U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment #1 to
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
July 31, 1999 0-25109
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(For the Fiscal Year Ended) (Commission No.)
Integrated Food Resources, Inc.
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(Name of Small Business Issuer in Its Charter)
State of Nevada 93-1255001
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6700 S.W. Sandburg Street, Tigard, Oregon 97223
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(Address of Principal Executive Offices)
503-598-4375
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(Issuer's Telephone No.)
Securities to be registered pursuant to Section 12(b) of the Act:
None
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(Title of class)
Securities of be registered pursuant to Section 12(g) of the Act:
Class A Voting Common Stock
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(Title of class)
Checkwhether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period than the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
[x] Yes [ ] No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy of information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to the Form 10-KSB. [x]
Revenues for the fiscal year ended July 31, 1999 were $917,839.
The aggregate market value of voting stock held by non-affiliates of the
Registrant was approximately $22,266,645 as June 29, 1999.
Documents incorporated by reference: None
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PART I
ITEM 1. DESCRIPTION OF THE BUSINESS
History
Integrated Food Resources, Inc. ("the Company") was originally
organized in the State of Oregon on September 12, 1966 under the name of The
Oregon Trail Company. The original business of the Company was the development
of a family-oriented recreational theme park on the Oregon coast. In May 1968,
the Company changed its name to Pixieland Corporation, and the development of
the theme park continued under the new corporate entity. The theme park opened
in 1968 and closed in October 1978. The closure was caused by poor attendance
and lack of public support of the theme park concept. At that time, the Company
stopped all of its operations and remained an inactive corporation until May
1989.
At various times since May 1989, the Company changed its name to
American Business Associates, Inc.; Cyberwin Corporation; and back to Pixieland
Corporation. These name changes were made in conjunction with several efforts to
acquire or merge with existing businesses. None of these business ventures
developed into the on-going, successful enterprise that was contemplated. In
October 1996, the Company changed its state of incorporation to Nevada.
Pursuant to a renewed effort at a reorganization, on September 25, 1997
the Company changed its name to Integrated Food Resources, Inc. and installed
its current management team. On September 29, 1997, the Company signed a Share
Exchange Agreement with Seabourne Ventures, Inc. ("Seabourne"), a newly formed
Oregon corporation organized by the current management of the Company. Seabourne
was organized as a wholly-owned subsidiary of the Company to operate its
business of harvesting, processing and distributing seafood and seafood-related
food products.
On July 31, 1998, the Company signed an Asset Acquisition Agreement and
Plan of Reorganization with Clipper Cubed Corporation ("Clipper Cubed"), a
Nevada corporation whereby the Company purchased all of the assets of Clipper
Cubed in exchange for common stock of the Company. In conjunction with the
agreement, the Company formed ClipperNet Corporation ("ClipperNet"), an Oregon
corporation, and the assets purchased from Clipper Cubed were transferred to
ClipperNet. ClipperNet became a wholly-owned subsidiary of the Company, and
Clipper Cubed stopped doing business. ClipperNet has developed a proprietary
high-speed wireless, microwave communications technology with broad applications
for the Internet including Internet access, voice transmission,
video-conferencing, document sharing and audio and video streaming.
In June of 1999, the Company's Board of Directors passed a resolution
creating Morningstar Finance, Inc. ("Morningstar"), a newly formed Oregon
corporation. Morningstar was organized as a wholly-owned bankruptcy remote
subsidiary of the Company to operate its business of raising money, prudently
managing the investment of those proceeds and supporting the Company's capital
projects and food trading programs. On June 14, 1999, the Company filed Restated
Articles of Incorporation with the Secretary of State of the State of Oregon on
behalf of Morningstar. Restated Articles of Incorporation were again filed with
the Secretary of State of Oregon on September 7, 1999 to change the name from
Morningstar to Integrated Food Finance Corp. ("IFFC").
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As used in this annual report, whenever reference is made to the
Company, it shall include Seabourne, ClipperNet and Morningstar, if the context
is appropriate.
Business and Operating Plan
The Company is engaged in the business of procuring, processing,
marketing and distributing private-label food products for large retail food
chains in the United States and Canada. The Company obtains its food products
from non-affiliated production facilities located throughout the world which are
in turn supplied to retail food chain clients by International Trade Group, LLC
("ITG"), an affiliated company.
ITG is an Oregon limited liability company of which Alain L. de la
Motte, the Chairman, Chief Executive Officer and director of the Company, owns a
90% controlling interest. Formed in 1992, ITG is an independent, privately-held
company. It serves as the central international sourcing and procurement arm for
such major U.S. food retail chains as the Kroger Company, Western Family Foods,
Aldi and Safeway. Where these chains could invest the time and financial
resources to become international sourcing experts, they have found it more
economical and efficient to entrust their private label food product procurement
to ITG. ITG's international business expertise lies in global procurement
operations, foreign factory audits, process control systems, quality control
management, trade financing, global logistics, import administration,
governmental regulatory compliance and domestic warehousing and distribution.
The collective volume requirements of these retailers represents a significant
position of purchasing strength which ITG leverages to negotiate advantageous
supplier contracts throughout the world. The Company will be one of the
suppliers from whom ITG will procure foreign produced private-label food
products. ITG's purchases from the Company are arms-length transactions
reflecting market prices and customary profit margins.
Seabourne is in the business of harvesting, processing, marketing and
distributing seafood products, principally canned tuna fish and tuna-related
products. Seabourne will use proprietary harvesting techniques for catching tuna
in the open seas and factory ships for initial processing of the tuna. This
harvesting and processing system will allow Seabourne to offer canned tuna and
tuna-related products that are superior in quality and that is priced below
established national brands. Seabourne is a source of tuna and other
seafood-related products for the Company. Prior to being acquired by the
Company, Seabourne had entered into an Asset Acquisition Agreement with ITG on
July 1, 1997 whereby Seabourne acquired, among other things, certain tuna
processing equipment and other related assets.
In fiscal year 1998, the Company and the Republic of Guinea ("Guinea"),
a French-speaking, West African nation, entered into three separate Project
Development Agreements ("Agreements") covering agricultural and aquacultural
development. One agreement deals with the establishment of prawn farms and a
processing facility. Another covers the development of tropical fruit
plantations and a processing facility. The third one covers the issuance fishing
permits for the country's territorial waters as well as the development of
facilities for fish processing and cold storage. Subsequent to the signing of
the Agreements, the Guinean government transferred to the Company approximately
35,000 acres of prime coastal agricultural and aquacultural land for the purpose
of implementing the Agreements. The land is owned by the Company free of
encumbrances and obligations, including the specific obligations to develop the
land as previously required by the Agreements. The government of Guinea expects
significant economic benefits from the land grant to the Company such as
employment opportunities, infrastructure development and the generation of hard
currency reserves through the export of the food products processed by the
Company.
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ClipperNet provides high-speed, wireless Internet access services to
business and residential customers in Oregon's Willamette Valley. This service
is delivered using point-to-point microwave technology as an alternative to
traditional Internet access. ClipperNet's microwave network technology can be
installed quickly and efficiently. It requires that a small antenna be installed
on the roof of an office building or a home. Microwave transmissions carrying
the digitized data are received by the antenna and carried through a transceiver
to a router which distributes incoming and outgoing data to and from individual
workstations. The system is suited for video conferencing, web hosting, web
browsing, e-mail and Internet faxing.
ClipperNet's growth is tied in large part to the acquisition of
existing and complementary Internet service provider networks. An example of how
this growth is anticipated to transpire occurred in November 1998 when
ClipperNet purchased the assets of Netbridge Internet Access Services, an
Internet service provider located in Newport and Lincoln City, Oregon.
ClipperNet competes in the Internet access industry against three
primary delivery technologies:
o Telecommunication Networks: Over the next 3-4 years, data
transmissions are expected to account for about 95% of the $192
billion annual revenues of the U.S. local and long distance
communication industry. This delivery system is principally
targeted at the business-user segment. The industry is investing
in fiber optics for its main trunk systems, but there is still
limited availability of this broadband infrastructure at the
user sites. Major players in this group include AT&T (which owns
TCI), MCI Worldcom, Sprint, Bell Atlantic and GTE.
o Internet Service Providers: This market for service to U.S.
homes is estimated at an annual volume of $4.2 billion. Most
providers have yet to invest in broadband infrastructure, but
this is expected to change as the demand for high speed access
grows. Major providers include AOL, Microsoft Network,
Mindspring/Netcom, Earthlink and the services provided by
companies such as AT&T and MCI.
o Television Cable Companies: This market is estimated at an
annual volume of $30 billion. The revenue share derived from
data transmissions is expected to grow as the industry upgrades
its network infrastructure with high-speed two-way hybrid fiber
optic coaxial cable which will enable the home user market to
make better use of this service. Major cable companies include
TCI (owned by AT&T), Time Warner, Comcast, Cox, Cablevision and
Media One.
On January 26, 1999, the Company's Board of Directors announced the
acquisition of a 20 year exclusive worldwide licensing agreement for Project
Harvest(R). Project Harvest(R) is a proprietary e-commerce system that will link
buyers and sellers of food products throughout the world via secure Internet
connections. The pending patents for Project Harvest(R) represent a series of
consecutive separate process patent application filed from early 1995 through
late 1998. All the patents were subsequently incorporated in a combined omnibus
patent application containing 17 families of patents with a total of 190
individual claims. This asset of the Company represents a formidable barrier to
competition, and the Company intends to aggressively defend against possible
infringement of its proprietary rights.
Using Project Harvest(R), buyers will be able to identify specific
suppliers who can meet their customized requirements for product specifications,
food safety, process control, hygiene, manufacturing practices, financial
stability and product quality. In the same manner that a rating from Standard &
Poors or Moody's turns a financial instrument into a marketable security,
Project Harvest(R) will create the first global standard for the rating of
factories and product
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quality. This business to business e-commerce technology is expected to
revolutionize the way food products are bought and sold worldwide. It is
anticipated that Project Harvest(R) will be reflective of the Company's core
business strategy in the years to come.
Traditional global sourcing of food products is done in one of two
ways. In "cold calling", manufacturer directories and similar reference sources
are used to identify foreign companies who become the recipients of unsolicited,
broadcast-fax offers to buy or sell a product. "Brokered relationship" involves
a buyer in one country, a seller in another and one or more middlemen between
the principals. Both approaches are inefficient. The former requires the
repetitive exchange of verbal and written communications to qualify the separate
parties' ability to perform and to verity the validity of the unsolicited offer.
In the latter, product quality can become a secondary consideration to the
spread created between seller and buyer prices, and the middlemen guardedly
protect their interests by withholding the identity of the principals.
Project Harvest(R) eliminates these inefficiencies and simplifies the
consummation of the global transactions. Selected, prequalified buyers and
suppliers from throughout the world will be invited to participate in Project
Harvest(R) and to register specific information about themselves. A buyer can
access the database to identify supplier contacts, product specifications,
product ingredients, quality control procedures, labelling options, seasonal
availability, factory locations and trade and banking references. A supplier can
rely on this tool to review similar information in the buyer database. The
databases are accurate, password protected and firewall insulated, and they will
enable buyers and sellers to quickly identify and confidently qualify potential
business partners throughout the world.
Modules within Project Harvest(R) automatically format the buyer's
product requirements into a clear and concise Request for Quotation ("RFQ")
which is then sent directly to the potential supplier. The supplier's quote goes
directly back to that genuinely interested, well-qualified buyer. The open and
direct communication allows transactions to be completed with fewer obstacles
and in less time than under the traditional approaches. The RFQ and the quote
can also be posted on the Project Harvest(R) trading floor where other
registered buyers and sellers can determine their interest. This market making
service extends the opportunity to consummate a transaction beyond the initial
contact to all registered participants in the Project Harvest(R) system.
Project Harvest(R) includes a translator program that allows the users
to communicate in multiple foreign languages. A buyer can create an RFQ in his
native language, and Project Harvest(R) will translate that communication into
the language of the recipient. In return, the supplier's quote is prepared in
his native language which is then translated for the buyer.
One of Project Harvest(R)'s distinct innovations is the incorporation
of standardized factory ratings. It is very unlikely that the same food product
from different suppliers was produced under the same manufacturing conditions.
Given these inherent variances, a buyer's quality assurance department must
visit and review each potential supplier's manufacturing processes, sanitation
standards, employee health practices, quality control procedures, process
engineering controls and regulatory requirement compliance. Given the number of
potential suppliers, a buyer's investment in time and money can be considerable.
This expenditure is compounded by the fact that the same supplier is visited and
reviewed by every buyer in the industry.
Project Harvest(R) simplifies factory evaluation and approval by
standardizing the rating process. The Company has drawn upon its industry
experience to develop a list of criteria which form the basis for the Project
Harvest(R) factory rating standard. Recognized authorities with experience in
global food processing and regulatory compliance will use this rating system to
conduct on-site evaluations around the world. Buyers will be able to rely on
factory ratings to
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discern a supplier's commitment to quality assurance, process control and
manufacturing procedures. Project Harvest(R) will alert registered buyers when a
query identifies a unrated prospective supplier.
Morningstar was formed to provide for the Company's financing
requirements. Its principal function is to raise capital and to manage the
investment of that capital to generate proscribed rates of return. Morningstar
purchases marketable investment grade securities as specifically permitted by
agreement with its lenders. The loans or the proceeds from the investing
activities will be a major source of funding for the Company's various capital
development projects. Proceeds will also used to mitigate currency risk by
purchasing forward currency contracts and through other hedging activities.
Morningstar was structured as a bankruptcy remote company to enhance its
attractiveness to lenders as a worthy borrower. Morningstar will also directly
and/or indirectly participate in the Company's food trading and arbitrage
activities. Given ITG's strategic alliances with major retailers, private label
distributors, food service groups and national brokerage organizations, the
Company anticipates these trading activities will prove to be successful.
The U.S. Food and Drug Administration ("FDA") is the principal
governmental regulatory agency involved with the Company's products. The FDA
sets standards for domestically produced and imported food products to ensure
they will not have a pernicious or deleterious impact on U.S. consumers.
Information from all import shipments of foreign-produced food products is
submitted to the FDA for review. Among the attributes of interest to the FDA are
foreign production facility, country-of-origin, food type, container type,
processing controls and labelling characteristics. If it is satisfied with the
information presented, the FDA will advise the importer the food products are
released for entry into the commerce of the United States. If its review of the
information indicates a likelihood the food product is not fit for human
consumption, the FDA can reject the shipment and deny distribution. Such action
is generally not taken until after samples of the food product have been
collected and sent to a food laboratory for testing and analysis. The Company
accepts that a small percentage of its product will be subject to in-transit
delay due to FDA review and that some rejections for reasons beyond the
Company's control may occur. It is recognized that such delays and possible
rejections are an inherent risk of the imported food products industry. There
are no specific environmental laws to which the Company and its product line is
subject.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's headquarter offices are located in the Western Family
Foods Building at 6700 S. W. Sandburg Street., Tigard, Oregon 97223, a 36,000
square foot, free standing, Class A corporate headquarter office building with
full facilities and amenities. The Seabourne and Morningstar corporate offices
are also located at this site. The Company's space is secured by a
month-to-month lease. Seabourne also maintains an office in Seattle, Washington.
ClipperNet rents approximately 1800 square feet of office space at 2295 Coburg
Rd., Suite 105, Eugene, Oregon 97401. ClipperNet's network operations center
occupies 400 square feet of leased office space at 2300 Oakmont Way, Eugene,
Oregon 97401. Management believes that its current space is suitable for its
intended purpose. The Company's offices are adequately covered by insurance.
The Company owns approximately 35,000 acres of coastal land in the west
African nation of the Republic of Guinea ("Guinea"). This land is free and clear
of encumbrances by the Guinean government, and the Company intends to use it,
its buildings and other improvements to develop and operate a tuna processing
plant, a shrimp farm and tropical fruit plantations.
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ITEM 3. LEGAL PROCEEDINGS
On December 1, 1998, the Company, as plaintiff, filed a 7-count civil
action in the Superior Court of New Jersey, Bergen County Law Division, docket
no. BER-L, against Kennedy Funding, Inc., ("KFI"), a commercial lending
institution organized under the laws of New Jersey, as defendant, alleging,
among other complaints, breach of written and oral contract, failure to perform
and equitable estoppel.
The Company entered into a negotiation with KFI for a $16,000,000 loan
that was to be secured by the land in Guinea and other assets. The Company
intended to use the proceeds of this loan to finance its food trading activities
and to cover certain underwriting expenses and fees associated with the closing
of $400 million funding transaction that was being negotiated with a major
investment firm. KFI predicated granting the loan on the Company meeting
specific conditions and collateralization requirements, and it required a
deposit of $90,000 in prepaid fees and legal expenses. The Company delivered
this sum with KFI with the written understanding that the deposit was fully
refundable should the loan fail to close for any reason whatsoever. The Company
complied with all conditions of the collateralization. KFI failed to grant the
loan, declared the deposit to be non-refundable and withheld return of the
$90,000.
KFI, as defendant, has filed a counterclaim in which KFI alleges that
the Company failed to meet the terms of the loan commitment. In its
counterclaim, KFI seeks damages of $375,000 plus attorney's fees.
During the deposition phase of the proceedings, certain facts deemed
detrimental to the defendant were discovered, and the Company's complaint has
been broadened to include two additional counts of fraud. The Company intends to
vigorously pursue its action against KFI and to defend against the counterclaim.
The Company is confident it will receive a favorable judgment, and no adverse
material outcome is expected.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
On June 23, 1999, the shareholders holding a majority of the voting
power of the Company's issued and outstanding common stock executed a written
consent pursuant to the provisions of the Nevada Business Corporation Act
amending the Company's Articles of Incorporation to increase the authorized
Series A Preferred Stock to 10,000,000 shares and to establish the conversion
rights of said Series A Preferred Stock. The consenting shareholders held an
aggregate of 8,446,201 shares representing 52.1% of the Company's total of
16,198,966 issued and outstanding shares of common stock as of the date of the
written consent.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company is authorized to issue 50,000,000 shares of Class A common
stock and 50,000,000 shares of Class B common stock. As of July 31, 1999, there
are 16,198,966 shares of Class A common stock issued and outstanding. This is an
increase of 14,323 shares since the end of the previous fiscal quarter. These
shares were authorized by the Board of Directors for inclusion in severance
packages offered to several employees of ClipperNet. No shares of Class B common
stock are issued and outstanding. Each share of Class A common stock entitles
the shareholder (a) to one non-cumulative vote for each share held of record on
all matters submitted to a vote of the stockholders, (b) to participate equally
and to receive
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dividends as may be declared by the Board of Directors and (c) to participate
pro rata in any distribution of assets available for distribution upon
liquidation of the Company. Stockholders have no preemptive rights to acquire
additional shares of common stock or any other securities. The Company's common
stock is not subject to redemption, carries no rights to purchase other
securities of the Company and is non-assessable.
The Company's common stock has been traded in the over-the-counter
market since January 1998 and prices for the common stock are published on the
OTC Bulletin Board under the symbol "IFGR.OB". This market is limited and the
common stock prices quoted by brokers is not a reliable indication of the value
of the common stock.
The following table sets forth the range of high and low bid prices for
the Company's common stock during each quarter of the reporting period.
Quarter Ending High Low
October 31, 1998 $4.50 $0.375
January 31, 1999 $2.00 $0.6875
April 30, 1999 $3.875 $0.60
July 31, 1999 $3.50 $2.00
These prices may reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual purchases and sales by
investors.
The Company has never paid cash dividends on its common stock; however,
dividends may be paid in the future if the Company's earnings justify it. There
are approximately 4,100 shareholders of the Company's common stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Review of Financial Condition
As of July 31, 1999 and 1998, the Company had total assets of $149,000
and $6,650,000, respectively. As of July 31, 1999, the Company's current assets
were $138,000 and its current liabilities were $292,000 resulting in a deficit
working capital position of $154,000. As of July 31, 1998, the Company had
current assets of $1,041,000 and current liabilities of $4,670,000, which
resulted in a deficit working capital position of $3,269,000. The changes in
assets and working capital are attributable to the Company's write-off of its
tuna processing facilities and the divestiture of its internet access service
segment during the year ended July 31, 1999. Assets written off during 1999
included all of the Company's remaining plant facilities located in Ensenada,
Mexico which had a recorded book value of $896,000 at the time of disposal and
$4,171,000 in unamortized goodwill previously recognized from the Company's
acquisition of ClipperNet Corporation in 1998.
To mitigate losses incurred from operations in 1999, the Company's
primary creditors, International Trade Group, LLC and ITG Finance LLC, which are
related parties to the Company, exchanged $4,050,000 in outstanding current debt
for preferred shares in the Company. The preferred shares have voting and
dividend rights equal to those of all common shareholders. In addition,
preferred shareholders enjoy liquidation preferences superior to existing common
shareholders and have rights to convert their holdings into common stock. These
preferred shares may be voluntarily exchanged for common stock at a rate of $1
per share, which will become subject to adjustment should changes arise in the
Company's
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capitalization. Mandatory conversion of preferred shares to common stock will
occur upon the earlier of a 30-day written notice from the Company or
immediately prior to the closing of a public offering by the Company. Despite
the conversion of related party debt to preferred stock during 1999, the Company
had a deficit equity position of $144,000 at July 31, 1999 compared to
stockholders' equity of $1,564,000 at July 31, 1998.
Included among the Company's assets as of July 31, 1999 and 1998 was
land held for future development of $74,498,000 offset by an equal amount
recorded as an adjustment for foreign land grant. The land was acquired as a
land grant from Guinea, and was recorded on the basis of appraised value.
However, the value of the land has been offset by the adjustment for foreign
land grant in accordance with international accounting standards. The adjustment
balance will be amortized to income in future years in amounts that will offset
depreciation or amortization expense arising form assets acquired or constructed
for use in conjunction with the foreign land grant. The land was received by the
Company free of encumbrance and without any commitment or obligation to Guinea.
Management believes development of properties in Guinea will require a
significant commitment of funds to realize its potential operating value.
Accordingly, the Company continues to pursue and evaluate viable sources of
long-term financing for future agricultural and aquacultural operations in the
Guinea.
Subsequent to July 31, 1999, the Company was in the process of closing
on $201,692,292 in senior secured notes to finance the construction of fishing
vessels for the Company's food processing operations. Since it has no active
operations as of July 31, 1999, the Company's closing of this financing
arrangement , or its ability to obtain other debt or equity funding, will be
critical for future operations. Management is confident that the proposed
financing will be closed to allow suitable funding for anticipated future
operations. This confidence is borne out by the Letter of Commitment for this
loan that has been received and that is detailed in a later section of this
report.
Review of Operating Results
During the 1st quarter of fiscal year 1999, the Company decided to
revise its strategy for packing tuna in Mexico. When the Company first became a
supplier of canned tuna fish, it contracted with Agroindustrias Rowen S.A. de
C.V. ("Rowen"), an independent, non-related processing facility in Ensenada,
Mexico, for product that would be sold at fixed prices. This proved to be a
satisfactory source of supply until the market pricing for raw materials and
finished goods deviated from the underlying cost assumptions of the model. The
El Nino conditions that prevailed in the Eastern Pacific Ocean disrupted the
supply chain for tuna, and prices for high-quality, dolphin-safe frozen tuna
reached such record high levels that fully compensatory pricing for finished
goods was pushed beyond what the market would bear.
Despite the unfavorable combination of increasing costs and declining
revenues, the Company felt an obligation to fulfill its customer commitments,
and it is the fulfillment of these commitments that ultimately accounts for the
negative performance reported by the Company in this segment of its business.
Given these current and projected marketplace dynamics, all indications were
that an on-going operation at the Rowen plant would continue to result in a
negative gross margin to the detriment of shareholder interest. On July 12,
1999, the Company sent Rowen written notification of its intent to terminate the
Toll Packing Agreement. The Company also decided to hold in abeyance its option
to acquire the Rowen cannery until such time as it can deliver a dependable
supply of competitively priced, dolphin-safe raw material through its own
fishing operations.
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For the year ended July 31, 1999, the Company experienced a loss from
continuing operations of $1,934,000 or $.12 per share of common stock and, after
deducting losses from discontinued operations of $4,000,000, experienced a
consolidated net loss of $5,934,000 or $.37 per share of common stock.
Operating revenues from continuing operations were only $108,000 for
the year ended July 31, 1999 and were derived exclusively from tuna processing
sales. Sales in this segment of the Company's business were limited by the
adverse operating environment in Mexico and by the difficulty in bringing to a
conclusion the Rowen bankruptcy proceedings. Given termination of the Toll
Packing Agreement, all assets pertaining to the Mexican tuna packing operations
were liquidated or written off by July 31, 1999. As a result, the Company wrote
off accounts receivable, inventories and plant assets, net of certain
liabilities, totaling $997,000 in disposing of its seafood processing plant
assets. As of July 31, 1999, the Company continues to hold land held for future
development in the Republic of Guinea which management intends to utilize in the
future to support long-term agriculture and aquaculture projects.
Throughout 1999, the Company also operated an Internet access service
enterprise through its wholly-owned subsidiary ClipperNet. While its promise
remains strong, ClipperNet's growth and operating results were less than
satisfactory, and continued financing of its operations was becoming
particularly burdensome to the consolidated group. For the year ended July 31,
1999, ClipperNet lost $740,000 from operations on sales of $809,000. As of July
31, 1999, ClipperNet had a deficit working capital position of approximately
$430,000. On September 9, 1999, the Company's Board of Directors approved a
reorganization plan enabling ClipperNet's management group to take control of
that company. The Company discontinued operating in this segment of business
effective July 31, 1999.
The Company's divestiture of ClipperNet was accomplished through a
series of transactions. First, ClipperNet completed a 20-for-1 reverse split of
its outstanding common stock. This resulted in the Company receiving 50,000
shares of common stock for the 1,000,000 shares of ClipperNet common stock it
held prior to the split. ClipperNet then issued 1,870,479 shares of its common
stock to former shareholders in exchange for 1,015,702 shares the same former
shareholders held in the Company's common stock and $693,849 in debt owed to
them by ClipperNet. These transactions resulted in the Company owning
approximately 2.6% of the outstanding common stock of ClipperNet and ClipperNet
owning approximately 6.3% of the Company as of July 31, 1999. Management of the
Company determined that its remaining investment in ClipperNet as of July 31,
1999 was of no value and, as a result, all of the Company's investment in
ClipperNet of $3,260,000 was written of as of July 31, 1999. The Company's
statement of operations for the year ended July 31, 1999 reflects a total loss
from the disposal of ClipperNet and discontinuance of its operating segment of
$4,000,000 or $.25 per share of common stock.
Under the reorganization agreement, the 1,015,702 shares of the
Company's common stock surrendered by the ClipperNet management group were
surrendered to and are being held by an escrow agent, and the Company has an
unconditional, ten-year option to repurchase these shares. This option can be
exercised at the Company's discretion by tendering to ClipperNet whichever of
the following has the lesser monetary value: 1) a cash payment of $4,570,659 or
2) its 50,000 shares of ClipperNet common stock. The cash payment is calculated
on the basis of 1,015,702 shares multiplied by an agreed upon share value of
$4.50. The value of the Company's 50,000 shares will be based on the market
price of the ClipperNet stock at the time the option is exercised.
Further to the reorganization agreement, Ransom R. Southerland tendered
his resignation without reservation from the Company's Board of Directors, and
Alain L. de la Motte and James M. McKenzie tendered their respective
resignations also without reservation from
10
<PAGE>
ClipperNet's Board of Directors. All resignations have been unanimously
approved. Closing on the terms and conditions of the reorganization took place
on October 1, 1999.
For the year ended July 31, 1999, the Company suffered a gross loss
from continuing operations of $27,000 on sales of $108,000. This compares to a
gross loss of $560,000 on sales of $5,379,000 for the year ending July 31, 1998.
Selling, general and administrative expenses of $521,000 caused a loss from
operations of $548,000. After the recognition of losses for the disposal of
seafood processing plant assets of $997,000, a write-down for the impairment of
assets of $99,000, depreciation and amortization expenses of $174,000 and
interest of $115,000, the Company incurred losses from continuing operations of
$1,934,000. This compares to operating losses of $2,452,000 for the year ending
July 31, 1998. With operating losses and write-off of the Company's remaining
investment in its internet access segment, net losses for the year were
$5,934,000. The Company's net loss from continuing operations was $.12 per share
of common stock while discontinued operations caused additional losses of $.25
per share of common stock. Overall, for the year ended July 31, 1999,
shareholders realized a $.37 loss per share of common stock ownership in the
Company. For the year ending July 31, 1998, the Company reported losses per
share of common stock of $.15.
Capital Needs and Future Requirements
Capital-Intensive Projects
When the Company and Guinea signed the Agreements, it was
optimistically felt that the necessary financing could be secured in a timely
manner, and clauses were written into the Agreements indicating the projects
would be completed by the end of fiscal year 1998. This expectation proved to be
overly aggressive, and the projects were targeted for initiation during fiscal
year 1999. Despite diligent efforts, the Company has been unable to obtain the
necessary financing. Consequently, the projects have not been initiated.
Moreover, given changing priorities since the signing of the Agreements, the
Company has decided to delay further consideration of these projects until it
can again devote the necessary attention to obtaining the funding. The Company
has not set a date for when it will renew this effort. The Agreements have not
been cancelled and remain in full force and effect. At this time, there are no
plans to begin the development of the projects. The Company has communicated its
intentions for these projects to its contacts in Guinea who have reiterated
their long-term support of and commitment to the Agreements and to their
relationship with the Company.
It was the Company's intent to initiate several capital development
projects during fiscal year 1999. These projects included 1) the acquisition of
two modernized tuna processing facilities in Mexico, Indonesia or Thailand, 2)
the construction of twelve bait boats and 3) the project development activities
in Guinea under the Agreements. The Company, however, has been unable to take
these steps due to the unanticipated delays it has experienced in obtaining
financing. As a result, the Company has withdrawn its intentions to move forward
on these projects. It is unlikely that the Company will revive its interest in
the acquisition of the processing facilities or in the construction of the bait
boats, and its intention to postpone the development of the projects covered by
the Agreements has previously been discussed.
The Company continues to actively pursue the construction of six
combination fishing/factory ships with an approximate cost of $180 million. The
design of these fishing vessels has been completed. During fiscal year 1998, no
expenses were incurred for ship design services. During fiscal year 1999, the
Company paid Tomra Engineering AS of Norway $6,000 for design services relative
to the fishing vessels. These design service expenses have been accounted for in
the Company's financial statements under the category of prepaid
11
<PAGE>
expenses. It is anticipated that the first of these vessels will be operational
by the third quarter of fiscal year 2000.
The Company is also prepared to move ahead on finalizing the
development of Project Harvest(R). As previously discussed, Project Harvest(R)
will permit any buyer or seller with an Internet connection to engage in global
business to business E-commerce transactions. The Company's long-term strategy
for Project Harvest(R) envisions the building of business relationships with
highly skilled and experienced Internet technology companies. The services of
some will be engaged on a contract basis to complete the design and programming
of Project Harvest(R) and its operating systems. The services of others, such as
ClipperNet, will be secured through lease arrangements to support the
connections through which the E-commerce transactions will be conducted.
The Company received a Letter of Commitment dated November 17, 1999
from an institutional lender which is the U.S. affiliate of a major European
financial institution. The commitment is for $200 million. The loan will be made
to IFFC, the Company's wholly-owned subsidiary which was organized for the
purpose of obtaining debt financing for the Company's projects, specifically the
construction of the fishing vessels and Project Harvest(R). When the commitment
is funded, IFFC will issue its 7% Senior Notes which will be due in December
2001. The loan will be collateralized by a stand-by letter of credit issued by a
major European bank. The Company expects the financing to be completed on or
before the end of calendar year 1999.
These projections are based on forward-looking events and occurrences
which involve risks and uncertainties including, without limitation, demand and
competition for the Company's products, relations with suppliers, the ability of
the Company to control costs and expenses, the ability of the Company to
penetrate its chosen distribution channels, foreign currency risks,
international political and trade relations and general economic conditions.
There may be other factors not mentioned above that may cause actual results to
differ materially from any forward-looking information.
Year 2000 Compliance
The Company's reliance on the use of computers and automated systems in
its business operations creates a potential vulnerability to the effects of the
Year 2000 issue ("Y2K"). The Company has made a preliminary determination that
led to the upgrading of software programs with recently-released Y2K compliant
versions. The Company also identified those assets in its hardware inventory
that required attention, and steps have been taken to upgrade or replace the Y2K
deficient components. Additional upgrades to its software programs and automated
systems are scheduled for completion by the third calendar quarter of 1999. The
cost to upgrade existing software, convert to new software and correct existing
data records is estimated at $10,000.
By the end of the fiscal year, the Company will have incurred
approximately $2,000 in Y2K compliance expenses. The Company believes its
compliance strategy will support timely reaction to new difficulties as they
manifest themselves and will enable effective implementation of the necessary
remedial actions.
The Company has no control over the computer systems of its banks,
vendors, customers or other third parties, and disruptions to these systems
could impair the Company's ability to obtain product or to sell to or service
its customers. Information made available to the Company indicates these
unrelated parties have taken and are continuing to take the necessary steps to
achieve Y2K compliance. The Company's planning strategy also anticipates the
12
<PAGE>
potential effects of Y2K in the third world countries in which it conducts its
business. Where the Company expands its foreign operations prior to the end of
1999, it will assess the host country's state of Y2K preparedness. Should a
country be deemed to lack the technical expertise or financial capabilities to
achieve Y2K preparedness, the Company anticipates direct investment in or
partnered financing for the resources necessary to ensure it can effectively
operate in the local environment. The costs for such a contingency are included
in the Company's estimates listed above. The Company is engaged in an on-going
effort to avoid disruptions that may be caused by the computer programs or
systems of third parties, or that may arise from its foreign operations.
However, should such disruption occur, there can be no assurance that it will
not have a material adverse impact on the Company's financial condition and
results of operations.
ITEM 7. FINANCIAL STATEMENTS
The schedules required for this item appear herein beginning on page 18.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no disagreements with accountants during the
Company's past fiscal year.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
This table describes the Company's directors and executive officers, as
of July 31, 1999:
Name Age Title
Alain L de la Motte 49 Chairman and Chief Executive Officer
James M. McKenzie 56 Secretary and Director
Hugh Latif 47 Director
Alan J. Resnik 54 Director
Ransom R. Southerland 50 Director
Alain L. de la Motte has been Chief Executive Officer and Chairman of
the Board of Directors since the inception of the Company's current business
operations in July 1997. Mr. de la Motte is also Chief Executive Officer of ITG
which is involved in world-wide sourcing and procuring of food products for the
largest grocery chains in the United States. ITG has participated in this
business since 1992 when it operated as a partnership prior to its
reorganization as a limited liability company. ITG is a shareholder in the
Company. Prior to ITG, Mr. de la Motte served as founder, President and chairman
of TRADE, Inc. which amassed a proprietary database of all U.S. imports. Mr. de
la Motte was educated at L'Ecole Nationale de Commerce in Paris and is fluent in
English and French.
James M. McKenzie has been corporate secretary and a director of the
Company since the inception of its current business operations in July 1997. Mr.
McKenzie is the President of CUI Stack, Inc., a joint venture with Stack
Electronics of Japan, which is involved in the distribution of electronic
components in the United States. He had been with CUI Stack since 1989. Mr.
McKenzie earned an MBA in finance from the University of Chicago.
13
<PAGE>
Hugh Latif has been a director since the inception of the Company's
current business operations in July 1997. Since 1996, Mr. Latif has been
President of Hugh Latif & Associates, a management consulting firm. From 1992 to
1996, he was Managing Director of A.C. Nielsen Co. of Canada Ltd., a marketing
research firm. Mr. Latif has also served as General Manager of Dunn & Bradstreet
France and Dun & Bradstreet Brazil. Mr. Latif holds a BA in economics from Cairo
University in Egypt.
Alan J. Resnik has been a director since the inception of the Company's
current business operations in July 1997. Dr. Resnik is currently a professor of
marketing in the School of Business Administration, Portland State University.
Since 1978 he has been the President of Market Insights, Inc., a consulting
firm. From 1994 to 1995, he was Executive Vice President of Widmer Brewing Co.
From 1995 to 1996, Dr. Resnik was Senior Vice President of Gentle Dental, a
dental services company. From 1992 to 1996, he was a director of Gentle Dental.
Dr. Resnik received a BS degree in economics from the Wharton School of the
University of Pennsylvania, an MBA from Tulane University and his PhD from
Arizona State University.
Ransom R. Southerland was appointed a director in October 1998. He
brings to the Board 25 years of business management experience from the
technology industry. He was one of the founders of Clipper Cubed Corporation and
has served as the President of ClipperNet since its inception. In the preceding
years he filled various management positions with PacTel InfoSystems, Byte Shops
Northwest, Omnitek Information Systems and Business Systems Group.
Philip M. Chrusz was appointed a director on November 2, 1998. Mr.
Chrusz tendered his resignation from the Board of Directors on February 11,
1999. Brian E. Bittke was a director at the beginning of the period covered by
this annual report. Mr. Bittke tendered his resignation from the Board of
Directors on March 18, 1999. Both resignations were tendered without reservation
or disagreement.
Directors serve in their positions until the next annual meeting of the
stockholders or until the directors' successors have been elected and qualified.
Executive officers are appointed by the Board of Directors and serve at the
discretion of the Board.
ITEM 10. EXECUTIVE COMPENSATION
The Company has not paid any compensation to Alain L. de la Motte, its
Chairman and CEO, or to any of its other executive officers since it began its
current business operations in July 1997. The Company does not have any written
employment agreements with its executive officers at this time. The Company will
enter into employment agreements with its executive officers and key employees
and begin paying appropriate salaries and other plan and non-plan compensation
when it determines that its financial condition is such that it can pay such
salaries and compensation.
On October 20, 1998, the Board of Directors approved a non-qualified
stock option program for key employees, directors and new Company hires. The
salient points of this program as of the date of this Board action are:
- 1.7 million shares of common stock allocated for the program
- directors to be issued options for 150,000 shares with vesting to occur
over 3 years at the rate of 50,000 per year
- options set to expire on October 20, 2008
- exercise price of the options set at $1.03125 (the trading price at the
time of the Board's decision)
14
<PAGE>
- shares proportionally vested if a director resigns for any reason
- option plan subject to review by corporate legal counsel
Option/SAR Grants in Last Fiscal Year Table
Individual Grants
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees in or Base Expiration
Name Granted (#) Fiscal Year Price ($/sh) Date
Alain L. de la Motte 150,000 16.7% $1.03125 10/20/2008
Chairman/CEO
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This table describes the current ownership of the Company's issued and
outstanding common stock as of July 31, 1999 by (a) the officers and directors,
(b) persons known by the Company to own more than 5% of the outstanding common
stock and (c) all of the officers and directors as a group.
Name and Address of Beneficial Percent
Title of Class Beneficial Owner Ownerership of Class
Common Stock (a) Alain L. de la Motte 2,642,708 16.2%
6700 SW Sandburg St.
Tigard, OR 97223
Common Stock (a) James M. McKenzie 496,125 3.0%
9615 SW Allen Blvd.
Portland, OR 97005
Common Stock (a) Ransom R. Southerland (i) 317,550 1.9%
2295 Coburg Road, Suite 105
Eugene, OR 97401
Common Stock (a) Alan J. Resnik 75,000 4.4%
1016 SW Davenport St.
Portland, OR 97201
Common Stock (a) Hugh Latif 38,000 *
135 Park Ave.
Toronto, Ontario, Canada
Common Stock (b) Harald A. Kvalo 1,320,000 8.1%
2334 West Plymouth St.
Seattle, WA 98119
Common Stock (b) International Trade Group, LLC (ii) 1,987,368 12.2%
6700 SW Sandburg St.
Tigard, OR 97223
15
<PAGE>
Common Stock (b) ITG Finance, LLC (iii) 2,000,000 12.3%
6700 SW Sandburg St.
Tigard, OR 97223
Common Stock (c) All officers and Directors as a group3,569,383 21.9%
- ------------------------------------
* refers to less than one percent
(i) Ransom R. Southerland, the President of ClipperNet, became a
director of the Company in October 1998.
(ii) International Trade Group, LLC is an Oregon limited liability
company organized in March 1994. Alain L. de la Motte is a member of this LLC
and directly and indirectly owns a 90% interest in it. The remaining 10% is
owned by Sower Ministries International, a tax-exempt religious organization
founded by Mr. de la Motte and for which Mr. de la Motte serves as one of
several directors.
(iii) ITG Finance, LLC is an Oregon limited liability company organized
in October 1997 and of which Alain L. de la Motte is a managing member.
International Trade Group, LLC owns an 80% interest in ITG Finance, LLC.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 25, 1999 the Company entered into a Technology and Trademark
License Agreement with Alain L. de la Motte, its Chairman and Chief Executive
Officer. The license agreement grants the Company the right to utilize certain
technology, patents, trademarks and trade names for a period of 20 years with
two 20 year renewal options. In exchange for the license, the Company has agreed
to pay a $200,000 fee to Mr. de la Motte at such time as the Company's
consolidated stockholders' equity exceeds $15,000,000 or it successfully raises
$15,000,000 in additional debt. The Company will also pay the Chief Executive
Officer royalty fees measured at 7.5% of the gross profits realized from
commercial use of the technology and the rights granted through the agreement.
Neither the debt nor equity milestones have been met, and the Company has yet to
make commercial use of the technology, patents, trademarks and trade names. No
license or royalty fees have been paid, and the Company's contingent liability
under the agreement will only be recognized in the future when the financing
milestones or operating results from commercial applications of the technology
and rights occur.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
The exhibits listed on the Index to Exhibits following the signature
page herein are filed as part of this Form 10-KSB.
No Reports on Form 8-K were filed by the Company during the last
quarter of the period covered by this report.
16
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Integrated Food Resources, Inc.
(Registrant)
By /s/ Alain L. de la Motte
------------------------
Alain de la Motte
Chairman, CEO and Director
Dated: December 12, 1999
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
By /s/ Alain L. de la Motte
------------------------
Alain L. de la Motte
Chairman, CEO & Director
By /s/ James M. McKenzie
------------------------
James M. McKenzie
Secretary &Director
By /s/ Hugh Latif
------------------------
Hugh Latif
Director
By /s/ Alan J. Resnik
------------------------
Alan J. Resnik, Ph.D.
Director
17
<PAGE>
INTEGRATED FOOD RESOURCES, INC.
INDEPENDENT AUDITOR'S REPORT
AND
CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1999 AND 1998
18
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
PAGE
INDEPENDENT AUDITOR'S REPORT 1
CONSOLIDATED FINANCIAL STATEMENTS
Balance sheets 2 - 3
Statements of operations 4
Statements of changes in stockholders' (deficit) equity 5
Statements of cash flows 6 - 7
Notes to consolidated financial statements 8 - 21
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Integrated Food Resources, Inc.
We have audited the accompanying consolidated balance sheets of Integrated Food
Resources, Inc., as of July 31, 1999 and 1998, and the related consolidated
statements of operations, changes in stockholders' (deficit) equity, and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Integrated Food
Resources, Inc., as of July 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
/s/Moss Adams LLP
Portland, Oregon
November 3, 1999
1
<PAGE>
<TABLE>
INTEGRATED FOOD RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
JULY 31,
-------------------------------
1999 1998
------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,528 $ 215,097
Receivables:
Trade - 63,458
Related-party 33,852 520,324
Employees - 8,421
Inventory - 223,883
Prepaid expenses 102,217 9,782
------------- -------------
Total current assets 137,597 1,040,965
------------- -------------
PLANT AND EQUIPMENT
Tuna packing plant - 918,617
Furniture and equipment 12,351 296,051
Accumulated depreciation (6,422 (36,757)
------------- -------------
5,929 1,177,911
------------- -------------
LAND HELD FOR FUTURE DEVELOPMENT 74,498,400 74,498,400
ADJUSTMENT FOR FOREIGN LAND GRANT (74,498,400) (74,498,400)
------------- -------------
Land held for future development, net of adjustment - -
------------- -------------
GOODWILL - 4,411,434
OTHER ASSETS 5,100 19,496
------------- -------------
Total assets $ 148,626 $ 6,649,806
============= =============
</TABLE>
See accompanying notes.
2
<PAGE>
<TABLE>
INTEGRATED FOOD RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
JULY 31,
-------------------------------
1999 1998
------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 60,379 $ 254,657
Accrued liabilities - 33,453
Related-party notes payable 232,100 4,261,500
Current portion of long-term debt - 113,800
Current portion of capital lease obligation - 6,425
------------- -------------
Total current liabilities 292,479 4,669,835
------------- -------------
LONG-TERM LIABILITIES
Long-term debt, net of current portion - 407,507
Long-term capital lease obligation - 8,032
------------- -------------
Total long-term liabilities - 415,539
------------- -------------
COMMITMENTS AND CONTINGENCIES (Notes 2 and 7)
STOCKHOLDERS' (DEFICIT) EQUITY
Preferred stock, $.001 par 4,067 1
value, 10,000,000 shares
authorized, 4,067,087 and 799
issued and outstanding in 1999
and 1998, respectively
Class A common stock, $.001 par 16,199 16,085
value, 50,000,000 shares
authorized, 16,198,966 and
16,084,643 issued and
outstanding in 1999 and 1998,
respectively
Class B common stock, $.001 par - -
value, 50,000,000 shares
authorized, none issued and
outstanding
Additional paid-in capital 8,275,574 4,054,078
Accumulated deficit (8,439,693) (2,505,732)
------------- -------------
Total stockholders' (deficit) equity (143,853) 1,564,432
------------- -------------
Total liabilities and stockholders' $ 148,626 $ 6,649,806
(deficit) equity
============= =============
</TABLE>
See accompanying notes.
3
<PAGE>
<TABLE>
INTEGRATED FOOD RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED
JULY 31,
--------------------------------
1999 1998
------------- -------------
<S> <C> <C>
NET SALES
Seafood processing sales $ 108,426 $ 5,378,691
COST OF SALES
Seafood processing costs 135,734 5,938,232
------------- -------------
Gross loss (27,308) (559,541)
------------- -------------
SELLING, GENERAL, AND ADMINISTRATIVE
Administrative and consulting (195,007) (1,118,832)
Other selling and general (326,171) (415,678)
------------- -------------
Total selling, general, and administrative expenses (521,178) (1,534,510)
------------- -------------
Operating loss (548,486) (2,094,051)
------------- -------------
OTHER EXPENSES
Loss on disposal of seafood processing plant assets (996,890) -
Write-down of impaired assets (99,448) -
Depreciation and amortization (173,845) (36,757)
Interest (115,292) (321,030)
------------- -------------
Total other expenses (1,385,475) (357,787)
------------- -------------
LOSS BEFORE DISCONTINUED OPERATIONS (1,933,961) (2,451,838)
DISCONTINUED OPERATIONS
Loss from operations of Internet access services segment (739,941) -
Loss on disposal of Internet access services segment (3,260,059) -
------------- -------------
(4,000,000) -
------------- -------------
NET LOSS $ (5,933,961) $ (2,451,838)
============= ==============
BASIC AND DILUTED LOSS PER SHARE
Continuing operations $ (0.12) $ (0.15)
Discontinued operations (0.25) -
------------- --------------
$ (0.37) $ (0.15)
============= ==============
</TABLE>
See accompanying notes.
4
<PAGE>
<TABLE>
INTEGRATED FOOD RESOURCES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY
COMMON STOCK PREFERRED STOCK ADDITIONAL TOTAL
-------------------- ------------------ PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT EQUITY
----------- ------- ---------- ------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, July 31, 1997 4,335,855 $ 4,336 6,637 7 $ 65,791 $ (53,894) 16,240
Issuance of common stock to 10,523,620 10,524 0 (10,524) - 0
Seabourne Ventures, Inc. -
Issuance of common stock for
professional services 30,000 30 - 0 - - 30
Issuance of common stock for 1,183,432 1,183 - 0 3,998,817 - 4,000,000
acquisition of Clipper Cubed
Corporation
Conversion of preferred stock
to common stock 11,736 12 (5,868) (6) (6) - 0
Net loss - - - 0 - ( 2,451,838) (2,451,838)
----------- ------- ---------- ------- ----------- ------------ -------------
BALANCE, July 31, 1998 16,084,643 16,085 799 1 4,054,078 ( 2,505,732) 1,564,432
Conversion of related-party - 4,050,000 4,050 4,045,950 - 4,050,000
notes payable to preferred -
stock
Issuance of preferred stock - - 16,288 16 16,272 - 16,288
Issuance of common stock in
business acquisition 20,000 20 - 0 59,980 - 60,000
Issuance of common stock for
professional services 80,000 80 - 0 59,920 - 60,000
Issuance of common stock to
employees 14,323 14 - 0 39,374 - 39,388
Net loss
- - - 0 - (5,933,961) (5,933,961)
----------- ------- ---------- ------- ----------- ------------ -------------
BALANCE, July 31, 1999 16,198,966 $16,199 4,067,087 $4,067 $8,275,574 $(8,439,693) ($143,853)
=========== ======= ========= ====== ========== ============ =============
</TABLE>
See accompanying notes.
5
<PAGE>
<TABLE>
INTEGRATED FOOD RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
JULY 31,
----------------------------------------------
1999 1998
--------------------- ---------------------
<S> <C> <C>
CASH FLOWS RELATED TO OPERATING ACTIVITIES
Net loss (5,933,961) (2,451,838)
Adjustments to reconcile net loss to net cash from
operations:
Loss on investment in ClipperNet 3,260,059 -
Loss on disposal of seafood processing assets 996,890 -
Expense recognized for issuance of common stock 60,000 -
Write-down of impaired of assets 99,448 -
Depreciation and amortization 542,200 36,757
Decrease (increase) in assets:
Receivables 426,363 (530,004)
Inventories 125,522 (223,883)
Prepaid expenses (93,851) (9,782)
Other assets 15,577 14,931
Increase (decrease) in liabilities:
Accounts payable (94,006) 216,062
Accrued liabilities 129,308 12,560
--------------------- ---------------------
Net cash from operating activities (466,451) (2,935,197)
--------------------- ---------------------
CASH FLOWS RELATED TO INVESTING ACTIVITIES
Purchase of equipment (81,015) (187,348)
Cash paid for business acquisition (42,076) -
Seafood processing plant costs - (918,617)
--------------------- ---------------------
Net cash from investing activities (123,091) (1,105,965)
--------------------- ---------------------
CASH FLOWS RELATED TO FINANCING ACTIVITIES
Proceeds from issuance of common stock - 30
Proceeds from issuance of preferred stock 16,288 -
Proceeds from long-term borrowings - 799
Proceeds from related-party notes payable 910,202 5,059,500
Repayment of related-party notes payable (509,467) (798,000)
Repayment of capital lease obligation (41,050) (6,070)
--------------------- ---------------------
Net cash from financing activities 375,973 4,256,259
--------------------- ---------------------
See accompanying notes.
6
<PAGE>
INTEGRATED FOOD RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
JULY 31,
----------------------------------------------
1999 1998
-------------------- ----------------------
Net (decrease) increase in cash (213,569) 215,097
CASH, beginning of period 215,097 -
--------------------- ---------------------
CASH, end of period 1,528 215,097
===================== =====================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest paid 133,496 321,030
===================== =====================
SCHEDULE OF NONCASH INVESTING AND
FINANCING TRANSACTIONS
Purchase of Clipper Cubed Corporation's assets for
1,183,432 shares of common stock - 4,061,434
--------------------- ---------------------
Conversion of related-party notes payable to
preferred stock 4,050,000 -
--------------------- ---------------------
Capital lease obligations incurred by ClipperNet to
finance the purchase of computer equipment 64,665 -
--------------------- ---------------------
Conversion of ClipperNet long-term debt and accrued
interest to common stock in ClipperNet 693,849 -
--------------------- ---------------------
Issuance of Company shares for consulting services
performed 60,000 -
--------------------- ---------------------
Issuance of Company shares to ClipperNet
employees 39,388 -
--------------------- ---------------------
Acquisition of Netbridge Internet Access Services
assets by ClipperNet:
Equipment 50,000
Goodwill 50,000
Intangible assets 50,000
---------------------
Assets acquired 150,000
Note payable (47,924)
Company stock issued (60,000)
---------------------
Cash paid for business acquisition 42,076
=====================
</TABLE>
See accompanying notes.
7
<PAGE>
INTEGRATED FOOD RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Integrated Food Resources, Inc. (the Company) is a
Nevada corporation, headquartered in Tigard, Oregon. Its business has
involved food processing for private label companies in the food
service industry through its wholly-owned subsidiary, Seabourne
Ventures, Inc. (Seabourne), and providing wireless Internet access
services through its former wholly-owned subsidiary, ClipperNet
Corporation (ClipperNet) (see Note 5). During 1999, the Company
established an additional wholly-owned subsidiary, Integrated Food
Finance Corp. (IFFC), which is a special purpose entity organized to
assist in the financing of future operating activities of the Company
and its operating subsidiaries. As further described in Note 2,
subsequent to July 31, 1999, this wholly-owned subsidiary was involved
in negotiations for additional financing. All significant intercompany
accounts and transactions among the Company's subsidiaries have been
eliminated in the preparation of the consolidated financial statements.
In July 1997, Seabourne Ventures, Inc., a newly organized company,
completed a Share Exchange Agreement with Pixieland Corporation, a
Nevada corporation, pursuant to which Seabourne exchanged 10,523,620
shares of its common stock (representing 70.82% of then issued and
outstanding common stock) for an equal number of Pixieland common
shares. Shortly thereafter, Pixieland changed its name to Integrated
Food Resources, Inc., and completed a Share Exchange Agreement with
Seabourne which then became a wholly-owned subsidiary of the Company.
As further discussed in Note 9, Seabourne operations have primarily
involved tuna processing and packing activities through a plant located
in Ensenada, Mexico. During 1999, the Company determined that
continuing operations through the Mexican plant was no longer
economically feasible and suspended its operations. Therefore, as of
July 31, 1999, Seabourne is involved in no significant operating
activities.
On July 28, 1998, the Company issued stock in exchange for all of the
assets and assumed the liabilities of Clipper Cubed Corporation, a
provider of wireless Internet access services. In 1999, all operations
of the acquired business were provided through the Company's
wholly-owned subsidiary, ClipperNet. As further discussed in Note 5, on
July 31, 1999, ClipperNet issued 1,870,479 shares of common stock to
its former owners in exchange for 1,015,702 shares they held in the
Company's common stock and $693,849 in debt owed to them by ClipperNet.
These transactions resulted in
8
<PAGE>
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES - (continued)
the Company owning approximately 2.6% of the outstanding common stock
of ClipperNet and ClipperNet owning approximately 6.3% of the Company
as of July 31, 1999. The accompanying consolidated financial
statements include the results of operations of ClipperNet through
July 31, 1999, when the exchange occurred. As of July 31, 1999, the
Company adopted the cost method of accounting for its investment in
ClipperNet which has been recorded at no value.
Sales and accounts receivable - As of July 31, 1999 and 1998, and for
the years then ended, one customer, International Trade Group, LLC
(ITG, a related-party as explained in Note 8), accounted for
substantially all sales and accounts receivable from Seabourne's tuna
processing activities. All products from sales to ITG are shipped to
retail food chains in the United States. Sales are recorded when
product is shipped to third-party buyers from ITG.
Substantially all sales and accounts receivable of ClipperNet have
been to independent third parties. Sales have been recognized when
services were provided.
Inventories - Inventories consist of frozen tuna, canned tuna, and
packaging materials. Inventories are valued at the lower of cost or
market by the first-in, first-out (FIFO) method.
Plant and equipment - Plant and equipment are stated at cost.
Depreciation of plant and equipment is computed by the straight-line
method over estimated useful lives ranging from five to seven years.
Expenditures for normal maintenance and repairs are charged to
operations as incurred.
Land held for future development net of adjustment for foreign land
grant - As further discussed in Note 10, in 1998 the Company received
a foreign land grant from the Republic of Guinea. The grant has been
recorded as land held for future development at its appraised value of
$74,498,400. The appraisal was performed by an independent
international firm with expertise in appraisal valuations. An
adjustment in the same amount as the appraisal value (adjustment
balance) has been recorded as an offset to the land value consistent
with International Accounting Standard No. 20. The adjustment balance
will be amortized in the consolidated financial statements as income
over future periods equal to depreciation expense recognized for
assets acquired or constructed for use in conjunction with the land
received by grant.
9
<PAGE>
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES - (continued)
Goodwill - Goodwill is amortized by the straight-line method over a
15-year period. Management periodically reviews goodwill for impairment
and, if appropriate, adjusts the carrying value of goodwill based upon
this assessment. As of July 31, 1999, all previously recorded goodwill
has been charged to expenses.
Income taxes - The Company follows the asset and liability method of
accounting for income taxes whereby deferred tax assets and liabilities
are recognized for the future tax consequences of differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases.
Earnings (loss) per share - Basic earnings (loss) per common share is
computed by dividing net income (loss) by the weighted average number
of common shares outstanding. Diluted earnings per common share assumes
that convertible preferred shares outstanding at the beginning of the
year are converted on that date and outstanding common shares are
adjusted accordingly. Because the outstanding preferred shares would be
antidultive to the calculation, they were not included in the 1999 and
1998 diluted earnings per share calculations.
Cash and cash equivalents - Cash and cash equivalents consist of
short-term, highly liquid investments with maturities of 90 days or
less.
Use of estimates - Preparation of the consolidated financial
statements, in conformity with generally accepted accounting
principles, requires management to make estimates and assumptions that
effect the amounts reported in the consolidated financial statements
and accompanying notes. Significant estimates include the appraisal for
land granted by the Republic of Guinea (see Note 10) and the value of
goodwill recorded by the Company. Actual results could differ from
those estimates and require periodic re-evaluation for impairment.
Recently issued accounting standards - In June 1999, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards (SFAS) No. 136, "Transfers of Assets to a Not-for-Profit
Organization or Charitable Trust That Raises or Holds Contributions for
Others," and SFAS No. 137 "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement
No. 133." Both statements, when they become effective, are expected to
have no effect on the consolidated financial statements of the Company.
10
<PAGE>
NOTE 2 - LIQUIDITY AND FUTURE OPERATIONS
As of July 31, 1999, the Company had current liabilities in excess of
current assets in the amount of $154,882. For the years ended July 31,
1999 and 1998, the Company incurred net losses of $5,933,961 and
$2,451,838, respectively, which contributed to an accumulated deficit
of $8,439,693 as of July 31, 1999. In addition, as of July 31, 1999,
the Company had suspended its tuna packing operations, not begun
operations within the Republic of Guinea, and disposed of its wireless
Internet access services segment resulting in the Company having no
operating activities. Subsequent to July 31, 1999, the Company was in
the process of closing on $201,649,292 in senior secured notes to
finance fishing vessels for the Company's food processing operations
and other capital projects of the Company. In the opinion of
management, completion of this financing will provide the necessary
working capital to allow the Company to pursue its intended business.
NOTE 3 - INVENTORIES
Inventories consisted of the following at July 31, 1999:
1999 1998
----------------------------------------
Finished goods $ - $115,925
Raw material $ - $ 860
Packaging material $ - $107,098
----------------------------------------
$ - $223,883
========================================
NOTE 4 - LONG-TERM LIABILITIES
Long-term debt consisted of the following:
1999 1998
---------- ----------
Unsecured note payable to ITG Finance, $ 232,100 $2,487,500
LLC, a related-party, payable in full
including interest at 10.5%, on December
31, 1999
11
<PAGE>
NOTE 4 - LONG-TERM LIABILITIES - (continued)
1999 1998
---------- -----------
Unsecured note payable to International $ - $ 1,765,000
Trade Group, LLC, a related-party, payable
in full including interest of 10%, on
December 31, 1998
Note payable to Pacific Continental Bank, $ - $ 100,000
secured by inventory, chattel paper,
accounts, equipment, and general
intangibles, payable in full including
interest of 11% per annum on September 16,
1998
Unsecured note payable to Business Systems $ - $ 350,000
Group, payable in monthly installments of
$1,500, including interest at 8%
amortizing over 30 years, payable on July
28, 2008
Unsecured note payable to International $ - $ 9,000
Trade Group, LLC, a related-party, payable
in full including interest of 6% per
annum, on July 15, 1999
Other unsecured notes of which $13,800 is $ - $ 71,307
payable on October 7, 1998, including
interest at 8% and $57,707 is payable in
full on December 8, 2002, including
interest at 8%
-------------------------
$ 234,099 $ 4,782,807
Less current portion $ (232,100) $ 4,375,300
-------------------------
Long-term debt, net of current portion $ 407,507
=========================
12
<PAGE>
NOTE 4 - LONG-TERM LIABILITIES - (continued)
On October 31, 1998, ITG Finance, LLC and International Trade Group,
LLC converted their outstanding debt of $2,285,000 and $1,765,000,
respectively, into the Company's preferred stock. With an exchange
ratio of one preferred share issued for each dollar of debt, this
resulted in the recognition of 4,050,000 additional shares of preferred
stock for $4,050,000. The conversion rate of one preferred share for
each share of common stock was provided for in the Company's amended
Articles of Incorporation, dated July 9, 1999. The Company's preferred
shareholders are entitled to receive dividends on the same basis as
common shareholders; to vote as a single class on all matters with each
preferred share converted to one common stock share for the purpose of
voting; to unrestricted conversion privileges at one common share for
each preferred share; and, to distribution preferences in the event of
dissolution or liquidation of the Company.
NOTE 5 - ACQUISITION AND DIVESTITURE OF CLIPPER CUBED CORPORATION
On July 28, 1998, the Company purchased certain assets and assumed
liabilities from Clipper Cubed Corporation for $4 million. The purchase
price was 1,183,432 shares of the Company's common stock valued, based
upon then current trades from over-the-counter bulletin board
transactions, at $3.38 per share in exchange for the net liabilities
assumed from Clipper Cubed Corporation. The Company placed the acquired
assets and assumed liabilities into a newly formed subsidiary,
ClipperNet Corporation. The acquisition was accounted for as a purchase
and resulted in the
13
<PAGE>
NOTE 5 - ACQUISITION AND DIVESTITURE OF CLIPPER CUBED CORPORATION - (continued)
recognition of goodwill which was being amortized to expense over 15
years unless adjusted for impairment consistent with the Company's
accounting policies. The assets purchased and liabilities assumed were
as follows:
Accounts receivable $ 62,199
Equipment $ 108,703
Goodwill $ 350,000
Other assets $ 18,186
Accounts payable $ (38,595)
Accrued liabilities $ (20,893)
Notes payable (520,507)
Capital lease obligation $ (20,527)
-------------
Net liabilities assumed in excess of assets purchased $ 61,434
Purchase price $ 4,000,000
-------------
Goodwill $ 4,061,434
=============
The accompanying 1998 income statement does not include the results of
operations of ClipperNet for the three days from the date of
acquisition to July 31, 1998, were not significant. The pro forma
effects for the year ended July 31, 1998, had ClipperNet's operations
been combined with those of the Company would have been as follows:
Net loss
Integrated Food Resources, Inc. $(2,451,808)
ClipperNet $ (61,434)
-------------
Combined net loss $(2,513,242)
=============
In November 1998, ClipperNet acquired certain assets and assumed
liabilities of Netbridge Internet Access Services (Netbridge) in
exchange for 20,000 shares of the Company's common stock and cash
consideration of $42,076. The acquisition of this Internet service
provider, located along the Oregon coast, has been accounted for as a
purchase. The pro forma effects of the acquisition on consolidated
operations for the
14
<PAGE>
NOTE 5 - ACQUISITION AND DIVESTITURE OF CLIPPER CUBED CORPORATION - (continued)
year ended July 31, 1999, are not material as Netbridge's operations
were not significant prior to its acquisition. The assets acquired and
liabilities assumed by ClipperNet in its acquisition of Netbridge are
summarized as follows:
Equipment $50,000
Goodwill $50,000
Other intangible assets $50,000
Note payable $ (47,924)
Stock issued $ (60,000)
--------------
Cash paid for business acquisition $ 42,076
==============
For the year ended July 31, 1999, ClipperNet recorded a net loss from
operations of $739,941 and, as of July 31, 1999, had a deficit working
capital position of approximately $430,000. Due to poor operating
results and the need for significant additional capital to support
on-going operations, management chose to divest the Company of
substantially all of its ownership interest in ClipperNet effective
July 31, 1999. To accomplish the disposition of its subsidiary, the
Company first elected a 20-for-1 reverse split of ClipperNet's
outstanding common stock. This resulted in the Company receiving
50,000 shares of common stock for the 1,000,000 shares of ClipperNet
common stock it held prior to the split. ClipperNet then issued
1,870,479 shares of its common stock to former shareholders in
exchange for 1,015,702 shares the same former shareholders held in the
Company's common stock and $693,849 in debt owed to them by
ClipperNet. These transactions resulted in the Company owning
approximately 2.6% of the outstanding common stock of ClipperNet and
ClipperNet owning approximately 6.3%, of the Company as of July 31,
1999. With the reduction in its ownership interest in ClipperNet, the
Company has adopted the cost method of accounting for its investment
which has been recorded at no value as of July 31, 1999.
15
<PAGE>
NOTE 5 - ACQUISITION AND DIVESTITURE OF CLIPPER CUBED CORPORATION - (continued)
The following summarizes the Company's divestiture of its investment
in ClipperNet as of July 31, 1999:
Cash $ 5,894
Receivables $ 89,016
Prepaids $ 1,416
Other assets $ 48,819
Equipment, net $ 235,552
Goodwill, net $4,171,006
Accounts payable $ (119,873)
Accrued liabilities $ (162,761)
Long-term debt $ (964,868)
Capital lease obligations $ (44,142)
-------------
Loss on disposal of Internet access services segment $3,260,059
Net loss from operations $ 739,941
-------------
Loss on investment in ClipperNet $4,000,000
=============
NOTE 6 - INCOME TAXES
Deferred income taxes are recognized for all significant temporary
differences between tax and financial statement bases of assets and
liabilities. The classification of the resulting deferred tax assets
and liabilities is based upon the classification of the related balance
sheet asset or liability.
Deferred tax assets result principally from the Company's net operating
loss carryforward. The net operating loss carryforward of approximately
$1,490,000 for both federal and state income tax purposes will begin
expiring in 2013 unless utilized in earlier years. The Company's
ability to utilize these net operating losses could be severely limited
under Section 382 of the Internal Revenue Code of 1986 if significant
ownership changes occur in the future. In addition, this limitation
could result in the expiration of the net operating losses prior to
their utilization. A valuation allowance is provided at July 31, 1999,
since it is uncertain if the Company will be able to utilize loss
carryforwards and other deferred tax assets in future periods.
16
<PAGE>
NOTE 6 - INCOME TAXES - (continued)
As described in Note 1, the Company completed a Share Exchange
Agreement with Pixieland Corporation in July 1997. The share exchange
transaction resulted in the Company assuming all of the tax attributes
of Pixieland's assets and liabilities and all actual or contingent tax
liabilities previously incurred by Pixieland. Management believes the
tax effect of the share exchange transaction was not significant and
was immaterial to the consolidated financial statements. However, as
complete taxpayer records for Pixieland Corporation are not available,
it is uncertain if any liability to local, state, or federal taxing
authority exists.
Long-term deferred tax assets and liabilities as of July 31, 1999 and
1998, consisted of the following;
1999 1998
-------------- --------------
Deferred tax assets
Net operating loss carryforward $ 1,490,000 $ 830,000
Valuation allowance $ (1,490,000) $ (830,000)
-------------- --------------
Net long-term deferred tax asset $ - $ -
============== ==============
NOTE 7 - PREFERRED STOCK RIGHTS AND PRIVILEGES
All holders of the Company's preferred stock have voting and dividend
rights equal to those of all common stockholders. In addition,
preferred stockholders enjoy liquidation preferences superior to
existing common stockholders and have rights to convert their holdings
into common stock. Preferred shares may be voluntarily exchanged for
common stock at a current rate of $1 per share, which is subject to
adjustment for changes in the Company's capitalization. Mandatory
conversion of preferred shares to common stock will occur upon the
earlier of a 30-day written notice from the Company or immediately
prior to the closing of a public offering by the Company.
In July 1998, the Company converted 5,868 shares of preferred stock at
a 2-for-1 conversion rate for 11,736 common shares. Since the preferred
shares were not issued with "in the money" beneficial conversion
features, the conversion of preferred to common shares has been
recorded as transfer of existing preferred stockholder interests to
that of common stockholder interests based on the exchange ratio.
17
<PAGE>
NOTE 8 - RELATED-PARTY TRANSACTIONS
International Trade Group, LLC (ITG), a corporation controlled by the
Company's Chairman and Chief Executive, has purchased substantially
all of the Company's tuna production for resale to its alliance of
large United States food retailers and private label distributors. ITG
Finance, LLC, also controlled by the Company's Chairman and Chief
Executive, provides short-term financing for the Company's tuna
packing operations.
As of July 31, 1999 and 1998, and for the years then ended, the
Company had the following transactions with ITG and ITG Finance, LLC,
which are related parties:
1999 1998
-------------- --------------
Net sales to International Trade $ 108,426 $ 5,378,691
Group, LLC
Administrative expenses paid to $ - $ 295,895
International Trade Group, LLC
Accounts receivable due from $ 33,852 $ 520,324
International Trade Group, LLC and
other related parties
Notes payable (see Note 4) $ 232,100 $ 4,261,500
At July 31, 1998, notes payable of $4,261,500 include two obligations
due to ITG in the original amount of $2,500,000 and $1,765,000. The
$2,500,000 note supported the working capital requirements of the
Company. The $1,765,000 note payable resulted from an Asset Acquisition
Agreement between the Company and ITG through which the Company
acquired all tangible and intangible assets and assumed certain lease
obligations that arose from ITG's investment in tuna packing operations
in Ensenada, Mexico (see note 9). The effect of the transaction was the
transfer of all tuna packing operations from ITG to the Company. Total
assets acquired at fair value are summarized as follows:
Cash $ 59,983
Accounts receivable $ 304,673
Inventory $ 429,519
Plant and equipment $ 927,383
Prepaid expenses $ 43,442
-----------------
$ 1,765,000
=================
18
<PAGE>
NOTE 8 - RELATED-PARTY TRANSACTIONS - (continued)
As further described in Note 9, tuna packing operations in Ensenada,
Mexico were terminated during 1999. At the time of termination, all
remaining assets were liquidated or abandoned and all liabilities paid.
This resulted in the recognition of a loss from disposal of $996,890.
NOTE 9 - MEXICAN SEAFOOD PROCESSING OPERATIONS
In 1998, the Company's subsidiary, Seabourne, entered into an agreement
that would have resulted in the purchase of the outstanding stock of
Agroindustrias Rowen S.A. (Rowen), a Company that operates a seafood
processing facility in Ensenada, Mexico. Management believed the
seafood processing facility, which is currently in bankruptcy, could
have been acquired in late 1998 or 1999 if conditions of bankruptcy and
terms of the purchase agreement were completed.
To complete the acquisition, which was dependent in part on settlement
of Rowen's outstanding debts of approximately $8.5 million, the Company
entered into a Consulting Agreement with Alvaro Romero Wendlandt
(Wendlandt), former owner in Rowen. Pursuant to the Consulting
Agreement, the Company engaged Wendlandt to negotiate full and complete
settlement of all of Rowen's bankruptcy debts for an amount not to
exceed $7 million. Of this amount, and subject to shareholder approval,
the Company would have paid Rowen's creditors up to $4 million in cash
and a fee to Wendlandt of up to $3 million in Company stock.
During the years ended July 31, 1999 and 1998, Rowen processed and
packed all of the Company's tuna production pursuant to a Toll Packing
Agreement and the Company invested $927,383 in plant equipment. The
Company's ability to acquire the Mexican seafood processing plant, was
dependent upon both settlement of existing creditor claims in
bankruptcy proceedings and its obtaining sufficient debt financing or
additional shareholder capital to meet settlement obligations. However,
during 1999 management recognized that the volume of tuna available for
processing through the Rowen plant was not sufficient to sustain
operations. Therefore, during 1999, the
19
<PAGE>
NOTE 9 - MEXICAN SEAFOOD PROCESSING OPERATIONS - (continued)
Company discontinued its seafood processing operations, liquidated or
wrote-off all Company assets remaining at the plant, and paid its
outstanding obligations when operations ceased. As a result of
terminating these operations and although management continues to
pursue further recoveries and liquidations, the Company wrote-off the
following assets and liabilities:
Accounts receivable $ 42,972
Inventory $ 98,361
Tuna packing plant, net of accumulated depreciation $ 895,956
Accounts payable $ (40,399)
-------------
Loss on disposal of tuna packing plant assets $ 996,890
=============
NOTE 10 - ACQUISITION OF LAND IN THE REPUBLIC OF GUINEA
On July 25, 1998, the Company and the Republic of Guinea (the Republic)
entered into an agreement whereby the Republic deeded to the Company
14,000 hectares (approx. 35,000 acres) of prime agricultural and
aquaculture land along its coastline. The parcels of land which
constitute the 14,000 hectares are spread throughout the coastal region
of the Republic and are not contiguous. The land is best suited for
shrimp farming, rice farming and/or tropical fruit production. In
addition, it is anticipated that a small portion of the land will be
used to construct a tuna processing facility. The land, with a value of
$74,498,400 based upon the independent appraisal of an international
firm with expertise in appraisals, is owned by the Company free of
encumbrances and obligations.
The Company intends to establish farming projects on the property and
anticipates it will fund these projects through the acquisition of debt
financing or the issuance of additional shareholder capital. The value
of the foreign land deeded to the Company has been recorded at fair
market value as land held for future development and is offset by an
adjustment in the same amount (see Note 1).
With the acquisition of additional shareholder capital and/or debt
financing, the Company expects to create viable commercial farming
operations that will maximize land use in phased-in farming projects.
However, the Company's ability to develop the property for its intended
use and to create viable commercial operations is dependent upon the
successful acquisition of additional shareholder capital and/or debt
financing. Further, although the Republic has no right to repatriate
the land if the Company is unable to complete its development plans,
this potential risk and uncertainty may only be mitigated by the
Company acquiring country risk insurance through the OPIC (a division
of ExIm Bank), which the Company has not obtained as of July 31, 1999.
20
<PAGE>
NOTE 11 - BUSINESS SEGMENTS
The Company has operated in two business segments: food processing and Internet
access services. The food processing segment harvests, processes, and
distributes food products to private label customers nationwide. The Internet
access services segment, until divested by the Company in 1999, provided
wireless Internet access services to customers domestically. The following table
discloses these business segments for 1999 and 1998.
INTERNET
SEAFOOD ACCESS
PROCESSING SERVICES CONSOLIDATED
--------------- ------------- ------------
1999
--------------------------
Revenues $ 108,426 $ 809,413 $ 917,839
Operating loss $(1,933,961) $ (739,941) $(2,673,902)
Identifiable assets $ 148,626 $ - $ 148,626
Capital expenditures $ 10,252 $ 70,763 $ 81,015
Interest expense $ 115,292 $ 69,254 $ 184,546
Depreciation and
amortization expense $ 173,845 $ 368,355 $ 542,200
1998
--------------------------
Revenues $ 5,378,691 $ - $ 5,378,691
Operating loss $(2,451,838) $ - $(2,451,838)
Identifiable assets $ 2,049,284 $ 189,088 $ 2,238,372
Capital expenditures $ 997,262 $ 108,703 $ 1,105,965
Interest expense $ 321,030 $ - $ 321,030
Depreciation and
amortization expense $ 36,757 $ - $ 36,757
21
<PAGE>
<TABLE>
INDEX TO EXHIBITS
Incorporated by
Filed Referenced from
No. Exhibit Description Here Form Date Exhibit
<S> <C> <C> <C> <C> <C>
2.0 Documents Comprising
the Reorganization of
ClipperNet Corporation Yes
3.1 Restated Articles of Incorporation
of Integrated Food Resources, Inc. Yes
3.2 Articles of Incorporation
of Seabourne Ventures, Inc. No 10-SB 11/25/98 3.2
3.3 Articles of Incorporation
of ClipperNet Corporation No 10-SB 11/25/98 3.3
3.4 Bylaws of Integrated Food
Resources, Inc. No 10-SB 11/25/98 3.4
3.5 Bylaws of Seabourne
Ventures, Inc. No 10-SB 11/25/98 3.5
3.6 Bylaws of ClipperNet
Corporation No 10-SB 11/25/98 3.6
3.7 Articles of Incorporation of
Morningstar Finance, Inc. Yes
3.8 Restated Articles of Incorporation
of Morningstar Finance, Inc. Yes
3.9 Bylaws of Morningstar
Finance, Inc. Yes
4.1 Certificate of Amendment to
the Articles of Incorporation Yes
4.2 Certificate of Amendment to
the Articles of Incorporation Yes
10.1 Technology and Trademark License
Agreement dated January 25, 1999
between Alain de la Motte and
Integrated Food Resources, Inc. No 10-SB 4/30/99 10.8
11 Statement of per share earnings
computation not filed as is readily
apparent from the consolidated
financial statements No
21 Subsidiaries of Integrated Food
Resources, Inc. No 10-SB 11/25/98 21
27 Financial Data Schedule Yes
</TABLE>
AGREEMENT TO CONVERT DEBT TO STOCK
This agreement is made effective the 31st day of July, 1999, by and
between Dean Bilyeau, herein referred to as "Shareholder" and ClipperNet
Corporation, an Oregon corporation, herein referred to as "ClipperNet."
RECITALS
WHEREAS, on December 8, 1997, ClipperNet executed a promissory note in
favor of Dean Bilyeau in the principal sum of $27,502.02, and on August 19,
1999, ClipperNet executed a Promissory Note in favor of Bilyeau-Miller Insurance
Agency, Inc. in the principal sum of $23,000.00. As of the effective date of
this agreement, Shareholder is the holder of said notes. A copy of the
Promissory Notes are attached as Exhibit "A" and incorporated by reference.
WHEREAS, on the effective date of this agreement, there is due and
owing from ClipperNet to Shareholder the sum of $27,4489.38 on said Promissory
Notes.
WHEREAS, ClipperNet and Shareholder have agreed to convert the balance
due on the Promissory Notes to common stock of ClipperNet at a value of $2.00
per share, pursuant to the terms and conditions of this agreement.
WITNESSETH
WHEREFORE, in consideration of the mutual covenants herein contained,
and other valuable consideration, the receipt of which is hereby acknowledged,
the parties agree as follows:
1. Recitals: The recitals set forth hereinabove are hereby made a part
of this agreement as though fully set forth herein.
2. Conversion: ClipperNet and Shareholder herein agree that Shareholder
shall, in exchange for the issuance of 13,725 shares of common stock of
ClipperNet, fully satisfy all indebtedness represented by the above-referenced
Promissory Notes.
3. Delivery of Note: Shareholder agrees that, as soon as practicable
after the date of this agreement, he shall deliver to ClipperNet the Promissory
Notes referred above, marked "Paid in Full."
4. Delivery of Certificate: Upon receipt of the Promissory Notes
pursuant to Section 3 hereinabove, ClipperNet shall cause to be delivered to
Shareholder a certificate in a form duly approved by the Board of Directors,
evidencing the ownership by Shareholder of 13,725 shares of common stock.
5. Representations of ClipperNet: ClipperNet warrants and represents:
1
<PAGE>
a. That it is a duly authorized corporation licensed to due
business in the State of Oregon, and has the authority to issue to
Shareholder 13,725 shares of common stock;
b. That this agreement has been unanimously approved by the
Board of Directors and Shareholders of ClipperNet pursuant to a consent
resolution in lieu of a special meeting; and
c. That the officer executing this agreement has been duly
authorized to sign on behalf of ClipperNet.
6. Representations of Shareholder: Shareholder warrants and represents:
a. That Shareholder has made an independent investment
decision relating to the Shares being acquired hereunder, based upon
the information that Shareholder has received from the Corporation;
b. That Shareholder understands that the Shares being acquired
hereunder have not been registered under the Security Act of 1933 and
that the undersigned has no right to require registration;
c. That Shareholder has adequate means of providing for
current needs and possible contingencies without having to resort to
funds contemplated to be used for the acquisition of Shares;
d. That Shareholder has a net worth sufficient to bear the
risk of losing his entire investment in the Shares;
e. That Shareholder has sufficient knowledge and experience in
financial matters so as to be able to evaluate the relative risks and
merits of an investment in ClipperNet;
f. That the Shares which are the subject of this Agreement
will be acquired solely for Shareholder's account as an investment and
will not be purchased with the view toward distributions, resale,
subdivision or fractionalization;
g. That Shareholder realizes that the Shares cannot be readily
sold, that there will be no public market, that he may not be able to
sell or to dispose of his interest in ClipperNet;
2
<PAGE>
h. That Shareholder understands that his right to transfer the
Shares will be restricted unless the transfer will not be in violation
of the Securities Act of 1933 or applicable state securities laws
(including investor suitability standards) and that ClipperNet will not
consent to transfer of shares unless the transferee represents that the
transferee meets certain financial suitability standards;
i. Shareholder has carefully reviewed the information relating
to the financial status, management, and product of ClipperNet.
ClipperNet has made available all documents that were reviewed or
requested prior to this agreement, and has provided answers to all
questions asked concerning the investment. In evaluating the
suitability of an investment in ClipperNet, the undersigned has not
relied upon any representations or other information (whether oral or
written) except documents or answers furnished by ClipperNet;
j. Shareholder acknowledges that the information provided
regarding ClipperNet is confidential and non-public and agrees that all
of the information will be kept in confidence and will not be disclosed
to any third party, but this obligation does not apply to any such
information which (1) is part of public knowledge or is readily
accessible as literature at the date of this agreement, (2) becomes
part of public knowledge or literature and, thus, becomes readily
accessible by publication (except as a result of a breach of this
provision), or (3) is received from third parties (except third parties
who disclose it is in violation of any confidentiality agreement they
may have with the corporation);
k. Shareholder understands that the books and records of
ClipperNet will be available upon reasonable notice for inspection by
investors during reasonable business hours at its principal place of
business;
l. Shareholder recognizes that investment in ClipperNet
involves certain risks, and Shareholder has taken full cognizance of
the special risks relating to a development stage company.
7. Survival of Warranties: All representations, warranties and
covenants set forth in this agreement shall survive after the date of this
agreement.
8. Attorney's Fees: In the event that suit or action shall be filed by
either of the parties to enforce or establish any rights or remedies under this
agreement, the party prevailing in such suit or action shall be entitled to
recover such additional sum from the other party as the court may adjudge
reasonable as attorney's fees in such suit or action and in any appeal
therefrom.
9. Notices: All notices provided for herein shall be in writing and
shall be deemed to have been duly given if mailed by United Sates certified
mail, postage prepaid, to the appropriate addresses set forth hereinbelow, or
such other address as one party may provide to the other in writing.
10. Successors' Interests: Subject to the limitations stated herein
this agreement shall be binding upon and inure to the benefit of the parties,
their heirs, personal representative, successors and assigns.
11. Gender; Singular or Plural: Any reference in this agreement in the
masculine gender shall include the feminine and neutral genders, and vice versa,
as appropriate. Any reference in this agreement in the singular shall mean the
plural and vice versa as appropriate.
3
<PAGE>
12. Governing Law: This agreement shall be construed as to both
validity and performance and enforced in accordance with and governed by the
laws of the State of Oregon. In the event of any dispute arising out of this
agreement, each of the parties consent to exclusive jurisdiction and venue in
the Circuit Court of Lane County, Oregon.
13. Entire Agreement: This agreement and the documents referenced
herein constitute the entire agreement regarding the acquisition of stock in
ClipperNet by Shareholder and supersedes all prior agreement and understandings,
oral and written, between the parties hereto with respect to the subject matter
hereof and may not be amended, modified or terminated unless by a written
instrument executed by the party or parties sought to be bound.
SHAREHOLDER CLIPPERNET CORPORATION
/s/ Dean Bilyeau By: /s/ Ransom R. Southerland
Title: President
4
<PAGE>
AGREEMENT TO CONVERT DEBT TO STOCK
This agreement is made effective the 31st day of July, 1999, by and
between Bill Southerland, herein referred to as "Shareholder" and ClipperNet
Corporation, an Oregon corporation, herein referred to as "ClipperNet."
RECITALS
WHEREAS, on December 8, 1997, ClipperNet executed a promissory note in
favor of Bill Southerland in the principal sum of $12,313.22. As of the
effective date of this agreement, Shareholder is the holder of said note. A copy
of the Promissory Note is attached as Exhibit "A" and incorporated by reference.
WHEREAS, on the effective date of this agreement, there is due and
owing from ClipperNet to Shareholder the sum of $10,777.31 on said Promissory
Note.
WHEREAS, ClipperNet and Shareholder have agreed to convert the balance
due on the Promissory Note to common stock of ClipperNet at a value of $2.00 per
share, pursuant to the terms and conditions of this agreement.
WITNESSETH
WHEREFORE, in consideration of the mutual covenants herein contained,
and other valuable consideration, the receipt of which is hereby acknowledged,
the parties agree as follows:
1. Recitals: The recitals set forth hereinabove are hereby made a part
of this agreement as though fully set forth herein.
2. Conversion: ClipperNet and Shareholder herein agree that Shareholder
shall, in exchange for the issuance of 5,389 shares of common stock of
ClipperNet, fully satisfy all indebtedness represented by the above-referenced
Promissory Note.
3. Delivery of Note: Shareholder agrees that, as soon as practicable
after the date of this agreement, he shall deliver to ClipperNet the Promissory
Note referred above, marked "Paid in Full."
4. Delivery of Certificate: Upon receipt of the Promissory Note
pursuant to Section 3 hereinabove, ClipperNet shall cause to be delivered to
Shareholder a certificate in a form duly approved by the Board of Directors,
evidencing the ownership by Shareholder of 5,389 shares of common stock.
5. Representations of ClipperNet: ClipperNet warrants and represents:
1
<PAGE>
a. That it is a duly authorized corporation licensed to due
business in the State of Oregon, and has the authority to issue to
Shareholder 5,389 shares of common stock;
b. That this agreement has been unanimously approved by the
Board of Directors and Shareholders of ClipperNet pursuant to a consent
resolution in lieu of a special meeting; and
c. That the officer executing this agreement has been duly
authorized to sign on behalf of ClipperNet.
6. Representations of Shareholder: Shareholder warrants and represents:
a. That Shareholder has made an independent investment
decision relating to the Shares being acquired hereunder, based upon
the information that Shareholder has received from the Corporation;
b. That Shareholder understands that the Shares being acquired
hereunder have not been registered under the Security Act of 1933 and
that the undersigned has no right to require registration;
c. That Shareholder has adequate means of providing for
current needs and possible contingencies without having to resort to
funds contemplated to be used for the acquisition of Shares;
d. That Shareholder has a net worth sufficient to bear the
risk of losing his entire investment in the Shares;
e. That Shareholder has sufficient knowledge and experience in
financial matters so as to be able to evaluate the relative risks and
merits of an investment in ClipperNet;
f. That the Shares which are the subject of this Agreement
will be acquired solely for Shareholder's account as an investment and
will not be purchased with the view toward distributions, resale,
subdivision or fractionalization;
g. That Shareholder realizes that the Shares cannot be readily
sold, that there will be no public market, that he may not be able to
sell or to dispose of his interest in ClipperNet;
h. That Shareholder understands that his right to transfer the
Shares will be restricted unless the transfer will not be in violation
of the Securities Act of 1933 or applicable state securities laws
(including investor suitability standards) and that ClipperNet will not
consent to transfer of shares unless the transferee represents that the
transferee meets certain financial suitability standards;
2
<PAGE>
i. Shareholder has carefully reviewed the information relating
to the financial status, management, and product of ClipperNet.
ClipperNet has made available all documents that were reviewed or
requested prior to this agreement, and has provided answers to all
questions asked concerning the investment. In evaluating the
suitability of an investment in ClipperNet, the undersigned has not
relied upon any representations or other information (whether oral or
written) except documents or answers furnished by ClipperNet;
j. Shareholder acknowledges that the information provided
regarding ClipperNet is confidential and non-public and agrees that all
of the information will be kept in confidence and will not be disclosed
to any third party, but this obligation does not apply to any such
information which (1) is part of public knowledge or is readily
accessible as literature at the date of this agreement, (2) becomes
part of public knowledge or literature and, thus, becomes readily
accessible by publication (except as a result of a breach of this
provision), or (3) is received from third parties (except third parties
who disclose it is in violation of any confidentiality agreement they
may have with the corporation);
k. Shareholder understands that the books and records of
ClipperNet will be available upon reasonable notice for inspection by
investors during reasonable business hours at its principal place of
business;
l. Shareholder recognizes that investment in ClipperNet
involves certain risks, and Shareholder has taken full cognizance of
the special risks relating to a development stage company.
7. Survival of Warranties: All representations, warranties and
covenants set forth in this agreement shall survive after the date of this
agreement.
8. Attorney's Fees: In the event that suit or action shall be filed by
either of the parties to enforce or establish any rights or remedies under this
agreement, the party prevailing in such suit or action shall be entitled to
recover such additional sum from the other party as the court may adjudge
reasonable as attorney's fees in such suit or action and in any appeal
therefrom.
9. Notices: All notices provided for herein shall be in writing and
shall be deemed to have been duly given if mailed by United Sates certified
mail, postage prepaid, to the appropriate addresses set forth hereinbelow, or
such other address as one party may provide to the other in writing.
10. Successors' Interests: Subject to the limitations stated herein
this agreement shall be binding upon and inure to the benefit of the parties,
their heirs, personal representative, successors and assigns.
11. Gender; Singular or Plural: Any reference in this agreement in the
masculine gender shall include the feminine and neutral genders, and vice versa,
as appropriate. Any reference in this agreement in the singular shall mean the
plural and vice versa as appropriate.
3
<PAGE>
12. Governing Law: This agreement shall be construed as to both
validity and performance and enforced in accordance with and governed by the
laws of the State of Oregon. In the event of any dispute arising out of this
agreement, each of the parties consent to exclusive jurisdiction and venue in
the Circuit Court of Lane County, Oregon.
13. Entire Agreement: This agreement and the documents referenced
herein constitute the entire agreement regarding the acquisition of stock in
ClipperNet by Shareholder and supersedes all prior agreement and understandings,
oral and written, between the parties hereto with respect to the subject matter
hereof and may not be amended, modified or terminated unless by a written
instrument executed by the party or parties sought to be bound.
SHAREHOLDER CLIPPERNET CORPORATION
/s/ Bill Southerland By: /s/ Ransom R. Southerland
Title: President
4
<PAGE>
AGREEMENT TO CONVERT DEBT TO STOCK
This agreement is made effective the 31st day of July, 1999, by and
between Ransom R. Southerland, herein referred to as "Shareholder" and
ClipperNet Corporation, an Oregon corporation, herein referred to as
"ClipperNet."
RECITALS
WHEREAS, ClipperNet has executed Promissory Notes evidencing
indebtedness as follows:
Date Payee Principal Amount
12/08/97 Ransom R. Southerland $30,654.99
07/28/98 Business Systems Group, Inc. $336,000.00
09/17/99 John Crowder $100,000.00
03/22/99 John Crowder $150,000.00
As of the effective date of this agreement, Shareholder is the holder
of said notes. A copy of the Promissory Notes are attached as Exhibit "A" and
incorporated by reference.
WHEREAS, on the effective date of this agreement, there is due and
owing from ClipperNet to Shareholder the sum of $655,622.08 on said Promissory
Notes.
WHEREAS, ClipperNet and Shareholder have agreed to convert the balance
due on the Promissory Notes to common stock of ClipperNet at a value of $2.00
per share, pursuant to the terms and conditions of this agreement.
WITNESSETH
WHEREFORE, in consideration of the mutual covenants herein contained,
and other valuable consideration, the receipt of which is hereby acknowledged,
the parties agree as follows:
1. Recitals: The recitals set forth hereinabove are hereby made a part
of this agreement as though fully set forth herein.
2. Conversion: ClipperNet and Shareholder herein agree that Shareholder
shall, in exchange for the issuance of 327,811 shares of common stock of
ClipperNet, fully satisfy all indebtedness represented by the above-referenced
Promissory Notes.
3. Delivery of Note: Shareholder agrees that, as soon as practicable
after the date of this agreement, he shall deliver to ClipperNet the Promissory
Notes referred above, marked "Paid in Full."
1
<PAGE>
4. Delivery of Certificate: Upon receipt of the Promissory Note
pursuant to Section 3 hereinabove, ClipperNet shall cause to be delivered to
Shareholder a certificate in a form duly approved by the Board of Directors,
evidencing the ownership by Shareholder of 327,811 shares of common stock.
5. Representations of ClipperNet: ClipperNet warrants and represents:
a. That it is a duly authorized corporation licensed to due
business in the State of Oregon, and has the authority to issue to
Shareholder 327,811 shares of common stock;
b. That this agreement has been unanimously approved by the
Board of Directors and Shareholders of ClipperNet pursuant to a consent
resolution in lieu of a special meeting; and
c. That the officer executing this agreement has been duly
authorized to sign on behalf of ClipperNet.
6. Representations of Shareholder: Shareholder warrants and represents:
a. That Shareholder has made an independent investment
decision relating to the Shares being acquired hereunder, based upon
the information that Shareholder has received from the Corporation;
b. That Shareholder understands that the Shares being acquired
hereunder have not been registered under the Security Act of 1933 and
that the undersigned has no right to require registration;
c. That Shareholder has adequate means of providing for
current needs and possible contingencies without having to resort to
funds contemplated to be used for the acquisition of Shares;
d. That Shareholder has a net worth sufficient to bear the
risk of losing his entire investment in the Shares;
e. That Shareholder has sufficient knowledge and experience in
financial matters so as to be able to evaluate the relative risks and
merits of an investment in ClipperNet;
f. That the Shares which are the subject of this Agreement
will be acquired solely for Shareholder's account as an investment and
will not be purchased with the view toward distributions, resale,
subdivision or fractionalization;
g. That Shareholder realizes that the Shares cannot be readily
sold, that there will be no public market, that he may not be able to
sell or to dispose of his interest in ClipperNet;
2
<PAGE>
h. That Shareholder understands that his right to transfer the
Shares will be restricted unless the transfer will not be in violation
of the Securities Act of 1933 or applicable state securities laws
(including investor suitability standards) and that ClipperNet will not
consent to transfer of shares unless the transferee represents that the
transferee meets certain financial suitability standards;
i. Shareholder has carefully reviewed the information relating
to the financial status, management, and product of ClipperNet.
ClipperNet has made available all documents that were reviewed or
requested prior to this agreement, and has provided answers to all
questions asked concerning the investment. In evaluating the
suitability of an investment in ClipperNet, the undersigned has not
relied upon any representations or other information (whether oral or
written) except documents or answers furnished by ClipperNet;
j. Shareholder acknowledges that the information provided
regarding ClipperNet is confidential and non-public and agrees that all
of the information will be kept in confidence and will not be disclosed
to any third party, but this obligation does not apply to any such
information which (1) is part of public knowledge or is readily
accessible as literature at the date of this agreement, (2) becomes
part of public knowledge or literature and, thus, becomes readily
accessible by publication (except as a result of a breach of this
provision), or (3) is received from third parties (except third parties
who disclose it is in violation of any confidentiality agreement they
may have with the corporation);
k. Shareholder understands that the books and records of
ClipperNet will be available upon reasonable notice for inspection by
investors during reasonable business hours at its principal place of
business;
l. Shareholder recognizes that investment in ClipperNet
involves certain risks, and Shareholder has taken full cognizance of
the special risks relating to a development stage company.
7. Survival of Warranties: All representations, warranties and
covenants set forth in this agreement shall survive after the date of this
agreement.
8. Attorney's Fees: In the event that suit or action shall be filed by
either of the parties to enforce or establish any rights or remedies under this
agreement, the party prevailing in such suit or action shall be entitled to
recover such additional sum from the other party as the court may adjudge
reasonable as attorney's fees in such suit or action and in any appeal
therefrom.
9. Notices: All notices provided for herein shall be in writing and
shall be deemed to have been duly given if mailed by United Sates certified
mail, postage prepaid, to the appropriate addresses set forth hereinbelow, or
such other address as one party may provide to the other in writing.
3
<PAGE>
10. Successors' Interests: Subject to the limitations stated herein
this agreement shall be binding upon and inure to the benefit of the parties,
their heirs, personal representative, successors and assigns.
11. Gender; Singular or Plural: Any reference in this agreement in the
masculine gender shall include the feminine and neutral genders, and vice versa,
as appropriate. Any reference in this agreement in the singular shall mean the
plural and vice versa as appropriate.
12. Governing Law: This agreement shall be construed as to both
validity and performance and enforced in accordance with and governed by the
laws of the State of Oregon. In the event of any dispute arising out of this
agreement, each of the parties consent to exclusive jurisdiction and venue in
the Circuit Court of Lane County, Oregon.
13. Entire Agreement: This agreement and the documents referenced
herein constitute the entire agreement regarding the acquisition of stock in
ClipperNet by Shareholder and supersedes all prior agreement and understandings,
oral and written, between the parties hereto with respect to the subject matter
hereof and may not be amended, modified or terminated unless by a written
instrument executed by the party or parties sought to be bound.
SHAREHOLDER CLIPPERNET CORPORATION
/s/ Ransom R. Southerland By: /s/ Ransom R. Southerland
Title: President
4
<PAGE>
CLIPPERNET CORPORATION
an Oregon corporation
SUBSCRIPTION AGREEMENT
ClipperNet Corporation
2295 Coburg Rd., Suite 105
Eugene, OR 97401
Gentlemen:
You have provided the undersigned with certain information regarding
ClipperNet Corporation, an Oregon corporation, ("The Corporation"), including
information relating to the financial status, management and product of the
Corporation. You have also provided me with the opportunity to ask questions and
to request information regarding the Corporation.
In light of that information, I agree with the Corporation:
Purchase Subject to the terms and conditions of this Subscription
Agreement and for valuable consideration, I irrevocably tender this Subscription
Agreement for purchase of 419,325 shares of the Corporation's common stock ("the
Shares"). The total purchase price of said shares is $838,650.00 to be paid by
transfer to ClipperNet Corporation of 279,550 shares of restricted common stock
of Integrated Food Resources, Inc., a Nevada corporation, valued at $3.00 per
share.
Upon acceptance of this Subscription Agreement by ClipperNet
Corporation and the execution hereof, the undersigned shall deliver to
ClipperNet Corporation Certificate No(s). 1319 evidencing 279,550 fully paid up,
non-assessable shares of restricted common stock of Integrated Food Resources,
Inc. fully endorsed for transfer to ClipperNet Corporation.
With respect to said shares of Integrated Food Resources, Inc. being
transferred to ClipperNet Corporation, the undersigned represents and warrants
the following:
A. The undersigned is the owner of 279,550 shares of
common stock of Integrated Food Resources, Inc. as evidenced by
Certificate No(s). 1319 free and clear of all liens, claims, pledges,
or encumbrances except for restrictions on transfer as disclosed
herein.
B. The undersigned has not granted to any person or entity an
option or the right to purchase any of said 279,550 shares of
Integrated Food Resources, Inc.
C. The undersigned has the right, power and authority to
transfer said 279,550 shares of Integrated Food Resources, Inc., and
the transfer will not breach any agreement or contract heretofore
entered into by the undersigned.
The undersigned represents that, as of the date of this Subscription
Agreement, he has made an independent investment decision relating to the Shares
based upon the above-described information that has received from the
Corporation
Representation by Subscriber. The undersigned represents and warrants:
1
<PAGE>
A. He understands that the Shares have not been registered
under the Security Act of 1933 and that the undersigned has no right to
require registration;
B. The undersigned has adequate means of providing for current
needs and possible contingencies without having to resort to funds
contemplated to be used for the purchase of Shares;
C. The undersigned has a net worth sufficient to bear the risk
of losing his entire investment in the Shares;
D. The undersigned has alone or together with a Purchaser
Representative (as defined by SEC Rule 501), sufficient knowledge and
experience in financial matters so as to be able to evaluate the
relative risks and merits of an investment in the corporation when it
is offered;
E. The Shares which are the subject of this Agreement will be
acquired solely for his account as an investment and will not be
purchased with the view toward distributions, resale, subdivision or
fractionalization;
F. The undersigned realizes that the Shares cannot be readily
sold, that there will be no public market, that he may not be able to
sell or to dispose of their interests in the Corporation;
G. The undersigned understands that his right to transfer the
Shares will be restricted unless the transfer will not be in violation
of the Securities Act of 1933 or applicable state securities laws
(including investor suitability standards) and that the corporation
will not consent to transfer of shares unless the transferee represents
that the transferee meets certain financial suitability standards;
H. The undersigned and his Purchaser Representative, if any,
have carefully reviewed the information relating to the financial
status, management, and product of the Corporation. The Corporation has
made available, if so requested, to his attorney, accountant, and
Purchaser Representative, all documents that were reviewed or requested
prior to an offer of shares of the Corporation, and has provided
answers to all questions asked of the Corporation concerning the
offering and an investment in the Corporation. In evaluating the
suitability of an investment in the Corporation, the undersigned has
not relied upon any representations or other information (whether oral
or written) except documents or answers furnished by the Corporation;
I. The undersigned acknowledges that the information
provided regarding the Corporation is confidential and non-public. The
undersigned agrees that all of the information will be kept in
confidence and will not be disclosed to any third party, but this
obligation does not apply to any such information which is (1) is part
of public knowledge or is readily accessible as literature at the date
of this Subscription Agreement, (2) becomes part of public knowledge or
literature and, thus, becomes readily accessible by publication (except
as a result of a breach of this provision), or (3) is received from
third parties (except third parties who disclose it is in violation of
any confidentiality agreement they may have with the corporation);
2
<PAGE>
J. The undersigned understands that the books and records of
the Corporation will be available upon reasonable notice for inspection
by investors during reasonable business hours at its principal place of
business;
K. The undersigned and his Purchaser Representative, if any,
recognize that investment in the Corporation involves certain risks,
and the undersigned has taken full cognizance of the special risks
relating to a development stage company.
Acknowledgement of ClipperNet Corporation. ClipperNet Corporation by
its acceptance and execution hereof, acknowledges that the shares of common
stock of Integrated Food Resources, Inc., received hereby, have not been
registered under the Securities Act of 1933, as amended, and may not be sold or
otherwise transferred unless compliance with the registration provisions of such
Act has been made or unless availability of an exemption from such registration
provisions has been established, or unless sold pursuant to Rule 144 under the
Securities Act of 1933.
IN WITNESS WHEREOF, the undersigned executed this Subscription
Agreement effective the 31st day of July, 1999.
/s/ Bill Southerland
BILL SOUTHERLAND
Address: 2729 Haven Dr.
Boise, ID 83616
Accepted this 15th day of September, 1999.
CLIPPERNET CORPORATION
By: /s/ Ransom R. Southerland
Title: President
4
<PAGE>
CLIPPERNET CORPORATION
an Oregon corporation
SUBSCRIPTION AGREEMENT
ClipperNet Corporation
2295 Coburg Rd., Suite 105
Eugene, OR 97401
Gentlemen:
You have provided the undersigned with certain information regarding
ClipperNet Corporation, an Oregon corporation, ("The Corporation"), including
information relating to the financial status, management and product of the
Corporation. You have also provided me with the opportunity to ask questions and
to request information regarding the Corporation.
In light of that information, I agree with the Corporation:
Purchase Subject to the terms and conditions of this Subscription
Agreement and for valuable consideration, I irrevocably tender this Subscription
Agreement for purchase of 67,092 shares of the Corporation's common stock ("the
Shares"). The total purchase price of said shares is $134,184.00 to be paid by
transfer to ClipperNet Corporation of 44,728 shares of restricted common stock
of Integrated Food Resources, Inc., a Nevada corporation, valued at $3.00 per
share.
Upon acceptance of this Subscription Agreement by ClipperNet
Corporation and the execution hereof, the undersigned shall deliver to
ClipperNet Corporation Certificate No(s). 1317 evidencing 44,728 fully paid up,
non-assessable shares of restricted common stock of Integrated Food Resources,
Inc. fully endorsed for transfer to ClipperNet Corporation.
With respect to said shares of Integrated Food Resources, Inc. being
transferred to ClipperNet Corporation, the undersigned represents and warrants
the following:
A. The undersigned is the owner of 44,728 shares of
common stock of Integrated Food Resources, Inc. as evidenced by
Certificate No(s). 1317 free and clear of all liens, claims, pledges,
or encumbrances except for restrictions on transfer as disclosed
herein.
B. The undersigned has not granted to any person or entity an
option or the right to purchase any of said 44,728 shares of Integrated
Food Resources, Inc.
C. The undersigned has the right, power and authority to
transfer said 44,728 shares of Integrated Food Resources, Inc., and the
transfer will not breach any agreement or contract heretofore entered
into by the undersigned.
The undersigned represents that, as of the date of this Subscription
Agreement, he has made an independent investment decision relating to the Shares
based upon the above-described information that has received from the
Corporation
Representation by Subscriber. The undersigned represents and warrants:
1
<PAGE>
A. He understands that the Shares have not been registered
under the Security Act of 1933 and that the undersigned has no right to
require registration;
B. The undersigned has adequate means of providing for current
needs and possible contingencies without having to resort to funds
contemplated to be used for the purchase of Shares;
C. The undersigned has a net worth sufficient to bear the risk
of losing his entire investment in the Shares;
D. The undersigned has alone or together with a Purchaser
Representative (as defined by SEC Rule 501), sufficient knowledge and
experience in financial matters so as to be able to evaluate the
relative risks and merits of an investment in the corporation when it
is offered;
E. The Shares which are the subject of this Agreement will be
acquired solely for his account as an investment and will not be
purchased with the view toward distributions, resale, subdivision or
fractionalization;
F. The undersigned realizes that the Shares cannot be readily
sold, that there will be no public market, that he may not be able to
sell or to dispose of their interests in the Corporation;
G. The undersigned understands that his right to transfer the
Shares will be restricted unless the transfer will not be in violation
of the Securities Act of 1933 or applicable state securities laws
(including investor suitability standards) and that the corporation
will not consent to transfer of shares unless the transferee represents
that the transferee meets certain financial suitability standards;
H. The undersigned and his Purchaser Representative, if any,
have carefully reviewed the information relating to the financial
status, management, and product of the Corporation. The Corporation has
made available, if so requested, to his attorney, accountant, and
Purchaser Representative, all documents that were reviewed or requested
prior to an offer of shares of the Corporation, and has provided
answers to all questions asked of the Corporation concerning the
offering and an investment in the Corporation. In evaluating the
suitability of an investment in the Corporation, the undersigned has
not relied upon any representations or other information (whether oral
or written) except documents or answers furnished by the Corporation;
I. The undersigned acknowledges that the information provided
regarding the Corporation is confidential and non-public. The
undersigned agrees that all of the information will be kept in
confidence and will not be disclosed to any third party, but this
obligation does not apply to any such information which is (1) is part
of public knowledge or is readily accessible as literature at the date
of this Subscription Agreement, (2) becomes part of public knowledge or
literature and, thus, becomes readily accessible by publication (except
as a result of a breach of this provision), or (3) is received from
third parties (except third parties who disclose it is in violation of
any confidentiality agreement they may have with the corporation);
J. The undersigned understands that the books and records of
the Corporation will be available upon reasonable notice for inspection
by investors during reasonable business hours at its principal place of
business;
2
<PAGE>
K. The undersigned and his Purchaser Representative, if any,
recognize that investment in the Corporation involves certain risks,
and the undersigned has taken full cognizance of the special risks
relating to a development stage company.
Acknowledgement of ClipperNet Corporation. ClipperNet Corporation by
its acceptance and execution hereof, acknowledges that the shares of common
stock of Integrated Food Resources, Inc., received hereby, have not been
registered under the Securities Act of 1933, as amended, and may not be sold or
otherwise transferred unless compliance with the registration provisions of such
Act has been made or unless availability of an exemption from such registration
provisions has been established, or unless sold pursuant to Rule 144 under the
Securities Act of 1933.
IN WITNESS WHEREOF, the undersigned executed this Subscription
Agreement effective the 31st day of July, 1999.
/s/ Dale Bilyeau
DALE BILYEAU
Address: P.O. Box 488
Lebanon, OR 97355
Accepted this 15th day of September, 1999.
CLIPPERNET CORPORATION
By: /s/ Ransom R. Southerland
Title: President
4
<PAGE>
CLIPPERNET CORPORATION
an Oregon corporation
SUBSCRIPTION AGREEMENT
ClipperNet Corporation
2295 Coburg Rd., Suite 105
Eugene, OR 97401
Gentlemen:
You have provided the undersigned with certain information regarding
ClipperNet Corporation, an Oregon corporation, ("The Corporation"), including
information relating to the financial status, management and product of the
Corporation. You have also provided me with the opportunity to ask questions and
to request information regarding the Corporation.
In light of that information, I agree with the Corporation:
Purchase Subject to the terms and conditions of this Subscription
Agreement and for valuable consideration, we irrevocably tender this
Subscription Agreement for purchase of 67,092 shares of the Corporation's common
stock ("the Shares"). The total purchase price of said shares is $134,184.00 to
be paid by transfer to ClipperNet Corporation of 44,728 shares of restricted
common stock of Integrated Food Resources, Inc., a Nevada corporation, valued at
$3.00 per share.
Upon acceptance of this Subscription Agreement by ClipperNet
Corporation and the execution hereof, the undersigned shall deliver to
ClipperNet Corporation Certificate No(s). 1317 evidencing 44,728 fully paid up,
non-assessable shares of restricted common stock of Integrated Food Resources,
Inc. fully endorsed for transfer to ClipperNet Corporation.
With respect to said shares of Integrated Food Resources, Inc. being
transferred to ClipperNet Corporation, the undersigned represents and warrants
the following:
A. The undersigned is the owner of 44,728 shares of
common stock of Integrated Food Resources, Inc. as evidenced by
Certificate No(s). 1317 free and clear of all liens, claims, pledges,
or encumbrances except for restrictions on transfer as disclosed
herein.
B. The undersigned has not granted to any person or entity an
option or the right to purchase any of said 44,728 shares of Integrated
Food Resources, Inc.
C. The undersigned has the right, power and authority to
transfer said 44,728 shares of Integrated Food Resources, Inc., and the
transfer will not breach any agreement or contract heretofore entered
into by the undersigned.
The undersigned represents that, as of the date of this Subscription
Agreement, he has made an independent investment decision relating to the Shares
based upon the above-described information that has received from the
Corporation
Representation by Subscriber. The undersigned represents and warrants:
1
<PAGE>
A. He understands that the Shares have not been registered
under the Security Act of 1933 and that the undersigned has no right to
require registration;
B. The undersigned has adequate means of providing for current
needs and possible contingencies without having to resort to funds
contemplated to be used for the purchase of Shares;
C. The undersigned has a net worth sufficient to bear the risk
of losing his entire investment in the Shares;
D. The undersigned has alone or together with a Purchaser
Representative (as defined by SEC Rule 501), sufficient knowledge and
experience in financial matters so as to be able to evaluate the
relative risks and merits of an investment in the corporation when it
is offered;
E. The Shares which are the subject of this Agreement will be
acquired solely for his account as an investment and will not be
purchased with the view toward distributions, resale, subdivision or
fractionalization;
F. The undersigned realizes that the Shares cannot be readily
sold, that there will be no public market, that he may not be able to
sell or to dispose of their interests in the Corporation;
G. The undersigned understands that his right to transfer the
Shares will be restricted unless the transfer will not be in violation
of the Securities Act of 1933 or applicable state securities laws
(including investor suitability standards) and that the corporation
will not consent to transfer of shares unless the transferee represents
that the transferee meets certain financial suitability standards;
H. The undersigned and his Purchaser Representative, if any,
have carefully reviewed the information relating to the financial
status, management, and product of the Corporation. The Corporation has
made available, if so requested, to his attorney, accountant, and
Purchaser Representative, all documents that were reviewed or requested
prior to an offer of shares of the Corporation, and has provided
answers to all questions asked of the Corporation concerning the
offering and an investment in the Corporation. In evaluating the
suitability of an investment in the Corporation, the undersigned has
not relied upon any representations or other information (whether oral
or written) except documents or answers furnished by the Corporation;
I. The undersigned acknowledges that the information provided
regarding the Corporation is confidential and non-public. The
undersigned agrees that all of the information will be kept in
confidence and will not be disclosed to any third party, but this
obligation does not apply to any such information which is (1) is part
of public knowledge or is readily accessible as literature at the date
of this Subscription Agreement, (2) becomes part of public knowledge or
literature and, thus, becomes readily accessible by publication (except
as a result of a breach of this provision), or (3) is received from
third parties (except third parties who disclose it is in violation of
any confidentiality agreement they may have with the corporation);
J. The undersigned understands that the books and records of
the Corporation will be available upon reasonable notice for inspection
by investors during reasonable business hours at its principal place of
business;
2
<PAGE>
K. The undersigned and his Purchaser Representative, if any,
recognize that investment in the Corporation involves certain risks,
and the undersigned has taken full cognizance of the special risks
relating to a development stage company.
Acknowledgement of ClipperNet Corporation. ClipperNet Corporation by
its acceptance and execution hereof, acknowledges that the shares of common
stock of Integrated Food Resources, Inc., received hereby, have not been
registered under the Securities Act of 1933, as amended, and may not be sold or
otherwise transferred unless compliance with the registration provisions of such
Act has been made or unless availability of an exemption from such registration
provisions has been established, or unless sold pursuant to Rule 144 under the
Securities Act of 1933.
IN WITNESS WHEREOF, the undersigned executed this Subscription
Agreement effective the 31st day of July, 1999.
/s/ Dean Bilyeau
DEAN BILYEAU
Address: 752 Nantucket Ave.
Eugene, OR 97404
Accepted this 15th day of September, 1999.
CLIPPERNET CORPORATION
By: /s/ Ransom R. Southerland
Title: President
3
<PAGE>
CLIPPERNET CORPORATION
an Oregon corporation
SUBSCRIPTION AGREEMENT
ClipperNet Corporation
2295 Coburg Rd., Suite 105
Eugene, OR 97401
Gentlemen:
You have provided the undersigned with certain information regarding
ClipperNet Corporation, an Oregon corporation, ("The Corporation"), including
information relating to the financial status, management and product of the
Corporation. You have also provided me with the opportunity to ask questions and
to request information regarding the Corporation.
In light of that information, I agree with the Corporation:
Purchase Subject to the terms and conditions of this Subscription
Agreement and for valuable consideration, I irrevocably tender this Subscription
Agreement for purchase of 67,092 shares of the Corporation's common stock ("the
Shares"). The total purchase price of said shares is $134,184.00 to be paid by
transfer to ClipperNet Corporation of 44,728 shares of restricted common stock
of Integrated Food Resources, Inc., a Nevada corporation, valued at $3.00 per
share.
Upon acceptance of this Subscription Agreement by ClipperNet
Corporation and the execution hereof, the undersigned shall deliver to
ClipperNet Corporation Certificate No(s). 1318 evidencing 44,728 fully paid up,
non-assessable shares of restricted common stock of Integrated Food Resources,
Inc. fully endorsed for transfer to ClipperNet Corporation.
With respect to said shares of Integrated Food Resources, Inc. being
transferred to ClipperNet Corporation, the undersigned represents and warrants
the following:
A. The undersigned is the owner of 44,728 shares of
common stock of Integrated Food Resources, Inc. as evidenced by
Certificate No(s). 1318 free and clear of all liens, claims, pledges,
or encumbrances except for restrictions on transfer as disclosed
herein.
B. The undersigned has not granted to any person or entity an
option or the right to purchase any of said 44,728 shares of Integrated
Food Resources, Inc.
C. The undersigned has the right, power and authority to
transfer said 44,728 shares of Integrated Food Resources, Inc., and the
transfer will not breach any agreement or contract heretofore entered
into by the undersigned.
The undersigned represents that, as of the date of this Subscription
Agreement, he has made an independent investment decision relating to the Shares
based upon the above-described information that has received from the
Corporation
Representation by Subscriber. The undersigned represents and warrants:
1
<PAGE>
A. He understands that the Shares have not been registered
under the Security Act of 1933 and that the undersigned has no right to
require registration;
B. The undersigned has adequate means of providing for current
needs and possible contingencies without having to resort to funds
contemplated to be used for the purchase of Shares;
C. The undersigned has a net worth sufficient to bear the risk
of losing his entire investment in the Shares;
D. The undersigned has alone or together with a Purchaser
Representative (as defined by SEC Rule 501), sufficient knowledge and
experience in financial matters so as to be able to evaluate the
relative risks and merits of an investment in the corporation when it
is offered;
E. The Shares which are the subject of this Agreement will be
acquired solely for his account as an investment and will not be
purchased with the view toward distributions, resale, subdivision or
fractionalization;
F. The undersigned realizes that the Shares cannot be readily
sold, that there will be no public market, that he may not be able to
sell or to dispose of their interests in the Corporation;
G. The undersigned understands that his right to transfer the
Shares will be restricted unless the transfer will not be in violation
of the Securities Act of 1933 or applicable state securities laws
(including investor suitability standards) and that the corporation
will not consent to transfer of shares unless the transferee represents
that the transferee meets certain financial suitability standards;
H. The undersigned and his Purchaser Representative, if any,
have carefully reviewed the information relating to the financial
status, management, and product of the Corporation. The Corporation has
made available, if so requested, to his attorney, accountant, and
Purchaser Representative, all documents that were reviewed or requested
prior to an offer of shares of the Corporation, and has provided
answers to all questions asked of the Corporation concerning the
offering and an investment in the Corporation. In evaluating the
suitability of an investment in the Corporation, the undersigned has
not relied upon any representations or other information (whether oral
or written) except documents or answers furnished by the Corporation;
I. The undersigned acknowledges that the information provided
regarding the Corporation is confidential and non-public. The
undersigned agrees that all of the information will be kept in
confidence and will not be disclosed to any third party, but this
obligation does not apply to any such information which is (1) is part
of public knowledge or is readily accessible as literature at the date
of this Subscription Agreement, (2) becomes part of public knowledge or
literature and, thus, becomes readily accessible by publication (except
as a result of a breach of this provision), or (3) is received from
third parties (except third parties who disclose it is in violation of
any confidentiality agreement they may have with the corporation);
J. The undersigned understands that the books and records of
the Corporation will be available upon reasonable notice for inspection
by investors during reasonable business hours at its principal place of
business;
2
<PAGE>
K. The undersigned and his Purchaser Representative, if any,
recognize that investment in the Corporation involves certain risks,
and the undersigned has taken full cognizance of the special risks
relating to a development stage company.
Acknowledgement of ClipperNet Corporation. ClipperNet Corporation by
its acceptance and execution hereof, acknowledges that the shares of common
stock of Integrated Food Resources, Inc., received hereby, have not been
registered under the Securities Act of 1933, as amended, and may not be sold or
otherwise transferred unless compliance with the registration provisions of such
Act has been made or unless availability of an exemption from such registration
provisions has been established, or unless sold pursuant to Rule 144 under the
Securities Act of 1933.
IN WITNESS WHEREOF, the undersigned executed this Subscription
Agreement effective the 31st day of July, 1999.
/s/ Don Bilyeau
DON BILYEAU
Address: 18541 Hwy. 99, Suite C
Lynnwood, WA 98037
Accepted this 10th day of November , 1999.
CLIPPERNET CORPORATION
By: /s/ Ransom R. Southerland
Title: President
3
<PAGE>
CLIPPERNET CORPORATION
an Oregon corporation
SUBSCRIPTION AGREEMENT
ClipperNet Corporation
2295 Coburg Rd., Suite 105
Eugene, OR 97401
Gentlemen:
You have provided the undersigned with certain information regarding
ClipperNet Corporation, an Oregon corporation, ("The Corporation"), including
information relating to the financial status, management and product of the
Corporation. You have also provided me with the opportunity to ask questions and
to request information regarding the Corporation.
In light of that information, I agree with the Corporation:
Purchase Subject to the terms and conditions of this Subscription
Agreement and for valuable consideration, I irrevocably tender this Subscription
Agreement for purchase of 27,962 shares of the Corporation's common stock ("the
Shares"). The total purchase price of said shares is $55,923.00 to be paid by
transfer to ClipperNet Corporation of 18,641 shares of restricted common stock
of Integrated Food Resources, Inc., a Nevada corporation, valued at $3.00 per
share.
Upon acceptance of this Subscription Agreement by ClipperNet
Corporation and the execution hereof, the undersigned shall deliver to
ClipperNet Corporation Certificate No(s). 1324 and 1325 evidencing 18,641 fully
paid up, non-assessable shares of restricted common stock of Integrated Food
Resources, Inc. fully endorsed for transfer to ClipperNet Corporation.
With respect to said shares of Integrated Food Resources, Inc. being
transferred to ClipperNet Corporation, the undersigned represents and warrants
the following:
A. The undersigned is the owner of 18,641 shares of
common stock of Integrated Food Resources, Inc. as evidenced by
Certificate No(s). 1324 and 1325 free and clear of all liens, claims,
pledges, or encumbrances except for restrictions on transfer as
disclosed herein.
B. The undersigned has not granted to any person or entity an
option or the right to purchase any of said 18,641 shares of Integrated
Food Resources, Inc.
C. The undersigned has the right, power and authority to
transfer said 18,641 shares of Integrated Food Resources, Inc., and the
transfer will not breach any agreement or contract heretofore entered
into by the undersigned.
The undersigned represents that, as of the date of this Subscription
Agreement, he has made an independent investment decision relating to the Shares
based upon the above-described information that has received from the
Corporation
Representation by Subscriber. The undersigned represents and warrants:
1
<PAGE>
A. He understands that the Shares have not been registered
under the Security Act of 1933 and that the undersigned has no right to
require registration;
B. The undersigned has adequate means of providing for current
needs and possible contingencies without having to resort to funds
contemplated to be used for the purchase of Shares;
C. The undersigned has a net worth sufficient to bear the risk
of losing his entire investment in the Shares;
D. The undersigned has alone or together with a Purchaser
Representative (as defined by SEC Rule 501), sufficient knowledge and
experience in financial matters so as to be able to evaluate the
relative risks and merits of an investment in the corporation when it
is offered;
E. The Shares which are the subject of this Agreement will be
acquired solely for his account as an investment and will not be
purchased with the view toward distributions, resale, subdivision or
fractionalization;
F. The undersigned realizes that the Shares cannot be readily
sold, that there will be no public market, that he may not be able to
sell or to dispose of their interests in the Corporation;
G. The undersigned understands that his right to transfer the
Shares will be restricted unless the transfer will not be in violation
of the Securities Act of 1933 or applicable state securities laws
(including investor suitability standards) and that the corporation
will not consent to transfer of shares unless the transferee represents
that the transferee meets certain financial suitability standards;
H. The undersigned and his Purchaser Representative, if any,
have carefully reviewed the information relating to the financial
status, management, and product of the Corporation. The Corporation has
made available, if so requested, to his attorney, accountant, and
Purchaser Representative, all documents that were reviewed or requested
prior to an offer of shares of the Corporation, and has provided
answers to all questions asked of the Corporation concerning the
offering and an investment in the Corporation. In evaluating the
suitability of an investment in the Corporation, the undersigned has
not relied upon any representations or other information (whether oral
or written) except documents or answers furnished by the Corporation;
I. The undersigned acknowledges that the information provided
regarding the Corporation is confidential and non-public. The
undersigned agrees that all of the information will be kept in
confidence and will not be disclosed to any third party, but this
obligation does not apply to any such information which is (1) is part
of public knowledge or is readily accessible as literature at the date
of this Subscription Agreement, (2) becomes part of public knowledge or
literature and, thus, becomes readily accessible by publication (except
as a result of a breach of this provision), or (3) is received from
third parties (except third parties who disclose it is in violation of
any confidentiality agreement they may have with the corporation);
J. The undersigned understands that the books and records of
the Corporation will be available upon reasonable notice for inspection
by investors during reasonable business hours at its principal place of
business;
2
<PAGE>
K. The undersigned and his Purchaser Representative, if any,
recognize that investment in the Corporation involves certain risks,
and the undersigned has taken full cognizance of the special risks
relating to a development stage company.
Acknowledgement of ClipperNet Corporation. ClipperNet Corporation by
its acceptance and execution hereof, acknowledges that the shares of common
stock of Integrated Food Resources, Inc., received hereby, have not been
registered under the Securities Act of 1933, as amended, and may not be sold or
otherwise transferred unless compliance with the registration provisions of such
Act has been made or unless availability of an exemption from such registration
provisions has been established, or unless sold pursuant to Rule 144 under the
Securities Act of 1933.
IN WITNESS WHEREOF, the undersigned executed this Subscription
Agreement effective the 31st day of July, 1999.
/s/ J. James Nelson
J. JAMES NELSON
Address: P.O. Box 41203
Eugene, OR 97404
Accepted this 15th day of September, 1999.
CLIPPERNET CORPORATION
By: /s/ Ransom R. Southerland
Title: President
3
<PAGE>
CLIPPERNET CORPORATION
an Oregon corporation
SUBSCRIPTION AGREEMENT
ClipperNet Corporation
2295 Coburg Rd., Suite 105
Eugene, OR 97401
Gentlemen:
You have provided the undersigned with certain information regarding
ClipperNet Corporation, an Oregon corporation, ("The Corporation"), including
information relating to the financial status, management and product of the
Corporation. You have also provided me with the opportunity to ask questions and
to request information regarding the Corporation.
In light of that information, I agree with the Corporation:
Purchase Subject to the terms and conditions of this Subscription
Agreement and for valuable consideration, I irrevocably tender this Subscription
Agreement for purchase of 419,325 shares of the Corporation's common stock ("the
Shares"). The total purchase price of said shares is $838,650.00 to be paid by
transfer to ClipperNet Corporation of 279,550 shares of restricted common stock
of Integrated Food Resources, Inc., a Nevada corporation, valued at $3.00 per
share.
Upon acceptance of this Subscription Agreement by ClipperNet
Corporation and the execution hereof, the undersigned shall deliver to
ClipperNet Corporation Certificate No(s). 1321 evidencing 279,550 fully paid up,
non-assessable shares of restricted common stock of Integrated Food Resources,
Inc. fully endorsed for transfer to ClipperNet Corporation.
With respect to said shares of Integrated Food Resources, Inc. being
transferred to ClipperNet Corporation, the undersigned represents and warrants
the following:
A. The undersigned is the owner of 279,550 shares of
common stock of Integrated Food Resources, Inc. as evidenced by
Certificate No(s). 1321 free and clear of all liens, claims, pledges,
or encumbrances except for restrictions on transfer as disclosed
herein.
B. The undersigned has not granted to any person or entity an
option or the right to purchase any of said 279,550 shares of
Integrated Food Resources, Inc.
C. The undersigned has the right, power and authority to
transfer said 279,550 shares of Integrated Food Resources, Inc., and
the transfer will not breach any agreement or contract heretofore
entered into by the undersigned.
The undersigned represents that, as of the date of this Subscription
Agreement, he has made an independent investment decision relating to the Shares
based upon the above-described information that has received from the
Corporation
Representation by Subscriber. The undersigned represents and warrants:
1
<PAGE>
A. He understands that the Shares have not been registered
under the Security Act of 1933 and that the undersigned has no right to
require registration;
B. The undersigned has adequate means of providing for current
needs and possible contingencies without having to resort to funds
contemplated to be used for the purchase of Shares;
C. The undersigned has a net worth sufficient to bear the risk
of losing his entire investment in the Shares;
D. The undersigned has alone or together with a Purchaser
Representative (as defined by SEC Rule 501), sufficient knowledge and
experience in financial matters so as to be able to evaluate the
relative risks and merits of an investment in the corporation when it
is offered;
E. The Shares which are the subject of this Agreement will be
acquired solely for his account as an investment and will not be
purchased with the view toward distributions, resale, subdivision or
fractionalization;
F. The undersigned realizes that the Shares cannot be readily
sold, that there will be no public market, that he may not be able to
sell or to dispose of their interests in the Corporation;
G. The undersigned understands that his right to transfer the
Shares will be restricted unless the transfer will not be in violation
of the Securities Act of 1933 or applicable state securities laws
(including investor suitability standards) and that the corporation
will not consent to transfer of shares unless the transferee represents
that the transferee meets certain financial suitability standards;
H. The undersigned and his Purchaser Representative, if any,
have carefully reviewed the information relating to the financial
status, management, and product of the Corporation. The Corporation has
made available, if so requested, to his attorney, accountant, and
Purchaser Representative, all documents that were reviewed or requested
prior to an offer of shares of the Corporation, and has provided
answers to all questions asked of the Corporation concerning the
offering and an investment in the Corporation. In evaluating the
suitability of an investment in the Corporation, the undersigned has
not relied upon any representations or other information (whether oral
or written) except documents or answers furnished by the Corporation;
I. The undersigned acknowledges that the information provided
regarding the Corporation is confidential and non-public. The
undersigned agrees that all of the information will be kept in
confidence and will not be disclosed to any third party, but this
obligation does not apply to any such information which is (1) is part
of public knowledge or is readily accessible as literature at the date
of this Subscription Agreement, (2) becomes part of public knowledge or
literature and, thus, becomes readily accessible by publication (except
as a result of a breach of this provision), or (3) is received from
third parties (except third parties who disclose it is in violation of
any confidentiality agreement they may have with the corporation);
J. The undersigned understands that the books and records of
the Corporation will be available upon reasonable notice for inspection
by investors during reasonable business hours at its principal place of
business;
2
<PAGE>
K. The undersigned and his Purchaser Representative, if any,
recognize that investment in the Corporation involves certain risks,
and the undersigned has taken full cognizance of the special risks
relating to a development stage company.
Acknowledgement of ClipperNet Corporation. ClipperNet Corporation by
its acceptance and execution hereof, acknowledges that the shares of common
stock of Integrated Food Resources, Inc., received hereby, have not been
registered under the Securities Act of 1933, as amended, and may not be sold or
otherwise transferred unless compliance with the registration provisions of such
Act has been made or unless availability of an exemption from such registration
provisions has been established, or unless sold pursuant to Rule 144 under the
Securities Act of 1933.
IN WITNESS WHEREOF, the undersigned executed this Subscription
Agreement effective the 31st day of July, 1999.
/s/ Ransom R. Southerland
RANSOM R. SOUTHERLAND
Address: 91593 Donna Rd.
Springfield, OR 97478
Accepted this 15th day of September, 1999.
CLIPPERNET CORPORATION
By: /s/ Ransom R. Southerland
Title: President
3
<PAGE>
CLIPPERNET CORPORATION
an Oregon corporation
SUBSCRIPTION AGREEMENT
ClipperNet Corporation
2295 Coburg Rd., Suite 105
Eugene, OR 97401
Gentlemen:
You have provided the undersigned with certain information regarding
ClipperNet Corporation, an Oregon corporation, ("The Corporation"), including
information relating to the financial status, management and product of the
Corporation. You have also provided us with the opportunity to ask questions and
to request information regarding the Corporation.
In light of that information, we agree with the Corporation:
Purchase Subject to the terms and conditions of this Subscription
Agreement and for valuable consideration, we irrevocably tender this
Subscription Agreement for purchase of 83,865 shares of the Corporation's common
stock ("the Shares"). The total purchase price of said shares is $167,730.00 to
be paid by transfer to ClipperNet Corporation of 55,910 shares of restricted
common stock of Integrated Food Resources, Inc., a Nevada corporation, valued at
$3.00 per share.
Upon acceptance of this Subscription Agreement by ClipperNet
Corporation and the execution hereof, the undersigned shall deliver to
ClipperNet Corporation Certificate No(s). 1323 evidencing 55,910 fully paid up,
non-assessable shares of restricted common stock of Integrated Food Resources,
Inc. fully endorsed for transfer to ClipperNet Corporation.
With respect to said shares of Integrated Food Resources, Inc. being
transferred to ClipperNet Corporation, the undersigned represents and warrants
the following:
A. The undersigned is the owner of 55,910 shares of
common stock of Integrated Food Resources, Inc. as evidenced by
Certificate No(s). 1323 free and clear of all liens, claims, pledges,
or encumbrances except for restrictions on transfer as disclosed
herein.
B. The undersigned has not granted to any person or entity an
option or the right to purchase any of said 55,910 shares of Integrated
Food Resources, Inc.
C. The undersigned has the right, power and authority to
transfer said 55,910 shares of Integrated Food Resources, Inc., and the
transfer will not breach any agreement or contract heretofore entered
into by the undersigned.
The undersigned represents that, as of the date of this Subscription
Agreement, they have made an independent investment decision relating to the
Shares based upon the above-described information that they have received from
the Corporation
Representation by Subscriber. The undersigned represents and warrants:
1
<PAGE>
A. They understand that the Shares have not been registered
under the Security Act of 1933 and that the undersigned has no right to
require registration;
B. The undersigned has adequate means of providing for current
needs and possible contingencies without having to resort to funds
contemplated to be used for the purchase of Shares;
C. The undersigned has a net worth sufficient to bear the risk
of losing their entire investment in the Shares;
D. The undersigned has alone or together with a Purchaser
Representative (as defined by SEC Rule 501), sufficient knowledge and
experience in financial matters so as to be able to evaluate the
relative risks and merits of an investment in the corporation when it
is offered;
E. The Shares which are the subject of this Agreement will be
acquired solely for their account as an investment and will not be
purchased with the view toward distributions, resale, subdivision or
fractionalization;
F. The undersigned realizes that the Shares cannot be readily
sold, that there will be no public market, that they may not be able to
sell or to dispose of their interests in the Corporation;
G. The undersigned understands that their right to transfer
the Shares will be restricted unless the transfer will not be in
violation of the Securities Act of 1933 or applicable state securities
laws (including investor suitability standards) and that the
corporation will not consent to transfer of shares unless the
transferee represents that the transferee meets certain financial
suitability standards;
H. The undersigned and their Purchaser Representative, if any,
have carefully reviewed the information relating to the financial
status, management, and product of the Corporation. The Corporation has
made available, if so requested, to their attorney, accountant, and
Purchaser Representative, all documents that were reviewed or requested
prior to an offer of shares of the Corporation, and has provided
answers to all questions asked of the Corporation concerning the
offering and an investment in the Corporation. In evaluating the
suitability of an investment in the Corporation, the undersigned has
not relied upon any representations or other information (whether oral
or written) except documents or answers furnished by the Corporation;
I. The undersigned acknowledges that the information provided
regarding the Corporation is confidential and non-public. The
undersigned agrees that all of the information will be kept in
confidence and will not be disclosed to any third party, but this
obligation does not apply to any such information which is (1) is part
of public knowledge or is readily accessible as literature at the date
of this Subscription Agreement, (2) becomes part of public knowledge or
literature and, thus, becomes readily accessible by publication (except
as a result of a breach of this provision), or (3) is received from
third parties (except third parties who disclose it is in violation of
any confidentiality agreement they may have with the corporation);
J. The undersigned understands that the books and records of
the Corporation will be available upon reasonable notice for inspection
by investors during reasonable business hours at its principal place of
business;
2
<PAGE>
K. The undersigned and their Purchaser Representative, if any,
recognize that investment in the Corporation involves certain risks,
and the undersigned has taken full cognizance of the special risks
relating to a development stage company.
Acknowledgement of ClipperNet Corporation. ClipperNet Corporation by
its acceptance and execution hereof, acknowledges that the shares of common
stock of Integrated Food Resources, Inc., received hereby, have not been
registered under the Securities Act of 1933, as amended, and may not be sold or
otherwise transferred unless compliance with the registration provisions of such
Act has been made or unless availability of an exemption from such registration
provisions has been established, or unless sold pursuant to Rule 144 under the
Securities Act of 1933.
IN WITNESS WHEREOF, the undersigned executed this Subscription
Agreement effective the 31st day of July, 1999.
/s/ James Henson
JAMES HENSON
/s/ Wanda L. Henson
WANDA HENSON
Address: 2780 Alyndale Dr.
Eugene, OR 97404
Accepted this 15th day of September , 1999.
CLIPPERNET CORPORATION
By: /s/ Ransom R. Southerland
Title: President
3
<PAGE>
CLIPPERNET CORPORATION
an Oregon corporation
SUBSCRIPTION AGREEMENT
ClipperNet Corporation
2295 Coburg Rd., Suite 105
Eugene, OR 97401
Gentlemen:
You have provided the undersigned with certain information regarding
ClipperNet Corporation, an Oregon corporation, ("The Corporation"), including
information relating to the financial status, management and product of the
Corporation. You have also provided us with the opportunity to ask questions and
to request information regarding the Corporation.
In light of that information, we agree with the Corporation:
Purchase Subject to the terms and conditions of this Subscription
Agreement and for valuable consideration, we irrevocably tender this
Subscription Agreement for purchase of 153,752 shares of the Corporation's
common stock ("the Shares"). The total purchase price of said shares is
$307,603.00 to be paid by transfer to ClipperNet Corporation of 102,501 shares
of restricted common stock of Integrated Food Resources, Inc., a Nevada
corporation, valued at $3.00 per share.
Upon acceptance of this Subscription Agreement by ClipperNet
Corporation and the execution hereof, the undersigned shall deliver to
ClipperNet Corporation Certificate No(s). 1322 evidencing 102,501 fully paid up,
non-assessable shares of restricted common stock of Integrated Food Resources,
Inc. fully endorsed for transfer to ClipperNet Corporation.
With respect to said shares of Integrated Food Resources, Inc. being
transferred to ClipperNet Corporation, the undersigned represents and warrants
the following:
A. The undersigned is the owner of 102,501 shares of
common stock of Integrated Food Resources, Inc. as evidenced by
Certificate No(s). 1322 free and clear of all liens, claims, pledges,
or encumbrances except for restrictions on transfer as disclosed
herein.
B. The undersigned has not granted to any person or entity an
option or the right to purchase any of said 102,501 shares of
Integrated Food Resources, Inc.
C. The undersigned has the right, power and authority to
transfer said 102,501 shares of Integrated Food Resources, Inc., and
the transfer will not breach any agreement or contract heretofore
entered into by the undersigned.
The undersigned represents that, as of the date of this Subscription
Agreement, they have made an independent investment decision relating to the
Shares based upon the above-described information that they have received from
the Corporation
Representation by Subscriber. The undersigned represents and warrants:
1
<PAGE>
A. They understand that the Shares have not been registered
under the Security Act of 1933 and that the undersigned has no right to
require registration;
B. The undersigned has adequate means of providing for current
needs and possible contingencies without having to resort to funds
contemplated to be used for the purchase of Shares;
C. The undersigned has a net worth sufficient to bear the risk
of losing their entire investment in the Shares;
D. The undersigned has alone or together with a Purchaser
Representative (as defined by SEC Rule 501), sufficient knowledge and
experience in financial matters so as to be able to evaluate the
relative risks and merits of an investment in the corporation when it
is offered;
E. The Shares which are the subject of this Agreement will be
acquired solely for their account as an investment and will not be
purchased with the view toward distributions, resale, subdivision or
fractionalization;
F. The undersigned realizes that the Shares cannot be readily
sold, that there will be no public market, that they may not be able to
sell or to dispose of their interests in the Corporation;
G. The undersigned understands that their right to transfer
the Shares will be restricted unless the transfer will not be in
violation of the Securities Act of 1933 or applicable state securities
laws (including investor suitability standards) and that the
corporation will not consent to transfer of shares unless the
transferee represents that the transferee meets certain financial
suitability standards;
H. The undersigned and their Purchaser Representative, if any,
have carefully reviewed the information relating to the financial
status, management, and product of the Corporation. The Corporation has
made available, if so requested, to their attorney, accountant, and
Purchaser Representative, all documents that were reviewed or requested
prior to an offer of shares of the Corporation, and has provided
answers to all questions asked of the Corporation concerning the
offering and an investment in the Corporation. In evaluating the
suitability of an investment in the Corporation, the undersigned has
not relied upon any representations or other information (whether oral
or written) except documents or answers furnished by the Corporation;
I. The undersigned acknowledges that the information provided
regarding the Corporation is confidential and non-public. The
undersigned agrees that all of the information will be kept in
confidence and will not be disclosed to any third party, but this
obligation does not apply to any such information which is (1) is part
of public knowledge or is readily accessible as literature at the date
of this Subscription Agreement, (2) becomes part of public knowledge or
literature and, thus, becomes readily accessible by publication (except
as a result of a breach of this provision), or (3) is received from
third parties (except third parties who disclose it is in violation of
any confidentiality agreement they may have with the corporation);
J. The undersigned understands that the books and records of
the Corporation will be available upon reasonable notice for inspection
by investors during reasonable business hours at its principal place of
business;
2
<PAGE>
K. The undersigned and their Purchaser Representative, if any,
recognize that investment in the Corporation involves certain risks,
and the undersigned has taken full cognizance of the special risks
relating to a development stage company.
Acknowledgement of ClipperNet Corporation. ClipperNet Corporation by
its acceptance and execution hereof, acknowledges that the shares of common
stock of Integrated Food Resources, Inc., received hereby, have not been
registered under the Securities Act of 1933, as amended, and may not be sold or
otherwise transferred unless compliance with the registration provisions of such
Act has been made or unless availability of an exemption from such registration
provisions has been established, or unless sold pursuant to Rule 144 under the
Securities Act of 1933.
IN WITNESS WHEREOF, the undersigned executed this Subscription
Agreement effective the 31st day of July, 1999.
/s/ Michael D. Henson
MICHAEL D. HENSON
/s/ Kelli Henson
KELLI HENSON
Address: 222 Sterling Dr.
Eugene, OR 97404
Accepted this 15th day of September , 1999.
CLIPPERNET CORPORATION
By: /s/ Ransom R. Southerland
Title: President
EXHIBIT 3.1
Registry Number: C21213-96
Certificate of Restatement
of Articles of Incorporation
(After Issuance of Stock)
INTEGRATED FOOD RESOURCES, INC.
We the undersigned, Alain de la Motte, President, and James McKenzie,
Secretary, of Integrated Food Resources, Inc., do hereby certify:
That the Board of Directors of said corporation at a meeting held on
July 23, 1999, adopted resolutions to restate the Articles of Incorporation as
described in attached Exhibit A.
The undersigned have been authorized to execute the Certificate by
resolution of the Board of Directors adopted on the date stated and this
Certificate correctly sets forth the text of the Articles of Incorporation to
the date of this Certificate.
/s/ Alain de la Motte
----------------------
Alain de la Motte, President
James McKenzie, Secretary
State of Oregon
County of Washington
On July 27, 1999, personally appeared before me, a Notary Public, Alain
de la Motte, who acknowledged that he executed the foregoing instrument.
OFFICIAL SEAL
ORRIE H. OLSON /s/ Orrie H. Olson
----------------------
NOTARY PUBLIC - OREGON Notary Public for Oregon
COMMISSION NO.047443
MY COMMISSION EXPIRES SEPT. 26, 1999
<PAGE>
Registry Number: C21213-96
Certificate of Restatement
of Articles of Incorporation
(After Issuance of Stock)
INTEGRATED FOOD RESOURCES, INC.
We the undersigned, Alain de la Motte, President, and James McKenzie,
Secretary, of Integrated Food Resources, Inc., do hereby certify:
That the Board of Directors of said corporation at a meeting held on
July 23, 1999, adopted resolutions to restate the Articles of Incorporation as
described in attached Exhibit A.
The undersigned have been authorized to execute the Certificate by
resolution of the Board of Directors adopted on the date stated and this
Certificate correctly sets forth the text of the Articles of Incorporation to
the date of this Certificate.
Alain de la Motte, President
/s/ James McKenzie
----------------------
James McKenzie, Secretary
State of Oregon
County of Washington
On July 27, 1999, personally appeared before me, a Notary Public, James
McKenzie, who acknowledged that he executed the foregoing instrument.
OFFICIAL SEAL
MARK E. FOSTER /s/ Mark E. Foster
----------------------
NOTARY PUBLIC - OREGON Notary Public for Oregon
COMMISSION NO. 310872
MY COMMISSION EXPIRES MARCH 24, 2002
<PAGE>
RESTATED ARTICLES OF INCORPORATION
OF
INTEGRATED FOOD RESOURCES, INC.
ARTICLE 1
The name of the corporation is Integrated Food Resources, Inc. The
purpose of the corporation shall be to engage in any lawful activity and any
activities necessary, convenient or desirable to accomplish such purposes, not
forbidden by law or these Restated Articles of Incorporation.
ARTICLE 2
The registered agent of the corporation shall be Nevada Agency & Trust
Company, 50 W. Liberty Street, Suite 880, Reno, Nevada 89501. The board of
directors may establish, from time to time, other places of business within and
without the State of Nevada for the conduct of its business.
ARTICLE 3
3.1 Issuance of Common and Preferred Stock in Series
The Common Stock and Preferred Stock may be issued from time to time in
one or more series, the shares of each series to have such voting powers, full
or limited, and such designations, preferences and re1ative, participating,
optional or other special rights and qualifications, limitations or restrictions
thereof as are stated and expressed herein or in the resolution or resolutions
providing for the issue of such series adopted by the board of directors.
3.1.1 Dividends
Subject to any preferential rights granted for any series of
Preferred Stock, the holders of shares of the Common Stock shall be entitled to
receive dividends out of the funds of the corporation legally available therefor
at the rate and at the time or times, whether cumulative or noncumulative, as
may be provided by the board of directors. The holders of shares of the
Preferred Stock shall be entitled to receive dividends to the extent provided
herein or by the board of directors in designating the particular series of
Preferred Stock. The holders of shares of the Common Stock shall not be entitled
to receive any dividends thereon other than the dividends referred to in this
Section.
3.1.2 Voting
To the extent provided herein or by resolution or resolutions
of the board of directors providing for the issue of a class or series of Common
Stock or Preferred Stock, the holders of each such class or series shall have
the right to vote for the election of members of the board of directors of the
corporation and the right to vote on all other matters, except those matters as
to which Nevada law of these Articles provide for a separate vote.
EXHIBIT A
<PAGE>
3.1.3 Issuance of Shares
The corporation may from time to time issue any authorized and
unissued shares of Common Stock or Preferred Stock for such consideration as may
be fixed from time to time by the board of directors, without action by the
shareholders. The board of directors may provide for payment therefor to be
received by the corporation in cash, property, services or such other
consideration as is approved by the board of directors. Any and all such shares
of Common Stock or Preferred Stock, the issuance of which has been so
authorized, and for which consideration so fixed by the board of directors has
been paid or delivered, shall be deemed fully paid stock and shall not be liable
to any further call or assessment thereon.
3.2 Designation of Class A Common Stock and Class B Common Stock
3.2.1 Designation
The series of Class A Common Stock, consisting of up to
50,000,000 shares, par value $.001, and the series of Class B Common Stock,
consisting of up to 50,000,000, par value $.001, shall be designated herein as
the "Class A Common Stock" and the "Class B Common Stock", respectively. The
Class A Common Stock and the Class B Common Stock are sometimes collectively
referred to herein as "Common Stock". The powers, preferences, rights and
qualifications, limitations and restrictions of the Common Stock are as follows:
3.2.2 Dividends
Dividends shall be declared and set aside for any shares of
the Common Stock only upon resolution of the Board of Directors.
3.2.3 Liquidation Rights
Upon the voluntary or involuntary dissolution, liquidation or
winding up of the corporation, the assets available for distribution to the
Common Stock shall be distributed in the order and amounts described in Section
3.3.8.
3.2.4 Voting Power
Each holder of Class A Common Stock shall be entitled to one
vote for each share of Common Stock held at the record date for the
determination of Common Stockholders entitled to vote on such matter or, if no
such record date is established, at the date on which notice of the meeting of
shareholders at which the vote is to be taken is marked, or the date any written
consent of shareholders is solicited if the vote is not to be taken at a
meeting. Class B Common Stock shall carry no voting power.
<PAGE>
3.3 Designation of Series A Convertible Preferred Stock
3.3.1 Designations
The series of Series A Convertible Preferred Stock, consisting
of 10,000,000 shares, par value $.001, authorized herein, shall be designated
herein as the "Series A Stock". The powers, preferences and rights and the
qualifications, limitations and restrictions of the Series A Stock are as
follows:
3.3.2 Dividends
Dividends shall be declared and set aside for any shares of
the Series A Stock in the same manner as the Common Stock.
3.3.3 Voting Power
Each holder of Series A Stock shall be entitled to vote on all
matters and shall be entitled to that number of votes equal to the largest
number of whole shares of Common Stock into which such holder's shares of Series
A Stock could be converted at the record date for the determination of
shareholders entitled to vote on such matter or, if no such record date is
established, at the date on which notice of the meeting of shareholders at which
the vote is to be taken is mailed, or the date any written consent of
shareholders is solicited if the vote is not to be taken at a meeting. Except as
otherwise expressly provided by the Nevada Business Corporation Act, the holders
of shares of Series A Stock, any other series of preferred Stock, and Common
Stock shall vote together as a single class on all matters.
3.3.4 Liquidation Rights
Upon the voluntary or involuntary dissolution, liquidation or
winding up of the corporation, the assets of the corporation available for
distribution to its shareholders shall be distributed in the order and amounts
described in Section 3.3.8.
3.3.5 Conversion Rights
The holders of the Series A Stock shall have the following
rights with respect to the conversion of Series A Stock into shares of Common
Stock:
a. General
(i) Voluntary Conversion. Shares of the Series
A Stock may, at the option of the holder, be converted at any time into such
number of fully paid and nonassessable shares of Class A Common Stock as are
equal to the product obtained by multiplying the Series A Conversion Rate
(determined under Section 3.3.5b) by the number of shares of Series A Stock
being converted.
<PAGE>
(ii) Mandatory Conversion. Each share of Series
A Stock shall be converted automatically, without any further action by the
holders of such shares and whether or not the certificates representing such
shares are surrendered to the corporation or its transfer agent for the Common
Stock, into the number of shares of Common Stock into which such Series A Stock
is convertible pursuant to Section 3.3.5a(i) upon the earlier of, (A)
immediately prior to the closing of a firmly underwritten, public offering by
the corporation of its Common Stock, registered under the Securities Act of
1933, as amended, or (B) upon the demand of the corporation upon thirty (30)
day's written notice.
b. Conversion Rate. The conversion rate for Series A Stock in
effect at anytime (the "Series A Conversion Rate") shall equal $1.00 divided by
the Series A Conversion Price, calculated as provided in Section 3.3.5c.
c. Conversion Price. The conversion price for Series A Stock
shall initially be $1.00 (the "Series A Conversion Price"). The Series A
Conversion Price shall be adjusted from time to time in accordance with Section
3.3.5d.
d. Adjustments to Applicable Conversion Price.
(i) Extraordinary Common Stock Event. Upon the
happening of an Extraordinary Common Stock Event (as defined below) after the
date of the initial issuance of any shares of Series A Stock, the Series A
Conversion Price shall simultaneously with the happening of such Extraordinary
Common Stock Event, be adjusted by multiplying the then effective Series A
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such Extraordinary
Common Stock Event and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such Extraordinary Common Stock
Event, and the product so obtained shall thereafter be the Series A Conversion
Price. The Series A Conversion Price, as so adjusted, shall be readjusted in the
same manner upon the happening of any successive Extraordinary Common Stock
Event or Events.
"Extraordinary Common Stock Event" shall
mean (i) the issuance of additional Shares of Common Stock as a dividend or
other distribution on outstanding Common Stock of the corporation, (ii) a
subdivision of outstanding shares of Common Stock into a greater number of
shares of Common Stock, or (iii) a combination of outstanding shares of Common
Stock into a smaller number of shares of Common Stock.
(ii) Sale of Shares Below Applicable Conversion
Price.
(A) If the corporation shall issue any
Additional Stock (as defined below) without consideration or for a consideration
per share less than the Series A Conversion Price in effect immediately prior to
the issuance of such
<PAGE>
Additional Stock, the Series A Conversion Price in effect upon such issuance
(except as otherwise provided in this Section 3.3.5d(ii) shall be adjusted to a
price equal to the quotient obtained by dividing the total computed under clause
(x) below by the total computed under clause (y) below as follows:
(x) an amount equal to the sum
of (1) the result obtained by multiplying the number of shares of Common Stock
deemed outstanding immediately prior to such issuance (which shall include the
actual number of shares outstanding plus all shares issuable upon the conversion
or exercise of all outstanding convertible securities, warrants and options) by
the Series A Conversion price then in effect, and (2) the aggregate
consideration, if any, received by the corporation upon the issuance of such
Additional Stock;
(y) the number of shares of
Common Stock of the corporation outstanding immediately after such issuance
(including the shares deemed outstanding as provided above).
(B) No adjustment of the Series A Conversion
Price shall be made in an amount less than $.000l share, provided, that any
adjustments which are not required to be made by reason of this sentence shall
be carried forward and shall be taken into account in any subsequent adjustment
made to the Series A Conversion Price. Except as provided in Sections
3.3.5d(ii)(E)(3) and (4) below, no adjustment of the Series A Conversion Price
shall have the effect of increasing the Series A Conversion Price above the
Series A Conversion Price in effect immediately prior to such adjustment.
(C) In the case of the issuance of Common
Stock for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any discounts, commissions or other expenses allowed,
paid or incurred by the corporation for any underwriting or otherwise in
connection with the issuance and sale thereof.
D) In the case of the issuance of Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair value thereof as determined in
good faith by the board of directors irrespective of any accounting treatment.
E) In the case of the issuance of
options to purchase or rights to subscribe for Common Stock, securities by their
terms convertible into or exchangeable for Common Stock, or options to purchase
or rights to subscribe for such convertible or exchangeable securities (which
options, rights, convertible or exchangeable securities are not excluded front
the definition of Additional Stock except as provided in Section
3.3.5d(iii)(B)), the following provisions shall apply:
<PAGE>
(1) the aggregate maximum
number of shares of Common Stock deliverable upon exercise of such options to
purchase or rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued for a consideration equal
to the consideration (determined in the manner provided in Sections
3.3.5d(iii)(C) and (D) above) received by the corporation upon the issuance of
such options or rights plus the purchase price provided in such options or
rights for the Common Stock covered thereby, but no further adjustment to the
Series A Conversion Price shall be made for the actual issuance of Common Stock
upon the exercise of such options or tights in accordance with their terms;
(2) the aggregate maximum
number of shares of Common Stock deliverable upon conversion of or in exchange
for any such convertible or exchangeable Securities or upon the exercise of
options to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall be deemed to have
been issued at the time such securities were issued or such options or rights
were issued for a consideration equal to the consideration received by the
corporation for any such securities and related options or rights, plus the
additional consideration, if any, to be received by the corporation upon the
conversion or exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the manner
provided in Sections 3.3.5d(iii)(C) and (D) above), but no further adjustment to
the Series A Conversion Price shall be made for the actual issuance of Common
Stock upon the conversion or exchange of such securities in accordance with
their terms;
(3) if such options, rights or
convertible or exchangeable securities by their terms provide, with the passage
of time or otherwise, for any increase in the consideration payable to the
corporation or any decrease in the number of shares of Common Stock issuable
upon the exercise, conversion or exchange thereof, the Series A Conversion Price
computed upon the original issue thereof, and any subsequent adjustments based
thereon, shall, upon such increase or decrease becoming effective, be recomputed
to reflect such increase or decrease with respect to such options, rights and
securities not already exercised, converted or exchanged prior to such increase
or decrease becoming effective, but no further adjustment to the Series A
Conversion Price shall be made for the actual issuance of Common Stock upon the
exercise of any such options or rights or the conversion or exchange of such
securities in accordance with their terms;
(4) upon the expiration of any
such options or rights, the termination of any such rights to convert or
exchange or the expiration of any options or rights related to such convertible
or exchangeable securities, the Series A Conversion Price shall forthwith be
readjusted to such Series A Conversion Price as would have been obtained had the
adjustment which was made upon the issuance of such options, rights or
securities or options or rights related to such securities been made upon the
basis of the issuance of only the number of shares of Common Stock
<PAGE>
actually issued upon the exercise of such options or rights, upon the conversion
or exchange of such securities or upon the exercise of the options or rights
related to such securities; and
(5) if any such options or
rights shall be issued in connection with the issue and sale of other securities
of the corporation, together compromising one integral transaction in which no
specific consideration is allocated to such options or rights by the parties
thereto, such options or rights shall be deemed to have been issued for such
consideration as determined in good faith by the board of directors.
(iii) "Additional Stock" shall mean any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
shares of Common Stock issued, or deemed to have been issued pursuant to Section
3.3.5d(iii)(E), by the corporation after the date of initial issuance of any
Series A Stock other than:
(A) Common Stock issued pursuant to a
transaction described in Section 3.3.5d(i);
B) Shares of Common Stock issued or
issuable to employees, consultants or directors of the corporation directly or
pursuant to the corporation's Stock Incentive Plan, as amended from time to
time, or other restricted stock plan to the extent such issuances are approved
by the board of directors of the corporation;
(C) Common Stock issued or issuable upon
conversion of Series A Stock; and
D) Common Stock issued or issuable upon
conversion or exercise of any Securities convertible into or exchangeable or
exercisable for shares of Common Stock, other than Common Stock issued or
issuable upon conversion of Series A stock, provided, that such securities are
designated as excluded from the definition of Additional Stock by the vote or
written consent of holders of a majority of the Series A Stock.
e. Capital Reorganization or Reclassification. If the Common
Stock issuable upon the conversion of the Series A Stock shall be changed into
the same or different number of shares of any class or classes of stock of the
corporation, whether by capital reorganization, reclassification or otherwise
(other than an Extraordinary Common Stock Event provided for in Section 3.3.5d),
then and in each such event the holders of each share of Series A Stock shall
have the right thereafter to convert such shares into the kind and amount of
shares of stock and other securities and property receivable upon such
reorganization, reclassification or other change by holders of the number of
shares of Common Stock into which such share of Series A Stock have been
<PAGE>
converted immediately prior to such reorganization, reclassification or change,
all subject to adjustment as provided herein.
f. Accountant's Certificate as to Adjustments; Notice by The
Corporation. In each case of an adjustment or readjustment of the Series A
Conversion Rate, the corporation at its expense will furnish each holder of
Series A Stock with a certificate, prepared by independent public accountants of
recognized standing if so required by such holder, showing such adjustment or
readjustment and stating in detail the facts upon which such adjustment or
readjustment is based.
g. Exercise of Conversion Privilege. To exercise its
conversion privilege, each holder of Series A Stock shall surrender the
certificate or certificates representing the shares being converted to the
corporation at its principal office, and shall give written notice to the
corporation at that office that such holder elects to convert such shares. Such
notice shall also state the name or names (with address or addresses) in which
the certificate or certificates for shares of Common Stock issuable upon such
conversion shall be issued. The certificate or certificates for shares of Series
A Stock surrendered for conversion shall be accompanied by proper assignment
thereof to the corporation or in blank. The date when such written notice is
received by the corporation, together with the certificate or certificates
representing the shares of Series A Stock being converted, shall be the "Series
A Conversion Date". As promptly as practicable after the Series A Conversion
Date, the corporation shall issue and shall deliver to the holder of the shares
of Series A Stock being converted, or on its written order such certificate or
certificates as it may request for the number of whole shares of Common Stock
issuable upon the conversion of such shares of Series A Stock in accordance with
the provisions of this Section 3.3.5, cash in the amount of all declared and
unpaid dividends on such shares of Series A Stock up to and including the Series
A Conversion Date, and cash, as provided in Section 3.3.5g, in respect of any
fraction of a share of Common Stock issuable upon such conversion. Such
conversion shall be deemed to have been effected immediately prior to the close
of business on the Series A Conversion Date, and at such time the rights of the
holder as holder of the converted shares of Series A Stock shall cease and the
person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares of Common Stock
represented thereby.
h. Cash in Lieu of Fractional Shares. No fractional shares of
Common Stock or scrip representing fractional shares shall be issued upon the
conversion of shares of Series A Stock, but the corporation shall pay to the
holder of such shares a cash adjustment in respect of such fractional shares in
an amount equal to the same fraction of the market price per share of the Common
Stock (as determined in a reasonable manner prescribed by the board of
directors) at the close of business on the Series A Conversion Date. The
determination as to whether or not any fractional shares are issuable shall be
based upon the total number of shares of Series A Stock being
<PAGE>
converted at any one time by any holder thereof, not upon each share of Series A
Stock being converted.
i. Partial Conversion. In the event some but not all of the
shares of Series A Stock represented by a certificate or certificates
surrendered by a holder are converted, the corporation shall execute and deliver
to or on the order of the holder, at the expense of the corporation, a new
certificate representing the shares of Series A Stock that were not converted.
j. Reservation of Common Stock. The corporation shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the shares
of the Series A Stock, such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all outstanding shares of
the Series A Stock and, if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of all
then outstanding shares of the Series A Stock, the corporation shall take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
k. No Impairment. T he corporation will not, by amendment of
its certificate of incorporation or through any reorganization. transfer of
assets consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 3.3 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Series A Stock against impairment.
3.3.6 Reissuance of Stock
No share or shares of Series A Stock redeemed, converted,
purchased or otherwise acquired by the corporation shall be reissued, and all
such shares shall be canceled, retired and eliminated from the shares which the
corporation shall be authorized to issue. The corporation may from time to time
take such appropriate corporate action as may be necessary to reduce the
authorized number of shares of the Series A Stock accordingly.
3.3.7 Redemption
The corporation shall not have the right to call for
redemption of all or any part of the Series A Stock. However, the corporation
shall have the right to purchase shares of Series A Stock pursuant to agreements
within the holders thereof when such purchases are approved by the board of
directors.
<PAGE>
3.3.8 Liquidation Rights
Upon the voluntary or involuntary dissolution, liquidation or
winding up of the corporation, the assets of the corporation available for
distribution to its shareholders shall be distributed in the following order and
amounts:
a. General
(i) Series A Stock. First, the holders of
shares of Series A Stock shall be entitled to receive $1.00 (appropriately
adjusted for any stock dividend, split or combination of such Series A Stock)
for each outstanding share of Series A Stock held by them plus any declared but
unpaid dividends per share on such outstanding shares of Series A Stock (the
"Series A Liquidation Amount"). If upon the occurrence of such event the assets
of the corporation shall be insufficient to permit the payment of the full
Series A Liquidation Amount, then the assets of the corporation available for
distribution shall be distributed ratably among the holders of the Series Stock
in the same proportions as the aggregate of the Series A Liquidation Amount each
such holder would otherwise be entitled to receive bears to the total Series A
Liquidation Amount that would otherwise be payable to all such holders, and no
distribution to other shareholders of the corporation shall be made. Upon the
completion of the distribution of the full Series A Liquidation Amount, if
assets remain in the corporation, such remaining assets shall be distributed as
set forth in Sections 3.3.8a(ii) and 3.3.8a(iii).
(ii) Common Stock. Second, subject to payment in
full of the Series A Liquidation Amount, the holders of shares of Class A Common
Stock shall be entitled to receive $1.00, appropriately adjusted for any stock
dividend, split or combination of such Common Stock for each outstanding share
of Common Stock held by them (the "Class A Common Stock Liquidation Amount").
After payment of the Class A Common Stock Liquidation Amount, the holder of
Class B Common Stock shall be entitled to receive $1.00, appropriately adjusted
for any stock dividend, split or combination of such Common Stock for each
outstanding share of Common Stock held by them. If upon the occurrence of such
event, the assets of the corporation shall be insufficient to permit the payment
of the full Common Stock Liquidation Amount, then the assets of the corporation
available for distribution shall be distributed ratably among the holders of the
Common Stock in the same proportions as the aggregate of the Common Stock
Liquidation Amount each such holder would otherwise be entitled to receive bears
to the total Common Stock Liquidation Amount that would otherwise be payable to
all such holders, and no further distribution to other shareholders of the
corporation shall be made. Upon the completion of the preferential rights
granted for any subsequent series of Preferred Stock and the full Common Stock
Liquidation Amount, if assets remain in the corporation, such remaining assets
shall be distributed as set forth in Section 3.3.8a(iii).
(iii) Participation. Finally, subject to the payment
in full of Series A Liquidation Amount, any other preferred rights granted for
any subsequent series of
<PAGE>
Preferred Stock, and the payment in full of the Common Stock Liquidation Amount
as provided in Section 3.3.8a(ii), if assets remain in the corporation, such
remaining assets shall be distributed to the holders of shares of Common Stock
together, who shall each be entitled to receive their Pro Rata Amount; provided
that the rights of the holders of shares of Common Stock are subject to any
preferential rights granted for any subsequent series of Preferred Stock. "Pro
Rata Amount" means that portion of remaining assets to which a group would be
entitled based on its percentage of the number of shares of Common Stock
outstanding and the number of shares of Common Stock into which the outstanding
shares of Series A Stock could then be converted.
b. Treatment of Sales of Assets or Acquisitions. The sale of
all or substantially all of the assets of the corporation or the acquisition of
the corporation by another entity by means of merger, consolidation or
otherwise, resulting in the exchange of the outstanding shares, of the
corporation for securities of or consideration issued, or caused to be issued,
by the acquiring entity or any of its affiliates, shall be regarded as a
liquidation within the meaning of this Section 3.3.8.
c. Distributions Other Than Cash. Whenever the distribution
provided for in this Section 3.3.8 shall be payable in property other than cash
the value of such distribution shall be the fair market value of such property
as determined in good faith by the board of directors.
ARTICLE 4
The business and affairs of the Corporation shall be conducted by a
board of directors. The number of directors shall be set forth in the bylaws of
the Corporation and may be changed from time to time. Directors need not be
shareholders of the Corporation nor residents of Nevada, but must be at least 18
years old. The directors may, at any time prior to the first meeting of the
board of directors, elect or appoint additional directors, not exceeding the
number set forth in the bylaws, to serve until their successors are elected and
qualified. Thereafter, vacancies on the board of directors, however arising, may
be filled at any time and from time to time by the remaining directors. The
successors of the first board of directors shall be elected at the annual
meeting of the shareholders to be held on the date and at the time provided in
the bylaws. The directors shall hold office for one year, or until they are
removed or their successors shall have been duly elected and qualified, as
provided in the bylaws. The board of directors shall elect or appoint a
president, a secretary, a treasurer, a resident agent and such other officers or
agents for the administration of the business of the Corporation as it shall
from time to time determine. Such persons need not be shareholders of the
Corporation nor members of the board of directors.
ARTICLE 5
No contract or other transaction between the Corporation and one or
more of its directors or any other person, partnership, corporation, firm,
association or entity in
<PAGE>
which one or more of the Corporation's directors are directors or officers or
are financially interested, shall be either void or voidable because of this
relationship or interest, or because such director or directors are present at
the meeting of the board of directors, or a committee thereof, which authorizes,
approves or ratifies such contract or transaction or because his or their vote
are counted for such purposes, and each such director of the Corporation is
hereby released from liability which might otherwise exist from such contract
if: (a) the fact of such relationship or interest is disclosed or known to the
board of directors or committee which authorizes, approves or ratifies the
contract or transaction; (b) the contract or transaction is approved by
sufficient vote or consent without counting the votes or consents of such
interested director; (c) the fact of such relationship or interest is disclosed
or known to the shareholders entitled to vote and they authorize, approve or
ratify such contract or transaction by vote or written consent; or (d) the
contract or transaction is fair or reasonable to the corporation. If the fact of
such relationship or interest is known, then the common or interested directors
may be counted in determining the presence of a quorum at the meeting of the
board of directors or committee thereof which authorizes, approves, or ratifies
such contract or transaction.
ARTICLE 6
No officer or director of the Corporation shall be liable to the
Corporation or its shareholders for damages for breach of fiduciary duty as a
director or officer other than: (a) acts or omissions which involve intentional
misconduct, fraud or a knowing violation of the law; or (b) payment of dividends
in violation of NRS ss. 78.300. The Corporation may purchase and maintain
insurance or make. other financial arrangements on behalf of any person who is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise for any liability asserted against him and liability and expenses
incurred by him in his capacity as a director officer, employee or agent, or
arising out of his status as such, whether or not the Corporation has the
authority to indemnify him against such liability or expenses.
The Corporation shall indemnify all of its officers and directors,
past, present and future, against any and all expenses incurred by them, and
each of them, including but not limited to, legal fees, judgments and penalties
which may be incurred, rendered or levied in any legal action or administrative
proceeding brought against them for any act or omission alleged to have been
committed while acting within the scope of their duties as officers or directors
of the Corporation. The expenses of officers and directors incurred in defending
any legal action or administrative proceeding must be paid by the Corporation as
they are incurred and in advance of the final disposition of the action or
proceeding upon receipt of an undertaking by or on behalf of the officer or
director to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he/she is not entitled to be indemnified by the
Corporation. Such right of indemnification shall not be exclusive of any other
rights of indemnification which
<PAGE>
the officer and directors may have or hereafter acquire. Without limitation of
the foregoing, the board of directors may adopt bylaws from time to time to
provide the fullest indemnification permitted by the laws of the State of
Nevada.
ARTICLE 7
To the extent permitted by law, the private property of each and every
shareholder, officer, and director of the Corporation, real or personal,
tangible or intangible, now owned or hereafter acquired by any of them, is and
shall be forever exempt from all debt and obligations of the Corporation of any
kind whatsoever. No paid-up stock and no stock issued as fully paid-up shall be
subject to any assessment to pay any debt of the Corporation.
ARTICLE 8
Except as may otherwise be provided by the board of directors of the
Corporation, no holder of any shares of stock of the Corporation shall have any
preemptive right to purchase, subscribe for, otherwise acquire any shares of
stock of the Corporation of any class now or hereafter authorized, or other
instruments evidencing rights or options to subscribe for, purchase or otherwise
acquire such shares.
ARTICLE 9
Election of directors of the Corporation shall be by majority vote of
the shareholders: There shall be no cumulative voting.
ARTICLE 10
These Restated Articles of Incorporation may be amended by the
affirmative vote of a majority of the shares entitled to vote on each such
amendment.
OFFICIAL SEAL
STATE OF NEVADA
Secretary of State I hereby certify that this is a true and complete copy of the
document as filed in this office.
AUG 19 '99
/s/ Dean Heller
- ------------------
DEAN HELLER
Secretary of State
By /s/ D. Farmer
- ------------------
EXHIBIT 3.7
ARTICLES OF INCORPORATION
OFFICIAL SEAL
FILED OF
JUN-1 1999
OREGON MORNINGSTAR FINANCE, INC.
SECRETARY OF STATE
I
The name of the corporation is MORNINGSTAR FINANCE, INC. (the
"Corporation") and its duration shall be perpetual.
II
The total number of shares of stock which the Corporation shall have
authority to issue is One Thousand (1,000) shares of Common Stock, and the par
value of each share is One Dollar ($1.00) (the "Common Stock").
III
The Common Stock shall be the only class of shares in the Corporation.
IV
The Common Stock shall have unlimited voting rights and shall be
entitled to receive the net assets of the Corporation upon dissolution.
V
The name and street address of the Corporation's initial registered
agent:
Robert C. Laskowski
1001 SW Fifth Ave. Suite 1300
Portland, OR 97204-1151
VI
The name of the business or purposes to be conducted or promoted by the
Corporation is to:
a) Issue proof-of-funds required to trigger global, "riskless" food
trading and arbitrage commitments for the benefit of Integrated Food Resources,
Inc. (hereinafter "IFR");
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<PAGE>
b) Direct the investment of funds in the Corporations' custodial cash
management account, in marketable investment grade securities;
c) Incur indebtedness of the type permitted by Article XII herein;
d) engage in any activity and to exercise any powers permitted to
corporations under the laws of the State of Oregon that are related or
incidental to the foregoing and necessary, convenient or advisable to accomplish
the foregoing.
VIII
The Corporation's Board of Directors must be elected separately from
the Boards of Directors of IFR and its Affiliates (as defined in Article XII
herein).
IX
No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under the Oregon Business Corporation Act, or (iv) for any
transaction from which the director derived an improper personal benefit.
X
The Corporation shall not make or commence any bankruptcy or insolvency
filing or proceeding or any similar filing or proceeding or make or commence any
dissolution, liquidation, consolidation, merger or sale of all or substantially
all of its assets or admit in writing its inability to pay its debts generally
as they become due without the unanimous vote of 100% of the entire Board of
Directors. The phrase "entire Board of Directors," whenever used in these
Articles of Incorporation, shall mean all of the directors of the Corporation
who would be in office, including as least one Independent Director, as defined
in Article XI herein. The Corporation shall not acquiesce, petition or otherwise
invoke or cause any other person or entity to invoke the process of the United
States of America, any state or other political subdivision thereof or any other
jurisdiction, any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government for the purpose of
commencing or sustaining a case against the Corporation under a federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator
assignee, trustee custodian, sequestrator or other similar official of the
Corporation for all or any part of its property or assets or ordering the
winding-up, dissolution or liquidation of the affairs of the corporation or a
consolidation, merger or sale of all or substantially all
2
<PAGE>
of the assets of the Corporation if in any such case such action has not been
approved by the vote of 100% of the entire Board of Directors.
Notwithstanding any other provision hereof, if there shall not be one
Independent Director as required pursuant to Article XI of these Articles of
Incorporation then in office and acting, no vote upon any matter set forth in
this Article X herein shall be taken unless and until one such Independent
Director shall have been duly elected and qualified.
XI
The Corporation shall at all times have at least one Independent
Director and such Independent Director cannot be removed without the appointment
of a successor Independent Director. In order for the Corporation to amend its
Articles of Incorporation to modify any provision of Article VI, Article X,
Article XI or Article XII, such amendment must be approved by the entire Board
of Directors, including the Independent Director. For purposes of these Articles
of Incorporation, (a) "Independent" shall mean, when used with respect to any
individual, an individual who (i) is in fact independent, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Corporation, or in any Affiliate of the Corporation, (iii) is not, and has not
been, connected with the Corporation or any Affiliate of the Corporation as an
officer, employee, promoter, underwriter, trustee, partner or person performing
similar functions and is not a member of the immediate family of any such
officer or employee and (iv) is not, and has not been, a director (other than as
an "independent" director) or stockholder of any Affiliate of the Corporation,
other than as a holder of less than five percent (5%) of the issued and
outstanding publicly traded securities, and is not a member of the immediate
family of any such director or stockholder; (b) "Person" shall mean any
individual, corporation, partnership, joint venture, joint stock company,
estate, trust, unincorporated association, any federal, state, county or
municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing; and (c)
"Affiliate" shall mean, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person. For purposes of this definition, control of a Person shall mean the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person whether through the ownership of voting
securities, by contract or otherwise. In the event of the death, incapacity or
resignation of the Independent Director, the Board of Directors of the
Corporation shall in a reasonably prompt manner elect a new Independent
Director. No Independent Director may be removed unless his successor has been
appointed. Any Independent Director so elected by the Board of Directors shall
hold office until the next annual election of directors and until his or her
successor shall be duly elected and qualified. No Independent Director shall,
with regard to any action requiring the approval of such Independent Director,
owe a
3
<PAGE>
fiduciary duty or other obligation to the initial stockholders nor to any
successor stockholders (except as may be required by the law of any applicable
jurisdiction), and every stockholder, including each successor stockholder,
shall consent to the foregoing by virtue of such stockholder's purchase of
shares of capital stock of the Corporation, no further act or deed of any
stockholder being required to evidence such consent. Instead, such Independent
Director's fiduciary duty and other obligations with regard to actions requiring
such Independent Director's approval shall be owed to the Corporation. The Board
of Directors of the Corporation shall not vote on any matter unless and until
the Independent Director has been duly elected and qualified to serve on the
Board of Directors.
XI
The Corporation
a) shall not incur any indebtedness for borrowed money, or assume or
guaranty any indebtedness for borrowed money of any other entity, other than (A)
any indebtedness incurred in connection with the sale or financing of Leases to
any third-party purchaser or lender, (B) any indebtedness to IFR or any
Affiliate thereof incurred in connection with the acquisition of leases, which
indebtedness to IFR or such Affiliate shall be subordinated to all other
obligations of the Corporation and (C) any trade payables incurred in the
ordinary course of its business as set forth in Article VI;
b) shall not direct or participate in the management of any other
Person's operations, and no other Person shall be permitted to direct or
participate in the management of the Corporation;
c) shall maintain a principal executive and administrative office
through which its business is conducted separately from those of any other
Person, and, to the extent that the Corporation and any other Persons have
offices in contiguous space, there shall be fair and appropriate allocation of
overhead costs among them, and each such entity shall bear its fair share of
such expenses;
d) shall engage only in those transactions described in Article VI
hereof and matters necessarily incident thereto;
e) shall have stationery and other business forms and a mailing address
and a telephone number separate from that of any other Person;
f) shall ensure that, to the extent that it jointly contracts with any
of its stockholder of Affiliates to do business with vendors or service
providers or to share overhead expenses, the costs incurred in so doing shall be
allocated fairly among such entities and that each such entity shall bear its
fair share of such costs and shall ensure
4
<PAGE>
that, to the extent that the Corporation contracts or does business with vendors
or service providers where the goods and service provided are partially for the
benefit of any other Person, the costs incurred in so doing shall be fairly
allocated to or among such entities for whose benefit the goods and services are
provided and that each such entity shall bear its fair share of such costs;
g) shall at all times be adequately capitalized in light of its
contemplated business;
h) shall at all times provide for its own operating expenses and
liabilities from its own funds, shall not allow its funds to be diverted to any
other Person or for other than the corporate use of the Corporation, and shall
not, except as may be expressly permitted by agreements of the Corporation,
allow its funds to be commingled with those of any Affiliate of the Corporation;
i) shall maintain its assets and transactions separately from those of
any other Person, reflect such assets and transactions in financial statements
separate and distinct from those of any other Person and evidence such assets
and transactions by appropriate entries in books and records separate and
distinct from those of any other Person;
j) shall ensure that all material transactions between the Corporation
and any of its Affiliates shall be only on an arm's-length basis and shall
receive the approval of the Board of Directors, including at least one
Independent Director;
k) shall hold itself out to the public under its own name as a legal
entity separate and distinct from any other Person, shall act solely in its own
corporate name and through its own authorized officers and agents, and no
Affiliate of the Corporation shall be appointed to act as agent by the
Corporation, except as may be expressly permitted by any written agreements of
the Corporation;
l) shall not hold itself out as having agreed to pay, or as being
liable, primarily or secondarily, for any obligations of any other Person,
except as may be expressly permitted in any written agreements of the
Corporation;
m) shall not become liable as a guarantor or otherwise with respect to
any debt or contractual obligation of any other Person;
n) shall not make any payment or distribution of assets with respect to
any obligation of any other Person or grant any lien, security interest or
encumbrance on any of its assets to secure any obligation of any other Person;
o) shall not make loans, advances or otherwise extend credit to any
other
5
<PAGE>
Person, except on an arm's-length basis, and shall not permit any Affiliate of
the Corporation to advance funds to the Corporation or otherwise supply funds
to, or guaranty debts of, the corporation, except as may be expressly permitted
by any written agreements of the Corporation;
p) shall hold regular duly noticed meetings of its stockholders and
Board of Directors, no less than once annually, and make and retain minutes of
such meeting;
q) shall ensure that decisions with respect to its business and daily
operations shall be independently made by the Corporation (although the officer
making any particular decision may also be an officer or director of any
Affiliate of the Corporation) and shall not be dictated by an Affiliate of the
Corporation;
r) shall have, if appropriate, UCC-1 financing statements, with respect
to all assets purchased from any other Person;
s) shall file its own tax returns or, if it is a member of a
consolidated group, will join in the consolidated return of such group as a
separate member thereof and shall ensure that any financial reports required of
the Corporation shall comply with generally accepted accounting principles and
shall be issued separately from, but may be consolidated with, any reports
prepared for any of its Affiliates;
t) shall not fail to maintain its assets in such a manner that it will
not be costly or difficult to segregate, ascertain or identify its individual
assets from those of any other Person; and
u) shall comply with all provisions of these Articles of Incorporation
and the Bylaws and shall observe all necessary, appropriate and customary
corporate formalities.
XIII
Each Person who at any time is or shall have been a director, officer,
employee or agent of the Corporation and is threatened to be or is made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
trustee or agent of another corporation, partnership, joint venture, trust or
other enterprise, shall be indemnified against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with any such action, suit or proceeding to the
fullest extent authorized under the Oregon Business Corporation Act. The
foregoing right of indemnification shall in no way be exclusive of any other
rights of
6
<PAGE>
indemnification to which such director, officer, employee or agent may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise. Notwithstanding the foregoing, the right of
indemnification by the Corporation shall be subordinate to any indebtedness of
the Corporation to its creditors.
Dated this 1st day of June, 1999
/s/ Robert C. Laskowski
---------------------------------
Robert C. Laskowski, Incorporator
EXHIBIT 3.8
RESTATED ARTICLES OF INCORPORATION
OFFICIAL SEAL
FILED OF
JUN-14 1999
OREGON MORNINGSTAR FINANCE, INC.
SECRETARY OF STATE
I
The name of the corporation is MORNINGSTAR FINANCE, INC. (the
"Corporation") and its duration shall be perpetual.
II
The total number of shares of stock which the Corporation shall have
authority to issue is One Thousand (1,000) shares of Common Stock, and the par
value of each share is One Dollar ($1.00) (the "Common Stock").
III
The Common Stock shall be the only class of shares in the Corporation.
IV
The Common Stock shall have unlimited voting rights and shall be
entitled to receive the net assets of the Corporation upon dissolution.
V
The name and street address of the Corporation's initial registered
agent and mailing address for notices is:
Robert C. Laskowski
1001 SW Fifth Ave. Suite 1300
Portland, OR 97204-1151
VI
The nature of the business or purposes to be conducted or promoted by
the Corporation is to:
Restated Articles of Incorporation - Page 1
<PAGE>
a) incur indebtedness of the type permitted by Article XI herein;
b) direct the investment of the funds of the Corporation in marketable
investment grade securities ("Securities") as specifically permitted by specific
agreements between the Corporation and its lender
c) to hold such Securities in Trust or Escrow as specifically
permitted by specific agreements between the Corporation and its lenders;
d) convert loan proceeds into US Dollars ($USD) and to purchase forward
currency contracts and engage in hedging activities to eliminate currency risk
related to the Corporation's indebtedness;
e) engage in any activity and to exercise any powers permitted to
corporations under the laws of the State of Oregon that are related or
incidental to the foregoing and necessary, convenient or advisable to accomplish
the foregoing.
VII
The Corporation's Board of Directors must be elected separately from
the Boards of Directors of Integrated Food Resources ("IFR"), the corporation's
sole shareholder, and its Affiliates (as defined in Article X herein).
VIII
No director of the Corporation shall be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under the Oregon Business Corporation Act, or (iv) for any
transaction from which the director derived an improper personal benefit.
IX
The Corporation shall not make or commence any bankruptcy or insolvency
filing or proceeding or any similar filing or proceeding or make or commence any
dissolution, liquidation, consolidation, merger or sale of all or substantially
all of its assets or admit in writing its inability to pay its debts generally
as they become due without the unanimous vote of 100% of the entire Board of
Directors. The phrase "entire Board of Directors," whenever used in these
Articles of Incorporation, shall mean all of
Restated Articles of Incorporation - Page 2
<PAGE>
the directors of the Corporation who would be in office, including as least one
Independent Director, as defined in Article X herein. The Corporation shall not
acquiesce, petition or otherwise invoke or cause any other person or entity to
invoke the process of the United States of America, any state or other political
subdivision thereof or any other jurisdiction, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government for the purpose of commencing or sustaining a case against the
Corporation under a federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator assignee, trustee custodian, sequestrator or
other similar official of the Corporation for all or any part of its property or
assets or ordering the winding-up, dissolution or liquidation of the affairs of
the corporation or a consolidation, merger or sale of all or substantially all
of the assets of the Corporation if in any such case such action has not been
approved by the vote of 100% of the entire Board of Directors.
Notwithstanding any other provision hereof, if there shall not be one
Independent Director as required pursuant to Article X of these Restate Articles
of Incorporation then in office and acting, no vote upon any matter set forth in
this Article IX herein shall be taken unless and until one such Independent
Director shall have been duly elected and qualified.
X
The Corporation shall at all times have at least one Independent
Director and such Independent Director cannot be removed without the appointment
of a successor Independent Director. In order for the Corporation to amend its
Articles of Incorporation to modify any provision of Article VI, Article X,
Article XI or Article XII, such amendment must be approved by the entire Board
of Directors, including the Independent Director. For purposes of these Articles
of Incorporation, (a) "Independent" shall mean, when used with respect to any
individual, an individual who (i) is in fact independent, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Corporation, or in any Affiliate of the Corporation, (iii) is not, and has not
been, connected with the Corporation or any Affiliate of the Corporation as an
officer, employee, promoter, underwriter, trustee, partner or person performing
similar functions and is not a member of the immediate family of any such
officer or employee and (iv) is not, and has not been, a director (other than as
an "independent" director) or stockholder of any Affiliate of the Corporation,
other than as a holder of less than five percent (5%) of the issued and
outstanding publicly traded securities, and is not a member of the immediate
family of any such director or stockholder; (b) "Person" shall mean any
individual, corporation, partnership, joint venture, joint stock company,
estate, trust, unincorporated association, any federal, state, county or
municipal government or any bureau,
Restated Articles of Incorporation - Page 3
<PAGE>
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing; and (c) "Affiliate" shall mean, as to any Person, any
other Person that, directly or indirectly, is in control of, is controlled by or
is under common control with such Person. For purposes of this definition,
control of a Person shall mean the power, directly or indirectly, to direct or
cause the direction of the management and policies of such Person whether
through the ownership of voting securities, by contract or otherwise. In the
event of the death, incapacity or resignation of the Independent Director, the
Board of Directors of the Corporation shall in a reasonably prompt manner elect
a new Independent Director. No Independent Director may be removed unless his
successor has been appointed. Any Independent Director so elected by the Board
of Directors shall hold office until the next annual election of directors and
until his or her successor shall be duly elected and qualified. No Independent
Director shall, with regard to any action requiring the approval of such
Independent Director, owe a fiduciary duty or other obligation to the initial
stockholders nor to any successor stockholders (except as may be required by the
law of any applicable jurisdiction), and every stockholder, including each
successor stockholder, shall consent to the foregoing by virtue of such
stockholder's purchase of shares of capital stock of the Corporation, no further
act or deed of any stockholder being required to evidence such consent. Instead,
such Independent Director's fiduciary duty and other obligations with regard to
actions requiring such Independent Director's approval shall be owed to the
Corporation. The Board of Directors of the Corporation shall not vote on any
matter unless and until the Independent Director has been duly elected and
qualified to serve on the Board of Directors.
XI
The Corporation
a) shall not incur any indebtedness for borrowed money, or assume or
guaranty any indebtedness for borrowed money of any other entity, other than
trade payables incurred in the ordinary course of its business as set forth in
Article VI;
b) shall not direct or participate in the management of any other
Person's operations, and no other Person shall be permitted to direct or
participate in the management of the Corporation;
c) shall maintain a principal executive and administrative office
through which its business is conducted separately from those of any other
Person, and, to the extent that the Corporation and any other Persons have
offices in contiguous space, there shall be fair and appropriate allocation of
overhead costs among them, and each such entity shall bear its fair share of
such expenses;
Restated Articles of Incorporation - Page 4
<PAGE>
d) shall engage only in those transactions described in Article VI
hereof and matters necessarily incident thereto;
e) shall have stationery and other business forms and a mailing address
and a telephone number separate from that of any other Person;
f) shall at all times be adequately capitalized in light of its
contemplated business;
g) shall at all times provide for its own operating expenses and
liabilities from its own funds, shall not allow its funds to be diverted to any
other Person or for other than the corporate use of the Corporation, and shall
not, except as may be expressly permitted by agreements of the Corporation,
allow its funds to be commingled with those of any Affiliate of the Corporation;
h) shall maintain its assets and transactions separately from those of
any other Person, reflect such assets and transactions in financial statements
separate and distinct from those of any other Person and evidence such assets
and transactions by appropriate entries in books and records separate and
distinct from those of any other Person;
i) shall ensure that all material transactions between the Corporation
and any of its Affiliates shall be only on an arm's-length basis and shall
receive the approval of the Board of Directors, including at least one
Independent Director;
j) shall hold itself out to the public under its own name as a legal
entity separate and distinct from any other Person, shall act solely in its own
corporate name and through its own authorized officers and agents, and no
Affiliate of the Corporation shall be appointed to act as agent by the
Corporation, except as may be expressly permitted by any written agreements of
the Corporation;
k) shall not hold itself out as having agreed to pay, or as being
liable, primarily or secondarily, for any obligations of any other Person,
except as may be expressly permitted in any written agreements of the
Corporation;
l) shall not become liable as a guarantor or otherwise with respect to
any debt or contractual obligation of any other Person;
m) shall not make any payment or distribution of assets with respect to
any obligation of any other Person or grant any lien, security interest or
encumbrance on
Restated Articles of Incorporation - Page 5
<PAGE>
any of its assets to secure any obligation of any other Person;
n) shall not make loans, advances or otherwise extend credit to any
other Person, except on an arm's-length basis, and shall not permit any
Affiliate of the Corporation to advance funds to the Corporation or otherwise
supply funds to, or guaranty debts of, the corporation, except as may be
expressly permitted by any written agreements of the Corporation;
o) shall hold regular duly noticed meetings of its stockholders and
Board of Directors, no less than once annually, and make and retain minutes of
such meeting;
p) shall ensure that decisions with respect to its business and daily
operations shall be independently made by the Corporation (although the officer
making any particular decision may also be an officer or director of any
Affiliate of the Corporation) and shall not be dictated by an Affiliate of the
Corporation;
q) shall have, if appropriate, UCC-1 financing statements, with respect
to all assets purchased from any other Person;
r) shall file its own tax returns or, if it is a member of a
consolidated group, will join in the consolidated return of such group as a
separate member thereof and shall ensure that any financial reports required of
the Corporation shall comply with generally accepted accounting principles and
shall be issued separately from, but may be consolidated with, any reports
prepared for any of its Affiliates;
s) shall not fail to maintain its assets in such a manner that it will
not be costly or difficult to segregate, ascertain or identify its individual
assets from those of any other Person; and
t) shall comply with all provisions of these Articles of Incorporation
and the Bylaws and shall observe all necessary, appropriate and customary
corporate formalities.
XII
Each Person who at any time is or shall have been a director, officer,
employee or agent of the Corporation and is threatened to be or is made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the Corporation as a director, officer, employee,
trustee or agent of another corporation, partnership, joint venture, trust or
other enterprise, shall be indemnified against expenses (including
Restated Articles of Incorporation - Page 6
<PAGE>
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with any such action, suit or
proceeding to the fullest extent authorized under the Oregon Business
Corporation Act. The foregoing right of indemnification shall in no way be
exclusive of any other rights of indemnification to which such director,
officer, employee or agent may be entitled under any Bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise. Notwithstanding the
foregoing, the right of indemnification by the Corporation shall be subordinate
to any indebtedness of the Corporation to its creditors.
Dated this 14th day of June, 1999
/s/ Robert C. Laskowski
---------------------------------
Robert C. Laskowski, Incorporator
Restated Articles of Incorporation - Page 7
EXHIBIT 3.9
BY-LAWS
OF
MORNINGSTAR FINANCE, INC
ARTICLE I
SHAREHOLDERS: MEETING AND VOTING
1.1 Place of Meetings.
-----------------
Meetings of the shareholders shall be held at the corporation's
principal office, or at such other location as shall be designated in the notice
of meeting.
1.2 Annual Meetings.
---------------
The annual meeting of the shareholders shall be held on the second
Monday of June of each year, beginning with the year 1999, if not a legal
holiday, and if a legal holiday, then on the next succeeding business day, at
the hour of 2:00 o'clock, p.m. The time and date of such meeting may be varied
by the Board of Directors provided that notice of the varied date and time of
the annual meeting is given in accordance with these By-Laws. At the annual
meeting, the shareholders shall elect by vote a Board of Directors, consider
reports of the affairs of the corporation, and transact such other business as
may properly be brought before the meeting.
1.3 Special Meetings.
----------------
Special meetings of the shareholders may be called at any time by the
President, the Board of Directors, by the holders of not less than one-tenth
(1/10th) of all the shares entitled to vote at such meeting, and as otherwise
provided in the Nevada Business Corporation Act, as amended (the "Act").
1.4 Notice of Meetings.
------------------
1.4.1 Written or printed notice, in a comprehensible form, stating the
date, time and place of the meeting, and in case of a special meeting, a
description of the purpose or purposes for which the meeting is called, shall be
delivered not earlier than sixty (60) nor less than ten (10) days before the
meeting date, in person, telegraph, teletype, or other form of wire or wireless
communication, by mail or private carrier, by or at the direction of the
President, Secretary, other officer or persons calling the meeting. If mailed,
the notice is effective when deposited postpaid in the United States mail,
correctly addressed to the shareholder's address shown on the Corporation's
current record of shareholders. In all other cases, the notice shall be
effective when received by the shareholders.
1. By-Laws
<PAGE>
1.4.2 If a shareholders' meeting is adjourned to a different date, time
or place, notice need not be given of the new date, time or place, if the new
date, time or place is announced at the meeting before adjournment, unless a new
record date for the adjourned meeting is or must be fixed under the Act, in
which event notice of the adjourned meeting must be given to the persons who are
shareholders as of the new record date.
1.5 Voting Entitlement of Shares.
Unless the Articles of Incorporation provide otherwise, or except as
provided by the Act, each outstanding share, regardless of class, is entitled to
one vote on each matter voted on at a shareholders' meeting. Only shares are
entitled to vote.
1.6 Quorum and Voting.
1.6.1 Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares exists with
respect to that matter. Unless the Articles of Incorporation or the Act provides
otherwise, a majority of the votes entitled to be cast on the matter by the
voting group constitutes a quorum of that voting group for action on that
matter.
1.6.2 Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting, unless a new record date is or must be set for that
adjourned meeting.
1.6.3 If a quorum exists, action on a matter, other than the election
of directors, by a voting group, is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
Articles of Incorporation or the Act requires a greater number of affirmative
votes.
1.6.4 Unless otherwise provided in the Articles of Incorporation,
Directors are elected by a plurality of the votes cast by the shares entitled to
vote in the election at a meeting at which a quorum is present.
1.6.5 If the Articles of Incorporation or the Act provides for voting
by a single group on a matter, action on that matter is taken when voted upon by
that voting group in accordance with these By-Laws.
1.6.6 If the Articles of Incorporation or the Act provides for voting
for two or more voting groups on a matter, action on that matter is taken only
when voted upon by each of those voting groups counted separately as provided by
these By-Laws.
2. By-LawS
<PAGE>
1.7 Proxies.
-------
A shareholder may vote shares in person or by written proxy signed by
the shareholder or the shareholder's attorney in fact and delivered to the
secretary or other officer or agent of the Corporation authorized to tabulate
votes.
1.8 Record Date.
-----------
The record date for determining the shareholders entitled to notice of
a shareholders' meeting, to demand a special meeting, to vote or to take other
action, shall, unless otherwise determined by the Board of Directors in advance
of such action, be the date of such notice, demand, vote, or other action.
1.9 Shareholders' List for Meeting.
------------------------------
After fixing a record date for a meeting, the corporation shall prepare
an alphabetical list of the names of all of its shareholders who are entitled to
notice of a shareholders' meeting. The list must be arranged by voting group,
and within each voting group by class or series of shares, and show the address
of and number of shares held by each shareholder. The shareholders' list must be
available for inspection by any shareholder, beginning two business days after
notice of the meeting is given for which the list was prepared and continuing
through the meeting, at the corporation's principal office or at a place
identified in the meeting notice in the city where the meeting is to take place.
The corporation shall make the shareholders' list available at the meeting, and
any shareholder, the shareholder's agent, or attorney is entitled to inspect the
list at any time during the meeting or any adjournment thereof.
ARTICLE II
DIRECTORS
2.1 Powers.
------
The business and affairs of the corporation shall be managed by a Board
of Directors which shall exercise or direct the exercise of all corporate powers
except to the extent shareholder authorization is required by the Act, the
Articles of Incorporation, or these By-Laws.
2.2 Number.
------
The number of the members of the Board of Directors shall be not less
than one.
2.3 Election and Term of Office.
---------------------------
3. By-Laws
<PAGE>
Except as provided in the Articles of Incorporation, the directors
shall be elected at the annual meeting of the shareholders. The terms of office
of the directors shall begin immediately after election and shall expire at the
next annual shareholders' meeting following their election and when their
successors are duly elected and qualified. The directors need not be residents
of this state, or shareholders of the corporation.
2.4 Vacancies.
---------
2.4.1 A vacancy on the Board of Directors shall exist upon the death,
resignation, or removal of any director, in the event an amendment of the
By-Laws is adopted increasing the number of directors, or in the event that the
directors determine that it is desirable to elect one or more additional
directors within the variable-range of the number of directors established by
these By-Laws.
2.4.2 Unless the Articles of Incorporation provide otherwise, a vacancy
may be filled by the shareholders, the Board of Directors, or if the Directors
remaining in office constitute fewer than a quorum of the Board, they may fill
the vacancy by an affirmative vote of a majority of all of the Directors
remaining in office.
2.4.3 The term of a director elected to fill a vacancy expires at the
next shareholders' meeting at which directors are elected, and when his/her
successor has been duly elected and qualified.
2.4.4 A vacancy that will occur at a specific later date, by reason of
a resignation submitted in accordance with the Act, may be filled before the
vacancy occurs, but the new director may not take office until the vacancy
occurs.
2.4.5 Except as provided by the Articles of Incorporation or the Act,
during the existence of any vacancy, the remaining directors shall possess and
may exercise all powers vested in the Board of Directors, notwithstanding lack
of a quorum of the board.
2.4.6 The shareholders may remove one or more directors with or without
cause at a special meeting of shareholders called for that purpose pursuant to a
meeting notice indicating removal as one of the purposes. If a director is
elected by a voting group of shareholders, only the shareholders of that voting
group may participate in the vote to remove the director. A director may be
removed only if the number of votes cast to remove the director exceeds the
number of votes cast not to remove the director.
2.5 Meetings.
--------
4. By-Laws
<PAGE>
2.5.1 The annual meeting of the Board of Directors of this corporation
shall be held immediately following the annual meeting of the shareholders,
which meeting shall be considered a regular meeting as to which no notice is
required.
2.5.2 Regular meetings of the Board of Directors may be held without
notice of the date, time, place or purpose of the meeting.
2.5.3 Special meetings of the Board of Directors for any purpose or
purposes may be called by an officer or director of the corporation in
accordance with the notice provisions of Section 2.6.1 of these By-Laws.
2.6 Notice of Special Meetings.
--------------------------
Special meetings of the Board of Directors must be preceded by at least
two (2) days' notice of the date, time and place of the meeting. The notice need
not describe the purpose of such meetings. Notice of special meetings of the
Board of Directors may be in writing or oral, and may be communicated in person,
by telephone, telegraph, teletype, or other form of wire or wireless
communication, by mail or by private carrier. Written notice, if in
comprehensible form, is effective at the earliest of the following: (a) when
received; (b) five (5) days after its deposit in the U.S. Mail, as evidenced by
the postmark, if mailed postpaid and correctly addressed; or (c) on the date
shown on the return receipt, if sent by registered or certified mail, return
receipt requested, and the receipt is signed by or on behalf of the addressee.
Oral notice is effective when communicated, if communicated in a comprehensible
manner.
2.7 Manner of Conducting Meetings.
-----------------------------
The Board of Directors may permit any or all directors to participate
in a regular or special meeting by, or conduct the meeting through, use of any
means of communication by which all directors participating may simultaneously
hear each other during the meeting. A director participating in a meeting by
this means is deemed to be present in person at the meeting.
2.8 Quorum.
------
Unless the Articles of Incorporation or these By-Laws provide
otherwise, a quorum of the Board of Directors consists of a majority of the
number in office immediately before the meeting begins.
2.9 Compensation.
------------
Unless the Articles of Incorporation provide otherwise, the Board of
Directors may fix the compensation of directors, and authorize the corporation
to reimburse the
5. By-Laws
<PAGE>
directors for their reasonable expenses incurred while attending meetings of the
Board and while engaged in other activities on behalf of the corporation.
ARTICLE III
OFFICERS
3.1 Designation, Election and Qualifications.
----------------------------------------
The officers shall include a President, and a Secretary. The officers
may include Vice-President(s), Treasurer, Assistant Secretary, or Assistant
Treasurer as the Board of Directors shall, from time to time, appoint. Officers
need not be members of the Board of Directors. The officers shall be elected by,
and hold office at the pleasure of the Board of Directors. Any two offices may
be held by the same person.
3.2 Compensation and Term of Office.
-------------------------------
3.2.1 The compensation and term of office of the officers of the
corporation shall be fixed by the Board of Directors. Any officer may be removed
either with or without cause, by action of the Board of Directors.
3.2.2 An officer may resign at any time by delivering notice to the
corporation. A resignation is effective when the notice is effective under the
Act, unless the notice specifies a later effective date. If a resignation is
made effective at a later date and the corporation accepts the future effective
date, Board of Directors may fill the pending vacancy before the effective date
provided that the successor does not take office until the effective date.
3.3 President.
---------
The President shall be the chief executive officer of the corporation
and shall, subject to the control of the Board of Directors, have general
supervision, direction and control of the business affairs of the corporation.
He shall, when present, preside at all meetings of the shareholders and of the
Board of Directors. He shall be an ex-officio member of all committees, if any,
shall have the general powers and duties of management usually vested in the
office of President of a corporation, and shall have such other powers and
duties as may be prescribed by the Board of Directors or the By-Laws. He may
sign, with the Secretary or any other proper officer of the corporation
authorized by the Board of Directors, certificates for shares of the
corporation, deeds, mortgages, bonds, contracts, or other instruments which the
Board of Directors authorizes to be executed, except in cases where the signing
and execution thereof shall be expressly delegated by the directors or by these
By-Laws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed.
3.4 Vice-President.
--------------
6. By-Laws
<PAGE>
The Vice-President(s), if any, shall perform such duties as may be
assigned to him/her by the President or the Board of Directors. In the event of
the death, disability, inability or refusal to act of the President, the
Vice-President shall perform the duties and exercise the powers of the President
unless otherwise designated by the Board of Directors. In the event the
corporation has more than one Vice-President, the Executive Vice-President or,
if none, the Vice-President in charge of administration, shall be the officer
acting in the stead of the President as provided in this section.
3.5 Secretary.
---------
3.5.1 The Secretary shall keep or cause to be kept at the principal
office of the corporation or such other place as the Board of Directors may
order, a book of minutes of all meetings of directors and shareholders showing
the time and place of the meeting, whether it was required by the By-Laws of the
corporation, how authorized, the notice given, the names of those present at
directors' meetings, the number of shares present or represented at
shareholders' meetings and the proceedings of each meeting.
3.5.2 The Secretary shall keep or cause to be kept at the principal
office or at the office of the corporation's transfer agent, a share register or
duplicate share register, showing the names of the shareholders and their
addresses, the number of shares of each class held by each, and the number and
date of cancellation of each certificate surrendered for cancellation.
3.5.3 The Secretary shall give or cause to be given such notice of the
meetings of the shareholders and of the Board of Directors as is required by the
By-Laws. He/she shall keep the seal of the corporation, if any, and affix it to
all documents requiring a seal, and shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or By-Laws.
3.6 Treasurer.
---------
The Treasurer, if any, shall be responsible for the funds of the
corporation, receive and give receipts for monies due and payable to the
corporation from any source whatsoever, deposit all such monies in the name of
the corporation in such banks, trust companies or other depositories as shall be
selected in accordance with these By-Laws, shall pay the funds of the
corporation out only on the checks of the corporation signed in the manner
authorized by the Board of Directors, and, in general, perform all of the duties
incident to the office of Treasurer and such other duties as, from time to time,
may be assigned to him/her by the President or the Board of Directors.
3.7 Assistants.
----------
7. By-Laws
<PAGE>
The Board of Directors may appoint or authorize the appointment of
assistants to any officer. Such assistants may exercise the power of such
officer and shall perform such duties as are prescribed by the Board of
Directors.
ARTICLE IV
COMMITTEES
The Board of Directors may appoint from among its members one or more committees
of two (2) or more members, in accordance with and subject to the restrictions
of the Act.
ARTICLE V
CONTRACTS, CHECKS AND DEPOSITS
5.1 Checks, Drafts, Etc.
-------------------
All checks, drafts, or other orders for the payment of money, notes or
other evidence of indebtedness, issued in the name of or payable to the
corporation, shall be signed by such person or persons and in the manner as
shall be determined from time to time by resolution of the Board of Directors.
5.2 Deposits.
--------
All funds of the corporation not otherwise employed shall be deposited,
from time to time, to the credit of the corporation in such banks, trust
companies, or other depositories as the Board of Directors may select.
5.3 Contracts, Instruments.
----------------------
The Board of Directors may, except as otherwise provided in the
By-Laws, authorize any officer or agent to enter into any contract or execute
any instrument in the name of and on behalf of the corporation. Such authority
may be general or confined to specific instances. Unless so authorized by the
Board of Directors, no officer, agent, or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credits, or to render it liable for any purpose or for any amount.
ARTICLE VI
CERTIFICATES AND TRANSFER OF SHARES
6.1 Certificates for Shares.
-----------------------
8. By-Laws
<PAGE>
6.1.1 Certificates for shares shall be in such form as the Board of
Directors may designate and shall indicate the state law under which the
corporation is organized. The certificates shall state the name of the record
holder of the shares represented thereby, the number of the certificate, the
date of issuance and the number of shares for which it is issued, the par value
of such shares, if any, or that such shares are without par value, and the
series and class of such shares. If the corporation is authorized to issue
different classes of shares or different series of shares within a class, the
designations, relative rights, preferences and limitations of each class, the
variations in rights, preferences and limitations determined for each series,
and the authority of the Board of Directors to determine variations for future
series shall be summarized on the front or back of each certificate, or, each
certificate may state conspicuously on its front or back that the corporation
will furnish the shareholder with this information on request in writing, and
without charge. Each certificate shall state or make reference on its front or
back to any liens, purchase options or restrictions on transfer.
6.1.2 Each share certificate must be signed, either manually or in
facsimile, by the President or a Vice-President and the Secretary or an
Assistant Secretary.
6.2 Transfer on the Books.
---------------------
Upon surrender to the corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment, or
authority to transfer, the corporation shall issue a new certificate to the
person entitled thereto, cancel the old certificate, and record the transaction
upon its books.
6.3 Lost, Stolen, or Destroyed Certificates.
---------------------------------------
If a certificate is represented as being lost, stolen, or destroyed, a
new certificate shall be issued in its place upon such proof of the loss, theft,
or destruction and upon the giving of such bond or other security as may be
required by the Board of Directors.
6.4 Transfer Agents and Registrars.
------------------------------
The Board of Directors may from time to time appoint one or more
specific transfer agents and one or more registrars for the shares of the
corporation who shall have such powers and duties as the Board of Directors may
specify.
ARTICLE VII
INDEMNIFICATION AND LIABILITY
7.1 Indemnification.
---------------
9. By-Laws
<PAGE>
The corporation shall indemnify to the fullest extent not prohibited by
law any person who was or is a party or is threatened to be made a party to any
proceeding (as hereinafter defined) against all expenses (including attorney's
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by the person in connection with such proceeding.
7.2 Advancement of Expenses.
-----------------------
Expenses incurred by a director or officer in defending a proceeding
shall, in all cases, be paid by the corporation in advance of the final
disposition of such proceeding at the written request of such person, if the
person:
7.2.1 Furnishes the corporation a written affirmation of the person's
good faith belief that such person is entitled to be indemnified by the
corporation under this article or under any other indemnification rights granted
by the corporation to such person; and
7.2.2 Furnishes the corporation a written undertaking to repay such
advance to the extent it is ultimately determined by a court that such person is
not entitled to be indemnified by the corporation under this article or under
any other indemnification rights granted by the corporation to such person. Such
advances shall be made without regard to the person's ultimate entitlement to
indemnification under this article or otherwise.
7.3 Definition of Proceedings.
-------------------------
The term "Proceeding" shall include any threatened, pending or
completed action, suit or proceeding, whether brought in the right of the
corporation or otherwise and whether of a civil, criminal, administrative or
investigative nature, in which a person may be or may have been involved as a
party or otherwise by reason of the fact that the person is or was a director or
officer of the corporation or a fiduciary within the meaning of the Employee
Retirement Income Security Act of 1974 with respect to any employee benefit plan
of the corporation, or is or was serving at the request of the corporation as a
director, officer or fiduciary of an employee benefit plan of another
corporation, partnership, joint venture, trust or other enterprise, whether or
not serving in such capacity at the time any liability or expense is incurred
for which indemnification or advancement of expenses can be provided under this
article.
7.4 Non-Exclusivity and Continuity of Rights.
----------------------------------------
The indemnification and entitlement to advancement of expenses provided
by this article shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under the articles of incorporation or any statute,
agreement, general or
10. By-Laws
<PAGE>
specific action of the board of directors, vote of stock holders or otherwise,
shall continue as to a person who has ceased to be a director or officer, shall
inure to the benefit of the heirs, executors, and administrators of such a
person and shall extend to all claims for indemnification of advancement of
expenses after the adoption of this article.
7.5 Amendments.
----------
Any repeal of this article shall only be prospective and no repeal or
modification hereof shall adversely affect the rights under this article in
effect at the time of the alleged occurrence of any action or omission to act
that is the cause of any proceeding.
7.6 Director Liability.
------------------
No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for conduct as a director;
provided that this section 7.6 shall not eliminate the liability of a director
for any act or omission for which sum elimination of liability is not permitted
under the Nevada Business Corporation Act. No amendment to the Nevada Business
Corporation Act that further limits the acts or omissions for which elimination
of liability is permitted shall affect the liability of a director for any act
or omission which occurs prior to the effective date of such amendment.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Amendment of By-Laws.
--------------------
Except as otherwise provided by the Act or the Articles of
Incorporation, the By-Laws may be amended by the Board of Directors or the
shareholders. Whenever amendments or new By-Laws are adopted, they shall be
placed in the minute book with the original By-Laws in the appropriate place. If
any By-Law is repealed, the fact of repeal and the date on which the repeal
occurred shall be stated in such book and place.
8.2 Dividends.
---------
Except as provided by the Act or the Articles of Incorporation, the
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.
8.3 Seal.
----
11. By-Laws
<PAGE>
The directors may provide a corporate seal which shall be circular in
form and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words "corporate seal".
8.4 Action Without Meeting.
----------------------
Any action which the Act, the Articles of Incorporation or by the
By-Laws require or permit the shareholders or directors to take at a meeting may
be taken without a meeting if the action is taken by all of the shareholders or
directors entitled to vote on the matter, evidenced by one or more written
consents describing the action taken, signed by each shareholder or director, as
the case may be, and included in the minutes or filed with the corporate records
reflecting the action taken.
8.5 Waiver of Notice.
----------------
A shareholder or director may, at any time, waive any notice required
by the Act, the Articles of Incorporation or the By-Laws. Any such waiver shall
be in writing, signed by the shareholder or director entitled to the notice and
shall be delivered to the corporation for inclusion in the minutes or corporate
records.
8.6 Fiscal Year.
-----------
The fiscal year of the corporation shall begin on the first day of
August of each year.
I hereby certify that the foregoing By-Laws were adopted by the Board
of Directors on June 23, 1999.
By: /s/ David Ramer
------------------------
Secretary
EXHIBIT 4.1
Registry Number: C21213-96
Certificate of Amendment
of Articles of Incorporation
(After Issuance of Stock)
INTEGRATED FOOD RESOURCES, INC.
We the undersigned, Alain de la Motte, President, and James McKenzie,
Secretary, of Integrated Food Resources, Inc., do hereby certify:
That the Board of Directors of said corporation by unanimous consent
action without a meeting pursuant to NRS 78.315 on March 25, 1999, adopted
resolutions to amend the original articles as follows:
Article 3 is hereby amended to read as described in the attached
Exhibit "A" which is incorporated by reference.
The number of shares of common stock of the corporation outstanding and
entitled to vote on the amendments to the Articles of Incorporation is
16,184,643; that the said changes and amendments have been consented to and
approved by the majority of the stockholders holding at least a majority of each
class of stock outstanding and entitled to vote thereon.
/s/ Alain de la Motte
---------------------
Alain de la Motte, President
James McKenzie, Secretary
State of Oregon
County of Washington
On March 31, 1999, personally appeared before me, a Notary Public,
Alain de la Motte, who acknowledged that he executed the foregoing instrument.
OFFICIAL SEAL
ORRIE H. OLSON /s/ Orrie H. Olson
NOTARY PUBLIC - OREGON Notary Public for Oregon
COMMISSION NO.047443
MY COMMISSION EXPIRES SEPT. 26, 1999
<PAGE>
Registry Number: C21213-96
Certificate of Restatement
of Articles of Incorporation
(After Issuance of Stock)
INTEGRATED FOOD RESOURCES, INC.
We the undersigned, Alain de la Motte, President, and James McKenzie,
Secretary, of Integrated Food Resources, Inc., do hereby certify:
That the Board of Directors of said corporation by unanimous consent
action without a meeting pursuant to NRS 78.315 on March 25, 1999, adopted
resolutions to amend the original articles as follows:
Article 3 is hereby amended to read as described in the attached
Exhibit "A" which is incorporated by reference.
The number of shares of common stock of the corporation outstanding and
entitled to vote on the amendments to the Articles of Incorporation is
16,184,643; that the said changes and amendments have been consented to and
approved by the majority of the stockholders holding at least a majority of each
class of stock outstanding and entitled to vote thereon.
Alain de la Motte, President
/s/ James McKenzie
------------------
James McKenzie, Secretary
State of Oregon
County of Washington
On March 25, 1999, personally appeared before me, a Notary Public,
James McKenzie, who acknowledged that he executed the foregoing instrument.
OFFICIAL SEAL
MARK E. FOSTER /s/ Mark E. Foster
------------------
NOTARY PUBLIC - OREGON Notary Public for Oregon
COMMISSION NO. 310872
MY COMMISSION EXPIRES MARCH 24, 2002
<PAGE>
3.1 Issuance of Common and Preferred Stock in Series
The Common Stock and Preferred Stock may be issued from time to time in
one or more series, the shares of each series to have such voting powers, full
or limited, and such designations, preferences and re1ative, participating,
optional or other special rights and qualifications, limitations or restrictions
thereof as are stated and expressed herein or in the resolution or resolutions
providing for the issue of such series adopted by the board of directors.
3.1.1 Dividends
Subject to any preferential rights granted for any series of
Preferred Stock, the holders of shares of the Common Stock shall be entitled to
receive dividends out of the funds of the corporation legally available therefor
at the rate and at the time or times, whether cumulative or noncumulative, as
may be provided by the board of directors. The holders of shares of the
Preferred Stock shall be entitled to receive dividends to the extent provided
herein or by the board of directors in designating the particular series of
Preferred Stock. The holders of shares of the Common Stock shall not be entitled
to receive any dividends thereon other than the dividends referred to in this
Section.
3.1.2 Voting
To the extent provided herein or by resolution or resolutions
of the board of directors providing for the issue of a class or series of Common
Stock or Preferred Stock, the holders of each such class or series shall have
the right to vote for the election of members of the board of directors of the
corporation and the right to vote on all other matters, except those matters as
to which Nevada law of these Articles provide for a separate vote.
3.1.3 Issuance of Shares
The corporation may from time to time issue any authorized and
unissued shares of Common Stock or Preferred Stock for such consideration as may
be fixed from time to time by the board of directors, without action by the
shareholders. The board of directors may provide for payment therefor to be
received by the corporation in cash, property, services or such other
consideration as is approved by the board of directors. Any and all such shares
of Common Stock or Preferred Stock, the issuance of which has been so
authorized, and for which consideration so fixed by the board of directors has
been paid or delivered, shall be deemed fully paid stock and shall not be liable
to any further call or assessment thereon.
3.2 Designation of Class A Common Stock and Class B Common Stock
3.2.1 Designation
The series of Class A Common Stock, consisting of up to
50,000,000 shares, par value $.001, and the series of Class B Common Stock,
consisting of up to 50,000,000, par value $.001, shall be designated herein as
the "Class A Common Stock" and the
EXHIBIT A
<PAGE>
"Class B Common Stock", respectively. The Class A Common Stock and the Class B
Common Stock are sometimes collectively referred to herein as "Common Stock".
The powers, preferences, rights and qualifications, limitations and restrictions
of the Common Stock are as follows:
3.2.2 Dividends
Dividends shall be declared and set aside for any shares of
the Common Stock only upon resolution of the Board of Directors.
3.2.3 Liquidation Rights
Upon the voluntary or involuntary dissolution, liquidation or
winding up of the corporation, the assets available for distribution to the
Common Stock shall be distributed in the order and amounts described in Section
3.3.8.
3.2.4 Voting Power
Each holder of Class A Common Stock shall be entitled to one
vote for each share of Common Stock held at the record date for the
determination of Common Stockholders entitled to vote on such matter or, if no
such record date is established, at the date on which notice of the meeting of
shareholders at which the vote is to be taken is marked, or the date any written
consent of shareholders is solicited if the vote is not to be taken at a
meeting. Class B Common Stock shall carry no voting power.
3.3 Designation of Series A Convertible Preferred Stock
3.3.1 Designations
The series of Series A Convertible Preferred Stock, consisting
of 10,000,000 shares, par value $.001, authorized herein, shall be designated
herein as the "Series A Stock". The powers, preferences and rights and the
qualifications, limitations and restrictions of the Series A Stock are as
follows:
3.3.2 Dividends
Dividends shall be declared and set aside for any shares of
the Series A Stock in the same manner as the Common Stock.
3.3.3 Voting Power
Each holder of Series A Stock shall be entitled to vote on all
matters and shall be entitled to that number of votes equal to the largest
number of whole shares of Common Stock into which such holder's shares of Series
A Stock could be converted at the record date for the determination of
shareholders entitled to vote on such matter or,
<PAGE>
if no such record date is established, at the date on which notice of the
meeting of shareholders at which the vote is to be taken is mailed, or the date
any written consent of shareholders is solicited if the vote is not to be taken
at a meeting. Except as otherwise expressly provided by the Nevada Business
Corporation Act, the holders of shares of Series A Stock, any other series of
preferred Stock, and Common Stock shall vote together as a single class on all
matters.
3.3.4 Liquidation Rights
Upon the voluntary or involuntary dissolution, liquidation or
winding up of the corporation, the assets of the corporation available for
distribution to its shareholders shall be distributed in the order and amounts
described in Section 3.3.8.
3.3.5 Conversion Rights
The holders of the Series A Stock shall have the following
rights with respect to the conversion of Series A Stock into shares of Common
Stock:
a. General
(i) Voluntary Conversion. Shares of the Series
A Stock may, at the option of the holder, be converted at any time into such
number of fully paid and nonassessable shares of Class A Common Stock as are
equal to the product obtained by multiplying the Series A Conversion Rate
(determined under Section 3.3.5b) by the number of shares of Series A Stock
being converted.
(ii) Mandatory Conversion. Each share of Series
A Stock shall be converted automatically, without any further action by the
holders of such shares and whether or not the certificates representing such
shares are surrendered to the corporation or its transfer agent for the Common
Stock, into the number of shares of Common Stock into which such Series A Stock
is convertible pursuant to Section 3.3.5a(i) upon the earlier of, (A)
immediately prior to the closing of a firmly underwritten, public offering by
the corporation of its Common Stock, registered under the Securities Act of
1933, as amended, or (B) upon the demand of the corporation upon thirty (30)
day's written notice.
b. Conversion Rate. The conversion rate for Series A Stock in
effect at anytime (the "Series A Conversion Rate") shall equal $2.00 divided by
the Series A Conversion Price, calculated as provided in Section 3.3.5c.
c. Conversion Price. The conversion price for Series A Stock
shall initially be $1.00 (the "Series A Conversion Price"). The Series A
Conversion Price shall be adjusted from time to time in accordance with Section
3.3.5d.
d. Adjustments to Applicable Conversion Price.
<PAGE>
(i) Extraordinary Common Stock Event. Upon the
happening of an Extraordinary Common Stock Event (as defined below) after the
date of the initial issuance of any shares of Series A Stock, the Series A
Conversion Price shall simultaneously with the happening of such Extraordinary
Common Stock Event, be adjusted by multiplying the then effective Series A
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such Extraordinary
Common Stock Event and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such Extraordinary Common Stock
Event, and the product so obtained shall thereafter be the Series A Conversion
Price. The Series A Conversion Price, as so adjusted, shall be readjusted in the
same manner upon the happening of any successive Extraordinary Common Stock
Event or Events.
"Extraordinary Common Stock Event" shall
mean (i) the issuance of additional Shares of Common Stock as a dividend or
other distribution on outstanding Common Stock of the corporation, (ii) a
subdivision of outstanding shares of Common Stock into a greater number of
shares of Common Stock, or (iii) a combination of outstanding shares of Common
Stock into a smaller number of shares of Common Stock.
(ii) Sale of Shares Below Applicable Conversion
Price.
(A) If the corporation shall issue any
Additional Stock (as defined below) without consideration or for a consideration
per share less than the Series A Conversion Price in effect immediately prior to
the issuance of such Additional Stock, the Series A Conversion Price in effect
upon such issuance (except as otherwise provided in this Section 3.3.5d(ii)
shall be adjusted to a price equal to the quotient obtained by dividing the
total computed under clause (x) below by the total computed under clause (y)
below as follows:
(x) an amount equal to the sum
of (1) the result obtained by multiplying the number of shares of Common Stock
deemed outstanding immediately prior to such issuance (which shall include the
actual number of shares outstanding plus all shares issuable upon the conversion
or exercise of all outstanding convertible securities, warrants and options) by
the Series A Conversion price then in effect, and (2) the aggregate
consideration, if any, received by the corporation upon the issuance of such
Additional Stock;
(y) the number of shares of
Common Stock of the corporation outstanding immediately after such issuance
(including the shares deemed outstanding as provided above).
(B) No adjustment of the Series A Conversion
Price shall be made in an amount less than $.000l share, provided, that any
adjustments which are
<PAGE>
not required to be made by reason of this sentence shall be carried forward and
shall be taken into account in any subsequent adjustment made to the Series A
Conversion Price. Except as provided in Sections 3.3.5d(ii)(E)(3) and (4) below,
no adjustment of the Series A Conversion Price shall have the effect of
increasing the Series A Conversion Price above the Series A Conversion Price in
effect immediately prior to such adjustment.
(C) In the case of the issuance of Common
Stock for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any discounts, commissions or other expenses allowed,
paid or incurred by the corporation for any underwriting or otherwise in
connection with the issuance and sale thereof.
D) In the case of the issuance of Common Stock for a consideration in whole or
in part other than cash, the consideration other than cash shall be deemed to be
the fair value thereof as determined in good faith by the board of directors
irrespective of any accounting treatment.
E) In the case of the issuance of
options to purchase or rights to subscribe for Common Stock, securities by their
terms convertible into or exchangeable for Common Stock, or options to purchase
or rights to subscribe for such convertible or exchangeable securities (which
options, rights, convertible or exchangeable securities are not excluded front
the definition of Additional Stock except as provided in Section
3.3.5d(iii)(B)), the following provisions shall apply:
(1) the aggregate maximum
number of shares of Common Stock deliverable upon exercise of such options to
purchase or rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued for a consideration equal
to the consideration (determined in the manner provided in Sections
3.3.5d(iii)(C) and (D) above) received by the corporation upon the issuance of
such options or rights plus the purchase price provided in such options or
rights for the Common Stock covered thereby, but no further adjustment to the
Series A Conversion Price shall be made for the actual issuance of Common Stock
upon the exercise of such options or tights in accordance with their terms;
(2) the aggregate maximum
number of shares of Common Stock deliverable upon conversion of or in exchange
for any such convertible or exchangeable Securities or upon the exercise of
options to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall be deemed to have
been issued at the time such securities were issued or such options or rights
were issued for a consideration equal to the consideration received by the
corporation for any such securities and related options or rights, plus the
additional consideration, if any, to be received by the corporation upon the
conversion or exchange of such securities or the exercise of any related options
or
<PAGE>
rights (the consideration in each case to be determined in the manner provided
in Sections 3.3.5d(iii)(C) and (D) above), but no further adjustment to the
Series A Conversion Price shall be made for the actual issuance of Common Stock
upon the conversion or exchange of such securities in accordance with their
terms;
(3) if such options, rights or
convertible or exchangeable securities by their terms provide, with the passage
of time or otherwise, for any increase in the consideration payable to the
corporation or any decrease in the number of shares of Common Stock issuable
upon the exercise, conversion or exchange thereof, the Series A Conversion Price
computed upon the original issue thereof, and any subsequent adjustments based
thereon, shall, upon such increase or decrease becoming effective, be recomputed
to reflect such increase or decrease with respect to such options, rights and
securities not already exercised, converted or exchanged prior to such increase
or decrease becoming effective, but no further adjustment to the Series A
Conversion Price shall be made for the actual issuance of Common Stock upon the
exercise of any such options or rights or the conversion or exchange of such
securities in accordance with their terms;
(4) upon the expiration of any
such options or rights, the termination of any such rights to convert or
exchange or the expiration of any options or rights related to such convertible
or exchangeable securities, the Series A Conversion Price shall forthwith be
readjusted to such Series A Conversion Price as would have been obtained had the
adjustment which was made upon the issuance of such options, rights or
securities or options or rights related to such securities been made upon the
basis of the issuance of only the number of shares of Common Stock actually
issued upon the exercise of such options or rights, upon the conversion or
exchange of such securities or upon the exercise of the options or rights
related to such securities; and
(5) if any such options or
rights shall be issued in connection with the issue and sale of other securities
of the corporation, together compromising one integral transaction in which no
specific consideration is allocated to such options or rights by the parties
thereto, such options or rights shall be deemed to have been issued for such
consideration as determined in good faith by the board of directors.
(iii) "Additional Stock" shall mean any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
shares of Common Stock issued, or deemed to have been issued pursuant to Section
3.3.5d(iii)(E), by the corporation after the date of initial issuance of any
Series A Stock other than:
(A) Common Stock issued pursuant to a
transaction described in Section 3.3.5d(i);
<PAGE>
B) Shares of Common Stock issued or
issuable to employees, consultants or directors of the corporation directly or
pursuant to the corporation's Stock Incentive Plan, as amended from time to
time, or other restricted stock plan to the extent such issuances are approved
by the board of directors of the corporation;
(C) Common Stock issued or issuable upon
conversion of Series A Stock; and
D) Common Stock issued or issuable upon
conversion or exercise of any Securities convertible into or exchangeable or
exercisable for shares of Common Stock, other than Common Stock issued or
issuable upon conversion of Series A stock, provided, that such securities are
designated as excluded from the definition of Additional Stock by the vote or
written consent of holders of a majority of the Series A Stock.
e. Capital Reorganization or Reclassification. If the Common
Stock issuable upon the conversion of the Series A Stock shall be changed into
the same or different number of shares of any class or classes of stock of the
corporation, whether by capital reorganization, reclassification or otherwise
(other than an Extraordinary Common Stock Event provided for in Section 3.3.5d),
then and in each such event the holders of each share of Series A Stock shall
have the right thereafter to convert such shares into the kind and amount of
shares of stock and other securities and property receivable upon such
reorganization, reclassification or other change by holders of the number of
shares of Common Stock into which such share of Series A Stock have been
converted immediately prior to such reorganization, reclassification or change,
all subject to adjustment as provided herein.
f. Accountant's Certificate as to Adjustments; Notice by The
Corporation. In each case of an adjustment or readjustment of the Series A
Conversion Rate, the corporation at its expense will furnish each holder of
Series A Stock with a certificate, prepared by independent public accountants of
recognized standing if so required by such holder, showing such adjustment or
readjustment and stating in detail the facts upon which such adjustment or
readjustment is based.
g. Exercise of Conversion Privilege. To exercise its
conversion privilege, each holder of Series A Stock shall surrender the
certificate or certificates representing the shares being converted to the
corporation at its principal office, and shall give written notice to the
corporation at that office that such holder elects to convert such shares. Such
notice shall also state the name or names (with address or addresses) in which
the certificate or certificates for shares of Common Stock issuable upon such
conversion shall be issued. The certificate or certificates for shares of Series
<PAGE>
A Stock surrendered for conversion shall be accompanied by proper assignment
thereof to the corporation or in blank. The date when such written notice is
received by the corporation, together with the certificate or certificates
representing the shares of Series A Stock being converted, shall be the "Series
A Conversion Date". As promptly as practicable after the Series A Conversion
Date, the corporation shall issue and shall deliver to the holder of the shares
of Series A Stock being converted, or on its written order such certificate or
certificates as it may request for the number of whole shares of Common Stock
issuable upon the conversion of such shares of Series A Stock in accordance with
the provisions of this Section 3.3.5, cash in the amount of all declared and
unpaid dividends on such shares of Series A Stock up to and including the Series
A Conversion Date, and cash, as provided in Section 3.3.5g, in respect of any
fraction of a share of Common Stock issuable upon such conversion. Such
conversion shall be deemed to have been effected immediately prior to the close
of business on the Series A Conversion Date, and at such time the rights of the
holder as holder of the converted shares of Series A Stock shall cease and the
person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of the shares of Common Stock
represented thereby.
h. Cash in Lieu of Fractional Shares. No fractional shares of
Common Stock or scrip representing fractional shares shall be issued upon the
conversion of shares of Series A Stock, but the corporation shall pay to the
holder of such shares a cash adjustment in respect of such fractional shares in
an amount equal to the same fraction of the market price per share of the Common
Stock (as determined in a reasonable manner prescribed by the board of
directors) at the close of business on the Series A Conversion Date. The
determination as to whether or not any fractional shares are issuable shall be
based upon the total number of shares of Series A Stock being converted at any
one time by any holder thereof, not upon each share of Series A Stock being
converted.
i. Partial Conversion. In the event some but not all of the
shares of Series A Stock represented by a certificate or certificates
surrendered by a holder are converted, the corporation shall execute and deliver
to or on the order of the holder, at the expense of the corporation, a new
certificate representing the shares of Series A Stock that were not converted.
j. Reservation of Common Stock. The corporation shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock, solely for the purpose of effecting the conversion of the shares
of the Series A Stock, such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all outstanding shares of
the Series A Stock and, if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of all
then outstanding shares of the Series A Stock, the corporation shall take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
<PAGE>
k. No Impairment. T he corporation will not, by amendment of
its certificate of incorporation or through any reorganization. transfer of
assets consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 3.3 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Series A Stock against impairment.
3.3.6 Reissuance of Stock
No share or shares of Series A Stock redeemed, converted,
purchased or otherwise acquired by the corporation shall be reissued, and all
such shares shall be canceled, retired and eliminated from the shares which the
corporation shall be authorized to issue. The corporation may from time to time
take such appropriate corporate action as may be necessary to reduce the
authorized number of shares of the Series A Stock accordingly.
3.3.7 Redemption
The corporation shall not have the right to call for
redemption of all or any part of the Series A Stock. However, the corporation
shall have the right to purchase shares of Series A Stock pursuant to agreements
within the holders thereof when such purchases are approved by the board of
directors.
3.3.8 Liquidation Rights
Upon the voluntary or involuntary dissolution, liquidation or
winding up of the corporation, the assets of the corporation available for
distribution to its shareholders shall be distributed in the following order and
amounts:
a. General
(i) Series A Stock. First, the holders of
shares of Series A Stock shall be entitled to receive $1.00 (appropriately
adjusted for any stock dividend, split or combination of such Series A Stock)
for each outstanding share of Series A Stock held by them plus any declared but
unpaid dividends per share on such outstanding shares of Series A Stock (the
"Series A Liquidation Amount"). If upon the occurrence of such event the assets
of the corporation shall be insufficient to permit the payment of the full
Series A Liquidation Amount, then the assets of the corporation available for
distribution shall be distributed ratably among the holders of the Series Stock
in the same proportions as the aggregate of the Series A Liquidation Amount each
such holder would otherwise be entitled to receive bears to the total Series A
Liquidation Amount that would otherwise be payable to all such holders, and no
distribution to other shareholders of the corporation shall be made. Upon the
completion of the distribution
<PAGE>
of the full Series A Liquidation Amount, if assets remain in the corporation,
such remaining assets shall be distributed as set forth in Sections 3.3.8a(ii)
and 3.3.8a(iii).
(ii) Common Stock. Second, subject to payment in
full of the Series A Liquidation Amount, the holders of shares of Class A Common
Stock shall be entitled to receive $1.00, appropriately adjusted for any stock
dividend, split or combination of such Common Stock for each outstanding share
of Common Stock held by them (the "Class A Common Stock Liquidation Amount").
After payment of the Class A Common Stock Liquidation Amount, the holder of
Class B Common Stock shall be entitled to receive $1.00, appropriately adjusted
for any stock dividend, split or combination of such Common Stock for each
outstanding share of Common Stock held by them. If upon the occurrence of such
event, the assets of the corporation shall be insufficient to permit the payment
of the full Common Stock Liquidation Amount, then the assets of the corporation
available for distribution shall be distributed ratably among the holders of the
Common Stock in the same proportions as the aggregate of the Common Stock
Liquidation Amount each such holder would otherwise be entitled to receive bears
to the total Common Stock Liquidation Amount that would otherwise be payable to
all such holders, and no further distribution to other shareholders of the
corporation shall be made. Upon the completion of the preferential rights
granted for any subsequent series of Preferred Stock and the full Common Stock
Liquidation Amount, if assets remain in the corporation, such remaining assets
shall be distributed as set forth in Section 3.3.8a(iii).
(iii) Participation. Finally, subject to the payment
in full of Series A Liquidation Amount,
any other preferred rights granted for any subsequent series of Preferred Stock,
and the payment in full of the Common Stock Liquidation Amount as provided in
Section 3.3.8a(ii), if assets remain in the corporation, such remaining assets
shall be distributed to the holders of shares of Common Stock together, who
shall each be entitled to receive their Pro Rata Amount; provided that the
rights of the holders of shares of Common Stock are subject to any preferential
rights granted for any subsequent series of Preferred Stock. "Pro Rata Amount"
means that portion of remaining assets to which a group would be entitled based
on its percentage of the number of shares of Common Stock outstanding and the
number of shares of Common Stock into which the outstanding shares of Series A
Stock could then be converted.
b. Treatment of Sales of Assets or Acquisitions. The sale of
all or substantially all of the assets of the corporation or the acquisition of
the corporation by another entity by means of merger, consolidation or
otherwise, resulting in the exchange of the outstanding shares, of the
corporation for securities of or consideration issued, or caused to be issued,
by the acquiring entity or any of its affiliates, shall be regarded as a
liquidation within the meaning of this Section 3.3.8.
c. Distributions Other Than Cash. Whenever the distribution provided
for in this Section 3.3.8 shall be payable in property other than cash the value
of such distribution shall be the fair market value of such property as
determined in good faith by the board of directors.
EXHIBIT 4.2
Registry Number: C21213-96
Certificate of Amendment
of Articles of Incorporation
(After Issuance of Stock)
INTEGRATED FOOD RESOURCES, INC.
We the undersigned, Alain de la Motte, President, and James McKenzie,
Secretary, of Integrated Food Resources, Inc., do hereby certify:
That the Board of Directors of said corporation by unanimous consent
action without a meeting pursuant to NRS 78.315 on June 23, 1999, adopted
resolutions to amend the original articles as follows:
Article 3.3.5a (i) and 3.3.5b are hereby amended to read as described
in the attached Exhibit "A" which is incorporated by reference.
The number of shares of common stock of the corporation outstanding and
entitled to vote on the amendments to the Articles of Incorporation is
16,184,643; that the said changes and amendments have been consented to and
approved by the majority of the stockholders holding at least a majority of each
class of stock outstanding and entitled to vote thereon.
/s/ Alain de la Motte
----------------------
Alain de la Motte, President
James McKenzie, Secretary
State of Oregon
County of Washington
On June 23, 1999, personally appeared before me, a Notary Public, Alain
de la Motte, who acknowledged that he executed the foregoing instrument.
OFFICIAL SEAL
KAREN I OTIS /s/ Karen I. Otis
----------------------
NOTARY PUBLIC - OREGON Notary Public for Oregon
COMMISSION NO.308030
MY COMMISSION EXPIRES DEC 29, 2001
<PAGE>
Registry Number: C21213-96
Certificate of Restatement
of Articles of Incorporation
(After Issuance of Stock)
INTEGRATED FOOD RESOURCES, INC.
We the undersigned, Alain de la Motte, President, and James McKenzie,
Secretary, of Integrated Food Resources, Inc., do hereby certify:
That the Board of Directors of said corporation by unanimous consent
action without a meeting pursuant to NRS 78.315 on June 23, 1999, adopted
resolutions to amend the original articles as follows:
Article 3.3.5a (i) and 3.3.5b are hereby amended to read as described
in the attached Exhibit "A" which is incorporated by reference.
The number of shares of common stock of the corporation outstanding and
entitled to vote on the amendments to the Articles of Incorporation is
16,184,643; that the said changes and amendments have been consented to and
approved by the majority of the stockholders holding at least a majority of each
class of stock outstanding and entitled to vote thereon.
Alain de la Motte, President
/s/ James McKenzie
----------------------
James McKenzie, Secretary
State of Oregon
County of Washington
On June 24, 1999, personally appeared before me, a Notary Public, James
McKenzie, who acknowledged that he executed the foregoing instrument.
OFFICIAL SEAL
MARK E. FOSTER /s/ Mark E. Foster
----------------------
NOTARY PUBLIC - OREGON Notary Public for Oregon
COMMISSION NO. 310872
MY COMMISSION EXPIRES MARCH 24, 2002
<PAGE>
3.3.5 Conversion Rights
The holders of the Series A Stock shall have the following
rights with respect to the conversion of Series A Stock into shares of Common
Stock:
a. General
(i) Voluntary Conversion. Shares of the Series
A Stock may, at the option of the holder, be converted at any time into such
number of fully paid and nonassessable shares of Class A Common Stock as are
equal to the product obtained by multiplying the Series A Conversion Rate
(determined under Section 3.3.5b) by the number of shares of Series A Stock
being converted.
(ii) Mandatory Conversion. Each share of Series
A Stock shall be converted automatically, without any further action by the
holders of such shares and whether or not the certificates representing such
shares are surrendered to the corporation or its transfer agent for the Common
Stock, into the number of shares of Common Stock into which such Series A Stock
is convertible pursuant to Section 3.3.5a(i) upon the earlier of, (A)
immediately prior to the closing of a firmly underwritten, public offering by
the corporation of its Common Stock, registered under the Securities Act of
1933, as amended, or (B) upon the demand of the corporation upon thirty (30)
day's written notice.
b. Conversion Rate. The conversion rate for Series A Stock in
effect at anytime (the "Series A Conversion Rate") shall equal $1.00 divided by
the Series A Conversion Price, calculated as provided in Section 3.3.5c.
c. Conversion Price. The conversion price for Series A Stock
shall initially be $1.00 (the "Series A Conversion Price"). The Series A
Conversion Price shall be adjusted from time to time in accordance with Section
3.3.5d.
EXHIBIT A
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
INDEPENDENT AUDITOR'S REPORT AND CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED JULY 31, 1999
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> JUL-31-1999
<CASH> 1,528
<SECURITIES> 0
<RECEIVABLES> 33,852
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,351
<DEPRECIATION> (6,422)
<TOTAL-ASSETS> 148,626
<CURRENT-LIABILITIES> 292,479
<BONDS> 0
0
4,067
<COMMON> 16,199
<OTHER-SE> (164,119)
<TOTAL-LIABILITY-AND-EQUITY> 148,626
<SALES> 108,426
<TOTAL-REVENUES> 917,839
<CGS> 135,734
<TOTAL-COSTS> 521,178
<OTHER-EXPENSES> 1,270,183
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 115,292
<INCOME-PRETAX> (1,933,961)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,933,961)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,933,961)
<EPS-BASIC> (0.37)
<EPS-DILUTED> (0.37)
</TABLE>
