.
- Interest
No interest has been capitalized. Expensed interest for the period is
$2,191.
- Income Taxes
Provisions for income taxes are based on income before taxes. The
current year net operating loss can be carried forward for up to
twenty years. The net deferred tax benefit in the accompanying
financial statements include the following:
<TABLE>
<S> <C>
Deferred tax asset $ 24,811
Deferred tax liability - 8,260
----------
Net deferred tax benefit $ 16,551
</TABLE>
The deferred tax asset results from the net operating loss. The
deferred tax liability results from the use of accelerated methods of
depreciation, and from the difference in asset bases arising from a
business combination accounted for under the purchase method.
NOTE 4 - EMPLOYEE BENEFITS
There are currently no qualified or non-qualified employee pension,
profit sharing, stock option or other plans authorized for any class
of employees.
<PAGE> 34
NOTE 5 - LEASES
- All leases for physical facilities are for a period of one year or
less, with no written option periods; no leases are with related
parties.
- There is only one equipment lease, the terms of which mandate
accounting as a capital lease.
Amortization of capitalized lease costs is included with depreciation.
Future obligations required under the lease terms are:
<TABLE>
<CAPTION>
Year Ending
June 30 Amount
----------- --------
<S> <C>
1999 $ 1,093
2000 13,116
2001 13,116
2002 12,566
2003 9,816
2004 7,362
------ -------
Total $57,069
</TABLE>
NOTE 6 - COMMITMENTS AND CONTINGENCIES
- No obligations, guarantees, potential lawsuits or other situations
exist that would require an accrual of any obligation or loss.
NOTE 7 - PROVED DEVELOPED OIL RESERVES
The Company owns, through a subsidiary, proven developed oil reserves
on 2300 acres in west Texas. Valuation at the time of acquisition was
based upon the discounted net present value of net revenues, after
development and operating costs. The applied discount rate was 10%,
and the oil price used was $15.00 per barrel. The current price of oil
is $20.00 per barrel, but the reserves are not to be revalued.
Recoverable oil reserves are 880,000 barrels.
NOTE 8 - BUSINESS COMBINATION
Effective January 15, 1999, the Company issued 850,000 shares of its
authorized but unissued shares of voting common stock in exchange for
all of the outstanding common stock of Simpco, Inc., a Texas
corporation. There is a contingency clause in the acquisition
agreement, which provides for the issuance of additional shares of
stock should the value of the Simpco, Inc., assets exceed a certain
level within eighteen months of the acquisition. That corporation, now
a wholly-owned subsidiary, is intended to be the owner and lessor of
the consolidated entities' operating equipment. The transaction was
accounted for under the purchase method.
NOTE 9 - SEGMENT REPORTING
Since only one segment, that of environmental remediation and salvage,
had revenue or operations during this period, no segment reporting
schedule is presented.
<PAGE> 35
NOTE 10 - EARNINGS PER SHARE
Basic earnings (loss) per share are computed by dividing the net loss
by the weighted average number of common shares outstanding during the
period. There are no provisions or contracts that would create
dilutive potential common stock.
NOTE 11 - LONG-TERM DEBT
In January 1999, the Company assumed a $90,000 unsecured note due
January 2001, as part of the acquisition cost of Simpco, Inc. The note
does not bear interest (which will be imputed), and the entire balance
is due at maturity.
In March 1999, the Company issued $50,000.00 in notes payable due in
March 2003 for working capital. Principal and interest accrued at 10%
are payable monthly, and the notes are secured by equipment.
In March 1999, the Company issued a $11,500.00 mortgage payable due in
March 2004 for the purchase of real estate. Principal and interest
accrued at 10% are payable monthly and the mortgage is secured by real
estate.
In February 1999, the Company assumed $71,700.00 in unsecured notes
payable due March 2002 for the purchase of inventory. Interest accrued
at 7%, as well as the entire principal balance, is due at maturity.
From November 1998 through May 1999, the Company issued six notes for
a total of $73,975.00 in notes payable for vehicle and equipment
purchases, due from August 2000 through March 2004. Principal and
interest accrued at rates from 7.85 % to 16.5% are payable monthly and
the notes are secured by vehicles and equipment.
There are no conversion provisions for any debt, nor any restrictive
or subordinative covenants other than standard liens.
Maturities of long term debt are as follows:
<TABLE>
<CAPTION>
Year Ending
June 30 Amount
----------- --------
<S> <C>
1999 $ 3,764
2000 47,201
2001 35,100
2002 99,892
2003 13,536
2004 2,281
------ --------
Total $ 201,774
</TABLE>
NOTE 12 - RELATED PARTY TRANSACTIONS
Open account cash advances have been made by controlling shareholders.
As of the financial statement date, no promissory notes, interest
rates or repayment schedules have been set. The balances are
classified as a long-term obligation.
<PAGE> 36
BASIC TECHNOLOGIES, INC.
Consolidated Balance Sheet
May 31, 1999
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
Cash $ 10,900
Trade Accounts Receivable 19,059
Inventories 128,949
Deferred Tax Asset 24,881
-----------
TOTAL CURRENT ASSETS $ 183,719
FIXED ASSETS
Land $ 8,000
Building 7,500
Equipment 1,159,891
-----------
Subtotal $ 1,175,391
Less: Accum. Depreciation ( 18,460)
-----------
TOTAL FIXED ASSETS $ 1,156,931
OTHER ASSETS
Organization Costs (net) $ 1,655
Proved Developed Oil Reserves 3,711,000
-----------
TOTAL OTHER ASSETS 3,712,655
-----------
TOTAL ASSETS $ 5,053,305
-----------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 37
BASIC TECHNOLOGIES, INC.
Consolidated Balance Sheet
May 31, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
CURRENT LIABILITIES
Accounts Payable $ 56,330
Customer Advances 34,860
Taxes Payable 9,460
Current Portion-Long Term Debt 56,553
------------
TOTAL CURRENT LIABILITIES $ 157,203
LONG-TERM LIABILITIES
Payable - Shareholders $ 78,701
Capital Lease Payable 57,069
Mortgage Payable-Real Estate 11,351
Notes Payable 265,423
Less: Current Maturities (56,553)
------------
TOTAL LONG TERM LIABILITIES 355,991
------------
TOTAL LIABILITIES $ 513,194
DEFERRED TAXES 8,260
STOCKHOLDERS' EQUITY
Common Stock, $.00001 par value, 100,000,000 $ 68
shares authorized and 6,780,625 issued and
outstanding
Paid in Capital 4,588,182
Retained Earnings (Deficit) (56,399)
------------
TOTAL STOCKHOLDERS' EQUITY 4,531,851
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 5,053,305
------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 38
BASIC TECHNOLOGIES, INC.
Consolidated Statement of Income
For the Eleven Months Ended May 31, 1999
<TABLE>
<S> <C>
REVENUES
Sales $ 31,291
Services 68,920
-----------
TOTAL REVENUES $ 100,211
COST OF SALES
Inventory Costs $ 18,232
Labor/Direct Costs 45,604
-----------
TOTAL COST OF SALES - 63,836
-----------
GROSS PROFIT ON SALES $ 36,375
EXPENSES
Interest $ 2,191
Automotive/Equipment Expense 12,762
Insurance 4,680
Salaries 34,053
Taxes 6,782
Rent 6,475
Telephone/Utilities 8,488
Professional/Filing Fees 7,385
Amortization/Depreciation 18,872
Miscellaneous 8,106
----------
TOTAL EXPENSES - 109,794
----------
Net Operating Loss $ (73,419)
Interest Income 445
----------
Net Loss $ (72,974)
Deferred Tax Benefit 16,551
----------
Net Loss $ (56,423)
----------
Basic earnings (loss) per common share $ (0.01)
-----------
Basic Weighted average shares outstanding 6,249,375
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 39
BASIC TECHNOLOGIES, INC.
Statement of Cash Flows-Income Tax Basis
For the Eleven Months Ended May 31, 1999
<TABLE>
<S> <C>
Cash Flows from Operating Activities:
Net Loss $ (56,423)
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation/Amortization $ 18,872
Increase in Inventory (128,949)
Increase in Accounts Receivable ( 19,059)
Increase in Accounts & Taxes Payable 100,650
Increase in Deferred Tax Asset (net) ( 16,551)
---------
Total Adjustments to Net Income (45,037)
---------
Net Cash Used in Operating Activities $(101,460)
Cash Flows from Investing Activities:
Capital Expenditures--Fixed Assets $(149,916)
Net Cash Used in Investing Activities (149,916)
Cash Flows from Financing Activities
Principal Payments on Bank & Other Notes $ (20,401)
Loan Principal Received 257,465
---------
Net Cash Provided by Financing Activities $ 237,064
---------
Net Decrease in Cash and Cash Equivalents $ (14,312)
Cash and Cash Equivalents at Beginning of Period 25,212
---------
Cash and Cash Equivalents at End of Period $ 10,900
---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 40
BASIC TECHNOLOGIES, INC.
Statement of Changes in Stockholder's Equity
For the Eleven Months Ended May 31, 1999
<TABLE>
<CAPTION>
Additional
Common Paid In Retained
Stock Capital Earnings Total
---------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
BALANCE, JUNE 30, 1998 $ 59 $ 3,738,191 $ 24 $3,738,274
Issuance of Common Stock
Acquisition of Wholly Owned
Subsidiary (Sale of
850,000 shares) 9 849,991 - 850,000
Interim Net Loss to May 31,1999 - - (56,423) (56,423)
----- ----------- -------- ----------
BALANCE, MAY 31, 1999 $ 68 $ 4,588,182 $(56,399) $4,531,851
----- ----------- -------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 41
PART III
ITEM 1. INDEX TO EXHIBITS.
<TABLE>
<CAPTION>
ITEM
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
3.1* Articles of Incorporation of Basic Technologies, Inc., filed January
21, 1998.
3.2* Bylaws of Basic Technologies, Inc.
3.3* Articles of Incorporation of Yankee Development Corporation filed
December 31, 1997.
3.4* Bylaws of Yankee Development Corporation.
3.5* Articles and Certificate of Organization of P & A Remediation, LLC,
filed October 16, 1998.
3.6* Regulations and Operating Agreement of P & A Remediation, LLC.
3.7* Articles of Incorporation of Simpco, Inc.
3.8* Bylaws of Simpco, Inc.
10.1* Voting Trust Agreement of Shelton Voting Trust dated July 1, 1986,
among Bryan L. Walker, for the benefit of Laura N. Walker, as her
separate property, Richard C. Smith and Bryan L. Walker, as trustee
and registrar.
10.2* General Warranty Assignment of Interest in Oil & Gas Lease dated
December 31, 1997, from the Shelton Voting Trust, as assignor, to
Yankee Development Corporation, as assignee.
10.3* Acquisition Agreement and Closing Memorandum dated April 23, 1998
between Basic Technologies, Inc., and Yankee Development Corporation.
10.4* Short Form of Lease dated November 1, 1998, between Rick Simpson, as
lessor, and P & A Remediation, LLC, as lessee.
10.5* Bill of Sale dated November 22, 1998, from Wes Roberts, as seller, to
Regal Operating Corp., as buyer.
10.6* Promissory Note dated November 22, 1998, in the principal amount of
$9,000 from Regal Operating Corp., as maker, payable to Wes Roberts,
as holder.
10.7* Bill of Sale dated March 15, 1999, from Regal Operating Corporation,
as seller, to Simpco, Inc., as buyer.
10.8* Short Form of Lease dated December 1, 1998, between the Estate of
Ivalene Kuykendall, as lessor, and P & A Remediation, LLC, as lessee.
</TABLE>
23
<PAGE> 42
<TABLE>
<S> <C>
10.9* Bill of Sale dated January 8, 1999, between Laura Walker, as seller,
and P & A Remediation, LLC, as buyer.
10.10* Promissory Note dated January 8, 1999, in the principal amount of
$10,500 from Laura N. Walker, as maker, payable to the United
Community Bank, N.A., as holder.
10.11* Acquisition Agreement and Closing Memorandum dated January 15, 1999,
between Basic Technologies, Inc., and Simpco, Inc.
10.12* Promissory Note dated March 18, 1999, in the principal amount of
$45,000 from Basic Technologies, Inc., as maker, payable to Boyd
Partners, Ltd., as holder.
10.13* Promissory Note dated March 18, 1999, in the principal amount of
$5,000 from Basic Technologies, Inc., as maker, payable to
Pleasantview Partners, Ltd., as holder.
10.14* Promissory Note Secured By Deed of Trust dated March 19, 1999, in the
principal amount of $11,500 from Basic Technologies, Inc., as maker,
payable to Wanda Ickert, as holder.
10.15* Deed of Trust dated March 19, 1999, among Basic Technologies, Inc.,
as grantor, to W. W. Price, Jr., as trustee, for the benefit of Wanda
Ickert, as beneficiary.
10.16* Bill of Sale dated March 29, 1999, between Ed Gober, as seller, and
Basic Technologies, Inc., as buyer.
10.17* Promissory Note in the principal amount of $15,700 from Basic
Technologies, Inc., as maker, payable to Ed Gober, as holder.
10.18* General Assignment dated April 1, 1999, from Basic Technologies,
Inc., as assignor, to Simpco, Inc., as assignee.
10.19* Bill of Sale dated April 12, 1999, between Russell Auto Parts, as
seller, and Basic Technologies, Inc., as buyer.
10.20* Promissory Note dated April 12, 1999, in the principal amount of
$8,000 from Basic Technologies, Inc., as maker, payable to Russell
Auto Parts, or assigns, as holder.
10.21* Bill of Sale dated April 12, 1999, from Russell Auto Parts, as
seller, to Basic Technologies, Inc, as buyer.
10.22* Bill of Sale dated April 12, 1999, from Basic Technologies, Inc., as
seller, to Simpco, Inc., as buyer.
</TABLE>
24
<PAGE> 43
<TABLE>
<S> <C>
10.23* Equipment Lease Agreement dated April 15, 1999, between Rodney W.
Simpson, as lessor, and Basic Technologies, Inc., as lessee.
10.24* Promissory Note dated April 19, 1999, in the principal amount of
$15,000.00 from Basic Technologies, Inc., as maker, payable to
Clemons Motor Co., Inc., as holder.
10.25* Bill of Sale dated April 19, 1999, from Basic Technologies, Inc., as
seller, to Simpco, Inc., as buyer.
10.26* Promissory Note dated May 14, 1999, in the principal amount of
$15,775 from Simpco, Inc., as maker, payable to Clemons Motor Co.,
Inc., as holder.
10.27* Promissory Note in the principal amount of $22,848.97 from Eddie J.
Gober, as maker, payable to Ford Motor Credit Company, as holder.
</TABLE>
- ----------
*Filed herewith.
ITEM 2. DESCRIPTION OF EXHIBITS.
The documents required to be filed as Exhibit Number 2 in Part III of
Form 1-A filed as part of this Registration Statement on Form 10-SB are listed
in Item 1 of this Part III above. No documents are required to be filed as
Exhibit Numbers 3, 5, 6 or 7 in Part III of Form 1-A, and the reference to such
Exhibit Numbers is therefore omitted. No additional exhibits are filed hereto.
25
<PAGE> 44
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
BASIC TECHNOLOGIES, INC.
(Registrant)
Date: October 12, 1999 By: /s/ Bryan L. Walker
-------------------------------------
Bryan L. Walker, President
26
<PAGE> 45
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
ITEM
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
3.1* Articles of Incorporation of Basic Technologies, Inc., filed January
21, 1998.
3.2* Bylaws of Basic Technologies, Inc.
3.3* Articles of Incorporation of Yankee Development Corporation filed
December 31, 1997.
3.4* Bylaws of Yankee Development Corporation.
3.5* Articles and Certificate of Organization of P & A Remediation, LLC,
filed October 16, 1998.
3.6* Regulations and Operating Agreement of P & A Remediation, LLC.
3.7* Articles of Incorporation of Simpco, Inc.
3.8* Bylaws of Simpco, Inc.
10.1* Voting Trust Agreement of Shelton Voting Trust dated July 1, 1986,
among Bryan L. Walker, for the benefit of Laura N. Walker, as her
separate property, Richard C. Smith and Bryan L. Walker, as trustee
and registrar.
10.2* General Warranty Assignment of Interest in Oil & Gas Lease dated
December 31, 1997, from the Shelton Voting Trust, as assignor, to
Yankee Development Corporation, as assignee.
10.3* Acquisition Agreement and Closing Memorandum dated April 23, 1998
between Basic Technologies, Inc., and Yankee Development Corporation.
10.4* Short Form of Lease dated November 1, 1998, between Rick Simpson, as
lessor, and P & A Remediation, LLC, as lessee.
10.5* Bill of Sale dated November 22, 1998, from Wes Roberts, as seller, to
Regal Operating Corp., as buyer.
10.6* Promissory Note dated November 22, 1998, in the principal amount of
$9,000 from Regal Operating Corp., as maker, payable to Wes Roberts,
as holder.
10.7* Bill of Sale dated March 15, 1999, from Regal Operating Corporation,
as seller, to Simpco, Inc., as buyer.
10.8* Short Form of Lease dated December 1, 1998, between the Estate of
Ivalene Kuykendall, as lessor, and P & A Remediation, LLC, as lessee.
</TABLE>
<PAGE> 46
<TABLE>
<S> <C>
10.9* Bill of Sale dated January 8, 1999, between Laura Walker, as seller,
and P & A Remediation, LLC, as buyer.
10.10* Promissory Note dated January 8, 1999, in the principal amount of
$10,500 from Laura N. Walker, as maker, payable to the United
Community Bank, N.A., as holder.
10.11* Acquisition Agreement and Closing Memorandum dated January 15, 1999,
between Basic Technologies, Inc., and Simpco, Inc.
10.12* Promissory Note dated March 18, 1999, in the principal amount of
$45,000 from Basic Technologies, Inc., as maker, payable to Boyd
Partners, Ltd., as holder.
10.13* Promissory Note dated March 18, 1999, in the principal amount of
$5,000 from Basic Technologies, Inc., as maker, payable to
Pleasantview Partners, Ltd., as holder.
10.14* Promissory Note Secured By Deed of Trust dated March 19, 1999, in the
principal amount of $11,500 from Basic Technologies, Inc., as maker,
payable to Wanda Ickert, as holder.
10.15* Deed of Trust dated March 19, 1999, among Basic Technologies, Inc.,
as grantor, to W. W. Price, Jr., as trustee, for the benefit of Wanda
Ickert, as beneficiary.
10.16* Bill of Sale dated March 29, 1999, between Ed Gober, as seller, and
Basic Technologies, Inc., as buyer.
10.17* Promissory Note in the principal amount of $15,700 from Basic
Technologies, Inc., as maker, payable to Ed Gober, as holder.
10.18* General Assignment dated April 1, 1999, from Basic Technologies,
Inc., as assignor, to Simpco, Inc., as assignee.
10.19* Bill of Sale dated April 12, 1999, between Russell Auto Parts, as
seller, and Basic Technologies, Inc., as buyer.
10.20* Promissory Note dated April 12, 1999, in the principal amount of
$8,000 from Basic Technologies, Inc., as maker, payable to Russell
Auto Parts, or assigns, as holder.
10.21* Bill of Sale dated April 12, 1999, from Russell Auto Parts, as
seller, to Basic Technologies, Inc, as buyer.
10.22* Bill of Sale dated April 12, 1999, from Basic Technologies, Inc., as
seller, to Simpco, Inc., as buyer.
</TABLE>
<PAGE> 47
<TABLE>
<S> <C>
10.23* Equipment Lease Agreement dated April 15, 1999, between Rodney W.
Simpson, as lessor, and Basic Technologies, Inc., as lessee.
10.24* Promissory Note dated April 19, 1999, in the principal amount of
$15,000.00 from Basic Technologies, Inc., as maker, payable to
Clemons Motor Co., Inc., as holder.
10.25* Bill of Sale dated April 19, 1999, from Basic Technologies, Inc., as
seller, to Simpco, Inc., as buyer.
10.26* Promissory Note dated May 14, 1999, in the principal amount of
$15,775 from Simpco, Inc., as maker, payable to Clemons Motor Co.,
Inc., as holder.
10.27* Promissory Note in the principal amount of $22,848.97 from Eddie J.
Gober, as maker, payable to Ford Motor Credit Company, as holder.
</TABLE>
- ----------
*Filed herewith.
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
BASIC TECHNOLOGIES, INC.
The undersigned, being a natural person of the age of eighteen years or
older, acting as the incorporator of a corporation to be incorporated under the
laws of the State of Colorado, adopts these articles of incorporation.
ARTICLE I
NAME
The name of the Corporation is Basic Technologies, Inc.
ARTICLE II
AUTHORIZED CAPITAL
A. AUTHORIZED SHARES. The aggregate number of shares that the
Corporation shall have authority to issue is One Hundred Ten Million
(110,000,000). One Hundred Million (100,000,000) shares shall be designated
"Common Stock" and shall have a par value of $0.00001 per share. Ten Million
(10,000,000) shares shall be designated "Preferred Stock" and shall have a par
value of $0.00001 per share. All shares of the Corporation shall be issued for
such consideration, expressed in dollars, as the Board of Directors may, from
time to time, determine.
B. COMMON STOCK. The Common Stock may be issued from time to time in
one or more classes or series in any manner permitted by law, as determined by
the Board of Directors and stated in the resolution or resolutions providing for
issuance thereof. Each class or series shall be appropriately designated, prior
to issuance of any shares thereof, by some distinguishing letter, number or
title. All shares of each class or series of Common Stock shall be alike in
every particular and shall be of equal rank and have the same power, preferences
and rights, and shall be subject to the same qualifications, limitations and
restrictions, if any, as all other shares of the same class or series. The
Common Stock, and any class or series thereof, may have such voting powers
(including, without limitation, multiple votes per share, or limited,
contingent, or no voting powers), such designations, preferences and relative,
participating, optional or other special rights, and be subject to such
qualifications, limitations and restrictions, as the Board of Directors shall
determine by resolution or resolutions. Unless otherwise resolved by the Board
of Directors, each Common Stock share shall be of the same class and carry a
voting right of one vote, without any designation, preference or relative,
participating, optional or other special rights, and subject to no
qualification, limitation or restriction.
C. Preferred Stock. The Preferred Stock may be issued from time to time
in series as determined by the Board of Directors and stated in the resolution
or resolutions providing for issuance thereof. The Board of Directors is further
authorized to fix and determine the variations in the relative rights and
preferences as between series. Each such series shall be appropriately
designated, prior to the issuance of any shares thereof, by some distinguishing
letter, number, or title. The Preferred Stock may have such voting powers
(including, without limitation, multiple
<PAGE> 2
votes per share, or limited, contingent, or no voting powers), may have such
designations, preferences, and relative, participating, optional or other
special rights, and be subject to such qualifications, limitations and
restrictions, as the Board of Directors shall determine by resolution or
resolutions. The Preferred Stock further may be made subject to redemption by
the Corporation at its option or at the options of the holders thereof and may
be convertible into Common Stock or exchangeable for other securities of the
Corporation.
ARTICLE III
OFFICES
A. The street address of the initial registered office of the
Corporation is 1420 Blake Street, Denver, Colorado 80202, and the name of the
initial registered agent at that address is James L. Speir. The written consent
of the initial registered agent to his appointment as such is stated below.
B. The address of the Corporation's initial principal office is 1420
Blake Street, Denver, Colorado 80202.
ARTICLE IV
INCORPORATOR
The name and address of the incorporator are Robert Neece, 303 East
Seventeenth Avenue, Suite 800, Denver, Colorado 80203-1260.
ARTICLE V
PREEMPTIVE RIGHTS
The shareholders shall not have preemptive rights.
ARTICLE VI
BOARD OF DIRECTORS
The corporate powers shall be exercised by or under the authority of,
and the business and affairs of the Corporation shall be managed under the
direction of, a board of directors. The number of directors shall be fixed and
may be altered from time to time in the manner provided in the bylaws of the
Corporation, but no decrease shall have the effect of shortening the term of any
incumbent director.
<PAGE> 3
The names and addresses of the members of the initial board of
directors are as follows:
<TABLE>
<CAPTION>
NAME ADDRESS
<S> <C>
James L. Speir 1420 Blake Street
Denver, Colorado 80202
Janine Kreuter 1420 Blake Street
Denver, Colorado 80202
</TABLE>
The directors shall be elected at each annual meeting of the
shareholders, provided that vacancies may be filled by election by the remaining
directors, though less than a quorum, or by the shareholders. Despite the
expiration of his or her term, a director continues to serve until his or her
successor is elected and qualifies.
ARTICLE VII
CUMULATIVE VOTING
Cumulative voting shall not be permitted in the election of directors.
ARTICLE VIII
LIMITATION ON DIRECTOR LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or to its shareholders for monetary damages for breach of fiduciary
duty as a director; except that this provision shall not eliminate or limit the
liability of a director to the Corporation or to its shareholders for monetary
damages otherwise existing for (i) any breach of the director's duty of loyalty
to the Corporation or to its shareholders; (ii) acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(iii) acts specified in Section 7-108403 of the Colorado Business Corporation
Act; or (iv) any transaction from which the director directly or indirectly
derived any improper personal benefit. If the Colorado Business Corporation Act
is hereafter amended to eliminate or limit further the liability of a director,
then, in addition to the elimination and limitation of liability provided by the
preceding sentence, the liability of each director shall be eliminated or
limited to the fullest extent permitted by the Colorado Business Corporation Act
as so amended. Any repeal or modification of this Article VIII shall not
adversely affect any right or protection of a director of the Corporation under
this Article VIII as in effect immediately prior to such repeal or modification,
with respect to any liability that would have accrued, but for this Article
VIII, prior to such repeal or modification.
<PAGE> 4
ARTICLE IX
INDEMNIFICATION
The Corporation shall indemnify, to the fullest extent permitted by
applicable law in effect from time to time, any person, and the estate and
personal representative of any such person, against all liability and expense
(including attorneys' fees) incurred by reason of the fact that such person is
or was a director or officer of the Corporation or, while serving as a director
or officer of the Corporation, is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee. Fiduciary, or
agent of, or in any similar managerial or fiduciary position of, another
domestic or foreign corporation or other individual or entity or of an employee
benefit plan. The Corporation shall also indemnify any person who is serving or
has served the Corporation as director, officer, employee, fiduciary, or agent,
and that person's estate and personal representative, to the extent and in the
manner provided in any bylaw, resolution of the shareholders or directors,
contract, or otherwise, so long as such provision is legally permissible.
[Signatures]
/s/ ROBERT NEECE
--------------------------------------
Robert Neece, Incorporator
The undersigned consents to his appointment as the initial registered agent of
Basic Technologies, Inc.
/s/ JAMES L. SPEIR
--------------------------------------
James L. Speir, Registered Agent
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
BASIC TECHNOLOGIES, INC.
(A Colorado Corporation)
ARTICLE I
GENERAL
1.01 Applicability. These Bylaws provide rules to govern the business
and internal affairs of Basic Technologies, Inc., a Colorado corporation
(hereinafter, the "Company"). Every shareholder and person who subsequently
becomes a shareholder, the Board of Directors, any Committees of the Board of
Directors, and the Officers of the Company shall comply with these Bylaws, as
amended from time to time. To the extent to which any resolutions heretofore
adopted by the Board of Directors conflict with the provisions of these Bylaws,
such resolutions are hereby repealed.
1.02. Principal Office. The principal office of the Company shall be
maintained at such location as shall be determined by the Board of Directors
from time to time; such office may be within or without the State of Colorado.
1.03. Other Offices. The Company may have such other offices, within or
without the State of Colorado, as the Board of Directors may, from time to time,
determine.
1.04. Registered Office. The registered office of the Company required
by the Colorado Corporation Code to be maintained in Colorado may be, but need
not be, identical with the principal office if in Colorado, and the address of
the registered office may be changed from time to time by the Board of
Directors.
ARTICLE II
STOCK AND THE TRANSFER THEREOF
2.01. Stock Certificates. The shares of the Company's capital stock
shall be represented by consecutively numbered certificates signed by the
President or a Vice President and the Secretary or Assistant Secretary of the
Company, and sealed with the seal of the Company, or a facsimile thereof. If
certificates are signed by a transfer agent, acting in behalf of the Company,
and a registrar, the signatures of the officers of the Company may be facsimile
signatures. In case any officer who has signed (whether by manual or facsimile
signature) shall have ceased to be such officer before such certificate is
issued, it may be issued by the Company with the same effect as if he were such
officer on the date of its issue.
<PAGE> 2
Each certificate representing shares shall state upon its face:
(a) That the Company is organized under the laws of the State of
Colorado:
(b) The name of the person or persons to whom issued;
(c) The number, class, and series (if any) of shares which such
certificate represents; and
(d) The par value, if any, of the shares represented by such
certificate.
Each certificate also shall set forth restrictions upon transfer, if
any, or a reference thereto, as shall be adopted by the Board of Directors or by
the shareholders, or as may be contained in this Article II
No certificate shall be issued for any share until such share is fully
paid.
2.02. Consideration for Shares. Shares shall be issued for such
consideration expressed in dollars as shall be fixed from time to time by the
Board of Directors. Treasury shares may be disposed of by the Company for such
consideration expressed in dollars as may be fixed from time to time by the
Board of Directors. No shares shall be issued for less than the par value
thereof. The consideration for the issuance of shares may be paid, in whole or
in part, in money, in other property, tangible or intangible, or in labor or
services actually performed for the Company. Neither promissory notes nor future
services shall constitute payment or part payment for shares of the Company.
2.03. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Company alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, and the Board of Directors when authorizing
such issue of a new certificate or certificates may in its discretion, and as a
condition precedent to the issuance thereof, require the owner of such lost or
destroyed certificate or certificates or his legal representative to advertise
the same in such manner as it shall require; to furnish to the Company a bond in
such sum as it may direct, as indemnity against any claim that may be made
against the Company; or to do both. Except as provided above in this Paragraph,
no new certificate or certificates evidencing shares of stock shall be issued
unless and until the old certificate or certificates, in lieu of which the new
certificate or certificates are to be issued, shall be surrendered for
cancellation.
2.04. Registered Holder as Owner. The Company shall be entitled to
treat the holder of record of any share of stock as the owner thereof entitled
to receive dividends and to vote such shares, and accordingly shall not be bound
to recognize any equitable or any other claim to or interest in such shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as may be required by a valid proxy or by the laws of the
State of Colorado.
<PAGE> 3
2.05. Returned Certificates. All certificates for shares changed or
returned to the Company for transfer shall be marked by the Secretary or
Assistant Secretary "Canceled," with the date of cancellation, and the
transaction shall be immediately recorded in the certificate book opposite the
memorandum of their issue. The returned certificate may be inserted into the
certificate book.
2.06. Transfer of Shares. Upon surrender to the Company or to a
transfer agent of the Company of a certificate of stock endorsed or accompanied
by proper evidence of succession, assignment, or authority to transfer, and such
documentary stamps as may be required by law, it shall be the duty of the
Company to issue a new certificate. Each such transfer of stock shall be entered
on the stock book of the Company.
2.07. Transfer Agents. The Board may, in its discretion, appoint one or
more transfer agents or registrars for making payment upon any class of stock,
bond, debenture or security of the Company. They shall have such rights and
duties and shall be paid such compensation as may be agreed.
ARTICLE III
SHAREHOLDERS AND MEETINGS THEREOF
3.01. Annual Meeting. The annual meeting of the Shareholders for the
election of Directors and the transaction of such other business as may properly
come before the meeting shall be held on such date as shall be determined by
resolution of the Board of Directors each year. The place of the annual meeting
shall be the principal office of the Company or such other place within or
without the State of Colorado as the Board of Directors may determine.
3.02. Special Meetings. The Board of Directors or the President may
call a special meeting of the shareholders at any time. The President shall call
a special meeting of the shareholders upon the Secretary's receipt of a request
therefor signed by shareholders who in the aggregate hold twenty percent (20%)
or more of the total voting power entitled to vote on the matter raised.
Business may be transacted or a matter voted upon only if set forth in the
special meeting notice.
3.03. Notice of Meetings. The Secretary shall cause written or printed
notice to be given to shareholders of every annual and special meeting, at least
ten (10) days before but not more than fifty (50) days before the date of the
meeting. The notice of every meeting shall state the date, place, and hour
thereof. Notice shall be given as provided for in Article IX of these Bylaws.
Notice shall be given by or at the direction of the President, the Secretary, or
the officer or persons calling the meeting to each shareholder of record
entitled to vote at such meeting; except that if the authorized capital stock is
to be increased, then at least thirty (30) days' notice shall be given. If
applicable statutes require a certain minimum notice for any particular business
to be transacted, then at least that minimum notice shall be given. Notice of
any meeting may be waived by submitting a signed waiver or by attendance at the
meeting.
<PAGE> 4
3.04 Closing of Transfer Books and Fixing Record Date. For the purpose
of determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose the Board of Directors of the Company may provide that the stock
transfer books shall be closed for a stated period not to exceed in any case
fifty (50) days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of I Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than fifty (50) days, and in case of a meeting of shareholders not less
than ten (10) days prior to the date on which the particular action, requiring
such determination of shareholders, is to be taken. If the stock transfer books
are not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders for any other
proper purpose the Board of Directors of the Company may provide that the stock
transfer books shall be closed for a stated period not to exceed in any case
fifty (50) days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than fifty (50) days, and in case of a meeting of shareholders, not less
than ten (10) days prior to the date on which the particular action, requiring
such determination of shareholders, is to be taken. If the stock transfer books
are not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is given (as defined in Article IX hereof) or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of the
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Paragraph such
determination shall apply to any adjournment thereof.
3.05. Voting List. The officer or agent having charge of the stock
transfer books for shares of the Company shall make, at least ten (10) days
before each meeting of shareholders (except emergency special meetings), a
complete list of the shareholders entitled to vote at such meeting or any
adjournment thereof, arranged in alphabetical order, with the address of and the
number of shares held by each, which list, for a period of ten (10) days prior
to such meeting, shall be kept on file at the principal office of the Company,
and shall be subject to inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original stock transfer books shall be
prima facie evidence as to who are the shareholders entitled to examine such
list or transfer books or to vote at any meeting of shareholders.
3.06. Quorum. A quorum at any meeting of the shareholders shall consist
of a majority of the shares entitled to vote represented in person or by proxy.
If a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting entitled to vote on the subject matter shall be the
act of the shareholders. If less than
<PAGE> 5
one-third (1/3) of the shares entitled to vote be represented at a meeting, a
majority of the shares so represented may adjourn the meeting from time to time
to the same place without further notice. At such adjourned meeting, at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at a meeting as originally notified. The shareholders
present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum.
3.07. Proxies. At all meetings of shareholders, a shareholder may vote
by proxy, executed in writing by the shareholder or by his duly authorized
attorney in fact. Such proxy shall be filed with the Secretary' of the Company
before or at the time of the meeting. No proxy shall be valid after eleven (11)
months from the date of its execution, unless otherwise provided in the proxy.
3.08. Voting of Shares. Each outstanding share shall be entitled to one
vote and each fractional share shall be entitled to a corresponding fractional
vote on each matter submitted to vote at a meeting of shareholders.
3.09. Voting of Shares by Certain Holders. Neither treasury' shares,
nor shares of its own stock held by the Company in a fiduciary capacity, nor
shares held by another corporation if the majority of the shares entitled to
vote for the election of directors of such other corporation is held by the
Company, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time.
Shares standing in the name of another corporation, domestic or
foreign, may be voted by such officer, agent, or proxy as the bylaws of such
corporation may prescribe, or, in the absence of such provision, as the board of
directors of such corporation may determine.
Shares held by an administrator, executor, personal representative,
guardian, or conservator may be voted by him, either in person or by proxy,
without a transfer of such shares into his name. Shares standing in the name of
a trustee may be voted by him, either in person or by proxy, but no trustee
shall be entitled to vote shares held by him without a transfer of such shares
into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
3.10. Chairman. The Chairman of the Board of Directors of the Company,
or in his absence, the President, shall act as chairman at all meetings of
shareholders.
<PAGE> 6
3.11. Voting. Voting at any shareholders' meeting shall be oral or by
show of hands; provided, that voting shall be by written ballot if such demand
is made by any shareholder present in person or by proxy and entitled to vote.
3.12. Informal Action by Shareholders. Any action required to be taken
at a meeting of the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof, Such
consent shall have the same force and effect as a unanimous vote of the
shareholders, and may be stated as such in any articles or document filed with
the Secretary' of State of Colorado under the Colorado Corporation Code.
3.13. Annual Report. The President of the Company shall prepare an
annual report which will set forth a statement of affairs of the Company as of a
date within ninety (90) days of the Annual Shareholders' Meeting, including a
balance sheet and an income statement, and present it at the Annual Meeting of
shareholders.
ARTICLE IV
DIRECTORS, POWERS AND MEETINGS
4.01. General Powers. The business and affairs of the Company shall be
managed by its Board of Directors, except as otherwise provided in the Colorado
Corporation Code or the Articles of Incorporation.
4.02. Number. Tenure and Qualifications. The number of Directors of the
Company shall be no less than three (3) nor more than seven (7), as fixed by
resolution of the Board of Directors from time to time. In default of any such
resolution, the Company shall have three (3) Directors. Directors shall be
elected at each Annual Meeting of Shareholders. Each Director shall hold office
until the next Annual Meeting of Shareholders and thereafter until his successor
shall have been elected and qualified. Directors need not be residents of
Colorado or shareholders of the Company. Directors shall be removable in the
manner provided by the Colorado Corporation Code. Directors shall be elected by
plurality vote.
4.03. Vacancies. Any Director may resign at any time by giving written
notice to the President or to the Secretary of the Company. Such resignation
shall take effect at the time specified therein; and unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective. Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of a majority of the remaining directors though less than a
quorum. A Director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any directorship to be filled by reason of an
increase in the number of Directors shall be filled by the affirmative vote of a
majority of the Directors then in office or by an election at an annual meeting
or at a special meeting of
<PAGE> 7
shareholders called for that purpose, and a Director so chosen shall hold office
for the term specified in Paragraph 4.02 of this Article.
4.04. Removal of Directors. Any Director may be removed only in the
manner provided in the Company's Articles of Incorporation, as amended, and if
no such provision appears in the Articles, any Director may be removed either
with or without cause, at any time, by a vote of the shareholders holding a
majority of the shares then issued and outstanding and who are entitled to vote
for the election of directors, present at any special meeting called for that
purpose. In case any vacancy so created shall not be filled by the shareholders
at such meeting, such vacancy may be filled by the Board of Directors as
provided in Paragraph 4.03 of this Article.
4.05. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after and at the
same place as the Annual Meeting of Shareholders. The Board of Directors may
provide by resolution the time and place, either within or without the State of
Colorado, for the holding of additional regular meetings without other notice
than such resolution.
4.06. Special Meetings. Special meetings of the Board of Directors may
be called by or at the request of the President, the Chairman of the Board, or
any two Directors. The person or persons authorized to call special meetings of
the Board of Directors may fix any place, either within or without the State of
Colorado, as the place for holding any special meeting of the Board of Directors
called by them.
4.07. Telephonic Meetings. Members of the Board of Directors or any
committee designated by the Board may participate in a meeting of the Board of
Directors or committee by means of conference telephone or similar
communications equipment by which all persons participating in the meeting can
hear one another at the same time. Such participation shall constitute presence
in person at the meeting. All participants in any meeting of Directors, by
virtue of their participation and without further action on their part, shall be
deemed to have consented to the recording of such meeting by electronic device
or otherwise, and to the making of a written transcript thereof, in order that
minutes thereof shall be available for the Company's records.
4.08. Notice. Notice of any special meeting of Directors shall be given
at least four (4) days previous thereto by written notice delivered personally
or mailed to each Director, or by notice given at least two (2) days prior to
the meeting by any means specified in Paragraph 9.01(b) or (c) or in person. Any
Director may waive notice of any meeting. The attendance of a Director at a
meeting shall constitute a waiver of notice of such meeting, except where a
Director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
<PAGE> 8
4.09 Quorum. A majority of the number of Directors fixed by, or in
accordance with, these Bylaws shall constitute a quorum for the transaction of
business. The act of the majority of the Directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors.
4.10. Compensation. By resolution of the Board of Directors, any
Director may be paid any one or more of the following: his expenses, if any, of
attendance at a meeting; a fixed sum for attendance at each meeting; or a stated
salary as Director. No such payment shall preclude any director from serving the
Company in any other capacity and receiving compensation therefor.
4.11. Presumption of Assent. A Director of the Company who is present
at a meeting of the Board of Directors at which action on any corporate matter
is taken shall be presumed to have assented to the action taken unless his
dissent shall be entered in the minutes of the meeting or unless he shall file
his written dissent to such action with the person acting as the Secretary' of
the meeting before the adjournment thereof, or shall forward such dissent by
registered or certified mail to the Secretary of the Company immediately after
the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
4.12. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the number of Directors, may designate two (2) or more
Directors to constitute an Executive Committee, which may exercise all of the
authority of the Board of Directors in the management of the Company, during the
period of time between meetings of the Board of Directors; but the designation
of such committee and the delegation thereto of authority shall not operate to
relieve the Board of Directors, or any member thereof, of any responsibility
imposed upon it or him by law.
4.13. Action by Directors Without Meeting. Any action required to be
taken at a meeting of the Directors of the Company or any action which may be
taken at such a meeting, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the Directors
entitled to vote with respect to the subject matter thereof. Consent shall be
sufficient for purposes of this Paragraph if it is executed in counterparts, in
which event all of such counterparts, when taken together, shall constitute one
and the same consent.
4.14. Chairman of the Board. The Chairman of the Board, if such officer
shall be chosen by the Board of Directors, shall preside at all meetings of the
Board of Directors and meetings of shareholders at which he is present. He
shall, subject to the direction of the Board of Directors, have general
supervision over the affairs of the Company, and shall, from time to time,
consult with and advise the President in the direction and management of the
Company's business and affairs, and shall also do and perform such other duties
as may, from time to time, be assigned to him by the Board of Directors.
4.15. Bank Accounts, Etc. Anything herein to the contrary
notwithstanding, the Board of Directors may, except as may otherwise be required
by law, authorize any officer
<PAGE> 9
or officers, agent or agents, in the name of and on behalf of the Company, to
sign checks, drafts, or other orders for the payment of money or notes or other
evidences of indebtedness, to endorse for deposit, deposit to the credit of the
Company at any bank or trust company or banking institution in which the Company
may maintain an account, or to cash checks, notes, drafts, or other bankable
securities or instruments, and such authority may be general or confined to
specific instances, as the Board of Directors may elect.
4.16. Inspection of Records. Every Director shall have the absolute
right at any reasonable time to inspect all books, records, documents of any
kind, and the physical properties of the Company, and also of its subsidiaries.
Such inspection may be made personally or by an agent and includes the right to
make copies and extracts.
ARTICLE V
OFFICERS AND AGENTS
5.01. General. The Officers of the Company shall be a President, one or
more Vice Presidents, a Secretary, and a Treasurer. The Board of Directors may
appoint such other officers, and assistant officers, as they may consider
necessary, who shall be chosen in such manner and hold their offices for such
terms and have such authority' and duties as from time to time may be determined
by the Board of Directors. The salaries of all the officers of the Company shall
be fixed by the Board of Directors. One person may hold any two offices, except
that no person may simultaneously hold the offices of President and Secretary.
In all cases where the duties of any officer, agent or employee are not
prescribed by these Bylaws or by the Board of Directors, such officer, agent or
employee shall follow the orders and instructions of the President.
5.02. Election and Term of Office. The officers of the Company shall be
elected by the Board of Directors annually at the first meeting of the board
held after each Annual Meeting of the shareholders. If the election of officers
shall not be held at such meeting, such election shall be held as soon
thereafter as conveniently may be. Each officer shall hold office until the
first of the following to occur: until his successor shall have been duly
elected and shall have qualified; or until his death; or until he shall resign;
or until he shall have been removed in the manner hereinafter provided.
5.03. Removal. Any officer or agent may be removed by the Board of
Directors or by the Executive Committee whenever in its judgment the best
interest of the Company will be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not in itself create
contract rights.
5.04. Vacancies. A vacancy in any office, however occurring, may be
filled by the Board of Directors for the unexpired portion of the term.
5.05. President. The President shall, subject to the Direction and
supervision of the Board of Directors, be the chief executive officer of the
Company and shall have
<PAGE> 10
general and active control of its affairs and business and general supervision
of its officers, agents, and employees. He shall, unless otherwise directed by
the Board of Directors, attend in person or by substitute appointed by him, or
shall execute in behalf of the Company written instruments appointing a proxy or
proxies to represent the Company, at all meetings of the stockholders of any
other Company in which the Company shall hold any stock. He may, on behalf of
the Company, in person or by substitute or by proxy, execute written waivers of
notice and consents with respect to any such meetings. At all such meetings and
otherwise, the President, in person or by substitute or proxy as aforesaid, may
vote the stock so held by the Company and may execute written consent and other
instruments with respect to such stock and may exercise any and all rights and
powers incident to the ownership of said stock, subject however to the
instructions, if any, of the Board of Directors. The President shall have
custody of the Treasurer's bond, if any
5.06. Vice Presidents. The Vice Presidents shall assist the President
and shall perform such duties as may be assigned to them by the President or by
the Board of Directors. In the absence of the President, the Vice-President
designated by the Board of Directors or (if there be no such designation)
designated in writing by the President shall have the powers and perform the
duties of the President. If no such designation shall be made all Vice
Presidents may exercise such powers and perform such duties.
5.07. Secretary. The Secretary shall: (a) Keep the minutes of the
proceedings of the shareholders, executive committee, and the Board of
Directors; (b) See that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law; (c) Be custodian of the
corporate records and of the seal of the Company and affix the seal to all
documents when authorized by the Board of Directors; (d) Keep at its registered
office or principal place of business within or outside Colorado a record
containing the names and addresses of all shareholders and the number and class
of shares held by each, unless such a record shall be kept at the office of the
Company's transfer agent or registrar; (e) Sign with the President, or a Vice
President, certificates for shares of the Company, the issuance of which shall
have been authorized by resolution of the Board of Directors; (f) Have general
charge of the stock transfer books of the Company, unless the Company has a
transfer agent; and (g) In general, perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the President or the Board of Directors. Assistant secretaries, if any, shall
have the same duties and powers, subject to supervision by the Secretary.
5.08. Treasurer. The Treasurer shall be the principal financial officer
of the Company and shall have the care and custody of all funds, securities,
evidence of indebtedness, and other personal property' of the Company and shall
deposit the same in accordance with the instructions of the Board of Directors.
He shall receive and give receipts and acquittances for monies paid in on
account of the Company, and shall pay out of the funds on hand all bills,
payrolls, and other just debts of the Company of whatever nature upon maturity.
He shall perform all other duties incident to the office of the Treasurer and,
upon request of the Board, shall make such reports to it as may be required at
any time. He shall, if required by the Board, give the Company a bond in such
sums, and with such sureties, as shall be satisfactory to the Board, conditioned
upon the faithful
<PAGE> 11
performance of his duties and for the restoration to the Company of all books,
papers, vouchers, money, and other property of whatever kind in his possession
or under his control belonging to the Company. He shall have such other powers
and perform such other duties as may be from time to time prescribed by the
Board of Directors or the President. The assistant treasurers, if any, shall
have the same powers and duties, subject to the supervision of the Treasurer.
The Treasurer shall also be the principal accounting officer of the
Company. He shall prescribe and maintain the methods and systems of accounting
to be followed, keep complete books and records of account, prepare and file all
local, state, and federal tax returns, prescribe and maintain an adequate system
of internal audit, and prepare and furnish to the President and the Board of
Directors statements of account showing the financial position of the Company
and the results of its operations.
ARTICLE VI
INDEMNIFICATION
Each Director, Officer, employee and agent of this Company, and each
person who shall serve at its request as a director, officer (or in a
functionally equivalent position), agent or employee of another entity shall be
indemnified by the Company to the extent and in the manner provided in the
Company's Articles of Incorporation, as they may be amended.
ARTICLE VII
MISCELLANEOUS
7.01. Declaration of Dividends. The Board of Directors at any regular
of special meeting may declare dividends payable out of the surplus of the
Company, whenever in the exercise of its discretion it may deem such declaration
advisable and such is permitted by law. Such dividends may be paid in cash,
property, or shares of the Company.
7.02 Benefit Programs. The Board of Directors shall have the power to
install and authorize any pension, profit sharing, stock option, insurance,
welfare, educational, bonus, health and accident, or other benefit program which
the Board deems to be in the interest of the Company, at the expense of the
Company, and to amend or revoke any plan so adopted.
7.03 Corporate Seal. The corporate seal of the Company shall be
circular in form and shall contain the name of the Company and the words "Seal,
Colorado."
7.04 Captions. The captions herein are inserted only as a matter of
convenience and for reference, and in no way define, limit, or describe the
scope of these Bylaws, or the intent of any provision hereof.
<PAGE> 12
7.05. Fiscal Year. The Board of Directors shall have the power to fix,
and from time to time change, the fiscal year of the Company. Any such adoption
of or change in the fiscal year shall not constitute nor require an amendment to
these Bylaws.
ARTICLE VIII
AMENDMENTS TO BYLAWS
These Bylaws may be amended or repealed in the manner provided for in
the Articles of Incorporation, or if none is there provided, by majority vote of
the Board of Directors, taken at any meeting or by written consent, subject to
the shareholders' right to change or repeal any Bylaws so made. Bylaws
amendments may be proposed by any Director.
ARTICLE IX
NOTICES
9.01 Giving of Notice. Except as otherwise provided by the Colorado
Corporation Code, these Bylaws, the Company's Articles of Incorporation, or
resolution of the Board of Directors, every meeting notice or other notice,
demand, bill, statement, or other communication (collectively, "Notice") to or
from the Company from or to a Director, Officer, or shareholder shall be duly
given if it is written or printed and is (a) sent by first class mail or by
overnight service of the U.S. Postal Service, postage prepaid, (b) sent by any
established overnight air courier service, such as Federal Express, Emery,
Airborne, or UPS, (c) sent by telegraph, tested telex, or other tested facsimile
transmission, (d) delivered by any commercial messenger service which regularly
retains its receipts, or (e) personally delivered, provided a receipt is
obtained reflecting the date of delivery. Notice shall not be duly given unless
all delivery or postage charges are prepaid. Notice shall be given to an
addressee's most recent address as it appears on the Company's records. A Notice
shall be deemed "given" when dispatched for delivery, or if mailed, on the date
postmarked. This Paragraph shall not have the effect of shortening any notice
period provided for in these Bylaws. 9.02 Waiver of Notice. Any Notice required
by the Colorado Corporation Code, the Articles of Incorporation, or these Bylaws
may be waived in writing at any time by the person entitled to the Notice, and
such waiver shall be equivalent to the giving of Notice. Notice of any meeting
shall be waived by attendance (if a shareholders' meeting, in person or by
proxy) at the meeting. A waiver of Notice of a special meeting of shareholders
shall state the purpose for which the meeting was called or the business to the
transacted thereat.
APPROVED AND ADOPTED as of the twenty-first day of January 1998.
/s/ JAMES L. SPEIR
------------------------
James L. Speir, Director
/s/ JANINE KREUTER
------------------------
Janine Kreuter, Director
<PAGE> 1
EXHIBIT 3.3
================================================================================
ARTICLES OF INCORPORTATION
OF
YANKEE DEVELOPMENT CORPORATION
================================================================================
ARTICLE ONE
The name of the Corporation is YANKEE DEVELOPMENT
CORPORATION.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose for which the Corporation is organized is the
transaction of any and all lawful business for which a corporation
may be incorporated under the Texas Business Corporation Act.
ARTICLE FOUR
The aggregate number of shares which the Corporation shall
have authority to issue is One Thousand (1,000). The shares shall
have no par value.
ARTICLE FIVE
The Corporation will not commence business until it has
received for the issuance of its shares consideration of the value of
$1,000.00, consisting of money, labor done or property actually
received.
ARTICLE SIX
The street address of its initial Registered Office, and the name of
its initial Registered Agent at this address, is as follows:
<PAGE> 2
Paul Rice
2300 West 32nd Street
Dallas, Texas 75261
ARTICLE SEVEN
The number of initial Directors is one. The name and address of the
initial director is:
Paul Rice
2300 West 32nd Street
Dallas, Texas 75261
ARTICLE EIGHT
The name and address of the Incorporator is:
Marilyn S. Hershman
408 W. 17th Street, Suite 101
Austin, Texas 78701-1207
(512) 474-2002
IN WITNESS WHEREOF: I have hereunto set my hand this 31st day of
December, 1997.
/s/ MARILYN S. HERSHMAN
-----------------------------------
Marilyn S. Hershman, Incorporator
- --------------------------------------------------------------------------------
ARTICLES OF INCORPORATION OF
YANKEE DEVELOPMENT CORPORATION
<PAGE> 1
EXHIBIT 3.4
BY LAWS
ARTICLE ONE
CAPITAL STOCK
SECTION ONE: Share certificates, as approved by the Board of Directors, shall
be issued to shareholders specifying the name of the owner, number of shares,
and date of issue. Each certificate shall be signed by the President and
Secretary with the corporate seal affixed thereon. Each certificate shall be
numbered in the order in which it is issued.
SECTION TWO: Each shareholder shall be entitled to one vote per share of common
stock, unless otherwise stated in Article of Incorporation
SECTION THREE: Transfer of shares of stock shall be in the transfer ledger of
the corporation. Such transfers shall be done in person or by power of
attorney. Transfers shall be completed on the surrender of the old certificate,
duly assigned.
ARTICLE TWO
SHAREHOLDER'S MEETINGS
SECTION ONE: The annual meeting of the shareholders shall be held on the 3rd
Thursday of August each year at Lewisville. If the stated day is a weekend day
or a legal holiday, the meeting shall be held on the next succeeding day not a
weekend day or a holiday.
<PAGE> 2
SECTION TWO: The place of the annual meeting may be changed by the Board of
Directors within or without the State of incorporation for any given year upon
10 days notice to the shareholders. Special meetings may be held within or
without of the State of incorporation and at such time as the Board of
Directors may fix.
SECTION THREE: Special meetings of the shareholders may be called at any time
by the President or any holder(s) of at least twenty-five percent of the
outstanding capital stock.
SECTION FOUR: Notice of any special meeting of the shareholders shall be given
to all shareholders to their last known address by registered mail. Notice of
any special meeting of the shareholders shall state the purpose of such
meeting. Notice of a special meeting may be waived in writing either before or
after such meeting.
SECTION FIVE: Unless otherwise provided by law or the Articles of
Incorporation, all meetings of the shareholders, action may be taken by a
majority vote of the number of shares entitled to vote as represented by the
shareholders present at such meeting. Directors shall be elected by a plurality
vote. A quorum shall constitute one share over fifty percent of the outstanding
shares entitled to vote as represented by the shareholders present at such
meeting. No business may be transacted without the presence of a quorum. At any
time during any shareholders meeting, if it is determined that a quorum is no
longer present, the meeting shall be then adjourned.
<PAGE> 3
SECTION SIX: Action may be taken by the shareholders without a formal meeting
by consent, if such consent is executed in writing by all of the shareholders
entitled to vote and if allowed under the laws of the State of incorporation.
ARTICLE THREE
DIRECTORS
SECTION ONE: The Board of Directors shall control the full and entire
management of the affairs and business of the corporation. The Board of
Directors shall adopt rules and regulations to manage the affairs and business
of the corporation by resolution at special or the annual meeting. A quorum
shall consist of a majority of the directors. Resolutions adopted and all
business transacted by the Board of Directors shall be done by a majority vote
of the directors present at such meetings.
SECTION TWO: The Board of Directors shall consist of two members to be elected
by the shareholders at an annual meeting. The term of office shall be one year.
Vacancies may be filled by the Board of Directors prior to the expiration of
the term. Such appointment shall continue until the next annual meeting of
shareholders.
SECTION THREE: The Board of Directors shall meet annually at the same place of
the shareholders meetings immediately following the annual meeting of the
shareholders. Special meetings of the Board of Directors may be called by the
President or any two (2) directors on ten (10) days notice,
<PAGE> 4
or such other and further notice as required by the laws of the State of
incorporation.
SECTION FOUR: Notice of special or regular meetings of the Board of Directors
other than the annual meeting of the Board of Directors, shall be made by mail
to the last known address of each director. Such notice shall be mailed ten
(10) days prior to such meeting and shall include time and place and reasons
for the meeting. All other requirements of the laws of the State of
incorporation for notices shall be followed.
SECTION FIVE: All directors of the corporation who are present at a meeting of
the Board of Directors shall be deemed to have assented to action taken at such
meeting as to any corporate action taken, unless a director who did not vote in
favor on such action goes on record in the minutes as dissenting. In such a
case, the dissenting director will not be deemed to having assented to the
action taken.
SECTION SIX: Directors may be removed for cause by a majority vote at a meeting
of the shareholders or Directors. Directors may be removed without cause by a
majority vote at a meeting of the shareholders.
<PAGE> 5
ARTICLE FOUR
OFFICERS
SECTION ONE: The officers of the corporation shall consist of a President,
Secretary and Treasurer. All officers shall be elected by the Board of
Directors and shall serve a term for compensation as fixed by the Board of
Directors. The Board of Directors may establish other offices as it may be deem
fit.
SECTION TWO: The chief executive officer shall be the President. The president
shall have management powers of the corporation. His duties shall include but
are not limited to administration of the corporation presiding over
shareholders meeting including general supervision of the policies of the
corporation as well as general management. The President shall execute
contracts, mortgages, loans and bonds under the seal of the corporation. The
President shall have other powers as determined by the Board of Directors by
resolution.
SECTION THREE: The Secretary shall keep the minutes of meetings of the Board of
Directors and shareholder meetings. The Secretary shall have charge of the
minute books, seal and stock books of the corporation. The Secretary shall have
other powers as delegated by the President.
SECTION FOUR: The Treasurer shall have the power to manage the financial
affairs of the corporation. The Treasurer shall keep books and records of the
financial affairs and make such available to the President and Board of
Directors upon request. The Treasurer may make recommendations to the officers
and directors in regard to the financial affairs of the corporation.
<PAGE> 6
SECTION FIVE: The Vice-President, if one is appointed by the Board of
Directors, shall have such powers as delegated to him by the President. Upon
the inability to perform by the President, the Vice-President shall serve as
President until such time as the President shall be able to perform or further
action by the Board of Directors. The President shall be deemed unable to
perform his duties upon written notification by the President of such inability
or resignation to the Board of Directors that the President is unable to
perform.
SECTION SIX: Vacancies shall be filled by the Board of Directors. Until such
time as vacancies are filled the following rules of succession shall apply
without regard to Section Five of this Article. The Vice-President shall act as
President, the Treasurer shall act as Secretary, and the Secretary shall act as
Treasurer.
SECTION SEVEN: Assistants to officers may be appointed by the President. These
duties shall be those delegated to them by the President or the board of
Directors.
SECTION EIGHT: Compensation of the officers shall be determined by the Board of
Directors.
ARTICLE FIVE
CONTRACTS AND INSTRUMENTS OF INDEBTEDNESS
SECTION ONE: No contracts or any instrument of indebtedness shall be executed
without approval by the Board of Directors
<PAGE> 7
by resolution. Upon such resolution, the President shall be authorized to
execute contracts or instruments of indebtedness as specified in the
resolution.
SECTION TWO: All checks, drafts or other instruments of indebtedness shall be
executed in the manner as determined by the Board of Directors by resolution.
ARTICLE SIX
CORPORATE SEAL
The seal of the corporation shall be provided by the Board of
Directors by resolution. The seal shall be used by the President or other
officers of the corporation as provided for in these By-Laws.
ARTICLE SEVEN
AMENDMENT
These By-Laws may be amended from time to time by a majority vote of
the Board of Directors or by a majority vote of the shareholders. These By-Laws
may be repealed and new By-Laws established in the same manner as amendments.
These By-Laws will continue in full force and effect until amended or repealed
and replaced by new By-Laws.
ARTICLE EIGHT
DIVIDENDS
The Board of Directors may from time to time declare dividends to the
shareholders. These distributions may be
<PAGE> 8
in cash or property. No such dividends may be made out of the capital of the
corporation.
ARTICLE NINE
DIRECTOR'S LIABILITIES
SECTION ONE: A director of the corporation shall not be liable to the
corporation or its shareholders for monetary damages for an act or omission in
the director's capacity as a director, except with respect to liability for:
(1) a breach of the director's duty of loyalty to the corporation or its
shareholders:
(2) an act or omission not in good faith or that involves intentional
misconduct or a knowing violation of the law;
(3) a transaction from which the director received an improper benefit,
whether or not the benefit resulted from an action taken within the
scope of the director's office;
(4) an act or omission for which the liability of a director is expressly
provided for by statute; or (5)An act related to an unlawful stock
repurchase or payment of a dividend.
If the Texas Business Corporation Act, the Texas Miscellaneous
Corporation Laws Act or any other similar statute is amended after approval by
the shareholders of this provision to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the corporation shall be eliminated or limited to the fullest
extent permitted by such statutes, as so amended.
ARTICLE TEN
RESTRICTIONS ON TRANSFER OF STOCK
SECTION ONE: No shareholder shall, during his life, assign, pledge, encumber,
or offer as collateral any shares of his stock.
SECTION TWO: No shareholder shall, during his life, transfer or sell any of
their shares of stock to any party without first offering them for sale to the
corporation. If suck offer is declined in writing within 10 days of delivery to
the corporation, such shares must then be offered to the other shareholders of
the corporation. If such offers are declined in writing within 10 days of
delivery to the other shareholders the shares may then be sold or transferred
as the selling shareholder wishes. Failure by either the
<PAGE> 9
corporation or the other shareholders to respond in writing within the 10-day
period shall be deemed to be equivalent to a written declination of the offer
to sell.
SECTION THREE: All bylaw or other provisions restricting the transfer of stock
are subject to the Texas Business Corporation Act and other state statutes, as
amended, and may not be construed as being more restrictive than the Texas
statutes allow.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION ONE: Action Without Meeting or By Use of Conference Telephone. Any
action permitted or required by law, these bylaws or the articles of
incorporation of the corporation, to be taken at a meeting of the shareholders,
the Board of Directors or any committee designated by the Board of Directors
may be taken without a meeting if a consent in writing, setting forth the
action so taken, is signed by all shareholders entitled to vote with respect to
the subject matter thereof, or all members of the Board of Directors or
committee, as the case may be. Such consent shall have the same force and
effect as a unanimous vote at a meeting, and may be stated as such in any
document or instrument filed with the Secretary of State. Subject to the
requirement for notice of meetings, shareholders, members of the Board of
Directors, or members of any committee designated by the Board of Directors,
may participate in and hold a meeting of such shareholders, Board of Directors
or committee, as the case may be, by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in such a meeting shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
<PAGE> 1
EXHIBIT 3.5
================================================================================
ARTICLES OF ORGANIZATION
OF
P & A REMEDIATION, LLC
================================================================================
ARTICLE ONE
The name of the limited liability company is P & A REMEDIATION, LLC.
ARTICLE TWO
The period of its duration is thirty years.
ARTICLE THREE
The purpose for which the Company is organized is the transaction of
any and all lawful business for which a limited liability company may be
organized under the Texas Limited Liability Company Act.
ARTICLE FOUR
The street address of its initial Registered Office, and the name of
its initial
Registered Agent at this address, is as follows:
Richard C. Smith
1026 West Main Street, Suite 208
Lewisville, Texas 75067
- --------------------------------------------------------------------------------
ARTICLES OF ORGANIZATION OF
P & A REMEDIATION, LLC, PAGE 1
<PAGE> 2
ARTICLE FIVE
The company is to be managed by a manager. The name and address of the
initial Manager, who is to serve until the first annual meeting of members or
until his successor is duly elected, is:
Richard C. Smith
1026 West Main Street, Suite 208
Lewisville, Texas 75067
ARTICLE SIX
The name and address of the Organizer is:
Marilyn S. Hershman
408 W. 17th Street, Suite 101
Austin, Texas 78701-1207
(512) 474-2002
IN WITNESS WHEREOF: I have hereunto set my hand this 16th day of
October, 1998.
/s/ MARILYN S. HERSHMAN
------------------------------------
Marilyn S. Hershman, Organizer
- --------------------------------------------------------------------------------
ARTICLES OF ORGANIZATION OF
P & A REMEDIATION, LLC, PAGE 2
<PAGE> 1
EXHIBIT 3.6
REGULATIONS AND OPERATING AGREEMENT
OF
P & A Remediation, LLC
ARTICLE I. OFFICES
1.1 Principal Office. The principal office of the Company in the State
of Texas shall be located at 1026 w. Main, Lewisvi11e Texas. The Company may
have such other offices, either within or without the state of Texas as the
Members may designate or as the business of the Company may from time to time
require.
1.2 Registered Office. The address of the initial registered office of
the Company is 1026 W. Main, Lewisville Texas, and the initial registered agent
at such address is Richard C. Smith. The registered office and the registered
agent may be changed from time to time by action of the Members and by filing
the prescribed form with the Texas Secretary of State.
ARTICLE II. MEETINGS
2.1 Annual Meeting. The annual meeting of the Members shall be held
the first Wednesday in the month of September in each year, beginning with the
year 1999 at the hour of 10:00 o'clock a.m., for the purpose of the transaction
of such other business as may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday, such meeting shall be held on the next
succeeding business day. If the election shall not be held on the day
designated herein for the annual meeting of the Members, or at any adjournment
thereof, the Members shall cause the election to be held at a special meeting
of the Members as soon thereafter as it may conveniently be held.
2.2 Regular Meetings. The Members may by resolution prescribe the time
and place for the holding of regular meetings and may provide that the adoption
of such resolution shall constitute notice of such regular meetings.
2.3 Special Meetings. Special meetings of the Members, for any purpose
or purposes, unless otherwise prescribed by statute, may be called by the
Presiding Member or by any two Members.
2.4 Notice of Meeting. Written or telephonic notice stating the place,
day and hour of the meeting and, in case of a special meeting, the purposes for
which the meeting is called shall be delivered not less than three days before
the date of the meeting, either personally or by mail, by or at the direction
of the Presiding Member, to each Member of record entitled to vote at such
meeting, If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail, addressed to the Member at his address as it appears
on the books of the Company, with postage thereon prepaid. When all the Members
of the Company are present at any meeting, or if those not present sign in
writing a waiver of notice of such meeting, or subsequently ratify all the
proceedings
<PAGE> 2
thereof, the transactions of such meeting are as valid as if a meeting were
formally called and notice had been given.
2.5 Ouorum. At any meeting of the Members, a majority of the equity
interests, as determined by the capital contribution of each Member as
reflected on the books of the Company, represented in person or by proxy, shall
constitute a quorum at a meeting of the Members. If less than said majority of
the equity interests are represented at a meeting, a majority of the interests
so represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. The Members present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding
the withdrawal of enough Members to leave less than a quorum.
2.6 Proxies. At all meetings of Members, a Member may vote by proxy
executed in writing by the Member or by his duly authorized attorney-in-fact.
Such proxy shall be filed with the Presiding Member of the Company before or at
the time of the meeting. No proxy shall be valid after three months from date
of execution, unless otherwise provided in the proxy.
2.7 Voting by Certain Members. Management Certificates held in the
name of a corporation, partnership or company may be voted by such officer,
partner, agent or proxy as the Bylaws of such entity may prescribe or, in the
absence of such provision, as the Board of Directors of such entity may
determine. Certificates held by a trustee, personal representative,
administrator, executor, guardian or conservator may be voted by him, either in
person or by proxy, without a transfer of such certificates into his name.
2.8 Manner of Acting.
2.8.1 Formal action by Members. Ordinarily, the act of a
majority of the Members present at a meeting at which a quorum is
present shall be the act of the Members. Upon demand of any Member,
voting on a particular issue shall be in accordance with percentage of
equity ownership in the company.
2.8.2 Procedure. The Presiding Member of the Company shall
preside at meetings of the Members, may move or second any item of business,
but shall not vote upon any matter when there is an even number of Members
present and the Members are evenly divided as to an issue. A record shall be
maintained of the meetings of the Members. The Members may adopt their own
rules of procedure, which shall not be inconsistent with this Operating
Agreement.
2.8.3 Presumption of Assent. A Member of the Company, who is
present at a meeting of the Members, at which action on any mailer is taken,
shall be presumed to have assented to the action taken, unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the secretary of the
meeting before the adjournment thereof or shall forward such dissent by
certified mail to the secretary of the meeting immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a Member
who voted in favor of such action.
2.8.4 Informal Action of Members. Unless otherwise provided
by law, any action required to be taken at a meeting of the Members, or any
other action which may be taken at a meeting of the Members, may be taken
without a meeting if a consent in writing, setting forth the
<PAGE> 3
action so taken, shall be signed by all the Members entitled to vote with
respect to the subject matter thereof.
2.9 Order of Business. The order of business at all meetings of the
Members, shall be as follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Report of the Executive Officer.
5. Reports of Committees.
6. Unfinished Business.
7. New Business.
2.10 Telephonic Meeting. Members of the Company may participate in any
meeting of the Members by means of conference telephone or similar
communication if all persons participating in such meeting can hear one another
for the entire discussion of the matter(s) to be voted upon. Participating in a
meeting pursuant to this Section shall constitute presence in person at such
meeting.
ARTICLE III
FISCAL MATTERS
3.1 Fiscal Year. The fiscal year of the Limited Liability Company
shall begin on the first day of January and end on the last day of December
each year, unless otherwise determined by resolution of the Members.
3.2 Deposits. All funds of the Limited Liability Company shall be
deposited from time to time to the credit of the Limited Liability Company in
such banks; trust companies or other depositories as the Members may select.
3.3 Checks. Drafts. Etc. All checks, drafts or other orders for the
payment of money, and all notes or other evidences of indebtedness issued in
the name of the Company shall be signed by the Executive Officer or by such
Member or Members as the Members may by Bank Form of Resolution or other action
specify.
3.4 Loans. No loans shall be contracted on behalf of the Limited
Liability Company and no evidences of indebtedness shall be issued in its name
unless authorized by a resolution of the Members. Such authority may be general
or confined to specific instances.
3.5 Contracts. The Members may authorize any Member or agent of the
Company to enter into any contract or execute any instrument in the name of and
on behalf of the Company, and such authority may be general or confined to
specific instances.
3.6 Accountant. An Accountant may be selected from time to time by the
Members to perform such tax and accounting services as may, from time to time,
be required. The Accountant may be removed by the Members without assigning any
cause.
3.7 Legal Counsel. One or more Attorney(s) at Law may be selected from
time to time by the Members to review the legal affairs of the Company and to
perform such other services as
<PAGE> 4
may be required and to report to the Members with respect thereto. The Legal
Counsel may he removed by the Members without assigning any cause.
ARTICLE IV.
MANAGEMENT CERTIFICATES AND THEIR TRANSFER
4.1 Certificates. Management Certificates representing equity interest
in the Company shall be in such form as shall be determined by the Members.
Such Management Certificates shall be signed by all the Members. Ml Management
Certificates shall be consecutively numbered or otherwise identified. The name
and address of the person to whom the Management Certificates are issued, with
the Capital Contribution and the date of issue shall be entered in the
Certificate Register of the Company. In case of a lost, destroyed or mutilated
Management Certificate, a new one may be issued upon such terms and indemnity
to the Company as the Members may prescribe.
4.2 Certificate Register. Any and all changes in Members or their
amount of capital contribution shall be formalized by filing notice of the same
with the Secretary of State by amendment of the Articles of Organization. The
most recent filing of the Articles or Organization, as amended, shall be deemed
the Register of Certificates.
4.3 Transfers of Shares. Any Member proposing a transfer or assignment
or his Certificate shall first notify the Company in writing of all the details
of and consideration for the proposed transfer or assignment. The company, for
the benefit of the remaining Members, shall have the first right to acquire the
equity by cancellation of the Certificate under the same terms and conditions
as provided in the formal Articles of Organization as filed with the Secretary
of State for Members who are deceased, retired, resigned, expelled, or
dissolved.
If the company declines to elect such option, the remaining Members
desiring to participate may proportionately (or in such proportions as the
remaining Members may agree) purchase such interest under these same terms and
conditions first proposed by the withdrawing Member.
If the transfer or assignment is made as originally proposed and the
other Members fail to approve the transfer or assignment by unanimous written
consent, the transferee or assignee shall have no right to participate in the
management of the business and affairs of the Limited Liability Company or to
become a Member. The transferee or assignee shall only be entitled to receive
the share of the profit or other compensation by way of income and the return
of contributions to which that Member would otherwise be entitled.
ARTICLE V.
BOOKS AND RECORDS
5.1 Books and Records. The books and records of the company shall be
kept at the principal office of the company or at such other places, within or
without the state of as the Members shall from time to time determine.
5.2 Right of Inspection. Any Member of the Company shall have the
right to examine at any reasonable time or times for any purpose, the books and
records of account, minutes and records of Members and to make copies thereof.
Such inspection may be made by any agent or attorney of the Member. Upon the
written request of any Member of the company, it shall mail to such Member
<PAGE> 5
its most recent financial statements, showing in reasonable detail its assets
and liabilities and the results of its operations.
5.3 Financial Records. All financial records shall be maintained and
reported based on generally acceptable accounting practices.
ARTICLE VI.
DISTRIBUTION OF PROFITS
The Members may from time to time unanimously declare, and the company
may distribute, accumulated profits agreed not necessary for the cash needs of
the company's business. Unless Otherwise provided, retained profits shall be
deemed an increase in capital contribution of the Company.
ARTICLE VII.
OFFICERS
7.0 Management. The business of the company shall be conducted under
the exclusive management of its Members, who shall have exclusive authority to
act for the Company in all matters. The Members may, from time to time,
designate certain Members to act for the Company in certain matters as herein
specified.
7.1 Presiding Member. The Presiding Member shall, when present,
preside at all meetings of the Members, be the official spokesperson for the
Company, and be the person primarily responsible for conducting transactions
with the Company's Attorney(s) and Accountant(s). The Presiding Member may
sign, on behalf of the Company, such deeds, mortgages, bonds, contracts or
other instruments which have been appropriately authorized to be executed by
the Members, except in cases where the signing or execution thereof shall be
expressly delegated by the Members or by this Operating Agreement or by Statute
to some other Officer or agent or the Company; and, in general, he shall
perform such duties as may be prescribed by the Members from time to time.
7.2 Executive Member. The executive officer of the Company shall be
responsible for the general overall supervision of the business and affairs of
the Company. The specific authority and responsibility of the Executive Officer
shall also include the following:
(1) The Executive Officer shall effectuate this Operating Agreement and
the Regulations and decisions of the Members.
(2) The Executive Officer shall direct and supervise the operations of
the Company.
(3) The Executive Officer, within such parameters as may be set by the
Members, shall establish such charges for services and products of
the Limited Liability Company as may be necessary to provide adequate
income for the efficient operation of the Company.
(4) The Executive Officer, within the budget established by the Members,
shall set and adjust wages and rates of pay for all personnel of the
Company and shall appoint, hire and dismiss all personnel and
regulate their hours of work.
(5) The Executive Officer shall keep the Members advised in all matters
pertaining to the operation of the Company, services rendered,
operating income and expense, financial position, and to this end,
shall prepare and submit a report to the Members at each regular
meeting and at other times as may be directed by the Members
(6) The Executive Officer shall have all powers of the Presiding member.
<PAGE> 6
7.3 Other Officers. The Company may, at the discretion or the Members,
have additional Officers including, without limitation, a Secretary to record
the minutes or the Members and to attest the signature of "the Presiding Member
or the Executive Officer, and a Bookkeeper to account for the financial
transactions of the Company. These other officers need not be selected from
among the Members. One person may hold two or more offices. When the incumbent
of an office is (as determined by the incumbent himself or by the Members)
unable to perform the duties thereof or when there is no incumbent of an office
(both such situations referred to hereafter as the "absence" of the Officer),
the duties of the office shall be performed by the person specified by the
Members.
7.4 Election and Tenure. The Officers of the Company shall be elected
annually by the Members at the annual meeting. Each Officer shall hold office
from the date of his election until the next annual meeting and until his
successor shall have been elected, unless he shall sooner resign or be removed.
7.5 Resignations and Removal. Any Officer may resign at any time by
giving written notice to all of the Members, and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective. Any Officer may be removed at any time by the Members with or
without cause. Such removal shall be without prejudice to the contract rights,
if any, of the person so removed.
7.6 Vacancy. A vacancy in any office may be filled for the unexpired
portion of the term by the Members.
7.7 Salaries. The salaries of the officers shall be fixed from time to
time by the Members and no officer shall be prevented from receiving such
salary by reason of the fact that he is also a Member of the Company.
ARTICLE VIII.
MISCELLANEOUS
8.1 Notice. Any notice required or permitted to be given, pursuant to
the provisions of the Statute, the Articles of Association of the Limited
Liability Company or this Operating Agreement, shall be effective as of the
date personally delivered, or if sent by mail, on the date deposited with
United States Postal Service, prepaid and addressed to the intended receiver at
his last known address as shown in the records of the Limited Liability
Company.
8.2 Waiver of Notice. Whenever any notice is required to be given
pursuant to the provisions of the Statute, the Articles of Association of the
Limited Liability Company or this Operating Agreement, a waiver thereof, in
writing, signed by the persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice.
8.3 Indemnification by Company. The Limited Liability Company may
indemnify any person who was or is a party defendant or is threatened to be
made a party defendant to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative (other
than an action by or in the right of the Limited Liability Company) by reason
of the fact that he is or was a Member of the Company, Officer, employee or
agent of the Company, or is or was serving at the request of the Company,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in
<PAGE> 7
connection with such action, suit or proceeding if the Members determine that
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interest of the Limited Liability Company, and with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not in itself create a presumption that the person did or
did not act in good faith and in a manner which he reasonably believed to be in
the best interest of the Limited Liability Company, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
8.4 Indemnification Funding. The Company shall fund the
indemnification obligations provided by Section 83 in such manner and to such
extent as the Members may from time to time deem proper.
8.5 Duality of Interest Transactions. Members of this Company have a
duty of undivided loyalty to this Company in all matters affecting this
Company's interests.
8.6 Anticipated Transactions. Notwithstanding the provision of Section
8.5, it is anticipated that the Members and Officers will have other legal and
financial relationships. Representatives of this Company, along with
representatives of other entities, may, from time to time, participate in the
joint development of contracts and transactions designed to be fair and
reasonable to each participant and to afford an aggregate benefit to all
participants. Therefore, it is anticipated that this Company will desire to
participate in such contracts and transactions and, after ordinary review for
reasonableness, that the participation of the Company in such contracts and
transactions may be authorized by the Members.
ARTICLE IX.
MEDIATION AND ARBITRATION
9.0 In the event there is a disagreement without resolution among the
members, the members agree to present such disagreement for mediation, and
failing that, arbitration, according to the provision of the American
Arbitration Association.
ARTICLE X.
DISSOLUTION
10.0 The company shall be dissolved on the first of the following to
occur:
(1) When the period fixed for the duration of the limited
liability company expires.
(2) On the occurrence of events specified in the articles of
organization or regulations to cause dissolution.
(3) Written consent of all members to dissolution.
(4) Except as otherwise provided in the regulations, upon the
death, retirement, resignation, expulsion, bankruptcy, or
dissolution of a member or the occurrence of any other event
which terminates the continued membership of a member in the
limited liability company, unless there is at least one
remaining member and the business of the limited liability
company is continued
<PAGE> 8
by the consent of the number of members or class thereof
stated in the articles of organization or regulations of the
limited liability company or if not so stated, by all
remaining members.
(5) Entry of a decree of judicial dissolution under Section 6.02
of this Act.
ARTICLE XI.
AMENDMENTS
11.0 Amendments. These Regulations may be altered, amended, restated,
or repealed and new Regulations may be adopted by three-fourths action of all
of the Members, after notice and opportunity for discussion of the proposed
alteration, amendment, restatement, or repeal.
CERTIFICATION
THE UNDERSIGNED, being all of the Members of a Texas Limited Liability Company,
hereby evidence their adoption and ratification of the foregoing Regulations of
the Company.
EXECUTED by each Member effective as of October 27, 1998.
/s/ RICHARD C. SMITH
- ---------------------------- ---------------------------
/s/ BRYAN L. WALKER
- ---------------------------- ---------------------------
<PAGE> 1
EXHIBIT 3.7
ARTICLES OF INCORPORATION
OF
SIMPCO, INC.
ARTICLE I
Name
The name of this corporation is SIMPCO, INC.
ARTICLE II
Duration
The period of its duration is perpetual.
ARTICLE III
Purpose or Purposes
The purpose or purposes for which the corporation is organized are:
(a) To engage, contract for and sell oil field services and goods (1) To
operate, establish, explore, plug and otherwise deal with oil and gas
properties, oil and gas wells, and oil and gas leases, and all other
activities attendant thereto.
(b) To engage in any business, related or unrelated, to those described in
Clause (a) of this Article III, from time to time authorized or
approved by the Board of Directors of this corporation;
(c) To enter into any lawful arrangement for sharing profits and/or losses
in any transaction or transactions, and to promote and organize other
corporations;
(d) To purchase, lease, construct, or otherwise acquire, and hold, use,
maintain, lease, manage, and operate plants, buildings, warehouses,
and other structures, establishments and facilities of every kind,
nature or description useful in the conduct of the business of this
corporation;
(e) To have and to exercise all rights and powers that are now or may
hereafter be granted to a corporation by law.
The foregoing shall be construed as objects, purposes, and powers, and
enumeration thereof shall not be held to limit or restrict in any manner the
powers now and hereafter conferred upon this corporation by the laws of the
State of Texas.
The objects, purposes and powers specified herein shall, except as
otherwise expressed, be
<PAGE> 2
in no way limited or restricted by reference to or inference from the terms of
any of the clauses or paragraphs of these Articles. The objects, purposes and
powers specified in each of the clauses or paragraphs of these Articles of
Incorporation shall be regarded as independent objects (1) purposes, or powers.
The corporation may in its bylaws confer powers not in conflict with
law upon its Directors in addition to the foregoing and in addition to the
powers and authorities expressly conferred upon them by statute.
ARTICLE IV
Capitalization
The aggregate number of shares which the corporation shall have
authority to issue is TEN THOUSAND AND NO/1OO SHARES (10,000) having no par
value.
ARTICLE V
Issuance of Shares
The corporation will not commence business until it has received for
the issuance of its shares consideration of the value of one thousand dollars
($1,000.00), consisting of money, labor done, or property actually received.
ARTICLE VI
Registered Office
The street address of its initial registered office is P.O. Box 494,
Ballinger, Runne1s County, Texas 76821, and the name of its initial registered
agent at such address is Eric Simpson.
ARTICLE VII
Directors
(a) The number of Directors constituting the initial Board of
Directors is ONE (1) and the names and addresses of the
person to serve as Director until the first annual meeting of
the shareholders or until their successors are elected and
qualified is:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
ERIC SIMPSON P.O. Box 494
Ballinger, TX 76821
</TABLE>
(b) The number of Directors in the corporation shall be fixed by the
bylaws.
<PAGE> 3
ARTICLE VIII
Incorporator
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
ERIC SIMPSON P.O. Box 494
Ballinger, TX 76821
</TABLE>
IN WITNESS WHEREOF, I hereunto set my hand this 21ST day of OCTOBER,
1996.
/s/ ERIC SIMPSON
--------------------------------
ERIC SIMPSON, Incorporator
STATE OF TEXAS )
COUNTY OF RUNNELS )
BEFORE ME, a notary public, on this day personally appeared ERIC
SIMPSON, known to me to be the person whose name is subscribed to the foregoing
document and, being by me first duly sworn, declared that the statements
therein contained are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 21st day of October, 1996.
/s/ KACI ADDISON
-------------------------------
Notary Public, State of Texas
KACI ADDISON
<PAGE> 1
EXHIBIT 3.8
BYLAWS
OF
SIMPCO, INC.
ARTICLE I.
NAME AND LOCATION
SECTION 1. Name. The name of this corporation shall be SIMPCO, INC.
SECTION 2. Principal Office. The principal office of the corporation
in the State of Texas shall be located in the City of Ballinger, Texas.
SECTION 3. Other Offices. The corporation may have such other offices,
either within or without the State of Texas, as the Board of Directors may
designate from time to time.
ARTICLE II.
SHAREHOLDERS
SECTION 1. Annual Meeting. The annual meeting of the shareholders
shall be held on the lst day in the month of October in each year, beginning
with the year 1997, at the hour of ten o'clock a.m., for the purpose of
electing Directors and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be a legal
holiday in the State of Texas, such meeting shall be held on the next
succeeding business day. If the election of Directors shall not be held on the
day designated herein for any annual meeting of the shareholders or at any
adjournment thereof, the Board of Directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as conveniently may
be.
SECTION 2. Special Meetings. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President or by the Board of Directors and shall be called by the
President at the request of the holders of not less than ten percent (10%) of
all the outstanding shares of the corporation entitled to vote at the meeting.
SECTION 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Texas, as the place of meeting for
any annual meeting or for any special meeting called by the Board of Directors.
A waiver of notice signed by all shareholders entitled to vote at a meeting may
designate any place, either within or without the State of Texas, as the place
for the holding of such meeting. If no designation is made, or if a special
meeting were otherwise called, the place of meeting shall be the registered
office of the corporation in the State of Texas.
SECTION 4. Notice of Meeting. Written or printed notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called shall be delivered not less
than ten (10) nor more than fifty (50) days before the date of the meeting,
either personally or by mail, by or at the direction of the President, or the
Secretary, or the officer or persons calling the meeting to each shareholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail, addressed to the
shareholder at his or her address as it appears on the stock transfer books of
the corporation, with postage thereon prepaid.
<PAGE> 2
SECTION 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders, entitled
to receive payment of any dividends, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, fifty (50) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least ten (10) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than fifty (50) days and, in case of a
meeting of shareholders, not less than ten (10) days prior to the date on which
the particular action, requiring such determination of shareholders, is to be
taken. If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
SECTION 6. Voting Lists. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make, at least ten
(10) days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at such meeting, or any adjournment thereof,
arranged in alphabetical order, with the address of and the number of shares
held by each, which list, for a period of ten (10) days prior to such meeting,
shall be kept on file at the registered office of the corporation and shall be
subject to inspection by any shareholder at any time during the usual business
hours. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during
the whole time of the meeting. The original stock transfer book shall be prima
facia evidence as to whom are the stockholders entitled to examine such list or
transfer books or to vote at any meeting of shareholders.
SECTION 7. Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of
the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. The shareholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than
quorum.
SECTION 8. Proxies. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his or her duly
authorized attorney in fact. Such proxy shall be filed with the secretary of
the corporation before or at the time of the meeting.
SECTION 9. Voting of Shares. Subject to the provisions of Section 2 of
this Article II, each outstanding share entitled to vote shall be entitled to
one vote upon each matter submitted to a vote at a meeting of shareholders.
SECTION 10. Voting of Shares by Certain Holders. Shares standing in
the name of another corporation may be voted by such officer, agent or proxy as
the Bylaws of such corporation may
<PAGE> 3
prescribe, or, in the absence of such provision, as the Board of Directors of
such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be voted
by that person, either in person, or by proxy, without a transfer of such
shares into his or her name. Shares standing in the name of a trustee may be
voted by such trustee, either in person or by proxy, but no trustee shall be
entitled to vote shares held by such trustee without a transfer of such shares
into his or her name.
Shares standing in the name of a receiver may be voted by such
receiver and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his or her name if authority so
to do be contained in an appropriate order of the court by which such receiver
was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgees,
and thereafter the pledgees shall be entitled to vote the shares so
transferred.
SECTION 11. Informal Action by Shareholders. Unless otherwise provided
by law, any action required to be taken at a meeting of the shareholders, or
any other action which may be taken at a meeting of the shareholders, may be
taken without a meeting if a consent in writing, setting forth the action so
taken shall be signed by all of the shareholders entitled to vote with respect
to the subject matter thereof.
SECTION 12. Failure to Hold Annual Meeting. Failure to hold an annual
meeting at the designated time shall not work a dissolution of the corporation.
In the event the Board of Directors fails to call the annual meeting at the
designated time, any shareholder may make demand that such meeting be held
within a reasonable time, such demand to be in writing by registered mail
directed to any officer of the corporation. If the annual meeting of the
shareholders is not called within sixty (60) days following such demand, any
shareholder may
ARTICLE III.
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the corporation
shall be managed by its Board of Directors.
SECTION 2. Number, Tenure and Qualifications. The number of Directors
shall be at least two and not more than nine. Each Director shall hold office
until the next annual meeting of shareholders and until his or her successor
shall have been elected and qualified. The incorporators may, however, at their
first meeting change one or more of those Directors designated by the Articles
of Incorporation. Directors need not be shareholders, nor residents of the
State of Texas. The Board of Directors by resolution adopted by a majority of
the number of Directors fixed by the Bylaws may designate two or more Directors
to constitute an executive committee which committee shall have and may
exercise all of the authority of the Board of Directors in the business and
affairs of the corporation except where action of the Board of Directors is
required by law.
SECTION 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw, immediately after
and at the same place as, the annual meeting
<PAGE> 4
of shareholders. The Board of Directors may provide, by resolution, the time
and place for the holding of additional regular meetings without other notice
than such resolution.
SECTION 4. Special Meetings. Special meetings of the Board of
Directors may be called at the request of the President or any two Directors.
The person or persons authorized to call special meetings of the Board of
Directors may fix the place for holding any special meeting of the Board of
Directors called by them.
SECTION 5. Notice. Notice of any special meeting shall be given at
least ten (10) days previously thereto by written notice delivered personally
or mailed to each Director at his or her business address, or by telegram. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail so addressed, with postage thereon prepaid.' If notice were
given by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the Telegraph Company. Any Director may waive notice
of any meeting. The attendance of a Director at a meeting shall constitute a
waiver of notice of such meeting, except where a Director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 6. Quorum. A majority of the number of Directors fixed by
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors but if less than such a
majority is present at a meeting, a majority of the Directors present may
adjourn the meeting from time to time without further notice.
SECTION 7. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 8. Vacancies. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining Directors
though less than a quorum of the Board of Directors, unless otherwise provided
by law. A Director elected to fill a vacancy shall be elected for the unexpired
term of his or her predecessor in office. Any directorship to be filled by
reason of an increase in the number of Directors shall be filled by election at
an annual meeting or at a special meeting of shareholders called for that
purpose.
SECTION 9. Compensation. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as Director. No such
payment shall preclude any Director from serving the corporation in any other
capacity and receiving compensation thereof.
SECTION 10. Presumption of Assent. A Director of the corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless such Director's dissent shall be entered in the minutes of the
meeting or unless such Director shall file his or her written dissent to such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a Director who voted in favor of the
action.
SECTION 11. Telephone Meeting. At any meeting of the Board, a member
may attend by telephone, radio, television or similar means of communications
which permits him or her to participate in the meeting, and a Director so
attending shall be deemed present at the meeting for all purposes including the
determination of whether a quorum is present.
<PAGE> 5
SECTION 12. Action by Written Consent. Any action required or
permitted to be taken by the Board of Directors, under the applicable
provisions of the statutes, the Articles of Incorporation, or these Bylaws, may
be taken without a meeting if a consent in writing, setting forth the action so
taken, is signed by all the members of the Board of Directors.
SECTION 13. Informal Meetings. The acts and resolutions when in
writing and signed by the Secretary and placed in the Minute Book of this
corporation shall be and constitute valid acts and resolutions of the Board of
Directors. All present and future shareholders, by becoming shareholders,
consent and agree to the informal management of the business and affairs of
this corporation by the Directors, and waive any and all rights to require the
Directors to act in a meeting as a Board, and said shareholders further agree
that the Directors may waive notice of meetings of Directors before, at or
after the meeting, and may after any meeting approve and ratify acts and
resolutions had and adopted at such meeting with the same effect as though they
had been personally present.
Page missing
SECTION 7. Secretary. The Secretary shall: (a) keep the minutes of the
shareholders' and of the Board of Directors' meetings in one or more books
provided for that purpose; ~) see that all notices are duly given in accordance
with the provisions of these Bylaws or as required by law; (c) be custodian of
the corporate records and of the seal of the corporation and see that the seal
of the corporation is affixed to all documents the execution of which on behalf
of the corporation under its seal is duly authorized and required by law; (d)
keep a register of the post office address of each shareholder which shall be
furnished to the Secretary by such shareholder; (e) have general charge of the
stock transfer books of the corporation; and (f) in general, perform all duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him or her by the President or by the Board of Directors.
SECTION 8. Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his or her duties in
such sum and with such surety or sureties as the Board of Directors shall
determine. The Treasurer shall: (a) have charge and custody of and be
responsible for all funds and securities of the corporation; (b,) receive and
give receipts for monies due and payable to the corporation from any source
whatsoever and deposit all such monies in the name of the corporation in such
banns, trust companies or other depositories as shall be selected in accordance
with the provisions of Article V of these Bylaws; and (c) in general, perform
all of the duties as from time to time may be assigned to him or her by the
President or by the Board of Directors.
SECTION 9. Officers' Salaries. Officers of the corporation shall
receive such salary as the Board of Directors shall provide from time to time,
provided however, that any salary so set shall receive the concurring vote of
eighty percent (80%) of the Directors of said Board of Directors.
ARTICLE V.
CONTRACTS, LOANS, PAYMENTS AND DEPOSITS
SECTION 1. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confirmed to specific instances.
<PAGE> 6
SECTION 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confirmed to specific instances.
SECTION 3. Payments. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name
of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banns, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VI.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates representing shares
of the corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President and by the
Secretary or by such other officers authorized by law and by the Board of
Directors so to do. Ml certificates for shares shall be consecutively numbered
or otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be canceled and no new
certificate shall be issued until the former certificate for a like number of
shares has been surrendered and canceled, except that in case of a lost,
destroyed or mutilated certificate a new one may be issued therefor upon such
terms and indemnity to the corporation as the Board of Directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the corporation
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by his or her legal representative, who shall furnish
proper evidence of authority to transfer, or by his or her attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose names shares stand on the books of the corporation
shall be deemed by the corporation to be the owner for all purposes.
SECTION 3. Stock Transfer Restriction. The following reasonable
restrictions upon the transfer of the shares of stock of this corporation,
hereafter stated, are imposed and shall be referred to on the face of each
certificate and reproduced in full on the back thereof: No share of the stock
of this corporation shall be transferred, whether through the voluntary or
involuntary act of a shareholder, or his heirs, executor or administrator, or
by the operation of law, unless such shares shall first have been offered to
the corporation and such corporation shall have the exclusive option to
purchase or redeem such shares at a price equal to the book value thereof for a
period of thirty (30) days after such offer is submitted to the Board of
Directors of said corporation in writing. If said corporation shall not have
exercised its option to purchase within such time, then each of the other
shareholders shall have the exclusive option to purchase that proportion of the
shares submitted as each shareholder's interest bears to total stock interest
excluding that stock interest which is being submitted, or to purchase
proportionately any or all of the shares submitted if not purchased by the
other shareholders, at a price equal to the book value thereof within thirty
(30) days after such stock is made available to the shareholders. After the
expiration of such time, the shareholder, or his representative, may then sell
that part of the stock submitted which has not been purchased by either
<PAGE> 7
the corporation or the other shareholders without any restriction whatsoever.
Failure of the corporation or of the other shareholders to purchase any share
of the stock so submitted shall not, as to any future sale or transfer,
discharge any such shares of the corporation from any of the restrictions
herein contained.
SECTION 4. Stock Subscriptions and Issues. No shares of the authorized
but unissued stock of this corporation shall be issued to subscribers until the
shareholders of issued and outstanding stock of this corporation, as disclosed
by the shareholders' ledger from time to time, shall first be given the option
to purchase proportionately all or a part of such shares of stock so subscribed
at par value price per share. After a subscription is made by a subscriber, the
Board of Directors shall provide the current shareholders with notice in
writing of such subscription; and the current shareholders must elect in
writing within thirty (30) days from date of receipt of such notices to
purchase all or part of the shares so subscribed. After the expiration of such
time, the Board of Directors may then accept such subscription and cause stock
to be issued on such subscription as to that part of the shares so subscribed
but not purchased by the current shareholders. Failure of the shareholders, or
any of them to exercise such option to purchase shares subscribed shall not, as
to any future subscription and issuance, discharge any shares subsequently
subscribed from any of the restrictions herein contained.
ARTICLE VII.
FISCAL YEAR
The fiscal year of the corporation shall begin on the first day of
3aarary and end on the last day of December in each year.
ARTICLE VIII.
DIVIDENDS
The Board of Directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law.
ARTICLE IX.
WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be given
to any shareholder or director of the corporation under the provisions of these
Bylaws or under the provisions of the Articles of Incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE X.
AMENDMENTS
These Bylaws may be amended, altered or repealed and new Bylaws may be adopted
by the Board of Directors at any regular or special meeting by the affirmative
vote of a majority of the Directors. Such amendments shall be subject to repeal
or change by action of the shareholders.
<PAGE> 8
CERTIFICATE
I, Eric Simpson, President of Simpco, Inc., a Texas corporation, do hereby
certificate that the above and foregoing is a correct and complete copy of the
Bylaws of this corporation adopted at the first Board of Directors meeting held
on the 31st day of October, 1996.
TO CERTIFY WHICH, witness my hand and seal of this corporation on
the_____day of ______________, 1996.
/s/ ERIC SIMPSON
--------------------------------
Eric Simpson, President
APPROVED:
/s/ ERIC SIMPSON
- -----------------------------------
Eric Simpson, Secretary
<PAGE> 1
EXHIBIT 10.1
VOTING TRUST AGREEMENT OF
SHELTON VOTING TRUST
This Agreement, made on this 1st day of July, 1986, at Dallas County,
Texas, by and between the undersigned parties creates a voting trust to own the
undeveloped working interests of the Yankee (Canyon Sand) Field Unit, MA., RRC
No. 03215, of Tom Green County, Texas, as set forth in the Unit Agreement, as
recorded in volume 405, Page 609, of the Deed Records of Tom Green County,
Texas, hereinafter referred to as 'The Asset'
In consideration of the mutual promises contained herein, the
undersigned parties enter into this voting trust agreement for the purpose of
concentrating the vote of the shares represented under this agreement into a
clear and definite policy of the management under the discretion of the voting
trustee.
1. The parties to this agreement are the owners of the 'Asset' who
shall subscribe their names to this agreement called VOTING TRUST CERTIFICATE
holders after the VOTING TRUST CERTIFICATES are issued to them and the Trustee,
Mr. Bryan L. Walker and the Registrar, Hr. Bryan L. Walker.
2. The voting trust agreement shall become effective on July 1, 1986.
3. There shall be one trustee of this trust. That trustee shall be Mr.
Bryan L. Walker and/or his successors. The trustee shall serve for the entire
term of this trust in the absence of his removal, resignation or death.
A. Removal: The Trustee may be removed for cause at any time
by a majority vote of the VOTING TRUST CERTIFICATE holders.
<PAGE> 2
B. Resignation: The trustee may resign by giving notice of
his resignation. When the trustee resigns, the successor trustee may settle any
account or transaction with the resigning trustee.
C. Death: The rights and duties of the trustee shall
terminate upon his death and no rights or duties of the trustee may be
transferred by will, devise, succession or in any manner, except as provided in
this agreement. However, the heirs, administrators, and executors of the
trustee shall have the right and duty to convey any property held by the
trustee to the successor trustee Successor Trustee may be appointed by a
majority vote of the VOTING TRUST CERTIFICATE holders.
4. The Registrar is appointed as an agent of the trustee, by the
trustee, to perform the following duties:
A. To receive and hold the assignment of the "asset"
delivered to the trustee under this agreement.
B. To execute and issue VOTING TRUST CERTIFICATES in the name
of the trustee.
C. To perform the functions delegated to him by the trustee.
D. Should a vacancy occur in the office of trustee, to
perform the duties of the trustee until a successor trustee is duly appointed
and qualified.
The Registrar may resign by giving fifteen (15) days notice to the
trustee in writing; and may, be removed by the trustee by giving of fifteen
(15) days notice, in writing.
If a vacancy occurs in the office of Registrar, the trustee
<PAGE> 3
may appoint a successor by an instrument in writing, signed by the successor
Registrar, to indicate his consent to such appointment.
5. On the execution of this agreement, the owners of the 'asset' shall
deposit with the registrar an assignment of a net revenue interest of .7640625
in the undeveloped portion of acreage covered by the aforementioned unit
agreement. This assignment shall be made to the trustee and shall be of a legal
form and accompanied by instruments of transfer which will enable the registrar
to cause the 'asset' to be transferred to the name of the trustee.
Despite any changes in the trustee, the record title standing in the
name of the trust may be endorsed and transferred by any successor trustee with
the same effect as if endorsed and transferred by the trustee who has ceased to
act. The trustee is authorized and empowered to cause any further transfer to
be made which may be necessary in his discretion.
Despite the provisions in the above and foregoing paragraphs, the
trustee shall have no authority to sell or otherwise dispose of or encumber any
of the 'asset' deposited pursuant to the provisions of this agreement, except
as otherwise provided in the document.
Upon receipt by the registrar of the assignment in the name of the
trustee, he shall hold the assignment subject to the terms of this agreement;
and the registrar shall issue and deliver to the surrendering owners VOTING
TRUST CERTIFICATES. The trustee may issue fractional share certificates, script
or other evidence of ownership of a fraction of the trust certificate
<PAGE> 4
properly indicates the ownership of the fractional interest represented
thereby.
The VOTING TRUST CERTIFICATE shall be transferable only as provided in
this agreement; and on the payment of any charges payable at the time of
transfer. All transfers shall be recorded in the certificate book and any
transfer made of any VOTING TRUST CERTIFICATE shall vest in the transferee all
rights of the transferor and shall subject the transferee to the same
limitations as those imposed on the transferor by the terms of the VOTING TRUST
CERTIFICATE and the terms of this agreement. The trustee shall deliver a number
of shares of VOTING TRUST CERTIFICATES to the transferee for his proportion of
ownership in the 'asset' represented by the VOTING TRUST CERTIFICATE order of
transfer.
The trustee shall not be required to recognize any transfer of a
VOTING TRUST CERTIFICATE not made in accordance with the provisions of this
agreement unless the persons claiming ownership shall have produced indicia of
title satisfactory to the trustee, and shall have deposited with the trustee
indemnity satisfactory to him.
The trustee may treat the VOTING TRUST CERTIFICATE holders as the
absolute owners of the VOTING TRUST CERTIFICATE and the trustee shall not be
bound or affected by any notice to the contrary.
If a VOTING TRUST CERTIFICATE shall be mutilated or be destroyed,
lost, or stolen, the trustee, in his discretion, may issue a new VOTING TRUST
CERTIFICATE of like tenor and
<PAGE> 5
like denomination in exchange or substitution for the mutilated VOTING TRUST
CERTIFICATE or for the certificate so destroyed, stolen, or lost. The applicant
for the substituted VOTING TRUST CERTIFICATE shall refer to the trustee
evidence of the destruction, theft, or loss of the certificate satisfactory to
him in his discretion.
The applicant shall also furnish indemnity satisfactory to the
trustee.
6. While the trustee holds assets deposited pursuant to the provisions
of this agreement, he shall possess and shall be entitled to exercise all
rights and powers of absolute asset owners to any action except those specified
below. The trustee shall not vote in favor of the sale, mortgage, or pledge of
all or substantially all the assets; or, for any change in the capital
structure, or powers of the 'asset', or in connection with a merger,
consolidation, reorganization, or dissolution, except with the consent of
two-thirds (2/3) or more i ~ interest of the VOTING TRUST CERTIFICATES obtained
at a meeting held under this paragraph. No other person shall have any voting
rights with respect to the 'asset' so long as this agreement is in effect and
the 'asset' is registered in the name of the trustee.
In doing any act regarding the control or management of the 'asset',
or its affairs, as a holder of the asset deposited hereunder, the trustee shall
exercise his best judgement in the interest of the asset to the end that its
affairs be properly managed.
If a question arises in which the trustee desires an opinion of the
VOTING TRUST CERTIFICATE holders, a meeting for
<PAGE> 6
this purpose may be called by the trustee. At the meeting, the owners of 2/3 or
more, interest in the VOTING TRUST CERTIFICATES, may determine the manner in
which they desire the trustee to act, and the trustee shall be bound to act in
the manner designated.
The trustee shall not be called upon or expected to take any action as
a result of this meeting unless or until he has been fully indemnified against
any loss, damage, claim, or injury to which he might be subjected, either by
reason of his action or by reason of his position as trustee under this
agreement.
Any trustee, his employees, or agents, or any firm or corporation of
which he may be a member, agent or employee; and any corporation, trust or
association, of which he may be a trustee, stockholder, director, officer,
agent, or employee may contract with or be or become pecuniarily interested,
directly or indirectly, in any manner or transaction, to which the company or a
subsidiary or controlled or affiliated corporation may be a party or in which
it may be concerned, as fully and freely as though the trustee were not a
trustee hereunder. The trustee, his employees or agents, may act as directors
or officers of the company or any subsidiary or controlled or affiliated
corporation.
The trustee shall serve without compensation.
The trustee is expressly authorized to incur and pay those reasonable
charges and expenses which may be necessary and proper for the administering of
this agreement. The VOTING TRUST CERTIFICATE holders agree to reimburse and
indemnify the trustee for all claims, expenses and liabilities
<PAGE> 7
incurred by him in connection with the discharge of his duties under this
agreement. Any such claim, expense or liability, shall be charged to the VOTING
TRUST CERTIFICATE holders, pro-rated, and may be deducted from distributions to
them, or may be made a charge payable as a condition to the delivery of other
property in his possession or in the possession of the registrar.
No trustee shall be liable for the acts or defaults of any other
trustee. The trustee shall be free from liability in acting on any paper,
document or signature, believed by him to be genuine and to have been signed by
the proper party. The trustee shall not be liable for any error of judgement
nor for any act done or omitted nor for any mistake of fact or law, nor for
anything which you may do or refrain from doing in good faith, nor generally
shall the trustee have any accountability thereunder, except, that the trustee
shall be liable for his own willful default or gross negligence. The trustee
may advise with legal counsel, and any action under this agreement taken or
offered in good faith by him in accordance with the opinion of counsel, shall
be conclusive oil the parties to disagreement and the trustee shall be fully
protected and subject to no liability in respect thereto.
7. Each VOTING TRUST CERTIFICATE holder shall be entitled to receive
from time to time, payments, equal to the amount of cash income collected or
received by the trustee on the assets in regard to which VOTING TRUST
CERTIFICATES were issued, less the deductions provided for in this agreement.
These payments shall be made, as soon as practical, after the receipt of
income, to the VOTING TRUST CERTIFICATE
<PAGE> 8
holders. Instead of receiving cash income, the trustees may instruct the income
pay or, in writing, to pay the income directly to the VOTING TRUST CERTIFICATE
holders. The trustee may at any time, revoke the instructions and direct that
payments to be made to the trustee.
Should the holders of a 2/3 of the VOTING TRUST CERTIFICATES vote to
create a legal entity to hold the asset, or to assign the asset to an existing
entity, in exchange for voting stock in such an entity, all provisions of this
agreement will remain in full effect. Should this happen, the definition of the
'asset' will be amended to reflect the 'description of share received'.
The Trustee may distribute, if practicable, allocated or divided
interests or portions of the assets held by the trustee to a holder of VOTING
TRUST CERTIFICATES, upon the following:
1. Written application and notice by such holder that he
wishes to sell or assign any or all of his beneficial interest in trust assets;
and
2. Surrender to the trustee of relevant VOTING TRUST
CERTIFICATES.
The transfer of voting rights to the trustee is not to be construed in
any manner as a restriction on the right of the VOTING TRUST CERTIFICATE
holders to sell or assign their interest. The assignment of voting rights is,
however, irrevocable as long as there has been no sale or assignment.
The holders of VOTING TRUST CERTIFICATES, or any other person, may at
any time, and from time to time, add cash,
<PAGE> 9
securities, or other property to the corpus of the trust estate herein created
with the consent of the Trustee. Any additions to the trust shall be held,
administered and distributed as an integral part of the corpus thereof in
accordance with all of the terms and provisions of this agreement.
8. It shall be the duty of the registrar to maintain a record of
assets which are transferred to the trustee, indicating the name in which the
asset was held, and any other information deemed important. The registrar shall
also maintain a record of the date on which any asset was received by him, and
shall also obtain a receipt for any asset so delivered. The registrar shall
maintain a record showing the names and addresses of the VOTING TRUST
CERTIFICATE holders. The record shall show the number of certificates held by
each person, the record shall also show the date on which the VOTING TRUST
CERTIFICATES were issued, cancelled, transferred or replaced.
The record shall be known as the Certificate Record Book and shall be
open to inspection by any of the parties to this agreement or their successors
at any reasonable time. The first VOTING TRUST CERTIFICATE holder to appear in
the Certificate Record Book shall be the parties to this agreement to whom the
VOTING TRUST CERTIFICATES are issued. The records shall show any subsequent
transfer, assignment, pledge, attachment, execution, and any other matter
affecting the title to the VOTING TRUST CERTIFICATE which comes to the
attention of the registrar or trustee. Any document purporting to affect the
title of the VOTING TRUST CERTIFICATE shall also
<PAGE> 10
be kept in the Certificate Record Book together with a sample copy of the
VOTING TRUST CERTIFICATE. The Certificate Record Book may be closed from time
to time by the registrar for a period not to exceed fifteen (15) days. Notice
of the closing shall be given to all parties to this agreement at least thirty
(30) days prior to closing. The closing of the Certificate Record Book shall
not affect the right to inspection.
The Registrar shall maintain a book of accounts which shall be in the
form prescribed from time to time by the trustee. Information concerning these
accounts shall be posted at least quarterly.
9. The trust created by this agreement is expressly declared to be
irrevocable except as otherwise provided in this agreement.
This agreement shall terminate in any event twenty-five (25) years
after its effective date without any action by the trustee or any other party.
Within sixty (60) days after the termination of this agreement the
trustee shall deliver to the VOTING TRUST CERTIFICATE holders, or assigns, and
assignment of the 'asset' representing the ownership represented by the VOTING
TRUST CERTIFICATES issued and the VOTING TRUST CERTIFICATE holders shall
surrender the VOTING TRUST CERTIFICATES properly endorsed together with a sum
sufficient to cover any governmental charges for the transfer or delivery of
the documents.
Within one-hundred and twenty (120) days after the
<PAGE> 11
termination of this trust, the trustee shall render a final accounting to the
VOTING TRUST CERTIFICATE holders and to the company and shall distribute any
funds or any other assets held by him to the parties entitled thereto.
10. This agreement is made, executed and entered into at Dallas,
Texas, and it is mutually agreed that performance of all parties of this
contract shall be made at Dallas, Dallas County, Texas.
This agreement is intended by the parties to be governed and construed
in accordance with the laws of the State of Texas.
This agreement shall not be severable or divisible in any way, but is
specifically agreed that, if any provision should be invalid, then that
invalidity shall not affect the validity of the remainder of this agreement.
Any notice to be given to the trustee under this agreement shall be
sufficiently given if mailed to the trustee at 6124 Sherry Lane, LB 199,
Dallas, Texas, by delivery, by certified mail, return receipt requested, or any
other such address as the trustee may from time to time designate by written
notice given to the VOTING TRUST CERTIFICATE holders.
Any notice to be given to a VOTING TRUST CERTIFICATE holder shall be
sufficiently given if mailed, postage prepaid, to him at his address on the
VOTING TRUST CERTIFICATE book, certified mail, return receipt requested.
WHEREOF, WITNESS OUR HANDS, at Roanoke, Texas, this the 1st day of July, 1986.
<PAGE> 12
Signature
----------------------------------
Bryan L. Walker, for the
benefit of Laura N. Walker, as
her separate property
Signature
----------------------------------
Richard C. Smith
Signature
- -----------------------------
Bryan L. Walker, Trustee
Signature
- -----------------------------
Bryan L. Walker, Registrar
SWORN TO AND SUBSCRIBED, BEFORE ME, on this 1st day of July, 1986.
Signature
----------------------------------
Notary Public, State of Texas
Exhibit "A"
Map - not able to scan
<PAGE> 1
EXHIBIT 10.2
GENERAL WARRANTY ASSIGNMENT OF INTEREST IN
OIL & GAS LEASE
DATE: DECEMBER 31, 1997
GRANTOR: SHELTON VOTING TRUST, A TEXAS BUSINESS TRUST
C/O ACCOUNTANT'S OFFICE
1026 WEST MAIN STREET, SUITE 208
LEWISVILLE, TEXAS 75067
GRANTEE: YANKEE DEVELOPMENT CORPORATION
P. O. BOX 612752
DALLAS, TEXAS 75261-7152
CONSIDERATION:
For Ten & No/100 Dollars ($10.00) and other good and valuable
consideration.
SPECIFIC DECLARATIONS:
This Assignment is given specifically subject to assignments of interest
in and to the producing wells on said base oil & gas leases and Unit Agreement,
and is not intended to be interpreted (in any manner) as an assignment of any
interest in a producing oil & gas well, rather only the acreage held by base
leases and Unit Agreement in Volume 405, Page 609, Deed Records of Tom Green
County, Texas. Property Description:
Oil & Gas leases covering tract and parcel of land more fully described on
the attached Exhibit "A"
CONVEYANCE AND WARRANTY:
Grantor, for the consideration and subject to the reservations from and
exceptions to conveyance and warranty, grants, sells, and conveys to Grantee the
property, together with all and singular the rights and appurtenances thereto in
any wise belonging , to have and hold it to Grantee, Grantee's heirs, executors,
administrators, successors, or assigns forever. Grantor binds Grantor and
Grantor's heirs, executors, administrators, and successors to warrant and
forever defend all and singular the property to Grantee and Grantee's heirs,
executors, administrators, successors, and assigns against every person
whomsoever lawfully claiming or to claim the same or any part thereof.
SHELTON VOTING TRUST
Witness : /s/ BRYAN WALKER
---------------------
By: /s/ RICHARD C. SMITH
---------------------
Administrator
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on the 2, day of
November, 1998, by Bryan Walker,
________________________________________ of Shelton Voting Trust, on behalf of
said Trust.
/s/ JODY A. MILLS
------------------------------
Notary Public, State of Texas
<PAGE> 2
"EXHIBIT A"
Oil and gas leasehold estate situated in Tom Green County, Texas and fully
described below:
Debtor grants to secure party a security interest in all of the personal
property, fixtures and equipment now or hereinafter situated or used in
connection with the operation of the above described oil and gas leases and
leasehold estate; also in all oil, gas and minerals produced from any interest
covered hereby; and in all proceeds thereof; and secured party shall have all
the remedies of a secured party under the Uniform Commercial Code as affecting
the State of Texas and all of such remedies are herein incorporated.
That certain real property lying and being situated in Tom Green County,
Texas, and being 2,524.38 acres of land, more or less, out of the F. Roden
Survey No. 1670, the Joseph Bays Survey No. 7752, the W. Palm Survey No.
2360, Survey No. 101-1/2, M. M. Boden Original Grantee, Northwest 1/4 of
Section 42, S. P. R. R. Co. Survey, District 11, being all the land
comprising the Yan-Kee (Canyon) Field Unit, which unit is described in a
Unit Agreement dated October 1, 1958, recorded in Volume 405, Page 609,
Deed Records of Tom Green County, Texas, executed by Hiawatha Oil & Gas
Company, et al, limited to the depths between the top of the Canyon Sand to
its base as found in the Hiawatha Oil & Gas Company Annie Willis Well #1 at
a depth of 3,853 below the Kelly Bushing, and in the Amerada Petroleum
Corporation Ed Kasberg Well #1 at a depth of 3,870 feet below the Kelly
Bushing, reference to said agreement being here made for all pertinent
purposes. The same being all right, title and interest undersigned has in
said oil property.
<PAGE> 1
EXHIBIT 10.3
ACQUISITION AGREEMENT AND CLOSING MEMORANDUM
This Aquisition Agreement and Closing Memorandum (this "Agreement") is entered
into as of April __, 1998, by and between Basic Technologies, Inc., a Colorado
corporation ("Basic") and Yankee Development Corp., a Texas corporation
("Yankee").
On this date, Basic and Yankee have consummated a business combination on the
following terms:
1. The transactions set forth below have been duly authorized by the respective
boards of directors of Basic and Yankee.
2. Yankee and the undersigned agent of Yankee jointly and severally represent
and warrant that all documents and information furnished to Basic in connection
with the transactions set forth below are true and accurate.
3. Basic and the undersigned agent of Basic jointly and severally represent and
warrant that all documents and information furnished to Yankee in connection
with the transactions set forth below are true and accurate.
4. Yankee has delivered to Basic stock certificates representing 100% of the
issued and outstanding shares of Yankee (the "Yankee Stock"), each certificate
bearing an endorsement in blank and duly signed by the shareholder named on the
face of the certificate.
In exchange for the Yankee Stock, Basic has issued 5, , shares (the "Basic
Shares") of its authorized but previously unissued common stock to the
shareholders of Yankee named on Exhibit A to this Agreement (the "Yankee
Shareholders"), and the In the respective numbers of shares set forth on
Exhibit A. The Basic Shares will, immediately following issuance, represent
approximately 90% of the issued and outstanding capital stock of Basic.
6. On behalf of Basic, John Bradley undertakes to cause individual stock
certificates, representing the Basic Shares, to be issued, executed, and
delivered to the Yankee Shareholders as soon as shall be practicable.
In witness whereof, the undersigned have caused this Agreement to be executed
as of the first date above written.
/s/ JOHN BRADLEY
---------------------
John Bradley
duly authorized agent of
Basic Technologies, Inc.
/s/ BRYAN WALKER
---------------------
Bryan Walker
duly authorized agent of
Yankee Development Corp.
<PAGE> 1
EXHIBIT 10.4
SHORT FORM OF LEASE
LEASE AGREEMENT, made between ESTATE OF RICK SIMPSON** (landlord) and
P & A REMEDIATION, LLC. (tenant).
**ACTING BY AND THROUGH ERIC F. SIMPSON, WHO REPRESENTS FULL POSER OF
ATTORNEY AND AUTHORITY TO LESSEE HEREIN.
For good consideration it is agreed between the parties as follows:
1. Landlord hereby leases and rents to Tenant the premises described as
follows: (describe leased premises)
EXCLUSIVE USE OF YARD AND OFFICE LOCATION (AND EXCLUSIVE USE
OF ALL ACREAGE FOR USE, STORAGE, ETC.) FORMERLY USED BY
SIMPCO, INC.; ROOLSWAY; SIMPCO MATERIALS; HANDLING; R.W. SIMPSON;
LOCATED 1-2 MILES NORTH OF BALLINGER, TEXAS ON US HWY 83, ALSO
KNOWN AS 11816 US HWY NORTH.
2. This Lease shall be in effect for a term of ONE years, commencing on
NOVEMBER 1, 1998 and terminating on OCTOBER 31, 1999.
3. Tenant shall pay Landlord the annual rent of $5400.00 during said term, in
monthly payments of $450.00, each, payable monthly in advance, TO ORDER OF
STEVE SIMPSON OR DIRECTOR PARTY.
4. Tenant shall, at its own expense, provide the following utilities: ALL
NORMAL USES. Landlord shall, at its own expense, provide the following
utilities: NONE
5. LANDLORD AND Tenant further agrees that:
a) Upon the expiration of the lease it will return possession of the
leased premises in its present condition, reasonable wear and tear,
and fire casualty excepted. Tenant shall commit no waste too the
leased premises. *TENANT SHALL HAVE UNLIMITED AUTHORITY TO SUB-LET TO
ANY PARTY DEEMED SUITABLE BY TENANT.
<PAGE> 2
b) Tenant may make any material or structural alterations to the leased
premises without the Landlord's consent. It shall comply with all
building, zoning and health codes and other applicable laws for said
leased premises.
c) Tenant shall not conduct a business deemed extra hazardous, a
nuisance or requiring an increase in fire insurance premiums. Tenant
warrants the leased premises shall be used only for the following
type business: (describe) OIL WELL PLUGGING FIELD OFFICE, OR ANY AND
ALL USES DEEMED PRUDENT BY TENANT.
d) In the event of any breach of the payment of rent or any other
allowed charge, or other breach of this lease, Landlord shall have
full rights to terminate this Lease in accordance with state law and
re-enter and claim possession of the leased premises, in addition to
such other remedies available to Landlord arising from said breach.
6. This Lease shall be binding upon and inure to the benefit of the parties,
their successors, assigns and personal representatives.
4. Additional lease terms:
Signed AS IF, ALTHOUGH NOT ON, under seal this 1st day of NOVEMBER, 1998.
RICHARD SIMPSON, DEED HOLDER
/s/ RICK SIMPSON
----------------------------------
Landlord Rick Simpson by Eric Simpson
P & A REMEDIATION, LLC.
/s/ BRYAN WALKER
----------------------------------
Tenant Bryan Walker
<PAGE> 1
EXHIBIT 10.5
BILL OF SALE
FOR GOOD CONSIDERATION, and in payment of the sum of $16,000.00, the
undersigned (Seller), hereby sells and transfers to REGAL OPERATING CORP, or
assigns, (Buyer), the following chattels and personal property: (describe
property)
See attached exhibit
The Seller warrants it has good title to said property, full authority
to sell and transfer same, and that said property is sold free of all liens,
claims and encumbrances. Seller warrants it will defend and indemnify Buyer
from any adverse claims.
Signed under seal this 22 day of Nov. 1998.
/s/ WES ROBERTS
-------------------------
Wes Roberts
<PAGE> 1
EXHIBIT 10.6
PROMISSORY NOTE
(Installment Note - Short Form)
FOR VALUE RECEIVED, the undersigned jointly and several promise to pay
to the order of WES ROBERTS, the sum of NINE THOUSAND (9,000.00) DOLLARS, USD,
together with interest thereon at the rate of 12% per annum on any unpaid
balance.
Said sum, inclusive of interest, shall be paid in 24 (monthly/weekly)
installments of $390.00 each, with a first payment due 3/15/99, and a like
amount on the same day of each (month/week) thereafter until the full amount if
this note and accrued interest shall be fully paid. All payments shall be first
applied to accrued interest and the balance to principal. The undersigned
reserves the right to prepay this note in whole or in part without penalty.
This note shall be fully payable upon demand of any holder in the event
the undersigned shall default in making any payments due under this note within
10 days of its due date.
In the event of any default, the undersigned agree to pay all
reasonable attorney fees and costs of collection to the extent permitted by law.
This note shall take effect as a sealed instrument and be in force in accordance
with the laws of the payee's state.
Dated: 11/20/98
Regal Operating Corp.
by /s/ D. WALKER
-------------------
D. WALKER, AGT
*See Exhibit "A" for schedule of payments
*See Exhibit "B" for Amortization schedule
*See Exhibit "C" for titles of vehicles (backhoe, dump-truck, trailer)
<PAGE> 2
PAYMENT SCHEDULE
WES ROBERTS SALE OF BACKHOE / TRAILER & DUMP-TRUCK TO
REGAL OPERATING CORPORATION
Date : November 22,1998
Sales Price : $16,000.00 USD
Down Payment
Due at Execution : $3,000.00
Due 1/15/99 : $2,000.00
Due 2/15/99 : $2,000.00
Installment payments
On 9,000.00 balance
To start 3/15/99
<PAGE> 3
MILES W. ROBERTS
BOX 30
ARCHER CITY, TX 76351
DETACH HERE
<TABLE>
- ------------------------------------------------------------------------------------------------------
TEXAS CERTIFICATE OF TITLE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VEHICLE IDENTIFICATION NUMBER YEAR MODEL MAKE OF VEHICLE BODY STYLE
TR169551 1990 SHOPMADE UTIL
TITLE NUMBER DATE TITLE ISSUED
29681480 01/14/91
MFG. CAPACITY
MODEL IN TONS WEIGHT LICENSE NUMBER DEPARTMENTAL USE ONLY
4700 W93693 V250285
PREVIOUS OWNER ODOMETER READING
UNKNOWN EXEMPT
OWNER REMARK(S)
MILES W. ROBERTS
BOX 30
ARCHER CITY, TX 76351
X
-----------------------------------------------------
SIGNATURE OF OWNER OR AGENT MUST BE IN INK
===========================================================
UNLESS OTHERWISE AUTHORIZED BY LAW, IT IS A VIOLATION OF
STATE LAW TO SIGN THE NAME OF ANOTHER PERSON ON A
CERTIFICATE OF TITLE OR OTHERWISE GIVE FALSE INFORMATION
ON A CERTIFICATE OF TITLE.
===========================================================
</TABLE>
<PAGE> 4
TEXAS CERTIFICATE OF TITLE
ORIGINAL
VEHICLE IDENTIFICATION NUMBER YEAR MODEL MAKE OF VEHICLE BODY STYLE
R6855T65359 1977 MACK TRK TR
TITLE NUMBER DATE TITLE ISSUED
37715326 02/04/93
MFG. CAPACITY
MODEL IN TONS WEIGHT LICENSE NUMBER DEPARTMENTAL USE ONLY
5 18500 2DW232 M979068
PREVIOUS OWNER ODOMETER READING
RUX BROS CONSTRUCTION ARCHER CITY TX EXEMPT
OWNER REMARK(S)
MILES W ROBERTS DIESEL
BOX 30
ARCHER CITY, TEX 76351
X
-----------------------------------------------------
SIGNATURE OF OWNER OR AGENT MUST BE IN INK
- -----------------------------------------------------------------------------
UNLESS OTHERWISE AUTHORIZED BY LAW, IT IS A VIOLATION OF STATE LAW TO SIGN
THE NAME OF ANOTHER PERSON ON A CERTIFICATE OF TITLE OR OTHERWISE GIVE FALSE
INFORMATION ON A CERTIFICATE OF TITLE.
- -----------------------------------------------------------------------------
DATE OF LIEN 1ST LIENHOLDER
11/06/92 FIRST STATE BANK 1ST LIEN RELEASED 11-7-97
PO BOX A -------------
ARCHER CITY, TEX 76351 DATE
BY /s/ MARILYN HAMPERT
----------------------------
AUTHORIZED AGENT
DATE OF LIEN 2ND LIENHOLDER 2ND LIEN RELEASED
-------------
DATE
BY
----------------------------
AUTHORIZED AGENT
DATE OF LIEN 3RD LIENHOLDER 3RD LIEN RELEASED
-------------
DATE
BY
----------------------------
AUTHORIZED AGENT
IT IS HEREBY CERTIFIED THAT ACCORDING TO THE RECORDS OF THE TEXAS DEPARTMENT OF
TRANSPORTATION, THE PERSON HEREIN NAMED IS THE OWNER OF THE VEHICLE DESCRIBED
ABOVE WHICH IS SUBJECT TO THE ABOVE LIEN(S), AS SHOWN.
DO NOT ACCEPT TITLE SHOWING ERASURE, ALTERATION, OR MUTILATION.
TEXAS DEPARTMENT OF TRANSPORTATION
DIVISION OF MOTOR VEHICLE TITLES AND REGISTRATION
FORM 30-C REV.8-92 10477248
<PAGE> 1
EXHIBIT 10.7
BILL OF SALE
FOR GOOD CONSIDERATION of Ten ($10.00) and other good an valuable
considerations, the receipt and sufficiency of which is hereby acknowledged,
and the agreement to assume legal liability for and make all payments and
fulfill all obligations under a promissory note in the amount of $9,000.00 USD,
bearing interest at 12%, and being payable in twenty four (24) monthly
installments of $390.00 with the first installment being due on 3/15/99,
payable to the order of WES ROBERTS, P. O. BOX 30, ARCHER CITY, TEXAS 76351,
the undersigned (Seller), hereby sells and transfers to Simpco, Inc., or
assigns, (Buyer), the following motor vehicles and personal property:
One (1) 1977 Mack Truck, VIN R685ST65359, Texas Title No. 37715326;
and One (1) 1990 shopmade utility trailer, VIN TR169S51, Texas Title No.
29681480; and One (1) John Deer 410 backhoe.
The Seller warrants it has good title to said property, full authority
to sell and transfer same, and that said property is, save & except this
assumed obligation, sold free of all liens, claims and encumbrances. Seller
warrants it will defend and indemnify Buyer from any adverse claims.
Signed under seal this 15th day of March, 1999.
REGAL OPERATING CORPORATION SIMPCO, INC.
By: By:
------------------------- ------------------------
C. Y. Smith Richard C. Smith
<PAGE> 1
EXHIBIT 10.8
SHORT FORM OF LEASE
LEASE AGREEMENT, made between ESTATE OF IVALENE KUYKENDALL (landlord)
and P & A REMEDIATION, LLC. (tenant). For good consideration it is agreed
between the parties as follows:
1. Landlord hereby leases and rents to Tenant the premises described as
follows: (describe leased premises)
1700 FT. HOUSE AND LOTS LOCATED AT 505 KNOX STREET
OLNEY, TX. (SEE EXHIBIT "A" AS MAP)
2. This Lease shall be in effect for a term of ONE years, commencing on
DECEMBER 1, 1998 and terminating on NOVEMBER 30, 1999.
3. Tenant shall pay Landlord the annual rent of $6600.00 during said
term, in monthly payments of $550.00, each, payable monthly in advance.
4. Tenant shall, at its own expense, provide the following utilities: ALL
UTILITIES Landlord shall at its own expense, provide the following utilities:
NONE
5. Tenant further agrees that:
a) Upon the expiration of the lease it will return possession of the
leased premises in its present condition, reasonable wear and tear,
and fire casualty excepted. Tenant shall commit no waste too the
leased premises.
b) It shall not assign or sub-let or allow any other person to
occupy the leased premises without Landlord's prior written consent
/ EXCEPT FOR INTERNAL CORPORATE OR TAX PURPOSES.
c) It shall not make any material or structural alterations TO THE
HOUSE to the leased premises without the Landlord's prior written
consent. BUT HAVE FULL AUTHORITY ON LOTS/PASTURE.
d) It shall comply with all building, zoning and health codes and
other applicable laws for said leased premises.
<PAGE> 2
e) It shall not conduct a business deemed extra hazardous, a
nuisance or requiring an increase in fire insurance premiums.
Tenant warrants the leased premises shall be used only for the
following type business: (describe) HOUSE FOR RESIDENCE, LOTS &
ACREAGE FOR BUSINESS OF OILFIELD SAWAGE / PIPE YARD. LESSEE MAY
MAKE STRUCTURAL IMPROVEMENTS INCLUDING BUILDINGS IF DESIRED.
f) In the event of any breach of the payment of rent or any other
allowed charge, or other breach of this lease, Landlord shall have
full rights to terminate this Lease in accordance with state law
and re-enter and claim possession of the leased premises, in
addition to such other remedies available to Landlord arising from
said breach.
6. This Lease shall be binding upon and inure to the benefit of the
parties, their successors, assigns and personal representatives.
7. Additional lease terms: LESSEE SHALL HAVE OPTION TO RENEW FOR ONE YEAR
& PURCHASE. SEE LETTER AS EXHIBIT "B".
Signed AS IF, ALTHOUGH NOT ON, under seal this 1st day of December,
1998.
ESTATE OF IVALENE KUYKENDALL
----------------------------------
Landlord
/s/ PAUL L. KUYKENDALL
----------------------------------
Paul L. Kuykendall, Co-Executor
P & A REMEDIATION, LLC.
----------------------------------
Tenant
/s/ B WALKER
----------------------------------
B Walker, Auth. Off.
<PAGE> 1
EXHIBIT 10.9
BILL OF SALE
FOR GOOD CONSIDERATION of Ten ($10.00) and other good an valuable
considerations, the receipt and sufficiency of which is hereby acknowledged,
and the agreement to assume legal liability for and make all payments and
fulfill all obligations under a promissory note in the amount of $10,500.00
USD, bearing interest at 7.85%, and being payable in thirty six (36) monthly
installments of $328.82 with the first installment being due on 2/15/99,
payable to the order of UNITED COMMUNITY BANK, N. A., HIGHLAND VILLAGE, TEXAS,
the undersigned (Seller), hereby sells and transfers to P & A Remediation,
LLC., or assigns, (Buyer), the following motor vehicle and personal property:
One (1) 1995 Jeep Cherokee 4 door vehicle, VIN 1J4FT28SXSL642806,
Texas Title No. 00022200047792407
The Seller warrants it has good title to said property, full authority
to sell and transfer same, and that said property is sold free of all liens,
claims and encumbrances. Seller warrants it will defend and indemnify Buyer
from any adverse claims.
Signed under seal this 8th day of January, 1999.
P & A REMEDIATION, LLC
/s/ LAURA WALKER By: /s/ RICHARD C. SMITH
- -------------------------- ---------------------------
Laura Walker Richard C. Smith
<PAGE> 1
EXHIBIT 10.10
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
UNITED COMMUNITY BANK, N.A. LAURA N. WALKER Loan Number 260
2100 FM 407 8505 FREEPORT PKWY #141 ------------
HIGHLAND VILLAGE, TX 75077 IRVING, TX 75063-0000 Date 1/08/99
LENDER'S NAME AND ADDRESS BORROWER'S NAME AND ADDRESS -------------------
"You" means the Lender, its successors and assigns "I" includes each Borrower above, Maturity date 1/15/02
jointly and severally ----------
Loan Amount $10,500.00
------------
Renewal Of .
------------------------
TLS/TLS
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
TERMS FOLLOWING A [ ] APPLY ONLY IF CHECKED
NOTE - For value received, I promise to pay you, or your order, at your address
above, the principal sum of:* * * * * * * * * * * * * * * * * * * * * * * * * *
TEN THOUSAND FIVE HUNDRED AND NO/100 Dollars $10,500 plus interest from 1/08/99
at the rate of 7.850% per year until 1/15/02.
ADMINISTRATIVE FEE - I also agree to pay a nonrefundable fee of $________,
that will be [ ] paid in cash. [ ] paid pro rate over the loan term.
PAYMENTS - I will pay this note as follows:
(a) [ ] In 36 payments. The first payment will be in the amount of
$328.82 and will be due 2/15/99.
A payment of $328.82 will be due on the 15th day of each
Month thereafter.
The final payment of the entire unpaid balance of principal
and interest will be due 1/15/99.
(b) [ ] (other)
-----------------------------------------------------
------------------------------------------------------------.
INTEREST - Interest accrues on an ACTUAL/365 basis.
POST-MATURITY INTEREST-Interest will accrue at the rate of 18.000% per year on
the principal balance of this note not paid on the date of the last scheduled
payment of principal. Interest will accrue at a rate of 18.000% per year on the
balance of this note from the date we accelerate the maturity of this note and
demand immediate payment in full.
THE PURPOSE OF THIS LOAN IS - PERSONAL.
SECURITY - You have certain rights that may affect my property as explained on
page 2. This loan [ ] is [ ] is not further secured.
(a) [ ] This loan is secured by CD#11099, dated ____________________.
(b) [ ] Security Agreement - I give you a security interest in the
Property described below. The rights I am giving you in this
Property and the obligations this agreement secures are
defined on page 2 of this agreement.
CD #11099 IN THE AMOUNT OF $10,500.00 @ 4.85% DUE 1/8/2002
This property will be used for PERSONAL purposes.
<TABLE>
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
ANNUAL PERCENTAGE RATE FINANCE CHARGE AMOUNT FINANCED TOTAL OF PAYMENTS
The cost of my credit The dollar amount the The amount of credit The amount I will have paid when
As a yearly rate credit will cost me provided to me or on my behalf. I have made all scheduled payments.
7.850% $1,337.52 $10,500.00 $11,837.52
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
I have the right to receive at this
time an itemization of the
Amount Financed.
X YES - I want an itemization.
- ---
NO - I do not want an itemization.
- ---
"e" means an estimate
$ Filing Fees
-----
$ Nonfiling Insurance
-----
My Payment Schedule will be:
- --------------------------------------------------------------------------------
Number of Payments Amount of Payments When Payments Are Due
- --------------------------------------------------------------------------------
36 $328.82 Monthly beginning 2/15/99
- --------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------
$
- --------------------------------------------------------------------------------
Security - I am giving a security interest in:
[ ] (brief description of property) CD #11099
[ ] the goods or property being purchased.
[ ] collateral securing other loans with you may also secure this loan.
[ ] deposit accounts end other rights to the payment of money from you.
[ ] REQUIRED DEPOSIT - The annual percentage rate does not take into account
my required deposit.
Prepayment - if I pay off this note early, I will not have to pay a penalty.
[ ] If I pay off this note early, I will not be entitled to a refund of part
of the Administrative Fee.
I can see my contract documents for any additional information about nonpayment,
default, any required repayment before the scheduled date, and prepayment
refunds and penalties.
- --------------------------------------------------------------------------------
CREDIT INSURANCE - Credit life insurance and credit disability insurance are not
required to obtain credit, and will not be provided unless I sign and agree to
pay the additional costs.
- --------------------------------------------------------------------------------
Type Premium Term
- --------------------------------------------------------------------------------
Credit Life
- --------------------------------------------------------------------------------
Credit Disability
- --------------------------------------------------------------------------------
Joint Credit Life
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ ] do [ ] do not want credit life insurance.
[ ] do [ ] do not want credit disability insurance.
[ ] do [ ] do not want joint credit life insurance.
[ ] do [ ] do not want _______________________________________ insurance.
x DOB .
- --------------------------------------------------------------------------------
x DOB .
- --------------------------------------------------------------------------------
PROPERTY INSURANCE - [ ] is REQUIRED. [ ] is NOT REQUIRED. I have the option of
furnishing any insurance you require in connection with this transaction either
through existing policies I own or control, or, by procuring and furnishing
insurance coverages equivalent to what you require from any insurance company
authorized to do business in Texas. If I get the insurance from or through you I
will pay $_______________ for _________________________ of coverage.
[ ] The premium quoted above for ______________________________________________
insurance is not fixed or approved by the State Board of Insurance.
ITEMIZATION OF AMOUNT FINANCED
AMOUNT GIVEN TO ME DIRECTLY $10,500.00
---------
AMOUNT PAID ON MY (LOAN) ACCOUNT $
---------
___________________________________. $
---------
AMOUNTS PAID TO OTHERS ON MY BEHALF:
To Insurance Companies $
---------
To Public Officials $
---------
___________________________________. $
---------
___________________________________. $
---------
___________________________________. $
(less) PREPAID FINANCE CHARGES(S) $
---------
Amount Financed $
---------
(Add all items financed and subtract
prepaid finance charges.)
- --------------------------------------------------------------------------------
SIGNATURES - I HAVE AGREED TO THE TERMS SET OUT ON PAGE 1 AND PAGE 2 OF THIS
AGREEMENT. I HAVE RECEIVED A COPY OF THIS DOCUMENT ON TODAY'S DATE.
COSIGNERS - SEE NOTICE ON PAGE 2 BEFORE SIGNING.
Signature /s/ LAURA N. WALKER
----------------------------------------------------------------------
LAURA N. WALKER ###-##-####
Signature
----------------------------------------------------------------------
/s/ TERRY LYNN SEWELL
- --------------------------------------------------------------------------------
TERRY LYNN SEWELL (Optional)
Signed For Lender
--------------------------------------------------------------
Title
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<PAGE> 2
ADDITIONAL TERMS OF THE ...
DEFINITIONS - "I," "me" or "my" means each borrower who signs this note and each
other person or legal entity (including guarantors, endorsers, and surities) who
agree to pay this note (together referred to as "us"). "You" or "your" means the
Lender and its successors and assigns.
APPLICABLE LAW - This note and any agreement securing this note will be governed
by the laws of the State of Texas. The federal Truth-in-Lending disclosures on
page 1 are, other than the Amount Financed, disclosures only and are not
intended to be terms of this agreement. If property securing the payment of this
note is located in another state, the security agreement may, in some
circumstances, be governed by the law of the state.
To the extent permitted by law, the terms of this note and security
agreement may vary applicable law. If any provision of applicable law may not be
varied by agreement, any term of this note and security agreement that does not
comply with that law will not be affective. If any part of this note or security
agreement cannot be enforced, this fact will not affect the rest of the terms of
the note or security agreement.
In particular, this section means (among other things) that I do not agree
or intent to pay, and you do not agree or intend to charge or collect, any
amount in the nature of interest or fee for this loan, which would in any way or
event (including demand, prepayment, or acceleration) cause you to charge or
collect more for this loan than the maximum you would be permitted by state or
federal law (as applicable). Any such excess interest or unauthorized fee shall,
instead of anything stated to the contrary, be applied first to reduce the
principal balance, and when the principal has been paid in full, refunded to me.
Any charge to this note or any agreement securing this note must be in
writing and signed by you and me.
PAYMENTS - Each payment I make on this loan will be applied first to any charges
I owe other than principal and interest, then to Interest that is due, and
finally to principal that is due. No late charge will be assessed on any payment
when only delinquency is due to late fees assessed on earlier payments and the
payment is otherwise a full payment. The actual amount of my final payment will
depend on my payment record.
PREPAYMENT - I may prepay this loan in whole or in part at any time without
penalty. If I prepay in part, I must still make each later payment in the
original amount as it becomes due until this note is paid in full.
ACCRUAL METHOD - The amount of interest that I will pay on this loan will be
calculated using the interest rate and accrual method stated on page 1. For
interest calculation, the accrual method will determine the number of days in a
year. If no accrual method is stated, then you may used any reasonable accrual
method for calculating interest.
DEFAULT - I further agree that the following are additional terms and conditions
of this loan agreement and that if one or more of the following occur I will be
in default.
(a) I fail to make a payment in full when due;
(b) I die, terminate or dissolve my business, or am involved in any insolvency
proceedings brought by or against me;
(c) I fail to keep collateral securing this note insured, if required;
(d) Any Property securing this note is substantially damaged, destroyed, or
stolen;
(e) I use any Property in violation of any rule, regulation or government
order;
(f) Any Property securing this note is confiscated by any government
authorities;
(g) A judgment or tax lien is filed against me or an attachment or garnishment
is issued against any of my property or rights, specifically including the
commencement of any action, suit or proceeding to seize any of my funds on
deposit with you;
(h) I make any written statement or provide any financial information that is
untrue or inaccurate at the time it is given;
(i) I permit any other lien holder to gain priority over the lien or security
interest which you have in the Property, if any, securing this note;
(j) Acceleration of the maturity of any other debt I have with any of my other
creditors;
(k) A judgment against me becomes final; or,
(l) I fail to keep any promise I have made in connection with this note.
If any of us are in default on this note or any security agreement, you may
exercise your remedies against any or all of us.
REMEDIES - If I am in default on this loan or any agreement securing this loan,
you may:
(a) Make unpaid principal, earned interest and all other agreed charges I owe
you under this loan immediately due;
(b) Use the right of set-off as explained below;
(c) Demand more security or new parties obligated to pay this loan (or both) in
return for not using any other remedy;
(d) Made a claim for any and all insurance benefits or refunds that may be
available on my default; and
(e) Use any remedy you have under state or federal law.
By choosing any one or more of these remedies you do not give up your right
to use any other remedy later. By deciding not to use any remedy should I be in
default, you do not give up your right to consider the event a default if it
happens again.
COSTS OF COLLECTION AND ATTORNEYS' FEES - I agree to pay you reasonable amounts
you actually incur in collecting this debt for attorneys' fees (if assessed by a
court) and court costs.
SET-OFF - I agree that you may set off any amount due and payable under this
note against any right I have to receive money from you.
"Right to receive money from you" means:
(a) Any deposit account balance I have with you;
(b) Any money owed to me on an item presented to you or in your possession for
collection or exchange; and
(c) Any repurchase agreement or other nondeposit obligation.
"Any amount due and payable under this note" means the total amount of
which you are entitled to demand payment under the terms of this note at the
time you set off. This total includes any balance the due date for which you
properly accelerate under this note.
If my right to receive money from you is also owned by someone who as not
agreed to pay this note, your right of set off will apply to my interest in the
obligation and to any other amounts I could withdraw on my sole request or
endorsement. Your right of set off does not apply to any account or other
obligation where my rights arise only in a representative capacity. It also does
not apply to any individual Retirement Account or other tax-deferred retirement
account.
You will not be liable for the dishonor of any check when the dishonor
occurs because you set off this debt against any of my accounts. I agree to hold
you harmless from any such claims arising as a result of your exercise of your
right of set-off.
OTHER SECURITY - Any present or future agreement securing any other debt I owe
you also will secure the payment of this loan. Property securing another debt
will not secure this loan if such property is my principal dwelling and you fail
to provide any required notice of right of rescission. Property securing another
debt will not secure this loan to the extent such property is in household
goods. Also, if the property securing another debt is real estate, it will not
secure this loan.
OBLIGATIONS INDEPENDENT - I understand that my obligation to pay this loan is
independent of the obligation of any other person who has also agreed to pay it.
You may, without notice, release me or any of us, give up any right you may have
against any of us, extend new credit to any of us, or renew or change this note
one or more times and for any term, and I will still be obligated to pay this
loan. You may, without notice, fail to perfect your security interest in,
impair, or release any security and I will still be obligated to pay this loan.
WAIVER - I waive (to the extent permitted by law) demand, presentment, protest,
notice of dishonor, notice of protest, notice of intent to accelerate and notice
of acceleration.
PRIVACY - I agree that from time to time you may receive credit information
about me from others, including other lenders and credit reporting agencies. I
agree that you may furnish on a regular basis credit and experience regarding
my loan to others seeking such information. To the extent permitted by law, I
agree that you will not be liable for any claim arising from the use of
information provided to you by others or for providing such information to
others.
FINANCIAL STATEMENTS - I will give you any financial statements or information
that you feel is necessary. All financial statements and information I give you
will be correct and complete.
PURCHASE MONEY LOAN - If this is a purchase money loan, you may include the name
of the seller on the check or draft for this loan.
RETURNED CHECKS - If this loan is made under Chapter 3A of the Texas Credit
code, I agree to pay a $25.00 charge for each check which (1) I give in payment
on this note and (2) is dishonored and returned to you. Any charges I incur
under this provision may be added to the unpaid balance of the note, but no
interest may restricted any noncontractual right you may have to impose this
charge on loans not subject to this law.
DEFERRED PAYMENTS - You and I may agree to defer one or more payments required
by the terms of this note. If we do so, you may collect additional interest for
the deferment period as provided by law.
<PAGE> 3
ADDITIONAL TERMS OF THE SECURITY AGREEMENT
SECURED OBLIGATIONS - this security agreement secures this loan (including all
extensions, renewals, refinancings, and modifications) and any other debt I have
with you now or later. Property described in this security agreement will not
secure other such debts if you fail to give any required notice of the right of
rescission with respect to the Property. Also, the security agreement will not
secure other debts if this security interest is in household goods and the other
debt is a consumer loan. This security agreement will not terminate when I am no
longer indebted to you under the terms of the note portion of this document, or
any other obligation secured by this agreement.
For the sole purpose of determining the extent of a purchase money security
interest arising under this security agreement:
(a) Payments on any nonpurchase money loan also secured by this agreement will
not be deemed to apply to the purchase money loan; and
(b) Payments on the purchase money loan will be deemed to apply first to the
nonpurchase money portion of the loan, in any, and then to the purchase
money obligations in the order in which the items were acquired.
No security interest will be terminated by application of this formula.
"Purchase money loan" means any loan the proceeds of which, in whole or in part,
are used to acquire any property securing the loan and all extensions, renewals,
consolidations and refinancings of such loan.
PROPERTY - The word "Property," as used here, includes all property that is
listed in the security agreement on page 1. If a general description is used,
the word means all benefits that arise from the described Property (including
all proceeds, insurance benefits, payments from others, Interest, dividends,
stock splits an voting rights). It also means property that now or later is
attached to, is a part of, or results from the Property. Property does not mean
consumer goods that are acquired later that are not instilled in or affixed to
other Property if I do not obtain rights in them within 10 days after you and I
enter into this loan agreement.
OWNERSHIP AND DUTIES TOWARD PROPERTY - Unless a co-owner(s) of the Property
signed a third party agreement, I represent that I own all the Property. I will
defend the Property against any other claim. I agree to do whatever you require
to perfect your interest and keep your priority. I will not do anything to harm
your position.
I will keep the Property in my possession (except if pledged and deliver to
you). I will keep it in good repair and use it only for its intended purposes. I
will keep it at my address unless we agree otherwise in writing.
I will not try to sell or transfer the Property, or permit the Property to
become attached to any real estate, without your written consent. I will pay all
taxes and charges on the Property as they become due. I will inform you of any
loss or damage to the Property. You have the right of reasonable access in order
to inspect the Property.
INSURANCE - If required, I agree to buy insurance on the Property against the
risks and for the amounts you require. I will name you as loss payee on any such
policy. You may require added security on this loan if you agree that insurance
proceeds may be used to repair or replace the Property. I agree that if the
insurance proceeds do not cover the amount I still owe you, I will pay the
difference. If I buy the required insurance (rather than furnishing it through
existing policies that I own or control) I will buy it from a company that is
authorized to do business in Texas. I will keep the insurance until all debts
secured by this agreement are paid.
DEFAULT AND REMEDIES - If I am in default, in addition to the remedies listed in
the note portion of this document, you may (after giving notice and waiting a
period of time, if required by law):
(a) Pay taxes or purchase any required insurance if I fail to do these things
(but you are not required to do so). You may add the amount you pay to this
loan and accrue interest on that amount at the interest rate disclosed on
page 1 until paid in full;
(b) Require me to gather the Property and any related records and make it
available to you in a reasonable fashion;
(c) Take immediate possession of the Property, but in doing so you may not
breach the peace or unlawfully enter onto my premises. You may sell, lease
or dispose of the Property as provided by law. You may apply what you
receive from the sale of the Property to amounts you actually expend for
the repossession, storing, preparing for sale and selling the Property, and
then what I owe you, you may take me to court to recover the difference (to
the extent permitted by law); and
(d) Keep the Property to satisfy the debt (when provided by law).
I agree that when you must give notice tome of your intended sale or
disposition of the Property, to the extent permitted by law, the notice is
reasonable if it is sent to me at my last known address by first class mail 10
days before the intended sale or disposition. My current address is on page 1, I
agree to inform you when allowed by law.
THIRD PARTY AGREEMENT
For the purposes of the provisions within this enclosure, "I," "me" or "my"
means the person signing below and "you" means the Lender identified on page 1.
I agree to give you a security interest in the Property that is described
on page 1. I agree to the terms of this note and security agreement but I am in
no way personally liable for payment of the debt. This means that if the
Borrower defaults, my interest in the Property may be used to satisfy the
Borrower's debt. I agree that you may, without releasing me or the Property from
the Third Party Agreement and without notice or demand upon me, extend new
credit to any Borrower, or renew or change this note or security agreement one
or more times and for any term, or fail to perfect your security interest in,
impair or release any security (including guarantees) for the obligations of any
Borrower.
I HAVE RECEIVED A COMPLETED COPY OF THIS NOTE AND SECURITY AGREEMENT.
NAME LAURA WALKER
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X /s/ LAURA WALKER
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NOTICE TO THE COSIGNER
YOU (THE COSIGNER) ARE BEING ASKED TO GUARANTEE THIS DEBT. THINK CAREFULLY
BEFORE YOU DO. IF THE BORROWER DOESN'T PAY THE DEBT, YOU WILL HAVE TO. BE SURE
YOU CAN AFFORD TO PAY IF YOU HAVE TO, AND THAT YOU WANT TO ACCEPT THIS
RESPONSIBILITY.
YOU MAY HAVE TO PAY UP TO THE FULL AMOUNT OF THE DEBT IF THE BORROWER DOES
NOT PAY. YOU ALSO MAY HAVE TO PAY LATE FEES OR COLLECTION COSTS, WHICH INCREASES
THIS AMOUNT.
THE CREDITOR CAN COLLECT THIS DEBT FROM YOU WITHOUT FIRST TRYING TO COLLECT
FROM THE BORROWER. THE CREDITOR CAN USE THE SAME COLLECTION METHODS AGAINST YOU
THAT CAN BE USED AGAINST THE BORROWER, SUCH AS SUING YOU, ETC. IF THIS DEBT IS
EVER IN DEFAULT, THAT FACT MAY BECOME PART OF YOUR CREDIT RECORD.
THIS NOTICE IS NOT THE CONTRACT THAT MAKES YOU LIABLE FOR THE DEBT.
<PAGE> 1
EXHIBIT 10.11
ACQUISITION AGREEMENT
AND
CLOSING MEMORANDUM
This Acquisition Agreement and Closing Memorandum ("Agreement") is entered into
effective January 15, 1999, by and between Basic Technologies, Inc., a Colorado
corporation ("Basic"), and Simpco, Inc., a Texas corporation ("Simpco").
Effective this date, Basic and Simpco have consummated and closed a business
combination on the following terms and under the following warranties:
1. The transactions set forth have been duly authorized by the respective boards
of directors of Basic and Simpco, and by the shareholders of Simpco.
2. The undersigned officers and representatives of the respective corporations
certify through their signatures that they have been duly authorized by their
respective boards of directors to execute the agreement on behalf of their
respective corporations.
3. Basic and the undersigned representative of Basic jointly and severally
represent and warrant that all documents and information furnished to Simpco in
connection with the transactions set forth herein are true and accurate to the
best of their knowledge.
4. Simpco and the undersigned representative of Simpco jointly and severally
represent and warrant that all documents and information furnished to Basic in
connection with the transactions set forth herein are true and accurate to the
best of their knowledge.
5. Simpco has delivered to Basic on behalf of Simpco's shareholders stock
certificates representing one hundred per cent (100%) of the issued and
outstanding shares of Simpco ("the Simpco stock"), each certificate bearing an
endorsement in blank and duly signed by the shareholder named on the face of the
certificate.
6. In exchange for the Simpco stock, Basic will cause to be issued through its
transfer agent 850,000 shares ("the Basic shares") of its authorized but
previously unissued voting common stock to the shareholders of Simpco named on
the attached Exhibit A to this Agreement, and in the respective numbers of
shares set forth on the same Exhibit A. The Basic shares will, immediately
following issuance, represent approximately thirteen per cent (13%) of the
issued and outstanding shares of the common stock of Basic.
(1)
<PAGE> 2
7. Both Basic and Simpco execute this Agreement based upon reliance that this
transaction will be considered to be a tax-free reorganization to both
corporations and to the shareholders of both corporations, under Internal
Revenue Code Sections 354, 361 and 368.
In witness whereof, the undersigned have caused this Agreement to be executed
effective as of the first date above written.
Basic Technologies, Inc.
By: /s/ BRYAN L. WALKER
-----------------------
Bryan L. Walker,
President and Chairman of the Board
Simpco, Inc.
By: /s/ ERIC SIMPSON
-----------------------
Eric Simpson, President
(2)
<PAGE> 3
EXHIBIT A
TO
ACQUISITION AGREEMENT AND CLOSING MEMORANDUM
NUMBER OF NUMBER OF
SIMPCO SHARES BASIC SHARES
SIMPCO SHAREHOLDER SURRENDERED ISSUED
Randy K. Dusek 2,500 212,500
Simpco Trust #1 2,500 212,500
Simpco Trust #2 2,500 212,500
Simpco Trust #3 2,500 212,500
Total 10,000 850,000
<PAGE> 4
ADDENDUM TO
ACQUISITION AGREEMENT
AND CLOSING MEMORANDUM
This Addendum to that certain Acquisition Agreement and
Closing Memorandum ("Agreement") entered into effective
January 15, 1999, by and between Basic Technologies, Inc. and
Simpco, Inc. is made effective January 15, 1999.
It is hereby agreed between the parties that paragraph 6 of the Agreement be
corrected and amended by adding the following wording to the said paragraph:
" The parties acknowledge that the number of shares to be issued by Basic
(valued at $ 1.00 per share) and the amount of the $ 90,000.00 promissory note
to be drawn by Basic, have been determined by the mutually agreed upon net value
of the equipment owned by Simpco, Inc.,of $ 940,000.00, and that there is no
goodwill value in the corporation.
On July 15, 2000, the equipment owned by Simpco on January 15, 1999 will
be re-valued by the same procedures used in the initial valuation. Should the
value of that equipment, taken as a whole, then be greater than $ 1,080,000.00,
the shareholders of Simpco currently transferring shares to Basic, or their
assigns, will be entitled to receive additional shares of Basic. The formula for
determining the number of shares to be issued is:
a. The Basic shares will be issued at a valuation equal to the greater of
the traded market price of the stock on July 15, 2000, or $ 1.00 per
share; and
b. The dollar equivalent to be received will be fifty per cent (50%) of the
excess of the equipment value over $ 1,080,000.00.
Basic will cause its transfer agent to issue any
qualified shares as soon as possible."
In witness whereof, the undersigned have caused this Addendum to be executed
effective as of the first date above written.
Basic Technologies, Inc Simpco, Inc.
By: /s/ BRYAN WALKER By: /s/ ERIC SIMPSON
Bryan Walker Eric Simpson
President and Chairman President
of the Board
<PAGE> 1
EXHIBIT 10.12
PROMISSORY NOTE
$45,000.00 Boyd, Texas MARCH 18,1999
For value received, BASIC TECHNOLOGIES, INC. promises to pay to the order of
BOYD PARTNERS, LTD. In the City of Boyd, Wise County, Texas the sum of
FORTY-FIVE THOUSAND AND NO/100--------DOLLARS ($45,000.000) in legal and lawful
money of the United States of America, with interest thereon from the date
hereof until maturity at the rate of TEN percent (10%) per annum: the interest
payable monthly as it accrues; matured unpaid principal and interest shall bear
interest at the rate ten percent (10%) per annum from date of maturity until
paid.
This note is due and payable as follows, to wit: $45,000.00 PAYABLE IN 48 EQUAL
MONTHLY INSTALLMENTS OF $1,141.10 EACH PER MONTH, SUCH PAYMENT DUE ON OR BEFORE
THE 18TH DAY OF APRIL, 1999 AND A LIKE INSTALLMENT DUE ON OR BEFORE THE 18TH DAY
OF EACH MONTH THEREAFTER, UNTIL SAID NOTE IS FULLY PAID.
This note, to the extent of the amount herein mentioned, represents money this
day borrowed by the undersigned from the said BOYD PARTNERS, LTD., and to secure
the credit thus extended I/we have this day by said promissory note secured to
be paid the following:
It is expressly provided that upon default in the punctual payment of this note
or any part thereof, principal or interest, as the same shall become due and
payable, the entire indebtedness evidenced hereby shall be matured, at the
option of the holder. In the event this note, or any part hereof, is collected
through Probate, Bankruptcy or other judicial proceedings by an attorney or is
placed in the hands of an attorney for collection after maturity, then the
undersigned agree and promise to pay a reasonable attorney's fee for collection,
which in no event shall be less than ten percent (10%) of the principal and
interest then owing.
This note may be paid in whole or part at any time without penalty.
/s/ RICHARD C. SMITH
-----------------------
Basic Technologies, Inc.
By: Richard C. Smith
Treasurer
1206 W. Main, Ste. 208
Lewisville, TX 75067
972-986-1654
-----------------------
Tax I.D. No.
<PAGE> 1
EXHIBIT 10.13
PROMISSORY NOTE
$5,000.00 Boyd, Texas MARCH 18,1999
For value received, BASIC TECHNOLOGIES, INC. promises to pay to the order of
PLEASANTVIEW PARTNERS, LTD. In the City of Boyd, Wise County, Texas the sum of
FIVE THOUSAND AND NO/100--------DOLLARS ($45,000.000) in legal and lawful money
of the United States of America, with interest thereon from the date hereof
until maturity at the rate of TEN percent (10%) per annum: the interest payable
monthly as it accrues; matured unpaid principal and interest shall bear interest
at the rate ten percent (10%) per annum from date of maturity until paid.
This note is due and payable as follows, to wit: $45,000.00 PAYABLE IN 48 EQUAL
MONTHLY INSTALLMENTS OF $126.80 EACH PER MONTH, SUCH PAYMENT DUE ON OR BEFORE
THE 18TH DAY OF APRIL, 1999 AND A LIKE INSTALLMENT DUE ON OR BEFORE THE 18TH DAY
OF EACH MONTH THEREAFTER, UNTIL SAID NOTE IS FULLY PAID.
This note, to the extent of the amount herein mentioned, represents money this
day borrowed by the undersigned from the said BOYD PARTNERS, LTD., and to secure
the credit thus extended I/we have this day by said promissory note secured to
be paid the following:
It is expressly provided that upon default in the punctual payment of this note
or any part thereof, principay or interest, as the same shall become due and
payable, the entire indebtness evidenced hereby shall be matured, at the option
of the holder. In the event this note, or any part hereof, is collected through
Probate, Bankruptcy or other judicial proceedings by an attorney or is placed in
the hands of an attorney for collection after maturity, then the undersigned
agree and promise to pay a reasonable attorney's fee for collection, which in no
event shall be less than ten percent (10%) of the principal and interest then
owing.
This note may be paid in whole or part at any time without penalty.
/s/ RICHARD C. SMITH
------------------------
Basic Technologies, Inc.
By: Richard C. Smith
Treasurer
1206 W. Main, Ste. 208
Lewisville, TX 75067
972-986-1654
------------------------
Tax I.D. No.
<PAGE> 1
EXHIBIT 10.14
PROMISSORY NOTE SECURED BY
DEED OF TRUST
DATE: March 19, 1999
MAKER: Basic Technologies, Inc.
MAKER'S MAILING ADDRESS (INCLUDING COUNTY):
Basic Technologies, Inc.
1026 West Main Street, Suite 208
Lewisville, Dallas County, Texas 75067
PAYEE: Wanda Ickert
PLACE FOR PAYMENTS (INCLUDING COUNTY):
1334 Highland
Olney, Young County, Texas 76374
PRINCIPAL AMOUNT: $11,500.00
ANNUAL INTEREST RATE ON UNPAID PRINCIPAL FROM DATE OF FUNDING:
10.0%
ANNUAL INTEREST RATE ON MATHRED, UNPAID AMOUNTS:
10.0%
TERMS OF PAYMENT:
Principal and interest shall be due and payable in monthly
installments of Two Hundred Forty-Five and 21/100 Dollars ($245.21)
(or more) each, payable on the 1st day of each and every calendar
month, beginning May 1, 1999, and continuing regularly and monthly
thereafter until April 1, 2004, when the entire balance of
principal and accrued interest shall be due and payable, interest
being calculated on the unpaid principal to the date of each
installment paid and the payment made credited first to the
discharge of the interest accrued and the balance to the reduction
of the principal.
SECURITY FOR PAYMENT:
Secured by a deed of trust of even date herewith executed by Maker
to W. W. Price, Jr., Trustee, covering real property located in Young County,
Texas, as more particularly described in said deed of trust.
Maker promises to pay to the order of Payee at the place for
payment and according to the terms of payment the principal amount plus
interest at the rates stated above. All unpaid amounts shall be due by the
final scheduled payment date.
On default in the payment of this note or in the performance of
any obligation in any instrument securing or collateral to it, the unpaid
principal balance and earned interest on this note shall become immediately due
at the election of Payee. Maker and each surety, endorser, and guarantor waive
all demands for payment, presentations for payment, notices of intention to
accelerate maturity, notices of acceleration of maturity, protests, and notice
of protest.
If this note or any instrument securing or collateral to it is
given to an attorney for collection or enforcement, or if suit is brought for
collection or enforcement, or if it is collected or enforced through probate,
bankruptcy, or other judicial proceeding, then Maker shall pay Payee all costs
of collection and enforcement, including reasonable attorney's fees and court
costs, in addition to other amounts due. Reasonable attorney's fees shall be
10% of all amounts due unless either party pleads otherwise.
<PAGE> 2
Interest on the debt evidence by this note shall not exceed the
maximum amount of nonusurious interest that may be contracted for, taken,
reserved, charged, or received under law; any interest in excess of that
maximum amount shall be credited on the principal of the debt or, if that has
been paid, refunded. On any acceleration or required or permitted prepayment,
any such excess shall be canceled automatically as of the acceleration or
prepayment or, if already paid, credited on the principal of the debt or, if
the principal of the debt has been paid, refunded. This provision overrides
other provisions in this and all other instruments concerning the debt.
Each Maker is responsible for all obligations represented by this
note.
When the context requires, singular nouns and pronouns include the
plural.
BASIC TECHNOLOGIES, INC.
By: /s/ BRYAN WALKER
------------------------------
Bryan Walker, President
<PAGE> 1
EXHIBIT 10.15
DEED OF TRUST
STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF YOUNG )
DATE: March 19, 1999
GRANTOR: Basic Technologies, Inc.
GRANTOR'S MAILING ADDRESS:
Basic Technologies, Inc.
1026 West Main Street, Suite 208
Lewisville, Dallas County, Texas 75067
TRUSTEE: W. W. Price, Jr.
TRUSTEE'S MAILING ADDRESS:
117 North Avenue C
Olney, Young County, Texas 76374
BENEFICIARY: Wanda Ickert
BENEFICIARY'S MAILING ADDRESS:
1334 Highland
Olney, Young County, Texas 76374
NOTE:
DATE: March 19, 1999
AMOUNT: $11,500.00
MAKER: Basic Technologies, Inc.
PAYEE: Wanda Ickert
FINAL MATURITY DATE: April 1,2004
TERMS OF PAYMENT:
Principal and interest shall be due and payable in monthly
installments of Two Hundred Forty-Five and 21/100 Dollars ($245.21)
(or more) each, payable on the 1st day of each and every calendar
month, beginning May 1, 1999, and continuing regularly and monthly
thereafter until April 1, 2004, when the entire balance of principal
and accrued interest shall be due and payable, interest being
calculated on the unpaid principal to the date of each installment
paid and the payment made credited first to the discharge of the
interest accrued and the balance to the reduction of the principal.
PROPERTY (INCLUDING ANY IMPROVEMENTS):
A tract of land containing 5.00 acres being within the Texas
Emmigration and Land Company Survey No.178, Abstract No.425, in
Young County, Texas, and being more particularly described as
follows:
BEGINNING at the intersecfion of the East line of the West one-half
of Texas Emmigrafion and Land Company Survey No.178, Abstract
No.425, and the center line of State Highway No.79, from which a
pipe post fence corner set in concrete at the Northeast corner of
said West one-half bears North 00 degrees 41 minutes 30 seconds East
1246.77 feet;
THENCE with the center of said highway South 64 degrees 07 minutes
30 seconds West for a distance of 740.82 feet;
THENCE North 00 degrees 41 minutes 30 seconds East at 55.90 feet
pass a 1/2" iron rod set in the North right-of-way line of State
Highway No.79, continuing for a total distance of 328.70 feet to a
1/2" iron rod set for corner;
<PAGE> 2
THENCE North 64 degrees 07 minutes 30 seconds East for a distance of
740.82 feet to a 1/2" iron rod set for corner in the East line of
the West one- half of Texas Emmigration and Land Company Survey
No.178, Abstract No. 425;
THENCE with said East line South 00 degrees 41 minutes 30 seconds
West at 272.80 feet pass a 1/2" iron rod set in the North
right-of-way line of State Highway No.79, continuing for a total
distance of 328.70 feet to the point of beginning.
PRIOR LIEN(S) (INCLUDING RECORDING INFORMATION):
Vendor's lien retained in that certain warranty deed of even date
herewith executed by Wanda Ickert to Basic Technologies, Inc.,
covering the above described property and securing payment of the
above described note.
OTHER EXCEPTIONS TO CONVEYANCE AND WARRANTY:
This conveyance is made subject to outstanding oil, gas and mineral
interests and existing easements and rights-of-way, if any, as shown of record
in Young County, Texas, affecting the above described property but only to the
extent that such are in full force and effect.
For value received and to secure payment of the note, Grantor
conveys the property to Trustee in trust. Grantor warrants and agrees to defend
title to the property. If Grantor performs all the covenants and pays the note
according to its terms, this deed of trust shall have no further effect, and
Beneficiary shall release it at Grantor's request.
GRANTOR' S OBLIGATIONS
Grantor agrees to:
1. keep the property in good repair and condition;
2. pay all taxes and assessments on the property when due;
3. preserve the lien's priority as it is established in this deed
of trust;
4. to build a fence around the perimeter of the property sufficient
to turn livestock, at Grantor's expense, by January 1, 2000.
BENEFICIARY'S RIGHTS
1. Beneficiary may appoint in writing a substitute or successor
trustee, succeeding to all rights and responsibilities of Trustee.
2. If the proceeds of the note are used to pay any debt secured by
prior liens, Beneficiary is subrogated to all of the rights and liens of the
holders of any debt so paid.
3. If Grantor fails to perform any of Grantor's obligations,
Beneficiary may perform those obligations and be reimbursed by Grantor on demand
at the place where the note is payable for any sums so paid, including
attorney's fees, plus interest on those sums from the dates of payment at the
rate stated in the note for matured, unpaid amounts. The sum to be reimbursed
shall be secured by this deed of trust.
4. If Grantor defaults on the note or fails to perform any of
Grantor's obligations or if default occurs on a prior lien note or other
instrument, Beneficiary may:
a. declare the unpaid principal balance and earned interest on
the note immediately due;
b. request Trustee to foreclose this lien, in which case
Beneficiary or Beneficiary's agent shall give notice of foreclosure
sale as provided by the Texas Property Code as then amended; and
c. purchase the property at any foreclosure sale by offering the
highest bid and then have the bid credited on the note.
5. If Grantor transfers any part of the property without
Beneficiary's prior written consent, Beneficiary may declare the debt secured by
this deed of trust immediately payable. In that event Beneficiary will notify
Grantor that the debt is payable; if it is not paid within thirty (30) days
after notice to Grantor, Beneficiary may without further notice or demand to
Grantor invoke any remedies provided in this instrument for default.
<PAGE> 3
TRUSTEE'S DUTIES
If requested by Beneficiary to foreclose the lien, Trustee shall:
1. either personally or by agent give notice of the foreclosure sale
as required by the Texas Property Code as then amended;
2. sell and convey all or part of the property to the highest bidder
for cash with a general warranty binding Grantor, subject to prior liens and to
other exceptions to conveyance and warranty; and
3. from the proceeds of the sale, pay, in this order:
a. expenses of foreclosure, including a commission to the
Trustee of 5% of the bid;
b. to Beneficiary, the full amount of principal, interest,
attorney's fees, and other charges due and unpaid;
c. any amounts required by law to be paid before payment to
Grantor; and
d. to Grantor, any balance.
GENERAL PROVISIONS
1. If any of the property is sold under this deed of trust, Grantor
shall immediately surrender possession to the purchaser. If Grantor fails to do
so, Grantor shall become a tenant at sufferance of the purchaser, subject to an
action for forcible detainer.
2. Recitals in any Trustee's deed conveying the property will be
presumed to be true.
3. Proceeding under this deed of trust, filing suit for foreclosure,
or pursuing any other remedy will not constitute an election of remedies.
4. This lien shall remain superior to liens later created even if
the time of payment of all or part of the note is extended or part of the
property is released.
5. If any portion of the note cannot be lawfully secured by this
deed of trust, payments shall be applied first to discharge that portion.
6. Grantor assigns to Beneficiary all sums payable to or received by
Grantor from condemnation of all or part of the property, from private sale in
lieu of condemnation, and from damages caused by public works or construction on
or near the property. After deducting any expenses incurred, including
attorney's fees, Beneficiary may release any remaining sums to Grantor or apply
such sums to reduce the note. Beneficiary shall not be liable for failure to
collect or to exercise diligence in collecting any such sums.
7. Grantor assigns to Beneficiary absolutely, not only as
collateral, all present and future rent and other income and receipts from the
property. Leases are not assigned. Grantor warrants the validity and
enforceability of the assignment. Grantor may as, Beneficiary's licensee,
collect rent and other income and receipts as long as Grantor is not in default
under the note or this deed of trust. Grantor will apply all rent and other
income and receipts to payment of the note and performance of this deed of
trust, but if the rent and other income and receipts exceed the amount due under
the note and deed of trust, Grantor may retain the excess. If Grantor defaults
in payment of the note or performance of this deed of trust, Beneficiary may
terminate Grantor's license to collect and then as Grantor's agent may rent the
property if it is vacant and collect all rent and other income and receipts.
Beneficiary neither has nor assumes any obligations as lessor or landlord with
respect to any occupant of the property. Beneficiary may exercise Beneficiary's
rights and remedies under this paragraph without taking possession of the
property. Beneficiary shall apply all rent and other income and receipts
collected under this paragraph first to expenses incurred in exercising
Beneficiary's rights and remedies and then to Grantor's obligations under the
note and this deed of trust in the order determined by Beneficiary. Beneficiary
is not required to act under this paragraph, and acting under this paragraph
does not waive any of Beneficiary's other rights or remedies. If Grantor becomes
a voluntary or involuntary bankrupt, Beneficiary's filing a proof of claim in
bankruptcy will be tantamount to the appointment of a receiver under Texas law.
8. Interest on the debt secured by this deed of trust shall not
exceed the maximum amount of nonusurious interest that may be contracted for,
taken, reserved, charged, or received under law; any interest in excess of that
maximum amount shall be credited on the principal of the debt or, if that has
been paid, refunded. On any acceleration or required or permitted prepayment,
any such excess shall be canceled automatically as of the acceleration or
prepayment or, if already paid, credited on the principal of the debt or, if the
principal of the debt has been paid, refunded. This provision overrides other
provisions in this and all other instruments concerning the debt.
9. When the context requires, singular nouns and pronouns include
the plural.
10. The term "note" includes all sums secured by this deed of trust.
11. This deed of trust shall bind, inure to the benefit of, and be
exercised by successors in interest of all parties.
12. If Grantor and Maker are not the same person, the term "Grantor"
shall include Maker.
13. Grantor represents that this deed of trust and the note are
given for the following purposes:
<PAGE> 4
The indebtedness, the payment of which is hereby secured, is in
partial payment of the purchase price of the real property herein described, and
is also secured by a vendor's lien thereon retained in deed of even date
herewith to the undersigned, and this Deed of Trust is given as additional
security for the payment of said indebtedness.
BASIC TECHNOLOGIES, INC.
By: /s/ BRYAN WALKER
------------------------------
Bryan Walker, President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on this ________ day of
July, 1999, by BRYAN WALKER, President of BASIC TECHNOLOGIES, INC., a Texas
corporation, on behalf of said corporation.
/s/
----------------------------------
Notary Public, State of Texas
<PAGE> 1
EXHIBIT 10.16
BILL OF SALE
FOR GOOD CONSIDERATION, and in payment of the sum of $20,000.00, the
undersigned (Seller), hereby sells and transfers to BASIC TECHNOLOGIES, INC.,
(Buyer), the following chattels and personal property: (describe property)
-ONE DOUBLE POLE PULLING MACHINE AND ONE WATER TRUCK
-SEE EXHIBIT "A" AND "B" FOR TITLES AND DESC.
The Seller warrants it has good title to said property, full authority
to sell and transfer same, and that said property is sold free of all liens,
claims and encumbrances. Seller warrants it will defend and indemnify Buyer
from any adverse claims.
Signed under seal this 29 day of MARCH, 1999.
/s/ ED GOBER
-------------------------
Ed Gober
*20,000.00 Sales Price is payable $4,300.00 upon execution and in monthly
payments of $1,000.00 due the 29th of each succeeding month until paid. Gober
will have option too take rule 504 stock at $0.50 below market price for
payment balance, or part thereof, as long as 504 stock is available.
<PAGE> 1
EXHIBIT 10.17
PROMISSORY NOTE
(Installment Note - Short Form)
FOR VALUE RECEIVED, the undersigned jointly and severally promise to
pay to the order of ED GOBER, the sum of FIFTEEN THOUSAND SEVEN HUNDRED DOLLARS
AND no/00 --- (15,700.00) DOLLARS, USD, together with interest thereon at the
rate of 10% per annum on any unpaid balance.
Said sum, inclusive of interest, shall be paid in (monthly)
installments of $1000.00 each, with a first payment due 4/29/99, and a like
amount on the same day of each (month/week) thereafter until the full amount if
this note and accrued interest shall be fully paid. All payments shall be first
applied to accrued interest and the balance to principal. The undersigned
reserves the right to prepay this note in whole or in part without penalty.
This note shall be fully payable upon demand of any holder in the
event the undersigned shall default in making any payments due under this note
within 10 days of its due date.
In the event of any default, the undersigned agree to pay all
reasonable attorney fees and costs of collection to the extent permitted by
law. This note shall take effect as a sealed instrument and be enforce in
accordance with the laws of the payee's state.
THIS NOTE IS EXECUTED AS PURCHASE PRICE FOR EQUIPMENT DESCRIBED ON
ATTACHED BILL OF SALE.
Dated:
Basic Technologies, Inc.
/s/ B. WALKER
------------------------
B. WALKER, AUTH. OFFICER
<PAGE> 1
EXHIBIT 10.18
GENERAL ASSIGNMENT
FOR GOOD CONSIDERATION, the undersigned (Seller), hereby sells and
transfers to SIMPCO, INC, (Buyer), all right, title, and interest, in an to any
piece of equipment and/or personal property owned by the undersigned.
Subject to collateral pledges, the Seller warrants it has good title to
said equipment and/or personal property, and has full authority to sell and
transfer same, and that said property is sold free of all liens, claims and
encumbrances (save & except collateral pledges aforementioned). Seller warrants
it will defend and indemnify Buyer from any adverse claims.
Signed under seal this 1st day of APRIL, 1999.
BASIC TECHNOLOGIES, INC.
By: /s/ BRYAN L. WALKER
--------------------------
Bryan L. Walker, President
<PAGE> 1
EXHIBIT 10.19
BILL OF SALE
FOR GOOD CONSIDERATION, and in payment of the sum of $1,000.00 CASH AND
$8,000.00 PROMISSORY NOTE, the undersigned (Seller), hereby sells and transfers
to BASIC TECHNOLOGIES, INC., or assigns, (Buyer), the following chattels and
personal property: (describe property)
1977 WHITE #ZTPCH1004419
SEE COPY TITLE AS EX. "A"
The Seller warrants it has good title to said property, full authority to
sell and transfer same, and that said property is sold free of all liens, claims
and encumbrances. Seller warrants it will defend and indemnify Buyer from any
adverse claims.
Signed under seal this 12 day of APRIL, 1999.
RUSSELL AUTO PARTS
/s/ J.R. RUSSELL
-----------------------
J.R. Russell
4800 Loop 378
San Angelo, TX
912-651-4812
<PAGE> 1
EXHIBIT 10.20
PROMISSORY NOTE
(Installment Note - Short Form)
FOR VALUE RECEIVED, the undersigned jointly and severally promise to
pay to the order of RUSSELL AUTO PARTS, OR ASSIGNS, the sum of EIGHT THOUSAND
DOLLARS AND no/00 --- (8,000.00) DOLLARS, USD, together with interest thereon at
the rate of 0% per annum on any unpaid balance.
Said sum shall be paid in 24 (monthly) installments of $500.00 each,
with a first payment due June 1, 1999, and a like amount on the same day of each
(month) thereafter until the full amount if this note shall be fully paid. All
payments shall be first applied to the balance to principal. The undersigned
reserves the right to prepay this note in whole or in part without penalty.
This note shall be fully payable upon demand of any holder in the event
the undersigned shall default in making any payments due under this note within
10 days of its due date.
In the event of any default, the undersigned agree to pay all
reasonable attorney fees and costs of collection to the extent permitted by law.
This note shall take effect as a sealed instrument and be enforce in accordance
with the laws of the payee's state.
Dated: 4/12/99
Basic Technologies, Inc.
/s/ STEVE SIMPSON
---------------------------------
Steve Simpson, authorized
4/12/99 by Bryan Walker
<PAGE> 1
EXHIBIT 10.21
BILL OF SALE
FOR GOOD CONSIDERATION, and in payment of the sum of $1,000.00 CASH
AND $8,000.00 PROMISSORY NOTE, the undersigned (Seller), hereby sells and
transfers to BASIC TECHNOLOGIES, INC., or assigns, (Buyer), the following
chattels and personal property: (describe property)
1977 WHITE #ZTPCH1004419
SEE COPY TITLE AS EX. "A"
The Seller warrants it has good title to said property, full authority
to sell and transfer same, and that said property is sold free of all liens,
claims and encumbrances. Seller warrants it will defend and indemnify Buyer
from any adverse claims.
Signed under seal this 12 day of APRIL, 1999.
RUSSELL AUTO PARTS
/s/ J.R. RUSSELL
-------------------------
J.R. Russell
4800 Loop 378
San Angelo, TX
912-651-4812
<PAGE> 1
EXHIBIT 10.22
BILL OF SALE
FOR GOOD CONSIDERATION of Ten ($10.00) and other good an valuable
considerations, the receipt and sufficiency of which is hereby acknowledged,
and the agreement to assume legal liability for and make all payments and
fulfill all obligations under a promissory note in the amount of $8,000.00 USD,
bearing interest at 0.0%, and being payable in twenty four (24) monthly
installments of $500.00 with the first installment being due on June 1, 1999,
payable to the order of RUSSELL AUTO PARTS, P. O. BOX 470, SAN ANGELO, TEXAS
76902, the undersigned (Seller), hereby sells and transfers to Simpco, Inc., or
assigns, (Buyer), the following motor vehicle and personal property:
1977 WHITE #ZTPCH1004419 wire line truck
and all pertinent attachments
The Seller warrants it has good title to said property, full authority
to sell and transfer same, and that said property is sold free of all liens,
claims and encumbrances. Seller warrants it will defend and indemnify Buyer
from any adverse claims.
Signed under seal this 12th day of April, 1999.
BASIC TECHNOLOGIES, INC. SIMPCO, INC.,
By: /s/ BRYAN L. WALKER By: /s/ RICHARD C. SMITH
-------------------------- -------------------------
Bryan L. Walker Richard C. Smith
<PAGE> 1
EXHIBIT 10.23
EQUIPMENT LEASE AGREEMENT
LESSOR: Rodney W. Simpson
2029 American Legion Way
San Angelo, Texas 76904
LESSEE: Basic Technologies, Inc.
1026 W. Main St. #208
Lewisville TX 75067
LOCATION OF
EQUIPMENT: 11816 Hwy 83 North
Ballinger TX 76821
DESCRIPTION OF
EQUIPMENT: Exhibit A Attached
This agreement of lease of personal property is made effective the date signed
below, by and between the Lessor and Lessee named above.
The lease is for a term of sixty (60) months, beginning Immediately. There is to
be no security deposit or prepayment of last month's lease payment.
Lease Payments: $ 1,093.00 per month, beginning April 17, 1999, and continuing
through March 17, 2002; followed by monthly lease payments of $818.00, beginning
April 17, 2002, and ending with the last payment on March 17, 2004.
Lease termination and purchase option: At the end of the lease, or the payoff of
the lease, if it occurs earlier, Lessee has the option to purchase the leased
equipment for Ten Dollars ( $10.00). Notice of exercise of such option Must be
made to Lessor no more than 30 days prior to expiration of the lease. If the
purchase option is not exercised, Lessee must return the equipment to Lessor
upon the termination of the lease. According to the provisions of the Uniform
Commercial Code, this lease is to be treated as a finance lease.
During the term of the lease, Lessee is solely responsible to maintain the
equipment in good working order; to maintain adequate casualty insurance
coverage; and to pay any assessed personal property taxes. Lessee agrees to
inform Lessor in writing promptly of any loss or significant damages to the
equipment, and to provide evidence of insurance coverage.
Lessor makes no express or implied warranties as to the fitness and suitability
of the equipment for the Lessee's purposes.
The terms of this lease will be governed by the laws of the State of Texas, with
venue for any disputes to be in Denton County, Texas.
<PAGE> 2
This lease cannot be assigned by Lessee without written permission of Lessor.
Notwithstanding this provision, Lessee may assign the lease or use of the leased
equipment to any company which is owned or controlled by the Lessee.
If Lessee is in default on any lease payment or on any other provision of the
lease, Lessor may consider Lessee to be in default, and accelerate the remaining
obligations of the lease, requiring Lessee to pay the remaining balance in full.
If any provision hereof or any remedy provided herein is found to be invalid,
such provision shall be deemed omitted, but the remaining provisions and
remedies shall remain in effect. Any delay or failure to enforce Lessor's rights
will not prevent Lessor from enforcing its rights at a later time, subject to
provisions of Texas law.
The terms and conditions of this Lease are the entire terms and conditions, and
may be modified only by a mutually-signed written agreement.
This Lease is binding upon the heirs, successors or legal representatives of
each party.
Signed and agreed to effective the day of , 1999.
LESSOR: LESSEE:
- ---------------------- ---------------------------------
Rodney Simpson Bryan Walker, President
for Basic Technologies,Inc.
<PAGE> 1
EXHIBIT 10.24
TEXAS SIMPLE INTEREST VEHICLE RETAIL INSTALMENT CONTRACT DATE 04/19/99
Buyer (and Co-Buyer) Name and Address (Including County and Zip Code)
Basic Technologies, Inc.
1026 W. Main 208
Lewisville, TX 75067
CREDITOR (Seller Name and Address)
Clemons Motor Co., Inc.
P.O. Box 241
Comanche, TX 76442-0241
YOU, THE BUYER (AND CO-BUYER, IF ANY), MAY BUY THE VEHICLE DESCRIBED BELOW FOR
CASH OR ON CREDIT. THE CASH PRICE IS SHOWN BELOW AS "CASH PRICE." THE CREDIT
PRICE IS SHOWN AS "TOTAL SALE PRICE." BY SIGNING THIS CONTRACT, YOU CHOOSE TO
BUY THE VEHICLE ON CREDIT UNDER THE AGREEMENTS ON THE FRONT AND BACK OF THIS
CONTRACT.
<TABLE>
<CAPTION>
New/Used Year and Make Model GVW if Truck (lbs.) Vehicle Identification Number Use For Which Purchased
- -------- ------------- ----- ------------------- ----------------------------- -----------------------
<S> <C> <C> <C> <C> <C>
Used 1995 Ford F350 SC PU 1FTJX35F1SKB82667 [ ] Personal [ ] Agricultural
[X] Commercial
</TABLE>
Trade-in n/a $ n/a $ n/a
-------------- ----------------- -----------------
Year and make Gross Allowance Amount Owing
ITEMIZATION OF AMOUNT FINANCED
1. Cash Price................................................... $ 17995.00 (1)
--------
2. Down Payment
Third Party Rebate Assigned To Creditor................ $ n/a
---------
Cash Down Payment...................................... $ 4219.38
---------
Deferred Down Payment due.............................. $ n/a
---------
Trade-in (description above) .......................... $ n/a
---------
Total Down Payment .......................................... $ 4219.38 (2)
---------
3. Unpaid Balance of Cash Price (1 minus 2) .................... $ 13775.62 (3)
---------
4. Amounts paid on your behalf (Seller may be retaining a portion of these
amounts)
To Public Officials (i) for license, title & registration fees $ 15.50;
------
(ii) for filing fees $ n/a;
----
(iii) for Vehicle Inventory Tax $ 34.19;
------
(iv) for taxes (not in Cash Price) $ 1124.69 $ 1174.38
-------- --------
To Insurance Companies for
Vehicle Insurance ............................ $ n/a
----
Credit Life Insurance ........................ $ n/a
----
Credit Disability Insurance .................. $ n/a
----
n/a........................................... $ n/a
----
Total Cost of Insurance .............................. $ n/a
----
To Clamons Motor Co.,Inc for Documentary Fee ............... $ n/a
--------------------- ----
(Name of Creditor)
A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A DOCUMENTARY FEE IS NOT REQUIRED BY
LAW, BUT MAY BE CHARGED TO BUYERS FOR HANDLING DOCUMENTS AND PERFORMING SERVICES
RELATED TO THE CLOSING OF A SALE. A DOCUMENTARY FEE MAY NOT EXCEED $50. THIS
NOTICE IS REQUIRED BY LAW.
To n/a for n/a $ n/a
------------------------ ------------------------- --------------
To n/a for n/a $ n/a
------------------------ ------------------------- --------------
To n/a for n/a $ n/a
------------------------ ------------------------- --------------
To n/a for n/a $ n/a
------------------------ ------------------------- --------------
Total ............................................... $ 1224.38 (4)
5. Amount Financed (3 plus 4) ............... ............. $ 15000.00 (5)
FEDERAL TRUTH-IN-LENDING DISCLOSURES
<TABLE>
<CAPTION>
ANNUAL PERCENTAGE RATE FINANCE AMOUNT TOTAL OF PAYMENTS TOTAL SALE
The cost of your CHARGE FINANCED The amount you PRICE
credit as a yearly rate The dollar amount The amount of will have paid The total cost
the credit will credit provided to when you have of your purchase on
cost you you or on made all scheduled credit,
your behalf payments including your
downpayment
of $ 4219.38
<S> <C> <C> <C> <C>
16.50 % $ 4118.52 $ 15000.00 $ 19118.52 $ 23337.90
- --------------------- ---------------- ----------------- -------------- --------------
</TABLE>
Number of Amount of Each When Payments
Payment Schedule Payments Payment are due
Your payment schedule 36 $ 531.07 (monthly starting)
------- --------
will be: 1 final $ n/a 05/19/99
-------- ----------------
PREPAYMENT: If you pay off your debt early, you will not have to pay a penalty.
SECURITY INTEREST: YOU are giving a security interest in the vehicle being
purchased.
CONTRACT: Please see this contract for additional information on security
interest, nonpayment, default, the right to require repayment of your debt in
full before the scheduled date, and prepayment penalty.
ANY CHANGE IN THIS CONTRACT MUST BE IN WRITING AND SIGNED BY YOU AND THE
CREDITOR.
BUYER: CO-BUYER:
----------------------------- --------------------------------
NOTICE TO THE BUYER:
DO NOT SIGN THIS CONTRACT BEFORE YOU READ IT OR IF IT CONTAINS ANY BLANK SPACES.
YOU ARE ENTITLED TO A COPY OF THE CONTRACT YOU SIGN. KEEP THIS CONTRACT TO
PROTECT YOUR LEGAL RIGHTS.
BUYER ACKNOWLEDGES RECEIPT OF A TRUE AND COMPLETELY FILLED IN COPY OF THIS
CONTRACT AT THE TIME OF SIGNING
Basic Technologies
by Bryan Walker, Pres.
- ----------------------------------- ---------------------------------
BUYER SIGNS (CO) BUYER SIGNS
BY SIGNING BELOW, THE SELLER ACCEPTS THIS CONTRACT. IF NO OTHER ASSIGNEE IS
NAMED IN A SEPARATE ASSIGNMENT ATTACHED TO THIS CONTRACT, THE SELLER ASSIGNS IT
TO FORD MOTOR CREDIT COMPANY.
SELLER Clemons Motor Co., Inc. By Title Sales Manager
---------------------------- ----------------- ----------------
INSURANCE
YOU MAY OBTAIN VEHICLE INSURANCE FROM A PERSON OF YOUR CHOICE.
LIABILITY INSURANCE COVERAGE FOR BODILY INJURY AND PROPERTY DAMAGE CAUSED TO
OTHERS IS NOT INCLUDED.
CREDIT LIFE, CREDIT DISABILITY AND OTHER OPTIONAL INSURANCE ARE NOT REQUIRED TO
OBTAIN CREDIT AND WILL NOT BE PROVIDED UNLESS YOU SIGN AND AGREE TO PAY THE
PREMIUM.
Credit
Life n/a
---------------------------------------------------------------------------
Insurer
$ n/a n/a
------------------------------ -----------------------------------------
Premium Insured(s)
n/a
- --------------------------------------------------------------------------------
Signature
Credit
Disability n/a
--------------------------------------------------------------------
$ n/a n/a
------------------------------ -----------------------------------------
Premium Insured(s)
n/a
- --------------------------------------------------------------------------------
Signature
n/a n/a
- ---------------------------------------------- -----------------------------
Type of Insurance Term
n/a $ n/a
- ---------------------------------------------- -----------------------------
Insurer Premium
n/a
- --------------------------------------------------------------------------------
Signature
CREDIT LIFE AND CREDIT DISABILITY INSURANCE ARE FOR THE TERM OF THE CONTRACT.
THE AMOUNT AND COVERAGES ARE SHOWN IN A NOTICE OR AGREEMENT GIVEN TO YOU TODAY.
YOU ARE REQUIRED TO INSURE THE VEHICLE. YOU MAY CHOOSE THE PERSON THROUGH WHOM
SUCH INSURANCE IS TO BE OBTAINED. YOU SHALL HAVE THE OPTION OF FURNISHING THE
INSURANCE OWNED OR CONTROLLED BY YOU OR OBTAINED BY YOU THROUGH ANY INSURANCE
COMPANY AUTHORIZED TO TRANSACT BUSINESS IN TEXAS. IF A CHARGE IS SHOWN BELOW,
THE CREDITOR WILL TRY TO BUY THE COVERAGES CHECKED FOR THE TERM SHOWN. COVERAGES
WILL BE BASED ON THE CASH VALUE OF THE VEHICLE AT THE TIME OF LOSS, BUT NOT MORE
THAN THE LIMITS OF THE POLICY.
Comprehensive $ n/a Deductible
-------- Collision
Fire-Theft-Combined Additional Coverage
Towing and Labor
Term n/a Months (Estimate)
-------------
Premium $ n/a
---------------------
IF CHECKED, THE PREMIUM FOR PHYSICAL DAMAGE INSURANCE INCLUDED HEREIN IS
AT A RATE OF CHARGE NOT FIXED OR APPROVED BY THE STATE BOARD OF INSURANCE OF
TEXAS. THE BUYER SHALL HAVE THE OPTION FOR A PERIOD OF TEN DAYS FROM THE DATE OF
THIS CONTRACT OF FURNISHING THE REQUIRED INSURANCE COVERAGE EITHER THROUGH
EXISTING POLICIES OF INSURANCE OWNED OR CONTROLLED BY HIM OR OF PROCURING AND
FURNISHING EQUIVALENT INSURANCE COMPANY AUTHORIZED TO TRANSACT BUSINESS IN
TEXAS.
IF ANY OF THE ABOVE INSURANCE IS CANCELLED, THE CREDITOR WILL GIVE YOU A CREDIT
FOR ANY UNEARNED INSURANCE PREMIUMS THE CREDITOR GETS. THE CREDIT WILL BE MADE
TO THE LAST PAYMENTS DUE.
<PAGE> 1
EXHIBIT 10.25
BILL OF SALE
FOR GOOD CONSIDERATION, and the agreement to make payments to the order
of Ford Motor Credit Company in the total amount of $15,000.00 which is payable
monthly in installments of $531.07, until note is paid the undersigned (Seller),
hereby sells and transfers to SIMPCO, INC, (Buyer), the following chattels and
personal property: (describe property)
-ONE 1996 FORD F350 PICKUP TRUCK-
VIN # 1FTJX35F1SKB82667
The Seller warrants it has good title to said property, subject to the
note collateralizing, and has full authority to sell and transfer same, and that
said property is sold free of all liens, claims and encumbrances. Seller
warrants it will defend and indemnify Buyer from any adverse claims.
Signed under seal this 19 day of APRIL, 1999.
BASIC TECHNOLOGIES, INC.
By: /s/ BRYAN L. WALKER
-------------------------------
Bryan L. Walker, President
<PAGE> 1
EXHIBIT 10.26
TEXAS SIMPLE INTEREST VEHICLE RETAIL INSTALMENT CONTRACT DATE 05/14/99
Buyer (and Co-Buyer) Name and Address (Including County and Zip Code)
Simpco, Inc.
P.O. Box 828
Zephyr, TX 76890-0828
CREDITOR (Seller Name and Address)
Clemons Motor Co., Inc.
P.O. Box 241
Comanche, TX 76442-0241
YOU, THE BUYER (AND CO-BUYER, IF ANY), MAY BUY THE VEHICLE DESCRIBED BELOW FOR
CASH OR ON CREDIT. THE CASH PRICE IS SHOWN BELOW AS "CASH PRICE." THE CREDIT
PRICE IS SHOWN AS "TOTAL SALE PRICE." BY SIGNING THIS CONTRACT, YOU CHOOSE TO
BUY THE VEHICLE ON CREDIT UNDER THE AGREEMENTS ON THE FRONT AND BACK OF THIS
CONTRACT.
<TABLE>
<CAPTION>
New/Used Year and Make Model GVW if Truck (lbs.) Vehicle Identification Number Use For Which Purchased
- -------- ------------- ----- ------------------- ----------------------------- -----------------------
<S> <C> <C> <C> <C> <C>
Used 1996 Ford F350 CrCb 1FTJW35F6TEB56911 [ ] Personal [ ] Agricultural
[X] Commercial
</TABLE>
Trade-in n/a $ n/a $ n/a
-------------- ----------------- -----------------
Year and make Gross Allowance Amount Owing
ITEMIZATION OF AMOUNT FINANCED
1. Cash Price................................................... $ 19596.52 (1)
--------
2. Down Payment
Third Party Rebate Assigned To Creditor................ $ n/a
---------
Cash Down Payment...................................... $ 3903.00
---------
Deferred Down Payment due.............................. $ n/a
---------
Trade-in (description above) .......................... $ n/a
---------
Total Down Payment .......................................... $ 3903.00 (2)
---------
3. Unpaid Balance of Cash Price (1 minus 2) .................... $ 15693.52 (3)
---------
4. Amounts paid on your behalf (Seller may be retaining a portion of these
amounts)
To Public Officials (i) for license, title & registration fees $ ;
------
(ii) for filing fees $ n/a;
----
(iii) for Vehicle Inventory Tax $ 31.48;
------
(iv) for taxes (not in Cash Price) n/a $ 31.48
-------- --------
To Insurance Companies for
Vehicle Insurance ............................ $ n/a
----
Credit Life Insurance ........................ $ n/a
----
Credit Disability Insurance .................. $ n/a
----
n/a........................................... $ n/a
----
Total Cost of Insurance .............................. $ n/a
------
To Clamons Motor Co.,Inc for Documentary Fee ............... $ 50.00
--------------------- ------
(Name of Creditor)
A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A DOCUMENTARY FEE IS NOT REQUIRED BY
LAW, BUT MAY BE CHARGED TO BUYERS FOR HANDLING DOCUMENTS AND PERFORMING SERVICES
RELATED TO THE CLOSING OF A SALE. A DOCUMENTARY FEE MAY NOT EXCEED $50. THIS
NOTICE IS REQUIRED BY LAW.
To n/a for n/a $ n/a
------------------------ ------------------------- --------------
To n/a for n/a $ n/a
------------------------ ------------------------- --------------
To n/a for n/a $ n/a
------------------------ ------------------------- --------------
To n/a for n/a $ n/a
------------------------ ------------------------- --------------
Total ............................................... $ 18.48 (4)
5. Amount Financed (3 plus 4) ............... ............. $ 15775.00 (5)
FEDERAL TRUTH-IN-LENDING DISCLOSURES
<TABLE>
<CAPTION>
ANNUAL PERCENTAGE RATE FINANCE AMOUNT TOTAL OF PAYMENTS TOTAL SALE
The cost of your CHARGE FINANCED The amount you PRICE
credit as a yearly rate The dollar amount The amount of will have paid The total cost
the credit will credit provided to when you have of your purchase on
cost you you or on made all scheduled credit,
your behalf payments including your
downpayment
of $ 3903.00
<S> <C> <C> <C> <C>
10.00 % $ 2549.36 $ 15775.00 $ 18324.36 $ 22227.36
- --------------------- ---------------- ----------------- -------------- --------------
</TABLE>
Number of Amount of Each When Payments
Payment Schedule Payments Payment are due
Your payment schedule 36 $ 509.01 (monthly starting)
------- --------
will be: 1 final $ n/a 06/25/99
-------- ----------------
PREPAYMENT: If you pay off your debt early, you will not have to pay a penalty.
SECURITY INTEREST: YOU are giving a security interest in the vehicle being
purchased.
CONTRACT: Please see this contract for additional information on security
interest, nonpayment, default, the right to require repayment of your debt in
full before the scheduled date, and prepayment penalty.
ANY CHANGE IN THIS CONTRACT MUST BE IN WRITING AND SIGNED BY YOU AND THE
CREDITOR.
BUYER: CO-BUYER:
----------------------------- --------------------------------
NOTICE TO THE BUYER:
DO NOT SIGN THIS CONTRACT BEFORE YOU READ IT OR IF IT CONTAINS ANY BLANK SPACES.
YOU ARE ENTITLED TO A COPY OF THE CONTRACT YOU SIGN. KEEP THIS CONTRACT TO
PROTECT YOUR LEGAL RIGHTS.
BUYER ACKNOWLEDGES RECEIPT OF A TRUE AND COMPLETELY FILLED IN COPY OF THIS
CONTRACT AT THE TIME OF SIGNING
- ----------------------------------- ---------------------------------
BUYER SIGNS (CO) BUYER SIGNS
BY SIGNING BELOW, THE SELLER ACCEPTS THIS CONTRACT. IF NO OTHER ASSIGNEE IS
NAMED IN A SEPARATE ASSIGNMENT ATTACHED TO THIS CONTRACT, THE SELLER ASSIGNS IT
TO FORD MOTOR CREDIT COMPANY.
SELLER Clemons Motor Co., Inc. By Title Sales Manager
---------------------------- ----------------- ----------------
INSURANCE
YOU MAY OBTAIN VEHICLE INSURANCE FROM A PERSON OF YOUR CHOICE.
LIABILITY INSURANCE COVERAGE FOR BODILY INJURY AND PROPERTY DAMAGE CAUSED TO
OTHERS IS NOT INCLUDED.
CREDIT LIFE, CREDIT DISABILITY AND OTHER OPTIONAL INSURANCE ARE NOT REQUIRED TO
OBTAIN CREDIT AND WILL NOT BE PROVIDED UNLESS YOU SIGN AND AGREE TO PAY THE
PREMIUM.
Credit
Life n/a
---------------------------------------------------------------------------
Insurer
$ n/a n/a
------------------------------ -----------------------------------------
Premium Insured(s)
n/a
- --------------------------------------------------------------------------------
Signature
Credit
Disability n/a
--------------------------------------------------------------------
$ n/a n/a
------------------------------ -----------------------------------------
Premium Insured(s)
n/a
- --------------------------------------------------------------------------------
Signature
n/a n/a
- ---------------------------------------------- -----------------------------
Type of Insurance Term
n/a $ n/a
- ---------------------------------------------- -----------------------------
Insurer Premium
n/a
- --------------------------------------------------------------------------------
Signature
CREDIT LIFE AND CREDIT DISABILITY INSURANCE ARE FOR THE TERM OF THE CONTRACT.
THE AMOUNT AND COVERAGES ARE SHOWN IN A NOTICE OR AGREEMENT GIVEN TO YOU TODAY.
YOU ARE REQUIRED TO INSURE THE VEHICLE. YOU MAY CHOOSE THE PERSON THROUGH WHOM
SUCH INSURANCE IS TO BE OBTAINED. YOU SHALL HAVE THE OPTION OF FURNISHING THE
INSURANCE OWNED OR CONTROLLED BY YOU OR OBTAINED BY YOU THROUGH ANY INSURANCE
COMPANY AUTHORIZED TO TRANSACT BUSINESS IN TEXAS. IF A CHARGE IS SHOWN BELOW,
THE CREDITOR WILL TRY TO BUY THE COVERAGES CHECKED FOR THE TERM SHOWN. COVERAGES
WILL BE BASED ON THE CASH VALUE OF THE VEHICLE AT THE TIME OF LOSS, BUT NOT MORE
THAN THE LIMITS OF THE POLICY.
Comprehensive $ n/a Deductible
-------- Collision
Fire-Theft-Combined Additional Coverage
Towing and Labor
Term n/a Months (Estimate)
-------------
Premium $ n/a
---------------------
IF CHECKED, THE PREMIUM FOR PHYSICAL DAMAGE INSURANCE INCLUDED HEREIN IS
AT A RATE OF CHARGE NOT FIXED OR APPROVED BY THE STATE BOARD OF INSURANCE OF
TEXAS. THE BUYER SHALL HAVE THE OPTION FOR A PERIOD OF TEN DAYS FROM THE DATE OF
THIS CONTRACT OF FURNISHING THE REQUIRED INSURANCE COVERAGE EITHER THROUGH
EXISTING POLICIES OF INSURANCE OWNED OR CONTROLLED BY HIM OR OF PROCURING AND
FURNISHING EQUIVALENT INSURANCE COMPANY AUTHORIZED TO TRANSACT BUSINESS IN
TEXAS.
IF ANY OF THE ABOVE INSURANCE IS CANCELLED, THE CREDITOR WILL GIVE YOU A CREDIT
FOR ANY UNEARNED INSURANCE PREMIUMS THE CREDITOR GETS. THE CREDIT WILL BE MADE
TO THE LAST PAYMENTS DUE.
<PAGE> 1
EXHIBIT 10.27
TEXAS SIMPLE INTEREST VEHICLE RETAIL INSTALMENT CONTRACT DATE 05/14/99
Buyer (and Co-Buyer) Name and Address (Including County and Zip Code)
CREDITOR (Seller Name and Address)
YOU, THE BUYER (AND CO-BUYER, IF ANY), MAY BUY THE VEHICLE DESCRIBED BELOW FOR
CASH OR ON CREDIT. THE CASH PRICE IS SHOWN BELOW AS "CASH PRICE." THE CREDIT
PRICE IS SHOWN AS "TOTAL SALE PRICE." BY SIGNING THIS CONTRACT, YOU CHOOSE TO
BUY THE VEHICLE ON CREDIT UNDER THE AGREEMENTS ON THE FRONT AND BACK OF THIS
CONTRACT.
<TABLE>
<CAPTION>
New/Used Year and Make Model GVW if Truck (lbs.) Vehicle Identification Number Use For Which Purchased
- -------- ------------- ----- ------------------- ----------------------------- -----------------------
<S> <C> <C> <C> <C> <C>
Used 1996 Ford F350 Cr Cb 1FTJW35F6TEB56911 [ ] Personal [ ] Agricultural
[X] Commercial
</TABLE>
Trade-in n/a $ n/a $ n/a
-------------- ----------------- -----------------
Year and make Gross Allowance Amount Owing
ITEMIZATION OF AMOUNT FINANCED
1. Cash Price................................................... $ (1)
--------
2. Down Payment
Third Party Rebate Assigned To Creditor................ $ n/a
---------
Cash Down Payment...................................... $
---------
Deferred Down Payment due.............................. $ n/a
---------
Trade-in (description above) .......................... $ n/a
---------
Total Down Payment .......................................... $ (2)
---------
3. Unpaid Balance of Cash Price (1 minus 2) .................... $ (3)
---------
4. Amounts paid on your behalf (Seller may be retaining a portion of these
amounts)
To Public Officials (i) for license, title & registration fees $ ;
------
(ii) for filing fees $ n/a;
----
(iii) for Vehicle Inventory Tax $ ;
------
(iv) for taxes (not in Cash Price) $ n/a $
-------- --------
To Insurance Companies for
Vehicle Insurance ............................ $ n/a
----
Credit Life Insurance ........................ $ n/a
----
Credit Disability Insurance .................. $ n/a
----
n/a........................................... $ n/a
----
Total Cost of Insurance .............................. $ n/a
----
To for Documentary Fee ............... $
--------------------- ----
(Name of Creditor)
A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A DOCUMENTARY FEE IS NOT REQUIRED BY
LAW, BUT MAY BE CHARGED TO BUYERS FOR HANDLING DOCUMENTS AND PERFORMING SERVICES
RELATED TO THE CLOSING OF A SALE. A DOCUMENTARY FEE MAY NOT EXCEED $50. THIS
NOTICE IS REQUIRED BY LAW.
To n/a for n/a $ n/a
------------------------ ------------------------- --------------
To n/a for n/a $ n/a
------------------------ ------------------------- --------------
To n/a for n/a $ n/a
------------------------ ------------------------- --------------
To n/a for n/a $ n/a
------------------------ ------------------------- --------------
Total ............................................... $ (4)
5. Amount Financed (3 plus 4) ............... ............. $ (5)
FEDERAL TRUTH-IN-LENDING DISCLOSURES
<TABLE>
<CAPTION>
ANNUAL PERCENTAGE RATE FINANCE AMOUNT TOTAL OF PAYMENTS TOTAL SALE
The cost of your CHARGE FINANCED The amount you PRICE
credit as a yearly rate The dollar amount The amount of will have paid The total cost
the credit will credit provided to when you have of your purchase on
cost you you or on made all scheduled credit,
your behalf payments including your
downpayment
of $ 3903.00
<S> <C> <C> <C> <C>
10.00 % $ 2549.36 $ 15775.00 $ 18324.36 $ 22277.36
- --------------------- ---------------- ----------------- -------------- --------------
</TABLE>
PREPAYMENT: If you pay off your debt early, you will not have to pay a penalty.
SECURITY INTEREST: YOU are giving a security interest in the vehicle being
purchased.
CONTRACT: Please see this contract for additional information on security
interest, nonpayment, default, the right to require repayment of your debt in
full before the scheduled date, and prepayment penalty.
ANY CHANGE IN THIS CONTRACT MUST BE IN WRITING AND SIGNED BY YOU AND THE
CREDITOR.
BUYER: CO-BUYER:
----------------------------- --------------------------------
NOTICE TO THE BUYER:
DO NOT SIGN THIS CONTRACT BEFORE YOU READ IT OR IF IT CONTAINS ANY BLANK SPACES.
YOU ARE ENTITLED TO A COPY OF THE CONTRACT YOU SIGN. KEEP THIS CONTRACT TO
PROTECT YOUR LEGAL RIGHTS.
BUYER ACKNOWLEDGES RECEIPT OF A TRUE AND COMPLETELY FILLED IN COPY OF THIS
CONTRACT AT THE TIME OF SIGNING
- ----------------------------------- ---------------------------------
BUYER SIGNS (CO) BUYER SIGNS
BY SIGNING BELOW, THE SELLER ACCEPTS THIS CONTRACT. IF NO OTHER ASSIGNEE IS
NAMED IN A SEPARATE ASSIGNMENT ATTACHED TO THIS CONTRACT, THE SELLER ASSIGNS IT
TO FORD MOTOR CREDIT COMPANY.
SELLER Clemons Motor Co., Inc. By Title Sales Manager
---------------------------- ----------------- ----------------
INSURANCE
YOU MAY OBTAIN VEHICLE INSURANCE FROM A PERSON OF YOUR CHOICE.
LIABILITY INSURANCE COVERAGE FOR BODILY INJURY AND PROPERTY DAMAGE CAUSED TO
OTHERS IS NOT INCLUDED.
CREDIT LIFE, CREDIT DISABILITY AND OTHER OPTIONAL INSURANCE ARE NOT REQUIRED TO
OBTAIN CREDIT AND WILL NOT BE PROVIDED UNLESS YOU SIGN AND AGREE TO PAY THE
PREMIUM.
Credit
Life n/a
---------------------------------------------------------------------------
Insurer
$ n/a n/a
------------------------------ -----------------------------------------
Premium Insured(s)
n/a
- --------------------------------------------------------------------------------
Signature
Credit
Disability n/a
--------------------------------------------------------------------
$ n/a n/a
------------------------------ -----------------------------------------
Premium Insured(s)
n/a
- --------------------------------------------------------------------------------
Signature
n/a n/a
- ---------------------------------------------- -----------------------------
Type of Insurance Term
n/a $ n/a
- ---------------------------------------------- -----------------------------
Insurer Premium
n/a
- --------------------------------------------------------------------------------
Signature
CREDIT LIFE AND CREDIT DISABILITY INSURANCE ARE FOR THE TERM OF THE CONTRACT.
THE AMOUNT AND COVERAGES ARE SHOWN IN A NOTICE OR AGREEMENT GIVEN TO YOU TODAY.
YOU ARE REQUIRED TO INSURE THE VEHICLE. YOU MAY CHOOSE THE PERSON THROUGH WHOM
SUCH INSURANCE IS TO BE OBTAINED. YOU SHALL HAVE THE OPTION OF FURNISHING THE
INSURANCE OWNED OR CONTROLLED BY YOU OR OBTAINED BY YOU THROUGH ANY INSURANCE
COMPANY AUTHORIZED TO TRANSACT BUSINESS IN TEXAS. IF A CHARGE IS SHOWN BELOW,
THE CREDITOR WILL TRY TO BUY THE COVERAGES CHECKED FOR THE TERM SHOWN. COVERAGES
WILL BE BASED ON THE CASH VALUE OF THE VEHICLE AT THE TIME OF LOSS, BUT NOT MORE
THAN THE LIMITS OF THE POLICY.
Comprehensive $ n/a Deductible
-------- Collision
Fire-Theft-Combined Additional Coverage
Towing and Labor
Term n/a Months (Estimate)
-------------
Premium $ n/a
---------------------
IF CHECKED, THE PREMIUM FOR PHYSICAL DAMAGE INSURANCE INCLUDED HEREIN IS
AT A RATE OF CHARGE NOT FIXED OR APPROVED BY THE STATE BOARD OF INSURANCE OF
TEXAS. THE BUYER SHALL HAVE THE OPTION FOR A PERIOD OF TEN DAYS FROM THE DATE OF
THIS CONTRACT OF FURNISHING THE REQUIRED INSURANCE COVERAGE EITHER THROUGH
EXISTING POLICIES OF INSURANCE OWNED OR CONTROLLED BY HIM OR OF PROCURING AND
FURNISHING EQUIVALENT INSURANCE COMPANY AUTHORIZED TO TRANSACT BUSINESS IN
TEXAS.
IF ANY OF THE ABOVE INSURANCE IS CANCELLED, THE CREDITOR WILL GIVE YOU A CREDIT
FOR ANY UNEARNED INSURANCE PREMIUMS THE CREDITOR GETS. THE CREDIT WILL BE MADE
TO THE LAST PAYMENTS DUE.
